The Royal Treatment: How Royalties Keep Your Favorite Products Thriving

First off, let’s talk about how almost everything you buy these days is branded. From the moment your little one enters the world, they are surrounded by Disney princesses, Marvel superheroes, and Paw Patrol critters  on everything from diapers to pajamas. And let’s not forget us grown-ups. Whether it’s sporting your favorite team’s jersey at a game or receiving a hilarious Ted Lasso Father’s Day card, branded products are everywhere.

For companies that rely heavily on these brands, a significant chunk of their sales comes from branded merchandise. Ensuring that all branded partners are paid accurately and on time is not just important—it’s crucial. This means royalties need to be managed meticulously, which brings us to why an effective royalty management system like Rightsline’s Alliant platform is a game-changer.

So, what makes royalties in consumer products so complex? Let’s break it down:

1. Multiple IP on One Product/Multiple Products in a Bundle: Imagine a pack of Harry Potter figurines. Each character, from Harry to Hermione, may have different royalty agreements. Every actor’s likeness may need to be compensated. The same goes for greeting cards with various features like college logos and chips embedded in them that play songs. Each element – the logo, song and chip-  often has a separate royalty stream. Rightsline’s royalty solution, Alliant can allocate bundle or multi-IP product revenue to the royalty bearing component level using a number of methods.  
2. Flexible Net Definitions and Caps: Companies need to track various costs, like marketing charges and cost of goods sold (COGS), often with specific caps. Navigating these different deductions can be a labyrinth.
3. Tiered and Mixed Payment Methods: From tiered royalties based on sales volume or dollars to common marketing funds and likeness fees, there’s no one-size-fits-all method. Add in minimum guarantees  and advances, and you’ve got a recipe for complexity.

Let’s take a deeper dive into some real-world scenarios. Minimum Guarantees (MGs) and advances are particularly tricky. Say a licensor has a million-dollar guarantee paid in quarterly installments. If their products perform well and surpass the expected sales, future payments need adjustment to avoid overpaying. Alliant automates these adjustments, ensuring accuracy and ease. In addition, Alliant can flexibly recoup MGs and Advances. Royalties may be grouped by territory, property, format, time frame, or any group thereof in order to perform recoupment.

Moreover, consumer product companies often face geographical and product line-specific challenges. Selling products in the wrong territory or distribution channel can lead to hefty fines and damaged relationships. Rightsline’s robust tracking and reporting tools help avoid such mishaps, ensuring compliance and transparency.

One of the unsung heroes in royalty management is forecasting. Major brands like Disney often require forecasted royalty reports. Alliant enables companies to run forecasted sales through the system, producing accurate and detailed royalty projections. This foresight helps in managing cash flow, meeting minimum guarantees, and planning future sales strategies.