You have the right to audit your royalties. How much could you be owed?

In 2020 Sony Music agreed to pay $12.7 million to settle a claim by artists that its companies abroad had taken a cut of their foreign streaming income before paying them. In 2022 a settlement moved one artist's streaming and download rate from 18% to 50%, with back pay.

Most record and publishing contracts give you the right to audit your royalties: to have the label's or publisher's books checked against your statements. Most artists never use it, because finding out whether it is worth using usually costs thousands. Your statements show what you were paid. We find out what you were owed, line by line against your contract, free. If money is owed, we go after it, working together with established audit partners, and we are paid only from what comes back.

How much could an audit find?

Kieran Hebden, who records as Four Tet, sued Domino in 2020 over a 2001 contract. He said streaming and downloads were licence income, due at 50%. Domino had paid 18%, its rate for CD and vinyl sales. The case settled in June 2022 on terms he made public: the 50% rate from then on, and £56,921 plus interest back to July 2017, the difference between the two rates. Domino said he had accepted terms it had offered before, and that neither the courts nor the settlement had decided how streaming should be categorised.

Eminem's then production company, F.B.T. Productions, had the same dispute with Aftermath Records. Its auditor's report covered 2005 to 2009, and put the difference between treating digital music as sales and treating it as licences at $3,810,256. The label disputed the report.

In both cases the dispute was whether the terms of the contract reflected the industry as it is today, and whether they had been applied accurately and in good faith. Those two questions are at the heart of every royalty audit we do.

Where do royalty statements lose money?

The public cases come back to two places. One is the rate paid on streams and downloads, the question behind both disputes above. The other is what is taken off foreign income before it reaches you.

They are not the only two. We have seen money go missing in many other parts of a contract, for example where a label sets what one account owes against what another has earned. Finding it comes down to going through the statements in detail and knowing the contract they are paid under.

When your songs earn money abroad, companies there collect it for your publisher and take a fee. Some contracts pay you on what reaches the publisher after those fees. Others pay you on the income before them. The Musicians' Union's specimen publishing agreement, written for the writer's side, pays on the income before those fees, with only three deductions allowed. So the same foreign income can reach you at very different amounts, depending on which kind of contract you signed.

The same question comes up with labels, and it was the subject of Sony Music's 2020 settlement. As well as paying the $12.7 million, Sony agreed to raise the artists' streaming royalties by 36% from then on.

We go through every statement you send and work out what each line should have paid you under your contract, rates and foreign income included.

If an audit finds a deduction, am I owed it?

Only if your contract does not allow it. Duke Ellington's grandson found in an audit that EMI's own companies abroad were keeping 50% of the royalties from foreign sales, before the rest was split 50/50 under a 1961 agreement. He sued, and lost at every stage, up to New York's highest court in 2014.

The contract paid on what EMI actually received, whoever took the cut abroad. The court noted that this arrangement had become "much more favorable to music publishers than to artists". Both sides told the court that publishing contracts now usually pay on the income before those cuts, which is why the age of yours matters.

So an audit can find a real deduction that the contract allows. What a statement shows has to be read against what the contract says, and we do that reading for you.

Where does the right to audit come from?

Usually from your contract, and many contracts allow one audit a year. Some make the label or publisher pay for the audit if it underpaid you by enough. The Musicians' Union's specimen publishing agreement makes the publisher pay the writer's reasonable costs of the audit, as well as the money owed with interest, where the audit shows an underpayment above 10% or £2,000, whichever is greater.

The right can also come from law. Under section 115 of the US Copyright Act, if the Mechanical Licensing Collective pays you, you may audit it once a year, alone or with other owners. An independent accountant with music royalty experience carries it out. Under that law you pay for the audit yourself, and if it finds you were underpaid, the MLC pays you the difference.

How far back can a claim reach?

Usually only as far as your contract's deadline for disputing a statement. Many contracts make a statement final unless you object to it in writing within a set time from its date. Jim Weatherly's 1974 songwriter contract allowed one year. The Allman Brothers' recording contract allowed two years to object and three to sue, and the court said limits like these had been repeatedly upheld. The Musicians' Union's specimen publishing and recording agreements allow four. Each period runs from its own statement's date, so your oldest statements go out of reach first, one at a time.

A missed deadline does not always end a claim. Weatherly's 2001 audit reported that Universal Music Publishing Group's companies abroad were taking 25% off the top. Most lines on his statements showed 100, which he read as 100% of the money received; the publisher said it showed its share of each song. The trial court held that the one-year limit had ended his claim, because he could have audited sooner. In 2004 the California Court of Appeal overturned that ruling: not having audited sooner did not by itself end the claim, where there was evidence that the publisher's statements had misled him. It sent the case back to the trial court.

An audit of the MLC reaches any or all of the three calendar years before the year it starts, and no year can be audited twice.

Collecting societies set their own limits, separate from your contract's. PRS says it can generally investigate payments going back three years, with exceptions: 12 months for live music in small venues, and none at all for online use.

What does it cost to find out whether an audit is worth it?

Finding out costs you nothing. Money never goes from you to us: we take a share of what is recovered. You can keep your publisher, your label and whoever administers your catalogue today.

What happens if money is owed?

We go after it. We work together with established audit partners on the formal audit, from our findings through to the settlement.

What do I send, and what happens after?

Fill in the form on this page. We get back to you shortly and ask for your statements and the contract they are paid under, and we sign an NDA first if you want one.