Pay Lag
Pay Lag refers to the time between when a transaction occurs (i.e. the Timestamp) and when the royalties for that transaction are remitted to a catalog (i.e. the Paid Timestamp).
Pay Lag is exceedingly common within music industry royalties, especially with the advent of streaming. Due to pay lag, there can often be a months-long delay between when a transaction occurs, when it is reported to a distributor, when the distributor reports and remits that transaction to the catalog, and finally, when the catalog reports and pays the royalties for that transaction to their payee(s).
For example, an audio stream may occur in April but is not reported to a catalog's distributor by the streaming platform on which the stream occurred until June. The distributor may then report the stream to the catalog in July reporting, and finally remit the total for the stream to the catalog in August. If the catalog reports to its payees bi-annually, this April stream remitted in August will likely not be reported or paid to a payee until the H2 round has been closed, as the stream would have a Paid Timestamp that falls in August (i.e. the second half of the year).
In some instances, platforms may report earnings so infrequently that they are only reported once or twice per year, or on no particular set schedule!
Additionally, Pay Lag is often dependent upon the type of data source and transaction. E-commerce (for example, Shopify) and other direct to customer sales (like Bandcamp) are often remitted as, or close to, when the transaction itself occurs. Streaming royalties, however, often go through several phases of being reported, calculated, and remitted before they reach the hands of those owed royalties. Similarly, due to the complex system of reporting and collections, publishing royalties also tend to be on a months-long system of pay lag.
The good news is that through Infinite Catalog's system of mapping Timestamps and Paid Timestamps, our platform makes it easy to track the progression of pay lag and see exactly when your royalty-bearing transactions occurred and were remitted, regardless of the format or source of the royalties, providing valuable insights into your catalog's remittance trends. Additionally, our system uses the Paid Timestamp for royalty accounting purposes to determine where a transaction lands in a reporting period and ensure royalties are remitted to the catalog first, before they are reported to payees.