ACX Royalty Payment Terms and Procedures for Rights Holders Pay-for-Production Deals: Audible Exclusive Distribution Rights

Version 1.0 (05.12.2011)

Payment Terms

These ACX Royalty Payment Terms and Procedures for Rights Holders Pay-for-Production Deals (Audible Exclusive Distribution Rights) (“Royalty Terms”) set forth the terms by which Audible will calculate and pay royalty payments owed to Rights Holder in connection with Audible’s distribution of any Audiobook based on Rights Holder’s Book (“Royalties”), as set forth in the Book Posting Agreement that Rights Holder agreed to when posting the applicable Book on ACX. These Royalty Terms form a part of the ACX Book Posting Agreement. Capitalized terms used in these Royalty Terms but not defined have the meaning assigned to such terms in the ACX Book Posting Agreement.

Audible will pay Royalties to Rights Holder only on Audible Net Sales Receipts (as defined below) it receives from sales of the Audiobook.

Audible will calculate Royalties using the variable Royalty Rate below. Audible will calculate and report all Royalties based solely on sales of the Audiobook, without combining such sales with sales of other audiobooks produced through ACX.

Royalty Rates for Rights Holders under Pay-for-Production Deals (Audible Exclusive Distribution Rights)

The percentage royalty rate that Audible will use to calculate Royalties (“Royalty Rate”) will depend on the number of units of the Audiobook sold by Audible and Audible’s sub-distributors (“Units”). The Royalty Rate will vary, by Unit, based on the cumulative number of Units sold as of the date a Unit is sold, as provided in the following chart, and will escalate as more Units are sold.


	Royalty Rate for Rights Holder
From 0 to 500 Units	50.0%
From 501 to 1000 Units	51.0%
From 1001 to 1500 Units	52.0%
From 1501 to 2000 Units	53.0%
From 2001 to 2500 Units	54.0%
From 2501 to 3000 Units	55.0%
From 3001 to 3500 Units	56.0%
From 3501 to 4000 Units	57.0%
From 4001 to 4500 Units	58.0%
From 4501 to 5000 Units	59.0%
From 5001 to 5500 Units	60.0%
From 5501 to 6000 Units	61.0%
From 6001 to 6500 Units	62.0%
From 6501 to 7000 Units	63.0%
From 7001 to 7500 Units	64.0%
From 7501 to 8000 Units	65.0%
From 8001 to 8500 Units	66.0%
From 8501 to 9000 Units	67.0%
From 9001 to 9500 Units	68.0%
From 9501 to 10000 Units	69.0%
From 10010 to 10500 Units	70.0%
From 10501 to 11000 Units	71.0%
From 11001 to 11500 Units	72.0%
From 11501 to 12000 Units	73.0%
From 12001 to 12500 Units	74.0%
From 12501 to 13000 Units	75.0%
From 13001 to 13500 Units	76.0%
From 13501 to 14000 Units	77.0%
From 14001 to 14500 Units	78.0%
From 14501 to 15000 Units	79.0%
From 15001 to 15500 Units	80.0%
From 15501 to 16000 Units	81.0%
From 16001 to 16500 Units	82.0%
From 16501 to 17000 Units	83.0%
From 17001 to 17500 Units	84.0%
From 17501 to 18000 Units	85.0%
From 18001 to 18500 Units	86.0%
From 18501 to 19000 Units	87.0%
From 19001 to 19500 Units	88.0%
From 19501 to 20000 Units	89.0%
From 20010 to 20500 Units	90.0%
From 20501 to 21000 Units	90.0%
From 21001 to 21500 Units	90.0%
From 21501 to 22000 Units	90.0%
From 22001 to 22500 Units	90.0%
For 22501 and more units	90.0%

Royalty Calculation

During the Distribution Period, Royalties for each Unit will be calculated by multiplying the Royalty Rate for the Unit set forth in the chart above by “Audible’s Net Sales Receipts,” which consist of: (i) A La Carte Net Sales Receipts (as defined below) for all a la carte sales of the Audiobook, and (ii) Membership Net Sales Receipts (as defined below) for all sales of the Audiobook to customers who are members of one of Audible’s membership programs, in each case, during the immediately preceding monthly period. No Royalty will be paid on the transmission or distribution of downloads or other copies of the Audiobook distributed for free for purposes of review, sample, advertising, publicity or promotion, provided that free copies distributed by Audible or its sub-distributors do not exceed the greater of 100 copies or five percent (5%) of the total number of Audiobooks sold by Audible or its sub-distributors during the applicable accounting period.

“A La Carte Net Sales Receipts” means the monetary amount received by Audible from a la carte sales of each Unit, less any cash incentives, promotional discounts, sales or use taxes, excise taxes, value-added taxes, duties, and returns.
“Membership Net Sales Receipts” means, for each Unit, the monetary amount obtained by multiplying the AudibleListener Allocation Factor (as defined below) by Audible’s a la carte price for the Unit at the time the AudibleListener Allocation Factor is calculated.
The “AudibleListener Allocation Factor” means the total of all membership sales receipts derived from sales of all content sold by Audible in the applicable accounting period, less any cash incentives, promotional discounts, device subsidies or rebates, sales or use taxes, excise taxes, value-added taxes, duties and returns, divided by the total a la carte value (as determined by Audible’s applicable a la carte price for the Audiobook at the time the AudibleListener Allocation Factor is calculated) of the membership sales of all content sold by Audible in the applicable accounting period.

Royalty Statements and Payments

Audible will provide Rights Holder a statement of Royalties, together with a check in the amount of any Royalty due, on a calendar monthly net 30 day basis, commencing with the first full month after the Audiobook is first offered for sale by Audible. If the Royalties owed to Rights Holder for any accounting period are less than $50, Audible will have the right to withhold making a payment and carry such payment forward to the next monthly reporting period. Any ACX royalty statements Audible provides Rights Holder will be considered final and incontestable 3 months from the date the statements are provided by Audible if Rights Holder does not object to the statements within that period of time.