LICENCE for Music Downloads on Demand for the private use of musical works from sgae s repertoire In Madrid, on., 2008 BETWEEN On the one hand: the SOCIEDAD GENERAL DE AUTORES Y EDITORES, a copyright management entity duly authorized by the Ministry of Culture (Official State Bulletin no. 134 dated May 4th, 1988) with its registered office at Calle Fernando VI 4 in 28004 Madrid, Spain, represented by Mr. Juan Palomino Medina in his capacity as Director of the Mechanical Reproduction department (hereinafter referred to as SGAE), And on the other hand:. whose address is at and holding a Fiscal Identity Code (CIF) number., represented by Mr./Ms...., in his/her capacity as..., (hereinafter referred to as LICENSEE). The parties hereto mutually acknowledge, in the capacity in which they act, the necessary legal status for the execution of this agreement in accordance with the following ARTICLES: One.- Service of LICENSEE and SGAE s Repertoire 1. LICENSEE is responsible for a music on demand with download service, in which musical works belonging to SGAE s repertoire are exploited on-line, by way of being made available to the public in such a way that any end user of the service may access them at the time and place they choose and carry out a reproduction of these for their own private use. The musical service is accessible via the following electronic address www... 2. SGAE s repertoire includes the musical works administered by SGAE, with or without lyrics, including pre-existing musical works or those that were composed to become part of an audiovisual recording (including, for example, music videos or Videoclips ), an audiovisual or a dramatical-musical work, whose owners of the corresponding exclusive rights of reproduction and public communication (including the making available right) have entrusted it or shall be entrusting it in the future, directly or indirectly, with the administration of such rights, and to the extent that such administration has been entrusted pursuant to the provisions contained in its by-laws. 1
a. Direct Repertoire: the Direct Repertoire is made up of those musical works whose right holders of the exclusive reproduction and performance rights have granted their administration directly by means of a management contract or pan-european mandate agreement. b. Indirect repertoire: the Indirect Repertoire is made up of those musical works whose right holders of the exclusive reproduction and performance rights are members of a Collective Rights Management Organisation that has a reciprocal representation agreement or similar bilateral agreement with SGAE. Two.- Object of the Agreement: Music on Demand with Download SGAE grants LICENSEE, under the conditions and within the limits set herein, the nonexclusive right to proceed with: 1. The recording of the works belonging to SGAE s repertoire, from a legally produced and distributed phonographic or videographic recording, in a digital file, either directly or through a third party, for the service offered by LICENSEE and for the sole purpose of: a. Making the works of SGAE s repertoire available to the recipients of such services to enable them to gain online access to such work as they have requested, from the place and at the time selected by each of them, and to provide them with an online permanent reproduction (download) of the selected work for their private use. b. Making the works of SGAE s repertoire available to the recipients of such services to enable them to gain online access to such work as they have requested, from the place and at the time selected by each of them, and to provide them with an online temporary reproduction limited in time (temporary/tethered download) of the selected work for their private use. 2. The use of legally commercialised sound and audiovisual recordings exclusively for private use for the transmissions authorised in this Article. Three.- Territory 1. The rights granted in Article Two shall have the following territoriality: a. In relation to the Direct Repertoire musical works, the territoriality of the authorisation granted in the present licence is the territory of the European Economic Area (EEA), as long as the right holder members of SGAE have granted the administration in said territory. In the case that the right holders members of SGAE have limited the territoriality of the administration to certain countries in the EEA, the present licence will have an identical territoriality; b. In relation to the musical works of the Indirect Repertoire, the territoriality of the authorisation granted in the present licence is the Kingdom of Spain; c. SGAE undertakes to inform LICENSEE promptly with regard to those countries where in the future it may acquire the possibility to grant a licence similar to the present one. At the same time LICENSEE will inform SGAE of any musical 2
