Payee – Contracts need to be linked to a beneficiary. Multiple Contracts can be added to the same Payee, but a contract can only be connected to one Payee.
Company – Per the Companies chapter, you can select which Company branding is used for statements for this particular contract. Leave this blank for statements to be branded from your Settings.
Name – Give the Contract a name. You can structure this as simple or complicated as you like, but we advise using identifiers to reference the nature and/or function of the contract. Examples of well-structured names are
- Kurt Cobain – Nirvana “Album 1”
- The Beatles “Abbey Road LP” – Producer
- Capitol Records – Project X
Foreign ID – You can assign the Contract a custom code that may relate to other databases you use.
Currency – Select the currency in which you want to create statements. The available currencies can be customised in your Settings. When selecting a currency different to your home currency; make sure all Transactions, Opening Balance & Minimum Payout are set in the Contract currency.
Accounting Period – How often do you need to report on this contract? Select from Monthly, Quarterly, Half-Yearly or Yearly. When you run a Period you will select which types of contracts to include. If a contract is set at Monthly but you run a Quarterly Period, the monthly Contract will not be included in the calculation. Accounting Periods can be customised in your Settings.
Contract Type – Select if the contract is a Royalty style deal or a Profit Share scenario. A Royalty Share contract will calculate the royalties due for each line of costs & sales; whereas a profit share deal will calculate a sum total of all sales & costs, then consider any outstanding Advance balance to produce a final balance. For more info on profit share deals, please refer to the section on profit shares later in this article.
Active – The system will only create statements for this contract if it is check-marked as active.
Start Date / End Date – Here you can specify the Start & End Date of your Contract. It is just for your reference, and does not decide if the Contract will calculate or not.
Categories – You can tag your Contract with a category. The categories can be created in your Settings.
Opening Balance – Set the current balance for this contract at the time of creating. Once you have run a period that includes this contract, this field will be locked. Make sure the Opening Balance is in the contract currency.
For Profit Share deals, due to the notion of profits only being split when in profit; negative balances should equal the total loss of the contract (prior to the profit share rate being applied), positive balances should equal the contract’s share in the profit (the total profit with the profit share rate already applied). Any unrecouped advances should be added as a Transaction to the Contract.
Min Payout – The threshold you want the balance of the Contract to meet or exceed before paying out.
Auto Payment – When this box is checked, if you run a period & the balance meets the set minimum payment threshold; the balance of the period will be added as a negative Transaction to the Transactions tab, clearing the Contract’s balance back to zero.
Generate Self Billing Invoice – Checking this means that a self-bill invoice will be created by Curve on the payee’s behalf once the Minimum Payout has been met. Assuming these self-bill invoices are paid, the Auto-Payment feature is automatically enabled when generating self-bill invoices.
Generate Fees Invoice – Checking this means that a fees invoice will be created by Curve on your behalf once the Minimum Payout has been met. You will essentially invoice your client for the commission that you take.
Deduct Withholding Tax – Checking this means Withholding Tax can be deducted from this Contract. The WHT rate can be specified on the Contract’s Terms tab or at Payee level in the Withholding Tax field. When WHT tax rates are specified but the Deduct Withholding Tax is not check-marked, WHT will not be applied.
Use this tool to transfer balances, or parts of balances, between statements. You can choose for balances to be transferred from one Contract to another, or to be subtracted from one Contract to another. The results of a Cross-Contract will be added as Transactions on the respective Contracts with each Period. The following parameters can be configured:
When – Define the conditions under which the balance for this contract will interact with another contract or set of contracts. And also set what needs to be transferred.
- Income is… transfers just income from this contract & ignores any costs or transactions.
- Income & Costs are… transfers income & costs, but ignores any transactions such as reserves.
- Income, Costs & Reserves are… transfers all the income, costs & reserves, but ignores transactions.
- Balance is… transfers the entire balance. So all income, costs, reserves & transactions.
- Balance Minus Opening is… transfers the difference between the closing balance and opening balance.
Process – How does the balance of this contract interact with the selected contract
- Add To will add the income/income & costs/balance to the new contract & deduct these from the original contract
- Subtract From will deduct the income/income & costs/balance from the new contract, BUT will also leave this on the original contract.
Contract – Select which contract to interact with per the previous settings.
% – Stipulate the share of royalties to be transferred. Entering 100 will transfer the royalties entirely.
The Income, Costs & Balances transferred will be that after the Contracts royalty rate has been applied. Once the cross-transaction has transferred to another Contract, no more royalty calculations will be made on this transaction by the receiving Contract.
