What are the main deal points in a music producer's agreement?
(1) Responsibilities: In your music producers 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 producers 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 producers 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 CDs. 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.)