270 Legal [Sample Agreements]

DIGITAL MUSIC SUBSCRIPTION SERVICE AGREEMENT

This Digital Music Subscription Service Agreement (“Agreement”) is entered into as of April 1, 2006 (the “Effective Date”) by and between Mohen, Inc. d/b/a Spiral Frog, a Delaware corporation with an office at 95 Morton Street, New York, New York 10014, and each and every Affiliate (individually and collectively, “Licensee”), and EMI Entertainment World Inc., a Delaware corporation with an office at 1290 Avenue of the Americas, New York. New York 10104 (“EMI”).

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1. Definitions. For purposes of this Agreement, the following terms shall have the
following meanings:

1.1 “Advertising Revenue” shall mean all amounts, fees, or other consideration received by, or paid or credited in any way to, Licensee (or any entity acting on its behalf), and not returned by Licensee, during the Term, in consideration of the placement and/or distribution of advertisements, promotions, and/or sponsorships on the Service. “Advertising Revenue” shall further include all amounts, fees, or other consideration received by, or paid or credited in any way to, Licensee, and not returned by Licensee, (a) in connection with any referral of a User by Licensee to a third party, and/or (b) the sale of any demographic, marketing or other User-related data to any third party. Notwithstanding the foregoing, “Advertising Revenue” shall expressly exclude Lyric Advertising Revenue, Music Video Advertising Revenue, Non-Music Related Advertising Revenue, and eCommerce Referral Revenue.

1.2 An “Affiliate” shall mean any corporation or other entity which directly or indirectly controls, or is controlled by, or is under common control with, Mohen, Inc. For purposes of this definition, “control” or “controlled” means ownership, directly or through one or more Affiliates, of fifty percent (50%) or more of the shares of stock entitled to vote for the election of directors, in the case of a corporation, or fifty percent (50%) or more of the equity interest in the case of any other type of legal entity, status as a general partner in any partnership, or any other arrangement whereby any entity controls or has the right to control the Board of Directors or equivalent governing body of a corporation or other entity, or the ability to cause the direction of the management or policies of a corporation or other entity. The parties to this Agreement acknowledge that in the case of certain entities organized under the laws of certain countries, the maximum percentage ownership permitted by law for an investor is less than fifty percent (50%), and that in such case such lower percentage shall be substituted in the preceding sentence, PROVIDED THAT such investor otherwise has the power, directly or indirectly, to direct the management and policies of such entity.

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1.5 A “Covered Device” shall mean (a) a Personal Computer located in the Territory that supports DRM and is able to receive Digital Files and display Lyric Files via the Internet or (b) a Portable Digital Music Device that supports DRM and is able to receive Digital Files and display Lyric Files via a Personal Computer; provided, however, that each User shall only be authorized to access Limited Downloads, On-Demand Streams, Limited Video Downloads, On-Demand Video Streams and Lyric Displays through the Service on, and for each User Covered Devices shall only include, the lesser of either (x) three (3) Personal Computers and two (2) Portable Digital Music Devices or (y) the least amount of Personal Computers or Portable Digital Music Devices, as applicable, permitted by any licensor with respect to a User’s access to sound recordings in connection with the Service. Notwithstanding the foregoing, in all events, the Service shall limit the number of Portable Digital Music Devices allowed to receive Digital Files and display Lyric Files to two.

1.6 A “Digital File” shall mean a single digital copy of a Master Recording or A/V Master Recording, as the case may be.

1.7 “DRM” shall mean digital rights management technology that imposes effective, secured controls over the use of a Composition (and/or the Lyrics of a Composition, as the case may be) and any Master Recordings embodying such Composition consistent with industry best practices, and shall include without limitation the Security Systems set forth in paragraph 10.1 hereof.

1.8 “eCommerce Referral Revenue” shall mean any referral fees received by Licensee, during the Term, from third-parties for “click-throughs” or referrals from advertisements or links on those pages of the Service that do not offer, sell, make available, link to, display, reproduce, transmit, distribute, refer to and/or otherwise exploit any Composition, Master Recording, A/V Master Recording, Limited Download, On-Demand Stream, Limited Video Download, On Demand Video Stream, Lyric Display, or the Lyric Search Service, that result in actual sale(s) to User(s) of non-music related products or services (that is, products or services that do not embody or in any way exploit any Composition(s)).

