Many of us would love to feature the music of the bands we enjoy in our personal lives. Oftentimes, however, this music is too expensive to feature in an independent film. Thus, filmmakers either search for lesser known music that may come cheaper or approach bands willing to write music that the production can own outright. In exchange the band is getting some exposure to their work.
Songs are copyrighted by law. Therefore, filmmakers must license the use of any songs from the copyright owners in order to feature them in their films. There are two licenses that you will need when featuring music in your film: Master Use and Synch.
The Master Use license is garnered from the label that recorded the song. They are the owners of the actual recording. If you are going to re-record the song then you won't need the Master Use license. The Synchronization license (which allows filmmakers to "synch" the song to images) comes from the publisher, who owns the publishing rights to the song. Songwriters may be their own publisher or they may work with a music publisher who helps promote their music and collects and disperses the royalties for a typical 50/50 cut of the royalties.
Publishing rights to songs can be bought and sold. One of the most publicized cases has been the handling of the publishing rights to a portion of the Beatles' songs. In the 1960s, publisher Dick James formed a company with the Beatles that held the majority of the publishing rights to the Beatles' work. When James sold his shares of the company, the Beatles found themselves with new partners who held the majority stake in the company. Eventually these new partners put their catalog up for sale and Michael Jackson outbid everyone, including Paul McCartney who had tried to buy back the publishing rights. Later Sony would pay Jackson millions for rights to the catalog. Needless to say, the Beatles haven't been happy about how their publishing rights have been handled through the years.
When securing the rights to songs for use in films, most productions hire a music supervisor to handle the process. They have the knowledge and relationships to garner good licensing deals for the usage of the songs. In addition, there are many different licensing deals to consider, i.e. theatrical usage, TV, Internet, festival, etc. And fees can vary depending on how much of the song is used and where in the film. Music is a whole other character in a film and a whole other negotiating process!