The Controlled Composition Clause ✪

The controlled composition clause is a way for record labels to negotiate a reduced mechanical royalty rate for songs where the recording artist is also the songwriter (or at least one of the contributing songwriters) of that same sound recording. This is negotiated into the artist’s Recording Agreement, when they sign a record deal with a label. When a performing artist is also a writer of that sound recording, this writer is referred to as a controlled writer, hence the name “controlled” composition clause.

There are multiple terms that come into play with controlled composition clauses. The record label may choose to implement just one of these terms, or they might mix and match more than one. Some examples of terms used within a Controlled Composition Clause are as follows:

Minimum stat rate

This is relevant in North America, where penny rates are applied, based on the playing time of the sound recording. For example, in the USA, the stat rate starts at a set value (which was 9.1c for a long time but now changes with inflation every year as decided by the CRB) but increases for recordings over 5 minutes. So if a minimum stat rate is referenced in the controlled composition clause, this means that the per song rate will be the minimum rate for songs up to 5 minutes, even if the recording is longer than 5 minutes… but ONLY for the controlled writer. Non-controlled writers will still get their share of “full stat”.

On Curve, this can be achieved by selecting the Min Statutory Rate option on the Mechanical Contract's term.

Percentage of Stat or Reduced Rate

The label negotiates to pay a percentage of the stat rate instead of the full rate to the controlled composer. For example, they negotiate they will pay 75% of the stat rate. So if the applied stat rate is 9.1c, then only 6.825c will be reported instead.

On Curve, this can be achieved by either setting this Rate at Contract level (which will then be applied to all mechanical royalties calculated in that Contract)

Or by setting this Rate individually per Track in the Rate% field.

Track cap 

When a track cap is negotiated, the mechanical royalty of the Release is limited to the number of tracks specified in the Track Cap. For example: when there is a track cap of 10 times the minimum stat rate, and the minimum stat rate for the sale is 12c, then the mechanical royalty for that sale is limited to $1.20.

Because the non-controlled writers are not part of the negotiations between the controlled writer and the label, they will still be paid the full share. This lowers the controlled writer’s share, who essentially gets paid whatever is ‘left’ of the track capped mechanical royalty after the non-controlled writers have been paid.

So let's say our Release has 14 Tracks, all tracks have a minimum stat rate of 12c, we have a fully controlled share on 8 Tracks with the 6 other Tracks being uncontrolled, and a Track Cap of 10 times the minimum stat rate; then the following will happen:

• The 6 Tracks that are uncontrolled will be reported the full stat rate, as no discount is agreed with these uncontrolled writers. Each Track will be reported a mechanical of 12c. So the 6 Tracks together are reported 72c.
• Our Track Cap of 10 dictates that the total mechanical royalty is limited to $1.2. Therefore, the remaining mechanical royalty for the 8 controlled Tracks totals 48c (we find this by taking 120c minus 72c). Therefore, each of the Tracks will be reported a discounted stat rate of 6c (we find this by dividing the 48c over the 8 controlled tracks, the duration of the controlled tracks is ignored).

On Curve, this can be achieved by setting the Track Cap on the Mechanicals Tab of the Release. If the Controlled Composition Clause is enabled, the Track Cap will only be applied to the Controlled Tracks and the Track Cap will be calculated on the minimum stat rate.

When linking the Mechanical Contracts to the Tracks, you can at this stage specify whether the share of that Contract is Controlled or not (via the Cont. checkbox).

If the Controlled Composition Clause is disabled, then the Track Cap will be applied to all Tracks and applied as a deduction on the full stat rate. For example, if the Release has 14 Tracks and there is a Track Cap of 10, then a multiplier of 10/14 will be applied to all mechanical royalties on that Release. If the Track Cap is higher than the number of Tracks on the Release, then no multiplier will be applied. The Track Cap can be adjusted for individual Contracts through the means of a Track Cap Override.