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Contracts
#1
I told you I would upload an example contract that we could discuss.  Please see attached. With so many participants, we found a simpler way to structure the deal that leaves ownership of the master recording always with the artist (instead of being owned by the Label and reverting back to  the artist after certain conditions.)

Basically its non-exclusive license agreement with a hold-back period.  Whetstone artists license their master recording to Secondfork for us to create and sell the recordings.  You still own the work in its entirety, and you can sell it yourself or include it on a different album BUT.…there is a hold-back period, which is a time of one year where you can't do that, that you have to wait so that Whetstone has the best chance to sell whatever its going to sell.  Secondfork can sell the album for up to 5 years, but the hold back period is for 1 year only.

It might be self serving to say so, but I think its as artist friendly as you are ever likely to see.  I lose (or rather don't gain anything) for any work I do on the masters.  Songwriters get the full statutory rate (normal is only 75% of the statutory rate) without a song limit on writer royalties.  (Standard would be that the album pays songwriter royalties on up to 10 songs only)

We avoided much of the complexity of discount, mid-level record, and foreign sales by simply saying that the benchmark is based on the net proceeds that we receive from distributors.  It may look long, but its relatively short, believe me. Smile  Comments, questions, concerns?


Attached Files
.doc   whetstone-complicense-nonex-1 (3).doc (Size: 35 KB / Downloads: 18)
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#2
Is there a typo on number 6 of schedule A?
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#3
Yes, there is a typo there. There is another I noticed. Good catch. I uploaded a corrected version.

We also made adjustment to the timeline for bringing up any errors or objections to any royalty statement - you have to bring up your initial objection (if any) to the accuracy of a royalty statement within 90 days. (A year seems a little long since it could affect the payout to others and would force us to keep higher reserves longer (which means that you'd get paid less initially.) You still have a year to bring suit if your objection is denied and if we can't agree on a resolution.

That's the point of reserves BTW, to avoid if at all possible a situation where someone was paid too much and we have to ask for any of it back. A reasonable reserve covers voided sales/chargebacks and other minor errors. Once all seems settled, the reserves are released to you. That's why its a balance of how much time to give any party to make an objection versus releasing reserves. Not that the album is likely to generate a lot of money, but we do plan.

There is also an update in there to make sure that digital downloads and streaming are explicitly mentioned.
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#4
Greg, I'm having my manager look over the contract. What is the timeframe for getting those to you? They are to be mailed, correct?
Questions: You have a line for performers as well as a line for artists. Does that mean that "artist" refers to "songwriter"? Do you need the IPI no for the performers as well as the songwriters? Do they need contracts as well? Do co-writers share a contract or have their own? When you say 50% royalties, where does the other 50% go? Is that 50% split among co-writers, & is there any publishing involved at all?
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#5
(04-28-2016, 10:06 AM)gdball Wrote: Yes, there is a typo there. There is another I noticed.   Good catch. I uploaded a corrected version.

We also made adjustment to the timeline for bringing up any errors or objections to any royalty statement - you have to bring up your initial objection (if any) to the accuracy of a royalty statement within 90 days. (A year seems a little long since it could affect the payout to others and would force us to keep higher reserves longer (which means that you'd get paid less initially.) You still have a year to bring suit if your objection is denied and if we can't agree on a resolution.  

That's the point of reserves BTW, to avoid if at all possible a situation where someone was paid too much and we have to ask for any of it back.  A reasonable reserve covers voided sales/chargebacks and other minor errors.  Once all seems settled, the reserves are released to you.  That's why its a balance of how much time to give any party to make an objection versus releasing reserves.  Not that the album is likely to generate a lot of money, but we do plan.

There is also an update in there to make sure that digital downloads and streaming are explicitly mentioned.
Okay I'm looking at "Schedule A" #6... what or where is the typo?  Your thread said normally up to 75% and the line mentioned says 50%...so I'm confused.  (not criticizing just want to know what typo?)
2nd Question:  Since Linda wrote the lyrics and I did the music, do we both sign on the "LICENSOR" 's Line? Thanks sorry about the flurry of questions.
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#6
Easy questions first: Smile And I'm going to split some of the answers into different posts to make it easier.

Shannon, first this is just an example.  Your real one would have your specific information in it.  So you don't have to return it yet. Marty, you won't find the typo because I corrected it and uploaded the correction.

Remember that the owner of a recording of a song, and the song itself (the songwriting) are two different things.  So there are two agreements - there is this contract, which is for the owner of the recording. And there is another, the finalized songwriter split-sheet (which we haven't done yet) which do something similar for the writers.

As far as who the recording owner is, we're kind of all over the map on that.  For example:
  • Erin owns her recording - the band members of her church are participating as "work for hire", and yes she has to have (has already done)  very simple one page work for hire agreements with them.
  • I haven't asked yet, but I suspect that the members of Reece's band will all own the recording of their song equally.
  • Marty did the music, so he owns the recording.  He and Linda both wrote the song, but that's a different agreement.
  • Neil AFAIK doesn't own any of the recordings. He's definitely a writer though involved in those other agreements.
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#7
Marty (and in general) here is what is up with seeing two percentages, and I'm sorry for the confusion.

