It’s a great day in the life of a sound designer when they get that first email, text or call that one of their beats has been placed with an artist on a major record label. The great news is that a getting a placement can open up other opportunities for producers and get the momentum rolling. The alternative is that artists, attorneys and A&Rs often sniff inexperience and take advantage of your first major label placement opportunity. A common question I get from producers is: What should I do when a manger/artist/attorney contacts me about a placement?
WHAT TO DO WHEN YOU FIND OUT YOU ARE GETTING A PLACEMENT?
The easiest answer is don’t agree to anything until you have discussed with your attorney or manager. One of the biggest mistakes I see from inexperienced producers is agreeing to material terms before they have a representative involved. “Material terms” in this context would be your fee/advance, producer points and publishing splits. Often times if you do not have a representative involved, A&Rs and artists are more likely to offer you less respectable terms. Bringing in an attorney or having an experienced producer manager, should alleviate some of those concerns. The right manager or attorney could have the vital relationships in place to make sure you are compensated properly. The reality is once you agree to something as a business principle you should stick to it unless the circumstances include serious mitigating factors. In layman’s terms, once you agree to $500, 2 points and 40% publishing it would be elementary to renege on your commitment because you now realize you didn’t know what you were talking about. Notwithstanding,there are obvious exceptions… for example if serious coercion was involved or the terms are simply unconscionable. Remember, it’s nobody’s business to teach you business.
With that being said, there are a multitude of factors you should be considering when deciding what to ask for and where to compromise. The first is the size of the label and the strength of the artist. While many producers would love to have a standard running price for a producer fee, often times there has to be give and take. If the artist you’ve landed a placement with is signed to a big label and has achieved a certain level of success and/or priority, the more you should ask for. In turn, a smaller label or less notable artist might not have the same resources or budget and you might be willing to compromise because of the placement opportunity. Remember, if you compromise on your front-end price always try to ensure your compromise is met on the back end with increased producer points or better legal terms in the contract.
WHAT IF AN ARTIST WANTS TO USE MORE THAN ONE OF YOUR BEATS?
Another opportunity for compromise might be when an artist or label is buying in bulk. If your normal producer fee is 5k per beat and you have 5 songs placed on an album, that could be a lot for a smaller artist or label to digest. In this scenario you might be willing to give them a deal on the upfront costs of the instrumental, for better back end terms. One of the fundamental elements of establishing a great business mind is truly knowing the circumstances of a situation and understanding your leverage. If you don’t have any placements, you should not expect a 15k advance and 5 points. The key is understanding that this part of the game is fluid. The more placements and bigger reputation you earn, the more you get to dictate what you receive. This does not mean that you must settle for terms that are unfavorable or flat out disrespectful. Still, talk to any producer you love, they have waived their producer advance in certain circumstances, and they have taken less money for opportunity in pursuit of the bigger goal. Another factor that might put you in a situation to compromise is understanding there are several co-producers on a song, the instrumental contains a sample or that the song is simply a “loosie” and not getting a push. While these factors might not mean a thing depending on your level of production success, for most they are reasons to compromise.
I represent several major label artists’ too. Producers demanding too much or killing an artist’s budget is a real occurrence. A label can be 100% ready to release a song with an artist and look to clear the track with the producer and the producer kills momentum with a ludicrous ask or an unreasonable request. That scenario might result in a missed placement opportunity and a burnt bridge because of a misreading of the situation. Nobody wants that to happen. You have to be find the balance between short term and long term value. Although you might have a sizable online beat selling revenue stream, the cache of a major label placement only makes that revenue stream more valuable.
I truly believe the pendulum is beginning to swing back in the Producer’s favor as we continue to push through the streaming era. Because of YouTube and Beatstars alone Producers are able to make better decisions about their intellectual property because they are building multiple revenue streams. I have had clients that are making 10k a month off one beat and a major label is only offering them a 2k advance. At that point the valuation of your work is not based on thin air, you have financial statements that show the quantitative value of your production even if you don’t have many major placements.
Things are getting better for producers slowly but surely however it is crucial you educate yourself on the business and align yourself with the right representation for continued success.
- If the Artist is signed to a major label and there are no other co-producers or samples, do not accept anything lower than 3% PPD and 50% Publishing. If there are other co-producers, you split accordingly.
- If you are taking less in terms of an advance, you can balance this by making the advance “non-recoupable”, increasing your producer points and/or adding escalations or bonuses if the record becomes successful. Ex: 3% PPD escalates to 4% PPD if the song becomes RIAA Certified “Gold”.
- Disclose at the inception if you have a co-producer or the beat contains a loop, melody or sample created by someone else or from another song.
- Consider retaining full rights to your instrumental and offer your work as a sample or nonexclusive license, if terms are not up to par. You get to have your cake and eat it too.
- Remember so called “producer points” are a percentage of royalty derived from the sound recording usually owned and paid out by labels but if the artist is independent, your points should be paid directly from the artist. Let’s dig a bit further. If an Artist is signed to a major label and is receiving a 18% royalty. If you have a 3% royalty you are taking 3 percentage points from the 18 thus you are getting 3% and the Artist is now receiving 15%. This language really doesn’t make sense if an Artist is independent or in a net profit deal. In that case, ask for something along the lines of 10 to 20% of the net receipts.
- Keep it simple if you can’t get a hold of an attorney or don’t have a Manager. Focus on the big three…Advance/Fee, Royalty/Net Receipts, Publishing.
Royalty (Major Label) or Net Receipts (Independent/Non Majors):
The information provided in this article does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available in this site are for general informational purposes only. Readers of this article should contact their attorney to obtain advice with respect to any particular legal matter.