Analysis of the CD Baby Digital Distribution
Agreement; Part II
By Suzette Becker, MusicDish.com
a. CD BABY shall pay RIGHTS HOLDER ninety-one
percent (91%) of the amount that CD BABY receives from Distributors
for the sale or other use of RIGHTS HOLDER's Digital Masters.
CD BABY will compute amounts payable to RIGHTS HOLDER after
the end of each calendar month during the Term, and will
provide a statement to Artist in accordance with CD Baby's
standard business practices. CD BABY shall make payment
to RIGHTS HOLDER only at such times that amounts owed to
RIGHTS HOLDER exceed the threshold amount set by RIGHTS
HOLDER upon registration with the CD BABY Site. Such payment
shall constitute full consideration for all rights granted
and obligations undertaken by RIGHTS HOLDER hereunder.
I like this split of 9% to CD Baby and 91% to
you, but be sure you understand that since this is a two deep
distribution, the first split will be between the one deep
distributor/retailer and CD Baby, then between CD Baby and
you. Here is just an example of how it might work: Download
sells for 99 cents. iTunes gives CDBaby 49 cents and keeps
50 cents for iTunes. CD Baby then splits the 49 cents as follows:
45 cents to you (assuming a rounding up) and 4 cents to CD
Baby or 44 cents to you and 5 cents to CD Baby (assuming no
b. Artist shall pay CD BABY a one-time, non-refundable
fee of $40.00 to cover the cost to convert the RIGHTS HOLDER
Content into Digital Masters and otherwise prepare the Digital
Masters for digital distribution.
CD Baby has to cover the labor encoding and other costs. No
refunds even if they don't choose, or iTunes or the other distributor/retailers
do not choose to offer your music. Again, it is a chance you
take. There are no guarantees in life.
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How many tracks does this $40 cover? I.E. Is
it the same price for one album as it is for two albums?
5. Parental Advisory.
If RIGHTS HOLDER provides a parental advisory
warning about a particular sound recording in the RIGHTS
HOLDER Content, CD BABY shall use or forward such parental
advisory information to Distributors. RIGHTS HOLDER shall
be responsible for determining parental advisory warning
6. Names and Likenesses; Promotional Use and
a. CD BABY may use and authorize its Distributors
to use the names and likenesses of, and biographical material
concerning, any Digital Master, artists, bands, producers
and/or songwriters, as well as track and/or album name,
and Artwork, in any marketing materials for the sale, promotion
and advertising of the applicable Digital Master which is
offered for sale or other use under the terms of this Agreement
(e.g., an artist or band name and likeness may be used in
an informational fashion, such as textual displays or other
informational passages, to identify and represent authorship,
production credits, and performances of the applicable artist
or band in connection with the authorized exploitation of
applicable Digital Masters).
No problem. Isn't this the point of distribution,
i.e. to get your name and music out there? So long as the
use is limited to being in connection with the Digital Master,
as it is. Same comment as before on the "or other use".
b. CD BABY and any of its Distributors shall
have the unrestricted right to market, promote and advertise
the Digital Masters available for purchase as it determines
in its discretion. Without limiting the foregoing, CD BABY
and any of its Distributors shall have the right to determine
which sound recordings, irrespective of any particular artist,
record company or label affiliation, would best further
their commercial purposes, and to promote such sound recordings
more than others.
Artist input would be nice at least as to the
suggestion of choice of Artist's tracks to be made available
As to the rest, it is their business to sell
downloads and they will promote the ones that will sell.
As between the Parties, all right, title and
interest in and to (i) the RIGHTS HOLDER Content, (ii) the
Digital Masters, (iii) the Clips, (iv) all copyrights and
equivalent rights embodied therein, and (v) all materials
furnished by RIGHTS HOLDER, except as to any rights of CD
BABY (whether pre-existing or under this Agreement), shall
remain the property of RIGHTS HOLDER, it being understood
that under no circumstances shall CD BABY have any lesser
rights than it would have as a member of the public.
I am not familiar with the necessity to mention
the member of the public's rights but regardless, as far as
you care, you are keeping your copyrights and master ownership
rights in everything as it should be. Further, this is interesting
because CD Baby seems to be implying that if the agreement
is terminated, you get to keep your digital master files and
clips that were encoded by CD Baby. Sure you paid to encode
them but they don't HAVE to be that nice, they just are being
I do not see any "grab" by CD Baby of the publishing
as Moses Supposes. I am having a hard time seeing any ambiguity
in this paragraph at all so as to provide food for Moses'
speculation. And as far as rights potentially falling into
probateS what could he be referring to? Probate is the opening
of a deceased person's property estate and has nothing to
do with Moses' fear that iTunes and CD Baby might find themselves
in an acrimonious position. Even if a corporation were subject
to probate, which it is not, (dissolution is another matter)
this contract is subject to termination by you.