1.9 An “EMI-Authorized Record Label” shall mean a record label that is, at the time Licensee seeks a license to reproduce and distribute Relevant A/V Master Recordings embodied in Digital Files as Limited Video Downloads and/or On-Demand Video Streams, authorized by EMI, pursuant to a New Digital Media Agreement with EMI, to act as EMI’s agent for the purpose of issuing such a license.

1.10 An “EMI Composition” shall mean a musical composition in which the rights which are the subject of this Agreement are owned or controlled by, or licensed to, EMI, in whole or in part, in the Territory, and which are available, to the extent of EMI’s ownership or control thereof, and to the extent of its rights, for the purposes described herein, subject to any restrictions or limitations thereon imposed pursuant to songwriter agreements or otherwise. With respect to any such musical composition which may be owned or controlled by EMI only in part, the term “EMI Composition” shall only refer to that portion of the musical composition controlled by EMI. Licensee acknowledges that EMI may, in the normal course of business, and otherwise, lose rights with respect to musical compositions, in which event such compositions may cease to be EMI Compositions hereunder, and EMI shall have no liability to Licensee with respect to the unavailability of such musical compositions.

1.11 “Gross Lyrics Revenue” shall mean all amounts, fees, or other consideration received by, or paid or credited in any way to, Licensee (or any entity acting on its behalf), and not returned by Licensee, during the Term, from (i) Users, and (ii) from any other entity (including, without limitation, advertisers), in connection with or relating to the exploitation of Lyrics (including, without limitation, in connection with the Lyric Search Service and/or as Lyric Displays). For the avoidance of doubt, Gross Lyrics Revenue shall include all Lyric Advertising Revenue, but shall not include eCommerce Referral Revenue.

1.12 “Gross Music Video Revenue” shall mean all amounts, fees, or other consideration received by, or paid or credited in any way to, Licensee (or any entity acting on its behalf), and not returned by Licensee, during the Term, from (i) Users, and (ii) from any other entity (including without limitation, advertisers), in connection with or relating to the exploitation of A/V Master Recordings and other music videos (including, without limitation, in connection with Limited Video Downloads and On-Demand Video Streams). For the avoidance of doubt, Gross Music Video Revenue shall include all Music Video Advertising Revenue, but shall not include eCommerce Referral Revenue.

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1.18 A “Lyric Display” shall mean a display of a Lyric File via the Service to a User’s Covered Device, solely for display on such Covered Device as a single, static image of the entirety of the Lyrics embodied therein, in a separate browser window (without downloading). For the avoidance of doubt, and without limiting the foregoing, Lyrics may not be synchronized with any sound recording, and no “bouncing ball” or other karaoke or similar use is permitted hereunder. In addition, and without limiting the foregoing, in connection with transmitting Lyric Displays, Licensee shall disable all “print”, “copy”, “paste”, “cut”, “view source”, and “save as” functionalities, and any “right click” functionalities, that might otherwise be available to a User viewing a Lyric Display, including through any web browser or other application used to access or view Lyric Files. This requirement shall also include, to the extent possible, disabling any “print screen” functionality that may be available as part of applicable operating system(s) through which the User may access the Service and Lyric Displays. Wherever commercially possible, Licensee shall create other possibilities of a referral or “buy button” to allow the User to purchase an authorized copy of the Lyrics.

1.19 “Lyric Advertising Revenue” shall mean all amounts, fees, or other consideration received by, or paid or credited in any way to, Licensee (or any entity acting on its behalf), and not returned by Licensee, during the Term, in consideration of the placement and/or distribution of advertisements, promotions, and/or sponsorships on those pages of the Service where Lyrics can be searched for via the Lyric Search Service and/or displayed as Lyric Displays.

