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Question about a Licensing Agreement.
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| lenieNt Force |
Hi! I'm about to sign a license agreement for four tracks of mine, but a few lines in the agreement I'm wondering about, and what this means for me and wether it deprives them of any royalties payable to me. Here is the section I'm wondering about :
| quote: | Payments To Third Parties:
Company shall pay all royalties which may become due to the artist(s), recording musicians, producers unions, guilds, or trust funds or other third parties with respect to records manufactured and sold hereunder, except the royalties payable for use of music copyright pursuant to this agreement, artist shall indemnify company and hold company free and harmless and shall indemnify licensee and hold licensee free and harmless from all claims with respect to such payments. |
Thanks for any help! |
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| Storyteller |
That depends how company is defined earlier in the contract.
I'm reading that the licensor takes responsibility for paying all royalties they owe you except for court action in case of copyright infringement claims. |
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| BritishLizard |
| Gotta love the wording on these things. Makes me wonder if they are even speaking English. |
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| Looney4Clooney |
lol
does not say who gets paid. It also restricts your sales to records and I doubt they have a definition page that clarifies record. In fact you would not use the term record but phonogram digital phonogram.
It states that they can pretty much give out as many promos without restriction. So lets say they get 10 million dollars for your music to be a free give away for a new ipod. You get 0. That is promotional.
also states in a nut shell that if you don't get paid, well don't hold us accountable.
I think that it is obvious they just don't really know what they are doing and are trying to sound legit. IMost EDM labels are like this. I wouldn't sweat it. It can work in your favour.
Also what is the license for. At first i thought was a label contract. |
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| lenieNt Force |
| Company is not defined, but it has to mean the Record Company don't you think? |
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| lenieNt Force |
| But doesn't this account for payments to Third Parties only as it is stated in the heading? |
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| Storyteller |
The bold title doesn't help either. Payments to third parties implies the paragraph applies to a party not mentioned in the contract explicitly. Might be our dear L4C is right on.
Of course you as an author should be mentioned explicitly at all times. |
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| lenieNt Force |
Before this section the "Payment of Royalties" is described in two other paragraphs:
| quote: | Royalties:
With respect to records released by licensee embodying the master(s) hereunder sold in the territory licensee agrees to pay the licensor a royalty equal to 70% (0,35€ per 1 track sold) of net receipts. For the purpose of this agreement “net receipts” shall mean the gross receipts (less sales taxes) received by licensee from sales of records less all costs incurred in releasing the records.
With regard to records sold in part of the territory through a license agreement between licensee and the third party, licensee shall credit licensors royalty account with a sum equivalent to 70% of the licensees net royalty receipts paid to the licensee.
Licensee agrees to pay the licensor a sum of money equal to 70% of all fees (except Remixes made by other artists), if any, received by licensee where licensee is paid on a “receipts” rather than a “royalty” basis by its lawful licensees hereunder. Where licensee for inclusion on third party compilation albums licenses masters then licensee shall account the licensor 70% of its net receipts from such licensee in respect to the relevant master.
Throughout the license territory, no royalty shall be payable to licensor in respect of records distributed in reasonable quantities (being not more than 5% of those manufactured) as “free” or “no charge” sample records for promotional use only.
Payment of Royalties:
Licensee shall pay licensor the sum of 70% of net receipts upon receipt of payment from third party digital distributor.
Royalties shall be computered in a national currency in which licensee is paid by its licenses or affiliates and shall be paid to licensor at the same rate of exchange at which licensee is paid.
Licensee shall submit to licensor within three months following the last day December of each year, a statement setting forth in reasonable detail the computation of royalties earned from the preceding semi annual period and including without limitation of the generality of the foregoing, number of copies of each record (accounting base as well as consumer price), the name of the artist(s) and title of the record accounted. |
But does this next section, really invalidate the two previous paragraphs? That is my question.
| quote: | Payments To Third Parties:
Company shall pay all royalties which may become due to the artist(s), recording musicians, producers unions, guilds, or trust funds or other third parties with respect to records manufactured and sold hereunder, except the royalties payable for use of music copyright pursuant to this agreement, artist shall indemnify company and hold company free and harmless and shall indemnify licensee and hold licensee free and harmless from all claims with respect to such payments. |
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| EddieZilker |
| quote: | Originally posted by lenieNt Force
But does this next section, really invalidate the two previous paragraphs? That is my question. |
No. It means that they're going to make sure that you're not using someone else's copyrighted material without paying them and that they're going to pay any musicians, producers, et al, it takes to promote the track. |
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| Looney4Clooney |
is this a distribution or publishing contract ?
Also although Eddie is right in the intention, the commas pretty much make it a free for all. Does it apply to the last few words ? or the ones before those. Legally, it would apply to anything right before which due to commas is everything. It also does not really tell you what they mean by music copyright. Whose ? Yours ? Music you ripped off ?
And further more, they would of had a part somewhere else stating that you are legally responsible for the legitimacy of your copyright. So they claim they won't pay the royalties, why state the rest. It doesn't add anything.
I don't know man. The problem is that they are using jargon they don't understand and it is just confusing./ You have to post the entire contract. |
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| DJ RANN |
The structure and words used in this smacks of several old contracts, spliced together to make a bastardised licensing contract.
Without a definition of terms, this contract is pretty useless. This is one of the things that makes me think it's a bad cut and paste job, where they didn't included the definitions, as some of the terms in the definitions no longer made sense when they both removed and added terms, so they just deleted the definitions.
