This Agreement is made and entered into as of the date you sign below (the "Effective Date"), by and between Arson Theory Inc., a Delaware corporation with a principal address at 626 Wilshire Blvd, Suite 410, Los Angeles, CA 90017 ("Arson"), and the undersigned party ("Client"). This Agreement, which is subject to the Standard Terms & Conditions below (Exhibit A) and incorporated herein by reference, confirms the terms on which Arson will act as Client's exclusive partner for the services described herein.
Scope of Services
This Agreement shall govern the provision by Arson of Digital Distribution, Rights Management, and Publishing Administration (collectively, the "Services"). All Services are made available to Client by default upon execution of this Agreement and through Client's access to the Arson Theory Portal.
Grant of Rights
For each Service so engaged, Client hereby grants to Arson the exclusive, worldwide ("Territory") right and license to perform said Service for all applicable Recordings and/or Compositions. Client shall retain full ownership of Client's share of the Recordings and underlying Compositions delivered hereunder.
Revenue Split
You receive 70% of all Net Revenue collected from the Services. Arson retains 30%.
Term
Two (2) years for all Services, auto-renewing for two (2) year periods (the "Term"). Terminable by either party with ninety (90) days' written Notice prior to the end of any term.
Sync Licensing
You grant Arson the non-exclusive right to pitch your Recordings for synchronization opportunities (film, TV, games, ads). Arson shall retain 30% of Net Revenue from any sync license issued or administered by Arson. No license will be granted without your prior approval, deemed granted if you do not object in writing within five (5) business days of Notice, or a shorter specified deadline for urgent requests.
Accounting & Payments
Digital Distribution & Rights Management: Earnings accounted and paid monthly, on or around the 15th of each month, for the preceding month's activity.
Publishing Administration: Earnings accounted for and paid quarterly, per our standard publishing cycle.
Payments: All payments made directly via the Arson Theory Portal. A minimum payout threshold of $35 applies; balances below this roll over to the next payment period.
Delivery
Client shall provide final, mastered audio files, artwork, and all necessary Metadata for all Recordings and Compositions via the Arson Theory Portal.
Dispute Resolution
Any disputes shall be resolved pursuant to the Resolution Framework (defined in the Definitions Glossary below).
Definitions Glossary
Arson Theory Portal: Arson's proprietary online dashboard and content management system where Client can deliver Recordings and Metadata, access royalty statements, and manage payment information.
CMOs: Collective Management Organizations, foreign rights societies that often manage and distribute both performance and mechanical royalties (e.g., GEMA in Germany, SACEM in France).
Compositions: The underlying musical works (music and lyrics) embodied in the Recordings.
Digital Distribution: Delivery and making available of Recordings for all forms of digital exploitation (permanent downloads, tethered downloads, interactive and non-interactive streaming, and monetization) on any and all DSPs now known or hereafter developed.
DSPs: Digital Service Providers, including Spotify, Apple Music, Amazon Music, YouTube, TikTok, and Pandora.
Metadata: All descriptive and identifying information for Recordings and Compositions: artist name, song title, album title, genre, writer and publisher names and ownership splits, ISRC, and ISWC. Client is solely responsible for accuracy.
MROs: Mechanical Rights Organizations that collect and distribute mechanical royalties (e.g., The MLC in the U.S.).
Neighboring Rights: Public performance royalties earned by the master sound recording, as distinct from the composition, paid to the master owner and featured performers when the recording is publicly broadcast or streamed (e.g., satellite radio, international radio and TV). Primarily collected by SoundExchange in the U.S. for digital performances.
Net Revenue: All income actually received by or credited to Arson on Client's behalf directly attributable to exploitation of the Recordings or Compositions, calculated "at source," less only direct, third-party costs, which may include: fees or commissions deducted by DSPs, collection societies, or any third-party sync agent or licensing representative, required tax withholdings, and bank charges.
PROs: Performing Rights Organizations that collect and distribute performance royalties (e.g., ASCAP, BMI, and SESAC in the U.S.).
Publishing Administration: Worldwide administration of Compositions: registering works with global collection societies (PROs, MROs, CMOs), issuing licenses, and collecting all publishing royalties on behalf of the songwriter(s).
Recordings: Fully mixed and mastered sound recordings, including accompanying artwork, delivered by Client to Arson for Digital Distribution.
Resolution Framework: Good faith discussion for thirty (30) days following written notice. If unresolved, final and binding arbitration administered by JAMS in Los Angeles, CA. The prevailing party shall be entitled to recover reasonable attorney's fees and costs.
Rights Management: Administration and collection of revenue for Recordings from specific sources, including YouTube Content ID, Meta (Facebook/Instagram) Rights Management, and master recording performance royalties including Neighboring Rights.