This particular contract is about what the recording owner gets. The writers are mentioned only in that the recording owner is agreeing for the songwriter royalties to be deducted, and how much that will be. This contract doesn't spell out who the writers are and how the songwriter royalties are split (that's in the split sheets.) but just the amount to be deducted for songwriter royalties. Is that clear?

The confusion starts I think around how the amount being deducted for songwriter royalties gets calculated. The U.S. congress has already set a "statutory compulsory mechanical license" rate that songwriters get paid, unless the two parties come to a different kind of deal. But that rate does change periodically, so when contracts refer to it they typically say that they will pay based on the current statutory rate, instead of giving the current numerical amount explicitly. Currently for a single song download, or for inclusion on a physical CD, its 9.6 cents per song, per unit sold.

Its compulsory in that WRITER's are REQUIRED to license their songs to an artist at that rate, unless you agree to something different. But artists are not required to choose any particular song for their album. So what it means in practice is that it has become the maximum amount of royalties that any artist will pay for a song. They can (and normally do) ask the writer to take less, but why would the artist agree to more, when they know that if the writer doesn't agree, they can just opt to use the compulsory license rate and the writer can't object?

So (not that its required) but it means that the deduction for songwriter royalties are often expressed as percentage too - something like "75% of the statutory rate". The rationale for getting a new writer to take a lower percentage like that is that it is going to be great for their song to be released by a major artists, or be in a film, or whatever the case may be. Truth is, major labels will often ask a new writer to take a LOT less. But I don't see any major artists here (yet) so I didn't see a reason to ask the writers to take anything less than 100% of the statutory rate.

The writer does have some leverage though, in that they have the right to say who first records and releases a song. For the very first time a song is recorded and released, the writer don't have to let you release the song at all. They are only compelled to license a song for the second and any following releases (covers). For the first release, they can theoretically hold out for more. Its also good if more than one artist wants the song - that can help you negotiate for a higher rate. But again in practice, It means that Elton John can demand a lot more than the statutory rate from Disney for writing the Lion King, for it's first release. For normal people, there are very few songs that are THAT compelling that they won't just go down the road to the next writer...
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#8
(04-29-2016, 02:22 PM)gdball Wrote:
  • I haven't asked yet, but I suspect that the members of Reece's band will all own the recording of their song equally.

yes!  just to confirm!
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#9
(04-29-2016, 03:15 PM)gdball Wrote: Marty (and in general) here is what is up with seeing two percentages, and I'm sorry for the confusion.

This particular contract is about what the recording owner gets. The writers are mentioned only in that the recording owner is agreeing for the songwriter royalties to be deducted, and how much that will be. This contract doesn't spell out who the writers are and how the songwriter royalties are split (that's in the split sheets.) but just the amount to be deducted for songwriter royalties. Is that clear?

The confusion starts I think around how the amount being deducted for songwriter royalties gets calculated.  The U.S. congress has already set a "statutory compulsory mechanical license" rate that songwriters get paid, unless the two parties come to a  different kind of deal.  But that rate does change periodically, so when contracts refer to it they typically say that they will pay based on the current statutory rate, instead of giving the current numerical amount explicitly.  Currently for a single song download, or for inclusion on a physical CD, its 9.6 cents per song, per unit sold.

Its compulsory in that WRITER's are REQUIRED to license their songs to an artist at that rate, unless you agree to something different.  But artists are not required to choose any particular song for their album. So what it means in practice is that it has become the maximum amount of royalties that any artist will pay for a song. They can (and normally do) ask the writer to take less, but why would the artist agree to more, when they know that if the writer doesn't agree, they can just opt to use the compulsory license rate and the writer can't object?

So (not that its required) but it means that the deduction for songwriter royalties are often expressed as percentage too - something like "75% of the statutory rate".  The rationale for getting a new writer to take a lower percentage like that is that it is going to be great for their song to be released by a major artists, or be in a film, or whatever the case may be.  Truth is, major labels will often ask a new writer to take a LOT less. But I don't see any major artists here (yet) so I didn't see a reason to ask the writers to take anything less than 100% of the statutory rate.  

The writer does have some leverage though, in that they have the right to say who first records and releases a song.  For the very first time a song is recorded and released, the writer don't have to let you release the song at all. They are only compelled to license a song for the second and any following releases (covers).  For the first release, they can theoretically hold out for more. Its also good if more than one artist wants the song - that can help you negotiate for a higher rate. But again in practice, It means that Elton John can demand a lot more than the statutory rate from Disney for writing the Lion King, for it's first release.  For normal people, there are very few songs that are THAT compelling that they won't just go down the road to the next writer...
WHEW!!  For a non lawyer you're pretty good brother.  Okay, I'm getting it, but will re read this about 20 more times to make sure I got it burned in my head.  Thank you.  It's a not to worry Greg, but I am of course always thinking ahead, so this better helps my over all knowledge and understanding. (The future looks bright as they say)  Thanks for the clarification.
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