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Royalty Agreement

Royalty agreements are valuable contracts to ensure that your models, talent, and venues are compensated, especially hard-working or high-quality talent and locations. In the professional photography industry, royalties are expected from higher-level professionals, or otherwise, very high fees may be demanded in return for the photography rights.

Photography is a type of intellectual property that can be bought and sold, and the rights are no exception. They can be split up into many different categories, and many incentives can be created or manipulated by using royalty agreements. Royalties are the amount of money paid to the models or venues with rights to their “likeness.” By mastering royalties, photographers can increase their profits and gain entry to more professional talent and work.

You’ll need to do all of the proper research and homework first, but this template will give you a head-start and a useful framework. You should always consult a lawyer, though, before finalizing any contracts.

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A royalty agreement is a type of contract used by a person who owns certain copyrighted works to permit somebody else to profit from their copyrighted works. Royalties make sense in certain situations, such as when the copyrighted works are created using somebody else's help.

The person who owns the copyrighted works is called the Grantor. The person who pays the money is called the Grantee. This amount of money can be given for each unit of sold copyrighted works, or it can be set to a percentage of the profits. It can also be part of a single payment or some combination of all of these elements.

For this reason, royalty agreements can be very versatile. They can create incentives for many different people who are involved in the process of selling this intellectual property. Intellectual property royalties can apply to a patent, a musical work created by a musician, a trademark, photography, and many more things.

When a person markets intellectual works, it's more common to use a licensing agreement to sell part of the copyright or license in exchange for some financial means. Licensors can arrange similar structures with licensing agreements: percentage of profits, payment per unit sold, or lump sum. But when a business owns the intellectual works, it's much more common for a royalty agreement to be used.

Businesses can be more efficient when licensing intellectual property works such as music because they can get investments and use that money to market, distribute, and reach a large audience. When a business is used, often the company is not the original owner of the intellectual works. Another business owns the intellectual rights to photography, music, or patents and grants royalties to the Grantee.

The promotional business often makes the majority of the investment into distribution and reaches a larger audience. The promotional company gets the larger share of profits of the sale of the work. When a record label sells their album, musical artists don't get the entire cost of the album deposited into their bank account. A large percentage goes to the record label to help pay for the costs of distribution, marketing, and even recording the record.

Although the artists own the original intellectual property rights or frequently the artists holding company, the company pays the royalties that collect money from the customers to the artist.

Because the royalty agreement is a legal contract, it must include the standard clauses for every legal arrangement, including the parties, consideration, acts, and execution. It's also helpful to include several other clauses, such as exclusivity, licensing causes, term, assignment, re-licensing, and fee structures.

Exclusivity allows the Grantor to restrict the intellectual property elements’ ability to be used by the Grantee. This can be more valuable for the Grantee in the case where the Grantee has exclusivity. It means that a particular distribution company is the only distribution company allowed to distribute the specific works. This decreases competition and allows this distribution company to charge higher prices. With such higher prices, if royalties are charged by commission or percentage basis, more royalties will be paid out per units sold.

For non-exclusive cases, royalties may be paid by multiple distribution companies. However, such distribution companies might compete with each other and have access to the same markets. In such cases, the grantor may not make significantly more money from royalties. Grantors should pay attention to each distribution company’s geographical market access and only offer exclusivity where competition might be advantageous.

Exclusivity also might pertain to the owner of the intellectual property themselves. Suppose the intellectual property owners intend to sell or distribute the intellectual property products. In that case, they may not want to sign an exclusivity clause, which effectively means that they cannot sell their intellectual property products to anyone else.

Exclusivity often has a term limit. It doesn't last forever. The expiration can also be a way to increase or decrease the value of the royalty agreement. By including a term expiration that is far in the future, royalty agreements have more weight towards the Grantee. As The Grantor, it's your responsibility to tweak the deal to make it fair and advantageous to yourself or your business, and the term limit is the right way for you to do that.

Each contract like this needs to include an execution clause. Each execution clause needs to have the applicable laws or governing law for the locality. Intellectual property laws are also included in the code of federal regulations, state ordinances, and codes, and city and county laws. You'll need to consult a lawyer and look over all relevant records for rules in your area.

Because royalties are essentially payments for intangible use of your intellectual property as a Grantor, one of the most important sections is the section called consideration. Consideration is just a word for the payments were compensations that you might receive. You need to describe considerations and payment terms as precisely as possible not to cause disputes later on.

Our templates include dispute resolution clauses and standard clauses, which might reduce the risk for you and the other parties. You can choose which clauses to leave in your contract or not, and easily edit you're royalty agreement with Kdan PDF Reader.

If you have received or desire to issue any legal document, you must consult a lawyer. Kdan Mobile provides this template for educational purposes only, and you are always responsible for the creation of any legal agreements you sign. By clicking "download," you agree to indemnify and hold harmless and inure Kdan Mobile for any damages incurred due to the use of the said template for commercial purposes.

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