Week 7 - Music Producers

7th Class - MID TERM MULTIPLE CHOICE EXAM

(CLASS lecture will proceed before exam is given)

Role of The Music Producer; Music Producer Agreements; Problems created when Producers Sample to Make Masters

PRODUCERS AND PRODUCER AGREEMENTS

A. After the Artist, the Producer is the most important person in recording a master. It is not necessary for a producer to write the music or the lyrics to the song they are producing. It can be chosen or written by the artist. Under those circumstances, the Producer’s job is to get the best Master recording possible out of the recording sessions. However, the trend in popular music is for artists and labels to hire producers who have written and created the music for top selling songs. Consider Kanye West who became a famous producer for other name artists and then launched his own solo career. Hip-Hop Beat Producers typically have less responsibility for the finished product. They often get paid for assigning rights to their original music track to the artist without the responsibility for going into the studio and finishing the Master recording by adding the vocals and side musicians.

Producers can be responsible for

1. selection of material, or writing and performing the music or hiring others to do so

2. finding or providing the recording studio, engineer, etc.

3. supervising all the recording sessions from beginning to end

4. hiring side musicians and vocalists where needed

5. mixing the record into a finished master

6. delivering master and stems; providing all credit information for track

B. Producer Agreements:

A written agreement embodying the basic terms of understanding between the producer and the hiring party is essential. Verbal agreements are too easily forgotten or misunderstood. Essential Terms include the following:

(a) What is the amount of the producer fee and how and when is it to be paid? How many Masters?

Typically a fee is paid 50% upon commencement of work and the balance upon delivery of the finished masters. A fee can be either an advance against a royalty, or a flat fee buyout of all the producer’s rights.

(b) Who is responsible for studio expenses and the engineer? 

If a producer owns his own studio, often the fee will include the studio costs. If not, the fee usually does not include these costs.

(c) Where are the sessions to take place?

Again, if a producer owns his own studio, the agreement will specify that the sessions are to take place there. Otherwise, it is good to specify what other studio will be used, particularly if the client is paying for the studio time.

(d) Are mixing services included?

Mixing services are often, but not always included in the fee. Even if the services are included, due to the necessity of using another facility, some times the costs of the mixing studio are extra.

(e) Is the fee an advance or a buyout of all the producer’s master royalties and publishing royalties?

It is increasingly common for a producer to be asked by small independent labels to accept a lump sum “buyout” for his/her services instead of a combination of an advance against royalties. This request should be considered carefully since you never know how successful a particular song will be.

Even when a buyout of a producer’s recording royalties is proposed, a producer can still negotiate the retention of his rights to publishing royalties for any original music created.

(f) If samples are to be used, who is responsible for clearing the samples? How are songwriting credits to be determined if a sample requires giving up part of the composition?

Typically, a producer will want the responsibility for clearing a sample to be on the part of the client. If the sample does not clear, the client may want the producer to use alternate music that is usable. If the sampled song requires an assignment of songwriting credit for the new composition, it should be agreed in advance whether this will be deducted from the producer’s share of the composition alone, or whether the parties will split the songwriting credit after deduction of the sample.

(g) If the producer is creating original music together with the client, how are the songwriting credits to be divided?

Typically the author of the lyrics will receive 50% of the song and the author of the music will receive 50% of the song. However, depending on the stature of the producer, a smaller percentage may be offered to outside writers just for the privilege of being able to work on a song which will be commercially released.

(h) If a producer is to receive royalties, what is the royalty rate?

The typical royalty rate for a producer is 2% to 3% of the retail selling price of the record, calculated and paid in the same manner as the artist’s royalty is calculated and paid. For superstar producers, it can be 4% or more. It is typically deducted from the artist’s royalty and therefore requires the artist’s agreement. If the producer does not receive an advance, they may insist on a 4% or more royalty given the risk involved.

The royalty is typically not paid until the costs of the recording (usually the entier album, but can be limited to only the songs produced by the producer) are recouped by the record label at the Artist's rate. Once the label has recouped, the producer will either be paid prospectively, or retroactively to the first record sold, which is the better treatment for the producer. If retroactivity is agreed, the recoupment rate will be at the Artist's royalty rate, minus the producer's royalty. This assures the record company that should recoupment occur, there will be a sum of money on hand that can be used to pay the retroactive royalties to the producer.

