Standard Contract
The Standard Contract is negotiated between BIEM and the International Federation of the Phonographic Industry (IFPI). It lays down the general terms and conditions under which record producers can use the repertoire of BIEM Member Societies on releases of audio-only recordings. The Standard Contract is implemented in one form or another in most countries – unless local laws or conditions dictate otherwise.
The Standard Contract effectively provides a licence for the reproduction of musical works and means that record producers benefit from a "one-stop shop" for clearing the mechanical rights for their releases.
It is essential to maximise efficiency gains in the administration of those rights for both rights owners and users.
- The royalty rate agreed between BIEM and IFPI for mechanical reproduction rights is 11% on the Published Price to Dealers (PPD - the highest price charged by a record producer to a retailer selling directly to consumers) and concerns physical audio products only.
- Two deductions are applied to the gross royalty rate: 12% for rebates and discounts and 10% for packaging costs. This results in an effective rate of 8.712% of PPD.
- Rates for audio-visual use of protected works are negotiated on a territory-by-territory basis, as rates for Internet and other usages.
- The Standard Contract provides for a minimum royalty equal to two-thirds of the normal royalty rate. There is also a provision for a minimum budget royalty equal to 57% of the normal minimum royalty and concerns only re-releases of carriers not less than one year after the original release, priced at least 35% below the original price.
The last amendment of the Standard Contract (No.8) came into effect on 1st January 2014.
The National Conditions applied by each BIEM society are detailed with the licensing conditions (see contract's comments).
- 1929 - BIEM is founded
- 1930 - First Standard Contract agreement with record producers
- 1933 - IFPI is created and will become the BIEM negotiating partner after WWII
- 1947 - First BIEM/IFPI Standard Contract is agreed upon
IFPI was created three years later. It became the negotiating partner of BIEM after the Second World War. The first BIEM/IFPI Standard Contract was agreed in 1947.
- To supply the producers with a non-exclusive licence and general access to the BIEM repertoire at the same royalty rate on an international level. The contract has always been a global agreement which the member societies of BIEM have the statutory obligation to apply in their respective territories, except in case of a legally binding obligation preventing the society from its application;
- The royalty is determined as a percentage of the price;
- The payment is made according to sales;
- Circulation of matrices is ruled and the SC provides the terms and conditions to be applied in cases of exports.
Obligations of the record producers
- The respect of the moral right and the integrity of the work;
- A permanent guarantee payment and of a monthly advance. Both provisions provide security for the societies against payment upon manufacture when accounted on a half-yearly basis.
Article V (3 to 6) and Article V (23) to (23ter) of the Standard Contract
|
Applied as of |
Basis rate |
Rebate on the PPD |
Packaging adjustment |
Net PPD Rate |
Net RRP Rate |
Introductory allowance |
|
|---|---|---|---|---|---|---|---|
| 1975 Contract | 01/01/1975 | 8% RRP* |
- |
2.5%, 4% or 6% (discs) or 17% tapes | - | - | |
|
Amend. No. 1 |
01/07/1980 | 8% most generally practised retail price** or RRP | 2.5%, 4% or 6% (discs) or 17% tapes | - | - | ||
|
Amend. No. 2 |
01/01/1985 | 11% highest PPD or 8% RRP | Locally negotiated | 10% (PPD) or 7.5% (Retail price) | - | - | |
|
Amend. No. 3 |
01/01/1988 | 11% highest PPD or 8% RRP | Locally negotiated (with a max of 4%) | 10% (PPD) or 7.5% (Retail price) | - | 7.4% | *** (CD) |
|
Amend. No. 3 |
01/07/1988 | 11% highest PPD or 8% RRP | 4% | 10% (PPD) or 7.5% (Retail price) | 9.504% | 7.4% | 20% (CD) |
|
Amend. No. 4 |
01/01/1989 | 11% highest PPD or 8% RRP | 4% | 10% (PPD) or 7.5% (Retail price) | 9.504% | 7.4% | 15% (CD) |
|
Amend. No. 5 |
01/01/1990 | 11% highest PPD or 8% RRP | 4% | 10% (PPD) or 7.5% (Retail price) | 9.504% | 7.4% | 10% (CD) |
|
Amend. No. 5 |
01/01/1991 | 11% highest PPD or 8% RRP | 4% | 10% (PPD) or 7.5% (Retail price) | 9.504% | 7.4% | - |
|
Amend. No. 6 |
01/10/1992 | 11% highest PPD or 8% RRP | 6% | 10% (PPD) or 7.5% (Retail price) | 9.306% | 7.4% |
25% |
|
Amend. No. 7 |
01/07/1997 | 11% highest PPD or 8% RRP | 9% | 10% (PPD) or 7.5% (Retail price) | 9.009% | 7.4% | 25% (DCC & MD) |
|
Amend. No. 8 |
01/01/2014 | 11% highest PPD or 8% RRP | 12% | 10% (PPD) or 7.5% (Retail price) | 8.712% | 7.4% |
25% |
* RRP = Recommended Retail Price
** Calculated as the highest wholesale price plus margin renegotiated nationally
*** For CD: Same royalty as for an equivalent vinyl carrier
| Applied as of | Minimum Royalty - Normal | Minimum Royalty - Budget* | |
|---|---|---|---|
| 1975 Contract | 01/01/1975 | 3/4 of the normal royalty | - |
| Amend. 1 | 01/07/1980 | 3/4 of the normal royalty | - |
| Amend. 2 | 01/01/1985 | 2/3 of the normal royalty | - |
| Amend. 3 | 01/01/1988 | 2/3 of the normal royalty | - |
| Amend. 3 | 01/07/1988 | 2/3 of the normal royalty | - |
| Amend. 4 | 01/01/1989 | 2/3 of the normal royalty | - |
| Amend. 5 | 01/01/1990 | 2/3 of the normal royalty | - |
| Amend. 5 | 01/01/1991 | 2/3 of the normal royalty | 70% of the normal minimum |
| Amend. 6 | 01/10/1992 | 2/3 of the normal royalty | 50% of the normal minimum |
| Amend. 7 | 01/07/1997 | 2/3 of the normal royalty | 50% of the normal minimum |
| Amend. 8 | 01/01/2014 | 2/3 of the normal royalty | 50% of the normal minimum |
*Minimum Budget is applicable to carriers re-released not less than 1 year after their original date of release and which are priced at 35% below the original price or less.
| Exports | Nature of the Importer | Price | Conditions |
|---|---|---|---|
| Exports to non-European countries (except the USA, and Canada) [*, **] | - | Country of destination | Country of destination |
| Exports from European non-EU countries to EU countries | not a licensee nor an affiliate | Country of destination | Country of destination |
| Exports from European non-EU countries to EU countries | a licensee or an affiliate | Country of destination | Country of destination |
| Shipments within the EU [***] | not a licensee nor an affiliate | Country of destination | Country of destination |
| Shipments within the EU [***] | a licensee or an affiliate | Country of destination | Country of destination |
| Exports to European countries (except shipments within the EU) | not a licensee nor an affiliate | Country of destination | Country of destination |
| Exports to European countries (except shipments within the EU) | a licensee or an affiliate | Country of destination | Country of destination |
[*] Nevertheless, the National Group of IFPI and the Society may agree to apply to such exports a royalty calculated and paid in accordance with the prices applicable and all the terms agreed in the country of origin.
[**] And countries where a statutory or compulsory rate applies.
[***] Shipments within the EU: the application of price and conditions in force in the country of destination is foreseen in the Reciprocal Representation Contract since 2007.