Producer Royalties: How Should Your Producer Be Paid?

producer royalties

Producer royalties are a very important part of the music industry. Indeed, almost every music producer these days will ask for a percentage of your record royalties. This percentage of record sales is known as “points”.

Producer “Points” vs. Producer Songwriting

As a reminder, producer “points” on the record involve an entirely different revenue stream than if your producer is given songwriting credit. For more on the 2 different copyrights in the recording and the song itself, see here. For more on whether your producer is also a co-writer, see here.

In short: almost every music producer will ask for points on the record, but only those producers that actually co-write songs with you are entitled to songwriting.

producer royalties

What Is the Norm For Producer Royalties?

Once you’ve decided that your producer is entitled to producer royalties, the next question is: how much? From my experience, the industry norm is between 2 and 5% of record sales. In the golden age of recorded music (after Elvis, before Napster), this could results in a lot of money. Think about 3% of Michael Jackson’s Thriller, which sold 30 million copies in the US alone (30 million times $10 per record times 3% = $9 million). And most of those records sold for far more than $10.

While records don’t quite sell like this any more, some do. Adele’s last record sold 25 million copies, for example. So producer royalties are still a very important consideration when entering the studio.

producer royalties

How Should Producer Royalties Be Calculated? PPD or SRLP

Once you determine what percentage of record sales your producer is entitled to, the next question is: which amount does that percentage apply to?

The key to answering this question is understanding the acronyms SRLP and PPD, and their differences.

SRLP is the “suggested retail list price”, which is the approximate price charged by the retailer (Wal-Mart, your local record store, or one of the few retailers left).

PPD is the “published price to dealers”, which is the approximate price that distributors charge their dealers, or the “wholesale price”.

So: PPD is lower, SRLP higher.

producer royalties

How Does SRLP or PPD Effect Producer Royalties?

Whether you choose SRLP or PPD can make a huge difference in terms of dollars flowing from you to your producer. For example, a 3% SRLP producer royalty on a $12.99 album would be roughly $0.39 per record sold. If this same 3% royalty was based on PPD, which is typically half of SRLP ($6.50), then you’re looking at roughly $0.20 per record sold to your producer. In other words, you would need to double the producer royalty to about 6% to come up with the same royalty of $0.39 per record going to the producer.

Whether you agree to pay producer royalties on PPD or SRLP, the royalty should be proportionate. In other words, the royalty per record sold going to the producer should be more or less the same whether you’re going SRLP or PPD.

How Do You Agree On Producer Royalites?

Whichever royalty base is used, it must be clearly stated in a Producer Agreement. The Producer Agreement is a crucial agreement for any musician recording songs, as it clarifies and confirms the mutual expectations of both parties. I large part of my legal practice deals with Artist/Producer disputes.

A Producer Agreement covers many issues, including:

  • What is the Producer Royalty?
  • Is the Producer also a songwriter?
  • Who owns the masters? (typically the artist, but not always)
  • What credit is to be given to the Producer?
  • Is the Producer entitled to a percentage of SoundExchange revenue?
  • When does the Producer Royalty kick in? (usually once the Artist recoups their recording costs)
  • And much more

I highly recommend that a Producer Agreement be drafted and signed before you start recording. As always, email me with any questions.

producer royalties

20 thoughts on “Producer Royalties: How Should Your Producer Be Paid?

    • I have a producer who is requesting 50% royalties on a single song, for Recording, Mixing/Mastering, and Production. Now my artist also is in a Co-Publishing and Administrative Deal with a private publisher. I understand how the royalties will be shared between the Artist and the Publisher, however I’m unclear on exactly, what the producer is requesting 50% royalties of. Maybe you can help me clarify a bit

        • Hi kuhrt how would i split royalties with a producer for the track they produced. Bmi said they only pay artists. How will the producers recieve their payments?

          • Hi Herman,

            The key thing is understanding which royalties you are referring to. If it’s from record sales, then typically you have a Producer Agreement that states how they are going to flow from you to the producer (often producers will require that the label pay them directly).

            If we’re talking songwriting – first you must determine if the producer is in fact a songwriter with you.

            Email me at kdahl@murphyandcompany.com to discuss further.

            Thanks

            Kurt Dahl
            Entertainment Lawyer

  1. If there is a co-producer that co-produced 4 out of 10 songs on an album and they receive 4 points on the album, does that calculate to 1.6% royalty or $1.60 per record sold?

