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No. 16Financial Terms
Also called cross-collateral, joint accounting, cross-collateralised
Profits from one album are applied to recoup losses from another before the artist is paid.
High risk
A single successful record may generate no artist payment if its profits are offset against an unrelated deficit.
Cross-collateralization means royalty accounts for multiple albums or income streams are pooled together. If Album A earns $100k and Album B still has a $200k deficit, you see none of Album A's royalties until the combined $100k net deficit is cleared. Each album should ideally stand on its own.
A successful record can be 'eaten' by an expensive flop on the same deal. Artists with multi-album deals are most at risk: one breakthrough album may never pay out if cross-collateralised against a debut that never recouped.
The same clause is drafted three ways. These are the positions we see, worst first, so you can tell at a glance which one is in front of you.
The drafting language and the negotiation moves for this clause are part of the workspace.
You have read what the clause means and where the risk sits. The rest is the side-by-side of how it reads when it is against you and when it is not, plus the specific moves that get it there.