Sound carrier distribution agreement

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The sound carrier distribution contract is one of the most important business contracts in the audio industry, alongside the exclusive artist contract and the tape transfer contract. It regulates the conditions for the distribution, accounting and, in some cases, the publication of sound carriers .

Contract partner

Contractual partners are the sound carrier distribution and a record company or an artist. The sales department takes over the sound carriers to be distributed from its contractual partner or produces them on behalf of record companies / artists. In principle, the contractual partner for the sound carrier distribution must be in possession of the necessary exploitation rights, copyrights, ancillary copyrights and other rights to any trademarks of the sound carrier. Often the sales department cannot check these conditions in detail and then insists on a contractual indemnification from third party claims. Basically, every record company or artist should know the core competence of the chosen distribution. Many sales companies have specialized in certain types of music on which their promotional activities and also their sales contacts concentrate. For example, having a rock band's CD distributed by a specialist jazz distributor would be an inappropriate choice.

Contract area and publication

The contract area, d. H. the area in which the product is sold can be limited to one country (e.g. Germany) but also include a region (e.g. countries of the European Community). In any case, the distribution insists on the exclusivity of the product to be sold. This should mean that the contractual partner is prohibited from having the respective sound carrier distributed by other distributors within the contractual territory. An exception is direct sales at concerts by the artist. In principle, the record company or the artist should pay attention to whether the distribution contract only applies to a specific release or whether future releases of audio recordings are also subject to the exclusivity of the selected distribution. Publications from distributors are usually subject to fixed sampling cycles, e.g. B. quarterly. It is therefore advisable to provide the sales department with additional information material about the sound carrier / artist in good time. (see advertising and promotion).

compensation

The sales department pays the record company / artist a fee for sold sound carriers according to agreed tariffs. Particular attention must be paid to which billing date and which payment term is agreed. Distributors often create monthly sales lists, but only invoice them after the record company / artist has issued an invoice. The term of payment is often up to 90 days. Furthermore, distributors insist on being able to set up a provision for returns. According to the guiding principle of the right of return offered by many electronics stores for the end consumer, returned or exchanged sound carriers can be returned to the sales department. For this purpose, distributors set up a provision of 10–15 percent, which is deducted from the invoice amount.

Advertising and promotion

As a rule, the sales department will only advertise the sound carrier to a limited extent. This is mostly done through telephone marketing and press releases, which are passed on to the buyers in the electronics stores. The record company / artist take on the majority of the promotion of the sound carrier in public. They also provide the sales department with free sound carriers, promotional copies as well as press releases, images and current artist information free of charge. However, this does not release sales from the effective distribution of the sound carrier. Regular inquiries as to which dealers have ordered sound carriers from the sales company show the success of the product and at the same time depict the work of sales. The sales department is also obliged to keep accurate bookkeeping, which the contractual partner can inspect at any time.

Contract duration and termination

The term of a distribution contract should be medium-term, i. H. Do not fall short of two years in order to give advertising and promotional measures sufficient time to take effect. If the contract is terminated after this period, the sales department still has the right to return and restocking records that are already on the market.