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A 4% royalty on sales value for a 5-year period of the license, together with a lump-sum payment of $32000 (risk-free income) on execution of the license is then the 'asking price' in the example. The TTF of this projection is 2.6, implying that for every dollar of royalty paid, the OP to the licensee enterprise is multiplied by this factor.
A royalty payment is a payment made by one party to another that owns a particular asset, for the right to ongoing use of that asset. Royalties are typically agreed upon as a percentage of gross or net revenues derived from the use of an asset or a fixed price per unit sold of an item of such, but there are also other modes and metrics of compensation.
The companies license public performance on a nonexclusive basis of the music they own or hold under contract using a complex weighting formula to distribute the fees to the respective rights holders. [4] The license may be a blanket license, but individual licenses may be negotiated.
] The minimum annual royalty is $10,000, which, in the first year, excludes the initial fee. Per-channel license fees fall from $0.99 to $0.50 with volume, up to a maximum of $2 million annually. Per-channel license fees fall from $0.99 to $0.50 with volume, up to a maximum of $2 million annually.
It collects blanket license fees from businesses that use music, entitling those businesses to play or sync any songs from BMI's repertoire of over 22.4 million musical works. [2] On a quarterly basis, BMI distributes the money to songwriters, composers, and music publishers as royalties to those members whose works have been performed.
Another point of negotiation is whether the sync license constitutes a "buyout" (i.e. whether or not the entity that will ultimately broadcast the production will be required to pay "backend" (performance royalty) fees). [5] Sync licensing fees can range anywhere from free, to a few hundred dollars, to millions of dollars for popular recordings ...
There is a minimum annual fee of $500 per channel or station, payable in advance, against the above per-play fees. For example, under the 2007 rate, 100 unique listeners of a transmission of a sound recording will cost the transmitter eleven cents.
Licensing costs also vary, based on the number of listeners that a station has, as well as other factors such as the number of songs played, the number of broadcast hours, and whether tracks are dubbed to a digital playout system. [citation needed] Licensing fees for Internet radio have often been the subject of controversy.