Contracts – Terms in a Publishing Deal

Contracts – Terms in a Publishing Deal

On the Terms tab you set the royalty rates for revenues generated in specific scenarios. For example, you may apply a different rate on mechanical royalties versus performance royalties. Or your royalty rate might be treated differently depending on the country of sale.

As such, the first line of a term can be read as an “If” & the second line can be read as a “Then”. ie If revenue matches the set criteria, Then apply this royalty rate.

If  Variables

The following types of If variables are for you to specify the conditions under which to apply a royalty rate. You can configure the menu options available for each type in the Settings area.

Cat Group – Works can be combined in groups for rates applying. For more information on how to assign products to groups see the Catalogue Group article.
Territory – Rates can be varied depending on where the revenues are generated. It is possible to create Territory Groups in Settings, so you can combine multiple territories as required
Channel – The overarching concept of revenue type (Sync, Mechanical, Performance etc)
Config – A more specific format (Online, Karaoke, Radio, Television etc)
Source – Do you need to treat revenue generated by particular sources in certain ways? Perhaps you pay out a different royalty for revenue by PRS compared to GEMA.

Then Variables

The following Then variables state the royalty rate to be applied to revenues meeting the conditions above.

Deal Type – Select what type of revenue to use as the base to calculate your royalty rate on. The different Types work in the following ways:

  • Gross Receipts – The rate is applied to the gross amounts in the sales data ie before the Source takes their share (think before distribution fee). The value stored as Gross Amount will be taken as the calculation input.
  • Net Receipts – The amount paid to you. The value stored as Net Amount will be taken as the calculation input.
Whichever deal type you select, be sure your Sales Templates capture the necessary values when ingesting sales data. For example, if you work with Gross Receipts deals make sure to capture the Gross Amount; if you work with Net Receipts deals, make sure you always capture the Net Amount.

Rate % – The royalty rate to be applied in these circumstances. IMPORTANT – this is the payee’s share. So if you have an 80/20 Royalty deal in your favour, the value to enter is 20.
Reduction % – This functions reduces the royalty & is scaled to 100 – so a value of 100 is 100% of the revenue. Or a reduction percentage of 50 would halve the royalty, a reduction percentage of 75 would turn $10 into a $7.5 royalty.

Examples

Let’s take a look at some examples of Sales terms.

The General Term – The below example has no conditions specified and will apply a royalty rate of 50% to the Net Receipts of every single sales line.

Curve calculates the most specific Term first – The below example has one general term & one term specified for Performance revenue. The order of the terms is inconsequential, Curve will always run the figures for the most specific term first. In this example, a royalty rate of 40% of the Net Receipts will be calculated on any Performance revenue. Any remaining revenue not captured as Performance (ie Mechanical, Sync, …) will have an 80% rate applied.

Terms that don’t cover every sale – In the below example, we have specified a term for Mechanical and Performance revenue. If there is a sales line that does not fall into these two categories (such as Sync revenue), no royalty would be calculated. We generally advise to always set a general term to capture revenues not captured by your subsequent specific terms. But you may have reasons against this, such as if you only want to report on a specific type of revenue.

Contradictory Terms, how (possibly not) to do it – The following terms specify a 70% royalty rate of net receipts for any Mechanical revenue & an 80% royalty rate for revenue from the United States. Of course, it is possible that revenue is both Mechanical revenue AND generated in the United States. It is always the If condition most left of the term that will get the upper hand. In this case, the Territory will be calculated before Channel. So Mechanical revenue from the United States will be applied a 70% royalty rate.

If this is not how you need the calculations to work, you can mitigate this by adding an extra Term that defines the rate for Mechanical revenue originating from the US. See the third term on the following example. All Mechanical revenue will now receive a royalty rate of 70%, with non-mechanical revenue from the United States receiving a royalty rate of 80% of the Net Receipts.

The order you add the Terms is inconsequential. The most specific Term is always applied first. In cases where terms overlap, the system works from left to right through the conditions to run calculations. So it will filter first on Cat Group, then Territory & so on to Source.