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1.24 “Music-Related eCommerce Referral Revenue” shall mean any referral fees received by Licensee, during the Term, from third-parties, in connection with the sale by such third-parties to Users of permanent downloads or physical copies (e.g., CDs, Dual Discs or DVDs) of sound recordings or audiovisual works embodying Composition(s) as to which the owner(s) and/or administrator(s) of the copyrights in the Composition(s) have otherwise been or will otherwise be paid mechanical and/or synchronization royalties. For the avoidance of doubt, it is understood and agreed that no rights are granted herein to offer, sell, reproduce, display, transmit, distribute or otherwise exploit any EMI Compositions via the Service in any manner, or embodied in any content, product, or audiovisual work (including in any permanent download, or any physical copy), other than as embodied in Limited Downloads, On-Demand Streams, and/or Lyric Displays, and other than to provide the Lyric Search Service.

1.25 “Music Video Advertising Revenue” shall mean all amounts, fees, or other consideration received by, or paid or credited in any way to, Licensee (or any entity acting on its behalf) and not returned by Licensee, during the Term, in consideration of the placement and/or distribution of advertisements, promotions, and/or sponsorships on those pages of the Service where A/V Master Recordings can be searched for and/or are offered, sold, reproduced, displayed, transmitted, distributed and/or otherwise exploited as Limited Video Downloads or On-Demand Video Streams.

1.26 “Non-Music Related Advertising Revenue” shall mean amounts or other consideration received by, or paid or credited in any way to, Licensee (or any entity acting on its behalf), and not returned by Licensee, during the Term, in consideration of the placement and/or distribution of advertisements, promotions, and/or sponsorships on those pages of the Service that do not offer, sell, make available, link to, display, reproduce, transmit, distribute, refer to and/or otherwise exploit any Composition, Master Recording, A/V Master Recording, Limited Download, On-Demand Stream, Limited Video Download, On Demand Video Stream, Lyric Display, or the Lyric Search Service.

1.27 An “On-Demand Stream” shall mean an encrypted digital transmission of a Digital File of a Master Recording from Secured Servers via the Service that allows a User to receive and listen to the particular Master Recording upon request at a time chosen by the User using streaming technology (including, without limitation, via Real Networks’ RealAudio or Microsoft’s Windows Media Audio formats) through the Users Covered Device, which transmission is (a) configured by the provider of the Service such that the transmission will not result in a substantially complete reproduction of such Master Recording other than a copy used solely for caching or buffering and (b) either contemporaneous or substantially contemporaneous with the play of the Master Recording embodied therein.

1.28 An “On-Demand Video Stream” shall mean an encrypted digital transmission of a Digital File embodying an A/V Master Recording from Secured Servers via the Service that allows a User to receive and listen to the particular A/V Master Recording upon request at a time chosen by the User using streaming technology (including, without limitation, via Real Networks’ RealAudio or Microsoft’s Windows Media Audio formats) through the User’s Covered Device, which transmission is (a) configured by the provider of the Service such that the transmission will not result in a substantially complete reproduction of such A/V Master Recording other than a copy used solely for caching or buffering and (b) either contemporaneous or substantially contemporaneous with the play of the A/V Master Recording embodied therein. All On-Demand Video Streams shall appear with an easy interface to purchase a permanent copy of the A/V Master Recording embodied therein in digital or physical format, through the use of a “Buy Button” or other similar device. For the avoidance of doubt, it is understood and agreed that no rights are granted herein by EMI with respect to the exploitation of any EMI Compositions in On-Demand Video Streams, and that Licensee will be obtaining from EMI-Authorized Record Labels, acting as EMI’s agents, licenses to reproduce and distribute Relevant A/V Master Recordings embodied in Digital Files as On-Demand Video Streams. With respect to the exploitation by Licensee of any On-Demand Video Streams that embody Relevant A/V Master Recordings as to which Licensee cannot obtain a license from an EMI-Authorized Record Label acting as EMI’s agent to Issue licenses pursuant to a New Digital Media Agreement, Licensee and EMI will negotiate in good faith the terms of a license to exploit EMI Compositions In On-Demand Video Streams embodying such Relevant A/V Master Recordings,

