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How we calculate your Royalties - Earnings Algorithm Explained
How we calculate your Royalties - Earnings Algorithm Explained

The intricacies of our earnings algorithm; precise calculations and transparent dealings in the music industry.

Brian Sucari avatar
Written by Brian Sucari
Updated over a week ago

In the multifaceted world of the music industry, clarity in financial dealings is often shrouded in complexity. At Zil Distribution, born from a record label and propelled by an unwavering commitment to transparency, we've experienced firsthand the challenges of navigating through the labyrinth of earnings calculations and payouts.

Engaging with massive data, even businesses with the purest intentions can inadvertently falter, stumbling into unintentional opacity. We understand that precise calculations and punctual payments while navigating through enormous data sets are immense tasks that can breed unintended obfuscation.

Herein, we unveil our meticulously developed technological solutions - an algorithm that efficiently manages large volumes of data and ensures precise calculations and transparent dealings.

This guide walks you through the logic behind our earnings algorithm, reflecting our dedication to ensuring clear, comprehensible, and transparent financial management for all our stakeholders in an often turbid industry.

Step 1: Indexation Protocol

The initial step in our earnings calculation process revolves around meticulously gathering the detailed metrics supplied by music stores. Each piece of data is indexed based on ISRC and UPC and further broken down by Date, Country, Store, and Plan. Resultantly, every line item distinctly displays the number of streams or usages of a track, alongside the generated revenues expressed in the local currency.

Step 2: Data Formatting

In this second step, we meticulously format the obtained data to ensure seamless access and interaction within our Front-End interface, simultaneously prepping it for the subsequent user revenue computation process. The meticulous arrangement and transformation of the data ensure that it is primed for the precise allocation of earnings per user in the upcoming calculation phase.

Step 3: Hierarchical Auto-Splits

The Auto-Splits feature ensures accurate and customizable revenue allocation for Labels during a release.

Initial Deduction: Every revenue is first subject to Zil Distribution's fee. The net amount post-deduction is the subject of further allocations.

Auto-Splits Decision:

  • Inactive: The entire net revenue directs straightforwardly to the Label.

  • Active: Labels determine revenue distribution, with options at two key levels:

    • Allocation Level:

      • Album-Level: Aggregate revenues from all tracks, then proceed.

      • Track-Level: Each track's revenue is processed individually.

    • Stakeholder Distribution:

      • Uniform Share: Assign a percentage (Share) to distribute direct stakeholder earnings.

      • Conditional Share: Incorporate a Start Limit, redirecting royalties to the Label until total earnings surpass it, post which the Share applies.

This methodology signifies Zil's commitment to enabling Labels to execute precise revenue distribution through a transparent, systematic approach.

Step 4: Revenue Allocation

An aggregation operation is performed to calculate each track's gross revenue, consolidating all associated financial data. After this, Zil Distribution's distribution fee is programmatically subtracted, deriving the net revenue available for distribution to stakeholders.

Implementing the Auto-Split functionality, the system retrieves the Label's pre-configured directives, determining the proportional allocation of net revenues to each pertinent user. This computational process ensures that each stakeholder receives an accurate, mathematically derived portion of the revenues according to the predetermined splits. The resultant data is then methodically registered in an auditable ledger database, offering precise financial accountability and transparency.

Users can access this data anytime through the Accountability Report in the Statements section, ensuring a clear, precise, and verifiable view of all distributable revenue calculations and allocations.

Step 5: User Balance Calculation

The data from the Accountability ledger becomes pivotal, acting as the foundational financial record for the balance calculations during the specified processing period, leading to the issuance of a royalty payment.

The Transactions model is crafted to emulate the meticulous accounting observed in banking systems. It involves the aggregation of royalties, credits, and the subsequent deductions for advanced payments and withdrawals from the balanced total. This database's immutability is essential; while new transactions can override older entries, the integrity of all historical movements is preserved impeccably.

Users can access and download this comprehensive transactional data directly from the Transactions section under Statements, ensuring transparency, verifiability, and integrity in every financial interaction and calculation within Zil Distribution.

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