Analysis of the CD Baby Digital Distribution Agreement -Part II
By Suzette Becker, MusicDish.com

4. Payment.

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 rounding up.)

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.

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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 status.

6. Names and Likenesses; Promotional Use and Opportunities.

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 for purchase.

As to the rest, it is their business to sell downloads and they will promote the ones that will sell.

7. Ownership.

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 that nice.

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 probateSâ 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 Termination.

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 this Agreement.

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 as is.

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 HOLDER Content.

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 herein.

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, or representative.

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 issue.

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.

EXHIBIT A

Usage Rules

End users obtaining Digital Masters from Distributors may:

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 as QuickTime.

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 personal use

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.

Click Here for Part I

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