service offer to the public that it may want to carry out in other territories, so that SGAE can inform whether it can grant the relevant licence or not; 2. LICENSEE shall inform in its web site and in its terms of use of the above-mentioned territorial limitations. If this information does not prevent access to its service, the parties will co-operate in good faith to put in place the most efficient system to avoid unauthorised use. Alternatively, if LICENSEE offers its service outside the territory described in this Article 3, then LICENSEE shall be responsible for obtaining the relevant licences as may be required from licensors outside the territory in order to operate the service legitimately. Four.- Reservation of the neighbouring rights affected The authorization granted in the Article Two leaves safe those rights eventually concerning the performing artists or performers, the phonographic producers, audiovisual producer and broadcast entities, for the use of their respective copyright protected offerings used by LICENSEE in the course of the licensed exploitations; such rights, which LICENSEE recognises and undertakes to respect, are reserved by the said owners. Five.- Licence restraints 1. Any rights corresponding to the owners of the works in connection with any usage mode which is not provided for in Article Two, or which should be performed in a way and conditions other than those expressly stated in the said Article, are excluded from this agreement and reserved to such owners. 2. Specially and without prejudice to the provisions contained in the preceding paragraph, the licence granted hereunder does not entitle LICENSEE to perform the following operations: a. The fixation of works in advertising spots; b. The recording of the works in a digital file by using a performance or public performance thereof, or an unauthorized fixation of such performance; c. The use of the musical works as mobile telephone ring tones. d. Any public communication, not covered by the present licence for the service offered by LICENSEE, by which a group of people have or may have access to the works belonging to SGAE s repertoire, and by way of an example but without limitation, such communication as may take place in a public establishment such as a bar, café, etc. 3. In order to carry out the operation mentioned in the previous points, LICENSEE must obtain the relevant authorisation. Six.- Moral Right 1. LICENSEE will use the works in the repertoire in compliance with the rights granted in Article Two above, in the way the works were created and with full consideration and 3
respect to the good artistic and technical rules and to their author s moral right, of which SGAE hereby makes express reservation. 2. LICENSEE may carry out the necessary technical adaptations to the works they use, as required by the medium of communication used to make the transmission. Such adaptations must not affect the creative elements of the work or alter its character. 3. LICENSEE will include, either by insertions or hyperlinks, a mention of the title of the works and the name of the authors, unless the technical or functional requirements of the service impede this. Seven.- Experimental nature The parties hereto state that, because of the relative technical novelty of the exploitations subject to this agreement and, consequently, given the absence of a properly consolidated minimum business practice in the on line service market, the terms of this agreement are to be construed in a consciously experimental context, as established by the principle of contractual good faith and demanded by the most elementary mercantile prudence. Eight.- Remuneration In consideration for the licence granted in Article Two herein, the General Tariffs of the Local Collecting Society of each territory where the exploitation takes place will be applicable. SGAE s general rates, as follows, shall be applicable for Spain and any other territories for which there are no published tariff for the licence granted in Article Two: 1. LICENSEE will pay SGAE the figure resulting from the application of the percentage figures established for each year to the base tariff, according to the following table: 2. Minimum Fee: 2008 2009 11% 12% a. Permanent downloads: When the result of the application of the provisions established in point 1 is less than the following, LICENSEE must pay SGAE the following minimums for each work downloaded: 2008 2009 0.081 0.085 b. Temporary/tethered downloads. When the result of the application of the provisions established in point 1 is less than the following, LICENSEE must pay SGAE the following monthly minimums: - 332.92 / month up to 100,000 temporary downloads a month - 532.67 / month more than 100,000 temporary downloads a month 4
