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

65 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

      • I have a producer requesting 50% publishing is this rite also? I buy beats from him that’s it he said if the songs are singed and released on a major id he wants his royalties

  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

  8. Hey Kurt,
    Thank you for your article, it was a great read.
    I had a quick question regarding a quote I received for a master clearance.

    1. 7% of the wholesale price (PPD) ; pro-rated by the total number of royalty bearing tracks on the record concerned, sold, paid for and not returned.
    (Does the 7% apply to just physical CD’s, or albums sold on iTunes as well? If applied to iTunes, what is the wholesale price?)

    2. I have to additionally pay a one-time AF of M payment plus an additional 2% of all gross receipts in excess of US$25,000.
    (What is an AF of M payment and why do I have to pay it? What does the 2% of all gross receipts mean?)

    Thanks!

  9. Hello my Question is, if the producer get 4% of song and he is not the song writer, how do you put that in for bmi seeing that it has 200%. What percent on bmi do I put in if I’m the artist, writer and publisher?

    • 4 “points” for a producer is not the same revenue source as songwriting. They are 2 distinct copyrights. See my other article on this topic.

      Thanks

      Kurt Dahl
      Entertainment Lawyer

  10. Hi Kurt,
    Question: Is a text message a legally binding contract?
    A music producer asked for 33% royalties on a song via text message. I agreed by texting back. We recorded, then the producer wouldn’t give me song until I signed an agreement. Which I did not. I recorded a whole new song with someone else. So can he sue me for royalties?
    Thanks,
    Lisa

  11. I’m recording a song with producer. I made a beat myself and also wrote the song. We went in there and he simply revamped I.t, produced around it and is recording and mixing but I asking for 50% of sales. Is this correct? Granted he gave me a discount and I can’t really even prove that that really is “discounted” from his prices. I can see if he started a beat from scratch and helped write but that’s not the case. Just a little confused.

  12. Hi Kurt,

    After reading several of your responses to other individuals I believe the producer I am working with is trying to take advantage of me. He is only producing the beats for me but I do all the songwriting, mixing, and recording and am going to be paying for distribution and all that other stuff. Anyways we have agreed upon 40% of all future royalties and he sent me a contract that I never signed because I originally thought that was too much. Would it be possible for you to recommend a place/person/organization where I could find a more legitimate producer that will work on a more reasonable percentage without any money needed upfront?

    Thank-you,
    Samantha

  13. Hi kurt,

    We are an unsigned act getting an album produced and recorded by a producer signed to a major publishing label in the UK. We have created the tracks to our songs to a demo standard and have wrote all lyrics and melody. We are using his services to record vocals, enhance production (make them industry ready), mixing/mastering. He has also said that with his publishing label on board, they could open doors to major record labels to help us get signed. The producer has offered us a discounted rate, around £450 per track and wants to own 33% of each song. Does this seem fair? Thanks.

    • Hi Georgia,

      I would have to see the entire deal, but what you’re talking about is 2 separate deals: a Producer Deal and a Publishing Deal. I would obtain legal advice in the UK before signing anything!

      Thanks

      Kurt Dahl
      Entertainment Lawyer

  14. Hi there,
    I saw this quote;

    ” Sometimes producers, namely “producers of tracks” who compose the music, are entitled to 50% ownership of the song, and thus, 50% of the mechanical royalties also referred to as the publishing rights to the song. The record company would pay the other 50% of the royalty to the other songwriter(s), usually the writer(s) of the lyrics. If the artist is the sole songwriter then normally the producer would not share in the mechanical royalties if the producer does not contribute to he songwriting”

    Could you clarify if the music produced by the Producer, to a song already written (including the melody), is the same as the producer composing the music? I’m the songwriter, the Artist/Perfomer, Rights Holder and the one submitting the funds. Producer did not write any of the songs. The tracks they produced are paid in full before the track is released. Nothing is agreed, but they’ve asked for 50% artist royalties. I think that’s way too high, so thinking to suggest 35%. Is this reasonable?

    • Hi ST

      Yes it really depends on the situation. I don’t think they should be entitled to 50% of the composition unless they wrote all the music. Email me to chat further.

