How contracts work in IC
A contract is a set of payee splits, the payee split percentage, and an optional ledger. There is no need to assign a label share contract split as any remaining percentage out of 100% not assigned to a payee is assumed to belong to the label.
All income and expense transactions in IC use these split amounts to calculate payee shares and ultimately how much you owe your payees. Transfers only use contracts to determine which balance they should be affecting - their splits are fixed at 100% and they can only have a single payee (selected directly on the transaction).
Creating Contracts
You can create individual contracts via the contract list page, the contract manager, or inline when editing a release, track, item, or transaction by clicking the ➕ button next the contract field in the form.
A deeper dive on this, including default, bundle, and compilation contract tools can be found here.
Ledgers
Read more about Ledgers here.
Assigning Contracts and the Contract Tree
One of the core functions of IC is matching transaction data to your contractual data. We do this by assigning contracts at different levels in your catalog, in a descending order we call the contract tree:
- Releases
- Tracks
- Items
- Transactions
Contracts at each level override the level above. If no contract is set for one of these objects it attempts to use any contracts from the levels above. This allows you to apply contracts all the way down to a single transaction without affecting your other transactions.
In general, we recommend using release and track contracts, with item and transaction level contracts applied as overrides when necessary. This reduces the complexity of your catalog overall and will make maintenance and changes easier.
There are almost an infinite amount of ways to apply contracts so to help better understand how contracts work here are some examples with diagrams to demonstrate how contracts flow down to transactions, and tables to show how these changes would affect payee shares.
Release Level
Let's start with a simple one and expand from there. Your artist has two releases, one with a 50% split, and the other with a 60% split. Create 2 contracts, and assign each one to your releases. In both cases, the splits of each contract are inherited all the way down to the transactional level, meaning the release level contract applies to all tracks, items and transactions within the release.
| Release | Contract | Net | Split | Share |
| Release 1 | Contract A | $1,000.00 | 50% | $500.00 |
| Release 2 | Contract B | $1,000.00 | 60% | $600.00 |
Track Level
You remember that Track 2 on Release 1 had a special producer who was promised a 10% share, and that you have agreed to take it out of both of your shares. So you create Contract C with a 45% split and apply it to Track 2. All items and transactions related to Track 2 now use Contract C's splits when calculating payee shares.
| Release | Contract | Net | Split | Share |
| Release 1 | Contract A | $800.00 | 50% | $400.00 |
| Release 1 | Contract C | $200.00 | 45% | $90.00 |
| Release 2 | Contract B | $1,000.00 | 60% | $600.00 |
Item Level
Perhaps Track 3 has a special publishing deal in place with an 80%. IC's items are unique per importer, so you create Contract D and assign it to Item 5.
| Release | Contract | Net | Split | Share |
| Release 1 | Contract A | $800.00 | 50% | $400.00 |
| Release 1 | Contract C | $200.00 | 75% | $150.00 |
| Release 2 | Contract B | $900.00 | 60% | $540.00 |
| Release 2 | Contract D | $100.00 | 80% | $80.00 |
Transaction Level
One last thing! Transaction 6 is a sync transaction you need to pass through at 100%. Create Contract E with a 100% split and assign it to the transaction itself.
| Release | Contract | Net | Split | Share |
| Release 1 | Contract A | $700.00 | 50% | $350.00 |
| Release 1 | Contract C | $200.00 | 75% | $150.00 |
| Release 1 | Contract E | $100.00 | 100% | $100.00 |
| Release 2 | Contract B | $900.00 | 60% | $540.00 |
| Release 2 | Contract D | $100.00 | 80% | $80.0 |