PENNY LETTERS

Penny Rate Per Song For Each Video Sold.  Although this is not common, some independent television producers accept the per-unit penny rate formula for songs used in television programs, since the up-front costs to get the program into the home video market will be sizably reduced if payments are restricted to actual sales. For example, many small producers can’t afford to buy out a song for $7,500 to over $12,000 when there are no guaranteed sales, and instead prefer a simple royalty based on actual sales figures payable every three or six months. If a penny rate is used, a royalty of between 10 cents and 15 cents per song is not uncommon, with additional monies due for multiple uses of if a song is used as the theme of the program. These per-unit royalty formulas are becoming extinct, however, and have already become a thing of the past for songs used in all major contemporary television series.