Five Steps to Effective Subscription Royalty Management

For publishers, this has forced major changes in the way they produce, distribute and price content. Businesses have responded well to people’s new preferences, embracing subscriptions to reach new readers and build loyalty. They have been supported by a range of third-party aggregators, like Audible and Scribd, who offer ‘all-you-can-read’ ebook programs, ‘all-you-can-listen’ audio subscriptions and schemes that give users weekly, monthly or annual credits for purchases. Some publishers—especially those providing textbooks or academic and professional content—have established popular own-brand subscriptions too. The COVID pandemic, which closed bookshops and raised the demand for digital content, accelerated the take-up of these and other subscriptions.

Providing content for subscriptions can be complicated—not least when it comes to royalty payments. It is easy enough to reward authors for a one-time purchase of their book, but when multiple creators are involved, or when content is sliced into parts, calculating and administering royalties becomes much more complex. MetaComet can help—and here are five steps you can take to make subscription royalties easier.

1. Check the rights

Before publishers use any content in a subscription package, they need to be sure they own the rights to do so. Controlling the rights for particular markets and formats doesn’t necessarily mean that a book can be delivered in subscriptions, especially ones with global access. This makes it important to carefully manage rights on a digital platform where contracts and licenses can be readily accessed. Doing so makes it easier and faster to sell content in subscriptions when the opportunities arise.

2. Establish the royalty model

When content is made available on subscription, it is usually done so in bulk—so its publisher cannot know which book or article will be “sold”. Royalties are often based on usage, so at its simplest, payments can be allocated according to the reads or listens that an author generates; for example, if an ebook attracts 10% of the total use of the package of content that a publisher supplies, then its creator might be paid royalties on 10% of the total subscription revenue. But it is not always that straightforward, because variables like the weighting of content or discounts based on where the content is used may apply. Many also create royalty “pools” from which to pay subscription royalties. Publishers need to establish algorithms that allocate royalties fairly.

3. Communicate with authors

This fairness requires clear and honest communication with authors. Subscription royalties can be an area of tension between publishers and content creators, and the two sides may hold different views on who is entitled to what. Explaining to authors that subscription royalties are not as simple as a royalty calculation on a one-off purchase, and setting out the different rates that apply in this area, will build trust and help manage expectations about income.

4. Make statements transparent

Publishers should ensure that royalty statements provide authors with enough detail about all the sales and usage of their content, and present the data as clearly as possible. Statements need to show which earnings relate to which business models, along with the royalty clause pertaining to each. They should also be readily available to recipients, via platforms like MetaComet’s Royalty Portal. While being transparent, it is also important to avoid burdening authors with too much data, and making it difficult to understand their breakdown of royalties.

5. Find the right systems

Given their complexity, manual management of subscription royalties is fraught with difficulty and extremely vulnerable to error. Automating the process takes away all of the heavy lifting and ensures publishers allocate the correct payments to the correct recipients, on time every time. Good systems also help to future-proof a business’s infrastructure, equipping it to deal with all the further technology-driven changes that lie ahead. Learn more about MetaComet’s solutions, and contact us to learn how we can help you meet the subscription royalty challenge.