Managing royalties is an essential task for managers and executives in several industries, including publishing, music recording, mining and manufacturing of patented devices. The royalties must be managed properly in order to ensure continued goodwill. Publishers need to have a continuing stream of new titles to publish and sell. Many manufacturers need to provide an incentive to inventors to design new products or improve existing ones in order to stay competitive in their industries. If royalties are not handled properly, artists and inventors may take their business to other publishers or manufacturers. Even if royalty statements arrive on time and contain accurate information, they can damage goodwill if they are difficult to read or are formatted awkwardly.
Although managing royalties is critical to remaining in business, it can be complex, cumbersome and expensive. Contracts between artists and publishers usually specify different royalty rates for different formats of publications, such as hardback and paperback copies of a book. Manufacturers may pay several different royalty rates according to the stages of development and marketing of an invention. Royalties are often divided between writers, their agents and sub-publishers or sub-labels in the music industry. Managing and tracking all of this information so that royalties are paid correctly can be a significant administrative expense for publishers and manufacturers.
To help prevent the management of royalties from diminishing profit margins, many publishers and manufacturers use royalties management software. Many vendors of royalties management software market their product as adaptable for any business that pays royalties. They can be used by publishers, mining companies, manufacturers, oil companies, mining companies or music labels and configured specifically for their business. Other vendors sell royalties management software that is more specialized, especially in the music industry. Royalties management in the music industry was complex even before the Internet changed business models and distribution channels for recorded music. Some royalties management software specifically for the music industry was developed by individuals who worked in the business for many years.
As in many businesses and industries, those who use royalties management software find it advantageous to subscribe to Software as a Service (SaaS) rather than purchase and install the software on their own hardware. The Internet has brought about new formats of books and recorded music and new ways of marketing and distributing products. Those who pay royalties expect continuing change. Subscribing to SaaS can be more cost effective than having to purchase and install upgrades to royalties management software as business models and distribution channels change.