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Music Contracts &
Royalties
Artists often wonder how their royalties are
going to be computed when they sign music
contracts. This is truly an important
question because basically determines how much money is
going to end up in their pockets. Recording
contracts are meticulous and somewhat
confusing so I will try to explain royalties to you as
simple as possible. A band or artist’s royalties are
totaled as a percentage of the “suggested retail list
price” for the total number of records sold.
A
general percentage that most artists will find in their
music business
contracts is anywhere from 7% to 16%. This
will obviously depend on who you are and what the
expectations are for your record sales. Remember,
royalties are the only place you are going to make your
money but it is an important part of your contract.
Royalty is expressed either as a percentage, a point or
in escalations. Escalations suggest that you get a flat
rate for up to a certain amount sold. Then your rate
would go up if you sell over and above the first amount.
Depending on the company you have the music
contract with, you may find that your
royalties could include a packaging deduction or not
include one. If it does not include one then you may
find that the royalty price is reduced and then your
royalties will be calculated. This is why it is vital
that you read and re-read your music business
contract before you sign so you completely
understand.
Keep
in mind that there may be a producer’s royalty that you
are entitled to take care of from your own royalties.
So, let’s say you had a royalty of 13% and the
producer’s royalty was 2%, you would only receive 11%.
Other than these industry standard deductions, you may
see deductions for free goods that might go to
wholesalers meaning your wouldn’t receive royalities for
these records. Also, promotional records such as those
sent to radio stations are not included as well. Keep in
mind your royalty account can be charged for any item
that is included in signed recording
contracts. This is why it can’t be stressed
enough that you need to understand every detail of what
you sign because it may not be a dream come true after
all. So, be careful, don’t be afraid to ask questions
and don’t be afraid to seek the help of a
professional. |
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