How to involve external stakeholders in the Royalty process
I’ve had very interesting feedback following my last blog “More transparency needed in the Royalty process“. One specific line of discussion was suggesting fear that this approach gives too much visibility to Artist Management Companies, too early.
This is a good point and worth considering. No company wants to involve external stakeholders in their processes too early. No company wants to air their dirty laundry. No matter how committed we are to honest fully transparent disclosure, we are all too aware of the fact that systems can be prone to errors which is why statements are review statements before they are distributed.
Involving external stakeholders too early could mean they see errors and omissions before you get the opportunity to resolve them, leading to a decrease in confidence and increase in queries.
Well, I am not proposing to involve external stakeholders before you are internally ready.
At the moment, statements are signed off internally before the statement is finalised and sent to Artists. What I am suggesting is almost the same, with a few extra steps: at the point where the statement is signed off internally, we treat this is “ready for artist review” and then involve the Artist Management Company in the review. At this point, before treating the statement as finalised give the Management Company the opportunity to perform their own review and signoff. By requesting they approve the content of the statement before it is finalised, they become integral to the process. They also become part of the chain of people who made the statement what it is (correct and accurate, or incomplete and erroneous).
In this way we are encouraging Management Companies to find errors early and resolve them up front instead of the current approach which can mean audits follow many years later. The Guardian recently published Floyd go after EMI’s money where they reported that “Pink Floyd, the band behind Dark Side of the Moon, one of the best-selling albums in music history, have filed a lawsuit against EMI, claiming the private equity-backed firm has miscalculated royalty payments.”
Following the approach in this blog can never remove all risk, but certainly should improve the chance of issues, omissions or miscalculations being identified upfront. When these issues are uncovered many years later the challenges are immense – the circumstances are no longer fresh in reviewers minds; recalculations are more difficult and often manual; information needed is no longer readily at hand and sometimes archived.
Apart from all this, how can a Management Company request an audit when they were involved in reviewing and signing off the statement in the first place?
