How do you split royalties with your co-writers and producers?

1 What are royalties and how are they calculated?

Royalties are the payments that you receive from the use of your music, such as streams, downloads, radio plays, sync placements, and more. Royalties are usually calculated as a percentage of the revenue generated by your music, and they are divided into two main types: mechanical royalties and performance royalties. Mechanical royalties are paid to the owners of the copyright of the composition, which includes the songwriters and publishers. Performance royalties are paid to the owners of the sound recording, which includes the artists and record labels.

2 How to split mechanical royalties with co-writers?

When you co-write a song with someone else, you need to agree on how to split the mechanical royalties for the composition. This is usually done by assigning a share of ownership to each co-writer, based on their contribution to the song. For example, if you co-write a song with two other writers, and you each contribute equally, you might agree to split the mechanical royalties 33.3% each. However, this is not a fixed rule, and you can negotiate different splits depending on the situation. For instance, you might agree to give a higher share to the writer who came up with the hook, or the writer who has more leverage or experience in the industry.

3 How to split performance royalties with producers?

When you work with a producer on a song, you need to agree on how to split the performance royalties for the sound recording. This is usually done by assigning a royalty rate to the producer, based on their role and input in the production process. For example, if you hire a producer to mix and master your song, you might agree to pay them a 3% royalty rate on the performance royalties. However, if you hire a producer to co-produce and co-create your song, you might agree to pay them a 10% royalty rate or more. Again, this is not a fixed rule, and you can negotiate different rates depending on the situation.

4 What are advances and how do they affect royalty splits?

An advance is an upfront payment that you receive from a publisher, record label, or other entity, in exchange for the rights to your music. Advances are usually recoupable, which means that you have to pay them back from your future royalties, before you can receive any additional payments. Advances can affect your royalty splits in two ways: first, they can reduce your net royalty rate, which is the percentage of revenue that you receive after deducting any expenses and fees. Second, they can create cross-collateralization, which means that your royalties from one source can be used to recoup your advances from another source.

5 How to negotiate royalty splits and advances with your collaborators?

Negotiating royalty splits and advances with co-writers and producers is a must before starting a project, and it should always be put in writing. To do so effectively, do your research to find out the market rates and standards for your genre, style, and experience. Be transparent and respectful when communicating your goals, vision, and budget. Remain flexible and realistic when negotiating terms, but don't agree to something you're not comfortable with. Additionally, seek out professional advice from a lawyer, manager, or other expert who can help you review and draft contracts, agreements, and splitsheets; this way you can understand your rights and obligations and protect your interests.

6 How to track and collect your royalties from your co-writers and producers?

To ensure you collect your royalties from the composition, sound recording, streaming platforms, and online stores, it’s necessary to register your music with the appropriate organizations and platforms. You should register with a performing rights organization (PRO), such as ASCAP or SESAC, a mechanical rights organization (MRO), such as The Harry Fox Agency (HFA) or The Mechanical Licensing Collective (MLC), a digital rights organization (DRO), such as SoundExchange or Audiam, a distribution service, such as TuneCore or DistroKid, and a sync licensing service, such as Songtradr or Musicbed. Additionally, keep track of your royalty statements and payments from your co-writers and producers to ensure they match your agreements and splitsheets. If any discrepancies arise, contact them promptly to resolve the issue.