In Tone, you can configure producer or collaborator contracts to automatically withhold royalty payouts until a main artist has fully recouped their balance. This ensures that the producer's share accurately calculates and accrues in the background each period while waiting for the artist to recoup.

🏗️ Pre-Requisites

Before linking your contracts together, ensure that both the individual Artist contract and the Producer/Collaborator contract are assigned to the same Contract Group.

The contract group dictates the frequency at which you will be running royalties (e.g., quarterly, semi-annual). Linked contracts are required to be run in the same contract group.

🔗 Linking the Contracts

Once your contracts are created and assigned to the same contract group, follow these steps to cross the producer contract to be deducted from the main artist:

1. Navigate to your Contracts list, locate the Producer contract, and click to open the Details panel on the right side of the screen.
2. Scroll down within the panel until you find the Producer / Collaborators section.
3. Click the "Add a contract" button and select the corresponding Main Artist contract from the drop-down menu.
4. Upon selecting the artist contract, the Percent field will automatically default to 100%.
   1. What this means: 100% of the producer's calculated income will be tied to and drawn from the selected artist contract.
   2. When to change it: This should typically stay at 100%. The only exception is if you have multiple artists jointly paying the producer's royalty, in which case you can split the percentages proportionally between them (e.g., two artists splitting the burden 50/50).
5. Select the checkbox labeled "Hold payout until recouped."

🔄 How Producer Payouts Are Impacted

Once this box is checked, Tone automates the financial logic behind the scenes:

• If the producer’s contract is unrecouped, no payment is due in any scenario.
• If the producer’s contract is recouped but the main artist is unrecouped:
  • The producer's positive balance will continue to accrue each accounting period.
  • In a royalty period, the producer’s statement status will read “Main artist balance is unrecouped”. This status will prevent producer payout. Even with a positive closing balance, the producer’s Amount Due will be $0.
  • In their payee portal, the producer’s balance will show as “carried forward”. When they hover over that status, they will see a note explaining that their balance is being held because the artist is unrecouped.
• If the producer’s contract is recouped and the main artist becomes recouped, the restriction lifts! The producer's total accrued balance will instantly become payable within the same royalty period the artist first becomes payable.

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Note: The producer will not become payable until the artist contract is fully recouped.

If a producer worked on 1 track on a 10 track album, and the artist contract contains all 10 tracks, the producer would not become payable until costs for all 10 tracks are recouped.

If an advance was issued directly to the artist, the producer would not become payable until the artist recoups their full advance.

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