The following MBW op/ed comes from Tom Allen (pictured), Managing Director of UK-headquartered Curve Royalty Systems. Curve has worked with music industry companies including Domino Recordings Co, Mad Decent, Audio Salad, and Cooking Vinyl.
Why Are (Some) Record Labels and Music Publishers Still Only Reporting Every 6 Months?
It’s a perfectly valid question, right? One that should elicit a considered response along the lines of, “huh, now that’s a GOOD question.”
Often though, the comeback is simply a shrug and a curt, “well, that’s the way we’ve always done it.”
Along with the classic “it’s industry standard”, “that’s the way we’ve always done it” must rank among the best get-out clauses going, with their elegant sidestep of any requirement to take innovation or progress seriously.
Of course, there are many reasons why this is “industry standard”, especially when you think prior to the ’90s, this was largely a manual process, but there are other reasons why this practice is continued today.
Others in the chain may work on slower time scales, so reporting more often may be an exercise in reporting zero value (think PRS For Music only reporting twice a year – publishers may have no need to report more often), and if the technology or processes being used are poor, it’s clearly going to clog up the timeline. Add to that the fact that many independent record labels and publishers are often understaffed and you can see that not having the resources to do things efficiently can be problematic.
“technology can offer solutions to all those problems. And it’s already here.”
Other reasons for delaying reporting may be a wish for companies to protect their cash flow or save money on the reporting process, which can involve lots of administration and an overwhelming workload for already under-resourced departments.
But technology can offer solutions to all those problems. And it’s already here. You can automate ingesting sales data from its source, calculate millions of lines of data is short time scales, and generate batch payments quickly and easily. Dashboard interfaces make distributing statements and managing bank details far easier.
The fact is, we all operate in an increasingly competitive music industry marketplace. The competition to sign or partner with talent is fierce and the pressure to add value to traditional record and publishing deals is huge. Add to that the proliferation of artist service companies and it’s no surprise that monthly reporting has become the norm in some sectors.
But even with faster, more reliable, user-friendly and affordable technology available there remains a significant percentage of companies who still persist with a, “that’s how we’ve always done it” mindset and only report bi-yearly.
“The big question remains though – is there really an appetite to make the process faster and more transparent?”
Yes, streaming has massively complicated the whole royalties process with huge data sets now having to be processed and billions of micro-payments collated. Of course, that’s intimidating and it’s right to spend time making sure the calculations are accurate but the technology now exists to take the pain out of the process.
The big question remains though – is there really an appetite to make the process faster and more transparent?
There should be. The kind of data that can be extrapolated from streaming numbers these days means that although the volumes can be mind boggling, it is much easier now to match sales data to catalogue and produce impressively accurate royalty statements.
Moving to monthly reporting, as a lot of the artist services companies already doing so have found, also allows for a clearer insight into the performance of a project.
Having the market intelligence to hand when assessing whether a release is performing to expectations can be invaluable and allows for much better financial decision making. And of course, data means analytics, which can be shared with artists and their representatives in a much more collaborative way.
This technology isn’t going away. It’s only going to get faster, more accurate and more reliable.
Deals are changing also – where taking an advance and not expecting to receive royalties for years was once the sensible thing to do – there are now lots of options for artists – with profit shares becoming much more commonplace amongst the indie community. The ethos of these deals is about transparency, and so keeping artists in the dark for 6 months whilst they wait, hoping for their pay day, is just not compelling.
This technology isn’t going away. It’s only going to get faster, more accurate and more reliable. There are going to be fewer and fewer justifications for not reporting royalties on more regular and equitable basis.
Hopefully, in the future the refrain of “well, that’s the way we’ve always done it”, will be a positive one, applied to best practice, fairness and efficiency.Music Business Worldwide