From 2009 the minimum fee will be revised annually in line with the amount that the rate of inflation has varied in the previous year at a national level as published by the Instituto Nacional de Estadística (Spanish National Statistics Institute) or such organisation as may take its place. 3. The basis for application of the tariff will constitute the totality of the income obtained from the licensed service, including, for example, the price paid by the consumer, payment for access, quotas or subscriptions, subsidies received for the exercise of the business activity or advertising income. 4. Pre-listening: Included in the licence is the authorisation for pre-listening of fragments of up to 30 seconds long, in web sites whose activity is the on-line delivery of music. 5. Notwithstanding the above, the tariff for those downloads that take part in a fixed terminal/pc will be as follows: a. General tariff: 8% b. Minimum fee: - Permanent downloads: per work: 0.07. - Temporary downloads: 332.92 / month up to 100,000 temporary downloads a month 532.67 / month more than 100,000 temporary downloads a month Nine.- Obligations of LICENSEE 1. LICENSEE shall ensure that the web site of the service bears SGAE s logo and the following mention, either directly or via links: All the rights of the owners of the works, artistic performances, phonographic or audiovisual recordings and radio broadcasts are reserved under the terms provided for in the intellectual property laws. Unless authorised, the reproduction, distribution (by means of sale, rental, loan, etc.), public performance, radio broadcast and communication to the public, in any way whatsoever, of this transmission and the contents thereof is expressly prohibited, under penalty as provided in the applicable civil and penal legislation. 2. LICENSEE undertakes to inform SGAE, by means of written notice, of any modifications in the URL stated in Article One above. 3. LICENSEE will forthwith delete any hyperlinks with another web site, upon indisputable notification by SGAE that such linked web site is infringing the copyright managed by SGAE. Ten.- Work identification computer handling LICENSEE and SGAE emphasise their mutual goal of reaching pan-european and global industry-wide standards for reporting formats and agree to use their respective reasonable endeavours to co-operate in good faith to this effect. SGAE declares that it forms part of an international working group, the Digital Data Exchange (DDEX), the goal of which is to define and maintain a standard for the exchange of data concerning the on-line exploitation of 5
protected content. Both parties undertake to study the implementation of this communication system within the context of the present agreement. Eleven.- Exceptional Prohibitions Notwithstanding the authorization granted hereunder, SGAE hereby reserves, on the express and well-founded request by the work right-owners concerned, the right to prohibit, either temporarily or for an indefinite period, the exploitation of certain works in its repertoire. SGAE shall give written notice of such intended prohibition. Twelve.- Income and transmission statements LICENSEE shall, within the first fortnight of every calendar quarter, deliver to SGAE, by completing the model hereto attached as Annex I, a statement for each territory, of the income received for the services licensed during the previous quarter and of the downloads, specifying every work used. Thirteen.- LICENSEE s financial obligations 1. Within fifteen (15) days following end of each quarter, in accordance with the statements mentioned in the previous article, SGAE will issue the corresponding statement and invoice, which is to be settled, via bank transfer to SGAE s account as stated, within a maximum term of fifteen (15) days from the receipt thereof by LICENSEE. 2. LICENSEE shall pay into SGAE s account, as a permanent guarantee for payment of the remuneration agreed for all concepts and its compliance with every other obligation stated herein, an amount to be set by SGAE but never exceeding the estimated sum of the remuneration regarding exploitations from one calendar quarter. The amount of said guarantee will be reviewed every three months and the sum agreed maintained from quarter to quarter. 3. Any amount unsettled on its due date shall accrue on behalf of SGAE late-payment interest as established by Law 3 dated December 29th, 2004, (Official State Gazette (BOE) nº 314, dated December 30th, 2004) on the terms and conditions set out therein. The same interest rate shall be applicable to any differences arising from the verifications of the exploitation data referred to in Article Fourteen below, such interest to accrue as from the date when the amounts known as a result of the said verification should have been paid. Fourteen.- Verification by SGAE 1. SGAE reserves the right to check the veracity of all data included in the statements submitted by LICENSEE, the latter being obliged to make available to SGAE all accounting books and any other information relating to exploitation by LICENSEE and, in general, any necessary documentation so as to enable SGAE to duly verify all data concerning the exploitations subject to this agreement, as well as the name and address of the hosting service provider and any change which may occur in the said data. 6
