Producers create enormous value, but how they are paid is often misunderstood - not least by producers themselves. This chapter covers the business side of producing records: the deal, the money and the credits.
General guidance, not legal advice. Use a music lawyer for producer agreements.
How producers are paid
Fees and advances
A producer is commonly paid an upfront fee or advance, per track or per album. On label projects, the producer's advance is often recoupable against the producer's royalties.
Producer royalties (points)
On many commercial projects, producers also receive a royalty on sales and streams of the recording - known as points. One point is one percentage point of the relevant royalty base. Producers typically receive their royalty once the recording costs have been recouped, and then often back to the first record sold ("record one").
Producer royalties are usually paid out of the artist's royalty in traditional deals - which matters, because it affects how artists and labels negotiate.
Letters of direction
A letter of direction instructs the label to pay the producer's royalties directly, rather than via the artist. This makes payment far more reliable.
Flat buyouts
On smaller or independent projects, producers often work for a flat fee with no royalties. Fine for some projects - but make sure it is a conscious choice.
Neighbouring rights
In many countries, producers who contribute to a recording can be entitled to a share of neighbouring-rights income, as a performer or under specific arrangements. In the US, producers can receive a share of digital performance royalties collected by SoundExchange via a letter of direction from the artist. Register your credits and contributions properly.
Songwriting credit
If a producer contributes to the composition - writing the beat, chords, melody, hooks or lyrics - they are a co-writer and entitled to a share of publishing. This is separate from production royalties. In many genres, particularly hip-hop, pop and electronic music, producers are routinely co-writers. Agree splits at the time the song is written, on a split sheet.
Producer agreements
A producer agreement typically covers:
- Fees and advances, and whether they are recoupable.
- Royalty rate, the royalty base, and when royalties start.
- Credit - how the producer is credited.
- Ownership - the label or artist usually owns the master; the producer is engaged to produce it.
- Delivery - what the producer must deliver, by when.
- Approvals and revisions.
- Samples - who is responsible for clearing them.
Beat sales and leasing
Many producers sell or lease beats online:
- Leases - non-exclusive licences with limits on streams or sales.
- Exclusive licences - the buyer has exclusive use, for a higher fee.
Leases and exclusives should state clearly what rights are granted, and the producer should keep their writer's share and credit.
Managers
Producer managers find work, negotiate deals, chase payments and grow careers, typically taking a commission. A good manager often pays for themselves through better deals.
Protecting yourself
- Get agreements in writing, even short ones.
- Keep session files and stems.
- Make sure your credits appear in release metadata.
- Register as a writer with a PRO and register your songs.
- Chase payments and keep records.
Do this now
- Write a simple one-page producer agreement template covering fee, royalty, credit, ownership and samples.
- Check that you are credited correctly on every release you have produced.
- For a co-written track, complete a split sheet that reflects your writing contribution separately from your production role.