Help - View Artist/Producer Contract

General Information

The artist contract shows configured terms, income types, expenses, and products associated with a contract. It also shows the configuration for the controlled composition clause associated with the contract.

"Contract" section:

The contracts section shows basic information for a contract, included the associated payor and payee.

Contract Title

- The name of the contract as configured in the system. This name is assigned by the user.

Artist

- The name of the artist as it appears on the contract. This field is optional, and is informational only.

Contract ID

- The contract ID that appears on the contract. This field is optional, and is informational only.

Payor

- The payor associated with the contract. Statements for the contract will only appear in royalty runs for the payor listed here. Also functions as a link to the "View Payor" page for the payor.

Payee

- Statements for the contract will be produced for this payee in royalty runs. Also functions as a link to the "View Artist/Producer Payee" page for the payee.

• Multiple contracts can be assigned to the same Payee. All associated contracts will appear on one statement.

Date Issued

- The date the contract was issued. This field is optional, and is informational only.

Term Start

- Notes the start date for the contact. Only sales that occur after the term start date will be included in artist royalty runs for the contract.

• If "Term Start" date is left blank, all sales up to the "Term End" date will be included in artist royalty runs for the contract.
• If "Term Start" date and "Term End" date are blank, all sales will be included in artist royalty runs for the contract.

Term End

- Notes the end date for the contract. Only sales that occur before the term end date will be included in artist royalty runs for the contract.

• If "Term End" date is left blank, all sales past the "Term Start" date will be included in artist royalty runs for the contract.
• If "Term End" date and "Term Start" date are blank, all sales will be included in artist royalty runs for the contract.

"Contract Terms" section:

The contract terms section shows payout rates currently set against the contract for different types of sales being processed in the RoyaltyShare system. These terms can be further configured or added to by clicking the "Edit Terms" button.

The following information is viewable in this section and available for the configuration of contract terms:

Priority

- The order in which sales process against the contract. Sales processed for attached albums and/or tracks will attempt to match the criteria provided in the first contract term, Priority 1, first. If they do not meet those criteria, they will attempt to match to the second term, Priority 2, and so on, until they reach the default term.

• Sales that do not match criteria for a contract term on any existing contract will show on the Unallocated Sales audit report, available with each artist royalty run created.

Source

- The original source of the sale, generally appearing in sales information as the format of the sale for a given transaction. The following source configurations are available for artist/producer contracts:

• All – All available sources
  • All Physical – All physical sources
    • CAS – Cassette
    • CD – Compact Disc
    • CD2 – Two Compact Disc Set
    • CD5 – Compact Disc Single
    • DVD – Digital Versatile Disc
    • DVDCD – DVD Audio/Dual Disc
    • LP – Vinyl (Long-Playing)
    • LP5 – Vinyl (Long-Playing) single
    • VHS – Video Home System
  • All Digital – All digital sources
    • BG - Background
    • DA – Digital Album Permanent Download
    • DA-P – Digital Album Permanent Download, Premium
    • DA-U – Digital Album Permanent Download, Upgrade
    • DD – Dual Permanent Download
    • DS – Digital Stream
    • DT – Digital Track Permanent Download
    • DT-P – Digital Track Permanent Download, Premium
    • DT-U – Digital Track Permanent Download, Upgrade
    • DTETH – Digital Tethered Download
    • JB – Jukebox
    • RING – Ringtone
    • VPD – Variable Priced Download

Region

- User-defined country or group of countries from which a sale must originate to process against the contract term, generally appearing in sales as territory information. Regions and their associated countries can be configured on the Admin tab.

Channel

- The distribution channel associated with a sale to process against the contract term. Applies to physical sources only. The following Channels can be configured for contract terms:

• All
• Retail
• Military
• Club
• Mail Order
• Direct

Price

- The reported price required for sales to process against the contract term. Applies to physical sources only. The following price levels are available:

• All
• Full
• Mid
• Budget
• Promo

Rate Type

- Designates the price or value that will be used to calculate royalties. The following rate types are available:

• % Retail – rate is applied against retail prices that are configured for the source within the system.
  • Retail prices can be managed on the Admin tab and assigned to individual products on the Catalog tab.
• % Wholesale – rate is applied against wholesale prices that are configured for the source within the system. Wholesale prices can be managed on the Admin tab and assigned to individual products on the Catalog tab.
• % Net Revenue – rate is applied against the total revenue received.
• % Retail Document – rate is applied against actual retail price reported in the original sales file.
• % Wholesale Document – rate is applied against the actual wholesale price reported in the original sales file.
• Fixed – Uses a fixed value per unit (in the base currency of the site) that is configured in the "Rate" variable.
• Non-payable – allows configuration of sources where no artist royalties are due. No rate information is entered against non-payable sales, as no payout is made for sales processed against the term.
  • Non-payable sales are only reported in the online version of the artist statement.

