No. 10Financial Terms
Royalty Base
Also called PPD, SRLP, published price to dealers, suggested retail list price, royalty calculation base
The price your royalty percentage is applied to, often reduced by deductions before the percentage is even calculated.
Watch closely
Multiple stacked deductions on the base can halve the effective royalty rate without changing the headline number.
- Appears in
- Recording Agreement, 360 Deal
- Topic
- Royalties
- Jurisdiction
- United States
- Reviewed
- July 2026
In plain English
The royalty base is the dollar amount your royalty rate is multiplied against. Labels typically use PPD (Published Price to Dealers) or SRLP (Suggested Retail List Price), then apply packaging deductions (15–25%), free goods deductions, and new-media discounts before calculating your royalty. Each deduction compounds the others.
Why it matters
The royalty base, not just the rate, determines what you actually receive. A 20% royalty on 75% of PPD with a 25% packaging deduction and 15% free goods deduction yields an effective rate around 9.6% of actual sales revenue.
Where it can land
The same clause is drafted three ways. These are the positions we see, worst first, so you can tell at a glance which one is in front of you.
- Packaging deduction applied to vinyl, CDs, and digital without differentiation
- Free goods deduction greater than 15%
- Royalty base reduced for 'new technologies' without a defined sunset clause
- Packaging deduction of 15–25% (common but worth eliminating for digital)
- Reduced royalty base for 'budget' or 'mid-price' releases with no price floor definition
- Royalty base is 100% of net receipts for digital and streaming
- No packaging deductions for any format
- Free goods capped at 10% and excluded from royalty calculations
The language
The drafting language and the negotiation moves for this clause are part of the workspace.
You have read what the clause means and where the risk sits. The rest is the side-by-side of how it reads when it is against you and when it is not, plus the specific moves that get it there.