Home > 20 more questions for artists, 20 questions for new artists > Twenty More Questions for Artists: Record Producer Agreements, Part 5: Proration

Twenty More Questions for Artists: Record Producer Agreements, Part 5: Proration

January 4, 2012

Please note: This is an installment in a multi-part post.  Each post has information relevant to prior posts, so until we get to the “Final” there will be more information to come. See also More Questions for Artists: Record Producer Agreements, Part 2, Part 3, Part 4, Part 5. Part 6 , Part 7, Part 8 , Part 9, Part 10, Part 11 and Part 12.  Watch this space for further installments, or subscribe to the RSS feed.  A post with all the current parts in one post is available here, and see also “Artist Management Agreements” on the Semaphore Music blog.

10.  Proration

It is important to understand that the producer royalty we have discussed is intended to be prorated based on the number of recordings that are produced by a particular producer on a record or a “bundle”.  So if the producer gets a 4% royalty rate,
that rate is prorated based on the number of tracks.  In the example we gave, the producer produced 12 out of 12 recordings on an album bundle.

If the producer produced 6 out of 12, then the producer would get a 4% royalty rate, but the rate as applied to the bundle would be prorated by multiplying the royalty rate by a fraction, the numerator of which would be the number of recordings produced by the particular producer (or 6 in this example) and the denominator of which would be the total number of recordings on the record
including those tracks (or 12 in this case).   So the producer royalty would be prorated by 6/12 or .50.

If you engaged multiple producers for your record, each producer may have a different rate, but all would be prorated.  So if there were 3 producers in our example and one produced 4 tracks for a 3% producer royalty, one produced 2 tracks for a 5% royalty, and one produced 6 tracks for a 4% royalty, then the math would look like this assuming each royalty point was worth 10¢:

Producer             Rate                       Tracks                   Proration             Royalty Per Album

1                           3%                              4                             4/12                        10¢

2                           5%                              2                             2/12                           8-1/3¢

3                           4%                              6                             6/12                        20¢

So instead of a total producer royalty rate of 40¢, you now have a total producer royalty rate of 38-1/3¢.   There is no magic to the tracks, rates and prorations that we have chosen, as you can see if you play around with the numbers, the total producer royalty rate (or “royalty load” as it is sometimes called) can be higher or lower.

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