No one-stop guide exists to tell artists and producers what’s what. When it comes to artist royalties and advances, best practices remain elusive. Strategic wisdom and rollout guidance are also hard to come by. How much should a featured artist receive in artist royalties? What terms can you contest in a record deal?
Stem spoke with acclaimed producer and budding artist Cam O’bi to provide insights for music makers. He’s learned how to make smart, ethical decisions by sitting at the negotiating table. He’s learned the production world inside and out by working with Chance The Rapper, Noname, J. Cole and others.
1. Know your rights to composition and artist royalties
Masters, compositions, mechanicals—explaining what they mean is one thing, knowing how they work in the real world is another. Songs have composition rights and master recording rights. When producers help write melodies or contribute to the sounds we hear when we press play, they deserve a portion of those rights to earn a living. Cam pulls the curtains back and reveals what producers can and should expect to receive in most situations when working with others.
As a producer I normally don’t get more than three percent. Usually a major label owns the majority of a master. 70 percent. So there’s only 30 percent to go around for the artist and everyone else. If it’d an independent artist, they can usually give producers more on the master.
The way you get paid as a producer, you first make a beat that gets placed. The record company pays you what’s called an advance, which is basically a lump sum, against future royalties. They pay you that so you can have something now. Then once the song makes that amount back, you start seeing your royalties. Sometimes companies try to snake you out of those artist royalties.
One thing you’re always entitled to as a producer is 50 percent of the publishing, which means the composition of the song. If I made the beat, and my friend Dee wrote the song, I get 50 percent for the beat, he gets 50 percent for the lyrics. If anyone is trying to give you less than that, it’s a red flag. The only time you get less is if you have a co-producer, or a co-writer, or you sample. If you sample, a lot of times it’s just the sample owner telling you, “I want this much!” And that’s it.
2. Consider the future to decide the present
Understanding the future value of present activities will help you make decisions with foresight. There’s no true science to determine who owns what portion of a song. Do your friend’s snares warrant 50 percent of the composition? Does your brilliant guitar melody deserve even more? Cam recommends a simple solution to help reasonably allocate royalties.
Do a hypothetical math problem. Say me and you make a song and we’re trying to figure out if it should be an even split. Well, if the song made a million dollars for the producers, is your contribution worth $500,000? Is mine? It puts a percentage into perspective more. Do I deserve $500,000 for just putting some hi hats on there? No? Then I don’t deserve 25 percent.
3. Give featured artists their third
Say you’re one verse away from finishing your new single but you want someone else’s energy. You invite another performer to feature on the recording. She accepts, you complete the song together and then release it through Stem. Happy ending, right? Almost. The missing link, royalty splits, remains unaddressed. Each month, we automatically distribute a song’s earnings to its creators based on their splits. Here’s how Cam recommends thinking about splits for featured acts.
The featured artist should get 33 percent of what the artist is getting. So if 70 points go to the label and three points go to the producer, now there’s 27 points left. So the feature should get about eight or nine points. If the feature is Justin Bieber, he can argue that nobody would listen to the song if he wasn’t on it, so he might negotiate a 50/50 cut of artist royalties. If you have more than one feature, I feel like they should all divide that 33 percent up evenly. So say the artist has 26 points left, and eight points of that goes to features. If there’s two features, they each get four points.
4. Look beyond the internet
Streaming will increasingly dominate music consumption. For now, though, plenty of people engage with artists outside of today’s ecosystem. Cam encourages creators to think about strategies that affect the world online and off. Ideally, campaigns will do both. For starter tips to prioritize fans in the streaming era, read our guide here.
Data only represents the people who have access to laptops and smartphones, and that’s not the whole country. When I go back home for family reunions or whatever, no one is on the internet. What’s hot to us, they haven’t heard of. You have to think outside the box. Places where Live Nation doesn’t have a venue. Radio is dying to us, but not to lots of people.
5. Show love to your trusted partners
Some of music’s best teams started with friends who were motivated by vision, not money. With that said, you should do your best to treat the people you love working with well. Splits make this easy. Creators can compensate collaborators for their work by assigning percentages of their masters and compositions though Stem.
If someone starts a beat, they own half of the composition rights. If someone else comes in and adds a lot to it, I would say the 50 percent becomes 30/20 in the original producer’s favor. But if two people start the beat together, it should be 25/25. If me and you started a beat together, and the final result was mostly my work, I still think you deserve 25 percent. If you don’t do that, it becomes a competition. Down the middle keeps it simple. For me, personally, I also try to treat people well. Say you only did five percent, but I like you, and we’re working together, and I want you to do well. Or maybe you’re short on cash and need money. I’m going to give you 10 percent.
6. Test your limits solo
To build your best team, you must first take steps to learn your own limits. In Cam’s words:
If you don’t fully know what you can do on your own, people will take advantage of you. If you’ve got the money to fund your album, fund it yourself. If you have a relationship yourself, as an artist, to a blog, reach out yourself. Don’t ask your manager. That’s why I’m where I’m at now. Personal relationships are the most important thing. People appreciate it more when it’s you.
7. Make time for side projects
Simply put, leaving all your eggs in one basket gets risky quickly. Artists (and people, generally) can benefit from specialization. However, if your schedule allows it, try to diversify projects It can help prepare for life’s unexpected twists. Cam has been through the wringer and attests first hand to uncertainty in the music business.
Sometimes I’ll make an entire album and the label will shelve it, so I won’t get paid for any of the work I did. Then there’s times where I do get a placement, but I’m incorrectly credited. More recently, I dealt with a company that just doesn’t want to pay me for my work, like at all, even though they can. Don’t rely on one person to make you. Or if you do, think it through.
8. Negotiate what makes sense for YOU
Most companies start negotiations with standard agreements, but creators vary and contracts should too. For Cam, knowing his career ambitions, financial needs and diverse talents lets him present his own ideal terms with clarity. Ask yourself what you really need to accomplish your vision and consult your manager, lawyer, parents, etc. before signing any binding agreement.
An advance is a loan to purchase your copyright from you, your master. It’s no different from one company buying stake in another. Your album is your company. A lot of people think you’re getting money for free, but you’re giving up a big percentage sometimes. A giant advance means they are taking a lot of the music. You can negotiate that.
The length of time they control your work for is also negotiable. It doesn’t have to be a death sentence. It doesn’t have to be them controlling 70 percent forever. I’d never sign more than two albums because I haven’t thought beyond that, so why sign a three-album deal? For me, say I need X dollars to finish my project. Give me that, and then we can negotiate how long you get to keep 70 percent of my artist royalties until I get it back, after you make your money back and make some profit. The other thing is, being my own producer, that’s another bargaining chip because I control the cost of production more.