When you sign a track from a Licensor (Artist or Label) you must replicate the agreed deal within RoyaltyWorx.
This is vital in providing the correct rates to calculate your royalties. This is done by creating what is called a Contract In.
The Contract In is a replication of your deal or agreement with your licensor and will hold key information (such as Royalty %, Expenses % etc) as well as provide a “hub” to tag Licensors to the specific Release/Tracks.
When you generate your statements, RoyaltyWorx will use the information you have entered, as well as the licensors and tracks added in order to calculate the relevant totals for each Licensor.
It is important to understand the Contract In as all calculations rely on its correct setup.
How to Create a Contract In
From the LabelWorx Top Menu, select Royalty, then select Contracts In. You will then see your Contracts In List.
From here, simply click the New button from the Icon Menu in the top right of the screen.
A pop-up window will appear showing you the New Contract screen.
Select the relevant tab at the top for whether you are creating an Artist Contract or a Remix Contract.
In the Release field, search for the Single, EP or Album you wish to attach the Contract In to. As you search, the system will populate your results with your releases from your Release List.
Select All Tracks to include the full release or select the relevant individual track.
IMPORTANT - You will need to have created your releases within the LabelWorx LMS. Please see the following support article for guidance
You can now select which Template to use for your new Contract In by choosing your option in the Copy From Template field.
IMPORTANT - You will need to have your templates already set up by this point. If you need to create your templates, add more or edit existing templates, please see the following guides for instructions:
Once you are happy you have selected the correct Template, added the correct Release and specified whether that is All Tracks or Individual Tracks, you can click the Create button. RoyaltyWorx will then create your contract and you will be automatically taken to the Contract Details page.
IMPORTANT - If the tracks selected exist on another contract a duplicate warning will appear with further instructions.
Adding Releases & Tracks to Your Contract
When you create a Contract In, it will add either the full release if you selected “All Tracks” or just the specific tracks you selected.
If you have any more instances of the track/release (such as a streaming edit version, in house compilation or a single version), you will need to add it to this Contract In so that it is accounted for when you generate a statement.
If the Auto Add Bundled Tracks setting is set to “Yes” (covered here, number 17.), instances of the track linked via the Bundle Builder/Copy tool will automatically be pulled through & marked as In House.
Make sure you always check this when setting up a Contract In & ensure it’s tagged properly as Standard/In House.
At the bottom of the Contract Details page, you will see the section relevant to the releases/tracks on the contract, as pictured above.
1 - Releases
This section allows you to add full releases to the Contract In.
Important - you should only do this in instances where the same deal applies to all tracks on the Contract In. If you have a featuring artist on some tracks, for example, you should create a standalone Contract In that details both licensors.
2 - Tracks
This is where you can check and add single tracks to a Contract In.
3 - Add Track
Depending on whether 1. or 2. is selected, this will either display as “Add Release” or “Add Track”.
When you click “add track”, it will open up the search box. Simply search the track name, select the instance you’d like to add, then press Save. The In House License tick box allows you to mark the track's rate as In House, which we’ll cover next.
4 - Rate
The rate references which royalty rate this instance of the track will be referenced from, either the “Physical & Digital Sales” field or the “In House Sales & Expenses” field.
If no statements have been generated on this contract, you are able to update the status by clicking on the text for each track. You will be prompted by this screen & you can select the relevant rate.
5 - Locked/Delete
This field indicates whether the track/release has been accounted for already.
If there’s a padlock through it, it means it’s already been included on a statement & cannot be removed. If there’s a red cross, it can be clicked to remove the instance of track/release from the Contract In.
Royalty & Expense Rates (Simple Mode)
When you create a new Contract In, you will notice this section below. This is where you specify the percentage of royalties to be assigned to this specific Contract In & expenses.
1 - Physical & Digital Sales
Physical & Digital Sales rate is the amount that will designate the artist's share of royalties.
It will cover streams, downloads & any simple sales entered in Vinyl & CD formats.
2 - In House Sales & Expenses
In House Sales & Expenses determines the percentage that will be assigned to tracks marked as In House (see the previous overview, point 4.).
You can use this in instances where a different rate needs to be paid to the licensors for compilation use. This also covers expenses added to these releases marked as In House as well.
