Example: Acquisition Contract with Transaction-Based Outgoing Royalties

You want to represent license acquisition contracts, which are exploitation-dependent and in which the licensor is to be paid for each relevant sales or exploitation transaction as soon as it is recorded in the system (and not on a static, periodical basis). This is useful in situations where exploitation does not happen continually but rather occasionally.

Representation in the License Acquisition Contract

You create a license acquisition contract to purchase broadcast rights of an IP, which you in turn, intend to sell to other licensees. You agree that the producer is to receive 5% of all revenues generated by the sale of this IP’s television transmission rights. More specifically, royalties are to be paid to the producer for each license sales transaction associated with this IP, where the rights dimension Market = TV is specified.

Maintain rights and variable royalties

Create an item with item category IEM5 (IPM Acquisitn Rghts+Roy. Trans-Based) or a similar item category that you define (in SAP Customizing).

Define the rights dimensions for the IP within this item. Ensure that the rights dimension Market is set to TV.
Define variable royalty rates (price agreements) within this item.
In this case, enter 5% using price type Percentage or using a similar price type that you define (in SAP Customizing).

Note Note

Billing request items (BRIs) are not generated for this rights and royalties item in advance. Instead a BRI will be created as soon as a relevant sales transaction is recorded in the system and associated with the contract item. Note the following:

If several sales transactions occur on the same day, they will be cumulated into one BRI.
If the sales transaction falls into one BRI which was already settled, then the system creates a new BRI for the day after.

End of the note.

Result

When an incoming royalty billing is recorded in the system and the acquisition contract items was determined as being relevant, then the system will create a respective BRI in the acquisition contracts billing plan. Now you can settle the 5% outgoing royalties to the producer.