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Published by David McLoughlin

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Published by: David McLoughlin on Jun 08, 2009
Copyright:Attribution Non-commercial


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It is compulsory for the royalty to be proportional to sales. The royalty must be
proportional to sales and increase at the same rate. It is never a fixed amount,
however high. If any fixed amount is stipulated in a contract, this is an advance on
royalties, but never a final payment for the cession of rights.

As a general rule, the main factor that may cause significant variations in the
amount of the royalty is if the artist has paid for the costs and production, or
organisation of the recording (i.e. If the artist is the phonographic producer). In
general, the royalty may vary between 12% and 18% of the record distribution
price. Hence, if the artist presents the company with a finished product that s/he
has paid for, not only does this imply a different royalty but also a new type of
contract; one of co-production (two companies with the same aim) in which the


Copyright Law (Real Decreto Legislativo 1/1996, de 12 de abril)


Copyright Law (Real Decreto Legislativo 1/1996, de 12 de abril)


royalty decreases in proportion with the increase in the amount invested by the
record company. In cases in which the record company has paid for the
aforementioned costs, the royalty varies between 7% and 12%.

Another important factor is the number of sales of the artist’s previous records. An

artist that has sold a great deal of records can negotiate a higher royalty than

The law (Art.47LPI) covers cases in which therecord company’s profits are
disproportionate, providing for a revision of the contract. In the case in which the
record company is not prepared to review it, a judge can be asked to revise the
contract and fix a just remuneration for both parties.

Usual reductions in royalties include television advertising; sales to certain clients
or reduced-price sales (ex: sales to the Círculo de lectores); and promotion copies
for the artist.

There are cases in which it is necessary to agree on a high royalty percentage. The
first case is Electronic music composers and performers in general. When
calculating royalties, there are some cases in which it is very important to
negotiate high royalty percentages. One of these cases is that of performers for
whom the onlydirect gain from the exploitation of the work’s recording is their
corresponding royalty, which is not the work’s author. Another typical case is that

of electronic music producers, in that they do not usually give performances, hence
the royalty is their only direct income (there are of course many exceptions).

Another case deals with the advances of royalties. For many artists, the only factor
that they value in their contract is the insertion of a hefty advance. This should
never be given priority over good contractual promotion, although a sizeable

advance also determines the company’s attitude.

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