5 Things to Look for in a Music Producer Agreement

kurt_dahlArticles, Drummer News, Lawyer News27 Comments

So, you’ve found the perfect producer for your upcoming recording project. Great news. Now the producer sends over a 10-page contract full of legalese regarding record royalties, songwriting splits, SoundExchange revenues, producer advances and more. Before you enter the studio, here are some key points to look for and understand:

1) Who Owns the Masters?

First and foremost, you should own the master recordings once the producer fee is paid. In rare circumstances, the producer might own the masters or have some co-ownership interest, but that is definitely not the norm. Almost always, you should own the masters.

2) How Many Points for Your Producer?  

It is industry standard for your music producer to receive “points” on the songs they produce. A point is simply a percentage of record sales. For example, 4 points equals 4% of net record revenues from the masters produced by your producer. My advice: make sure that there is language inserted that allows you to recoup all expenses related to the production and exploitation of the masters before these points kick in. In other words, until you recoup all of your costs in relation to the masters, the producer doesn’t start getting revenue. Industry standard is 2-5% for points, either on the suggested retail price (SRLP) or published price to dealer (PPD). See my article here for more on SRLP vs. PPD.

3) Should Your Producer Get SoundExchange and Other Revenues?

I find that more and more producers are demanding a percentage of SoundExchange revenues on songs they produce. The same goes for other so-called “direct monies” or “flat fee” uses of the masters (film/tv placements, etc.). This is mostly a reflection of the modern realities of the music biz, as “points” aren’t worth what they used to be. Not all producer agreements include SoundExchange/Flat Fee revenues, but if yours does, make sure the language is clear and the percentage is fair. Typically, a fraction is used: whatever producer points you agree on (let’s say 4 as per above) divided by the artist’s record royalty flowing from the record label (let’s say 20%). So in this example, 4 divided by 20 gives a 20% SoundExchange/Flat Fee percentage to the producer. My advice: if you don’t know what the label royalty is or don’t have a label involved, the standard practice is to use a “deemed royalty,” which is simply a royalty that you and the producer agree on that’s based on industry standards (somewhere between 15 and 20%). I would cap the producer’s SoundExchange/Flat Fee entitlement at a specified amount, nothing over 25%. Obviously, lower is better for you as artist.

4)  Is Your Producer a Co-Writer of the Compositions?

This is perhaps the most important point to consider: is your producer a co-writer? See my article here for guidance on such a determination. I recommend that you have this discussion as to whether you intend to co-write with the producer before recording commences. I realize that sometimes co-writing just happens in studio, whether you plan for it or not, but it’s wise to discuss this ahead of time to ensure mutual expectations going in. My advice: If the producer is indeed a co-writer, you need to ensure that they assign administrative rights in the compositions to you. This will allow you to use and exploit the compositions without having to obtain the producer’s signature in each instance.

Insider tip: this exact issue was taken to the Supreme Court of British Columbia in the late 90s, when Sarah McLachlan was sued by her former producer Darryl Neudorf, who claimed he was a joint author of four of McLachlan’s early compositions. The takeaway from the court’s decision: if an artist and producer intend to co-write together, that must be agreed to before the recording process commences. Otherwise, the court will assume that your producer is not a co-writer.

5)  How Much Will Your Producer Be Paid?

The Music Producer Agreement should clearly define how much you are paying the producer, either per song or via an hourly rate. My advice: go with per song, otherwise you might be surprised by the bill at the end of the project. Typically, half of the producer’s fee is considered a recoupable advance against royalties payable to your producer. In other words, half the producer fee is considered a recoupable cost, and half is not. A typical timeline in terms of payment of the producer fee is half before recording starts and half upon completion.

Insider tip: the producer fee and producer points/SoundExchange entitlement are definitely intertwined. In other words, if you want to keep more of your royalties and SoundExchange (and can afford it), you can offer a higher per-song producer fee. The same goes the other way, if you are short on funds, you might be able to offer more on the other end. My advice: think big picture and long term, and don’t undervalue your catalog in the long term in exchange for a short-term break in producer fees.

There are many other important clauses in a music producer agreement, but this is a great start. As always, don’t hesitate to reach out with questions. My door is always open.