2. The people in SGAE s staff in charge of carrying out the verification referred to herein shall not be involved, directly or indirectly, in any kind of exploitation similar to that performed by LICENSEE. It is further understood that no person from SGAE shall be allowed to disclose to a third party any data concerning such exploitation which they may have become aware of in the course of the operations conducted for the performance or execution of this agreement. Fifteen.- Termination of the agreement 1. In addition to any legal grounds for the termination of this agreement, any failure by LICENSEE in performing its obligation to pay the agreed remuneration, distortion of any data shown in statements of use or the lack of delivery thereof shall be deemed as grounds for the termination of the agreement. 2. The parties hereto may terminate this agreement by giving prior written notice to the other party one month in advance. In case of such termination on the part of LICENSEE, the effective cessation in the use of the SGAE repertoire and the withdrawal thereof from the file referred to in section 1 of Article Two above shall be mandatorily required. The termination of the agreement shall not prevent SGAE from having the right to request from LICENSEE the payment of all accrued remuneration outstanding for payment at the time of such termination, although LICENSEE shall no longer be entitled to make any use of SGAE s repertoire. Such remunerations still outstanding at the said termination shall be calculated pursuant to the provisions of this agreement. 3. Any amount unsettled on its due date shall accrue on behalf of SGAE interest equal to the legal rate of interest increased by two percentage points, to be calculated on a daily basis. Sixteen.- Duration of the agreement 1. This agreement shall enter into force as from the date of its execution and shall be valid for a one-year term, being automatically extended for identically similar terms, unless such extension is rejected by either of the parties; such rejection to be made by written notice to the other party one month in advance. 2. Upon the expiration or rejection of this agreement, LICENSEE shall no longer be entitled to conduct any of the operations related to the works in the SGAE repertoire as laid down in Article Two above. Seventeen.- Unassignability of the agreement The rights and obligations laid down in this agreement are unassignable, whether by means of acts inter vivos or by mortis causa and whether by way of a title acquired free of charge or for a consideration. Consequently, neither this agreement nor the rights granted herein may be subject to any assignment whatsoever on the part of LICENSEE. 7
Eighteen.- Applicable law and jurisdiction 1. This agreement shall be subject to the laws of the Kingdom of Spain. 2. The parties hereto agree to abide by the Courts and Tribunals of Madrid for all disputes arising out of this agreement and the performance thereof, both parties expressly waiving any other right of venue that may lie to them. 3. This licence is signed in English and Spanish languages. If there is any inconsistency or conflict between the English and Spanish versions of these Terms and Conditions, the Spanish version shall prevail. Nineteen.- Safeguards 1. SGAE represents and warrants that SGAE is authorised to receive all payments under this Agreement on behalf of itself, each of its members and, to the extent applicable, other collecting societies, and that there shall not be double payment for the same transaction. 2. Where Licensee informs SGAE of a claim made against Licensee in relation to the reproduction, communication or other use of a music work licensed under this Agreement, SGAE undertakes to analyse the claim and if necessary mediate between the different parties in order to reach a peaceful solution to the conflict. During the course of any such conflict, the contract shall be valid in all aspects, including economic aspects, with respect to the work or works affected by the dispute. 3. If as a result of the mediation mentioned in the previous point, one or more works are deemed not to be part of SGAE s repertoire during a certain period of time, SGAE will reimburse to LICENSEE the amounts corresponding to each work for the concepts set out in the present agreement that have been paid to SGAE, following receipt of the invoice thereof. The amount returned to LICENSEE will only be for the relevant period and up to the maximum amount of the sum already paid by LICENSEE for said work(s), in accordance with the provisions of the present agreement. BOTH PARTIES HAVE READ THE PRESENT DOCUMENT, PRINTED IN DUPLICATE, AND, IT BEING FOUND IN ORDER, IT IS SIGNED AT THE PLACE AND ON THE DATE FIRST ABOVE WRITTEN. For LICENSEE For SGAE 8
ANNEX I SOCIEDAD GENERAL DE AUTORES Y EDITORES QUARTERLY REPORT LICENSE FOR MUSIC DOWNLOADS ON DEMAND Company name Address Commercial Name CIF/NIF Company Territory of exploitation Period (indicate which period Q108, Q208, Q308 or Q408) Details of the exploitation USES Downloads Retail price Income 0 0,00 Advertising income Other *The prices and total are less VAT. If the same product is sold for different prices please fill in as many lines as necessary with the number of downloads at each price. Web access address Wap / i-mode access address Short message code (SMS) Audiotel number (806...) Name and job title of the person responsible Other details Madrid, (date) Signature 9
DETAILS OF USE SGAE/ISWC CODE WORK TITLE AUTHOR/COMPOSER Nº of DOWNLOADS RETAIL PRICE (less vat) TOTAL 10