Which option best describes net revenue?

• A. Revenue after deductions such as recoupable costs, before royalties
• B. Revenue before any deductions
• C. Revenue after deductions including taxes
• D. Total revenue from all streams

Answer: (A)

Net revenue is the money left after subtracting the allowable deductions from gross receipts, and it’s the amount used to calculate royalties. In music business contracts, deductions like recoupable costs, marketing, distribution fees, and other contractually chargeable items reduce gross revenue to net revenue. Royalties are then calculated from this net revenue, not from the original gross amount, so the net figure is used before royalties are paid.

For example, if gross revenue is 100,000 and recoupable costs plus other deductions total 35,000, net revenue would be 65,000. The royalty rate would apply to that 65,000 to determine the royalties due.

The other descriptions don’t fit net revenue: revenue before deductions describes gross revenue, not net; revenue after deductions including taxes shifts taxes into the calculation, which isn’t typically how net revenue is defined in this context; and total revenue from all streams also describes gross receipts rather than the post-deduction base used for royalty calculations.