What is a controlled/composition clause and how does it affect mechanical royalties paid by a label?

What is a controlled/composition clause and how does it affect mechanical royalties paid by a label?

• A. It eliminates mechanical royalties entirely.
• B. It increases the rate paid for songs written by the artist.
• C. It only applies to songs not written by the artist.
• D. It caps the statutory rate payable to artist for songs they wrote, often lower than standard statutory rate.

Answer: (D)

A controlled/composition clause limits how much mechanical royalty the label must pay for songs the artist writes that appear on the recording. It sets a cap and usually trims the rate used to calculate those royalties, so the artist receives a reduced portion on their own compositions compared to the standard rate. In practice, mechanical royalties are paid at the statutory rate for each copy sold or distributed. When a song on the album is written by the artist, the clause typically reduces that rate to a fraction of the statutory rate (often around 75% of the standard rate). So, for example, if the statutory rate is 9.1 cents per copy, the artist’s own songs on the album might receive about 6.8 cents per copy under the clause. Songs not written by the artist aren’t subject to this reduction and pay the full statutory rate (or the negotiated rate) instead. So, the clause doesn’t eliminate royalties or increase them; it caps and lowers the rate for the artist’s own compositions on the record.

A controlled/composition clause limits how much mechanical royalty the label must pay for songs the artist writes that appear on the recording. It sets a cap and usually trims the rate used to calculate those royalties, so the artist receives a reduced portion on their own compositions compared to the standard rate.

In practice, mechanical royalties are paid at the statutory rate for each copy sold or distributed. When a song on the album is written by the artist, the clause typically reduces that rate to a fraction of the statutory rate (often around 75% of the standard rate). So, for example, if the statutory rate is 9.1 cents per copy, the artist’s own songs on the album might receive about 6.8 cents per copy under the clause. Songs not written by the artist aren’t subject to this reduction and pay the full statutory rate (or the negotiated rate) instead.

So, the clause doesn’t eliminate royalties or increase them; it caps and lowers the rate for the artist’s own compositions on the record.