Revenue reporting – distribution, allocation, statement
As part of the music licensing companies’ revenue collection and payment process the use of terms such as distribution, allocation and statement are frequently used. Consequently, RDR-R also refers to these terms in cell names such as DistributionDate and StatementType.
RDR-R states that “The header Record only permits a single DistributionDate, therefore a RevenueReport message can only relate to revenue being passed on in a single distribution.”
Where a sender is using the combined RevenueSummary and/or RevenueDetails messages, more than one RevenueDetails message may need to be sent to cover a single distribution. This is because the simplified structure of the messages requires individual messages to be sent, the data contained in which is driven by the values for UseType, StatementType and AllocatedPartyContributionRole.
While each data cell is clearly defined in the standard, it is worth noting that internal processes and terms used may vary between companies. This may also be the case with regard to the specifics of the revenue that is being distributed, because each music licensing company may have its own rules about distribution and allocation of revenue for contributors and rights controllers.
It is therefore recommended to always consult with the implementation partners and confirm with those collecting and paying music licensing companies (see Clauses 4.1 and 5.2.2) directly about the meaning of terms and definitions to avoid communication errors.
While the standard defines the data cells, it is useful to view the three terms distribution, allocation and statement as part of a single process with various steps for the collection, allocation and repatriation of revenue related to neighbouring rights. The aggregation of all these steps is usually called a distribution cycle where a statement forms the final step and is the physical manifestation of the distribution before the paying-out process to rights holders may take place. A statement may consist of one or more RDR-R messages files because of the restrictions of what can be communicated in a single message as mentioned above. A statement shows the revenue collected within a distribution cycle but may not always result in a payment, as the final balance may either be positive or negative depending on previously applied advances, deductions or other adjustments. A positive balance may be paid out after the provision of a statement within a distribution cycle, while a negative balance may be carried forward into the next one.
The following should only be used as clarification to distinguish the three terms from each other in the context of revenue reporting as outlined in the standard.
Distribution refers to the process of identifying collected revenue to the rights holders and performers. After revenue is collected from licensees, the distribution cycle involves the calculation, attribution, notification and finally the payment to these parties according to the relevant distribution rules;
Allocation is the process of dividing collected revenue among qualifying rights holders and performers. This calculation is based on factors such as usage data, proxies, and contractual agreements. Each music licencing company follows specific distribution rules relating to how the revenue is allocated between qualifying rights holders and performers; and
A statement is a detailed report provided to rights holders and performers or their representatives, showing the breakdown of revenue due. It usually contains information such as the usage data of their recordings, the revenue allocated to them, and specifics of the revenue collection, along with any deductions, interest, and taxes. If the statement shows a positive balance, a payment to the rights holder maybe issued.