Archives for March 2009

Multi-Tier Backup for Royalty Data

Regardless of the royalty software you select, a multi-tiered backup strategy is essential to protecting your royalty software’s data.

Recently, a CNET news article reported that Carbonite, an on-line backup provider, is suing a hardware manufacturer and reseller for selling it defective hardware that affected the backups of 7,500 customers in 2007.

In the past we have seen systems where the backup tape device or external hard drive failed.

At Kensai we recommend that users of Easy Royalties software backup their data with a three tier approach that includes; connected backup devices, online backup service and an independent backup media that is not connected to the hardware.

One royalty software client uses an online service to backup their data file each night. 

Their IT department uses Norton Ghost to program makes an incremental image copy of their hard drive each day.

They also use a Clickfree USB hard drive to backup the royalty software. The user plugs the Clickfree into a USB port. It automatically backs up the data and turns itself off. Then the user unplugs the drive and stores it in a fire and waterproof storage container.

All hardware and software backup devices can fail. A redundant backup strategy ensures that no one failure will threaten the safety of your Easy Royalties software data.

Publishing Forms and Contracts

Publishing Forms and Contracts presents more than 80 forms and templates representing all of the major agreements regularly encountered by a publishing company along with strategic commentary on their use.

Topics include book publishing, periodical publishing, electronic publishing, litagation, litagation avoidance and permissions/subsidiary rights. Each chapter begins with introductory text setting forth key issues and other insights, and then presents the related forms, which in turn are accompanied by drafting and negotiating tips.

An accompanying CD-ROM provides readers with electronic copies of the forms which can be downloaded.

The author; Roy Kaufman, is the Legal Director of Wiley-Blackwell business of John Wiley and Sons, Inc.

Royalty Escalators & Foreign Sales

Many publishers exclude foreign sales from the royalty rate escalator quantity. 

This means that if a book sold 5,000 copies in the USA and 20,000 copies overseas the royalty rate would be based on the domestic sales of 5,000, not the 25,000 copies sold worldwide.

Why? A book that sells for $24 in the USA might sell for only $4 in India. The publisher often engages a distributor to market the title in foreign markets. The distributor will ask for a discount of 55% or more off the list price and expect the publisher to pay the shipping expense. 

EasyRoyalties software can exclude foreign sales from the royalty rate escalator royalty. You do do this by stating that the escalator is based on a specific sales type.

Author Relations

Managing royalties is not just about generating statements, its also about managing author relations. If you ignore the author it may cause the author to take his next manuscript elsewhere. A really upset and well-financed author may request a audit of his statements. His tales of woe may discourage other authors from signing with your press.

EasyRoyalties software is not just royalty software, it can also be used as an author relations tool. You can use the mail-merge feature in Microsoft Word to automatically generate customized letters to each author.

To set this up in Microsoft Word use the Mail Merge Wizard. On the first screen select “Use an Existing List” and then select “Select a different list.” This will bring up the Select Data Source window where you will select Connect to New Data Source, then select Other/Advanced. This brings up another window and you select select Microsoft Access 12.0 database engine. After pressing next the connection tab will show. Here you enter the location of your Easy Royalties data file. The default location is:

C:\Program Files\JDC Software\EasyRoyalties\data\trdata.dat

After entering the above file location press Test Connection.

After you connect to the data file, select the Author table. This contains core author information.

Now you can insert EasyRoyalty information; such as the author name and address, into your template letters.

Many publishers send authors a royalty letter that explains the layout of the royalty statements and includes contact information to use if they have questions about the statements. Some book publishers use this to generate a quarterly or semi-annual newsletter that they send to authors. The newsletters highlight new titles released, awards won by authors of the press, new rights sales and what featured authors are doing to market their titles.

Remember, Easy Royalties software is not just about generating statements. It can also help you improve your author relations.

Import QuickBooks Authors

Learn how to export author information from QuickBooks and import it into the EasyRoyalties software.

The steps are detailed in a new document added to the downloads section of this website that shows you how this is done in three steps;

Step 1. Create the modified vendor contact list report.

Step 2. Export the report to a new Excel worksheet, and delete the top three rows that contain the company name, report name and report date.

Step 3. Import the Excel worksheet into the EasyRoyalties software.

Importing author contact information into your royalty software will save you lots of time.

Universal Music Wins Eminem Royalty Lawsuit

The Los Angeles Times reported that a jury sided with Universal Music in saying that the company does not have to pay a higher royalty on songs.

