Understanding Royalty Statements

There's several things really on royalty statements. We ensure that:

• Each song appears
• Every song that should appear on the royalty statement is listed
• Even if there's a new balance against it
• Even if there's no income

We want to make sure that our artist's creativity is properly reflected in an income statement. And that's what the royalty statement is: an income statement. It's no different from someone in an office getting their payslip at the end of the month.

The Process of Reviewing Royalty Statements

The first thing they do is look at the bottom line to see:

• How much am I taking home today?

Then they look upwards to see what deductions were made, ensuring the income was correct. That's exactly what we do in terms of royalty statements.

Multiple Facets of Statements

Obviously, there are multiple facets of statements, including:

• Publishing Royalty Statements
• Recording Royalty Statements
• Performance Rights Organizations (PROs)
• Public Performance Licenses (PPL)

There are organizations like BMI or ASCAP in America and all sorts of other collection agencies around the world.

Ensuring Timely and Accurate Statements

We make sure that royalty statements come in on time. We also ensure that the income that should be appearing on there is indeed there.

Limitations in Reviewing Statements

We can't look at everything in fine detail immediately, as it's just not possible given time constraints. For instance, we don't have the capability of reviewing 200, 300, or 500 pages of royalty statements. However, we do the following:

• Every two to three years, if we think the reported income is a little light, we commission an audit on those statements.

Findings from Audits

It's amazing how many times the audits are justified. There are often sufficient funds that have been overclaimed in expenses by:

• Labels
• Publishers
• Primary labels

In some instances, certain country income hasn't filtered through as it should have, and so forth.

Cross-Referencing for Accuracy

We closely examine the statements to ensure that our client's work is properly represented. We have a rough idea of how much money should be coming in based on:

• Number of sales
• Number of plays

Sales is a very good indicator, as you can roughly estimate:

• How many albums were pressed
• How many were posted on platforms like Apple or sold through other means
• Your income level per album sale

Ultimately, it becomes a multiplative process from that point on.

Cross-Referencing with Publishing

Additionally, there are ways of cross-referencing, especially on publishing with PROs. You can see:

• What PROs are paying you
• How that aligns with what you expect from the publisher's royalty statements

This forms a solid basis for further cross-referencing and analysis moving forward.