(i) If the producer retains his share of any songwriting and publishing of the song being produced, is there an agreement that the producer will grant a mechanical license for less than the full mechanical rate?

If the release is digital, copyright law now requires a full mechanical rate to be paid to the writers. However, for physical sales (CD, Vinyl) the record label might release, it will often ask the artist and producer to accept a 3/4 mechanical rate for the song. Super-star producers are able to insist on a full mechanical rate for their compositions even if released on CD. They will also insist on not being subject to the “cap” for mechanical rates on the album. 

Here is how the mechanical “cap” might be calculated. Assume the artist’s recording agreement provides that the maximum number of songs for which they will pay mechanicals on are 10 at a ¾ mechanical rate.

sample calculation:

10 songs X 3/4 of 9.1 = 6.82 cents per song or 10 x 6.82 cents = 68.2 cents per album in total mechanicals payable by the releasing label, no matter how many songs

If there are any cover songs or non-controlled songs (i.e. those written by songwriters and owned by publishers that are independent of the artist or producer) usually those songs have to be paid at the full rate. Whatever is left over is then divided up between all the “controlled publishers” which is usually the artist songwriter and producer.

In the above example, if there were 14 songs on the album, and 4 of them were non-controlled, they would have to pay those outside publishers 4 x 9.1 cents = 36.4 cents. That would be deducted from the “cap” of 68.2 cents, leaving 31.8 cents left to divide up amongst the remaining 10 songs. Each song would be paid at a rate of 3.18 cents per song due to the cap.

Some producers will accept a ¾ rate but will not accept the cap. For the above example, if a producer has produced the music for two songs, if they were to accept the ¾ rate and the cap, they would be entitled to 50% of the 3.18 cents for two songs or 1.59 cents X 2 = 3.18 cents total. If they did not accept the cap, but only the ¾ rate, they would receive ¾ x 9.1 cents = 6.82 x ½ = 3.4 per song for each song, times two songs = 6.8 cents instead of 3.18 cents for two songs.

(j) Dates that sessions are to take place and completion dates

Timing of sessions is often a key issue given the availability of the talent, the schedule of the producer, and the desired date for commercial release of the material. Careful thought should be given to the time frame of the sessions so that all parties are available for the amount of time needed to complete the work. If out-of-town artists are required to fly back to complete the work due to inadequate planning, the expense could be significant.

(k) Deliverables

The final payment to the producer is contingent upon the Producer delivering all items specified in the contract. Those items are usually the mixed and finished two-track master tape or digital master; all outtakes and pro-tools sessions, stems; all signed side-artist agreements, all the credit information; any receipts that reflect expenses reimbursed by the label

(l) Warranties of Originality

The Producer must warrant that any creative material they deliver is original and does not infringe on anyone else’s rights. If they are using samples, they must disclose all the information and only use with the consent of the other party.

2. Producer’s Copyright Issues

As we have discussed, there are two copyrights in a musical work - one for the sound recording and one for the musical composition being recorded. If a producer is hired to produce for a client, the client will typically want to own the copyright of the Master recording. Therefore the client will have to obtain an assignment of those rights from the Producer in the Producer Agreement.

However, producers often create songs on a speculative basis. If a song is written and financed by the producer alone, the producer would be entitled to copyright both the master recording and musical composition featured on the recording. Both copyrights can be secured on the U.S. Copyright Office form SR or eCO if the author is the same.

If the producer has written the composition, either alone or in conjunction with other people, the producer should take steps to copyright the composition as soon as it is recorded. In the case of songs which are written in conjunction with others, they should have simple letter agreement signed by all the writers setting forth the agreed splits on the song, and if available, the names of the publishing companies for the respective writers. The following is an example of a brief acknowledgement of the writer credits and splits which would be effective until a more formal co-publishing and administration agreement could be reached.

Song Title: “Economical Disaster”

Songwriters: Publishing Company: Percentage:

Slim Daddy ABC Music (ASCAP) 50%

Tom Waits Typical Tunes (BMI) 50%

Signatures: _____________________________

Slim Daddy

_____________________________

Tom Waits

Copyright forms (eCO, SR, and PA) can be obtained through the U.S. Copyright Office over the intertnet. The new on-line form is “eCO” which can be used for all filings and replaces the other forms.

