Appendix A – Model Producer Agreement Clause

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The following template clause illustrates how to implement the PMPAC Royalty Standard in a producer agreement. Parties should adapt placeholders (percentages, timelines, jurisdictions) to their specific project and seek legal review before execution.

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1. Definitions

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For purposes of this Agreement:

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1.1 “Master” means the final mixed and mastered sound recording(s) produced by Producer under this Agreement, in any format or medium, intended for public release.

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1.2 “Gross Receipts” means all revenues actually received by Label (or Rights-Holder) from exploitation of the Master, including but not limited to streaming, digital downloads, physical sales, sync licenses, performance collections to the extent paid to the Master owner, and other uses, before deductions.

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1.3 “Distribution Fees” means fees payable to third-party distributors, aggregators, or platforms for distributing the Master, capped at fifteen percent (15%) of Gross Receipts.

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1.4 “Transaction Processing Fees” means fees charged by payment processors, DSPs, or similar service providers for handling individual transactions (e.g., per-stream fees, payment gateway charges), as reflected in statements.

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1.5 “Net Master Revenue” (NMR) means Gross Receipts less Distribution Fees and Transaction Processing Fees. Marketing costs, overhead allocations, and advances are not deducted from NMR.

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1.6 “Producer Share” means the percentage of Net Master Revenue to which Producer is entitled under Section 3 below.

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1.7 “Advance” means any upfront payment(s) paid to Producer as set out in Section 4.

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1.8 “Recoupment” means recovery of Advance from Producer’s share of NMR-based royalties payable under this Agreement.

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1.9 “Direct Monies” means one-off or usage-based revenues paid directly to rights-holders for the Master (e.g., sync fees, YouTube Content ID payouts, SoundExchange or neighboring rights collections where remitted directly to rights-holders). Producer is entitled to a share of Direct Monies as set out in Section 5.

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1.10 “Territory” means worldwide, unless otherwise specified in writing.

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2. Engagement & Services

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2.1 Engagement. Label (or Artist) hereby engages Producer to provide creative and/or technical production services for the Master, including arranging, recording oversight, programming, performance direction, editing, mixing, and related tasks as described in Exhibit A (if applicable).

 

2.2 Delivery. Producer shall deliver the completed Master(s) by the dates and in the formats agreed in writing (e.g., WAV 24-bit/48kHz, stems, etc.). Delivery obligations and timelines are set out in Exhibit A or separate schedule.

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​3. Producer Royalties

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3.1 Producer Share of Net Master Revenue. Producer shall receive not less than [__]% of Net Master Revenue from all exploitation of the Master worldwide. Label shall pay Producer’s share concurrently with payments to Artist/Label or as soon as reasonably practicable after Label’s receipt of revenues.

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3.2 Minimum Remuneration Contexts. If the total production budget for the project is less than CAD 20,000, Producer’s minimum share shall be [20]% of Net Master Revenue. For self-released or no-label projects, Producer is encouraged to negotiate within 20–25% of NMR. Parties may agree on a specific percentage within or above these minima in writing.

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3.3 Multiple Producers. If more than one producer contributes materially to the Master, the aggregate Producer Share (as above) shall be divided among Producers in proportions agreed in writing prior to release. If no written agreement exists, shares default to equal division.

 

3.4 Physical Formats. If revenue arises from physical formats (CD, vinyl, etc.) calculated on Published Price to Dealer (PPD), Label shall ensure Producer’s cast-off return equals or exceeds what Producer would receive under NMR calculation.

 

3.5 Payment Schedule. Label shall deliver royalty statements and payments to Producer at least annually, within 90 days after each fiscal year-end, detailing Gross Receipts, deductions, NMR, and Producer’s share. Interim (quarterly or monthly) statements/payments may be provided if available via distributor portals or agreed in writing.

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4. Advances & Recoupment

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4.1 Producer Fees / Advance. As consideration for Producer’s services, Producer shall receive a fee of [CAD __], payable 50% upon commencement of production services and 50% upon delivery of the Master in final form (“Advance”). Parties may negotiate different structures, but any Advance shall be recoupable only as set out below.

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4.2 Recoupment. Producer’s Advance is recoupable solely from Producer’s share of NMR-based royalties under Section 3. Producer shall not be responsible for recoupment from any other revenue streams. Once the cumulative Advance has been fully recouped from Producer’s share, Producer becomes entitled to receive 100% of Producer Share of NMR without further deductions.

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4.3 No Cross-Collateralization. Recoupment shall be confined to income derived from this Master only and shall not be cross-collateralized against other Masters or projects, unless Producer expressly agrees in writing.

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5. Direct Monies

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5.1 Share of Direct Monies. Producer shall receive [__]% of all Direct Monies attributable to the Master, equal to Producer Share of NMR unless otherwise agreed in writing.

