At Source vs. Receipts Basis: Why the Same Royalty Rate Pays Out Differently
By Qlero Team
Compare at-source and receipts-based royalties, reconcile a worked publishing example, and check the source data behind the contractual calculation base.
Two contracts can show the same royalty percentage yet produce different earnings. The percentage matters, but so does the amount it is applied to. In an international collection chain, that difference may be the income before a sub-publisher's commission or the amount received after it.
This guide explains at-source and receipts-based calculations, follows the money through a worked example, and offers a checklist for reviewing the underlying records. It is an operational explanation, not legal advice about a particular agreement.
The core difference
In its publishing guide, Songtrust distinguishes at-source from receipts-based deals by where the earnings are measured. An at-source calculation uses earnings in the territory of origin; a receipts calculation uses the amount received by the publisher, after the relevant sub-publisher's cut.
That distinction does not tell you every deduction an individual contract allows. Read the definitions, territory provisions and exceptions together. Do not assume that “at source” means the listener's entire subscription payment, or that “receipts” has one universal definition.
The practical question is: which amount does this percentage multiply? Write that amount down before comparing two headline rates.
A worked example: the same 75% rate
Assume $100 of relevant income is earned in France. A French sub-publisher retains 25%, and the songwriter's U.S. agreement provides a 75% royalty. These are illustrative terms, not market-rate recommendations. To isolate the calculation basis, assume no tax, currency conversion, reserves or recoupment.
Under the stipulated at-source arrangement, the songwriter earns 75% of $100: $75. The $25 sub-publisher commission comes from the other $25, leaving the U.S. publisher nothing in this deliberately simplified example.
Under the receipts arrangement, the U.S. publisher receives $75 and credits the songwriter with 75% of that: $56.25. The remaining $18.75 stays with the U.S. publisher.
| Comparison | At-source example | Receipts example |
|---|---|---|
| Income before sub-publisher commission | $100.00 | $100.00 |
| Sub-publisher commission | $25.00 | $25.00 |
| Base for the songwriter's 75% | $100.00 | $75.00 |
| Songwriter royalty earned | $75.00 | $56.25 |
| U.S. publisher remainder | $0.00 | $18.75 |
| All three parties combined | $100.00 | $100.00 |
The difference in songwriter earnings is $18.75. In the receipts example, the two intermediaries retain $43.75 in total: $25 plus $18.75. Every dollar reconciles to the original $100.
These are royalty earnings, not evidence of a bank payment. An advance balance or another permitted statement entry may change the amount currently payable. See how to read a royalty statement for that distinction.
Gross receipts and net receipts: identify whose receipts
Do not treat “gross receipts” as an automatic synonym for at-source income. Ask whose receipts the clause describes and at what stage they are measured.
For a review, make a short bridge between the figures: originating income, each supported deduction, the amount received by the accounting party, and the contractual royalty base. A column labelled “gross” is not enough to establish that bridge.
For example, if a file contains only the $75 remitted in the example above, renaming that field “gross” will not supply the missing $100 source amount. Request the upstream report or a supported reconciliation. Do not reverse-engineer a source value from an assumed commission rate.
Also distinguish deductions made before the royalty calculation from charges against the resulting royalty balance. Subtracting the same commission from both can count it twice. The agreement and source records must determine which treatment applies.
Physical sales add a separate basis question
For a physical-sale calculation, check whether the agreement specifies receipts or a price multiplied by units. Qlero's royalty calculation guide identifies Gross Receipts, Net Receipts, Unit Price, Retail Price and PPD, or published price to dealer, as distinct bases. PPD is documented for Pro and Enterprise.
There is no automatic ranking in this guide of which base pays more. Compare the actual amounts and all applicable terms.
Consider a separate fictional sale with ten units, a dealer-price base of $8 per unit, and $60 in net receipts. At a 20% rate and full participation, the price-based royalty is $16; the receipts-based royalty is $12. If the net receipts were instead $90, that royalty would be $18. These examples show why the inputs, not the label alone, decide the result.
International income: reconcile each chain separately
More territories do not automatically mean more deductions from each royalty. Ten parallel territory arrangements are not ten successive commissions on the same money.
Our recommendation is to reconcile by territory and income stream before combining totals. Keep the reporting party, currency, covered activity, amounts and deductions visible. If two reports cover different periods or use different currencies, make those differences explicit before comparing them.
Where money passes through successive commission layers, calculate the effect using each layer's actual base. For instance, a hypothetical 10% deduction followed by 20% of the remainder leaves 72% of the starting amount, not 70%. That is arithmetic, not a claim that either deduction is permitted by a particular deal.
An at-source label also does not establish that one overall offer is better. Advances, services, rates, contractual scope and reporting obligations can differ. Have a qualified adviser review the complete agreement before making that decision.
A practical review checklist
Before approving a royalty calculation, we recommend recording:
- The defined base: quote or reference the relevant agreement provision, including exceptions.
- The income chain: identify which entity reports each amount and which statement supports it.
- The deductions: show the amount, denominator, supporting record and contractual treatment for each.
- The scope: distinguish territories, income types and recordings or compositions covered by the calculation.
- The reconciliation: account for the original amount without double-counting a commission or mixing currencies.
- The balance effects: keep royalties earned separate from advances, reserves and actual payments.
Treat missing evidence as an exception to resolve, not a reason to choose the figure that produces the most plausible-looking statement.
What Qlero documents—and what to confirm
Qlero's calculation guide says Gross Receipts uses the imported row's gross amount, while Net Receipts uses its net amount. That makes accurate source mapping important; selecting a base does not prove that the file contains the right contractual figure.
The contract-terms guide documents rules that combine territory and other sales conditions with a base and rate. This is documented configuration, not a claim that Qlero automatically interprets every at-source clause or reconstructs an undisclosed collection chain.
For your evaluation, bring an anonymized agreement excerpt and the corresponding source rows. Ask Qlero to confirm the required configuration and plan, then compare the output with a calculation you can explain independently. This article does not establish end-to-end support for every publishing arrangement.
Frequently asked questions
Is at source always better for the recipient?
With identical rates and the assumptions in our first example, it produces a larger royalty. That is not a conclusion about the overall value of two different agreements.
Does receipts basis always mean the same deductions?
No deduction list can be inferred from that phrase alone. Review the definition and supporting records rather than importing assumptions from another deal.
How large can the difference be?
Calculate it from the actual income and permitted deductions. The $18.75 difference above belongs to that example; it is not an estimate for a real catalog.
Can I apply one basis to every income type?
Only if that matches the agreement. Build a review matrix for the relevant streams and territories, and resolve unclear terms with the appropriate adviser.
Make the base as clear as the rate
A useful reconciliation shows where the income began, what happened before the royalty was calculated, and how the result reached the statement. Start there before debating whether the percentage looks attractive.
Book a Qlero demo to discuss your source files, royalty bases and reporting requirements.