Creating Contracts

Creating Contracts

Contracts are the hub of all royalty processes – they are used to store down contract terms, match the catalogue to, & track payments & transactions. They can range from being super simple Profit Share style deals, to the most complicated Royalty deals, & everything inbetween.

To access contracts, head back to the side bar, & under the Contracts sub menu, select Contracts.

Much like our Payee, let’s create one by clicking on the Create button in the top right of the screen.

Editing a Contract

The Contract page looks a little different to the Payee page; we now have some tabs across the top! We’ll go through each in detail, but the key ones to look at now are Overview & Terms.

Overview Tab

The Overview tab contains all the key information about a contract. On the left there is the topline information such as a name, matching to a Payee etc. On the right is the financial information for the contract.

The key things to think about when setting up a Contract are: the Accounting Period – when this contract should be reported to; & the Contract Type – is this a Royalty style deal, or a Profit Share? Knowing these key pieces of information will help to configure a contract correctly first time around.

Royalty deal or Profit Share? The key distinction at this stage is that a Royalty style deal will calculate the royalty due at each sales & cost line; whereas a Profit Share style deal will essentially add up all the sales & costs, then run a calculation should there be any profit to share.

 

Terms Tab

The royalty rates are set within the Terms tab, & here you have the ability to pin point specific terms for specific use cases.  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 given criteria, then apply the given royalty rate.

 

 

As you can see above, we have used the menus to select specific usage types & alter the royalty rates for each one. So, we have created a general royalty rate of 20% on the top term; with all the configurations set to ‘All’, the Deal Type set to ‘Net Receipts’ and a Rate of 20%. The second term is specific for just ‘Physical’ releases, using the Channel to target those releases. If the revenue comes from physical sales, then the royalty is to be calculated at 18% of the PPD, with a reserve of 20%.

 

You can add as many or few terms as necessary, there is no deal Curve can’t handle. You do not need to consider the order in which you lay put your terms. When the calculations run, they begin with the most specific scenarios first, before running the more general terms. So in the scenario pictured, the second line will run first due to Physical being specified.
Consider having a catch all sales term on your contracts, per the first line in the picture. So that any revenue generated by the associated tracks & releases, but via a format or territory or channel not defined in the rest of your sales terms, is always captured. If a contract has no sales terms capturing a sale, no revenue will flow through the contract – there will be no calculations to make. If for example you would only have one sales term on a contract, one that specifies a rate for physical revenue, yet the contract has digital releases attached to it – only revenue generated by the physical releases will flow to the statements.
As publishing deals tend to be more straightforward, Publishers will notice they have access to a streamlined version of the Contracts page.
We cover how to structure a deal in greater depth in the full documentation, including how to work with Reserves, Escalations, Crossing contracts & how to add advances to a contract.
To follow along with our demo, head back to the Contracts index page and import the “Curve Demo Contracts” file  using the Import button on the top right of your screen. Once you receive an email confirming the Contract import is complete, refresh your page and the Contracts will appear. In our example, this should not take more than a few seconds. Now you can check out how we’ve configured our demo contracts for some ideas on how you can use the terms to manage your royalties.

Now onto our Catalogue.