1 point 5 dollars is now down to 96 cents. Plus remember what we said about the controlled
composition clause? How the artist owes the difference in the mechanical licensing fees
if the publisher insists on the full mechanicals? That came to 22 point 75 cents per 10 song
album, remember? So the artist’s 96 cents gets further diminished by those 22 point
75 cents, and that’s how the artist’s royalty, through the sheer magic of a standard
recording contract, goes from 1 point 5 dollars, to 73 point 25 cents; or it get’s cut in
half, from 15 percent, to 7 and a half percent, faster than you can say recoupables.
By the way, you remember those recoupable expenses we spoke about? All those expenses
that the contract stipulates are recoupable by the company from the artist’s royalties?
Well, the royalties clauses also stipulate that the artist will start receiving royalties
when the company has recouped all its recoupable expenses. Other words, the artist does not
receive his, by now, cut in half royalty rate of 7 and a half percent of retail, until the
company recoups. OK so when is that? Well, since the contract defines recoupment as accumulating
from the artist’s royalties, when the sum of the royalties exceeds all the recoupable
expenses, then the artist starts receiving the royalties. Do you realize the implication
of that? No? Well, think. Let’s say the cost of the recording production for the album,
which is a recoupable cost as we said, was 50,000 dollars. And let’s say that the artist
received a 20,000 dollars advance, which is also recoupable. And that the video production
for one of the singles from the album costs 100,000 dollars, half of which is recoupable.
Plus the company will kick in 50,000 for the tour support, and 50,000 for independent promotion,
both of which are fully recoupable expenses. So, we’ll stay with our artist’s royalty
example of 15 percent, the album unit price of 10 dollars, and all the contractual royalty