“They argued that the songs Universal provided to online and mobile services amounted to music “masters,” from which infinite digital copies could be produced. As such, F.B.T. (the music producers) said it was entitled to a higher royalty rate (i.e. 50%) than the 12% they would otherwise receive on the sale of a song or music CD.

The jury sided with the music company’s interpretation that a song purchased online is no different from one bought in a store.
“It’s saying that the digital download is the modern version of a record sale,” said music attorney Fred Davis, founder of law firm Davis, Shapiro, Lewit, Montone & Hayes in New York, who was not involved in the lawsuit. “And the economics to the artist are the same for a digital download as they were for the sale of a single, back in the glory years.” (source: Los Angeles Times)
This case reminded me of a situation at a publisher whose standard contract provided for a 50% royalties on subsidiary rights and non-book sales. This meant, according to the publisher’s own lawyer, that he had to pay a 50% royalty on eBook sales.
It also brought to mind another case in which one publisher’s contract called for a higher royalty rate on bulk sales without defining what consituted a bulk sale. The author argued that a bulk sale was any sale of 10 or more copies.
The Eminim lawsuit against UMG (Universal Music Group) and the two cases that I mentioned above highlight the importance of defining what the terms stated in a royalty contract actually mean.

IRS 1042 Reporting Penalties

Not reporting royalty payments to foreign authors on IRS form 1042-S can result in penalties that approach the amount of royalties paid to foreign authors.

A report from Deloitte lists the penalties that the IRS can apply;

  • Tax liability for 30% withholding
  • Interest on tax
  • Failure to deposit penalty
  • Interest on failure to file penalty
  • Failure to pay penalty
  • Failure to file form 1042-S penalty
  • Failure to provide payee statement penalty

 The Deloitte report also outlines the  10 step audit procedure that IRS agents follow when auditing the reporting of income paid to foreign recipients – including the payment of royalties to foreign authors.

Read the Deloitte Paper on Tax Information Reporting

Universal Music Royalty Website

Universal Music Group has a website dedicated to music royalty accounting.  Here royalty recipients can find the answers to their most common questions.

The main page; We Are Looking For You, provides a search function so that authors can determine if UMG has their correct address. 

The News page highlights an upcoming Royalty Accounting Workshop

The FAQ section answers questions such as;

  • What are artist royalties?
  • What are producer royalties?
  • What are copyright (mechanical royalties)?
  • Why have I not been paid my copyright royalties?
  • My statement shows a positive balance but I didn’t receive a check.
  • I have questions about my statement. Who can help me?
  • I want to audit my royalty statements. What do I need to do?
  • How do I change an address?
  • How does UMG pay artist royalties on internet sales?
  • How do I distinguish digital products from physical products on my royalty statements?

The Resources page has links to sites of interest to music royalty recipients.

The Contact Us page provides contact information along with directions on how to report a change of address.

Read more at Universal Music Group Royalty Accounting

UMG’s royalty accounting website is a good example of best practices in royalty management. Too often, publishers rely on royalty software alone to manage author relations. At Kensai we believe that good author relations requires two way communication with the author via print and the internet, not just the use of royalty software to calculate royalties payable and generate royalty statements.

EasyRoyalties v3.3.0 Update

EasyRoyalties update 3.3.0 is available for free to all version 3 users.

Address functionality has seen major enhancements in this version. The royalty software will automatically parse addresses that you paste in, and you can change the parsing by pressing the Edit button.

Support for foreign address formats has been added. If you select USA as the country the zip code appears after the city and state. If you select France as the country the zip code appears before the city name.

When generating mailing labels the country name does not print if it is for your home country. If the label is for a foreign address the country name prints.

When importing addresses from Excel you can include the entire address (with line breaks) in one field, and the import will parse the address. Or you can place each part of the address in its own field. The choice is yours.

Music Royalty Software

Companies looking for music royalty software should look at the following solutions;

1. Counterpoint Systems – the leading solution for music and record labels

2. Musicalc – for smaller music labels, a hosted solution

3. RoyaltyShare– for larger music labels (RoyaltyShare owns Musicalc), a hosted solution

4. Real Software Systems – for larger music labels

If these solutions are too expensive a book royalty solution may be able to meet your needs. In this area we suggest that you look at; EasyRoyalties and AcumenBook. The vendors behind both of these solutions have a track record of  quickly enhancing their software to meet customer requirements.

Having said this, we believe that a growing music label is best served by a music royalty solution that has a large client base of music publishers and record labels.