Monday, October 25, 2010

Music Business/Law Tips - "Foreign Licensing Deal" (Part 2)

Money. The company will make payments to the artist in the form of royalties and advances. The royalty will usually be a percentage of the suggested retail list price in the licensed territory on records sold, or, if there is no such list price, the equivalent in that territory. Sometimes, the royalty will simply be a certain number of the company's country's currency for each CD sold (e.g., three German marks for each copy sold). The artist could request that royalties be paid in U.S. dollars. The artist should also expect an advance against royalties (i.e., recoupable). Here, unlike domestic recording agreements, the company generally will absorb the costs to manufacture and sell the CDs and not charge these costs back to the artist.

Guaranteed Release. The artist should insist that the company commence manufacturing and selling the CD (and online) within a few months after the deal is signed, or else the rights granted will terminate and revert back to the artist. Logically, the company wants to release the CD because it bears all the costs of manufacturing and selling; each record sold results in a payment to the company.

Payments. Royalty payments are generally due to the artist semiannually within 30-90 days following June and December of each year. Such payment will be accompanied by a statement setting forth the amount of records sold, if any, and the royalty computation.

Copyright. The copyright to the master(s) remains with the artist. The artist is only granting to the company the right to make reproductions of the master. The artist should make sure that the company puts the proper "notice of copyright" on the CDs manufactured (i.e., © [name of artist]).

Termination. Once the term ends, the company is usually allowed a sell-off period of six months for the CDs already manufactured (with royalties still payable).

Ben McLane Esq