Exhibit A: Standard Terms & Conditions
These Standard Terms & Conditions are attached to and incorporated by reference into the Client Services Agreement (the "Agreement") between Arson Theory Inc. ("Arson") and the undersigned Client.
Warranties and Indemnification. Client warrants and represents that: (i) Client has the full right, power, and authority to enter into this Agreement and to grant all rights granted herein; (ii) Client has secured all necessary rights, licenses, and permissions in the Recordings and Compositions to allow Arson to perform the Services without infringing on the rights of any third party; and (iii) all Metadata provided by Client is accurate. Client agrees to defend, indemnify, and hold Arson harmless from any third-party claims, liabilities, or expenses (including reasonable attorney's fees) arising from a breach of these warranties. Arson warrants and represents that it has the full right, power, and authority to enter into this Agreement and will perform its services in a professional manner, and agrees to indemnify and hold Client harmless from any third-party claims or damages (including reasonable attorney's fees) arising from a breach of its warranties.
Verification and Takedown of Content. Arson shall have the right, upon reasonable notice, to request documentation from Client to verify Client's rights in the Recordings and Compositions. Client's failure to provide satisfactory documentation in a timely manner may result in Arson pausing services, taking down the applicable content, and withholding related royalties until such documentation is provided. Arson shall have the right, in its sole discretion, to refuse to distribute or to take down any content that it reasonably believes: (a) is infringing, obscene, defamatory, or otherwise objectionable; (b) is the subject of a third-party claim; or (c) was created or promoted using fraudulent means, such as artificial streaming or view manipulation. In the event of such activity, Arson shall have the right to withhold and retain any Net Revenue generated from such content and to terminate the Agreement immediately. Client consents to Arson cooperating with any DSP investigation into such activity. During the Term, any Post-Term License Period, and any Advance License Term, Client shall not, and shall not authorize any third party to, re-record, re-distribute, re-release, re-deliver, transfer, remove, or take down any Recording or Composition licensed hereunder.
Audit Rights. Client shall have the right, once per year upon at least thirty (30) days' written notice, to have an independent certified public accountant audit Arson's books and records relating to this Agreement at Client's sole expense. If such an audit reveals an underpayment of more than ten percent (10%) of the total amount owed for the audited period, Arson shall reimburse Client for the reasonable costs of the audit.
License Term for Recordings and Compositions. The license granted to Arson under the Grant of Rights section for each Recording and Composition delivered hereunder shall run for the Term, including all renewals. Upon expiration of the Term, the license for each Recording and Composition delivered during the Term shall continue for one (1) year and automatically renew for successive one (1) year periods (the "Post-Term License Period") unless either party gives written Notice at least ninety (90) days prior to the end of the then-current period. Recordings and Compositions covered by an Advance shall be governed by the Advance License Term set forth below. The foregoing is in addition to (and shall not limit) the post-termination collection rights set forth below.
Advances. Arson may, at its sole discretion, offer Client funding (an "Advance"). The type, amount, and use of each Advance shall be set forth in a written addendum signed by both parties.
Recoupment. Upon Client's written acceptance of an Advance, and notwithstanding the Revenue Split otherwise set forth in this Agreement, the division of Net Revenue shall automatically adjust such that Net Revenue is divided fifty percent (50%) to Client and fifty percent (50%) to Arson for so long as any Advance remains unrecouped (the "Recoupment Period"). During the Recoupment Period, Arson shall recoup one hundred percent (100%) of the Advance by crediting Client's fifty percent (50%) share of Net Revenue against the outstanding Advance balance until full recoupment. Upon full recoupment of the Advance, the division of Net Revenue shall automatically revert to the standard split of seventy percent (70%) to Client and thirty percent (30%) to Arson. Advances are recoupable only from Client's share of Net Revenue and are not personally recoverable from Client absent material breach.
Advance License Term. Acceptance of an Advance converts Client's grant of rights under Section 2 (Grant of Rights) for the Recordings and Compositions covered by that Advance to an exclusive license to Arson that continues until the Advance is fully recouped and for three (3) years thereafter (the "Advance License Term"), notwithstanding any shorter term otherwise set forth in this Agreement, and survives any termination of this Agreement. The Advance License Term then auto-renews for three (3) year periods unless Client gives written Notice at least ninety (90) days prior to the end of the then-current period. No such Notice shall take effect while any Advance remains unrecouped. Where Client accepts multiple Advances, each triggers its own Advance License Term; the longest then-running term controls.
Buyout. At the end of any two (2) year term in which an Advance remains unrecouped, Client may elect, by written Notice at least ninety (90) days prior to the end of that term, to pay Arson one hundred twenty percent (120%) of the unrecouped balance. Upon payment in full, the Advance is deemed fully recouped and the three (3) year period of the Advance License Term begins.
