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, 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 retains 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
Digital Distribution & Rights Management: Two (2) year initial term commencing on the Effective Date, automatically renewing for successive one (1) year renewal terms thereafter. Terminable by either party with thirty (30) days' written Notice prior to the end of any then-current term.
Publishing Administration: Per-song basis (two-year initial term, one-year renewal terms). Publishing terms renew annually and are terminable with thirty (30) days' notice prior to the end of a song's current term.
Sync Licensing
You grant Arson the non-exclusive right to pitch your Recordings for synchronization opportunities (film, TV, games, ads). Arson shall retain 15% of Gross Revenue from any sync opportunities procured. 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
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.
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 have an initial term of one (1) year from the date such Recording or Composition is first delivered to Arson, and shall automatically renew for successive one (1) year renewal terms thereafter unless either party delivers written Notice of non-renewal no later than ninety (90) days prior to the end of the then-current term. The foregoing license-term structure applies on a per-Recording and per-Composition basis to the music delivered under this Agreement and is in addition to (and shall not limit) the post-termination collection rights set forth below. Notwithstanding the foregoing, upon Client's acceptance of any Advance, the license term for all Recordings and Compositions shall convert to the Advance License Term set forth below, which shall control for so long as it remains in effect.
Advances
Arson may, at its sole discretion, offer Client an advance or campaign budget ("Advance") to fund marketing, promotion, content, or other approved initiatives. All disbursement is administered by Arson on Client's behalf. Recoupment terms and the Advance License Term applicable to any accepted Advance are set forth in Exhibit A.
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 through good faith discussion for thirty (30) days following written notice. If unresolved, disputes shall be submitted to 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.
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 (e.g., GEMA, SACEM).
Compositions: The underlying musical works (music and lyrics) embodied in the Recordings.
Digital Distribution: Delivery and making available of Recordings for all digital exploitation (permanent downloads, tethered downloads, interactive and noninteractive streaming) on all DSPs now known or hereafter developed.
DSPs: Digital Service Providers including Spotify, Apple Music, Amazon Music, YouTube, TikTok, Pandora.
Metadata: All descriptive and identifying information for Recordings and Compositions: artist name, song title, album title, genre, writer/publisher names and splits, ISRC, ISWC. Client is solely responsible for accuracy.
MROs: Mechanical Rights Organizations (e.g., The MLC in the U.S.).
Neighboring Rights: Public performance royalties earned by the master sound recording, as distinct from the composition. 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: DSP/society fees or commissions, required tax withholdings, and bank charges.
PROs: Performing Rights Organizations (e.g., ASCAP, BMI, SESAC).
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 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 30 days, then binding JAMS arbitration in Los Angeles, CA.
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 that: (i) Client has full right, power, and authority to enter into this Agreement and grant all rights hereunder; (ii) Client has secured all necessary rights, licenses, and permissions in the Recordings and Compositions; and (iii) all Metadata is accurate. Client agrees to defend, indemnify, and hold Arson harmless from third-party claims arising from breach of these warranties. Arson warrants it has the full right and authority to enter this Agreement and will perform in a professional manner, and agrees to indemnify Client from third-party claims arising from breach of its warranties.
Verification & Takedown. Arson may, upon reasonable notice, request documentation to verify Client's rights in the Recordings and Compositions. Client's failure to provide satisfactory documentation may result in paused services, content takedown, and withheld royalties until provided. Arson may, in its sole discretion, refuse to distribute or take down any content it reasonably believes is (a) infringing, obscene, defamatory, or objectionable; (b) subject to third-party claim; or (c) created or promoted via fraudulent means like artificial streaming. Arson may withhold Net Revenue from such content and terminate immediately. Client may request removal of any Recording at any time; Arson shall complete takedown within thirty (30) days of written notice, with outstanding royalties still payable. Arson shall notify Client in writing prior to removing any content, except where required by law or by a DSP.
Audit Rights. Client may, once per year upon 30 days' written notice, have an independent CPA audit Arson's books relating to this Agreement at Client's sole expense. If the audit reveals an underpayment of more than 10% for the audited period, Arson shall reimburse reasonable audit costs.
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, plus reasonable administrative costs, 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 and such administrative costs, the division of Net Revenue shall automatically revert to the standard split of seventy percent (70%) to Client and thirty percent (30%) to Arson. Any unrecouped balance at the end of the Advance License Term shall be written off as an at-risk investment and 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) to an exclusive license to Arson for five (5) years from the date of acceptance (the "Advance License Term"), notwithstanding any shorter term otherwise set forth in this Agreement (including the one (1) year License Term for Recordings and Compositions set forth above), and shall survive any earlier termination until full recoupment or expiration of such term. Where Client accepts multiple Advances, each triggers its own Advance License Term; the longest then-running term controls.
Post-Termination Collection. Following termination, Arson may collect income earned during the Term as follows. Distribution & Rights Management: until final payment is received from all third-party platforms for exploitations authorized during the Term. Publishing Administration: twelve (12) months in the U.S. and eighteen (18) months in all other territories following the effective date of termination.
Limitation of Liability. Arson shall not be liable for any indirect, incidental, or consequential damages, including lost profits. Arson's total liability 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 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 & Force Majeure. Neither party shall be deemed in breach unless the other party provides written notice of the specific breach and the breaching party fails to cure within 30 days (or 15 days for royalty payment failures). Neither party shall be deemed in breach for failure caused by force majeure (acts of God, war, natural disaster).
Confidentiality & Non-Disparagement. The terms of this Agreement are confidential and shall not be disclosed to third parties (other than professional representatives or as required by law). Neither party shall make any public statement disparaging the other in connection with this Agreement.
Relationship of Parties. Client and Arson are independent contractors. No joint venture, partnership, agency, or fiduciary relationship is created by this Agreement.
Assignment. This Agreement binds and inures to the parties and permitted successors and assigns. Client may not assign this Agreement or any of Client's rights or obligations hereunder, in whole or in part, whether by operation of law or otherwise, without Arson's prior written consent. Any assignment in contravention of the foregoing shall be deemed null and void ab initio. A merger, change of control, reorganization (bankruptcy or otherwise), or controlling interest sale of Client is deemed an assignment requiring consent, regardless of whether Client is the surviving entity. Arson may assign or delegate any obligations to any third party, with or without notice.
Severability. If any provision conflicts with applicable law, that provision will be construed consistent with applicable law; all other provisions remain in full force.
No Waiver. No waiver (express or implied) of any provision affects the waiving party's right to later enforce that provision.
Counterparts & Electronic Signature. This Agreement may be executed electronically (including by clicking "Agree" or signing a PDF). Electronic signatures have the same legal effect as handwritten signatures.
Modification & Amendment. No modification, waiver, or amendment is valid unless in a written document signed by both parties. This Agreement does not supersede any separate, fully executed agreement concerning a different subject matter unless expressly agreed in a written amendment.
Controlling Agreement. In the event of a direct conflict between 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 regarding the services outlined herein and supersedes all prior and contemporaneous agreements, whether written or oral.
