Breakage
Contract deductions originally for damaged records, now often applied to digital sales.
Definition
Breakage is a historical contract deduction that reduced artist royalties to account for broken or damaged vinyl records during shipping. Despite the term's obsolescence in the digital era, some legacy contracts still apply breakage deductions to streaming and digital sales.
Modern contracts typically eliminate breakage provisions, but artists on older deals may still see these deductions reducing their royalties on formats that can't physically break.
Why It Matters
Breakage represents how outdated contract language can persist to artists' detriment. Artists should ensure contracts don't apply physical-era deductions to digital revenue.
The persistence of breakage deductions illustrates the importance of carefully reviewing contract terms.
Examples in Practice
A legacy contract applying 10% breakage to digital sales, reducing royalties on music that can't break.
Renegotiating to eliminate breakage provisions when converting to digital distribution deals.
Industry criticism of labels maintaining breakage deductions in the streaming era.