Friday, May 28, 2021

What Does Pro-Rata Mean? Especially With Reference to Streaming Royalties.

Pro rata is a Latin adverb or adjective meaning a proportionate allocation.

When services calculate streaming royalties to licensors on a pro rata basis, it usually means allocating earnings to each licensor according to its share of a pool of total earnings.

However, licensors of content that attracts the most profitable per-stream users are apt to find such standard pro-rata methodology to be unfair and may favor user-centric royalty calculations instead of those that are pool-based. In a user-centric calculation, a streaming service instead pro-rates earnings from each individual user to the relevant licensors and does not first pool earnings matched to individual users.

Pro rata calculations can be used to determine the proportionate shares of any given whole and it is often used in business finance.