When setting up contracts in Tone, you’ll need to add a sales rate. Sales rates determine what percentage of earnings should be allocated to that contract. This can be as simple as adding one percentage to apply to all earnings, or you can add different rates for different conditions based on territory, distribution channel, configuration, source, or catalog groups.
Most digital royalty deals calculate royalties as a percentage of total Net Receipts. However, some labels and contracts require different calculation methods. To accommodate these needs, we offer various calculation styles in Advanced Mode. Contact us if you need access to these options.
Net Receipts:
Choose this option when a contract’s sales should be calculated based on the amount collected by the label. This is most common.
Calculation:
(Net Amount * Sales Participation Rate) x Sales Rate
Tone provides numerous calculation methods to accommodate the various ways royalty deals are structured in contracts. Users with the "Tone Advanced Features" permission can access the following calculation methods:
Gross Receipts:
Choose this option when sales should be calculated based on the original amount (before any distributor commissions, fees, or deductions). This is the most artist-friendly option.
Calculation:
(Gross Amount x Sales Participation Rate) x Sales Rate
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Contracts often define “gross” and “net” differently. Always refer to the specific contract language to determine which calculation basis to use.
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The following sales rate types are calculated in the exact same way, using different values from the Cleaned Data in the Sales tool. These values can be mapped to a column from the raw sales file, or calculated when the file is processed in Tone.
Example: If your contract is based on Retail Price x Units but the distributor has not reported the Retail Price, you can add a rule to calculate the Retail Price by dividing Gross Amount by Units.