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Royalties
Royalties are contingent on the booked, net revenue of the
iAttachments subscription business. The net is calculated as gross
revenue less credit card processing fees and customer service credits.
Revenue is booked at 1/12 of the net $20 annual subscription fee per month.
Eighteen percent of the net revenue goes into the royalty pool, shared
equally (1/3, 1/3, 1/3) between the film maker, the recording owner and the
publisher/ songwriter team. If the public performance monitors (BMI and ASCAP)
collect a fee from iA, this is included in the publisher/ songwriter share.
Because the sales proposition to the customer is a fixed fee ($20/ year),
there isn’t a fixed pay per view/ listen, otherwise there wouldn’t be a business
model. Hence the pro- ration on a popularity basis. Royalties will be paid
quarterly. For the month of December, Holiday greetings are expected to garner
most of the royalties (but they should be in the library by 1 November to generate
inspection). But the royalty pool will be larger the following month, and Holiday
greetings dramatically decline.
No participant is guaranteed anything, and there are no advance royalties. You
might not make anything, and we don’t want to create any unreasonable expectations.
But under the following assumptions, here is what each of the three parties
(the film maker, the record owner and the music publisher/ songwriter team could make.
- New iAttachments are only included in the library and
introduced on the first of each month.
- New subscribers who activate during the month have the first
month’s revenue booked during that month.
- The total number of views for all iAttachments is calculated for
the month. Some subscribers may do more viewing than sending. A “view”
is defined as any time a subscriber, recipient or recipient’s friend
(someone they forwarded the link to) clicks on the iAttachment to view it.
Non- subscribers viewing sample (30 second) iAttachments does not count as
a “view.” There are safeguards to deter those attempting to artificially
boost views in order to increase royalties.
- In this example, 25,000 new subscribers are added monthly @$20; net
revenue is $19 annually, or $1.5833/ subscriber/ month.
- The library starts with 20 titles. Three new titles are added per month
on the first of the month. The pro- rata percent of views is the same each
month for four years, and the title stays in the library for four years.
- Case #1: a title generates 0.1% of the views;
Case #2: a title generates 1.0% of the views;
Case #3: a title generates 10% of the views.
| Case |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Total Royalties |
| 1 |
$185.24 |
$527.22 |
$869.39 |
$1,211.64 |
$2,793.49 |
| 2 |
$1,852.40 |
$5,272.20 |
$8,693.90 |
$12,116.40 |
$27,934.90 |
| 3 |
$18,524.00 |
$52,722.00 |
$86,939.00 |
$121,164.00 |
$279,349.00 |
| © 2009 iAttachments All rights reserved. |
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