Masters: Royalty Reductions and Reserves

[agivens]

[h=1]Master: Royalty Reductions and Reserves[/h][h=3][/h]

REDUCTIONS Reductions are the things that everyone tells you about but nobody can fully avoid. Reductions are the expenses that the record label bankrolls to get the product to the retailer. The money is paid back from the sales. These are different recoupable expenses because these are more like fees that come off the top from the sale of the master and reduce your royalty base. PACKAGING Packaging reductions can range anywhere from 10-25% and can be applied to the retail price, whole sale price, actual selling price, the list category price, the advertised price, etc. TAXI Transmitter November 2005 Music Biz and Law: Packaging Deductions in Record Contracts BREAKAGE Breakage fees entered into music contracts when records were fragile and a significant amount would be delivered broken. This fee can range from 5-10% of the many different price points listed in the packaging paragraph above. With more records being downloaded or streamed each year breakage and packaging are becoming a thing of the past so feel free to negotiate them down but don't expect these them to go away.

RESERVES Reserves are like reductions in that they can reduce how much money an artist producer or songwriter actually sees. Record labels agree to pay out based on record sales, but for a period of time retailers can return the product. To protect themselves from overpaying record labels keep a portion of the money earned from record sales in "reserve" to cover the cost of product that doesn't sell. This reserve can range from 50-80% of the money earned from sales. You should also negotiate how long the label can hold this reserve before paying out. JOIN THE MAILING LIST ON MY TUMBLR.

 

[King-Vis]

You know that we're unable to read this, right?

 

[bandcoach]

fixed it removed color tags

 

[Desire Inspires]

​I read all of this in the Donald Passman book.

 

[agivens]

If def recommend the Passman book to anyone even thinking about a career in music.

The purpose of posts like this is to provide a snap shot of information that is required to even function in the industry and maybe clarify some stuff for people who have heard about these things but didn't quite understand them.

I'm trying to figure out a way to educate people on techniques I use to actually negotiate and strategically apply these terms, but no luck so far.

 

[B.U.M.]

This was actually very informative.

 

[orpheous]

thanks for the info!