Publishing is important for an artist/writer/producer in being financially secure from their works. So below we’ll look at “How it works” regarding the accounting methods of publishing. I’ve decided to introduce this segment called “How it works” to the readership on our site Amaru Don TV, so you can get a feel of how things work from the professional point of view.
Most publishers will account to the writer on a semiannual basis usually within 90 days so that for the six months period ending 30th June in each year a statement will be delivered at the end of September and for the six months period ending 31st December a statement will be delivered at the end of the following March. The writer will, of course, receive his share of performance income direct from the PRS. The PRS account quarterly although there are only two main distributions in each year.
In the case of a record deal there may be lengthy delays before royalties (particularly in relation to foreign sales) actually come through the “pipeline”. Publishing income is prone to still longer delays mainly as a result of the inefficiencies of the various collection societies. The record company in the territory concerned will pay mechanical royalties to the local mechanical copyright collection society. In turn, the local society will then pay the UK publisher’s subpublisher.
The subpublisher should then pay the UK publisher although it is important for the writer to establish that the UK publisher’s subpublishing arrangements are structured so that the UK publisher will receive accountings direct from the overseas subpublisher (i.e. so that no unnecessary link has been added to the chain). By way of example, in relation to records sold in Germany the German record company for a record sold in December may only account to GEMA (the German collection society) in January the following year.
GEMA account quarterly within thirty days so that the payment would fall within the first quarter of the year and be due for payment by GEMA to the local subpublisher in April. If the German subpublisher accounts to the UK publisher on a quarterly basis the money (having been received during the second quarter) will be due within say sixty days of the end of that quarter so that the UK publisher would receive payment at the end of August.
If the UK publisher accounts to the writer semiannually then payment would not be due until the end of March the following year (a total period since the income arose of some sixteen months). Inefficiencies and delays often result in a period of perhaps two years or more before foreign royalties finally work their way through the system.
The writer should ensure that the contract contains appropriate rights of audit. An audit of a publishing company tends to be far less complicated than a record company audit but nevertheless it is prudent periodically to carry out an audit. If a writer’s royalty account is unrecouped so that the audit is unlikely to give rise to any additional payment then it may be sensible to delay carrying out the audit. The writer should be careful not to fall foul of restrictions in the agreement to the effect that accounting statements are to be deemed accepted and no longer subject to any objection after a given period (usually two or three years). Generally, it is a simple matter to persuade the publisher to extend any objection period to allow any audit to be deferred.
Written by Lee Thompson
Check out below Amaru Don TV interview with Bryan-Micheal Cox on publishing