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5.2 Timing of Payment. Direct Monies received by Label or rights-holder on behalf of Producer shall be paid to Producer within 30 days of receipt. If Direct Monies are paid directly to Producer (e.g., via letter of direction for SoundExchange), Label shall facilitate necessary documentation (e.g., Letters of Direction) to ensure proper allocation.

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5.3 Recoupment and Direct Monies. Unless expressly agreed otherwise, Direct Monies shall not be applied toward recoupment of Producer Advance; they are paid to Producer in full in accordance with Section 5.1.

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6. Reporting & Audit Rights

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6.1 Statements. Label shall provide Producer with statements at least annually, showing: stream/download/sale counts; Gross Receipts; Distribution Fees; Transaction Processing Fees; Net Master Revenue; Producer Share calculation; Direct Monies received and paid to Producer; and advances recouped to date.

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6.2 Audit Rights. Producer shall have the right, once per fiscal year upon written notice, to audit Label’s relevant records (e.g., distribution statements, accounting ledgers) solely to verify accuracy of payments under this Agreement. Such audit shall be conducted during normal business hours, with reasonable prior notice, and by an independent accountant chosen by Producer. If audit uncovers an underpayment exceeding [5]% of amounts due, Label shall promptly pay the shortfall plus interest at [__]% per annum and reimburse Producer’s reasonable audit costs. If discrepancy is less than 5%, Producer bears audit costs.

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6.3 Delivery Timing. Statements shall be delivered within 90 days after fiscal-year-end or within 30 days after receipt of a Direct Monies payment.

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7. Letters of Direction & Collection Organizations

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7.1 SoundExchange / Neighboring Rights. Producer and Artist agree to execute Letters of Direction or similar documentation instructing collection societies (e.g., SoundExchange in the U.S., SOCAN or other neighboring rights organizations in Canada/EU) to allocate Producer’s share of digital performance or neighboring rights royalties. Label shall provide templates or guidance as needed.

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7.2 Sync Licenses. For synchronization opportunities, Label (or Artist) shall notify Producer in advance of negotiation or offer. Producer may participate or be consulted on terms. Producer’s share of sync fees is paid per Section 5.

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8. Warranties & Representations

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8.1 Producer represents that it has the right to enter into this Agreement and grant the rights herein, and that to Producer’s knowledge, the Master will not infringe any third-party rights.

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8.2 Label represents it has the right to exploit the Master as contemplated and will remit Producer’s share according to this Agreement.

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9. Term & Termination

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9.1 Term. This Agreement commences upon signature and continues for the life of applicable royalty payment obligations (including recoupment period and beyond for ongoing NMR share).

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9.2 Termination for Breach. Either party may terminate this Agreement for material breach by the other, provided written notice and reasonable cure period. Termination shall not relieve Label of obligation to pay Producer’s share for exploitation occurring prior to termination and thereafter for any income streams attributable to the Master in perpetuity.

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10. Miscellaneous

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10.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of [Province/Territory, e.g., Ontario], without regard to conflict-of-law principles.

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10.2 Notices. All notices under this Agreement shall be in writing and delivered to addresses set out in the preamble or as updated in writing.

 

10.3 Assignment. Producer’s rights under Sections 3–6 may be assigned to a trusted entity (e.g., publishing or management company) only with Label’s consent, not to be unreasonably withheld.

 

10.4 Entire Agreement. This Agreement, including exhibits, constitutes the entire understanding between the parties regarding the Master and supersedes prior discussions.

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11. Exhibit A (Optional): Scope & Deliverables

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[List specific deliverables, timelines, technical specs, session schedules, personnel, revisions, etc., as agreed.]

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Guidance for Use

 

• Customize Percentages: Fill [__]% fields per the Standard’s minima or negotiated terms (e.g., 15–25% of NMR). For low-budget projects (< CAD 20k), default 20%. For self-release, consider 20–25%.

• Audit Thresholds & Interest: Adjust the “underpayment exceeding 5%” threshold or interest rate as appropriate.

• Payment Timing: The 90-day window after fiscal year-end is common; modify if your distributor provides faster dashboards.

• Territory & Law: Ensure the governing law matches the label’s jurisdiction and consider international implications if revenue collected across multiple territories.

• Letters of Direction: Provide clear instructions/templates early so Producer can register with collection societies promptly.

• Physical Format Clause: If offering CDs/vinyl, ensure the PPD clause guarantees parity with NMR calculation.

• Recoupment Clarity: Confirm whether Direct Monies bypass recoupment or not; the template assumes they bypass. Adjust if desired otherwise.

• Advance Structure: If no advance is paid, delete Section 4 or set Advance to CAD 0 and note “no recoupable advance.”

• Multiple Producers: For co-produced projects, include a side-letter among producers detailing split percentages before release.

• Interactive Calculator Link: In the agreement cover sheet or schedule, you may reference “PMPAC Producer Royalty Calculator v1.1” for transparency on how NMR share is derived.

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