> ## Documentation Index
> Fetch the complete documentation index at: https://docs.royaltyport.com/llms.txt
> Use this file to discover all available pages before exploring further.
# Royalties
> Extraction of royalty rates, calculation bases, and exceptions
Structured data fields are by definition an abstraction of legal language. When in doubt, use [citations](/projects/contracts/contract-details/citations), the [AI chat](/projects/ai-chat), and the actual contract text to validate the structured data against your own interpretation.
## Overview
The Royalties extraction captures the complete royalty structure from the contract, including calculation bases, base rates, modifiers, and exceptions.
## What Gets Extracted
### Calculation Bases
The foundation for royalty calculations:
| Type | Description |
| ----------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |
| At Source | Revenue at the point of collection |
| Gross Receipts | Total revenue before deductions |
| Net Receipts | Revenue after specified deductions |
| PPD | Published Price to Dealer |
| Retail Price | Consumer purchase price |
| Unit Rate | Fixed amount per unit |
| Writer/Publisher/Artist Share | Percentage of specific share |
| Label Share | The label's defined allocation from a collecting society distribution (e.g., neighbouring rights via SoundExchange, PPL, VPL, SENA, GVL). Used when the contract references the "label share" directly as the base, without a further revenue pool underneath. Contracts that say "Label's Net Receipts" or "income received by the Label" use **Net Receipts** instead. |
| List Price | Published list price as defined in the contract |
| Net Profits | Revenue remaining after all agreed deductions |
Each calculation base includes:
* **Type**: Category of calculation base
* **Definitions**: How the contract defines this base. A base can hold more than one definition when the same named term is defined differently under different conditions — for example, a "net receipts" base that is calculated one way for licensed uses below a fee threshold and another way above it. Each definition has an optional **condition** (when it applies) and a **formula** (how it's calculated). Definitions carry their own [citations](/projects/contracts/contract-details/citations): when a definition is backed by source text, a citation indicator appears next to it in the royalties tree, and you can hover it to see the underlying contract language.
* **Derived From** *(optional)*: For share-type bases (Artist Share, Label Share, Publisher Share, Writer Share), the parent base this share is calculated from — letting you express, for example, that an "artist share" is derived from "net receipts". When set, the royalties tree shows a "derived from" label on the base so the relationship is visible at a glance.
A single definition with no condition is the common case. Use multiple conditional definitions only when the contract genuinely defines the same base term differently depending on the scenario.
### Base Rates
Primary royalty percentages:
| Field | Description |
| ---------------- | ------------------------------------------------------------------------------------------------------------------------------ |
| Rate | Percentage (e.g., "15%") |
| Description | What the rate applies to |
| Selection | Conditions when this rate applies |
| Calculation Base | Which base this rate uses |
| Condition | Free-text condition that gates when the rate fires — fee thresholds, territory, milestones, recoupment status, etc. (optional) |
| Recipient | The party receiving payment under this rate (defaults to the assignor) |
### Modifiers
Adjustments to base rates under specific conditions:
| Field | Description |
| -------------- | ------------------------------------- |
| Rate | Adjustment value (e.g., "+5%", "-2%") |
| Description | What triggers this modifier |
| Applies To | Which base rates are affected |
| Effective Rate | Calculated result (base + modifier) |
Modifiers can be nested infinitely.
### Exceptions
Scenarios when no royalties are due:
| Field | Description |
| ----------- | ---------------------------------- |
| Title | Exception name |
| Description | When and why royalties don't apply |
## How They Relate
Royalties are displayed as a tree structure. Each level narrows the scope and adjusts the rate:
```
Calculation Base: Net Receipts
│ "All revenue received, less distribution fees and taxes"
│
├── Base Rate: 18%
│ "All digital exploitation"
│ Effective rate: 18% of Net Receipts
│ │
│ ├── Modifier: 75%
│ │ "Streaming revenue"
│ │ Effective rate: 13.5% of Net Receipts (18% × 75%)
│ │ │
│ │ └── Modifier: 50%
│ │ "Streaming in territories outside North America"
│ │ Effective rate: 6.75% of Net Receipts (13.5% × 50%)
│ │
│ └── Modifier: -3%
│ "Download sales"
│ Effective rate: 15% of Net Receipts (18% - 3%)
│
├── Base Rate: 14%
│ "Physical exploitation"
│ Effective rate: 14% of Net Receipts
│
└── Exception: "No royalties on promotional copies"
"Free goods and promotional units up to 15% of shipment"
```
### Effective Rates
At every level of the tree, Royaltyport calculates and displays the **effective rate** -- the actual royalty percentage that applies after all parent modifiers have been taken into account.
