As we detailed in this article, Splits let creators seamlessly distribute the earnings from a release to collaborators according to set percentages. While Splits must always add up to 100%, you may find that a more complicated structure is better suited for your label or release. For example, sometimes it is helpful to recoup costs before splitting income, or set funds aside in a treasury for a future project.
Using Splits to recoup costs
Let’s say you and a friend decided to release a digital album together. You are both Label and Release Admins, so you have equal permissions. Ultimately you want to split the earnings evenly, but there is a $200 cost to license an artwork from a friend to use as the album cover. You are generous and offer to front this cost before any albums are sold. In this scenario, you can use Splits in two ways.
One option is to recoup the costs before setting your split. Here's how to do this:
- The duo should initially set the Split to go entirely to you until your earnings equal the cost threshold. You can do this via the Earnings tab in the Release Builder.
- Once the duo hits $200 in earnings and these funds are paid out to the friend who fronted the costs via the Label’s Earnings tab, the Split can be updated to 50% per collaborator in the Release Builder.
- From then on, the earnings will be evenly split across both collaborators. Both parties will receive an email documenting that they have been added to the Split.
Note that since this is a manual change, this method requires a watchful eye on your Earnings.
Another option is to determine a different split amount from the outset. This method can be helpful when working with external collaborators like close folks contributing to the production of the release. Let’s use the artwork license example again. You could offer $200, or offer a 5% Split of all sales. If they agree to the latter, head to the Release Builder and add them as a contributor in the Collaborators tab. This will allow you to add them to the Split in the Earnings tab and toggle if their name is visible as a Creator on your release page. In this scenario, both members would each earn 47.5% and the artwork collaborator would earn 5%, totaling 100%.
Using a Label Treasury
Splits can also be used to build resources for future projects. Let’s say our digital album dup knows that they want to release another project together in 6 months. When they first made this digital album they had access to a lot of free resources, but now they want to plan towards trying something different like booking time at a recording studio or making a physical release.
The duo can use the automated label treasury to help them grow towards these goals. A treasury is a pool of funds that are accessible by a group or organization.
With two members using their personal email accounts for their user profiles, picture two "buckets" where money from the release can flow with the current split set up. Adding a treasury means we want a third "bucket" that money can flow to.
To designate funds to your treasury, head to the Earnings tab in the Release Builder. Select split with contributors and look for the dropdown menu of Contributors. Here you will see all the contributors on the release, and a Label Treasury option.
In this example, the label is called wake up call so the label treasury option is “wake up call Treasury”. Once selected, you can designate a portion of earnings to the treasury just as you would for any other split.
All release admins will have the option to add the label treasury to the split. Just like splits, only Label admin can pay out treasury funds. Next, read how to pay out from a treasury or dive into how to get funds to your personal accounts.