If you are a performer, writer or producer, then you may have wondered if you are receiving all of the income that is rightfully yours.
For sure, your Record or Publishing company have always been good to you, are pretty helpful, and seem like a good bunch of guys. Surely they wouldn’t be withholding any income from you ?
The fact is that they probably are, albeit not necessarily deliberately or with any intent to cheat you out of any money. But there are a wide number of examples and reasons why you should think about carrying out a royalty audit;
Human error
Even with all the technology available these days, at some point there is a perfectly normal human being, that has been involved in setting up systems or otherwise carrying out tasks which directly affect your income. This can be as simple as a royalty percentage that has been setup in a computer system incorrectly, or a recoupable expense that has been charged to your Royalty account in error. Don’t forget, Record and Publishing companies have an ever increasing number of clients and catalogues, that is growing each and every year. Small errors that could mean a lot to you are probably going undetected.
New technologies and formats
Are you receiving all the royalties that are due to you from all the weird and wonderful new things such as digital downloads and online streaming?
In fact, does the Record company know that they are receiving all the proper income on your behalf?
And once they have the money, do they know what to do with it, how to incorporate it into their systems, and hence pass some money on to you? Working in a Royalties department is a busy and challenging job, and if there is some money that they can’t deal with, then it is going to sit around in the Company bank account until somebody figures out what it’s for and who to pay.
These are the type of questions that need to be asked.
Vague and unhelpful contract terms
Remember your contract ? Sure you do, it’s that 85 page doorstep that seems to have been written with a lot of big words and without any punctuation. You probably signed it a long time ago and were given a bundle of money at the time that made you feel pretty good.
Well, that contract has grow and evolved from the early days of the recording industry, when the lawyers ran the show, and plenty of artists ended up with nothing due to some pretty unfavourable contracts that they signed.
Indeed, the Bruce Springsteen song, “Held up without a Gun” includes the lyrics;
“Some damn fool with a guitar walks in off the street
Ain’t got nowhere to go, ain’t got nothing to eat
Man with a cigar says ‘Sign here son’
Held up without a gun
There are a number of clauses in your contract that you will understand in a different way to the record company. And because they are holding the purse strings, they will pay you based on the way that they understand the contract. Partly this is because they would have always done it that way, or it may be that their systems can’t or don’t actually calculate your royalties as per the wording of the contract.
Either way, in undertaking a royalty audit there will almost certainly be areas where there is a strong argument that you haven’t been paid enough, or correctly.
Tracking the money – where should it all be coming from
You have received your 347 page royalty statement. It’s a big pile of numbers and a confusing array of not very descriptive items that seem to be reported from all around the world.
This is a truly international business – so can you trust your record company to know when and where they should be getting your income from? In fact, can you answer the following questions yourself ;
1. What territories was your last record released in ?
2. Roughly how many did it sell ? Gold in Argentina – how many is that anyway ?
3. What compilation albums were your tracks on, and in what countries ?
4. Where can your material be obtained / downloaded online ?
5. Music on TV or in a Movie? Did you get anything for it ?
6. Has any other money been received that you should share in ? – broadcasts, performances, videos, TV advertising etc etc
In short, the potential for errors and shortfalls in your income are wide and varied. Your record company is almost certainly not very good at keeping track of everything, so how on earth are you supposed to? If, by carrying out a royalty audit, you could uncover another 10% of income that is due to you, then the chances are it’s probably worth doing.
So, how do you do it? Well, your contract probably specifies that you need to appoint a firm of Accountants to conduct the audit, as they don’t want just anybody going over their books and records. And if you want the best results from the audit, then you should probably appoint a firm that is experienced in royalty audits.
Author Resource:-
Audit services : www.royaltyauditor.com
Accountancy and Business managemet : www.brightenjeffreyjames.com
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