As a music producer its of vital importance that you understand the business side of music……because good understanding will help you get what’s rightfully yours.
One of the more common questions that I get from most newbie music producers is:
“What percentage do music producers get?”
Music producers with enough clout can get 50% of the publishing and 3% to 5% of the master recording royalty. But both the publishing and master royalties will vary depending on the agreement in place.
Now that we have percentages out of the way, let’s discuss the various ways a producer is paid.
Upfront fees
Producers will usually get an upfront fee for the beat which will usually be stipulated by the producer and agreed upon.
This fee is usually the asking price of the exclusive rights. Which means that whoever pays for the exclusive rights will own and retain the rights to use that music exclusively.
In non-exclusive arrangements, the producer will retain the rights to sell the beat to more than one individual which is why most non exclusive beats cost far less compared to exclusive beats.
Depending on the artist you’re working with…the upfront fee may or may not be on the table, especially if a record label is involved.
If the upfront fee or advance is off the table, the producer can demand for a higher publishing and royalty percentage. Which is usually the case for most producers that have frequent dealings with record labels.
On the other hand, if you do get advance or upfront fee. Your negotiations for royalties will be slightly off put because they’ll be a limit for what you can actually demand..
Therefore, as a good business move, it pays to understand the artist you’re dealing with because in some cases…it may be good business to scrape the upfront fee and ask for higher publishing and royalty payments/percentages.
Publishing royalties
Publishing is a combination of mechanical, sync and performance royalties.
With publishing royalties it is usually common for producers to get around 50%. But this will depend on how well they can negotiate, their status and etc.
The logic behind this is that, when the producer sells an artist a beat exclusively…. they should be compensated for their contribution to the record so their share is usually half of the publishing royalties while the other half goes to the songwriters.
Producers with weak legal teams will likely encounter difficulties in getting their fair share of the publishing. Especially if they just made the beat.
For producers that make the beat and help out during the creation of song by providing input and direction on the lyrics or music in general, publishing royalties are a good way to give the producer a fair share because of their contribution in the process of making the song.
Theres really no actual role that says producers are entitled to publishing but it is the general practice in the music business. Therefore it is up to you as the music producer to take advantage of this.
You just have to remember that working with major record labels may lead to you getting smaller royalty percentages because major labels tend to pump in a lot of money in ensuring that the record is created, marketed and monetized… therefore they’ll have to retain a reasonable amount of ownership of the record in order to recoup expenses.
Production Points
Points are heavily talked about in the music production world therefore having a good understanding of them will help you know how to negotiate.
Points refer to the percentage share in the master recording royalties. Record labels spends lots of money in ensuring their artists create the best of music and that is what is referred to as the master recording and will be the very thing that the record label will be focused on selling to make a profit.
Labels will usually own a certain percentage of the master recording rights and the producer will usually get points out of the artists share which is usually 12% to 18%. This is why we see most producers walking away with 3 to 5 points (3% to 5%) of royalties.
Usually artists have to wait for the record label to recoup all expenses and then begin to see royalty checks because this is usually the agreement in most of these deal.
For example, Say a label advances an artist a $100,000 then covers marketing, promotion and distribution costs of about $200,000. This means the label has spent a total of $300,000 to create your album and have it ready for sale. This means the label will have to recoup this $300,000 before you as the artist start to receive any income….. but this is a different story for producers, they’ll start to receive payments the moment your record starts to be streamed and sold…. why?
because the producer is not part of the artist deal and is in most cases not signed to the label which makes them independent contractors free of any cost implications between the record label and artists.
