At-Source

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Imagine a lemonade stand sells lemonade to a corner store, which then resells it to customers for more than it paid. If you were owed a share of the "sales," would that mean a share of what the store paid for the lemonade, or a share of what customers paid the store? An at-source rule settles that question ahead of time.

At-source is a contract rule requiring Royalty or participation payments to be calculated based on Gross Receipts measured at one specific, agreed upon link in the distribution chain, no matter who actually ends up collecting that money. For different kinds of media, at-source gross receipts is generally calculated using a specific number: Film Rentals for theatrical showings, the wholesale price charged to retailers for home video, payments made by broadcasters for television, and payments made by manufacturers for merchandising.

Fun facts

• An at-source rule protects a licensor from a distributor quietly reselling the movie through extra middlemen, since it is measured at a fixed point no matter how many hands the money passes through afterward.
• Negotiating exactly where the "source" point is defined can make a real difference in how much someone actually gets paid.
• At-source terms are common in international deals, where a movie might pass through several countries and companies before it reaches an audience.