Lying hidden beneath the latest debatably catchy Taylor Swift or Ed Sheeran tune is the royalty ‘black box’, or the millions of dollars artists lose from untracked royalties each year.
By clearer definition, the term refers to royalty money from allegedly unclaimed work that sits in escrow accounts across the world, which after a period of time, is withdrawn and distributed to publishers in that region.
It’s an issue that carves into the earnings of artists, which can be especially damaging to smaller-time artists trying to work their way upwards.
Meanwhile, simple mistakes and missing data cause music artists to miss out on chunks of their potential income, a problem which is growing increasingly ever-present in the digital age of streaming content.
Searching for a way to tackle the royalty-loss issue was Tom Harris, the founder of White Sky Accounting, a Melbourne-based business management firm which has been supporting clients in the music industry since its inception in 2002.
Harris launched Royalty Tracks at the beginning of this year, an in-house platform which automates the process of finding an artist’s missing income in a just a few hours. Using the technology, the business has served local artists including Gotye, Empire of the Sun, Vance Joy and Courtney Barnett, as well as international talent such as Grimes and Fink.
“When artists sign deals with record labels and publishers, they’re sent royalty statements every six months showing them where their music has made money, and the labels then pay the artists their share. However, these royalty statements are often riddled with mistakes and missing data, leading to the artists being underpaid,” explained Harris.
“As the flow of royalty income is becoming more complex and the volume of data increasing exponentially, it’s inevitable that mistakes will be made and money will be lost. The average anomaly rate is 9.12 percent, which equates to a worldwide problem worth $1.1 billion per annum in missing royalties.”
Gaining Australian rock band The Temper Trap as a client back in 2009, the business gathered record statements from various music labels around the world, which Harris said featured a lot of data that made little sense.
Looking to understand the data to gain an holistic overview into the band’s earnings, White Sky partnered with Gerry McKenna, a local expert in music royalties.
“I was fascinated with the work she did. It was meticulous and complex, and it found us a lot of money we would never have found ourselves. I could see Gerry had a real genius in the way she worked but I felt with the help of some fancy Excel macros it could all be done a lot quicker and the findings could be communicated to her clients more clearly,” recounted Harris.
Asking McKenna to join the team, the pair began working on an MVP for a royalty tracker that would operate in Excel, dubbed “The Batcave”.
Using the program to serve clients for some time, the pair soon found that excel and The Batcave could no longer handle the data increase derived from streaming royalties, and so they looked to build something more “robust” – the result is Royalty Tracks.
“The brilliance of Royalty Tracks is that it’s able to import and normalise the data from royalty statements received from any record label or publisher,” explained Harris.
“From there, by entering the variables in the artist’s record contract, Royalty Tracks can automatically identify where the rules of the contract have been breached, therefore identifying any missing royalty income or anomalies that have caused the artist to be underpaid.”
Once the software has churned through data, it can be visualised on an easy-to-read dashboard, which breaks down the artist’s income by country, format, tracks ,or albums.
While the concept of sorting through data to find royalty anomalies isn’t exactly new, the speed, visualisation and automation is, according to Harris.
For smaller artists, the speed of Royalty Tracks makes the service cheaper, therefore offering them an affordable avenue to track any missing income.
“Incorrect royalty statements is a global problem and has been for decades,” said Harris.
“The reason royalty statements are inaccurate is because there are a lot of record labels, with limited resources, who are required to produce royalty statements for every artist they work for and there just aren’t enough people with the skills and experience to get it right. Previously, going through royalty statements would take days, but now we can do it in a matter of hours.”
With a cheaper model available, the business has been able to extend its offering to smaller artists, garnering a number of local and international talents.
While the software is currently being as an exclusive internal service under Why Sky Accounting, Harris said the next “phase” will look at licensing the product as software-as-a-service (SaaS).
Although the platform is mostly automated, clients will still have to hold a “fair bit” of royalty knowledge to sift through the data. Harris said the business will continue to work alongside international and local music business managers to broaden Royalty Track’s reach across the globe.
Image: Tom Harris. Source: Supplied.