8. Modification, Termination and Effect of
a. CD BABY reserves the right, in its sole
discretion, to change, modify, add or remove all or part
of this Agreement. Notice of any amendments and/or modifications
shall be sent to you by email prior to their effective date.
In the event that you do not consent to any such amendments
and/or modifications, your sole recourse shall be to terminate
b. Either party shall have the right to terminate
this Agreement prior to the expiration of the Term in the
event that the other party breaches any material representation,
obligation or covenant contained herein, unless such breach
is cured prospectively, no later than thirty (30) days from
the date of receipt of written notice of such breach, or
if not able to be so cured, then resolved to the other party's
satisfaction, not to be unreasonably withheld.
. Sections 1, 3, 7, 8, 9, 10 and 11 shall
remain in full force and effect following the expiration
or earlier termination of this Agreement. The expiration
or earlier termination of this Agreement shall not relieve
RIGHTS HOLDER or CD BABY of their respective obligations
to make any payments with respect to the sale or other use
of Digital Masters in the periods prior to such expiration
or termination (and the associated accounting) in accordance
with this Agreement.
We already addressed why CD Baby needs flexibility
whether you like it or not. I would really like to see this
termination procedure featured more prominently so there will
be no confusion. While certain sections do remain in force,
such as warranties and obligations to pay you, etc. after
termination, as you should expect, the right of CD Baby to
continue to digital distribute your music does end upon termination,
as you should expect.
9. Indemnification and Limitation of Liability.
a. RIGHTS HOLDER will indemnify and hold harmless,
and upon CD BABY's request, defend, CD BABY and its Distributors
and affiliates (and their respective directors, officers
and employees) from and against any and all losses, liabilities,
damages, costs or expenses (including reasonable attorneys'
fees and costs) arising out of a claim by a third party
by reason of: (i) a breach of any warranty, representation,
covenant or obligation of RIGHTS HOLDER under this Agreement;
or (ii) any claim that any Digital Master, sound recording
or RIGHTS HOLDER Content, Artwork, metadata or any other
materials provided or authorized by or on behalf of RIGHTS
HOLDER hereunder or CD BABY's or its Distributors" use thereof
violates or infringes the rights of another party.
RIGHTS HOLDER will reimburse CD BABY and its
Distributors and affiliates on demand for any actual payments
made in resolution of any liability or claim that is subject
to indemnification under this Section 9, provided that CD
BABY obtains RIGHTS HOLDER's written consent prior to making
such payments, such consent not to be unreasonably withheld,
delayed or conditioned. CD BABY shall promptly notify RIGHTS
HOLDER of any such claim, and RIGHTS HOLDER may assume control
of the defense of such claim. CD BABY shall have the right,
at its expense, to participate in the defense thereof under
RIGHTS HOLDER's direction.
Again, it is of the utmost importance that you
have secured proper licenses. Don't fool around with this.
Copyright infringement is a serious matter. You want to be
credited and paid for your work otherwise you would not be
signing up for digital distribution so do accord the same
courtesies to others.
Making these provisions mutual is always better,
but it won't happen here because this is non-negotiable via
a click. Maybe CD Baby will consider changing it.
b. EXCEPT PURSUANT TO AN EXPRESS INDEMNITY
OBLIGATION, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO
THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL
OR SPECIAL DAMAGES, INCLUDING LOSS OF PROFITS OR PUNITIVE
DAMAGES, EVEN IF ADVISED OF THEIR POSSIBILITY.
That first phrase "Except pursuant to an express
indemnity obligation" should be deleted, so long as 9a. remains
10. Additional Representations and Warranties
of the Parties.
a. RIGHTS HOLDER represents and warrants that
it has the full authority to act on behalf of any and all
owners of any right, title and interest in and to the RIGHTS
b. Each party represents and warrants that
it has full authority to enter into this Agreement and to
fully perform its obligations hereunder and has obtained
all necessary third-party consents, licenses and permissions
necessary to enter into and fully perform its obligations
c. Each party represents and warrants that
it owns or controls the necessary rights in order to make
the grant of rights, licenses and permissions herein, and
that the exercise of such rights, licenses and permissions
by the other party hereto shall not violate or infringe
the rights of any third party.
d. Each party represents and warrants that
it shall not act in any manner which conflicts or interferes
with any existing commitment or obligation of such party,
and that no agreement previously entered into by such party
will interfere with such party's performance of its obligations
under this Agreement.
e. Each party represents and warrants that
it shall perform in compliance with any applicable laws,
rules and regulations of any governmental authority.