3. Producers Making Demo Recordings for New Artists

Producers routinely become involved in demo recordings. Sometimes they are hired by a new artist to showcase their talent. Other times, they find talent who they want to assist in getting a record deal and promote their own music at the same time.

Quite often in demo recording situations the producer receives either no fee or a very reduced fee for their work. If the producer is not being paid up front, the written agreement should specify that the producer retains all copyrights to the Masters until the agreed compensation is received. It is also advisable to negotiate for royalties should the material be commercially released. Producers may also ask that they be given the opportunity to produce a certain number of songs on the first album that the artist releases, but this will be difficult to enforce since the record company signing the artist will usually dictate which producers are to be used. A producer can also negotiate a finder’s fee measured as a percentage of the artist’s advance and/or royalties if they are able to find a record company willing to sign the artist.

Producers should be aware that although they may retain ownership of the Master recordings which they produce for a new artist until they are paid and assign all rights to someone else, this does not offer complete protection. The artist can still re-record the material with another producer and not be obligated to the first producer (except to secure a mechanical license if the first producer has written the composition).

4. Side Man Clearances

One of the obligations of a producer is to obtain the necessary written consent forms from any person who performs services on the Masters. All vocalists (singers or rappers) and musicians should sign a simple release form which contains at a minimum the following points:

(a) amount of compensation to be paid, if any

(b) name and address of person rendering services

(c) date and place of session

(d) type of services rendered and rights assigned by Side Artist

(e) assignment of all rights to producer or clients for services rendered, including any writing credit that otherwise may have been received

(f) right to use the person’s name in connection with the Master and proper credit line for album notes

(g) acknowledgement by the side man that they are not under any exclusive contract that would prevent them from performing the services

A signed release will provide valuable insurance from later claims that the person rendering the services did not consent to the use of their name and work product for the Master.

5. Re-recording Restrictions

Producers are often asked to agree that they will not re-record the same composition for anyone else for a stated period of time, usually 2 to 5 years. The producer will want to agree to this only if the client agrees that the Master will be released within a certain time frame after delivery. If the material is not commercially released within a given time frame, the producer can argue that they should be free to record the song with someone else.

6. Co-Producing

When more than one individual is producing one Master, care should be taken to define what roles each will play and how compensation will be divided. For example, one producer may bring in another producer to work on a Master with the understanding that they will be entitled to a negotiated flat fee for their work, and not share in the royalties or over-all advances paid to the main producer on the track. It has become common in LA to invite several secondary producers into a room when a track is being created to see if anyone has ideas that add to the commercial appeal of the song. If those ideas make it into the finished master, their participation has to be worked out without having an up front agreement beforehand. This will lead to a round of re-negotiations with the original producer and other writers on the song who will have to take less publishing due to accommodate the share to be awarded to the late night producer with the great idea.

On the other hand, often producers work in teams and divide all compensation and songwriting credit equally, regardless of who does what on the track. A simple partnership agreement confirming this arrangement is advised if this is the case.

7. Re-Mixes

Everything mentioned above applies to re-mixes, however there are two items that usually distinguish the re-mix terms from standard terms for producing a new Master.

First, a flat fee is paid, but no royalties are typically paid for a re-mixer's work, even if the original music is stripped and replaced. The only exception would be a superstar remixer, and then only a 1% royalty would be paid.

Second, no publishing or writing contribution is typically awarded to the producer, even if they make substantial creative additions to the song. The theory is that if you have the original song and the remixed version in circulation, it would be hard to track performance royalties for each version since they usually bear the same title, label, and artist.

8. Exclusive Producer Arrangements

Occasionally, a label will hire a producer exclusively. These agreements can consist of one or more of the following variations:

(a) The producer can be paid a salary in exchange for a grant of all rights to all music, both to musical compositions and to sound recordings produced for the label.

(b) The producer's salary can be treated as an advance against an agreed producer royalty rate based on records sold.

(c) The producer may have a salary and retain all music publishing rights

(d) The producer can be paid a flat fee per track and guaranteed a certain number of tracks per month.

Under California law, to be able to obtain an injunction against the producer should he or she decide to work elsewhere, the minimum compensation guarantees required of $9,000 a year for the first year, $12,000 a year for the second year, and $15,000 a year for the third year have to be paid.

Companies who have producers under exclusive contract can loan out their services and cause the payment to be made to the Company instead of the producer.