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1.36 The“Service” shall mean the online service owned and operated by Licensee, as described more fully in Exhibit A hereto (hereby incorporated herein by this reference), which offers to Users Limited Downloads, On-Demand Streams, Limited Video Downloads, On-Demand Video Streams and/or Lyric Displays that are transmitted from Secured Servers to the Covered Devices of Users in accordance with the terms and conditions of this Agreement. The Service shall also include and incorporate the Lyric Search Service. While EMI acknowledges that the Service may also distribute or provide content or products other than the products referenced in the preceding two sentences (e.g., it may also distribute or provide film clips other than A/V Master Recordings, or video games), no rights are granted herein or hereby to exploit any EMI Compositions via the Service in any manner, or embodied in any content, product, or audiovisual work, other than as embodied in Limited Downloads, On-Demand Streams and/or Lyric Displays, and other than to provide the Lyric Search Service. Moreover, and for the avoidance of doubt, it is understood and agreed that no rights are granted herein by EMI with respect to the exploitation of any EMI Compositions in Limited Video Downloads or On-Demand Video Streams, and that Licensee will be obtaining from EMI-Authorized Record Labels, acting as EMI’s agents, licenses to reproduce and distribute Relevant A/V Master Recordings embodied in Digital Files as Limited Video Downloads and/or On-Demand Video Streams. With respect to the exploitation by Licensee of any Limited Video Downloads and/or On-Demand Video Streams that embody Relevant A/V Master Recordings as to which Licensee cannot obtain a license from an EMI-Authorized Record Label acting as EMI’s agent to issue licenses pursuant to a New Digital Media Agreement, Licensee and EMI will negotiate in good faith the terms of a license to exploit EMI Compositions in Limited Video Downloads and/or On-Demand Video Streams embodying such Relevant A/V Master Recordings.

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2. Grant of Rights. Subject to the terms and conditions of this Agreement, EMI hereby grants to Licensee the nonexclusive, non-transferable, non-sub-licensable license, solely during the Term and solely within the Territory, and solely in accordance with the terms and conditions set forth in this Agreement to:

(a) reproduce Relevant Master Recordings as Digital Files on Secured Servers;

(b) reproduce and distribute Relevant Master Recordings embodied in Digital Files as Limited Downloads and On-Demand Streams;

(c) reproduce Relevant Lyric Files in a searchable database of Lyric Files on Secured Servers, solely in connection with the Lyric Search Service;

(d) permit Users to use keyword inquiries to search for Relevant Lyric Files in such searchable database of Lyric Files on Secured Servers, solely in connection with the Lyric Search Service; and

(e) reproduce and distribute Relevant Lyric Files as Lyric Displays (collectively, the “Licenses”).

3. Limitations on Grant of Rights.

3.1 The Licenses issued hereunder are strictly limited to the use of EMI Compositions or the Lyrics of EMI Compositions, as the case may be, in the manner expressly set forth in the Agreement. Any and all other rights held by EMI that are not specifically covered hereunder are reserved by EMI (and all other rights held by third parties are expressly excluded from the Licenses), including, without limitation:

(a) any right of public performance;

(b) any copyrights or other rights in sound recordings, including any sound recordings embodied in any Digital File;

(c) any digital video rights, including the right to offer, sell, reproduce, display, transmit, distribute or otherwise exploit any EMI Compositions in Limited Video Downloads or On-Demand Video Streams (it being understood that Licensee will be obtaining from EMI-Authorized Record Labels, acting as EMI’s agents, licenses to reproduce and distribute Relevant A/V Master Recordings embodied in Digital Files as Limited Video Downloads and/or On-Demand Video Streams, and it being further understood that, with respect to the exploitation by Licensee of any Limited Video Downloads and/or On-Demand Video Streams that embody Relevant A/V Master Recordings as to which Licensee cannot obtain a license from an EMI-Authorized Record Label acting as EMI’s agent to issue licenses pursuant to a New Digital Media Agreement, Licensee and EMI will negotiate in good faith the terms of a license to exploit EMI Compositions in Limited Video Downloads and/or On-Demand Video Streams embodying such Relevant A/V Master Recordings);