      Kurt Dahl
      Entertainment Lawyer

  15. Hey Kurt Dahl, I’m an Upcoming Producer, and I’m making a collaborative Project with my Friend who is an Aspiring Artist. Most of the beats in our collaborative album have been made 100% by me, however there are some beats on the album that have been made using “free” loops from a site called Looperman.com I put “free” in quotations because while the site says any loops acquired from the site may be used for commercial and non-commercial purposes, I still fear that I could get into legal trouble if I use a loop from this site with the commercial project my friend and I are doing. Is my fear misplaced? I recently went to go check the comments of one of the loops I used and the loop creator is asking people to buy rights for the loop yet he posted it on a Royalty-Free Loop Website? I want to disregard that but Is he in the right, and do I owe him something for his loop when I release the project? Thank You.

    • Hi Andrew

      Yeah you want to be careful with these beat sites. Do some research into their track record and customer reviews. And read their Terms and Conditions and any other fine print as closely as you can, to make sure they have no claim if the song becomes a hit.

      Thanks

      Kurt Dahl
      Entertainment Lawyer

  16. Hi,
    I agreed a 50/50 split via e mail on royalties with someone that did a remix of one of my tracks. I sent over my vocals and they built the music & beat around them from scratch. I liked the remix that much that I decided to use that as my official single release. Do I have to pay the producer 50% of all iTunes sales and streaming online? And what if a label was interested in the track. Would I have to split 50-50 on every level? Radio play, sales etc. The producer had no involvement in writing the lyrics that was all me. They just created the music and beat.

    • Sounds like you need a clear agreement in place Danny! It’s not clear to me if the producer meant 50% of the master or of the compositions, which are entirely different copyrights and revenue streams.

      Thanks

      Kurt Dahl
      Entertainment Lawyer

  17. Kurt,

    This is an outstanding article!! Well put together and its helping job my memory on some important things.

    I have a client that is looking to get help with paying the cost necessary for mixing and mastering a completed song. I know me and my partner would get Executive Production credit as we would both split the amount down the middle to pay the full amount; but would we use a producer agreement to get points off the song to recoup and profit from our investment down the road?

    • Hi Jamel

      It doesn’t sound like a Producer Agreement makes sense, as you’re not producers. If anything, an Investor Agreement might make sense, where you recoup your investment from record revenues.

      Thanks

      Kurt Dahl
      Entertainment Lawyer

  18. Hey!

    I have been working with a producer for original works for a while and am registering the works but having a hard time figuring out “composer credit”. There are a few songs that I had written lyrics and melodies for and sent over to my producer who then created music around my melodies. He did not help with lyric or melody, just music. However, I also pay him by the hour for his services. Due to this, is he still entitled to composer songwriting credit for creating the music or no because he was paid hourly? Thanks!

    • Hi Alicia,

      The line between writer/composer and producer is a fine one. If he “created music”, it sounds like he’s a co-writer. Unless your melodies dictated 100% of the music and it was a clear line b/w the two, which I would suggest is rare. But if he wrote all the music and you did lyrics/melody, many times that would justify 50% of the writing.

      Thanks

      Kurt Dahl
      Entertainment Lawyer

  19. Hi Kurt,
    My band has recorded popular music & some original pieces as part of a live dance show. What is the going rate/guideline for royalties for our work to be used in the show. If i have also mastered it would this be a seperate percentage?
    Would kindly appreciate your guidance in this very complex industry

    • Hi Sally

      There truly is no “going rate” for production (nor for mastering). It really depends on your bargaining power and reputation. Producers fees go from “free” to “sky is the limit”.

      Kurt Dahl
      Entertainment Lawyer

  20. Hello
    I have an exclusive Liscence Agreement for a beat I purchased with my producer. I alone have written the songs and laid down vocals for the master recording. He is wanting to split 50/50 of publishing share and letting me have 100% of the writers share, is this reasonable??. Also, he is stating that he is to own the mechanical rights of his beat. Does that mean we split 50/50 ownership of the master recording as well??.

    I am working with another producer but he will not agree to sign any type of contract with me. Am I being set up??

