Answer to Controlled Compositions Pt. 1

This is the worksheet for the controlled compositions problem posed in Controlled Compositions Pt. 1

Example:

The deal memo for your record deal has this section:

Controlled Compositions: 10 x 3/4, 5 on EP, 2 on Single, bumps to 87.5 and full at gold and platinum, full on digital and club, 3/4 of 3/4 on mid and budget, protection for 2 outside, rate fixed on delivery, no crossing, paid on royalty bearing, US and Canada.

What did you just agree?

You just agreed to the following maximum mechanical rates, all based on 75% of the minimum statutory rate in effect at the date that you deliver your recordings to your record company. Each cap is multiplied times the minimum statutory rate. The current minimum statutory rate is $0.091 so we will use that rate for the example. 75% of that rate is $0.06825.

LP: 10 x controlled rate or $0.6825
EP: 5 x controlled rate or $0.3412
Single: 2 x controlled rate or $0.1365
Download: 1 x controlled rate or $0.0910
Club: 10 x $0.0910
Midprice: 10 x 3/4 of controlled rate or $0.5118
Budget: 10 x 3/4 of controlled rate or $0.5118

If the equivalent of 2 songs are written or co-written with songwriters who do not accept the controlled compositions clause, then those songs will be treated as controlled for purposes of calculating the maximum mechanical rate.

These rates only apply in the US and Canada (but note that the CMRRA sets special terms benefiting songwriters for sales in Canada under controlled composition clauses).

Mechanical royalties cannot be cross-collateralized to recoup advances under the artist agreement against mechanical royalties, except in specific circumstances (the “Four Horsemen of the Apocolypse”): Unexcused overbudget, union penalties, overpayments and indemnity claims.