3 - Third-Party & Comp Licenses
The Third-Party & Comp Licenses field determines sales from statements imported as 3rd party. It also covers any Simple Sales entered as either 3rd party license or compilation format.
4 - All Other Expenses
Finally, All Other Expenses determines the percentage of expenses added that will be recouped on this Contract In. If this is set to 50% for example & a £100 expense is added to the release, the licensor will only recoup £50.
If you need to break any of these down further, you can switch the Contract In Mode to “Advanced”, either through RoyaltyWorx Settings or by pressing the “Advanced” button at the top of the Contract In.
Royalty & Expense Rates (Advanced Mode)
Setting your Contract In mode to Advanced gives you more flexibility when it comes to detailing different rates for sales formats & expenses. Advanced mode enables more options, as seen below
1 - Physical
The first tab details the standard rates for Physical sales formats.
By default, Compact Disc & Vinyl are automatically detailed.
You can add new formats by pressing the “New Contract Detail” button. This will open up the following menu:
1.1 - Format is the sales format that will be added to the Contract In.
To add new custom formats, please check out this guide which covers the process of adding custom sales formats & adding physical sales: SIMPLE SALES ENTRY OVERVIEW
1.2 - The Share is the percentage of revenue you want to be assigned to the Contract In.
For example, if you added in a £10 vinyl sale & set the rate at 10%, £1 would be allocated to the Contract In.
1.3 - The Received Royalties is the standard calculation setting for calculating the amount owed.
Whatever amount you enter through Simple Sales Entry, that amount will be split by the percentage defined in 1.2.
1.4 - If you have an agreement with your licensors that states a Fixed Price Per Dealer, instead of using the Unit Value entered in the Simple Sales Entry, it will use the fixed price stated here & then apply the percentage calculation to that value instead.
2 - Digital
The Digital tab by default details 2 rates, named “Album Basis” & “Track Basis” for both Downloads & Streams. When you click into one of the formats, the following screen will appear:
2.1 - The Format dropdown allows you to select the sales format.
You can also add custom sales formats here.
2.2 - The album share percentage allows you to set a separate rate for a full release sale.
This can be used in instances where the licensors on the Contract In should receive a different percentage for a full product sale. Note that the amount of royalty allocated to this calculation is the pro-rata album share for tracks on this contract.
2.3 - The track basis is the rate the licensor receives for a single track download/stream.
You can use this setting to specify the rate a single track sale is allocated.
3 - Licenses
This field only correlates to the sale type "Licenses" added through the Simple Sales entry, as shown in the image below.
IMPORTANT - This rate is separate from the 3rd Party License rate in the “Compilation” tab.
4 - Compilations
By default, two rates are specified here, 3rd Party License & In House License.
The 3rd Party License rate here covers sales inputted via Distributor Sales - File Conversions (Third Party) or through Simple Sales Entry - Compilations - 3rd Party License.
The In House rate will override the rates specified in the “Digital” tab if a track is marked as “In House” as shown below.
5 - Expenses
The Expenses tab allows you to detail different rates for different expense types.
If an Expense type is set to 100% here, the Contract In will be allocated the full value of the expense which will be recouped against the licensors royalties. Setting an expense rate to 0% will mean the licensors on the Contract In will not pay a share of the expenses.
The expense types listed here correlate to the expense types found when adding an expense to a release. Custom expense types can be added under Royalty > Maintenance > Expense Types.
6 - Territories
IMPORTANT: If you do not see these next 2 tabs in Advanced mode & you need to use them, please contact support & we can enable these expert features for you. You will also need to go to Settings - RoyaltyWorx Settings and change the “LW Statement Consolidation” to “No Consolidation”.
If you have a territory-specific deal in place, you can use this section in Advanced mode to specify which territories the terms of the Contract In apply to. From this tab, you can select individual territories, along with the rule you would like to apply to the Contract in
Worldwide Release - This is the default setting. You will not be able to select any individual territories. All territories worldwide will be accounted for on the Contract In.
Only these selected countries - This setting allows you to select specific territories to apply to the Contract In.
You can use this in conjunction with the below, to create 2 or more separate Contract Ins. Explained in more detail below.
Worldwide except these countries - The final option on this dropdown allows you to apply the terms of the Contract to all of the territories EXCEPT for the ones that are ticked.
This is useful if you need to exclude a handful of territories. It is also useful to use in conjunction with the above.
