What are the main deal points in a music producer’s agreement?

A music producer or the producer’s “loan-out” corporation may sing a deal with artist, a production company, or a record company. The producer’s job is to help create and deliver quality master sound recordings. A music producer’s agreement may be for a single song (master), or may cover an entire album. Some of the following key terms may be addressed:

(1) Responsibilities: In your music producer’s agreement, make sure to clarify what is meant by “production.” For example, does it include selecting the songs, selecting the instruments and vocals, and help in writing or arranging songs, etc.

(2) “All-in” Deal: An “all-in” record company agreement is in which the artists is responsible for hiring the producer. In this case, the producer will want the artist to be responsible for any “overages” in the recording budget. Try to limit your liability for overages to only those caused by you (the artists), and not caused by or within the control of the producer, engineer, or recording studio.

(3) Producer Royalties: Producers generally charge royalties (“points) which range from 2.5% to 3% of suggested list retail price (SLRP) of an album, depending on the producer’s reputation, skills, and track record. For beginning artists, you can usually get a new (unestablished) producer to charge from 1% to 2% of records sold. Hot (established) producers can charge from 2% to 4%, while superstar producers can demand from 5% to even 6%. A producer’s royalty rate may also be increased at specified sales plateaus (e.g., an increase of 3% to 5% after 500,000 record sold.)

(4) Record One Royalties: Unlike artists, producers are customarily paid on all records sold, without recoupment of recording costs. These are called “record one” royalties because they are paid from the first record that is sold. Try to strike this language, if you can. If you are unable able to avoid a “record one” clause, you may be able to negotiate a better deal in terms of when those record one royalties will be paid.

(5) Other Royalty Deductions: As an artist, you may be under contract with a record label whose recording agreement provides for various royalty deductions, exclusions, and limitations. Producer royalties are generally calculated on the same basis as the artist, including the same deductions for “packaging”, “CDs”, and “free goods.” Moreover, producer royalties should also track the lower royalty rates paid to the artist in the same proportionate reduction (e.g., lower royalties from foreign, budget, and mid-price sales.).

(6) Producer Advances: Like artists, producers also get “advances.” The amount of the advances varies (like the points), depending on the stature of the producer. New (unestablished) producers can get anywhere from free, to $2,000 – $3,500 per master (song). A mid-level producer can charge anywhere from $3,500 – $7,500 per master. And superstar producers can get up to $10,000 – $15,000 per master, and sometimes even higher.

(7) Masters: Take time to commit in writing what each others’ rights are vis-a-vis the finished product, i.e., the masters and CD’s. Obviously, ownership of the masters should be in the artist.

(8) First Right of Refusal: Sometimes a producer will want to do the first re-mix and/or recording of the masters that he/she helped to create. If you want total creative control over your masters, avoid this.

(Reprinted with permission from Ruben Salazar, Esq.)

Navigating Music Producer’s Agreements: Case Studies and Insurance Considerations

Case Study 1: Errors and Omissions Insurance

Mike, an established music producer, was approached by a record company to produce an album for a rising artist. As part of the producer’s agreement, Mike was responsible for ensuring that all the music and samples used in the album were properly licensed and cleared. To protect himself from any potential legal claims related to copyright infringement, Mike obtained errors and omissions (E&O) insurance.

This insurance coverage provided financial protection in case of legal disputes arising from alleged unauthorized use of copyrighted material. If a claim were to arise, the E&O insurance would cover Mike’s legal defense costs and any potential damages awarded to the copyright holders.

Case Study 2: Equipment Insurance

Sarah, a freelance music producer, owned valuable recording equipment that she used for her production projects. She entered into a producer’s agreement with an artist to produce an album, which involved using her equipment. To protect her equipment from damage, theft, or loss during the production process, Sarah obtained equipment insurance.

This type of insurance provided coverage for her recording equipment against various risks, including accidental damage, theft, and fire. In the unfortunate event of any damage or loss, the insurance policy would cover the cost of repairing or replacing the equipment, ensuring that Sarah could continue her production work without financial setbacks.

Case Study 3: General Liability Insurance

John, a music producer, was collaborating with multiple artists and recording in various locations. He often rented studio spaces and venues for his production projects. Recognizing the potential risks associated with working in different environments, John obtained general liability insurance.

This insurance coverage protected him against claims of property damage or bodily injury that could occur during his production activities. If someone were to be injured or property were to be damaged as a result of John’s production work, the general liability insurance would cover his legal defense costs and any potential settlements or judgments.