🚧
Feature in development
Escalation Rules are not yet available in Reprtoir.
This page documents the upcoming Escalation mechanism to clarify its purpose, logic, and future behavior. The feature is currently under development and will be released in a future update.
Until then, Escalation logic must be handled contractually or through manual workflows.

What are Escalation Rules?

Escalation Rules are contractual mechanisms that allow Royalty Rates to evolve over time based on cumulative performance thresholds.

Unlike Deduction Rules, which apply contextual adjustments at the statement line level, Escalation Rules modify Royalty Rates when predefined milestones are reached, such as revenue thresholds, unit counts, or contract lifecycle events.

Escalation Rules are commonly referred to as "step-ups" in music contracts.

They are typically used to reward performance by increasing a Rights Holder’s share once certain conditions are met.

Core Principles of Escalation Rules

Escalation Rules are defined at the Contract level and apply over time.

They are based on four fundamental principles:

Cumulative logic
Escalations rely on aggregated values over time, not on individual statement lines.
Threshold based activation
A Royalty Rate changes only when a defined threshold is reached.
Forward looking application
Once triggered, the new rate applies to future revenues only.
Contract scoped behavior
Escalations are evaluated within the scope of a specific Contract or Contract Group.

Escalation Rules do not retroactively modify past calculations.

Escalation Rules versus Deduction Rules

Escalation Rules and Deduction Rules address different contractual needs and must not be confused.

Deduction Rules:

apply line by line
depend on contextual criteria (territory, retailer, sale type, etc.)
modify Royalty Rates based on usage attributes

Escalation Rules:

apply over time
depend on cumulative thresholds
modify Royalty Rates based on historical performance

Both mechanisms are complementary and may coexist on the same Contract.

Typical Use Cases

Common Escalation scenarios include:

increasing an Artist Royalty Rate after a revenue threshold is reached
increasing Producer points once an Advance is fully recouped
step ups after a defined number of units sold
improved rates after a contract anniversary or milestone

Example:

An Artist earns "15%" until cumulative Net Revenue reaches "100,000".

Once reached, the Royalty Rate automatically escalates to "18%" for all subsequent revenues.

Escalation Logic Model (Planned)

When implemented, Escalation Rules in Reprtoir will follow a deterministic order:

Base Royalty Rate defined in the Contract
Asset level Adjustment Rates
Deduction Rules (contextual modifiers)
Escalation Rules (cumulative modifiers)

Escalation Rules will always apply after recoupment logic and before final Operations are generated.

Threshold Types (Planned)

Escalation Rules may be triggered by different threshold types, including:

cumulative Net Amount
cumulative Gross Amount
cumulative Units
recoupment completion

The exact list of supported threshold types will be documented upon release.

Important Considerations

Because Escalation Rules modify contractual rates over time, they introduce additional complexity.

When defining Escalation Rules, users must ensure that:

thresholds are unambiguous
escalation order is clearly defined
interactions with Deduction Rules are well understood
contract data remains auditable and predictable

Poorly designed Escalation Rules can unintentionally override expected royalty behavior.

Relationship with Other Contract Concepts

Escalation Rules build on top of:

Royalty Rates, which define the base contractual shares
Adjustment Rates, which modify rates at the asset level
Deduction Rules, which modify rates contextually
Recoupment Logic, which may act as an escalation trigger

They are a natural extension of advanced royalty contract modeling.

What to do until Escalation Rules are available

Until Escalation Rules are released, recommended approaches include:

splitting Contracts by phase or milestone
manual reprocessing at contractual thresholds
documenting escalation clauses in Contract Notes
applying Adjustment Rates temporarily when needed

These approaches preserve accounting accuracy while awaiting native support.