Royalty Software: Find the right Solution for You

A reliable royalty software is the basis of most music industry companies. Record labels, distributors and publishing houses alike need software that helps them convert the income from physical sales and streams into royalty statements for the artists. What is more, a good royalty software can help you stay on top of the costs and split them evenly between all the shareholders. However, this is not always the case; finding the right royalty software for your business isn’t as straightforward as one might think. For once, there are numerous challenges, including Excel chaos, transparency issues, and time-consuming processes. When you work in an indie record label, for example, your workload is already extensive. Running into issues like calculation errors in your statements is the last thing you want to deal with.Besides, having a tool that your whole team can work with is essential in the modern, fast-paced music business. This post is here to help you understand the basics of royalty software and what to look out for.

‍What Is A Royalty Software?

First things first, what is royalty software exactly, and who needs to use one? Here’s the thing: royalties affect every aspect of the music industry. Whenever a fan streams a song on Spotify or watches a music video of an artist on YouTube, income is generated. By the same token, every time a Vinyl is sold, that income needs to be administered. Let’s take the example of a small indie record label. Your digital distributor will send you a statement with all the income from streams and so on. Likewise, your physical distributor will send you a statement with all the physical sales that you have generated within a month. Most distributors will send you an Excel sheet with all the income in neat lines. Depending on your income in a respective month, that can be a lot of individual lines within an Excel sheet. That is where your royalty software comes in handy. To administer the proper distribution of that income, you can feed it into your royalty software, which will do the work for you and sort the income into the respective accounts for each artist or contract holder. On top of that, you can also account for all additional income from, for example, master right usage licenses, web shop sales, Bandcamp sales and much more.

What does a Royalty Software do for you?

You might have already wondered what the key features are to look out for to ensure you are working with the best royalty software for your needs. Fear not, here are the most important key features to look out for in your royalty software.

Automated Revenue Import

Without a doubt, one of the most important features that you’ll need is importing data from your distribution statements, from your web shop or Bandcamp or directly from your Digital Service Provider like Spotify. Having a clear workspace where everything is displayed in an intuitive way is very important to make your everyday work as easy as possible. What is more, a speedy upload process of your statements is important to ensure your workflow won’t stop in a disturbing way. Additionally, having software that supports many different file formats and offers a surplus of integrations is vital for you to get the most out of your account. For example, an automated integration from your digital distributor to automatically import the digital sales into your account will help you save precious time and nerves!

Transparent Statements & Reporting

The next important measure any royalty software needs to be able to execute is generating artist royalty statements that show their share of the sales, both of physical and digital sales, as well as any licenses that may have occurred. That is always a time-consuming task for every record label manager. However, a good royalty software can make your life so much easier. For once, being able to export the artist statement into PDF or send it as a link within an email. What is more, offering your artists direct online access to their statement can help with trust and keep them engaged with the record label.

Contract Management

As a matter of fact, rights and contract management are equally important. Having a clear and transparent set-up of all the rights and contracts that you need to administer is vital in ensuring all artists are well taken care of. Let’s say you are taking care of a band consisting of four members, and all four members split the income equally between them, then you need to reflect that fact in your royalty software by creating four different artists’ accounts/ contracts in order to send each member of the band their individual statement.

More importantly, being able to check in an instant how the deal is laid out in terms of advances, contract durations, split of costs, split of licenses, and frequency of royalty statement send out is one of the most important features of any good royalty statement.

Multi-Currency & Tax Support

Here is a fact that might not be obvious. If you run a record label that has an international roster, your artists will live in many different countries. That means that you must be prepared to do your accounting in many different currencies. The same goes for the income you’re going to ingest into your royalty software; here, you might have to deal with many different currencies as well. To make things even more complex, serving all the tax handling rules in your country can be a difficult task. A solid royalty software will allow you to set prefaces for all artists’ accounts and sort the tax requirements out in no time. That will save you so many nerves when it’s time to issue the artist’s royalty statements.

Scalability

One more thing to look out for is the suitability for the company you work for, for example, an indie record label. Does the royalty software support all of your needs? Can the software adjust to your needs in case you’re record label grows? Does it allow you to scale it up with your growth in an organic way? Does it have extra features like Booking Management that you can add to your portfolio in case you’re record company starts supporting its artists also in the booking sphere? Equally important,  can you work with the software across your entire team and assign each team member different roles and levels of authority? Perhaps your intern needs to learn the software, but doesn’t need to have the same level of access as you do. Likewise, does the software offer a specific login for your artists where they can transparently check the income and royalty statements issued by you?

What can you do wrong when choosing your royalty software?

Even the experienced music industry person can find it difficult to differentiate between all the tools and software that the modern music business has to offer. In addition, with the advent of artificial intelligence, there are so many digital offerings that claim to be revolutionary with their use of AI. As mentioned above, you need a digital solution that can easily scale with your growth and success. Being held back by the wrong royalty software but not having the time or scope to switch can make your work life difficult. By the same token, using a royalty software that has poor support in case you need help or have a question can delay your workflow significantly. Having a great support team that is ready to answer your questions whenever you need them can really bolster your success and ensure that best practice is achieved every day. Equally important is to have a transparent cost structure that gives you complete control over how much you’ll spend. For example, knowing exactly how much the support will cost can help you work within your budget without bad surprises in the final invoice.

How to Find the Right Software for You

Here are some criteria for finding the right solution for you. Firstly, you need to establish whether your royalty software should be a SaaS solution or an on-premises one. SaaS refers to Software as a Service, where you access the software with a login through your web browser, like Mozilla Firefox or Google Chrome. An on-premises software is one that you’re installing directly on your computer. A SaaS solution can be more agile in terms of updates and scalability; the costs might also be smaller. On the other hand, an on-premises solution can offer you more of a traditional feel to the software as it is hosted on your own server.

Next, make sure that the pricing model is in line with your philosophy. Some solutions take a flat fee each month, some calculate their prices depending on how many statements you are issuing each year, and some are revenue-based. Choosing the pricing model that offers you the most bang for your buck, as well as the ability to quickly scale, can make all the difference in your company's development.

One vital step is to ask for a free demo from the software team to make sure you can check the software in a live setting with real data. This will also show you the environment in which the support team is working and will introduce you to your contact person.

Validate that there is ongoing development from the software engineers to ensure frequent updates and the rollout of new features like AI support, for example.

‍Conclusion

All things considered, a good royalty software should support your needs in terms of accounting, tax requirements and scalability.Above all, having a support team that has your back is fundamental in ensuring your work will be pleasant. One must not forget, you’ll use the royalty software almost every day, make sure that you’ll enjoy it and that it is a true support rather than another source of stress.  In the long run, a royalty software should save you time, money and give you space to grow. Compare tools and make sure to schedule a demo or a free trial!

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