Media and Entertainment Industries: Facing the Royalty Leakage

New technologies and distribution channels are changing how people consume content.  As a result, today’s consumer expects to access content anytime, anywhere and from any device. Despite this, most media and entertainment companies are ill equipped to manage the new digital world. Companies are losing billions each year in poor licensing royalty management and are spending millions to manage, generate and distribute payee statements to artists and other content owners. 
Looking ahead, if they want to remain competitive and relevant, these organizations need to start scrutinizing and evaluating whether or not they are correctly billing and collecting royalties.  They must make capturing inbound royalties a priority, and as the market dictates, royalties payable become increasingly important as costs increase, channels diversify, and new markets open.
Unfortunately, it’s not uncommon for media and entertainment organizations to continue to rely on outdated, siloed legacy systems that provide little flexibility and transparency.  This in turns leaves them ineffective to changing market conditions, vulnerable to royalty leakage, and overall, unable to gain true insights on data to drive business transformation.
For companies wanting to protect their share of the marketplace, it’s vital that they re-evaluate their participations and residuals reporting process.  In fact, now more than ever, they need:

  • Structured and rigorous capture of the participation and residual agreements and related definitions
  • Reliable and accurate negative cost accounting and calculation of “off the tops”
  • Complete understanding of overhead and interest
  • Detailed awareness of production, advertising, and distribution costs
  • Analytics to guide decision making and drive profitability

Companies with the right BPO partner have a competitive edge to better monetize both digital and intellectual property and adapt to today’s changing environment.  The right BPO partner provides end-to-end support and visibility such as an accurate participations and residuals accounting on a by-title basis; early detection of potential issues among producers, artists, and partners; ability to research financial transactions managed in accounts payable, Order to Cash, and Record to Record areas; and transformation expertise focused on streamlining or removing manual processes while leveraging technology.
As a result, companies are able to monetize their IP and have a true understanding of royalties payable and receivables.  With these insights, they are able to accelerate their cash flow on royalties due and position themselves to capture all royalties due as new markets and channel growth accelerate.

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