27 Comments on “5 Things to Look for in a Music Producer Agreement”

  1. Hi! Thank you for these articles. I’m still a bit confused.
    I’ve paid my producer upfront and then he asked for a percentage. I thought that meant via my PRO so I added him as a co-writer. But now he’s asking about owning the masters. So if he wants 5 points of the masters he shouldn’t also get 5% co-writing credit? We did NOT discuss a co-writing deal beforehand and he didn’t change the melodies and just took out a couple lines in one song and went to a minor chord at the end of a verse.
    Also, where do I register these 5 points? On sound exchange or through my distributor?

    1. Hi Rachel. If he didn’t help co-write the composition, he shouldn’t be listed as writer or get any songwriting revenues. It sounds like he produced the song, not co-write it. So I would remove him from the PRO registration and offer him 3 to 5 points on the master side of things. You don’t need to register them unless he asks for SoundExchange registration, then do that there. Otherwise, just report to him twice a year or whatever you agree on, with 5% of your net revenues from the masters.

      Kurt Dahl
      Entertainment Lawyer

  2. Ok I just started a record label and I’m going to be releasing a single next week…I’m leasing a beat from a producer and it states that he will grant me 50% of the writers share of the beat…so my question is if the song must add up to 100% how much does the producer owns

  3. Hi Kurt,
    Axelle, here.
    I have a question about composition and production that has always confused me until now.
    I am a lyricist and I provide the melodies. Am I also a composer? Is the arranger the one who adapt an instrument to the melody I provide?
    Many thanks

    1. You’re definitely a songwriter. Whoever writes the music to your melodies would be considered the composer, and if someone else arranges the instruments for said music, they would be the arranger.

      Kurt Dahl
      Entertainment Lawyer

  4. Thank you, Kurt! This article was very helpful to the mother / manager of a 16-year old singer/songwriter/musician who is currently beginning to record her first EP and who has sold a handful of songs to other artists for their EPs. This stuff is so confusing and without people like you to educate, I’d be lost. I still am actually, just less lost than I was before this article. Thanks, Denise Neeley

      1. Hi, Kurt I’m a Producer/Songwriter. I was wondering is it possbile for me to waive Mechanical Royalty payments for Artists on a case by case for Controlled Compostions or is that required by copyright law? I’m the Co-Writer of the musical compostion as some times it could be a hassle for an Artist to account recourring payments that could continue on forever.

  5. Hi Kurt,

    I read both of your articles on how producers can be compensated and the information given is what I have been looking for. Some questions I would like to ask deals with streaming. I sale beats online and in the pre-made contracts it states that I will receive or be paid 100% of mechanical royalties at the minimum of the statutory rate. With that being said, services such as Cdbaby, Distrokid, and Tunecore allow the artist to allocate the percentage a producer can receive for their contribution to the song when uploading to a streaming service like Spotify. Unlike SoundExchange, which allocates 45% to be distributed to featured artists,(i.e. music producers), who contributed to the creation of the song. So, my question(s) is would the percentage from SoundExchange, 15-25%, be the same for the other services mentioned or would it be the point system where a music producer will receive the standard nominal value per stream?

    1. What I see often is that the producer gets a % of all “Direct Monies” that aren’t coming from a record label (film/tv placements, SoundExchange, etc). But it really depends on what sort of deal you negotiate with your artists.

      Kurt Dahl
      Entertainment Lawyer

  6. Hi, Kurt I’m a Producer/Songwriter. I was wondering is it possbile for me to waive Mechanical Royalty payments for Artists on a case by case for Controlled Compostions or is that required by copyright law? I’m the Co-Writer of the musical compostion as I’m the guy that makes all the beats and some times it could be a hassle for an Artist to account recourring payments that could continue on forever. Heres the following clause I have in my Producer Agreement.

