Maximum Royalty Cap
In addition to the controlled-composition rate and the lock-in date for a particular album, the other important clause in the record company's controlled-composition provisions is that which determines the maximum amount of mechanical royalties a record company is willing to pay for all songs on a particular album. Here a writer/performer's lawyer must be not only a proficient negotiator of the legal aspects of an agreement but also an accountant and mathematician, since all these clauses work in concert with each other and cannot be considered independently of one another. If they are dealt with in isolation, financial disasters can, have, and will continue to happen.
The way these clauses usually work is that the record company dictates that no more than 10 times the controlled artist/writer rate of 75% times statutory (10 x 7.55¢ x 75% = 56.6¢) will be payable in mechanical royalties on any 1 album regardless of how many compositions are on the album or when sales actually occur. If the writer/artist records 12 or even 14 compositions on the album, the maximum album cap will still be 56.6¢, the same as for 10 songs.
