TAKE CARE
BEFORE SIGNING AWAY YOUR CREATIONS
IMG is one of the
most respected and highly efficient independent music publishers and administrators
in the World. IMG controls thousands of copyrights and is probably in the charts
more often than any other true independent.
It's all too easy to get the wrong impression when entering into a publishing
deal. If you can afford to, you should always get a music industry lawyer
to look over an agreement for you before you sign it. It need not cost a fortune,
and it may prevent you from losing a great deal of money in the future.
If you really can't afford legal advice then at least consider the points
made here to stop you agreeing to the worst of the scenarios in which your
royalty income could be reduced. Some of the examples given here are extreme
cases but they are designed to illustrate the pitfalls that can lure the innocent
songwriter or publisher.
At INDEPENDENT MUSIC GROUP, we pride ourselves in offering deals that do
not contain clauses that would lead to the horrendous situations we show here.
We are here to help you whether or not you choose to enter into an agreement
with us.
Find out how to make certain you get paid quickly and properly. Those dangerous
clauses are explained!!
Some of the examples given here can virtually halve your income or worse!!
Don't fall for it, read any contract carefully and remember to watch out for
those nightmare words, "Receipts" and "Controlled Composition Clause".
CONTROLLED
COMPOSITION CLAUSES
The Controlled Composition
Clause is normally applied to record royalties that are earned in the U.S.A.
and can have an absolutely amazing effect on the amount of income you may receive
when these clauses are applied to you.
There are several types of clauses and any of them, but often all of them,
can be applied to your income.
Remember that in the U.S.A. there is a cent rate (currently 8 cents and
referred to as the Statutory Rate) that is paid for each song on a recording.
However, that is not normally what happens.
The first element of the Controlled Composition Clause attempts to limit
payments to "75% of statutory rate".
This is even nastier than you think as it not only reduces that 8.00 cents
to 6.00 cents, it is also designed to stop you benefiting from the increased
rate that is available when works are longer than a certain duration.
Next, there is the clause that says that only one recording of any composition
will attract a royalty. So, all those dance records with more than one mix
of a track will really lose out! They have probably already lost out because
they did not get the bonus amount because the track was of a longer duration.
As if all this was not enough, there is a final kick in the shape of a "cap".
This would typically say that the total royalty that would be paid on an album
would be the amount payable (including all of the limitations already discussed)
as if there were only 10 tracks on the album irrespective of how many tracks
there actually were. So an 11 track album would only be paid as if there were
10 tracks etc. This type of restriction can also be applied to singles. Let's
now see an example.
We will assume that all tracks are of normal length, it would be much worse
if they were not! Also remember that a co-writer may have insisted on "full
rate" (i.e. no reduction) which could also affect an artist/writer's royalty.
Let us assume that you are a 50% co-writer of a song on an album with 12 tracks
and that your co-writer is able to demand a full rate and you are not. Let
us also assume that two other (100%) writers on the album have also insisted
on full rate.
So, the total royalty on the album is 10 (maximum number of tracks paid
on) multiplied by 8.00 cents multiplied by 75% equals 60.00 cents. There are
2.5 songs at full rate which equals 8.00 cents multiplied by 2.5 equalling
20.00 cents. This leaves 9.5 songs. They will all have to share 60.00 cents
less 20.00 cents which equals 40.00 cents. Each song will therefore get 40.00
cents divided by 9.5 which equals 4.21 cents, just over half the full rate.
You can see how much worse this could be if there were longer songs, more
songs or more full rate writers on the CD.
"AT SOURCE"
vs. "RECEIPTS" - WHERE DOES THE MONEY GO?!
Here, we compare
what happens to your royalties when you enter into either a "Receipts" deal
or an "At Source" deal.
Let us assume that a song has earned £100 in Germany (the "Source" of the
payment). If you have signed a receipts deal with a U.K. publisher then they
will pay you whatever royalty rate has been agreed as a percentage of the
amount they receive from their German sub-publisher (their "Receipt"). So,
if you have signed a 75/25 deal and your U.K. publisher has agreed a 75/25
sub-publishing deal with a German sub-publisher you will get 75% of 75% of
the original £100. In other words, £56.25. That 75/25 deal you signed is actually
only 75/25 in the United Kingdom. Everywhere else it is 56.25/43.75. It could
be worse.
If the sub-publishing rate is 50/50 then you would only get £37.50 from
the original £100. With an "At Source" deal you will get the same contract
percentage wherever in the world it has been earned. If you have a 75/25 deal,
you will receive £75 for every £100 you earn "At (the) Source" wherever it
is earned.
Take care before signing
away your creations
Controlled
Composition clauses
"At Source" vs. "Receipts" WHERE
DOES THE MONEY GO?!
What are my rights? - Our promise
to you
Where
is my money?
WHAT ARE MY RIGHTS? - Our promise to you
Remember there
are many rights involved in music. As well as the Performing Right (when a work
is performed or broadcast) and the Mechanical Right (when a record is sold or
used for profit) there is also the Phonographic Performance Right (known as
PPL in the U.K.) which is paid for the performance of the recording and the
Performer's Right (paid when a performance by an artist or musician is broadcast).
There are also other rights relating to the showing of films and television
programs.
All of our agreements provide for "At Source" accounting. You will always
know exactly what you are getting; there will be no double deductions.
* We will always fight on your behalf to protect you from the effects of
Controlled Composition Clauses. We will not accept them automatically and
will always try to negotiate you out of some or all of the elements of them
unless, of course, as the recording artist, you have already agreed to them.
* We are always keenly aware of the delays that can be caused by late registrations.
We will take all these factors into account when handling your songs.
* We are always pleased to give free advice on all aspects of music publishing;
we have experts in all areas and can help steer you in the right direction.
* We are not just administrators-we have an active and thriving A & R division
always eager to show that we know what real music publishing is all about.
WHERE IS MY MONEY?
It is all too easy
to miss a record company accounting period by registering a song just a week
after the record company has applied for a licence to record and release that
composition. Most record companies operate on a calendar quarterly system ending
31st March, 30th June, 30th September and 31st December. Also, most record companies
do not like dealing with queries or back claims in the middle of a quarterly
period. An example of the delays that could occur is illustrated by the following
example:
* July 2nd: Record Company applies to MCPS for a licence to release a recording
of the song. Normally a response is given within 7 days. As the song does
not appear on the database, no claim is made and the Application for Licence
(AFL) is returned without a claim.
* July 10th: Song is registered at the society.
* July 20th: Society issues back claim invoice to record company.
* July 21st: Record company receives invoice but will not process until
the end of the then current quarter (30th September).
* October 1st: Record Company processes claim and includes income in payments
to society for 4th quarter payable 45 days after the end of that quarter (15th
February of the following year!).
There can be even more delay if the record company releasing the recording
is operating under a central licensing procedure where the royalty flow and
income must pass through additional channels.