Understanding Music Royalties: Producers, Songwriters, and Splits

Two Types of Copyrights in Music:

• Master Recording: The actual recorded performance.

• Publishing: The composition, including lyrics and melody.

Producers’ Royalties:

• Producers typically charge an upfront fee for their time and work.

• Producers also receive a percentage of the master recording royalties, such as 10-20%, depending on the negotiated terms.

• If the producer co-wrote or contributed to the songwriting, they are also entitled to publishing royalties.

Artist Buys All Rights:

  • If you are a music artist looking to retain 100% ownership of both your Master Recording and Publishing rights, you will need to pay a significantly higher price for the production.

  • Expect to pay your producer 3 to 5 times their standard price if you do not want to give the Music Producer any royalties on the master recording.

  • Buying out both the master and publishing rights eliminates the producer's ability to earn future income from the work they created for you.

  • The pricing for such an arrangement will increase exponentially to compensate for the loss of potential long-term earnings for the producer.


Recording Engineers vs. Producers:

• A recording engineer who records your vocals or instruments during a session should be credited as a recording engineer on the project.

• However, a recording engineer is not necessarily a producer unless they also fulfill the producer’s role by contributing creatively to the overall production (e.g., arranging, directing performances, or overseeing the project).

• If the producer and recording engineer are the same person, they should be credited for both roles.

Splits and Distribution:

• Splits and credits are not applied automatically. When uploading your music to a distributor (e.g., DistroKid, TuneCore, or CD Baby), you must manually input the details.

• To credit your producer, co-writers, or recording engineers on streaming platforms and ensure they receive royalties:

• Add their IPI number and name (available through their PRO registration, if applicable).

• Select their role (e.g., Producer, Songwriter, Recording Engineer) in the project.

• This ensures everyone is properly credited and royalties are distributed accurately.

Songwriters and PROs:

• Songwriters must register their songs with a Performing Rights Organization (PRO), like ASCAP or BMI.

• Properly linking co-writers’ IPI numbers is critical for royalty tracking.

Negotiating Fees and Percentages:

• Higher upfront fees typically result in lower backend percentages, and vice versa:

• Example: $10,000 upfront = 5% backend.

• $1,500 upfront = 20% backend.

• This balance compensates producers for their time while ensuring they benefit from long-term success.

Mixing and Mastering Services:

• Mixing and mastering engineers usually receive credits only, not royalties, unless otherwise negotiated.

Why Producers Own a Portion of the Master:

• By owning a percentage, producers earn royalties when the song generates income (streams, sales, syncs). This is a way for the Music Producer to continue to be compensated for the role. They played as the song grows and build momentum building, passive income for the artist as well as the Music Producer in the long run and making sure that this song could be a career maker and not just a one time fee payment. 

• This ensures they benefit if the song becomes successful. This is equivalent to residuals the actors get when they are in movies or TV shows. They play the role, but if they have royalties or residuals after the movie has been released, they still are getting paid from the movie performs.

 

Scenario 1: Songwriter or Co-Writer Only

If a songwriter or co-writer contributes lyrics or melody to a song, their work is part of the publishing rights. They do not own any portion of the master recording, as they did not participate in the production of the song. Instead, they earn royalties from the song’s performance, synchronization, and mechanical uses.

 

Scenario 2: Music Producer Who Also Writes the Song

If a Music Producer produces the song and also contributes to its writing (e.g., lyrics or melody), they play multiple roles in the project. This means they are entitled to both:

• Publishing royalties for their songwriting contributions.

• A percentage of the master recording royalties for their production work.

This scenario reflects their dual involvement in both the creative composition and the technical production.

Scenario 3: Music Producer Who Only Produces the Song

If a Music Producer is solely responsible for producing the song, they are entitled to a percentage of the Master Recording royalties but not the Publishing, as their work is essential to the creation of the final product. They will not receiving any Publishing unless they contributed to the songwriting process.

Clearly defining roles and responsibilities for each contributor ensures fair and accurate royalty distribution.

 

Clear Agreements are Key:

• Always define roles and splits upfront.

• Include all parties in split sheets and contracts to avoid disputes.

 



In the Case of "Beat Leasing" : Types of Rights

  1. Non-Exclusive Lease:

    • The producer retains the right to lease or sell the beat to multiple artists.
    • The artist gets limited usage rights (e.g., up to a specific number of streams, downloads, or performances) without exclusivity.
    • Typically involves a lower upfront cost for the artist.

  2. Exclusive Rights:

    • The artist purchases the exclusive license to use the beat.
    • The producer agrees to stop leasing or selling the beat to other artists.
    • The producer may still retain certain rights, such as a percentage of royalties or credit as the creator.

  3. Buyout:

    • The artist purchases full ownership of the beat.
    • The producer agrees to take the beat down and no longer distribute it in any form.
    • While the artist has complete control, many agreements include a clause that entitles the producer to a share of royalties, often 50% on the master recording, to protect the producer’s long-term earnings.

Producer Royalties on Buyouts

Even if a buyout is completed, most agreements maintain:

  • Royalties on the Master Recording: Producers often secure 50% of royalties generated by the master. This ensures they still earn from streams, sales, and performances.
  • Publishing Royalties (if applicable): If the producer contributed to the composition or arrangement, they may also earn a share of publishing royalties.

Key Points for Artists and Producers

  • For Artists: If you want the producer to stop selling or leasing the beat, you need to negotiate a buyout agreement.
  • For Producers: Clearly define your rights in the agreement, ensuring you retain a percentage of royalties and proper credit, even after a buyout.

 

In the case of a Famous Music Artist Leveraging their Fame:

    • Well-established artists with major success or significant industry presence may not offer producers an upfront fee.
    • Instead, they often provide royalties-only deals, allowing the producer to earn from the song’s performance over time.
    • This approach works because the artist’s strong fan base and proven track record create substantial earning potential from streams, sales, and placements.

  • Independent Artists:

    • If you are an independent artist who is not yet well-known or lacks a large following, this type of royalty-only deal is not realistic.
    • Without at least 1 million monthly listeners or 1 million followers, producers are unlikely to agree to a royalties-only arrangement, as there’s no guaranteed return on their work.
    • In this case, artists should expect to pay upfront fees to compensate the producer fairly for their time and talent.

  • Key Takeaway:

    • Unless you have a significant audience and proven success, your negotiation should prioritize offering upfront payment along with royalties, ensuring a fair and professional working relationship.

 

By properly distinguishing between roles (e.g., producer, recording engineer), and manually setting up splits and credits during the distribution process, you ensure accurate recognition and royalty payments for everyone involved in the project.