This matters because contracts often express royalty structures as a base rate with a chain of conditional modifiers. The effective rate resolves that chain into a single number so you can immediately see what the real rate is for a given scenario, without having to manually calculate through the levels.
| Level | Rate | Effective Rate | How It's Calculated |
| ----------------------- | ---- | -------------- | ------------------- |
| Base Rate | 18% | 18% | The starting rate |
| Modifier (proportional) | 75% | 13.5% | 18% × 75% = 13.5% |
| Modifier (nested) | 50% | 6.75% | 13.5% × 50% = 6.75% |
| Modifier (additive) | -3% | 15% | 18% - 3% = 15% |
Modifiers can be either **proportional** (a percentage of the parent rate) or **additive** (added to or subtracted from the parent rate), and they can nest multiple levels deep. The effective rate at each level always reflects the cumulative result.
These effective rates represent the entire assignor side of the agreement. If the assignor's share is further divided between multiple parties (e.g., between co-writers or co-artists), that breakdown is handled in the [Splits](/projects/contracts/contract-details/structured-data/splits) section. If this agreement is part of a larger group of agreements that collectively determine the final effective rate, that consolidation is calculated at the [IP Group](/projects/contracts/contract-details/ip-groups) level.
## Recipients
Every rate has a **recipient** — the party that receives payment under it. The recipient defaults to the **Assignor** (the person whose contract is being read), but it can be any named party, such as a featured artist, a producer, or a foundation.
When a contract defines rates for more than one recipient, the rates are organised into one tab per recipient, so you can see each party's royalty structure separately. Contracts with a single recipient show no tabs.
For example, a producer agreement might surface an **Assignor** tab (the producer's own rate) alongside an **Artist** tab (the main artist's rate that the producer's royalty is derived from).
Royalty data created before recipients were introduced is migrated automatically: rates that were previously marked as third-party appear under a **Third Party** tab, and everything else under **Assignor**.
## Editing Royalties
Click the edit icon to:
* Add or modify rates
* Create new calculation bases, including multiple **conditional definitions** (each with its own condition and formula) and, for share-type bases, a **Derived From** parent base
* Edit an **existing** calculation base in place: when you select a base for a rate, its current definitions and **Derived From** parent are loaded into the editor so you can correct the formulas, conditions, or parent relationship without rebuilding the base from scratch
* Add modifiers and exceptions
* Correct rate values or descriptions
* Set a **Recipient** — the party that receives payment under the rate. Leave it as the default (**Assignor**) for rates payable directly to the contract's primary party, or name another party (e.g. an artist, producer, or foundation) when the rate defines that party's compensation. This is useful when a rate exists as a **reference point** for calculating the assignor's effective royalty — for example, in a producer agreement the main artist's rate ("Artist receives 18% of Net Receipts") can be recorded against the *Artist* recipient so the producer's royalty can be derived from it.
* Set a **Condition** — free text describing when the rate applies (e.g. "after recoupment", "for sales in the UK")
* Note: you never edit effective rates, these are calculated values
To update an existing rate or exception, click the pencil icon next to it. The wizard opens pre-filled with the current values so you can adjust the rate, calculation base, modifiers, or description without removing and re-adding the entry.
## See Also
View simplified royalty rates categorized by rights type (master/publishing) and revenue category. Optimized for filtering, exports, and comparisons across contracts.