How You Should Pay Your Music Producer

Recording Engineer at Mixing Console in a Studio
••• Bob Ingelhart / E+ / Getty Images

Music producers make a big impact on your album—they can also make a big impact on your budget. Like most things in the music business, people deserve to be fairly compensated, but the key word is fair.

Most producers want to help you make your songs the best that they can be. Some aren't, and a bad deal with a producer can haunt you for a long time. The best way to prevent a nightmarish scenario is to understand how producers are compensated for their work and evaluate any deal on the table.

What Record Producers Do

The first step in the process is that they listen to the artist or band’s material and pick the best songs. During this phase, they’re looking for both commercial tracks (the elusive “hit song”) and album tracks. The band and producer go through the songs and hammer out arrangement ideas, look for areas where instrument parts are clashing, and ways to make the song more memorable or catchy. Next, the band is ready to record.

Each track is an instrument—for example, there's a track for a vocal, another one for guitar, bass, kick drum, etc.  Next, the overdubs (usually vocal tracks, guitars, etc.) are added. The next step is mixing, which is adjusting volumes and effects on each track and producing a stereo mix. This stereo mix is taken to the mastering house, where they “sweeten”  the mix so it's less harsh, and compression is added to “glue” the mix together.

Contracts Terms Can Vary

First and foremost, music producer contracts can vary greatly. Everything from the genre of music to the bargaining power of the producer determines what kind of money they can demand, so, unfortunately, there's no cookie-cutter answer regarding compensation. However,  there are generalities you can keep in mind. Producers have two main streams of income:

  • Advances
  • Royalties

Advances

A brand-new producer may receive no advance at all and do the work solely for the purpose of building a portfolio. Other producer’s get anywhere from $250 to $10,000 per song, based on his or her experience and success, the artist’s level of success, and the number of songs to be recorded. The fee also can be influenced by whether the label is local or national, independent or a major record company. 

As a general rule of thumb, hip-hop producers get more money because they tend to be much more integral in the final product than their other-genre counterparts—after all, they usually supply the beat.

Recording Fees

If the producer owns their own studio, their advance may be wrapped up with the actual recording cost in what is sometimes called a fund deal. With a fund deal, an artist is quoted a set price that includes both fees co-mingled together. It is the role of the producer to make clear in the contract how much of the fund goes to an advance and how much is considered a recording fee.

Recording fees are not recoupable against producer royalties, so the higher the recording cost, the higher the recoupable expense the artist faces. Also, advances should be recoupable from the royalties paid to the producer.

Royalties

Many producers get a percentage of an artist's royalties on an album. These percentages are also called "points"—one point equals 1 percent. etc.

Traditionally, the royalty is based on how the artist was paid, which is a percentage of the record’s sales price, multiplied by the number of CDs or downloads sold. The record royalty to the artist is around 15 percent to 16 percent of the sales price of the audio product. The record royalty for a music producer is usually between 3 percent to 4 percent of the record’s sales price or 20 percent to 25 percent of the artist's royalties. On a CD that sells for $10.98, the producer’s royalty would be about 33 cents for each copy sold and for a digital download of an album priced at $9.98 the producer receives 30 cents.

Record One Royalties

One very important note about producer royalties—producers are paid what are called "record one" royalties, meaning they get paid for every album sold, unlike artists, who only get royalties after recording costs have been recouped. To help make that easier to pay for the artists, most producer contracts specify something called "retroactive to record one," meaning the artist does not owe the producer any royalties until they (or often, their label) recoups their recording costs. However, once the costs are recouped, the producer is owed royalties on everything sold going back to the first record.

It's worth noting that some producers forgo advances and charge an artist a flat fee and then get out of the way. This is a good way for new producers and new artists to work together in a cost-efficient way that helps both of their careers.

The Bottom Line

Never sign a deal you don't understand and don't shy away from negotiating or getting a lawyer to negotiate for you. if you can't come to an agreement on advances, fees, and royalties, then move to another music producer.