This Agreement Shall Not Be Recorded

“Cross-collateralization” (sometimes called “offsets”) is the process by which financial commitments accumulated throughout the term of the contract, including earnings that you have not repaid, are reimbursed from earnings from future albums or publications. (e.30) Suppose, for example, that you get a $100,000 advance for your first album and a $100,000 advance for your second album. You owe $200,000 to the label. They earned $10,000 in royalties from the first album and $120,000 in royalties from the second album. (e.31) Although this is so, as if you had made money with the second album ($120,000 in royalties, that`s $20,000 more than the $100,000 advance), if your two albums are guaranteed by crosses (which they probably will be), the royalties of both albums will be put in the same bag for a total of 130,000 $US. Advances of $200,000 will be repaid from this amount. So, you still owe $70,000 to the label, which will be transferred to your next album and added to your next advance. (e.32) In other words, this obligation will never be due until it has borne fruit. Cross-collateralization can be particularly detrimental if you sign both a recording contract and a publishing contract with the same company and both contracts stipulate that advances from both royalty agreements can be repaid between the two. This is a situation you want to avoid as much as possible. (e.33) As explained in the “Mechanical Royalties” section, publishing is an important potential source of income for you when you write your own songs and you must do everything in your power to isolate these revenues from cross-protection. This means that, depending on the label, the recordings you have made can be successfully marketed and sold.

(e.26) If the label claims that you have not met this standard, it may be difficult to combat this claim in court, as the label normally only has to prove that it has assessed its commercial satisfaction in good faith. (e.27) To understand this reduction in royalties, multiply a royalty of 11 per cent by 85 per cent for a “free goods” deduction. Then multiply it by 75 percent for a packaging deduction. Then multiply it again by 75 percent for a “New Media” deduction. After this deduction process, the license fee is effectively reduced from 11 percent to less than 6 percent. In this section of your contract, it`s about how much you`re involved in creating, selecting, and approving album covers. In some cases, the label grants you the right to “consult”, which means that the label chooses the artwork, asks for your opinion, but then has the right to use the artwork, even if you agree. (e.80) In other circumstances, you may be granted “permission rights”. In this case, the label continues to select the images, but can only use the images if you allow it. (e.81) Once you have gained more bargaining power, the label can allow you to create your own artwork, provided that it is not offensive or offensive and that its use does not cost too much. (e.82) 3. .

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