The remuneration principle of Pro Rata Production ensures that every contributor—be it an actor, singer, technician, or writer—receives a fair share of royalties from any successful project they work on, even though the initial work is unpaid.
Here’s how it works, step-by-step:
1. Entering into an Agreement
- Each participant, regardless of their role, signs an agreement with Pro Rata Production or its head production company before starting any work on a project.
- This agreement sets an “unpaid hourly rate,” meaning that while participants aren’t paid immediately, their work is still valued at an agreed hourly rate.
2. Tracking Work Hours
- Throughout the project, each participant’s work hours are carefully documented and confirmed in writing each day.
- This tracking system is crucial because it determines the amount of “unpaid remuneration” they are entitled to, based on their contribution to the project.
3. The “Pro Rata” Concept
- “Pro Rata” means that each participant’s share of royalties is calculated proportionally based on their unpaid contribution relative to the total cost of the project.
- In simpler terms, if you work a certain number of hours, and the project’s total unpaid costs are tallied up, your share of royalties will correspond to the percentage of those total costs that you represent.
4. Right to Royalties
- Once the project starts generating revenue, such as from sales, streaming, licensing, or broadcasting, royalties are distributed among the participants.
- The distribution is directly tied to the amount of work each person put into the project. So, the more hours you worked (and therefore the higher your unpaid remuneration), the larger your share of the royalties will be.
Example for Clarity:
Imagine a music project with three participants: a singer, a producer, and a sound technician.
- The total unpaid cost of the project, based on all participants’ hours, is $10,000.
- The singer contributed $4,000 of that total (40%).
- The producer contributed $3,000 (30%).
- The technician contributed $3,000 (30%).
- When the project starts making money, 40% of the royalties will go to the singer, 30% to the producer, and 30% to the technician.
Why Use This Principle?
- Fairness and Transparency: By linking remuneration to work hours and project success, everyone gets a fair share of the earnings.
- Motivation and Incentive: Since participants are rewarded based on the project’s success, there’s a strong incentive to ensure the project’s quality and market appeal.
- Financial Accessibility for Young Talent: This principle allows new and emerging artists to participate in professional projects without the barrier of upfront payments.
In essence, the Pro Rata remuneration principle values each participant’s contribution and shares the rewards fairly, making it an equitable system in the creative industry.