Note that the following conditions must be met for a sale to process against the rate types "% Retail Document" and "% Wholesale Document" and show the respective reported price on statements:

• The sales record must report retail or wholesale price, depending on the selected rate type, in a separate and distinct field.
• The sales record must have been imported after March 31^st, 2010, when document retail and wholesale rate type features went into effect.

Rate

- The rate used for payment, as calculated against the rate type, or the set value for payment.

Rate Reduction

- The percentage of the rate that is payable, which can be greater or less than 100%, though generally an adjustment to rate reduction is made to lower the rate payable.

% of Sales

- The percentage of sales to be paid out, which is a reduction in payout, varying by the type of royalties. Cannot be greater than 100% of sales.

• For unit based royalties, the % of Sales reduces the number of units to be paid out.
• For net revenue royalties, % of Sales is applied against the base rate.

Packaging

- A packaging deduction that is applied against the base rate. Cannot be greater than 100% of sales.

Free Goods

- The percentage of free goods allowed on gross units or sales. Cannot be greater than 100%.

• For unit based royalties, Free Goods further reduces the number of units to be paid out.
• For net revenue royalties, Free Goods further reduces the total amount of sales to be paid out.

Default Term

- A default term can be configured for all sources, all regions, all channels, and all prices to process sales at a percentage of net revenue. No reductions in rate can be made to the default term.

• If you do not want to use a default term on your contract, you can inactivate the default term by selecting the "Inactive" checkbox when editing your contract. A message will then show on the main View Artist/Producer Contract page noting that "The default term is currently inactive."

Reserve

- The percentage used to calculate the amount of reserves to be held for an artist royalty period. Cannot be greater than 100%.

• For unit based royalties, Reserves are taken as a percentage of units.
• For net revenue based royalties, Reserves are taken as a percentage of sales.
• Reserves are only taken for physical product sales.

Liquidation Schedule

- Determines the release of reserves held during the mechanical royalty period. If a reserve percentage is entered, you must enter a liquidation schedule that totals 100%.

Physical Only

- Notes for the user that reserves are only applied to physical sales if reserves are being taken.

Artist contract royalty calculation for Retail / Wholesale rate type (Unit Royalties)

Effective Rate = Sales Price * Rate * Rate Reduction * (100% - Packaging)

Net Units = (((Gross Units * % of Sales) – Reserves + Liquidations) * (100% - Free Goods)) – Returns

Reserves = Gross Units * % of Sales * Reserve Rate

Total = Effective Rate * Net Units

Artist contract royalty calculation for Net Revenue rate type (Net Revenue royalties)

Effective Rate = Rate * Rate Reduction * % of Sales * (100% - Packaging)

Net Sales = (Gross Sales – Reserves + Liquidations) * (100% - Free Goods)

Reserves = Gross Sales * Reserve Rate

Total = Effective Rate * Net Sales

"License Income Sources" section:

This section shows income types and their associated rates for license income sources that can be applied to the contract. In order to add license income transactions through the Revenue tab that will apply to a contract, the license income sources must first be defined and attached to the contract.

Income Type

- Defined by the user, the label that will show on the statement for the associated license income entered.

Net Revenue Rate

- The rate paid out on the contract for the associated income type. All rates for license income are percentages of net revenue only.

"Recoupable Expenses" section:

This section shows album- or track-level expenses that can be taken and the amount of that expense that will recoup against sales on the artist/producer statement. Expense types must be defined here in order to add expenses to albums and tracks attached to the contract.

Expense Type

- Defined by the users, the label that will show on the statement for the associated expense or net revenue deduction entered against the album or track.

Recoupable

- The percentage of the total expense amount that will be recouped on the statement. If the expectation is to recoup the entire amount, the percentage entered should be 100%.

"Controlled Composition Clause" section:

This section shows information related to the controlled composition which may be used for mechanical royalties on an album or track attached to the contract. Only one controlled composition clause can be used on an album, and only one can be configured against a contract.

