(4) date of sale.Obviously, the latter date is more advantageous to an artist, as the statutory rate may go up fromthe date of recording to the date of sale.B. The rate is reduced further to a certain number of songs. Thus, the "rate" is usually limited to10 to 11 songs per record, even though you may have 15 songs on the album.C. The reduced "x 10 min stat" rate is also further reduced depending on the configuration(format). Thus, a typical reduced mechanical license rate would be: 10 songs x 75% rate on LP’s,5 songs x 75% on EP’s, and 2 songs x 75% rate on singles.D. Mechanicals are payable only on records for which record royalties are payable, whichusually means no payment on "free goods" and promotional copies.E. There is usually a further reduced rate for secondary markets, such as for record clubs sales, budget lines, and sometimes mid-priced records. And, there may also be special treatment for multi-record packages. There is also a special rule regarding "Greatest Hits" or other re-releases.(9) Advances: Royalty "advances" are basically pre-payments of estimated royalties. They arenon-refundable but recoupable, meaning they can be paid back to the record company fromartist’s earnings only. They come in different forms, the obvious being an advance payable uponexecution of an exclusive recording agreement.(10) Reserves: Currently, most record companies limit returns to 20% to 22% of records shipped.Because record companies do not know how many records will be returned by retailers, theycompute mechanical royalties based on net sales "less returns" so as to avoid any overpayment of royalties. They maintain what is known as a "reserve" against future returns. The reserves is a percentage of gross sales of a record. These reserves may range from 30% to 75%. Since mostrecord companies are not going to accept more than a 22% return privilege from retailers, theartist should try to limit these to "reasonable" reserves, not to exceed a certain percentage (e.g.,20% to 25%), and include a specific liquidation clause ensuring full payment after a certain period of time (e.g., within three or four accounting periods.).(11) Cross-collateralization: This clause should definitely be avoided. A cross-collateralizationclause compromises the song writer's otherwise independent royalty income. Under this clause,the record company is allowed to recoup mechanical royalty advances from sources other thanfrom the actual sales of the record in question. For example, if an artist owes the record companyfor unrecouped mechanical royalties from LP1, the record company can use sales from LP2 or even publishing income to get paid. This obviously substantially reduces and sometimeseliminates the likelihood that the artist will receive any royalties. This clause is never called byits name. It is usually recognizable by the term, "all agreements between artist and recordcompany heretofore or hereafter entered into shall be deemed to be one accounting unit." Alwaystry to get these clauses removed from the recording contract.