It’s no secret that the media & entertainment industry is becoming increasingly fragmented. While no two consumers are exactly alike, these days, what nearly all of them have in common is the expectation of flexibility. Rather than heading to the theater to see the latest movie –– the exception being blockbuster hits like Avengers or Star Wars –– consumers want to be able to watch what they want, where they want, and when they want. This shake-up has completely turned the traditional theatrical distribution model on its head. As a result, networks and studios have been forced to make changes to age-old business models.
Modern Distribution Models
To succeed in today’s hyper-competitive digital landscape, profitable growth requires having multiple revenue streams that extend beyond traditional sources of monetization.
When it comes to video-on-demand, there are three main types of distribution:
Subscription video on demand allows users to consume as much content as they want in exchange for a recurring monthly fee.Examples: Netflix, Amazon, Hulu, HBO Now.
With transactional video on demand, users pay a one-time fee to rent and/or buy content.Examples: iTunes, Amazon, Google Play
The advertising video on demand model allows users to watch ab-supported content for free.Examples: YouTube, Crackle, Tubi
Rights & Royalty Management in the Digital Age
The advent of new digital distribution models has completely altered the way media and entertainment companies manage rights and royalties.
What is a Royalty?
Content rights and royalties are the cornerstone of the media and entertainment industry. Royalties involve payments for the right to use intellectual property, such as movies, TV shows, or music, and are typically agreed upon as a percentage of gross or net revenues derived from the use of an asset.
How Do Royalties Work?
In this particular instance, we define royalty income –– or, royalties in –– as money received from allowing someone to use your intellectual property. Conversely, a royalty payment –– or, royalties out –– is the amount of amount that a licensee would pay to a licensor for the use of intellectual property.
Before platforms such as Netflix, Hulu, and Amazon rose to prominence, royalty agreements were much simpler. This is because traditional rights are much more cut and dry: with theatrical distribution, there is typically only one title involved in the deal-making process. But in the era of the digital boom –– where streaming is king –– video on demand deals have a much faster time to market, with hundreds upon hundreds of titles often packaged into a single contract. Not to mention, managing revenue from subscriptions can be tricky because SVOD deals can be structured so that payment is per price, per unit, per hour, or even per percent of an hour.
Because of this shift, it’s no longer practical to rely solely on custom spreadsheets and home-grown systems to manage royalty and rights calculations. In order to handle the volume of content being licensed and distributed, you need a royalty management software as flexible and scalable as your organization.
Royalty Management Software Made Simple
With FilmTrack, your finance team can easily define, receive, validate, process, and invoice all royalties with the simple click of a button. Our central content and rights management platform provides your team with the real-time data insights and analytics reports needed to make critical decisions for growth.
Utilizing our software, here’s how your finance team can quickly streamline complex business operations:
- Step #1: Establish royalty definitions
Pull pertinent information from your licensing agreement (e.g. how much profit you will receive for every purchase/view/ticket/etc.) then upload directly to the platform.
- Step #2: Mass ingest royalty statements by licensee
Instead of having to manually input data –– which could be up to 10,000 lines when it comes to VOD statements –– our software allows users to automate the entire ingestion process.
- Step #3: Process and calculate royalty statements
Our software reduces the risk of human error by automatically generating detailed royalty statements.
- Step #4: Budget for and report on royalty statements
FilmTrack gives you the ability to analyze by title, territory, right, channel, and SKU. Verify actual versus projected and identify delinquent statements.
FilmTrack can even streamline your back office with document automation. Our reliable and secure, metadata hub keeps international teams aligned across business units and channels to increase efficiency, mitigate risk, and lower costs.
Ready to see how FilmTrack can help your finance team find success? Contact us today to book a demo.