Question from an Audio Masterclass visitor…
“Can you explain 'producer points?' I know each agreement may be different, but from what I understand is that the going rate is around 3%. But what I don't understand is, is the 3% from the total sell and each producer gets a piece of the 3% allotment or each producer gets 3% of their own? Thanks.”
Of all the roles in music – writer, singer, instrumentalist, manager, lawyer etc. – which would you rather be?
Well of course, you'd prefer to be the lawyer because they make piles of money and never get swindled. (Except of course by other, cleverer, lawyers. But it's legal because it's done in court!)
Lawyers don't get to play the music though, so we'll rule that out.
Next in line is the writer. If you write music, then you will get a royalty for the rest of your life, plus 70 years, and there are very few ways you can get swindled out of this, or have it siphoned away by 'expenses'.
You could be a performer. They can do quite well, but they don't have the same security that the writer does.
You don't want to be a non-writing member of a band. You'll end up bitter and twisted when you see how much more money the writers make.
So what else is good as a career?
A Record Producer of course!
Because you get paid royalties. Not quite so reliably as the writer, but you get a share of everything that's sold, for the duration of the copyright of the recording, which is a long, long time.
And you are one step ahead of a non-writing performer. Where they can probably make an album every eighteen months to two years at maximum, to allow for promotion and so as not to saturate their market, you can make several albums every year.
And although it's fair to say that there are fashions in producers, record labels are nowhere near as fickle as the market. So your career could be long.
As mentioned in the question, the going rate for a producer seems to be around 3% of retail, with the normal deductions that record labels seem to be able to get away with.
If you tried to hold out for 4%, then another producer would get the work. If you were satisfied with 2%, then it wouldn't be long before you wanted more.
If there were two or more producers on an album, then the royalty would be shared between them.
Royalties are often called 'points'. 'Point' is short for 'percentage point'. Complicated bit follows…
Suppose I have a cake and I give you 50% of it. Suppose I'm not so hungry and I give you 60% instead of 50%. Have I given you 10% more? Not from your viewpoint, because 10% of 50% is 5%. I have given you ten percentage points more, not 10% more.
So the difference between 50% and 60% is ten percentage points. The difference between 3% and 4% is one percentage point. Phew, I'm glad I got that off my chest.
… It's OK – the complicated bit is over now.
If you were a real hotshot producer, then you might ask for a fee as well as points. Of course, the label would try and negotiate your points down to compensate.
So in conclusion, financially it is a very good option to be a record producer. If you're successful, you could make an incredible amount of money.