Firstly, the term "record" is abiguous in this situation, as they could sell a million downloads and not give you a penny as they were not "records" as such. Same with L4C's point about giving them away as promos.
Who is the "company"? Unless it states on the signing page who is the company, and they are the exact entity you are dealing with (not a DBA or subsidiary etc), the contract is between you and god knows who.
They have also not specified or given examples or limited the "costs incurred" during the accounting of Net Sales. Does this mean the boss's pet grooming is a deductible as part of doing business with you?
I could go on but you get the point.
However, all this aside, I think the intention is not untoward, it's just a badly written contract that has been chopped up too many times meaning parts of it no longer make sense. It's very common and I would not sweat it unless you're giving up the pinnacle of your music ability and shall never produce anything so sweat as long as you tread this earth. even so, there is hopefully an expiration provision which lets you out after a certain period in case you decide to license them later to someone else or they don't perform in the alloted period.
At least if you're going to sign something as as this, make sure
it has a time limit. |
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| lenieNt Force |
Ok.. Ill post the entire contract:
| quote: |
Licensing Agreement
This agreement is made on the 30th november 2011
Agreement validity: 10 years
Between
(1) [Record company and address]
The “Licensee” or “We” or “Us”; and
(2) [My name]
For digital release of original track(s):
[Track titles]
This letter confirms and sets out below the terms of your agreement with us:
Grant of Rights:
(a) You hereby grant us the exclusive right and license to use your master recordings containing the recording titles set out in part one of the schedule to this letter (“the masters”) for the manufacture, distribution and sales of a digital recording embodying either the master(s) only, or various mixes/remixes. (When remixes are commissioned and paid for by us they shall be our exclusive property). You hereby grant us the rights to use your master as we deem fit for sole use for all our associated distributor (digital).
b) We shall release the mp3 and wave single format version of the master comprising the single in accordance with the release commitment as specified in part two of the schedule.
(c) You further hereby grant Us the rights to to sub-license our obligations in hereof to such other company or organization within the territory on such commercials terms as we in our sole discretion deem fit.
(d) Indemnity: You warrant that the recordings are free of all third party claims including without limitation all sample claims. Artist will obtain all necessary licenses and authorization for all samples used in the Original Recording and subsequently used in any Remix.
Royalties:
With respect to records released by licensee embodying the master(s) hereunder sold in the territory licensee agrees to pay the licensor a royalty equal to 70% (0,35€ per 1 track sold) of net receipts. For the purpose of this agreement “net receipts” shall mean the gross receipts (less sales taxes) received by licensee from sales of records less all costs incurred in releasing the records.
With regard to records sold in part of the territory through a license agreement between licensee and the third party, licensee shall credit licensors royalty account with a sum equivalent to 70% of the licensees net royalty receipts paid to the licensee.
Licensee agrees to pay the licensor a sum of money equal to 70% of all fees (except Remixes made by other artists), if any, received by licensee were licensee is paid on a “receipts” rather than a “royalty” basis by its lawful licensees hereunder.
Where licensee for inclusion on third party compilation albums licenses masters then licensee shall account the licensor 70% of its net receipts from such licensee in respect to the relevant master.
Throughout the license territory, no royalty shall be payable to licensor in respect of records distributed in reasonable quantities (being not more than 5% of those manufactured) as “free” or “no charge” sample records for promotional use only.
Payment of Royalties:
Licensee shall pay licensor the sum of 70% of net receipts upon receipt of payment from third party digital distributor.
Royalties shall be computed in a national currency in which licensee is paid by its licenses or affiliates and shall be paid to licensor at the same rate of exchange at which licensee is paid.
Licensee shall submit to licensor within three months following the last day December of each year, a statement setting forth in reasonable detail the computation of royalties earned from the preceding semi annual period and including without limitation of the generality of the foregoing, number of copies of each record (accounting base as well as consumer price), the name of the artist(s) and title of the record accounted.
Payments To Third Parties:
Company shall pay all royalties which may become due to the artist(s), recording musicians, producers unions, guilds, or trust funds or other third parties with respect to records manufactured and sold hereunder, except the royalties payable for use of music copyright pursuant to this agreement, artist shall indemnify company and hold company free and harmless and shall indemnify licensee and hold licensee free and harmless from all claims with respect to such payments.
Release:
Licensee shall manufacture and release records from the masters licensed hereunder within 250 (Two Hundred & Fifty) days after receipt and acceptance of the relevant masters and all production parts therefore. Required to be delivered by licensor hereunder.
General:
At any time within thirty six (36) months after any royalty statement due to, You hereunder, you shall have the right to examine Company's books and records with respect to such statement (or have the books examined). In the event that your examination reveals an underpayment of royalties to you then we shall rectify your account. In the event that any such underpayment exceeds 10% of royalties otherwise due we shall reimburse your examination costs.
Bankruptcy:
In case of bankruptcy of Licensee, all rights to and in the Masters will automatically and directly return to the licensor.
IN WITNESS HEREOF, the parties have caused this record license agreement to be executed the date first above written. |
(And then the signing section)
I was missing some definitions myself, but like DJ RANN says, I think the intention is good, and the tracks are not "the pinnacle of my musical ability" :P so I think it's all good.. It's some old tracks of mine..
But what do you guys think? |
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