The Danger Of The Controlled Composition Clause
Although U.S. Copyright Law states that artists and their publishers are owed a statutory mechanical royalty rate of $.091 cents per song, many record labels use their position of power over new, inexperienced artists to persuade them to enter into contracts which reduce this minimum rate.
In a recent piece on MusicThinkTank, Wallace Collins cautions artists against the financial risks of entering into a contract containing the controlled composition clause provision which, in addition to reducing the statutory mechanical royalty rate which is paid to artists and publishers, also lowers the number of compositions off of which this reduced payment can be made, as well as fixing which point in time the calculation concerning this payment shall be done, thereby preventing any adjustments for things such cost of living.
"Assume a typical clause where the songwriter/artist will receive 3/4 of the minimum statutory mechanical rate (assuming the minimum rate is 6 cents per song at the time) on a maximum of 10 songs per LP. The mechanical royalty on the artist’s entire LP usually has a “cap” of 68.25 cents (3/4 of $.091x 10 songs) so that, even if the songwriter/artist writes 12 songs for its own album, the artist’s publishing is not worth $1.09 per album ($.091 x 12 songs) but only 68.25 cents."