Your role as a music producer is a major component to making the music we love. You’re the mixologists behind the scenes – the Berry Gordy’s, Rick Rubin’s, Dr. Dre’s and Gary Katz’s of our time. And as a music creative, you’ve probably found yourself looking for ways to make money for your music. The overlooked fees for recording sessions, venues, payouts to your team, and so many others “gotchas” that come with creating music can be overwhelming in this industry. Every penny counts, so we put together this short blueprint on how you can ensure what you should be earning, where you should be earning, and how to collect on those earnings.
Music Producer Agreements:
Before a producer begins working on a new project, he or she should consider creating a music producer agreement. These agreements are contracts that are signed by the producer and featured artist, label, or studio, that protects the producer’s work and ensures he or she will be paid. These contracts include producer fees, which are dues paid for producing or coproducing another artist’s work, rates per master recording or rates for completing an entire project, as well as a breakdown of negotiated royalties and advances.
We believe that all music creatives should hold on to their copyrights when at all possible. With the uptick in streaming revenue and ever-evolving changes in the industry, it is wise to consider the long-term value of your copyrights. A producer’s work is copyrighted as a sound recording, which allows them to receive a cut of the royalties that is split with the artist. Want to know how to copyright your music? Click here for more information.
Producer points are a percentage of royalties that producers earn for contributions to the sound recording of another creative; these can also serve as royalties for performances. For instance, if our CEO Alex Heiche, produces an album for our Managing Director Evan Kaye (who is the artist in this case), then Alex will receive producer points (royalties), on the profit Evan collects for his performance on the album. These royalties are negotiated within the terms of the contract and are ideally established before the producer’s work is released.
Another way that producers can cash in on performance royalties is if they’re accredited as a background musician. This can easily be proven with the producer being noted as an instrumentalist in a song. AFM & SAG-AFTRA is a rights distribution organization that handles these payouts.
Now, this is where things get tricky. There’s a term that can be misinterpreted when it comes to copyrights and that term is neighboring rights. Simply put, we know that there are always two copyrights for a song, publishing, representing the written music and lyrics, and sound or master recordings, referring to the performance of a song. Neighboring rights refer to the royalties earned for the public performance of a song aka the sound recordings. The terminology may seem odd, but they are called “neighboring” rights because they are “neighbors” of the publishing copyrights. Neighboring rights are the royalties that are directly paid to producers by SoundExchange for digital content. The United States does not pay neighboring rights for terrestrial radio.
Producer advances are advances against the producer’s future earnings. During the initial stages of an agreement, producers can include a flat fee for their services or agree to the terms of an advance that are set by the record label. These advances are often in favor of the label, as the company can recoup these earnings, or royalties, from album sales. In short, advances act as credit for royalties that are yet to be collected.
Producers may also utilize independent finance firms like Sound Royalties to receive a royalty advance based on their future earnings. With this type of advance, the producer can choose from a variety of customized funding options and will always retain ownership of their copyrights. Beyond that, the transactions do not require 100% recoupment as is typical in the industry.
So how do music producers make money? Copyrights, royalties, and advances all tie into the financial process to ensure that music producers are paid their dues. As a music finance firm, we encourage all creatives to diligently review contracts they enter and educate themselves on the financial aspects of the music industry.
If you’re looking for uncollected royalties or would like to see a projection of your earnings for the coming year, connect with our team at 844-ALL-MUSIC.