Fee, Points or Both? How to Structure a Producer Deal
By Written by Peter McVeigh
The main ways producers get paid, who each one suits, and the trade-offs behind each option.
There's no single right way to pay a producer. Most deals are a mixture of a fee, a royalty and some terms about what happens when things change. What suits a major-label album won't suit a self-funded EP. So the aim is a deal that's clear and fair for this project.
I typically work on a fee, as I don't want to have any ownership of someone else's work. If someone can't afford to pay me up front, I'm happy to work on a point or royalty until I receive the amount I would normally have got as a fee. Then I'm happy to stop that point.
Here are the main options, including that one.
The main structures
Structure: How it works: Suits: The risk
Flat fee: One price for the job, with no royalty: Small budgets, clear jobs, people who want simple accounts: The producer misses out if it becomes a hit
Fee and points: A fee now, plus a share of income later: Projects with some budget and a real plan for release: Someone must calculate and pay royalties for years
Points until the fee is paid: No money up front. The producer takes a point or royalty until it reaches their normal fee, then it stops: Artists who can't pay up front, and producers who don't want a long-term share: The producer may wait a long time, or never reach the full amount
Fee as an advance: The fee is earned back from the producer's royalties first: Label deals, or artists who need to limit what they pay out early: Small releases may never reach the point where royalties are paid
Reduced fee, more points: Lower cost now, in exchange for a bigger share later: Promising projects with little money: The producer can do a lot of work for very little
Day or hourly rate: Paid for time spent: Open-ended projects: No one is sure of the final cost
Start with what each side needs
An artist with a tight budget may care most about the total cost today. A producer with bills to pay may care most about the fee. Saying this out loud helps. It's easier to find a fair deal when you know what matters to the other person, instead of guessing.
Fee per track or for the whole project?
A per-track fee is easy to understand and copes well if the project grows or shrinks. A project fee can reward a bigger commitment, but needs a clear definition of what's included. Whichever you choose, say how many songs, how many days and how many rounds of changes are covered. You can price the parts with our Studio Quote Builder.
Who pays for the recording costs?
Check whether the fee includes studio hire, musicians, mixing and mastering, or whether these are separate. An "all-in" price can look cheap until you realise the producer has to pay for everything from it, or expensive until you see how much it includes. Whatever you agree, set a budget and say who approves any overspend.
Is the fee earned back?
If the fee counts as an advance, the producer's royalties first pay it back. If it's a separate payment, royalties start straight away. On independent releases, this is something to agree between you, as there's no default. On label deals, once the costs have been earned back, producers are often paid back to the first unit sold. Don't assume your deal does this. Say so in the contract if that's what you've agreed.
If you're deferring the fee
Working on a point until a fee is reached can help a project happen when there's no money up front. If you do this, write down:
The total amount the producer is owed.
The percentage paid until that amount is reached.
What it's a percentage of, and how often it's paid.
That the payments stop once the amount is reached.
That the producer doesn't own any part of the recording.
For example, a producer's normal fee is £1,000 and the artist can't pay it up front. They agree three points of net income until £1,000 has been paid. That happens when net income reaches about £33,333, and then the point stops. On a smaller release, that might take a long time or never happen, so go in with your eyes open.
Other things to include
Credit: the exact wording, and where it appears.
Payment schedule: how much is paid on starting and on delivery.
Approval: who signs off the final track.
Ownership: when the rights move, and on what condition.
Stopping early: what's paid if the project doesn't finish.
Remixes and re-releases: whether they're included.
Songwriting: separate from production, and agreed separately if it happens.
Two made-up examples
A local band's EP. They have a small budget and four songs. The producer offers a flat per-track fee with two rounds of changes, no points and a clear credit. It's simple, and nobody has to do royalty accounts.
An artist with a label budget. The label pays a producer a fee as an advance against a royalty. Statements come through the label, and a lawyer negotiates the details.
Both deals can be fair. They're just solving different problems.
What to do next
Write down the fee, points and conditions you'd each be happy with before you meet. Then read the clauses in our practice Music Producer Contract to learn how those terms are usually worded, and have your real agreement checked by a legal expert.
Disclaimer
General information for independent musicians, not legal, tax or financial advice. Deals and rules vary, so check your own contract and take professional advice before relying on this.