Music producers are being paid in two ways – either a flat fee or through royalties. The amount may vary but the most important factor is the success of the tracks or the album.
A music producer is paid by the hour and the number of master recordings completed or a flat fee. A producer’s up-front fee is estimated between $250 and $10,000 per song. The fee varies based on the producer’s experience and success, the artist’s level of success, the number of songs to be recorded, the average number of tracks the producer worked on and most importantly, the budget. Also to be considered, is the company’s status - whether local, international, independent or a major record company.
Moreover, a producer could also demand a royalty from the sale of the record. However, this agreement must be put into formality through a written contract with the assistance of an entertainment attorney.
Music royalty means the same way the artist was paid – a percentage of the record’s sales price multiplied by the number of CD's or downloads sold. An artist receives a record loyalty between 15% and 16%, while a producer receives between 3% to 4% of the record’s sales price or 20% to 25% of the artist’s royalties.
An example, if the recording agreement states the artist is to receive a royalty of 15%, he will only receive 12%. The 3% will go to the producer. If the producer also participates in the writing or arranging of music, he or she will also receive an additional mechanical royalty. Mechanical royalty is the payment given by the record company to songwriters for the right to record their songs.
Those who are dubbed “producers of tracks” are entitled to 50% ownership of the song, and thus, 50% of the mechanical royalties also referred to the publishing rights to the song. The other 50% goes to the other songwriter(s) or the writer(s) of the lyrics.
Meanwhile, known to some, hip hop artists receive more money since they are the ones who usually write the lyrics and supply beats of their songs.