    • Hi Shayla,

      They would get 4% of the royalties for those 4 songs — the focus would be on the individual songs rather than the album (especially in the modern single-driven world). So when any of those songs is sold on iTunes for example, he would get 4% of the $0.99 sale price.

      If you are selling hard copy albums, let’s say for $10, that means each song is selling for $1 and the producer gets 4% of that dollar, or 4 cents. If they had produced all 10 songs, they would get 10 songs times 4 cents, or 40 cents per album sold. Because he produced 4/10 songs, that’s 16 cents per album sold. So not much. The key is to look at “points” as percentages. 4 points = 4%.

      I hope this helps,

      Kurt Dahl
      Entertainment Lawyer

  2. What’s 5% PPD For one song dat sold 1 million how do you do the math if its more than a million. And what about streaming music as well

  3. I finished a mixtape im the recording artist also the songwriter i recorded in my own studio my producer wanted 100$ for every beat i payed him off also payed him off for mixing the songs. We dont work under a label were both upcomming we havent written a contract. But he tells me he wants 50% split of all the money except when im getting paid on stage? Whats the normal % i can give a producer and who can decide homutch a each get? Who gets to decide who is what of the contract?

    • I would not agree to these terms. It sounds like you need a lawyer to negotiate the terms with this producer.

      If he wrote all the music, then he might be entitled to 50% of the songwriting, but it depends on the terms of sale for his beats. Email me to discuss further.

      Thanks,

      Kurt Dahl
      Entertainment Lawyer

  4. hi my name is matthew pandi and i am a music producer i got a contract that a has a split share of 80% that goes to the artist and 20% that goes to me is it a good deal or not

      • That is an interesting viewpoint Fradella! As a drummer, I especially like it 😉

        I think it really depends on the genre and the song. In country music, for example, most would say that the beat is less important than in hip-hop. But in hip hop, the “beat” means more than just drums, it means music as well. So you’re right in that regard.

        Thanks,

        Kurt Dahl
        Entertainment Lawyer

  5. Hey Kurt, Thank you for this amazing article. It has helped me gain some understanding in the difference between PPD and SRLP. I have been sent an agreement, with an advance and percentage in PPD, was wondering if it would be possible for me to show you the agreement as I would really value your expert opinion on whether it is a contract to go ahead with or not.

    Thank you

  6. Hi Kurt, I’m a unsigned artist. I sent a piano arrangement only of a song I wrote that I want him to produce for me. He use to work out of an established studio but now has his own studio in his house. He is a fairly known producer in nashville in certain circles. He gave me a contract where he’s asking for 3.5% royalties if I get signed by a label and 20% if I stay Indy. Below is the language:

    “If Master(s) are embodied on a record which is released by a Record Company, a pro-rated royalty equal to three percent (3%) of suggested retail list price (“SRLP”), or the equivalent wholesale (“PPD”) rate, (the “Base Rate”) payable from the first record sold and not returned (i.e. “from record one”) after recoupment of only the Producer’s Advance and reduced, increased, calculated, accounted for and paid in the same manner as are Artist’s royalties pursuant to the Recording Agreement.

    If Artist is not subject to a Recording Agreement and/or Artist distributes Master(s) directly, Artist shall pay Producer twenty percent (20%) of Artist’s net income (gross revenue less recording costs and Producer’s Advance) from sales or other exploitations of Master(s) from record one. ”

    Does this seem fair? I mean, I’m an unsigned artist, I wrote the song, and I’m asking the producer to produce 1 song based off a composition that I gave him.

    • Hi Alfred,

      I would have to see the rest of the agreement, as there are other clauses that will effect this. Please email me and we can chat further.

      Thanks

      Kurt Dahl
      Entertainment Lawyer

  7. I’m helping a friend who is very creative and writes lots of songs (she comes up with chords and melodies) to becoming an independent artist. I told her since i know how to arrange songs I’d arrange all her songs for her and she likes that idea. I didn’t think to create any kind of agreement or contract as we are friends and we both think a verbal agreement should be good. In this case what % of royalty should a producer deserve? Any general suggestion?

    • Donni

      The first question: are you a co-writer with her?

      Second: a standard producer royalty is 2-5%.

      Email me and we can chat more on this point

      Thanks

      Kurt Dahl
      Entertainment Lawyer

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