Understanding Sales Estimates

Label Engine Accounting, Help, Updates

Sales estimates are a great way to study the progress of your music and measure the success of it but why shouldn’t it be used for accounting purposes and why isn’t an actual indicative of income?

Every month/quarter we receive several emails regarding this topic and the question is often “why doesn’t my estimates match my final report?”, although we have tried our best to warn users of additional deductions by stores that are not calculated until the final report we know it can still be confusing but we don’t blame you, after all, working in the music industry is an ongoing learning experience.

Lets break it down and understand what kind of deductions stores add at the end of the reporting cycle that unfortunately can not be calculated in our estimates.

a) Voids: Voids are the equivalent of “returns/exchanges” in a normal retail store. Everytime something is messed up, whether it is a download or a transaction, a payment is refunded to the customer, ending up in a void. Certain stores are only able to reflect this at the end of their accounting cycles, Beatport for example is harder to track as they account quarterly so it can be months before you can even see this information.

b) Promotional Expenses: Promotional campaigns like discounted downloads, special bundles and free downloads are marked as Promotional Expenses. Stores like Beatport use this deductions to facilitate this options.

c) Publishing Withholdings: Certain countries have laws that force stores to pay publishing royalties for digital sales in said territories, they are then distributed to songwriters and publishers (often owned by the same labels and artists as well). These royalties are withheld by the stores and are paid to the various publishing rights organizations (PROs) around the world.

For example, Beatport withholds publishing royalties for all transactions outside of the USA and here is a list of the current PROs they report to:

– APRA/AMCOS (Australia/New Zealand)
– PRS (UK/Ireland)
– CSI (Canada)
– GEMA (Germany)
– SACEM (France)
– SIAE (Italy)
– SGAE (Spain)
– NCB (Northern Europe)
– Buma/Stemra (Netherlands)

Here is a great article by Billboard explaining how publishing works and the different organizations you should be affiliated with (in the USA, research the equivalents of them in your country) if you wish to learn more: Click Here

d) Exchange Rate Fluctuations: One of the hardest things to predict is currency exchange rates, they change by the minute/hour/day. Certain stores are not only located outside of the USA, they often account and pay us in their currencies, they can change drastically from when you see our estimates to when we are actually accounted and paid for those downloads.

Keep in mind that some of this deductions are taken out before the report is even sent to us so in certain cases it won’t reflect on the expenses sheets we send out with our reports.

Any questions or feedback feel free to email us to support(at)label-engine.com

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