Producer Agreements and What You Should Know Before Signing One

Are you a producer? Maybe you have a passion for music and want to be one! We are here to break down the basics of what every producer in the music industry should know.

What do Music Producers Do?  

Essentially, a music producer is responsible for the production of a track, or a beat given to an Artist to record their vocals. At times, producers organize the logistics of the creative process such as booking studio time or hiring the studio musicians, and bringing in songwriters to the sessions. They guide the creative process and shape the sound of the tracks.

What is a Producer Agreement?

As a producer in the industry, it is important to protect your rights and intellectual property. The most common agreement you are going to see is a producer agreement. Producer agreements are entered into by a producer and the artist, or on occasions a record label. These types of agreements could be for one specific song or any number of songs. These agreements usually lay out the payment terms for the producer, determine who gets the copyright for the song (usually the label), who pays the recording costs, royalties, and any other relevant details. Most importantly the agreement specifies the producer’s specific responsibilities that tend to vary depending on the production.


Things To Look For in Your Producer Agreement

There are a few things you should keep in mind when reviewing your producer agreement. In regards to compensation, you should look out for any advances or fees, as well as if you will be receiving royalties from the recording, composition, or SoundExchange. It is crucial to understand how the royalties are to be calculated and how accounting will be reported. Additionally, you should also keep an eye out for any re-recording clause stating that the producer shall not record, produce, perform, engineer, or remix the master recording into another project for a certain period of time. 

How Do Producers Get Paid?

There are a number of ways a producer can get compensated for their services. Most commonly, they receive an advance against future earnings or a flat fee. As producers start working with higher caliber artists it is more likely that they will get an advance or fee as well as a percentage of the artist’s royalties or “producer points”.

What Are Producer Points?

Producer points, also known as points, are a percentage of the sales of a record. One point is equal to 1%. This percentage usually comes from the Artist’s corresponding percentage of royalties.


What is SoundExchange and How Do Producers Get Paid There?

Producer points only apply to record sales while SoundExchange applies to the neighboring rights of the record. SoundExchange is a collective rights management organization that collects digital performance royalties on behalf of recording artists and master rights owners, such as record labels. More simply, SoundExchange collects the revenue for non-interactive digital radios such as Pandora,  iHeartRadio, or satellite radio. 

Producers can negotiate to get a percentage of the artist’s SoundExchange revenue in their Producer Agreement. If negotiated it is common for producers to receive a percentage equivalent to what is received by or credited to the Artist multiplied by the Fraction, which is calculated from the artist royalty as the denominator and the producer points as the numerator.  

These calculations can be tricky so let’s break them down.  If a producer is entitled to 3 points, they would be taking 3% from the artist’s royalty. For example, if the artist’s royalty is 18%, they now make 15% and the producer makes 3%. For SoundExchange, the formula translates to 3% (producer points) over 18% (the artist royalty) 3/18 which comes out to 16.67% by simply dividing 3/18 to get to the featured artist royalty for SoundExchange.  

Are points and songwriting credit the same?

No, sometimes producers are also given songwriting credit but not always. This varies depending on whether the producer took part in the composition of the song. Additionally, the royalties for points and songwriting credits come from different places. A songwriting credit comes from the written composition while the producer points come from the recording.

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