Glossary · Economics

Breakage

also filed under: unattributed income, digital breakage

Breakage is money a label receives from a digital service that is not attributable to any specific artist's usage, such as advances, minimum guarantees and equity.

The mechanism

Platform deals often include payments that do not correspond to plays: an upfront advance against future royalties, a guaranteed minimum whether or not usage justifies it, or shares in the service itself. Because these are not tied to any particular recording, there is no automatic mechanism that routes a portion to the artists whose catalogue made the deal worth doing.

A worked example

A service pays a large minimum guarantee for catalogue access. Usage in the period falls short of that minimum. The surplus arrives at the label with no per-track attribution attached to it.
Money the platform paid for your catalogue that your catalogue cannot claim.

What it is confused with

Why it matters

Whether an artist sees any of it depends entirely on a contract clause, and most agreements are silent, which resolves in favour of the party holding the money.

Sources: US Copyright Office
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Related: Recoupment · Black box royalties · 360 deal