    7. MECHANICAL LICENSING AND ROYALTIES: All musical compositions or material recorded pursuant to this Agreement, which are written or composed, in whole or in part, or owned or controlled directly or indirectly by Producer (herein “Controlled Compositions”), shall be and are hereby perpetually licensed to Artist for the United States and Canada at a royalty per selection equal to Producer’s share of the Song multiplied by one hundred percent (100%) of the mechanical statutory per selection rate (with regard to playing time) effective on the date of initial U.S. commercial release of the masters concerned hereinafter sometimes to be referred to as the “Per Selection Rate”. Notwithstanding the foregoing, with respect to foreign sales, the royalty per selection shall be equal to one hundred percent (100%) of the minimum statutory mechanical royalty rate as established by the mechanical rights society having jurisdiction over the territory in which records are manufactured.

    i. Notwithstanding the foregoing, all mechanical royalties payable to Producer hereunder shall be paid on the basis of net records sold.

    ii. Artist shall account to Producer, on a quarterly basis and pay royalties to Producer, if any, within thirty (30) days of the end of each quarterly period beginning. Artist shall send such accounting with payment, if any, to Producer at Producer’s mailing address. In the event Producer’s address changes, Artist shall have no obligation to send the accounting and royalty payment to any other address until Producer shall give to Artist in writing such new address.

    1. Hi Emmanuel,

      I have seen deals where the artist waives the payment of mechanical royalties, but I would advise that you hire a lawyer to review the clause in the context of the entire agreement.

      Thanks

      Kurt Dahl
      Entertainment Lawyer

  7. Thanks info as I think I figured it. I did create the agreement myself from a template that was written by a Music Attorney which is basically a Producer Agreement between an Independent label and independent Record Producer that’s hired as an Independent contractor. Basically what I did, I stripped away all the Record Label stuff from the agreement, Such as recording cost, Artist Recording Agreement for Points on an album, and replaced Employer with Artist, boosted the statuary Mechanical rate from 75% to 100% for the Controlled Composition clause as the Co-Writer etc that composes the orignal music as well.

    The agreement came with another Producer Royalty clause called Net receipts which is what I ended up keeping in that includes Sound Exhange royalties. I basically have the compensation setup as a recoupable Advance that goes against Points on the Album or EP based on the “Net receipts” model and not the tradtional SRLP model. Basically the Artist would keep books and accounting of record sales from their online Distributor such as TuneCore or Distrokid and they recouped back the money they paid me and then they start paying me record royalties from their distributor. I Audit the Artist books based on written notice for accuracy etc.

    I see that you stated the Suggested Retail Listing Price. I heard that alot of labels are moving away from that model as alot of them esp independent labels have switched to the Net Receipts model due to decline in Record sales now that digital streaming has taken over. It would basically be impossible to calucate an Audio stream based on the SRLP.

    Emmanuel

  8. Hello! I’m working on my first body of music, I have a couple questions:

    My producer is saying that I’ll own the sound recording masters and he’ll own the production masters, after I pay him a fee, is that reasonable?

    Also with this particular experience, I always come in knowing exactly what I want sound wise and I really instruct him and am Very involved with production, would his make me the co-producer?

    Thanks!

    Amber

    1. There should only be one set of “masters”…not sound recording and production masters. That sounds confusing and not in-line with industry norms. Unless the producer created the beats and wants to use them with other artists — perhaps that is what he’s referring to. I guess I’ll need more info to give you proper advice Amber

      Kurt Dahl
      Entertainment Lawyer

  9. Kurt where can I find a sample of a well drafted agreement between an independent producer and a production company? I’m especially interested in how royalty terms are drafted.

    1. Not sure Valerie but I can help draft something for you. “Well-drafted” and “online sample from the Internet” don’t go together that well from my experience. And I’m not being facetious.

      Kurt Dahl
      Entertainment Lawyer

  10. Would you please reach out to me about Producer contracts. I would like to work with an attorney to have my standard agreement created. I have a template I am using from online. Thanks

  11. Hello kurt_dahl, I noticed some text strangely blocking some of the other text on this page, just above the insider tip underneath #5. I was able to highlight it and realize it says,
    “Remote control vibrators
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    I am in no way bothered by this, I actually think its hilarious, but I’m curious if you are aware that the text is there? Certainly I am not the only one experiencing this. I noticed it in two different browsers. I just need confirmation of this cuz it’s got me DYING laughing over here!!

    Thanks for the article btw, it helped me out(:

    1. Wow that is weird and thank you for pointing it out. Obviously had no clue. Got my website guy working on it. Some messed up spam, thanks for letting me know

      Kurt Dahl
      Entertainment Lawyer

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