Beware, for cross-transactions coming from profit share contracts, Income (& Costs) triggers the total Income (& Cost) prior to the profit share calculation to be transferred. When transferring the Balance, this will be the Balance after the profit share calculation is applied. On the receiving end, when a cross-transaction is sent to a profit share deal, the profit share rate of the receiving Contract will not be applied on this transaction & is added straight to the artist’s share instead.
Practical use: Summary Contracts
The most common use case for the Cross Contracts function is creating summary contracts. If you have multiple contracts for a payee it can be useful to merge all of them to a summary contract giving you a total balance due. To do this create a new contract (the summary contract), then on each contract to be added (the individual contracts) use the Cross Contract function to transfer all the balances to this summary contract. In the below example, we will show how to set up a summary contract for a payee for which all balances should be combined into one, regardless if these balances are positive or negative.
Summary Contract – The summary contract must always be a Royalty type deal, never a profit share; this to avoid Curve applies a profit share percentage to the total balance. Name it for your reference, such as “Artist A – Summary Contract” & mark it as a summary contract, via the checkbox displayed below. This will make sure all sales transferred in by any cross-contracts will be displayed in the summary statement’s Sales CSV & data visualisations. For contracts not marked as a summary contract, any incoming cross-contract transfers will solely be added as a transaction and not be displayed as part of the Sales CSV & data visualisations.
Individual Contracts – Cross-contracts have to be created on the individual contracts, indicating to which contract the balance should be transferred to. In the below example, the balance would always be transferred whether it is positive or negative. If the balance of this contract is $100 for example, it will be added for the full $100 to the summary contract & the balance of this individual contract would reset to $0. Also when the balance is $-100 for example, this will be added as a negative to the summary contract & the balance of the individual contract will be reset to $0.
The above example can only be used when you wish for all balances to be combined into one, regardless whether they are positive or negative. If you wish to pay out the balance as soon as one individual contracts reaches a positive balance, you will need a “Always Transfer Balance When Positive” cross-contract, thus leaving any negative balances on their individual contract. In this case, it is advised to not check-mark the summary contract as a summary statement. And it is advised to still add your artist as a Payee on each of the individual contracts, so they can keep track of the current balance of all contracts, also the ones with a negative balance.
Practical use: Producer contract
Another typical use of cross contracts is where a producer’s royalties are to be deducted from the royalties due to a primary artist.
The example below will subtract a positive balance on this contract from the Main Artist A contract. Imagine the producer has a balance of $100, then $100 will be subtracted from the balance on Main Artist A.
This feature is generally only useful to Distributors using Curve. This can be used to automatically link a Track or Release to a contract based on the label value entered in the catalogue. In the below example, this contract will be added with a participation rate of 100 to any Track or Release that is released on “Curve Records” or “Curve Records Ltd”. For this to work, it is necessary that the Label value entered at Track & Release level matches exactly with that which is entered on the contract.
A Profit Share contract is calculated slightly differently than a Royalty style contract. Where a Royalty contract will calculate the royalty owed line by line, a Profit Share calculation breaks down as follows –
- It totals the revenue then deducts the total costs for this period
- It then withholds & releases any reserves for the period, leaving a Gross Amount for the period
- Taking into account the Opening Balance, if the Opening Balance + Gross Amount is positive, the profit is multiplied by the Profit Share Split Percentage. If it is negative, the negative balance will be held at 100% & not multiplied by the Profit Share Split
- Once there is a positive output from the profit share calculation, any advances paid to the artist are recouped from their share
Whilst most profit shares will not require any adjustments to the royalty rate per line, this is also possible; allowing you to pay through certain income types or costs, into the profit share calculation, at different rates. This can be achieved using the Sales terms, as you would in a Royalty contract type.
A simple scenario, where 100% of all income & 100% of all costs are to be included in the calculation of the balance, is configured as follows:
On the Contract Overview tab the Contract Type value is set at ‘Profit Share’, which will cause a further field to populate where the Profit Share percentage is entered.
For the Sales terms, just one general term is required to specify a 100% royalty rate of Net Receipts for all sales.
For Costs terms, one general term is needed to specify a 100% recoup rate for all costs.
Unlike in a Royalty style deal, these terms do not describe the percentage of income or costs to be shared with the payee, but instead specifies the share of revenue & costs to be included in the profit calculation.
Following the above example, if we have a total revenue of $1000 and a total cost of $100, the profit balance will be $900. This is split 50/50 between artist & label, so $450 will be added to the artist’s balance.