Do Beat Makers Get Royalties
Every music producer needs to understand these three items below:
1) have your music copyright protected,
2) join a Performance Rights Organization (PRO) and
3) get your licensing terms right.
Royalties and Publishing
Generally, the composer and publisher split is 50–50.
In Hip Hop and R&B, publishing is generally split between the music and the lyrics. Thus, some music producers can get up to half of a record's publishing.
However, an alternative view is that a producer is not necessarily entitled to publishing royalties. If the producer simply made the beat and only the beat and didn't have any input on the melody and words of the song then it is completely plausible that an inexperienced producer with a weak legal team will get shafted into believing or signing an agreement that forfeits publishing.
However, if a producer is in the studio making a song with the songwriters and artist then it is very likely the producer will be entitled to not only a percentage of the producers publishing but also the lyrics as well. Publishing can be a way for the producer to get fairly compensated for their contributions. A top level producer will also likely seek publishing because there name probably had a lot to do with the record being a success.
A general rule of thumb, however, is that if you have produced a record and even if you only made the beat, you deserve a portion of the Publishing. The simple breakdown being you own half of the record's publishing if you created the beat and the other half is distributed out to the songwriters.
Please understand "There is no law that says a music producer is entitled to publishing", but it is standard practice. Producers get your Publishing!
If you are a music producer you may be interested in our article "What Are The Best Beat Making Software".
An artist's master recording royalty (which typically ranges from 12% to 18% at a major label) is the crux of why anyone signs a record deal. The recording of the song is what we refer to as the"masters". It's what the label invests all of their time and money in selling to the public thus it is an important way for an artist and producer to get paid. Usually, a producer makes 3% to 5% (20% to 25%) of the artists share of a master recording. This number could be a bit higher if the producer is influential and has a brand of their own.
Unlike the artist, the producer usually receives his royalty from the first record sold after recoupment of recording costs (usually an advance to the producer). This means that once gross income exceeds recording costs, the producer is paid for all records sales going forward— the artist is not until they recoup for all other costs.
If a recording artist is at an indie label or is represented by himself, producers will likely take a higher percentage on points because they are less likely to receive an upfront fee. And when you think about this is really fair.
In order for the producer to receive a piece of the SoundExchange royalties, you'd need to include the allocation in your agreement and have the artist sign the letter and submit the information. This is really important because without this you don't have a paper trail to ensure you get your money.
When you leases a beat to a recording artist, the artist can use the beat but you have as the producer still have copyright ownership of the beat giving the artist either an exclusive or (usually) non-exclusive license to use the beat, typically for a set period of time and/or a set number of exploitations (sales and streams). Beat leasing similar to car rentals usually exists because of a fiscal issue from the consumer side. An artist might not have the money to purchase the full rights in a beat but they want to use it for a project or for promotion.
On the contrary, a producer wants income for their beats and this is a way for them to continue to add income while getting there work out there to the public. Producers usually do not forfeit the highest quality of their beat to an Artist under a beat leasing agreement. If someone, wants to use a beat exclusively, this is the way a Producer can make sure they are compensated and can renegotiate later if the song takes off.
This one can be tricky, because it really depends on the country. Technically, as soon as you publish any of your music (which could mean uploading a beat to your favorite social media site) you should be able to prove ownership and copyright.
But if you want to be sure, spend some money sending a CD full of your beats to your country's copyright office and register the copyright with them.
You'll usually get a certificate that proves you own the creative work and all rights to reproduce it. But this isn't legal advice, so go talk to a lawyer to be sure.
What Are PROs
Performing Rights Organizations
Joining a Performance Rights Organization is super important. These companies collect royalties for public performances of your music and distribute them.
I'm a member of SOCAN (the main Canadian PRO), and in the USA there are a couple of options – ASCAP and BMI. In Europe you have SESAC.
Join a company and submit your beats & any songs that use your beats to them.
You can also join SoundExchange, which is a company that deals with online streaming royalties.
This way, if a song you produced blows up, or even gets MILD radio play, you'll get your piece.
Granted, this typically cost a few dollars (or few hundred dollars if you're lucky) every few months, but if you end up making a surprise hit – like Menace did with Panda – you'll get a nice chunk of change.
Producers are typically paid "record one" royalties. Whenever a record is sold a producer receives a payment. For a musician this is different because they only get paid after the label recovers the money they spent to promote the album.
However, many producer contracts specify "retroactive to record one" clauses. This basically means that the artist doesn't have to pay the producer anything until after the label recoups it's money. The producer will receive royalties on everything sold, after the costs are recouped. This keeps the label and the artist safe from lawsuits.
Never sign a deal you don't having an understanding of, and don't hesitate on negotiating a better deal or getting yourself an attorney to negotiate a deal on your behalf. If your producer has a problem with the deal find another one. It's that simple.