ABSTRACT
A recording contract clause that states a record label can deduct from an artist’s royalties the production of packaging or container of a recording.
Often known as “container charges” or “jacket charges,” the amount deducted is calculated against the suggested retail price of a recording before the artist’s royalty rate is calculated. The reduction is often 20 to 25 percent of the suggested retail price of CDs. These charges are also applied to record club sales, foreign sales, and other categories with reduced royalties. A contentious issue related to packing charges is how such charges should be dealt with when it comes to recordings delivered through electronic transmissions; since there is no physical container, there should be no packing charge.
