Sub Contracts (How to account for Format, Region, or Data Source Specific Splits)
Sub Contracts allow a catalog to set up multiple sets of splits that will be used by Items (and their Transactions) depending on the Item's Territory, Format Group or Importer. This allows for catalogs to easily account for format, territory, or data source specific contracts, and reduces the need to assign Item-level contracts manually.
How to set up Sub Contracts
Great news! If you have previously been accounting for Item-level contracts for Item, Format, or Data Source specific splits in your catalog, you can simply follow the instructions below to set up Sub Contracts in order to automate these workflows moving forward.
Sub Contracts can be added to regular Contracts within IC when creating a Contract. In this instance, our system will default to the primary Contract terms when no Items meet the criteria set with Sub Contracts. For example, if there was a Release with a 50/50 split - except for Physical revenue which was split 60/40 in the Payee's favor, you would first start by ensuring your Format Groups and Territories have been set up (and Items split by these terms) and begin by setting the primary contract:
This will ensure that all Transactions associated with this Contract are accounted for by the terms of the 50/50 split, unless there are Items that meet the criteria of any of the Sub Contracts attached to the Contract. If we want to account for the 60/40 physical split, we could simply click "Add A Sub Contract" in order to add a Format Group term to this contract:
If we wanted to take this a step further and add another Sub Contract term - let's say for example all Digital revenue from Europe was split 40/60 between the payee and the catalog - we could add another Sub Contract with a Territory term to this primary contract:
When a contract has Sub Contracts defined, any Item inheriting the primary Contract via the Item's Release or Track will compare its Format Group, Territory and Importer against the Sub Contract terms and use the first Sub Contract that matches. If an item matches multiple Sub Contracts, it will use the highest priority Sub Contract (i.e. the highest one in the list of Sub Contracts). You can change this priority by using the "Change Priority" button when editing a contract.
In the example above, our system would first assign all "All Physical" Format Group Items and their Transactions with the 60/40 terms we've set. Next, our system will look for any "Europe" Territory Groups and their Transactions and will assign them with the 40/60 terms we've set. Finally, all Items and Transactions that do not meet the Sub Contract criteria will be accounted for by the 50/50 terms set on the primary parent contract. If we wanted all "Europe" Territory Group transactions to be accounted for by the terms of this Sub Contract whether they were Digital or Physical, we could simply swap the priority of these Sub Contracts to ensure those terms were of the highest priority.
Additionally, explicitly assigning a Contract to an Item or Transaction overrides the use of Sub Contracts in the same way that it would override a normal Release or Track contract.
Please note, Sub Contracts account for transactions that meet the entirety of the terms defined on a single contract.
If you, for example, had a 60/40 primary Contract but were accounting 50/50 splits on Physical sales and Europe region transactions, you would want to set up your 50/50 terms as two separate sub contracts - one with your 50% Physical split and another with your 50% Europe split. Doing so will ensure that all Physical revenue is "caught" by the sub contract, and the other will ensure that all other transactions in Europe that are not already accounted for by the terms of the first sub contract are also accounted for at a 50% split.
If a single sub contract was set with All Physical Format Group and Europe Territory terms, our system would only account for transactions that meet the entirety of those terms (i.e. only All Physical from Europe), rather than transactions that meet those terms separately.
It's important to note sub contracts do not care about the format or region of transactions inside an item. For instance, say there's an item with an "All Physical" format group, but a user manually updates transactions inside that item to have a digital format, those transactions will continue to use any "All Physical" Sub Contracts that have been set up. In that case, it is recommended that the user explicitly assign the correct Contract to the relevant transaction(s) or item(s).
Under the hood, Sub Contracts are just normal contracts with a relationship to another contract. They are hidden from the contract list page, but will show up when searching for contracts in any filters or form fields. So you could, for example, explicitly assign a sub contract to a catalog object or use it as a filter on the transactions list page.
Any contract filters do not automatically include sub contracts when filtering, you will explicitly need to add any sub contracts if you want results to include items or transactions that are using them.