The Controlled Compositions are songs that have been written by the Artist. They write, own and control their own material. These compositions fall under the Songwriting Copyright. If you don’t know what that means, you can check that out here: Understanding the Two Copyrights of a Song.

Why is This So Important?

It’s important because Record labels have to pay mechanical royalties to Music Publishers for songs that are recorded by their Artist and released by their companies. In an effort to pay less money, Record labels insert the controlled composition clause in their Artist contracts that number one, limits the number of songs that they have to pay songwriter royalties on, and number two, reduces the amount payable on those songs.

How Can They Do This?

They are able to do this, because the Artist signs those agreements with that clause inserted. Can the Artist negotiate that clause out of their agreement? It depends, but most times for the Record Label, that’s the deal breaker. Either the Artist signs the agreement or forfeit the entire record deal. Some attorneys are able to negotiate it out, or negotiate for more favorable terms.

Who is in the most favorable position, the Artist or the Label? Well, that also depends. Are Record Labels in the midst of a bidding war for a particular Artist? Has the Artist reached such a status that the labels are willing to negotiate whatever it takes to sign them? Or, is the Artist willing to sign whatever they have to just to get a record deal?  A lot of times the Artist are willing to sign just to get a deal, and because they sign, this is what allows the record companies to do so.

There’s more. Record Companies have expanded their definition of the Controlled Composition to include both the Artist and/or the Producer! Do the producers want the contract and the job more? Most times they do, especially if it means the opportunity to produce a record for a well-known Artist, or to expand their portfolio or their  notoriety! The result of this is less pay for the Artist and Producers on the songs that they wrote! This has nothing to do with their Artist or Producer Royalty, this has to do with the song (mechanical) royalty.

The Result

If the Artist and/or the Producer is also the songwriter, then this clause allows the Record labels to only pay 3/4 or 75% of the statutory rate required for each song on the album. It also allows the Record Companies to only pay on a fixed number of songs on that album.

Scenario #1 – The Controlled Composition Clause limits payments to only 10 songs at 3/4 of the rate: The Artist has 12 songs on their upcoming album, and 11 of them were written by the Artist, those 11 songs would be considered Controlled Compositions. They only get paid on 10 of 11 songs they wrote at 3/4 of the full rate. The one song that is not controlled by the Artist and/or Producer, is paid in full to the Music Publisher representing that songwriter, or to the songwriter themselves, if they are the Publisher as well the songwriter.

Scenario #2 – The Controlled Composition Clause limits payments to only 7 songs at 3/4 of the rate: The Artist wrote all 12 songs on their upcoming album. They will only be paid on 7 of those songs at the reduced rate.

Scenario #3 – The Controlled Composition Clause limits payments to only 10 songs at 3/4 of the rate: The Producer wrote 9 songs and the Artist wrote 3 songs. Someone will not receive their royalty payments. All 12 songs are Controlled Compositions. According to the terms of the agreement, the label will only pay on 10 of those 12 songs. Who will get paid?  How will they decide? Will the Artist and the Producer have to work it out? Will the Artist and the Producer fight with the Label? Do you see how complicated this can get? This is the Music Business! However, having knowledge, hard work and skill helps to put you in a more favorable position of knowing what to expect and how to prepare yourself to negotiate for more favorable terms for yourself! Thanks for stopping by, and have a great day!

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