Spitfire Audio used to spend four to six weeks of solid work on every royalty run. The UK sample library company pays more than 1,500 people around the world. After it automated the process, the same job took 30 minutes.
“It took us four to six weeks of solid work to do all the statements and payments, whereas now, it’s 30 minutes of solid work,” said Shahid Khalid, the company’s Head of Finance. By the company’s count, the change removed 10 weeks of manual work a year, and it did so without new hires.
The example comes from a payments provider’s account of how music businesses handle payouts as they grow. The music industry generates more than $100 billion a year, with billions of royalty streams every day, and the account argues that the companies winning abroad are the ones that can pay artists quickly in many markets.
Fragmented markets, separate rules
Listening is spread across seven channels, according to the account. Audio streaming accounts for 32%, video for 31% and radio for 17%. Each channel has its own licences, splits, royalty rates and payment schedules.
The administrative load grows quietly as a company enters new countries. Finance teams end up onboarding international artists, chasing tax forms, running compliance screenings, logging into separate bank portals and working out currency conversions by hand.
Poor accounting carries a legal cost too. Copyright issues drive 55% of music industry lawsuits, the account says, and many of those stem from improper accounting or non-payment.
Paying faster
Some labels still pay only quarterly or every six months. Create Music Group, which handles about 25,000 artists across four continents, pays monthly. It says an automated onboarding and payout system saved it 36 days of manual financial work each year.
“We aim to be one of the fastest to pay in the industry,” said Zach Victor, the company’s VP of Finance. “A primary benefit of joining Create is your YouTube money. We pretty much pay it out three days after we receive it.” Create also runs a portal where artists can check the status and history of their payouts.
Ninja Tune, an independent UK label with a 35-year history, cut payment processing time by 50%. It now pays artists a full week earlier than before. Dawn Dobson, the label’s CFO, said the Tipalti system made royalty payments faster and “may have delayed or removed the need to increase headcount.”
The account comes from Tipalti’s side of the argument, and the savings quoted are the companies’ own figures. Spitfire’s four-to-six-week runs and Ninja Tune’s one-week gain were not independently checked.
