Music producers are authors of a sound recording as a matter of copyright law. Under U.S. Copyright law (17 U.S.C. § 102), when musical sounds are “fixed in a tangible medium of expression” in the recording studio a producer qualifies for such copyright ownership. Copyright ownership can only be transferred by a signed, writing under 17 U.S.C. § 204(a). In other words, unless and until the producer signs an agreement with the artist, the producer and artist are co-owners of the copyright in the sound recording and are entitled to share equally in any and all revenues which arise from the use and exploitation thereof. Therefore, a producer and artist would share 50/50 in the sound recording copyright. Where the artist has multiple members or is a band, then the multiple authors of the sound recording would share on a pro-rata basis (i.e., 3 authors share 3 ways, 4 authors share 4 ways, etc.).
That is
the main reason why, in most instances, an artist and producer enter into a
written producer agreement: to determine and adjust shares of ownership in the
master and revenue division from the use and exploitation of the master sound
recording. Major record labels under their record contacts with the artist
wanted the master assigned to them, so producer agreements often mirrored that copyright
transfer model. The producer would agree to transfer rights in the master sound
recording copyright in exchange for an advance payment, royalties and producer
credit on the records.
Modern producer royalties are calculated differently than under the old record business model. The producer advance is usually an agreed upon amount, typically a portion of the amount advanced to the artist by the record company or distributor, if any, usually calculated in proportion to the royalty share between the artist and the producer for a master recording. Under the old physical record business model, the royalty was often based on suggested retail list price (SRLP), and a producer would typically agree to receive 3-5% or "points" out of the artist's 12-15% retail royalty paid to the artist by the record company. Since the newer recorded music world is mostly digital and streaming, and is calculated based on a "net receipts" basis, the mathematical translation is as follows: 15% - 25% of net receipts as the basic rate for many producers; 25% - 50%+ for established producers or producers who discover and/or develop an artist from an earlier stage. Net receipts is the amount the artist actually receives from use and exploitation of the master recording (after distributor/retailer share). For example, if the digital streaming service pays the artist (or pays the label or distributor who then pays the artist) the amount of $100, and the producer royalty is 25% of net receipts, then the producer’s royalty should be approximately $25 out of the artist’s share. In addition, the producer also earns a pro rata share of royalty income from any use and exploitation of the sound recording just as the artist does, whether from synchronization licenses for film and TV use, from social media, and from streaming digital streaming services like YouTube, or otherwise. A producer is also entitled to a pro rata share of the amounts payable to the artist from SoundExchange for the performance rights in the sound recordings.
As easy as this math may appear to be (or not), if you believe in yourself and your talents as a producer, give yourself the benefit of the doubt and invest in good legal representation - all the successful producers do. Your lawyer can "translate" the deal and explain its terms to you, and then help negotiate more favorable terms for you as appropriate. My advice: never sign anything - other than an autograph - without having your entertainment lawyer review it first.
Wallace Collins is an entertainment lawyer and intellectual property attorney based in New York with over 35 years’ experience in music, film, television and emerging technology, and he handles many current digital media matters including issues that arise with AI. He was a songwriter and recording artist for Epic Records before receiving his law degree from Fordham Law School. Tel: (212) 661-3656 Website: http://www.wallacecollins.com
