Following is a continuation of the transcript from David Marlin’s interview on the IPG Podcast.
Hello and welcome to the IPG Podcast. I’m Tom Holman of the IPG, and this is part 2 of our discussion about royalty management with David Marlin, President of MetaComet Systems.
Tom Holman / So, convince anyone who doesn’t automate royalties, or who doesn’t do them very well, that they need to start automating. How do they go about it? A lot of people are understandably quite daunted about changing practices, and about introducing new systems into a business. What are the things they need to think about when they’re doing that?
David Marlin / I think there are really four phases of the royalty process. There’s the contract piece, amassing all your contracts. There’s managing all your sales data, and making sure that’s all properly accounted for. There’s your reporting requirements and what you need to see in terms of royalty costs—your royalty accruals, unearned advances, reserve balances. And then, at the end of every royalty period, the fourth phase is getting your royalty statements and payments out the door. So it can help to look at those four areas and see which ones you need help with.
On the contract piece, providing online access to contracts is one way to simplify and make the process more efficient. On the sales piece, most publishers these days receive 8 to 12 sales files every month from various sources—digital sources, physical distributors, and maybe direct sales coming from some kind of an accounting system—and we have customers that receive close to 60 sales files every month. Consolidating all that sales data is time-consuming and error-prone, so that’s another area where you can look at automating. The third piece is the reporting and the fourth piece is the statements, and here you really need a system to automate all these aspects of royalty management.
So then it boils down to what system you choose, and how you go about implementing it. It’s really important to choose a well-established system that’s reliable, and like so many things you get what you pay for. We’ve seen customers switch from systems that were cheap and had major IT constraints on them. You have to make sure you’re getting a system that can meet your needs and that can grow with you. Some of these systems are great if you have 25 titles, but if you hit 100 titles they’re going to start to bomb out. We were working with one publisher that was growing pretty quickly but had a system designed for fewer titles: they were up to about 1,000 titles, and their system just kept crashing. So you need to make sure you have a well-established, reliable system.
Definitely check what other publishers are saying about the royalty management system. Again, the wrong system can actually increase risk. We’ve seen so-called automated royalty systems that need as much manual effort as if they were doing the whole thing manually because they had to double-check things and had to develop their own reports to validate. It’s really important when you decide to go down the route of automation to make sure you’re working with a well-established and reliable vendor.