Music producer points refers 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 were 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 artist by putting it into 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 song they produced.
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