Track Cap

- The maximum number of tracks used in the controlled composition calculation to determine the payout.

• Note that if the Track Cap is greater than the number of tracks on the album the controlled composition clause is attached to, the actual album track count will be used in place of the Track Cap.

Rate Type

- Notes the type of royalty rate that will be used for the license. Rate types include:

• Stat Rate – pays license at full statutory rate based off of song timing. Full Stat rate requires song timing to be filled in for license to be paid. Within the "Statements" tab, the "Tracks Without Timings" report lists all licenses configured for full stat rate where song timings are missing.
• Minimum Stat – pays license at the minimum statutory rate. Minimum statutory rate does not require song timing.
• Minimum Stat – pays license at the minimum statutory rate. Minimum statutory rate does not require song timing.
  • Note that penny rates are paid out as entered, with "Share" and "Rate Percent" not included in the penny rate mechanical license calculation.
  • Note that penny rates are paid out as entered, with "Share" and "Rate Percent" not included in the penny rate mechanical license calculation.

Rate %

- Notes the percent of the applied rate type that will be paid out on the license.

• Note that "Rate Percent" is not used in penny rate calculations.

Rate Basis

- Determines how full or min stat rate types will be paid. Options include:

• Sales Date – Pays the license out based on the associated stat rate for the date of the sale.
• Lock Date – Pays the license out based on the associated stat rate for the date configured in the "Lock Date" variable. Sets the statutory rate period for all sales processed against the license.

Lock Date

- Sets the statutory rate period for all sales processed against the license at the entered date if the "Rate Basis" variable is set to "Lock Date".

Reserve

- The percentage of sales used to calculate the amount of reserves to be held for a mechanical royalty period.

Liquidation Schedule

- Determines the release of reserves held during the mechanical royalty period. The liquidation schedule must be equal to 100%.

"Albums" section:

This section shows all albums currently attached to the contact. Sales for these albums, and for all tracks on these albums, are eligible to be paid out on contract terms associated with the contract.

Contracts can be attached to an album or track on the Catalog tab. The Contracts sub-tab for the album also allows you to inactivate or reactivate a contract for an album or track.

The following information is viewable in this section:

Title

- The title of the album. The title also functions as a link to the main album page.

Catalog #

- The catalog number for the album.

Label

- The label name associated with the album.

Artist

- The album artist name associated with the album.

Contract Status

- Notes if the contract is Active or Inactive for the attached album. If the contract status is Inactive for an album, no sales will be processed against the contract for that album.

Expenses

- Allows the user to view any expenses or net revenue deductions associated with the album. Expenses entered for an album will show on the next artist run statement for that album.

XC

- Cross collateralize (Yes / No). Allows the user to cross collateralize all expenses and earnings for an album.

• Cross collateralization occurs at the album contract level or at the track contract level. When crossed, all totals for all products, negative and positive, will be combined for a final payout amount.
• o If uncrossed, separate balances will be shown on the statement for all products, and negative balances will not be deducted from positive balances to find the amount due. Negative balances for products will carry over to the next period.

"Tracks" section:

This section shows all tracks currently attached to the contact. Sales associated with these tracks, are eligible to be paid out on contract terms associated with the contract. Note that both track level and album level sales which include the track will be included in the pay out.

The following information is viewable in this section:

Title

- The title of the track. The title also functions as a link to the main track page.

Artist

- The track artist name associated with the track.

Album

- The album where the track appears.

Length

- The duration of the track.

Proration

- The number by which album sales are prorated before royalties are calculated for a track. Initially set as the number of tracks on the album where the track appears, the proration can be adjusted by clicking on the number link and entering the proration desired.

Contract Status

- Notes if the contract is Active or Inactive for the attached track. If the contract status is Inactive for a track, no sales will be processed against the contract for that track.

Expenses

- Allows the user to view any expenses associated with the track. Expenses entered for a track will show on the next artist run statement for that track.

XC

- Cross collateralize (Yes / No). Allows the user to cross collateralize all expenses and earnings for a track.

• Cross collateralization occurs at the album contract level or at the track contract level. When crossed, all totals for all products, negative and positive, will be combined for a final payout amount.
• If uncrossed, separate balances will be shown on the statement for all products, and negative balances will not be deducted from positive balances to find the amount due. Negative balances for products will carry over to the next period.