Stop Waiting Around for Data Standards: How to Manage Royalties Now

At OTT.X Summit 2024, Molten Cloud delivered a hard-hitting talk titled Transparency and Standards are a Pipe Dream: Practical Strategies for Royalties Today. The session emphasized a harsh reality for media companies relying on the dream of industry-wide standards: they aren’t coming. As the media landscape evolves, many professionals in content distribution and media rights management anticipate the arrival of standards to streamline operations. But as Molten Cloud's talk revealed, this hope may be a pipe dream. Here’s why, and more importantly, how you can manage royalties in this environment anyway.

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The Industry’s Fragmented Reality

The growth of streaming platforms has led to a more fractured landscape than ever before. Every platform operates with its own formats, deal structures, and reporting styles. As Arjun Mendhi from Molten Cloud explained, while there have been attempts to create standardization (like EMA standards), every platform has still customized the standard to its own needs, effectively creating "non-standard standards"​.

The challenge is further compounded by the rapid increase in the number of monetization avenues — FAST channels, SVOD, AVOD, and more. This adds layers of complexity in rights and royalties management, as platforms expand globally and deal structures become more nuanced. Simply put, the industry’s lack of incentive to collaborate on unifying reporting formats means standards are unlikely to arrive anytime soon. Even if some common frameworks emerge, as Mendhi put it, history shows that platforms will diverge in their adoption​.

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The Distributors’ Dilemma

So, what do we do in a world without uniformity? Molten Cloud presents the "Distributors’ Dilemma," a common struggle faced by content distributors today. There are two primary choices:

Limit Complexity: Simplify your business operations, reduce deal complexity, and standardize internally. While this limits potential revenue from diverse deals, it minimizes the challenges of royalty calculation.

Embrace Complexity and Scale: Dive into more complex deal structures and scale operations. This requires investment in automation to handle the myriad data points from different platforms but allows for a fuller monetization of content​.

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The Molten Royalty Strategy Grid

Understanding where your organization sits in this dilemma can help determine the best way forward. Molten Cloud presented a strategy grid to evaluate how to approach royalties management based on two factors: the complexity of your deal structures and the volume of deals​. Here’s the full breakdown:

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Low Volume, Consistent Deals:

• If your deals are straightforward and few in number, automation may not be worth the investment. Simple manual management is sufficient, as the operational burden is low and can be handled by a small team without the need for complex software.

Low Volume, Complex Deals:

• Even when deal structures are complex, if the volume of deals is low, the cost and effort of automating may outweigh the benefits. In this case, a small, specialized team with deep expertise can manage the complexity manually. Automation can be considered later as volume increases.

High Volume, Consistent Deals:

• When you manage a large number of deals that are relatively consistent, automation is essential. Processing high volumes of royalties without automation introduces inefficiencies and a high risk of error, even if the deal structures themselves are uniform.

High Volume, High Complexity:

• The most challenging scenario—where both the volume and complexity of deals are high—requires a hybrid approach. While automation is necessary to process the large amount of data efficiently, human oversight is needed to manage exceptions, edge cases, and any outliers that don’t fit neatly into the automated system.

Scaling: The Only Way Forward

In a competitive, fast-evolving industry, staying ahead often means scaling up. For companies in media distribution, the sheer volume of deals and growing complexity of content rights mean that manual processes simply can’t keep up. As platforms multiply and deal structures become increasingly nuanced, the need to process data quickly and accurately becomes more urgent. For many, the only way forward is to scale — and in this case, automation is the answer.

Given the industry’s fragmented landscape and lack of standardization, automation isn't just a tool; it's a necessity. Molten Cloud has pioneered an automation model specifically designed to manage the complexities of modern royalty calculations. Their approach revolves around streamlining the end-to-end process, ensuring that companies can handle high volumes of data while maintaining accuracy and flexibility in their operations​.

This automated approach involves several key components:

1. Business Data Foundation:

• You can’t build automation without digitizing and organizing your fundamental business data—titles, contracts, and financial terms. This data serves as the bedrock for automating the royalty workflow.

2. Data Ingestion:

• Automation systems must be equipped to handle various formats of incoming data from different platforms. The ability to integrate performance data, revenue data, and expenses seamlessly is critical for maintaining accuracy in royalty calculations​.

3. Royalty Calculations:

• At the heart of automation lies the calculation engine. By automating calculations that account for different deal structures—revenue splits, cross-collateralization, payment schedules—companies can eliminate human error and speed up financial reporting.

4. Output and Reporting:

• Automation also ensures that once royalties are calculated, reports and statements can be generated in a variety of formats tailored to the needs of each platform or partner. This flexibility reduces manual labor while increasing accuracy​.

5. Analytics and Continuous Improvement:

• Automation not only facilitates the royalty process but also provides valuable business insights. Over time, these systems can generate predictive analytics, allowing companies to make better decisions on future deals, optimize revenue, and adapt more quickly to market changes.

In Conclusion

There are numerous ways to approach automation in your royalty management process, and the path you choose will depend on your unique business needs. For some, it may be enough to enhance existing spreadsheets by building in more complex formulas and automations using tools like Airtable. Assigning a team member to create workflows and automations that address the five key areas — from data ingestion to reporting — can make a significant difference without needing to invest in a complete overhaul.

Teams with higher volume or complexity may consider hiring engineers to build a custom solution from the ground up, tailored precisely to their operations. However, if you’re looking for a proven, comprehensive solution, companies like Molten Cloud have spent years fine-tuning royalty automation tools designed to manage the growing complexity of the media landscape. Molten Cloud’s platform integrates data across rights, royalties, and content into one cohesive system,drastically reducing manual effort while enhancing accuracy and speed.

There is no one-size-fits-all approach to automation. Whichever method you decide to pursue, we wish you the best on your journey. If you’re interested in exploring whether Molten Cloud’s automated royalties platform is the right fit for your business, we welcome you to reach out. Request a demo here.

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For more insight into automating your existing royalties workflows, we invite you to watch the full OTT.X Summit Session, or download the free Royalties Automation Worksheet.