Negotiating For Your Royalty Rights as an Indie Artist: What You Need to Know to Not Get Ripped Off

Music royalties and copyrights are notoriously complicated. Even if you took a music copyright class in school or have some idea of what publishing rights are, it seems like every new relationship in the music business brings new legal challenges. 

You’re not alone, believe me. Music copyrights are a needlessly complicated system born out of an industry dramatically affected by technology & intangible art. 

The number of ways music can be sold is part of what makes it so confusing. There’s streaming, CDs, vinyl, sync licensing, radio — and the list goes on. In the end, all royalties and conversations around royalties are about fair compensation for who wrote the song and who owns the actual track (i.e. the song recording).

I’ve been in the music business for a while now, and here at SoundCannon we deal with copyrights all of the time. If you’re an indie artist, it pays to know what the landscape is. The best way to not get ripped off is to know what getting ripped off looks like, right?

My goal with this article is to show you your cards and how they typically play out in situations you’re most likely to find yourself in — that way you understand where everyone is bargaining from and can use that knowledge to empower yourself to make smarter decisions.

We’re going to start with the basics and then segue into specific situations, and if you have any more questions, drop a comment or shoot me an email at INSERT EMAIL

Let’s go.

Part 1: The basics of music copyrights that all indie artists should know

Before we dive into common times when you need to know what the bargaining landscape is, we need to cover some basics about music copyrights. This is worth your time, believe me.  

Important Concept #1: Copyrights simply mean ownership.

That’s it. Copyrights are just who owns the intellectual property. Ownership allows you to use your work for financial gain or however else you’d like to use it. 

In music, this means you can sell it, you can license it, and you can publicly perform it. 

Or more specifically, 

Reproduce the work in whatever format you want (e.g. Vinyls, downloads, etc.)

Distribute the work (streaming and free downloads are both examples of distribution rights).

Produce and/or license derivative works (e.g. remixes, covers).

Perform the copyrighted work (on TV, radio, live, etc.)

Important Concept #2: Every piece of recorded music has two copyrights: The Composition Copyright and the Sound Recording Copyright.

Music copyright separates who wrote the underlying composition from a recording of the song. In other words, if I write the song and you take it into the studio, then you own the sound recording rights and I own the composition. 

Or for a more modern example, let’s say Dua Lipa covers a song by St. Vincent. After permission is granted and the song is recorded, Dua Lipa will own the sound recording or master copyrights to that particular version but not the composition rights.

So composition rights = lyrics, chords, and melody.

Sound recording rights = the actual recording or “performance”

Something else to note:

You may hear the composition rights referred to as the song rights or publishing rights.

You may hear sound recording rights referred to as the master rights or recording rights.

These are synonyms and mean the same thing. 

Just file them under the same umbrella and treat them the same way. 

Important Concept #3: Publishers deal with composition rights and record labels deal with sound recording rights. 

No publisher collects sound recording rights, and no record label collects songwriting rights. These are separate worlds, but sometimes a company (or sister companies) will play both roles.

Publishing companies make their money from composition rights and record labels make their money from sound recording rights.

Put another way, all “pub deals” split composition rights, and all “record deals” split sound recording rights. 

Important Concept #4: All deals and contract situations are based upon what person or entity owns how much of either the composition rights or sound recording rights AND to what extent they can use them.

Any deal or contract you ever sign boils down to those distinctions over percent and use. 

Do you get 14% or 16% of the sound recording rights as the artist? Does your producer get 50% of the publishing rights? Does a track given by the producer equal songwriting credit, which equals a split of the composition rights? Does your manager get 10% of composition and song recording rights or do they just take a piece of your overall gross profits? Does your producer have the right to sync and take income from those placements or do you have exclusive use of the track?

Any seemingly complicated deal can be boiled down to these rights and uses. It’s not that bad when you think about it this way. People are just fighting for bigger slices of the composition or sound recording rights pies. 

Important Concept #5: If you don’t make an active effort to sign up to the appropriate organizations, you won’t receive all of the money you’re owed. 

This is a broader point, but you need to make sure you have all of your boxes checked when it comes to collecting revenue for your music. The two most important things you can do are sign up for a PRO or performing rights organization like ASCAP or BMI (these organizations collect the composition or songwriting rights) & Harry Fox agency, which collects mechanical rights. 

It’s weird because mechanical rights are a composition right or songwriting right, and their respective mechanical royalties are owed to songwriters every time their song is copied (think like every time a CD is made), but even though publishers handle everything else to do with composition rights, they don’t handle mechanical royalties.

Again, PROs do not collect mechanical royalties (derived from the sound recording right) when a song is streamed, purchased, etc., so you aren’t getting everything if you only have a PRO!

Part 2: Common situations indie artists find themselves in

Now that we have the basics down, let’s talk specifically about the situations you are likely to encounter. We’ve arranged them so you’ll know what both parties at negotiating for — that way you can walk in knowing the appropriate bargaining room on both sides. 

