Music producer points refer to percentage royalty earnings that a music producer negotiates from the artist's contractual sales income split with the record label.
For example, if an artist signs a record deal in which the artist is entitled to 25% of the sales income. This means that if an artist agrees to give a music producer 4 points for a particular song produced.
The music producer would earn 4 points taken from the artist's 25%. Now simple math tells us that 25% - 4 % = 21%.
So in our aforementioned example, the breakdown for the sales income will be as follows:
The artist will get 21% of the sales income from the song.
The music producer will get 4% of the sales income from the song.
The record label will get to recoup 75% of the sales income from the song.
NOTE: The word "points" in the context of the music business is synonymous with the word "percentage." So when you hear people talking about 3 or 4 points it just the same as saying 3% or 4%.
Music Producer Points vs Work-for-Hire
When an artist approaches a music producer the onus is on the music producer to persuade the artist to either share some of the gross sales royalty income derived from that particular music release.
But sometimes the artist may decline to let the music producer take a small slice of the artist's sales royalty income.
Therefore, this leaves the music producer with a choice to either accept a lump sum payment referred to as work-for-hire or completely refuse to work with the artist.
In a nutshell, a music producer has to be very clear with the artist by putting it into a contract whether they will be entitled to production points or just work-for-hire.
Because further down the line the song can end up being a hit record and the music producer will lose out big time if they had agreed to sign a work-for-hire contract rather than to be paid production points from a song they produced.
The difference between music producer points and mechanical royalties is that producers' points have absolutely nothing to do with music publishing earnings but mechanical royalties are a part of a music publishing copyright that earns royalty payments as the work is exploited.
NOTE: Music producer points are due when the song in question is sold as physical copies or digital downloads.
On the other hand, mechanical royalties will be due when the song is sold as a physical copy, streamed online (e.g. Spotify, Apple Music & Amazon Music).
For example, if a music producer makes a beat for an artist he has the right to negotiate producer points including splitting the ownership of the music publishing copyright as 50/50 or whatever agreement he can reach with the artist.
However, the artist has the final say whether they want to share their artist royalty percentage for record sales or digital downloads with the music producer.
For instance, if an artist is contractually entitled to earn 25% of the record sales whilst the record label gets the other 75%. The artist can agree to give the music producer 4 points (or 4% as producer points for physical record sales or digital downloads). But only if the artist agrees to do so.
Furthermore, the artist can also decide if they want to own the entire music publishing copyright for that particular song without sharing any music publishing with the music producer.
Or the artist can demand that they want the bigger share of the music publishing copyright for that song e.g owning 75% whilst the music producer gets 25% of the music publishing.
Now the interesting part is that the music producer also has to sign into contract agreement whether he is satisfied with the demand of the artist.
And if the music producer refuses the proposed arrangement from the artist then the artist will not have legal rights to use the beat for commercial releases meaning the music producer will keep his beat or sell it to someone else.
Standard Producer Points & Music Publishing Agreements Between Rappers and Music Producers.
The standard and common arrangement of producer points and music publishing between rappers and music producers depend on how popular the artist is and also the reputation or production credits of the music producer in question.
So let's look at different scenarios and evaluate how the music split sheets will play out.
Scenario #1: A-List Rapper & A-List Music Producer:
The music producer is mostly like get 4 points or 3 points from the rapper's sales income royalties.
The music producer also stands a chance to get 50% of the music publishing for making the beat.
Scenario #2: A-List Rapper & D-List Music Producer:
The A-list rapper will be very reluctant to share his sales income royalties. It's a take it, or leave it scenario for the music producer.
The A-list rapper will also demand huge ownership of the music publishing (e.g. 75%) Or even tell the music producer that the agreement will be work-for-hire where the rapper gets to keep the entire share of the music publishing copyright.
Because of the A-list rapper's demands to have the agreement set up as work-for-hire, the music producer will be paid a one-off lump sum payment and that's a deal done nothing else will come.
Self-publishing in the business of music is often used by composers, songwriters and music producers that want to set up their own independent music publishing company for the purpose of administering their music catalogs and music publishing copyrights.
The most challenging aspect of embarking on the self-publishing route is that it requires extensive knowledge about music publishing deals, and not only that but financial resources to hire staff and legal fees of making sure the music publishing catalog is compensated as it should.
Now in the practical world most songwriters and music producers when they get up and running in the business of music they will be clueless how music publishing actually works.
This right here is what makes it difficult for them to start their own music publishing company.
So as such many songwriters and music producers opt to settle for co-publishing deals were the music publishing company takes care of the music publishing administration on behalf of their clients.
When Should You Take The Self-Publishing Route As A Musician
Self-publishing usually makes sense when an artist is independent and not signed or affiliated with a major record label.
So as a musician if you own your record label and finance your entire project from start to finish then it would perhaps be more beneficial for you to take a step further to set up your own music publishing company to administer your music publishing copyrights.
However, please note that music publishing is not a smooth road because you will certainly come across many challenges along the way.
You better brace yourself and develop a strong sense of business acumen to deal with issues concerning publishing royalties because if you don't you will not get the money that is due to you.
It takes a great creative effort as a musician to make a living off music and you shouldn't let other people deter you from achieving your goals.
As a result, you are better off hiring an entertainment lawyer to clear things up so as to relieve yourself from being confounded by the business of music and the world of music publishing.