Hmmm…Andrew, as you’ve posted it here it’s not so unreasonable, a 50/50 split in the writing royalties is a pragmatic approach and working in film myself (production/post sound rather than composition), I can appreciate the industrial nature of content production for library use.
But a $500 pay-to-play…jeez guy, you need to rethink that ‘offer.’ That means you’re aiming to take in up to $10,000 up front from people who are providing you with raw material for your compositional work. Plus you want sessions - presumably Pro Tools sessions? rather than just wave files such as a stereo recording out of my mixer. So that suggests you’re asking for multitrack recording of every beat, and as ASCAP #, which costs $50 - I suppose I should go ahead and get one anyway, but that’s a whole bunch of extra requirements that you left out of your original request.
Now I get that you’re running a business and you’re looking for a way to expand both your offering to clients and your talent network, and I recognize that hitting the sweet spot here has the potential to pay out nicely in terms of both cash and career advancement. I also recognize that besides the composition you’re taking on the administrative and legal legwork that goes into creating a pre-cleared music library - as I said, I work in a similar line of business and I realize there’s a lot of contractual overhead in media production.
All the same, it sounds very much as if you over-promised to your client and now you’re under a bit of pressure to deliver, and you’re trying to make that process pay for itself because simply evaluating and organizing all that incoming material is a great deal of work. You seem to have painted yourself into a corner somewhat, and opted for a common but rather ethically (and possibly legally) questionable music supervision industry practice to break even on the promises you’ve made - not least because you too have probably got a deal where you have to deliver a large volume of material without getting paid anything up front.
Although this is an awkward business problem that comes up all the time in a very competitive industry, I have to tell you as one pro to another that I don’t think this is a good way to go about it. You would be better off drawing up a rights contract that takes the first $50 of any cue royalties for administrative expenses and then splits the remainder or something along those lines. Paying $500 in submission 50% cut of potential future one-time royalties is about as attractive as handing over my credit card to enter the champagne room at a strip club.