A lot of this is redundant but that is just
a matter of repetitive, rather than concise contract drafting.
As far as you are concerned, if you are not breaching another
agreement by entering into this one and if you have the RIGHTS
CLEARED and did not steal the masters, you can pretty much
have a clear conscience!
11. General Provisions.
a. No Agency or Joint Venture. The parties
agree and acknowledge that the relationship between the
parties is that of independent contractors. This Agreement
shall not be deemed to create a partnership or joint venture,
and neither party is the other's agent, partner, employee,
b. Entire Agreement, Modification, Waiver.
This Agreement, including any annexes, schedules and exhibits
hereto, contains the entire understanding of the parties
relating to the subject matter hereof, and supersedes all
previous agreements or arrangements between the parties
relating to the subject matter hereof. This Agreement cannot
be changed or modified except by a writing signed by the
parties. A waiver by either party of any term or condition
of this Agreement in any instance shall not be deemed or
construed as a waiver of such term or condition for the
future, or of any subsequent breach thereof. If any provision
of this Agreement is determined by a court of competent
jurisdiction to be unenforceable, such determination shall
not affect any other provision hereof, and the unenforceable
provision shall be replaced by an enforceable provision
that most closely meets the commercial intent of the parties.
The signed writing is not going to happen by
email, unless everyone is using digital signatures, but this
is just inapplicable boilerplate ballast and a contract drafting
b. Binding on Successors. This Agreement shall
be binding on the assigns, heirs, executors, personal representatives,
administrators, and successors (whether through merger,
operation of law, or otherwise) of the parties.
a. Notices. Any notice, approval, request,
authorization, direction or other communication under this
Agreement shall be given in writing and shall be deemed
to have been delivered and given for all purposes: (i) on
the delivery date if sent by electronic mail to the addresses
provided to and by RIGHTS HOLDER upon registration with
the CD Baby Site, or as properly updated.
b. Governing Law. This Agreement shall be
governed and interpreted in accordance with the internal
laws of the State of California applicable to agreements
entered into and wholly to be performed therein, without
regard to principles of conflict of laws.
c. Remedies. To the extent permitted by applicable
law, the rights and remedies of the parties provided under
this Agreement are cumulative and in addition to any other
rights and remedies of the parties at law or equity.
d. Headings. The titles used in this Agreement
are for convenience only and are not to be considered in
construing or interpreting the Agreement.
e. No Third-Party Beneficiaries. This Agreement
is for the sole benefit of the parties hereto and their
authorized successors and permitted assigns. Nothing herein,
express or implied, is intended to or shall confer upon
any person or entity, other than the parties hereto and
their authorized successors and permitted assigns, any legal
or equitable right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
f. Force Majeure. For the purposes of this
Agreement, "Force Majeure" shall mean any event which a
party hereto could not foresee, such as fire, flood, acts
of God or public enemy, Internet failures, earthquakes,
governmental or court order, national emergency, strikes
or labor disputes, the effect of which it could not reasonably
prevent or predict and which renders impossible or impractical
the performance of contractual obligations either totally
or in part. The party invoking a Force Majeure shall notify
the other party within three (3) business days of its occurrence
by accurately describing all the circumstances of the situation
involved and its effect upon the performance of its contractual
obligations. The taking place of a Force Majeure shall have
the effect of suspending the obligations of the party which
has invoked the provisions of this Section to the extent
such obligations are affected by the Force Majeure. Contractual
dates shall be extended for a period equal to the duration
of a Force Majeure. The cessation of a Force Majeure shall
be communicated by notice within three (3) business days
of its occurrence by the party that invoked it.
End users obtaining Digital Masters from Distributors
1. Burn single-track Digital Masters an unlimited
number of times to a CD as part of a playlist.
2. Use Digital Masters in applications such
3. Store Digital Masters on up to five (5)
computers at the same time.
4. Subject to Paragraph 3 above, transfer
Digital Masters to, and/or render from, a device.
5. Use Digital Masters solely for end user's
FOR REFERENCE ONLY
This is a printable copy of our contract for
reference only. This is not a binding agreement until you
log in to your CD Baby Members login area at https://members.cdbaby.com
with your username and password, then follow the prompts
for Digital Distribution to agree to this Agreement, and
then pay the setup fee to start.
by the MusicDish
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It 2003 - Republished with Permission