In my experience, the discussion of the accuracy of participations and residuals payments has often been a divisive one. Actors and guild members suggest that their payments are incorrect, and the accounting process is stacked against them, while studios lament piles of audits creating a seemingly insurmountable backlog and growing cost. But after delving deeper into this disconnect, I discovered valuable insights that could lead to greater unity on the subject.
From our early days in applications management, we learned “garbage in, garbage out.” This phrase was known by those who wrote beautiful computer programs only to discover that the data they were manipulating was bad or possibly mishandled. In the media and entertainment world, we also know that bad outcomes from data processing can come from a host of causes, most of which are not intended and not malicious.
In fact, the key to an accurate and consistent outcome is based on a pair of known fundamentals:
- Careful and systematic testing of system-based calculations to ensure accuracy
- A structured approach to data accuracy and data validation to ensure the information used in those calculations is correct
When working with media and entertainment clients, I’ve found that following these two axioms is crucial for positive outcomes. User acceptance and system testing can be successfully implemented in a relatively centralized model where systems are tested, stressed, and finally certified based on a structured methodology.
But how is the data that goes into these calculations being scrubbed and authenticated? This is where the conversation gets interesting. It’s time for companies to connect the dots between general accounting and participations and residuals, with a plan to focus on data quality.
In order to determine how media and entertainment companies ensure the quality of their numbers, we began to work with the upstream processes that contribute to those participations payments. From there, we had an epiphany – if we can improve the data quality in those upstream processes, then we can improve the accuracy of the payment, and the relationship with talent. The thinking caps went on and a series of ideas came tumbling out, similar to the words of a hit song.
Following the musical metaphor, we set our hook phrase for the chorus of our new song, “on accuracy we’ll focus our action, to increase talent satisfaction.” Ok, maybe not a hit song, but we knew we were on the right track.
The verses for our song were then composed of workstreams:
- How familiar is our field accounting team with the chart of accounts?
- What training have we shared on invoice coding for expenses and how do we ensure the continuity of our processes when faced with turnover?
- As new productions are introduced, how much information is shared between departments?
- With distribution teams and international markets, how accurate is our revenue collection process?
- Has all run data been captured?
Once we started looking at the source data for those calculations, we realized that the talent and studio discord had another dimension: data quality also affects payment accuracy, though this dimension may have been missed due to lack of trust. And if we focus on data quality we can improve the dialog between talent and management.
As consumer taste shifts, channels multiply, international markets grow, volumes increase, and revenue and cost streams react, we need to turn our attention to the aging upstream accounting processes that generate the revenue and costs that make up the participations and residuals statements.
The good news is that studios have a number of ways to review and improve those processes which can also reduce cost, temper audit findings and control rework, as processes are evaluated and streamlined to produce more accurate outcomes.
And more importantly, accurate payments for participations and residuals will result in improved relationships with talent, which is to the benefit of both parties.
You can access our previous posts here