Royalty Split Agreement

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Royalty Split Agreement

A Brief Introduction of Royalty Split Agreement

In production of any artist, whether it is literature, music or painting, multiple parties are involved. Several parties use those products and services for their personal purposes. When they generate a profit using these campaigns, the artist becomes eligible for a part of that profit. In the music industry especially, where multiple people work on creating one song, splitting the revenue becomes tough. In that context, a royalty split agreement becomes helpful

Business relationships surpass any personal bonds individuals may have. While the nature of personal relationships may affect the goodwill in the business, you can’t rely on relationships to last. To prevent disputes on compensation for services provided in the past, a royalty split contract is useful. This helps in figuring out how royalties are calculated for the services provided by other parties.

Defining who gets what part of royalties helps in settling business relationships. Producer royalties help in compensating the producer for their efforts. Songwriter royalties compensate the writer for his efforts. Each party involved in the process of songwriting can be compensated with this split sheet agreement as a template

Who Takes the Royalty Split Agreement?

In many cases, the artists, musicians or songwriters have managers. However, if you are just starting out and you are not managed by managers, you have to take care of everything that you do. The Royalty Split Agreement is signed between members who contribute to the making of a song. There can be more than one person involved in the process.

Purpose of the Royalty Split Agreement

The purpose of this agreement is to suitably compensate the artist for his effort and every other party who was instrumental in assisting the artist. A royalty split contract solidifies the relationship between the parties so that the rights and obligations are suitably explained. Since it describes how the services would be used and therefore how revenue would be generated which would help in revenue split, parties can represent their interest so that their gains are fair and commensurate to their efforts.

Reasons to sign this agreement –

  • It ensures profits and rewards are divided in a fair way
  • It ensures there are no unnecessary legal battles
  • It makes sure that all parties know their roles and responsibilities
  • It ensures the whole process of song making is legally binding
  • It ensures all parties are protected
  • It ensures that the interests of all the parties are suitably represented so that their compensation is just

Contents of the Royalty Split Agreement

A split sheet or Royalty Agreement Template must be drafted very carefully. It must include many crucial details, such as details of every person’s involvement. Basic details need to be included such as name, address, phone number, etc. A standard split sheet agreement template would include terms like

  • Duration of the contract for which the services would be used and therefore the agreement would be binding
  • The way in which the royalties would be split between the artist’s parties and the person who uses the service
  • The rights and responsibilities of each party involved in the contract which would make them eligible for royalty
  • The activities and terms of use of the content that are permitted and those that are not allowed for use
  • Ownership of the content during the course of the agreement including the copyright
  • The distribution rights and the responsibility of the costs involved therein
  • Marketing and publication of track and the representation for each piece of music
  • Arbitration clauses and methods of conflict resolution between the parties
  • Legal recourse for breach of contract and fair acknowledgments and warranties by the parties.

How to Draft the Royalty Split Agreement?

In drafting the contract, each party must consider their interests and what they believe is fair compensation. Since remuneration is not the only important part of the contract, the parties should focus on several issues that define their relationship. Some of them are

  • Responsibility of expenses incurred during the course of distribution and publication
  • How are music royalties calculated and the contribution of each party who contributed to the music
  • Names of the copyright registration and the list of owners
  • Method of issue of licenses and clearance cards
  • Statements of performance for both parties
  • Deadlines and timelines for delivery
  • Sub-licensing and self-publication of the content by the artists.

Negotiation Strategy

Negotiation strategy depends on the popularity of the piece and the need of the organisation that wants to use the piece. Each party to the music should discuss their priority and their contribution to music and therefore their share in the royalty. The negotiations would also be based on the nature of the relationship between the parties, and how important the contributors are in their field. The demand for their services also determines their negotiation strategies.

Benefits & Drawbacks of the Royalty Split Agreement

There are always benefits and disadvantages to signing the agreement.

Benefits are stated below:

  • It ensures all parties get the deserving amount as reward or royalty
  • It ensures there are no unnecessary legal battle
  • It tells each party their responsibilities and obligations
  • It makes the songwriting procedure legally binding
  • It documents the role of each person in the making of a song

There are no disadvantages to this agreement. People who want to violate the rights of others may see it as a threat, but if drafted carefully, it makes everything easy for all the involved members. It also ensures a healthy long relationship between all the band members. Transparency is something that everyone appreciates.

What Happens in Case of Violation?

In case of any violation(1), both parties are well within their rights to approach the court. In the absence of a Royalty Split Agreement, state laws are generally applied. But, if a conflict occurs even after signing the agreement, parties can mediate or take the help of a court. It is suggested that they first consult an expert to take legal advice.

This Agreement is one of the most important kinds of an agreement in the musical or creative industry. It makes a lot of things easier for everyone involved. The agreement must be drafted, keeping the results in mind.

There are many Royalty Split Agreement samples available online. However, you must choose the one drafted by an expert. Here is a sample songwriter split sheet. Download the PDF form here and customize it as per your need.