It's confusing to be sure. I spoke with several lawyers to prepare this article, and my head was spinning by the end. So I will avoid the messiest of details and hopefully give you only what you need to negotiate from a position of relative strength and knowledge. Of course, if you’re about to sign a big licensing deal with a major studio or TV production house, by all means… get a lawyer! But on smaller deals, it may not be worth it. So you should be as knowledgeable as you possibly can be in order to secure the best deal.

First things first. Be aware that there are really two separate permissions to negotiate: There’s the use of the sound recording itself, which compensates the owner of the master recording. And then there’s the use of the song itself, which involves paying those who wrote the song and/or own the publishing rights to it. This way, the artist/label gets paid for the recording, and the songwriter/publisher gets compensated separately.

Same thing for cover songs. A Punk band can get paid for the use of its rockin’ U2 cover recording while Bono and the boys can get paid for use of the song in a completely separate deal. Often the person who wrote the song also owns the publishing and masters, which can make the licensing process much easier. Also keep in mind that the owner of the master recording doesn’t benefit from the performance royalties that rights organizations pay publishers and songwriters. So if you own the recording but not the copyright on the song itself, keep that in mind when negotiating your fee (More about this next month in part three of this series).

For the music supervisor, dealing with one entity that owns both the song and the masters is a great way to cut out a lot of red tape and meet deadlines. But it doesn’t mean song owners should necessarily agree to wrap everything into one deal. "Don’t get tied down," says Ken Burry, a partner at Greenberg Taurig’s entertainment practice in Los Angeles. "Don’t talk about just one price." For example, producer may offer you a one-time $200 to use your song, which may sound great (and beat the hell out of what you made at your last gig). But why not ask for two separate contracts? You might be able to negotiate a publishing fee of $150 and another master license of $150—coming out to $300 total, which obviously puts you in a better overall position.

Burry also suggests asking for a "step deal," especially if it’s an indie flick without much of a budget. That way, you can agree to that piddly $50 up front but limit the license to just the indie film festival circuit. In many cases, the indie film producers are simply hoping to bag a distribution deal at a festival anyway, at which point they will have plenty of money to pay you more. You can either negotiate specific step payments up front or leave the negotiation for later (often the second option puts you in a better position because your song is already part of the movie at this point). "If you’re doing a deal with an indie, there’s no reason not to try to benefit on the back end," says Burry.

A step deal can get pretty granular and might work like this. You get one fee for the festival, another for theatrical release, another if the movie makes it onto TV, another when it hits DVD, and so on. You could also link payments to the movie’s financial success (After the box office hits $10 million, you get a payment of X). You could even negotiate specific mechanical royalties for the soundtrack album, which are becoming easier to release because of digital distribution, and negotiate terms for the promotional uses of the song in trailers. Even within trailers, the fees could be different for an "in-context" use in which the song plays with the scene in the movie or an "out-of-context" use in which the song is used over a montage of different scenes not originally associated with the song (Did I mention this was complicated?).

The bottom line is that you need to feel out the situation. If the film or TV project is a small endeavor, though, you might have some wiggle room. After all, an indie producer is probably just hoping to get their movie out there and would likely be happy to pay you more if the film ends up a huge success. "They’re just trying to get the deal done," says Larry Iser, a partner at L.A.-based law firm Greenberg Glusker. "They’re not thinking it will sell a lot of tickets." Of course, demanding too much complexity in your deal could actually irritate the music supervisor to the point that he or she would walk away and just use another song.

When you’re reasonable, you’re really helping the music supervisor help you. For example, Alexandra Patsavas, owner of the L.A.-based The Chop Shop, makes a real effort to find up-and-coming bands for her impressive slate of hit TV shows, including The O.C., Without A Trace, Grey’s Anatomy and many more. Patsavas says indie artists can make between $600 and $3,000 per TV placement. That’s free money! Don’t waste her time! "If you’re focused on placing music in television, definitely watch the show and get a feel for what the music supervisors are using," she says.

You also don’t want to be too difficult during negotiations when people like Patsavas are out there trying to give you a fair shake. If you’re a largely unknown artist, and a big studio or TV production house wants to pay you good money to use your song and give you massive exposure, they will probably want to wrap most of the backend into a nice upfront payment rather than trying to keep track of several step payments. "They all basically have tried to do buyouts—paying one time and never paying again," says Owen Sloane, a music lawyer at the L.A. office of Berger Kahn. You need to ask yourself whether you really want to risk losing the deal because you want something on the back end.

Remember: The bigger the film or TV project, the less leverage you have. "Spielberg’s guy might say, `hey, you’re lucky to be in the film," says Oren Warshavsky, a music lawyer at Gibbons, Del Deo, Dolan, Griffinger and Vecchione. So be careful! Feel it out. See if you can negotiate a little bit of flexibility and, if you can’t, enjoy that nice upfront fee and exposure!

(EDITOR’S NOTE: In part three of this series next month, we’ll explore the mysterious world of performance royalties and how those checks can keep rolling in long after you’ve spent that upfront money).

(Mike Grebb is a writer, journalist and singer/songwriter based in Washington, D.C. He has written for numerous publications, including Wired and Billboard. He just completed his debut solo record, Resolution, which is available at www.mikegrebb.com, as well as digitally on iTunes, MSN Music, Musicmatch, Yahoo! Music Unlimited and other sites. Mike will also be an instructor at a songwriting workshop in Takoma Park, MD, on Oct. 22. Check www.emergingsongwriters.com for sign-up info).