It's very important to be aware if your contract has a Controlled Composition Clause.
Some recording contracts contain what is called a controlled composition clause that applies to compositions written and “controlled” by the artist. These clauses can affect the amount mechanical royalties payed back to the songwriter.
Many contracts attempt to establish a 75% United States mechanical rate (specifically, 6.82¢, which is three-quarters of the 9.1¢ full U.S. statutory rate) for all controlled compositions. In most cases, the figures are computed at the mechanical rate that was current at the time the contract is written.
In other cases, there can be a maximum aggregate mechanical royalty limit for an album despite the number of tracks that actually exist. So, for example, if the agreed upon rate is 10 songs x 6.82¢ (68.2¢ per album) and there ends up being 12 songs on the album, the rate for each individual song would be reduced to 5.68¢ per song and 68.2¢ will still be paid out per album. In a sense, this is a cap on the royalties the record label will pay out.
It is important to note that the above information is specific to the United States, and that every agreement is different and that the terms above are by no means concrete, and may not apply to any agreement you may be given.
Please consult the necessary legal council when given an agreement so that you have a full understanding of what you are agreeing to
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Disclaimer: This article is for educational and informational purposes only and not for the purpose of providing legal advice. The content contained in this article is not legal advice or a legal opinion on any specific matter or matters.