Understand How You’re Getting Paid – ROYALTIES on GROSS vs NET REVENUE and an ADVANCE 1

Publishing contracts include terms for how musicians and writers get paid for their work and understanding these terms helps you figure out how much you are getting paid and when you will see the money.  Most publishing contracts include an ADVANCE and ROYALTIES that are based on either NET or GROSS revenue.  These three little words ADVANCE, NET and GROSS mean very different things.  Let’s break it down:

ADVANCE:  An advance is a set amount of money that is paid upfront when the contract is signed.  The advance can be paid in one lump sum or may be divided in to multiple payments.  Generally royalty payments will not start being paid until the publisher recovers the cost of the ADVANCE.

ROYALTIES based on NET vs GROSS revenue:  Publishing contracts generally grant a percentage of the royalties to the writer or musician and this % will be based on GROSS or NET sales revenue.   A royalty % that is based on the GROSS revenue means that the writer or musician’s cut is calculated from the money made from the sale of the work BEFORE any deductions are made for the publisher’s business overhead costs.  On the other hand, a royalty % based on NET revenue means that the publisher makes deductions for its business overhead costs before calculating the royalties owed the writer or musician.  The writer or musician makes more money if a publishing contract is based on GROSS revenue; however, basing royalties on NET revenue is more common.

BY: Vanessa Kaster, Esq., LL.M.

vk@kasterlegal.com

LEARN MORE: Another important and common contract term to be aware of  is ‘All Media’ –> https://iplegalfreebies.wordpress.com/category/all-media-contracts/

SoundExchange pays digital royalties to performers and copyright owners 1

SoundExchange pays royalties to performers and copyright owners when music is played on digital internet and satellite music dollar signproviders.

For example, if you hear Aretha Franklin’s famous rendition of ‘Respect’ played over internet radio, the royalty payments are paid to both Aretha as the performer (paid to her by SoundExchange) and to Otis Redding who wrote the song (ASCAP pays Otis Redding’s estate).  However, if you hear Otis Redding’s original version over internet radio then his estate is compensated for both the original composition, and also for the sound recording (ie both ASCAP and Sound Exchange pay royalties to Otis.)

If you own your own track and play on it, then you get paid twice (if you are registered with SoundExchange) when your track is played on Pandora, Sirius Radio and other satellite or internet radio streaming sites.

Register with SoundExchange –> https://www.soundexchange.com/artist-copyright-owner/does-soundexchange-have-royalties-for-you/

See other posts for more information on unclaimed SoundExchange royalties –> http://wp.me/p10nNq-np, and Digital Royalty rates –> http://t.co/Z0XvrRO; @iplegalfreebies and www.kasterlegal.com

BY: Vanessa Kaster, Esq., LL.M.

vk@kasterlegal.com

“Use in all media” Contracts – what are you giving away? 1

Contracts come in all shapes and sizes.  Musicians, artists, photographers, graphic designers and all sorts of creative folk share their creative genius by taking paid gigs to make, create or share things that they have created with other (perhaps less creative) folks. Take a careful look at the nuts and bolts of the agreement that transfers the right to use your work to others, so that you are clear about what you are giving and getting out of the deal.

Are the use rights for ‘ALL MEDIA’ being given away? If yes, then you have an All Media contract, and it’s important to understand what ‘use rights for ALL MEDIA’ means.  All Media contracts are common (virtually standard in the Music Industry)… and their mission is to transfer the rights to use the song or other creative work in ALL types of MEDIA.  ‘All types of media’ sounds broad, and it is.  For example, transferring the rights to use a music jingle in ALL types of MEDIA includes having the right to use, reproduce and sell it on DVD’s, CD’s, ipad applications.. and possibly any future media outlet that is yet to be developed.

The opposite of an All Media clause within a contract, is a clause that lists the approved types of media where the song or other creative work can be used.  For example, contracts that were written to license music for TV sitcom broadcasts back in the 1970’s had to be renegotiated when the networks decided to re-release the sitcoms on DVD.  Since the use of the media on DVD wasn’t accounted for in the original contracts, a new crop of contracts were required to cover this type of use.

Be clear about you are giving and getting out of the deal when you share your creative work.

A trademark ‘in use’ is cheaper to register than one you ‘intend to use’ 3

Registering a trademark that you are already using is 3 to 4 times less expensive than registering a trademark that you are intending to use down the road.  How can this be?  The answer is that a trademark that is already in use has a fewer fees.  A trademark that is being registered for future use has more fee payments and is called an ITU (intent to use) trademark.   The extra fees associated with an ITU application can easily add up to over $1,000.  After a trademark application for an ITU is filed, additional documents must be filed every six months accompanied by a $150 fee per class of goods and services.   These six month extensions (which are available for a max of 3 years) are required until the ITU starts being used in commerce.  Then once the ITU starts being used, additional paperwork (a Statement of Use) must be filed along with an additional $100 fee.

Since an ITU can cost so much more, it’s a good idea to take a close look at your business plan to determine if you are better off filing for trademark registration after you have started using your mark.  Often ITU registrations are filed when a business idea is being pitched to potential business investors and there is a risk that the trademark could be stolen along with the business idea in the early stages of developing and financing the business.  If you are financing your own business and there is a low risk of your idea being stolen… then waiting to file your trademark once it is being used in commerce (with the goods and services being sold by your business) could be a good idea.

A Signature Seals the Deal (Get agreements SIGNED!) Reply

pencilsFar too often, the fun creative vibe that moves artists and musicians to collaborate on brilliant work… overlooks the need to have the terms of the deal put into writing and signed.  GET IT SIGNED FOLKS!

If you are writing music together and agree to split the royalties 50/50 –write it down, date and sign it!  If you are a freelancer submitting sketches to a toy producer – write down a few simple terms as to who owns unused submissions, date and sign it!  Similarly, if your business is membership driven – write down your membership terms, date and have members sign it!

Even if the agreement seems obvious and understood by everyone involved, take 5 minutes to write it down, date and sign it!

Just last week, news came out that a renowned art and decorating extravaganza that takes place annually in NYC and makes over $1 million …was postponed by 6 months because the organizers never signed an agreement guaranteeing them to use the designated show space.   Consequently, the show space was sold out from under them and they were back to square one.  They thought they had a deal… but they didn’t, because it wasn’t signed.  Keep this from happening to you.  Get a signature to seal the deal!!