Accrued and Other Current Liabilities

6 Months Ended

Jun. 30, 2020


Note 7			Accrued royalties, fulfillment and other current liabilities

Accrued royalties, fulfillment and other current liabilities (in thousands):


	June 30, 2020		December 31, 2019
Royalties and other fulfillment costs	$	53,085	$	55,750
Employee compensation, commissions and benefits	6,159		6,858

Sales, VAT and other taxes payable	2,069		2,547
Operating lease liabilities - current	4,388		4,805
Other	10,164		7,343
Total accrued royalties, fulfillment and other current liabilities	$	75,865	$	77,303

Included in royalties and other fulfillment costs are Napster's accrued music royalties totaling $51.9 million and $54.2 million at June 30, 2020 and December 31, 2019, respectively. Napster’s agreements and arrangements with rights holders for the content used in its business are complex and the determination of royalty accruals involves significant judgments, assumptions, and estimates of the amounts to be paid.

The variables involved in determining royalty accruals include unmatched royalty accruals, revenue to be recognized, the type of content used and the country it is used in, outstanding royalty audits, and identification of appropriate license holders, among other variables. In addition, some rights holders have allowed the use of their content while negotiations of the terms and conditions are ongoing. In certain jurisdictions, rights holders have several years to claim royalties for musical composition.

While Napster bases its estimates on historical experience and on various assumptions that management believes to be reasonable under the circumstances, actual results may differ materially from these estimates in the event of modified assumptions or conditions.

Related to Napster's accrued music royalties are amounts that are advanced to certain music publishers for royalty amounts that have been agreed as being owed, but for which the underlying rights holder have not yet been specifically matched. These prepaid royalty amounts totaling $0.9 million and $2.0 million at June 30, 2020 and December 31, 2019, respectively, are included in Prepaid expenses and other current assets on the unaudited condensed consolidated balance sheets. When these amounts are ultimately matched and invoiced to Napster, the prepaid royalty amount and the related accrued royalty liability are offset on the unaudited condensed consolidated balance sheets.