First Negotiation and Matching Right. During the Term and for twelve (12) months after it ends, before Client negotiates or enters into any exclusive recording, label, or distribution agreement with a third party, Client shall first negotiate exclusively and in good faith with Arson for thirty (30) days. If no agreement is reached, Client may negotiate with third parties, but before accepting any third-party offer Client shall give Arson its material terms in writing, and Arson shall have thirty (30) days to match. If Arson matches, Client shall enter into that agreement with Arson.
Post-Termination Collection. Following the end of the Term, any Post-Term License Period, and any Advance License Term (as applicable to each Recording and Composition), Arson shall have the right to collect all income earned by the Recordings and Compositions during those periods as follows. Digital Distribution & Rights Management: a collection period extending until Arson has received final payment from all third-party platforms for all exploitations of the Recordings authorized during the Term. Publishing Administration: twelve (12) months in the United States and eighteen (18) months in all other territories following the effective date of termination.
Limitation of Liability. In no event shall Arson be liable for any indirect, incidental, or consequential damages, including lost profits. Arson's total liability to Client under this Agreement for any and all claims shall be limited to the amount of Net Revenue paid by Arson to Client during the twelve (12) month period preceding the claim.
Notices. All formal notices ("Notice") hereunder shall be in writing and sent via email. Notices to Arson: legal@arsontheory.com. Notices to Client: the email address you provided above. Notices shall be deemed received upon transmission.
Cure Period and Force Majeure. Neither party shall be deemed in breach of this Agreement unless the other party has provided written notice of the specific breach and the breaching party fails to cure such breach within thirty (30) days after receiving the notice (or fifteen (15) days in the case of a failure to pay royalties). Neither party shall be deemed in breach if their failure to perform is caused by a force majeure event (e.g., an act of God, war, natural disaster).
Confidentiality and Non-Disparagement. The parties agree that the terms of this Agreement are confidential and shall not be disclosed to any third party, other than their respective professional representatives or as required by law. Furthermore, each party agrees not to make any public statement that disparages the other party in connection with the matters of this Agreement.
Relationship of Parties. Client and Arson have and will have the status of independent contractors hereunder. Accordingly, there is no joint venture, partnership, agency or fiduciary relationship existing between Client and Arson, and neither party intends to create any such relationship by this Agreement.
Assignment. This Agreement will be binding upon and inure to the benefit of the parties and their permitted successors and assigns. Client may not assign this Agreement or any or all of Client's rights and/or obligations hereunder, in whole or in part, whether by operation of law or otherwise, to a third party, without the prior written consent of Arson. Any assignment in contravention of the foregoing sentence shall be deemed null and void ab initio. A merger, change of control, reorganization (in bankruptcy or otherwise) or stock sale of a controlling interest in Client shall be deemed an "assignment" requiring such consent, regardless of whether Client is the surviving entity. Notwithstanding anything herein, Arson may assign this Agreement or all or any of its rights, or delegate or otherwise transfer all or any of its obligations or performance hereunder to any third party, with or without notice to Client.
Severability. In the event of a conflict between any provisions of this Agreement and any applicable law contrary to which the parties have no legal right to contract, such provision will be construed in a manner consistent with applicable law and all other provisions will remain in full force and effect.
No Waiver. No waiver by a party, whether expressed or implied, of any provision of this Agreement or default hereunder will affect such party's right thereafter to enforce such provision or to exercise a right or remedy set forth herein in the event of any other default, whether or not similar.
Counterparts. This Agreement may be executed via electronic means (e.g., if you click "Agree" or if you sign a PDF copy), in one or more counterparts and delivered by facsimile or via other electronic transmission, each of which will be deemed an original and all of which, when taken together, will constitute one and the same instrument. The parties agree that the electronic signatures appearing on this Agreement (if applicable) are the same as handwritten signatures for the purposes of validity, enforceability, and admissibility.
Modification and Amendment. No modification, waiver, or amendment to this Agreement shall be valid unless made in a written document signed by both parties. For avoidance of doubt, this Agreement shall not supersede or alter the terms of any separate, fully executed agreement between the parties concerning a different subject matter (e.g., an exclusive publishing administration agreement) unless the parties expressly agree to such a modification in a written amendment.
Controlling Agreement. In the event of a direct conflict between the terms of this Agreement and any other separate, fully executed agreement between the parties, the terms of the agreement most specific to the subject matter in question shall control.
Entire Agreement. This Agreement, together with its Exhibits, constitutes the entire understanding between the parties with respect to the services outlined herein and supersedes all prior and contemporaneous agreements, whether written or oral.