And across all of these scenarios, remember to:

  • Always push for more points or percentage points unless you’re being significantly compensated in advance.
  • Never let someone pressure you to sign on the spot. 
  • Use an entertainment lawyer whenever possible. 
  • Don’t always trust your partner’s lawyer. They are there to negotiate for their client, not you. 

Indie Artist and Producers

There are many ways artists can strike deals with producers, but the most common approach is a per song advance of sorts with a portion of the artist’s “sound recording” rights. 

What You Want

  • To either buy the producer’s “sound recording” rights out at a cheap cost or pay little upfront in return for paying the producer future royalties. 
  • The right to use the sound recording how you want. 

What They Want

  • An advance AND a significant share of the “sound recording” rights.
  • Sometimes they want writer share rights too depending on how much they contributed to the composition. This varies by genre. 
  • Explicit compensation for any third-party licensing uses like sync. 

What’s Typical

  • Producers get paid for a beat upfront without any revenue share (e.g. $1,000 song + no sound recording or publishing rights).

  • Producers get paid a large upfront fee and a small revenue share. (e.g. $3k per song & 5% of sound recording rights).

  • Producers get paid a small upfront fee and a medium revenue share (e.g. 20%).

  • Producers are exclusively paid in revenue share. This is more of a partnership. E.g. 50% of sound recording rights. 

Note: For record label deals producers usually get 4-7 “points” out of the artist share. Unsigned indie artists usually give up a lot more points. So if the artist share is 17% of the sound recording rights & the label gets 83%, then a 5% producer share would leave the artist with 12%, the label with 83%, and the producer with 5% (or 29.4% of the original artist share). 

Indie Artists Writing with Other Songwriters

This goes for any situation where you are sitting down with a musician with the intention of writing chords, lyrics, or melodies. Remember that sometimes a producer plays both the songwriter and producer roles! 

What You Want

  • An equal part of the writer share (remember this is a portion of the total publishing revenue that derives from the “composition” right). 

What They Want

  • An equal part of the writer share. 

What’s Typical

  • Think “one word, one third”. This is a famous Nashville saying that says if someone even contributes a word, they deserve a share. Always make a point to outline the writer share split at the beginning of a co-write! 

  • Bringing in a spreadsheet that outlines the splits at the beginning of a session.

Indie Artists and Managers

Managers take a percentage of your gross revenue and are considered an expense from your business. This is not net income, so if you made $80k in a year touring, you owe your manager $8k — even if after your expenses you only took home $20k. 

What You Want

  • As low as a percentage as possible while still giving enough to motivate your manager. 
  • A push for net income percentage until a certain threshold is passed. 

What They Want

  • As high of a percentage of gross revenue as possible while still making their artist feel good about the relationship. 
  • A way to get a slice of gross revenue and not net income. 

What’s Typical

  • 15-20% of gross income. 
  • Sometimes gross income pricing is tiered, so 20% until $100k+ per year. 15% for $100k-$200k, 10% for $250k, etc. 
  • Many small managers agree to only take part of net income after a certain point (an I don’t make money until you make money situation).

Indie Artists and Publishing Deals

One thing to note, for any given song’s composition rights there are two equal (50%-50%) types of shares created and paid out by PROs: the writer share and the publisher share. 

Writer shares cannot be sold and are always given to songwriters. The writer share is split between how many people wrote the song and serve as protection for songwriters. 

All publishing deals negotiate what happens to the remaining 50% of the publishing revenue

What You Want

  • As high of a percent of your publishing rights as possible. This is out of the other 50% of publishing revenue left after your automatic 50% writer share. 
  • An advance (usually a salary in the publishing world)
  • Shorter commitments and the ability to break the contract and still have ownership. 

What They Want

  • As much of the publishing rights as possible (up to a total of 50% of the total publishing revenue or up to 100% of what’s left after the automatic writer share is removed). 
  • A lower advance
  • Exclusive rights to use the songs for as long as possible. 
  • Harsher penalties for breach of contract. 
  • To only pay you royalties after your advance is paid back by the royalties your songs are generating. 

What’s Typical

  • 50-50 split of publishing revenue (after the writer share) is very common.
  • Sometimes this goes to 60-40 for first-time publishing deals. 
  • Exclusivity to administer (pitch and sell) the songs for the duration of the contract. 

Final note: Use these examples as your baseline, but always do your research before signing anything

In the end, it’s impossible to cover the complexity of music publishing and copyrights in one blog. For any expansive or expensive deal, always hire an entertainment lawyer to work with you. If you can’t afford one for now, then use the guide above & always research / take your time before signing a deal. Any deal should be a win-win, and a company trying to pressure you into a deal that works well for them is a terrible way to start a working relationship. 

Good luck, and if you have any questions about what it’s like to work with a team of producers, just ask any of our producers at SoundCannon. And don’t forget to pick up this split sheet that you can use before every session and co-write!

 

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