Reporting frequency - how often should I be paying royalties?
As we move more and more into a digital age, where artists now have the option of self-releasing music, there is more pressure than ever on publishers and labels to offer a more regular royalty accounting process. How they choose to organise this process is down to them but at Curve we provide the tools to organise statements efficiently and offer a monthly report to artists.
There are of course, tricks of the trade that Curve is happy to share so that our clients get the very best out of what we feel is the most effective reporting platform in the industry.
What are the common frequencies and why?
Common frequencies for reporting are half-yearly, quarterly and monthly. For distributors reporting to record labels, monthly statements are now the industry standard. For record labels reporting to their artists, half-yearly was the industry standard for a long time, and largely still is, though the digitisation of the music industry, where reporting process tend to become more automated, monthly accounting periods are certainly becoming more popular. New and modern labels establishing themselves in the marketplace tend to go monthly, as they work with new artists who are used to receiving monthly statements from their self-release distribution platforms. In that respect, older, more established labels will need to re-think their reporting periods if they wish to compete going forward.
For publishers reporting to their songwriters, half yearly or quarterly tend to be standard. Monthly reporting is not as common, since publishers receive their royalties largely from collection societies who tend to not report more frequently than quarterly themselves.
What are the delays?
At the end of each half-year, quarter or month, labels and publishers must allow themselves a contractual accounting delay to get their affairs in order and calculate their statements. Ordinarily half-yearly periods have a ninety-day accounting delay, quarterly periods a forty-five days accounting delay, and monthly periods have a fifteen day accounting delay after the closing of the royalty period.
For instance, the first half-yearly period (from January to June) tends to be reported on the 30th September. The second half-yearly period (from July to December) tends to be reported on the 31st March in the next year. Deadlines for Q1, Q2, Q3 and Q4 tend to be 15th May, 15th August, 15th November and 15th February respectively. And monthly deadlines tend to be around the 15th of each month.
Which sales files should you include?
As a record label or publisher, taking into consideration the distributors, collection societies or DSPs their own accounting delays is crucial when organising your own accounts.
For instance, if a stream happened at the end of January, it may well be that this royalty is only reported to yourself by the end of February, in which case it is too late to include in your first Monthly period. With this in mind, we don't advise the organisation of statements per the sales month, but instead as per the date you were paid. If a statement was paid on a date that falls between the 1st January and 31st January, then include this in your first monthly period due by the 15th February. If a statement was paid later in February, this shouldn’t postpone January's monthly run, instead opt to include this in February's monthly run instead.
The benefits of handling these delays in such a way is two-fold; not only is it the most efficient way, saving the stress of waiting on overdue statements, but it also means you can assess the effect of fluctuating exchange rates that may impact the artist's royalty total.
What reporting frequency is best?
Which reporting frequency works best for a label or publisher depends not only on what your artists expect but on how efficiently you can organise your statements. The general consensus in the industry is that royalties paid out on a frequent and short-notice period is a fairer way to work and with a platform like Curve, it's easy to organise your royalty accounting process, meaning a frequent and efficient service and the provision of regular royalty payments is at your fingertips.