How Royalties Are Calculated
This page provides an overview of the various factors that are considered when calculating royalties. Screenrights has a Distribution Policy that sets out how royalties are calculated in detail. Read the overview below or the full Distribution Policy here.
Collections to Expenses Ratio
Screenrights is a not-for-profit organisation. All the money we collect is distributed to members after the deduction of administrative overheads only. The administration fee is referred to in percentage terms and is called the collections to expenses ratio. The overall collections to expenses ratio is detailed in our Annual Reports.
Rightsholders should note that if they appoint an agent to collect Screenrights royalties on their behalf, the agent may also charge an administrative or agent’s fee on top of Screenrights’ costs.
Distribution Period
Screenrights operates on a four-year distribution cycle, meaning we have four years from the year of collection to distribute royalties. When a Distribution Period expires (Year 4 in the graph below), any undistributed royalties are transferred into the gross distributable amount for the following distribution year for reallocation. The only exception to this is when there is a competing claim, where unresolved Year 4 royalties will be transferred to the Competing Claims Fund (CCF Year), where it may remain for a maximum of one year.
Calculating the value of a program within a pool
The money collected from Australian institutions is dealt with separately to the New Zealand money. Within each of these larger pools, there is a further separation between each of the sectors – i.e. university money is separate to school money, which is separate to TAFE money.
The value of a program is influenced by the money available in the pool for the sector and these three factors:
Balancing the relative value of representative programs
The final step in calculating the royalties earned by a program involves applying a “weight” to increase the value of the copying or communication reported in the survey. This is because programs that are reported in the survey are best understood as representative of what’s happening in the entire sector. They are therefore worth more than a program that is copied or communicated by a record-keeping institution.
Once these factors have been taken into account, each program can then be allocated a total amount.
Allocation to copyrights in a program
Each program contains a number of different copyrights. The total amount for a program is divided between the distinct copyrights. The division differs slightly for New Zealand and Australian royalties because each of the Copyright Acts is different. The allocations are determined by the Screenrights Board.
Australian Retransmission Royalties
Royalties for each Network are separated into different pools.
The money collected from the retransmitters is divided into two pools, one for TV royalties and one for radio royalties. These pools are further divided into individual TV network and radio channel pools. This means money collected for the retransmission of each network is held separately, for instance ABC1 is separate to the money for SBS ONE.
The amount paid to each program is therefore influenced by the money available in the pool for that TV network.
In the case of radio, royalties are paid on a channel basis.
Details of retransmitted programs including regional variations are obtained.
Screenrights can find out which programs have been retransmitted by obtaining details of all programs broadcast in metropolitan and regional areas, or it can take a representative sample of this data and use this. Obtaining details of all broadcast programs involves processing considerably more records, many of which are duplicates. This is a much more costly option, and as administrative costs are deducted from the royalties paid to rightsholders, the Screenrights Board has elected to use the sample method.
To take into account the regional variations in programming on most free-to-air networks in Australia, Screenrights monitors each retransmitted regional signal throughout the year and compiles a representative sample of 365 days. The representative sample is based on relative cable subscriber numbers in each region. The more subscribers in a region, the greater number of days are picked up in the representative sample.
The value of a program within a pool is calculated.
The next task is to work out how much each program that was retransmitted should be paid.
The first factor that determines how many royalties a program earns is the number of minutes retransmitted. The more minutes that are retransmitted, the higher the value of the royalties.
The second factor that determines how many royalties a program earns is the time of day the program is broadcast. Programs that are broadcast in primetime earn around three times as much as programs that play during the day or late in the evening, which in turn earn three times as much as programs that are broadcast in the middle of the night.
The third factor that affects payment is the ratings of the channel (not the individual program) retransmitted.
Once these factors have been taken into account, each program can then be allocated a total amount.
What Happens To Undistributed Funds?
Screenrights pays Members as soon as possible after determining their entitlement. Most royalties are paid to Members in the first year of release. For the remaining amounts, Screenrights works to identify and contact potential rightsholders and to assist Members to resolve any competing claims that may be preventing the release of royalties.
Screenrights holds royalties in trust for a period of four years, unless the Board is satisfied that circumstances exist to justify holding the money in trust for a maximum further two years. If the royalties are subject to a competing claim, Members are granted an additional 12 months to resolve the competing claim.
Once the above period expires, any money that has not been paid to a rightsholder is rolled over into the distributable amount for the next distribution year and is allocated to new records of usage, once again to be paid to Members as soon as possible after determination of their entitlement. Any allocation to a work in which the copyright has expired is not distributable and will also roll over into the next distributable amount. On average, Screenrights distributes over 97% of money, leaving less than 3% undistributed at the end of a trust period.
To arrive at the distributable amount each year, we deduct our expenses, then allocate a maximum 1% to the Cultural Fund and an amount to our Reserve or IBNR Fund to cover errors and omissions. The balance is then allocated as above.