For example, you may need different rates for different territories. You may need a 30% digital rate for US & UK but 50% for all other territories. You could create 2 Contract Ins for this.
Version 1 with "Only these selected countries" set to US & UK, with the relevant digital rate (30%).
Version 2 would be set to "Worldwide except these countries" with US & UK selected, also with the relevant digital rate (50%).
This way, all territories are covered and accounted for at the correct rate.
7 - Reserves
The reserves tab allows you to allocate a specified percentage of all royalties to be held for a number of months. Please note that this will be taken from the total amount of all royalties assigned to the Contract In. Any adjustments to a statement will not be affected by the reserve rate.
In this next section, we will cover how you can add licensors to your Contract In & how the breakdowns work.
By default, when you set up a new Contract In for an artist that doesn’t have a licensor linked to it, this section of the Contract In will be blank.
1 - Add Licensor
To add a licensor simply press this Add Licensor button & you can search through a list of your licensors.
You are also able to create new Licensors from here as well. To do this, press Create New Licensor.
From here you will be prompted to enter the licensor's details. Please note only the following fields are mandatory at this point:
Licensor Name - which is what will display on the statement.
Contact Name - this will autofill with the Licensor Name unless you change it manually.
Email - this should be the licensor's email, but if you do not have it on hand, you can enter your personal email temporarily & update it once you’ve got it
Once these fields are filled, you can press Save, then you will be greeted with this prompt:
This allows you to link a licensor to a specific artist in the system. When you set up new Contract In for tracks/releases by that specific artist, it will automatically pull through the correct licensor.
If you have complex deals where different licensors are paid for the same artist, we would advise not linking them.
2 - Modify Licensor Share
Licensor share allows you to further break down the revenue assigned to a Contract In.
You are able to add multiple licensors and assign different rates, however, the rates defined in this section should always add up to 100%.
Using the example below, you are telling the system to allocate the licensors 50% on any physical rates. This is then split by the 2 licensors 50/50. So physical sales of $100 would result in the label receiving $50 (50%) and the 2 licensors receiving $25 each (50% of the 50%)
Contract In Settings
In this next section of the article, we will cover the different settings on the Contract In screen. As there are a whole host of customisations and settings you can enter in RoyaltyWorx, there is a full article on the settings below.
Adjustments, Advances & Opening Balances
In this final segment, we will be going over how to add/recoup amounts from a Contract In.
You can find these settings on the toolbar at the top right of the screen when you click on a Contract In.
1 - Opening Balances
These are amounts that will be brought forward to the next statement.
Adding an unpaid opening balance to a Contract In will mean the licensor is able to invoice for the amount (assuming it’s positive, if a negative amount is added & the Licensor Invoice Submission mode is set to Positive & Negative, the amount will be cross-recouped against other positive statements).
When adding in an Opening Balance, it is important to ensure it is not marked as “Opening Balance Paid”, otherwise the amount will not be accounted for. Make sure you also select the correct Licensor to allocate the balance to as well.
If the value is not cross recouped, the balance will be carried on to the next statement when it is generated & will display as a “Balance Brought Forward” on the statement totals section.
If a Contract In has statements already generated, you will not be able to add an Opening Balance.
2 - Advances
Advances are added to replicate an advance on royalties that you have paid or will pay, to your licensor.
Advances do not cross recoup against other statements that the artist may have, it only recoups against the royalties from theContract In that the advance is assigned to.
When adding an Advance, it is important to mark it as “Advance Paid” if you have already paid the Advance out to your licensor, otherwise they will be able to invoice you for the specified amount before it starts recouping.
To delete/amend an advance that hasn’t been included on a statement yet, head to the “Statements” tab, click on the “Date Paid” for the Advance.
This allows you to mark the Advance as Unpaid & delete it.
3 - Adjustments
IMPORTANT - If you do not see the “Adjust” button, please contact support & we can activate this expert feature for you.
Adjustments allow you to add/remove an amount from a specific statement or create an Unallocated Adjustment, which will be pulled through onto the next statement generated.
You can add in a custom note which will also display next to the amount at the bottom of the statement next to the adjustment value. This can be used in instances where you need to make a correction to a locked Contract In.
When you add an adjustment to an existing statement, it will automatically update the PDF in the system to include the adjustment.