How do I understand royalty statements (reserves, foreign tax, negative earnings, delays) and reconcile reports?

Case Study - “Crystal Transit”
  DistroKid (DSP master), Q1 2025: gross $4,830, deductions none, net paid $4,830. Audit note: matches Spotify dashboard.
  CD Baby Sync (film use), Q1 2025: gross $1,200, deductions 30% admin fee, net paid $840. Audit note: fee correct per contract.
  SoundExchange (US radio), Jan-Mar: gross $950, deductions none, net paid $950. Audit note: good.
  ASCAP (publishing), Q1 2025: gross $1,730, deductions 5% admin plus $120 foreign tax, net paid $1,514. Audit note: withholding to reclaim.
  Label services partner, Q1 2025: negative $220, reason return reserve, net paid negative $220. Audit note: physical returns settle next quarter.
  Outcome: after foreign tax credit and roll forward returns, net cash $7,914. The sheet flagged one mismatched ISRC that ASCAP had not paid; a claim was filed before the 180 day window closed.

Decode the main line items
  Reserves: percentage of physical sales withheld to cover returns, often 20 to 30% for 6 to 12 months. Track and expect release next period.
  Foreign withholding tax: 0 to 30% withheld by overseas PROs or DSPs. Use IRS Form 6166 or your local tax residency certificate to reduce future rates and claim a credit at filing.
  Recoup and advances: advances or marketing costs are subtracted before payout. Monitor until the balance hits $0.
  Negative earnings and adjustments: clawbacks for fraud, refunds, or reporting lags. Ensure negatives tie to prior positives and dispute unexplained amounts.
  Delivery and admin fees: flat or percentage charged by admins or aggregators. Confirm the rate matches your contract.
  Currency fluctuation: some payers convert at payment date, others at sale date. Log FX rates to spot swings.

Build a master reconciliation sheet
  Include columns: Date, Payer, Song or ISRC, Songwriter share, Master share, Gross, Deductions, Net, Currency, Notes.
  Steps:
  Export CSVs from distributor, PRO, SoundExchange, and any pitching dashboard.
  Pivot by ISRC or ISWC; totals should roughly match streaming dashboards with a 2 to 3% timing drift.
  Match deductions; reserves should flow back in later quarters. Create a Reserve Released category.
  Flag any variance of 5% or more for follow up.

Handle foreign tax and withholding
  EU PROs such as PRS and GEMA: typical 0 to 8% with Form 6166. File a tax residency certificate annually.
  South Korea DSPs: typical 15%. A local CPA can file reclaims every 3 years.
  Canada SOCAN: 0% for US under treaty; include IRS residency certificate.
  Brazil PRO: typical 25%. Hard to reclaim; plan as a cost.
  Log withheld amounts per statement and give totals to your accountant for foreign tax credit.

Timing and delay cheat sheet
  Spotify or Apple via distributor: 45 to 60 days, for example January streams pay mid March.
  YouTube Content ID publishing: 3 to 4 months, two quarter lag is normal.
  SoundExchange US: about 3 months, pays quarterly.
  PRO live performance claims: 6 to 12 months, submit setlists as soon as possible.
  Neighboring rights abroad: 6 to 18 months, big but slow money.
  Set calendar reminders; if a line is missing by the usual lag plus 1 month, open a ticket.

Quarterly audit workflow
  Download all statements into a folder named by quarter, for example Q 2025 03.
  Drop CSVs into Google Sheets and run a saved pivot to spot missing ISRCs.
  Reconcile reserves; check that Q3 releases the Q1 withheld amount.
  Sum a foreign tax column for your accountant.
  Create an issue tracker; any variance over $100, email the payer before their dispute window closes, often 90 to 180 days.

Common pitfalls
  Mismatched metadata, different song titles at PRO vs distributor, sends money to unmatched pools.
  Letting distributor CSVs pile up; monthly updates take minutes, annual catch ups take days.
  Assuming SoundExchange collects publishing; it handles non interactive master royalties only.
  Ignoring currency lines; FX loss can look like a deduction if not separated.
  Missing dispute deadlines; after 6 months many payers purge backup data.

Key takeaways
  Separate buckets: publishing vs master lines, then reconcile each.
  Reserves return later, but track them; unreleased reserve is money left behind.
  Withholding is not theft; file certificates and claim credits.
  Build one spreadsheet with all sources and pivot by song and period.
  Audit quarterly and raise disputes before payout windows close; clean statements equal full paydays.