(d) any print, display or karaoke rights (other than the limited rights specifically granted herein in connection with the Lyric Search Service);

(e) any right to use, exploit, or permit the use of exploitation of any EMI Composition or the Lyrics of any EMI Composition in a video game;

(f) any right to use, exploit, or permit the use of. exploitation of any EMI Composition or the Lyrics of any EMI Composition as a ringtone, ringback tone, or other so-called “telecommunication personalization product”;

(g) any adaptation (derivative work) rights or right to alter the fundamental character of an EMI Composition or the Lyrics of an EMI Composition, to excerpt or use only a portion of any EMI Composition (other then solely the Lyrics of EMI Compositions, to the extent permitted herein) or a portion of the Lyrics of any EMI Composition, or to create any derivative work based in whole or in part on an EMI Composition or the Lyrics of an EMI Composition;

(h) any merchandising rights;

(i) any use of an EMI Composition or the Lyrics of an EMI Composition for a marketing campaign, product tie-in, game or contest, or otherwise to advertise, promote or cross-promote any product or service;

(j) any right to permit downloads of Relevant Master Recordings or Relevant A/V Master Recordings (or Digital Files embodying the same), or Relevant Lyric Files, on a permanent basis (including any right to make any permanent digital phonorecord delivery);

(k) any use of the title of an EMI Composition, or the name or likeness of any writer or publisher of an EMI Composition, except solely as necessary to identify the EMI Composition to Users as part of (and not to promote) the Service or as otherwise required hereunder.

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3.5 Licensee shall neither cause nor allow any third party to cause any particular advertisement, sponsorship or other commercial message (“Advertisement”): (a) to appear in response to, or otherwise to be associated with, a user’s selection of, search for, playback of or access to any particular EMI Composition (including any sound recording or music video embodying any EMI Composition), the Lyrics of any EMI Composition, or any Digital File or Lyric File, except to the extent such Advertisement directly and solely promotes the sale of a particular Relevant Master Recording or Relevant A/V Master Recording being played or accessed by such user at the time the Advertisement appears; (b) to appear in response to, or otherwise to be associated with, a user’s selection of or search for any particular writer, artist or publisher; (c) to suggest or imply in any way that EMI or any EMI Composition, Digital File, Lyric File, writer, or artist is associated with or endorsing such Advertisement or any other Advertisement, product or service; or (d) to suggest or imply that the Advertisement is part of or integrated into any EMI Composition, Digital File or Lyric File (the foregoing, collectively, “Prohibited Endorsements”). For clarity, Licensee may present advertisements during the User’s selection, search or playback of any Digital File or the display of any Lyric File, provided no such advertisements are selected or played based upon the particular writer, artist, Digital File or Lyric File selected.

4. Licensing Methodology.

4.1 The rights granted hereunder shall apply solely to EMI Compositions included on the Approved Compositions List (defined below). The“Approved Compositions List” shall mean the list of the EMI Compositions that EMI has cleared for exploitation in accordance with this Agreement by Licensee. The most current version of the Approved Compositions List as of the Effective Date is annexed hereto as Schedule A. Licensee shall, from time to time, provide EMI with written notice of additional EMI Compositions it desires to add to the Approved Compositions List, and the same shall be so added if, in EMI’s sole but reasonable discretion, all relevant approvals have been obtained. For the avoidance of doubt, neither Licensee nor anyone acting on Licensee’ behalf shall exploit any EMI Composition that is not on the Approved Compositions List. Also for the avoidance of doubt, if a composition ceases to be an “EMI Composition” for any reason after Licensee has begun exploiting such EMI Composition in accordance with the terms of this Agreement, Licensee shall cease further distribution of such EMI Composition promptly following receipt of written notice by EMI that such composition is no longer an “EMI Composition” (a “Take Down Notification”). With respect to each EMI Composition included on the Approved Compositions List, EMI shall set forth its pro rata share.
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