Music Publishers play a role in the development of new music and take care of the business side of things. In return for doing this they will have a publishing contract set out with the Musician. The publisher agrees to pay the songwriter/composer royalties earned by their compositions after deducting an administration fee.
But how do they keep track of your income? It’s important to be sure that you are receiving the right amount as outlined in your contract. To be sure income is accurate you can track with royalty Audits. A royalty audit is a financial inspection that will outline whether the publishers are paying yourself (the licensor) the correct amount of fees agreed upon in the agreement set in place.
You should have the right to audit the publisher’s books and records, it’s important to ensure this is always written in any agreement before you sign. This is because clerical errors, misinterpretation of agreed terms or even fraud can happen.
How Royalty Audits can help you to save time and increase profits.
Having specialist accountants carrying out your royalty audits means you do not have to take the time to go visit publishers yourself to find out what is going on.
All too often, licensees will deliberately bend the rules by such ruses as under-reporting sales or deducting far too many disallowed marketing costs. If they know from the outset of a contract that professional royalty audits will be conducted, there is a much better chance that a new licensee will get off on the right foot.
Royalties have traditionally been under-reported and therefore underpaid. There is a suspicion that many licensees routinely report royalties incorrectly and that this results in significant underpayments. Set against this background, it is perhaps hardly surprising that royalty audits can result in such noticeable improvements in income.
It’s is worth bearing in mind that the specialists you choose to conduct your royalty audits will have already performed so many for other organisations that they have a firm grasp of what works and what doesn’t and how both you and your licensees can improve the way you operate and interact. Royalty audits should always be ultimately viewed as mutually constructive exercises and not just about waving the big stick.
Individual and corporate owners of IP often find that royalty audits turn up the same specific problems time after time and it is usually down to incorrect interpretation of contract wording or some inappropriate wording in the first place. This provides valuable input when it comes to revising the wording of contracts for future use.