The agreement also sets out the financial terms under which the grantor will be compensated for the use of its assets. Finances generally take into account the market value for the licensed product, the cost of manufacturing the licensed product, and what the licensor could lose if it did not pursue any other use of its assets. A number of financial agreements can be concluded, but requiring a percentage of royalties on sales is a common practice. The contract may also require a minimum payment from the licensor. In other words, the licensee typically assumes a higher cost risk out of pocket in a license agreement, while the licensor often risks higher opportunity costs if the expected returns do not fail. Describe how the royalties work. What is paid and when? Will the property remain with the original owner for the duration of the license? What happens if the minimum turnover is not reached? Is there an advance on royalties? Companies that license music include almost everyone who uses music to improve their products (for example. B, the use of music in movies) or the business atmosphere (. B, playing music in restaurants).
Examples of licensees include television stations, cable channels, film studios, radio stations, airlines, concert halls and shopping malls. Royalties for playing copyrighted music – which include most of the recorded music currently on the market – vary depending on the size and type of installation. In general, the larger the company and the larger the audience, the higher the rate. Very small businesses, including restaurants under 3,750 square feet, are legally exempt from paying royalties. The controversial Music Licensing Fairness Act of 1998 fell to small businesses in this regard, reducing the number of companies subject to music licensing requirements. Exclusivity and territory. The licensee is granted the exclusive right to manufacture and sell the product in a specific territory. Licensor agrees not to allow anyone to sell the Product in this territory.
This part of the agreement is usually associated with a term. .