heres how royalties work
There are four types of royalties
Album Royalties
Mechanical Royalties
Performance Royalties
Print Royalties – these aren’t seen in rap usually theyre for sheet music like for Billy Joel or The Rolling Stones
Performance Royalties – these involve ASCAP, BMI, and SESAC
ASCAP and BMI are non profit organizations (SESAC is for profit and only has about 1% of all performing rights) they go each publisher and ask for permission to license performing rights of all their songs. Then they go to the people who want to use them (TV stations, concert halls, radio stations) and make a deal that lets them use all the songs of all the publishers they represent – for each license they collect the fees, divide them up and send the publisher a share
But if you are a song writer you can also affiliate directly with one of these societies and they will send you a check directly not thru the publisher and on a quarterly basis
Its estimated that performance income from a number one country song would be about $500,000 - based from all of the 10,000 commercial radio stations that pay fees to the societies but each song has a different value basically so no concrete number is available to my knowledge – this example is from 2005
-#1 pop chart single in one year can garner over $350,000
-#10 pop chart single in one year: over $225,000
-#50 pop chart single in one year: over $50,000 – these numbers are outdated though there from around 2001
Album Royalties – these are the shadiest ones of the bunch and heres an example of a new artist’s deal - the artist got a $250,000 advance/recording fund, 50% of making a music video, tour support around $50,000 and 50% of independent promotion – meaning the label pays for half the video, half the promotion and gives you 50,000 for tour support because starting out youre likely to lose money on the road
Points = equal your royalty percentage aka 12 points equals 12%
Then multiply your points times the wholesale price – currently for a CD the whole sale price is $12.05
12.05 x 12% = 1.44 – that’s what the artist would see on every CD sold –but 15% of albums don’t contain royalties because the label considers them “free goods” (you sell 100,000 albums youre only paid on 85,000)
So if an artist sells 600,000 albums youd be paid on 510,000 albums
510,000 x 1.44 = 734,700 – the artists share not bad right? Well the label keeps a percentage of your royalties in a reserve fund in case any retailers return the product and it can be as high as 35% but we’ll use 20% for this example
$734,700 – $146,940 = $587,760 but now the label has to recoup all its expenses
So now its $587,760
- $250,000 advance/recording fun
- 75,000 of promotion
- 50,000 for the video
- 50,000 of tour support
_______________
$162,760
But we’ll say that no one returns your album so the label pays back the $146,940 as well even though it takes about 18 months
Mechanical royalties ar the payments congress stipulates label pay based on copyright ownership and publishing ownership – they aren’t affected by recoupment but this is why its so important to own your publishing – currently the rate is .091 cents a song and if you have a publisher half of it is theirs. Also record labels all have clauses in their contracts that allow them to only pay 75% to 85% of the statutory rate (.091 cents) and they will only pay you on about 12 songs on your CD
12 tracks x 9.1 cents = 1.092 each CD
But the label only pays you 80% cause theyre jerkoffs so its really
1.092 x 80% = .8736
So if you own all your publishing (rare) and you sell the 600,000 albums
600,000 x .8736 = $524,610
But if you have a publisher that number gets diluted to $262,080 – and this is also provided you wrote all of your own songs and produced all of it your self if you didn’t those numbers get even smaller because more people have to get paid
So you would of made roughly
$524,610 + $162,760 + $146,940 = $834, 310
Now subtract another 20 – 30% for manger fees, attorney fees, agent fees, and taxes
im sure people will respond with some kinda bs saying im wrong etc etc ....all record deals are different but you guys can pretty much trust me on these facts or feel free to research them if you dont