    • It’s difficult with beat purchases. Sometimes, the beat creator wants half of songwriting, other times, you take full ownership. It sounds like this is the former, where his “beat” is the equivalent of writing all the music, while you bring the lyrics.

      The question for you: is the music good enough to warrant 50% of the writing, or are you better off to create something on your own?

      RE the other producer, get something in writing!

      Kurt Dahl
      Entertainment Lawyer

  21. Hey! – I’m having trouble getting my head around this. if the composer makes the music instrumental he’s entitled to 50% royalties song share, correct? – Therefore with the points revenue from streaming, who’s responsibility is it to collect revenue and distribute to the composer in a self-releasing/independent situation?

    Many Thanks!

  22. Hey, I’m working with a producer and we have agreed to 10% of royalties. when i register publishing does he get an composition credit? also do i register publishing under my real name or artist name. Last inquiry if I have a llc do i use that entity for publishing and if so does a tune core publishing contract influence how i use my publishing through the llc? (which serves as a record label)

  23. What if their was a producer who help with the music but now theres another producer. The present (new) producer is just redoing the music that I and the first producer did, adding a musical string he now wants 3% royalty when I hired him to replay my music exactly as it is. He said no one producer can copy another producer work exactly the same but it’s clear it’s the same song, same melody, most of the same music. He may did a horn that is slightly different because of his program versus the one I and my other producer used. I did not sign the contract but may be willing in giving him 2% because his one or two lines I may want to keep. How do I make sure the first producer and myself get the producer credit as well as he but not him claiming 100%. I am the writer, owner/artist, my melody and I helped produced the track before I cam to this present producer who wants credit for redoing with what he calls producer credits.

    • Yes it really depends on a) how much the first producer is asking or already receiving and b) whether the new producer’s changes made a significant change to the song. From there, it’s a matter of negotiation. I wouldn’t give up more than 4% total on the song.

      Kurt Dahl
      Entertainment Lawyer

  24. Hi, I am currently writing music to beats that I can lease online from producers who promote their instrumentals on beat stores.

    I can pay for an unlimited lease of that beat which gives me the right to stream on the major platforms but the beat maker will retrain 100% publishing rights and I get 0%.
    There is another option to purchase the beat exclusively and that gives me 50% of the publishing rights. My question is what do I gain from getting 50% of the publishing rights over 0%.

    • I’m not an expert on statute of limitations, but I assume so. But if a deal was renewed (as was the case in the Led Zeppelin case), then that might effect things.

      Kurt Dahl
      Entertainment Lawyer

  25. my cousin is my producer and agreed to make beats for me in return of percentage from my sales. i did not pay for the beats up front and am now ready to submit my music for distribution. we didnt agree on any percentage split, i created all of the lyrics, melodys, hooks, etc, he just created the beat and sent it to me. what is the proper percentage split for that? is 80% artist, 20% producer fair on songwriting info?

    • That is really up to the two of you to discuss and agree on. Many producers take 50% of the songwriting if they create all the music.

      Kurt Dahl
      Entertainment Lawyer

  26. Hi I am a music producer requesting 50% royalties for the master recording. I provided my services not as a work for hire but as a producer who composed the music for the song with the artist. She is requesting 100% rights to the song. How should a buy out price be determined if it was not predetermined. I would like to have the right to submit the song to publishing opportunities.

    My intentions with every artist I offer my services to without work for hire established is to retain rights. Would that need to be expressed and established in a producer agreement?

    • The buyout price really depends on the bargaining power of the two parties. I would highly recommend that you have a Producer Agreement drafted that you can use for all of your artists, as it will prove to be invaluable. Happy to help

      Kurt Dahl
      Entertainment Lawyer

  27. I am looking to purchase some tracks from someone and they are asking for 25% of publishing but I will get 100% of all royalties does that mean
    I would still have to pay him after I have already bought the beat exclusively.

    • I would have to see the deal Mike but the publishing should simply flow to them through the applicable PRO (ASCAP, SOCAN, etc)

      Thanks

      Kurt Dahl
      Entertainment Lawyer

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