Digital Distribution Common Terminology
The terms below are the general definitions used by the majority of digital distribution companies. There is no guarantee that the company you select will use the terms in the exact same way. Closely read the relevant paragraphs and surrounding information to ensure that you are protecting your copyright and money. This section was written by TMO legal intern Emily Burrows during the summer of 2009.
Disclaimer: The Texas Music Office does not intend for this advice to provide or replace professional legal advice in any way. These suggestions are only intended to provide a short-answer reference guide to the basic legal and business practices associated with the music industry. In your own interest, consult with an attorney before entering into any contractual agreement or taking any action against copyright infringement.
Many distribution companies
reserve the right to amend (change) their terms of service at any time.
Some will notify you by email or other means, while others will not
directly notify you of changes. They will simply change the date on
the terms of service and it is your responsibility to ensure that you
are aware of any relevant changes. If changes occur and you do not request
termination of your service (usually within 30 days), you have agreed
to the new terms of service.
Most distribution companies
directly protect themselves from paying you damages for anything they
potentially did wrong. These damages could include loss of profits or
damage to your computer if the website has a virus or malfunctions.
Many agreements include
the state or country whose law will apply in the event of a dispute
between you and the distribution company. Most state that even if the
distribution company is the side that has failed to follow the contract,
you must still go to court in the state of their choosing. Although
litigation is not generally common with these types of agreements, keep
in mind the expense of traveling and hiring an out of state attorney.
Gross vs. Net Profits:
Gross – the entire
profit; you will receive the full proceeds of sales made by retailers.
This is most often seen in agreements where you pay a monthly or one-time
fee for the distribution service.
– part of the profit; you will receive the amount left after deductions
are made from the proceeds of sales made by retailers. This is most
often seen in agreements that charge you a per-song fee.
You must pay the distribution
company (and often the retailers) for any losses they may face as a
result of being in a contract with you. For example, if you do not actually
own the content you license for sale and the true owner sues the distribution
company, you will have to reimburse the distribution company for any
damages they have to pay to the owner. Also, you often agree to not
add the company as a party in the event you are directly sued.
The company holds a license
for your work, but they do not hold exclusive control over your content.
You may distribute your work on your own, such as at shows or through
your website. You could even use multiple digital distribution companies.
However, this is not recommended. For instance, if both companies distribute
to iTunes, iTunes will only post one version of your song. You will
be forced to pay both companies for one song. Some companies require
that you notify them if you enter a record deal because most record
deals are exclusive agreements.
You, the licensor/content
creator, keep the copyright of your work. You are licensing the distribution
company to use your work for distribution, for which you pay a fee.
Royalty-free means that you cannot collect further royalties from the
distribution company, or the retailers, for using your content.
vary on their terms for ending an agreement. For some sites you are
committed to paying for a month or a year. Others allow you to cancel
the agreement, in writing, thirty days before you wish to end
the agreement. Many companies allow themselves the option to terminate
the agreement at any time.
You, as the content owner,
are required to pay any royalties to individuals who have contributed
to your work. This includes musicians, producers and songwriters who
collaborated on your work and entered into a deal with you to receive
a percentage of future revenues. This also includes the owner of any
“samples” you use in your content.
Most digital distribution
sites require you own or purchase UPC and ISRC codes for each track.
UPC’s (Universal Product Code) are the barcode you see on almost any
item you purchase in a store. You can purchase these codes at a number
of sites online. ISRC’s (International Standard Recording Code) are
similar to UPCs but are specifically for sound and music video recordings.
Check the guidelines for the distribution site you are interested in
before purchasing either code.
User Content (recordings, work, etc.):
Generally includes, but is not limited to, your song, sample, art work, images, biographical information, lyrics, charts, videos, liner notes, and graphics.