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Legal Tips | ||||||||||||||||||||||||||||||||
| Royalties: Four Key Negotiating Tips | |||||||||||||||||||||||||||||||||
 In a recent meeting of The
Circle, we looked at a royalty-related clause from an actual
contract. You can read the clause in my workbook,
Make Music, Make Money
(page 50). I explained that, when I work with clients, there are four key areas I advise them about when I review, draft or negotiate their contracts. Of course, the advice I give will vary depending on whether the client is the party who pays the royalty or the party who receives the royalty. |
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The audience at The Circle
actively participated as I presented my in-depth explanation
of these four key areas as well as a few other ones. Make
Music, Make Money is a great reference to have. But
it's even better when you also attend The Circle. At
the meetings, I go beyond what the workbook covers with extra
money-saving information. Here, I summarize my presentation as four key negotiating tips. |
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Contracts usually specify a deadline
when royalty statements and payments can be contested. If you're the one paying the royalty... you will want to keep this deadline as short as possible. If you're the one receiving the royalty... you will want to keep this deadline as long as possible. |
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If a statement or payment is contested,
there is typically an option to conduct a royalty audit to check
the accuracy of the statement and payments. If you're the one paying the royalty... you will want the contract to specify that the audit be conducted by a certified public accountant. If you're the one receiving the royalty... you will not want the contract to require that you hire a CPA. |
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Royalty audits are time-consuming,
labor-intensive and costly. So contracts will usually specify
who has the burden of paying this expense. If you're the one paying the royalty... you will want the contract to specify that the other party (i.e., the one contesting your statements or payments) is responsible for paying the audit costs. If you're the one receiving the royalty... you will want the contract to require that your costs be reimbursed if the audit shows that you were underpaid. |
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While reviewing the books and
records, the auditor will have access to lots of information
that may be sensitive. If you're the one paying the royalty... you will want the contract to confirm that the books and records contain trade information that must be kept confidential. If you're the one receiving the royalty... you will want the contract to permit the disclosure of the information to your representatives or to enforce your rights. |
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| There are many variations on how each of these tips get negotiated. And, of course, there are many additional negotiating points on this one clause alone. You can imagine how many other negotiating issues I can spot if I review all the other clauses in a contract. | |||||||||||||||||||||||||||||||||
| As you can see, there is no such thing as a "simple" agreement or a "standard" agreement. These tips will not enable you to handle your own contracts. But they will educate you about important issues you need to think about and to discuss with an experienced entertainment attorney. | |||||||||||||||||||||||||||||||||
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| If you have questions about any of these negotiating tips or if you are getting involved in a contractual situation, e-mail me about setting up a consultation. | |||||||||||||||||||||||||||||||||
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Not sure yet? Have
questions about the fee or services? Email-me to arrange for a free confidential telephone appointment to get more information. |
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In the meantime, you can learn
more by getting a copy of Make Music, Make Money and by attending the next meeting of The Circle - Manhattan or The Circle - Long Island. Make sure to tell your friends and colleagues. |
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| Feedback | |||||||||||||||||||||||||||||||||
| Have Topics You Want To Read About? | |||||||||||||||||||||||||||||||||
 E-mail me if
you have any suggestions. I can't guarantee that your topic will be addressed. But if I get many requests on a similar story idea, I will try to include an article in an upcoming issue. In the meantime, click here for more Behind The Limelight. |
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> invited
to The Circle,
