March 2005
Kylie should be so lucky! And the saga of the unpaid royalties………
Kylie Minogue is the latest in an increasing stream of artists complaining that their royalties have been substantially underpaid by their music companies.
Kylie is claiming that PAL Productions owned by Pete Waterman underpaid her by over £400,000 for royalties she claims are due as a result of her "Greatest Hits" Album. She has apparently issued proceedings in Melbourne, Australia to recover the royalties.
Many artists complain that they are underpaid but often feel that they are not in a position to pursue anyone as a result of agreements that they have entered.
Other artists calling foul have famously included Badly Drawn Boy (allegedly sued his ex music company for £300,000 at the end of last year) .
The problem of unpaid royalties is not restricted to artists suing music companies, in the last year the papers have seen an ex Busted member suing the band for royalties in his rile prior to being axed and also a (now grown up ) group of school children pursing Pink Floyd for their part in "Another Brick in the Wall". One of the main problems with such claims is that no specific agreement is reached regarding payment of royalties whilst all the parties are on good terms, it is then only when things turn sour that sorting out royalty payments turns ugly.
BRIFFA Comment:
The collection of royalties does not, of course, only apply to the music industry. Designers and artists are often in a position where they are collecting regular royalties from licensees.
If you are entering an agreement whereby you will be collecting royalties from a licensor you should ensure that the following are included:
• Ensure that you have a written agreement as to how you will be paid for your work. Make sure that it is clear when royalties will be paid and how often. Licensors often manage to draft an agreement so that payment is not made sometimes until several months after the goods or works have been sold
• Ensure that you are entitled to enter the premises of the Licensor to inspect their accounts in relation to your works. It can also be worthwhile asking to inspect manufacturing records as well since just because there isn't a record of something being sold doesn't mean it wasn't made!
• Clarify the percentage royalty that will be paid and how it is made up. 5 % of gross revenue brings a very different total to that of 5 % of manufacturing costs yet we often still see a flat percentage inserted into contracts.
• Negotiating advance royalties will help with cash flow and you should request that they are non refundable in the event that sales never reach the total amount of the advance royalty.
Briffa regularly draft and review licensing agreements across a spectrum of industries including for artists and designers as well as software developers and the IT industry. Should you have any questions about a deal you are planning on entering or even general questions on licensing please do contact us.
Article written by Sarah Jeffery.
For further information please contact: Sarah.