Twenty More Questions for Artists: Record producer agreements, Part 1

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.

Your record producer is probably the most important member of your creative team.  Good record producers understand the physics of sound, but also understand the dynamic of  performance and the craft of songwriting.  Most independent artists start out self-producing, or working with producers who are new to the business of producing either because they are getting their feet wet or are transitioning from being engineers, managers, or some other role.  For purposes of the next few posts on this subject, we are going to consider the middle to low end case:  A recording budget of $50,000.  Records involving the top rock producers usually require a budget in the $300,000 plus range, top mixers add more to the budget, and other genres can be higher or lower than that depending on the success rate of the producer invovled.  Some very well known producers may get near that number just for themselves.  Rather than try to cover the full range of economic terms, we will stick with the terms in producer deals that are most likely to confront the independent artist or indie label.

Your record producer is in many ways a member of your band, and is essentially the creative partner in your recordings.  A good producer helps you understand when you are “ready” to go into the studio both in terms of your own performance as a musician or vocalist and whether your creative direction and songs are “ready”—meaning you are about to spend a fair amount of money and the producer is about to spend a fair amount of time capturing your performance in a recording.  For your own sake financially as well as creatively, there’s not much point in taking that step unless you have a good idea of what your plan is and how you are going to accomplish your goals.  Your producer helps you get there.

For further reading, we recommend the websites of Luke Ebbin and Rick Goetz to get more background on the creative side of producers, and we also recommend an interview with mastering great Bob Ludwig that will get you started on the physics of recording.  Mix Magazine, Tape Op and Prosound Web are also good resources.

Like anyone else on your team, you need to engage the producer and this article will focus on the major deal points in record producer agreements from the artist’s perspective.  Some math will be required.

1.  Scope of Engagement:  You generally engage a producer for one “album” project at a time.  “Album” is a concept that is undergoing some renovation, but usually you would expect to engage a producer to record about 11-15 songs.  Sometimes you will have the budget to “over cut” meaning that you will record more songs than you really need to complete a full-length CD, and you will put those unused tracks in “the vault”, meaning that you will keep them for bonus material of various kinds where you might want to add some value for your fans.

This also requires that you have the luxury of extra good songs, and depending on how prolific you are, you may find that “extra” songs worth recording are a luxury.

2.  Preproduction and Post Production:  You may want to engage the producer to work with you at rehearsal while you prepare your album.  Depending on the stature of the producer, this may or may not be feasible—the busier the producer is, the less likely they are to want to spend weeks in preproduction, unless of course you are able to pay them well.  Every producer expects to spend at least a few days with the artist before they go into the studio and this is generally time well spent if for no other reason than you want to find out that the bass drum pedal squeaks or the favorite guitar needs refretting before you go into the studio.

After the record is completed (including mixes), you probably will want the producer to be available to accompany you to the mastering studio and perhaps do a couple of other mixes or redos depending on the genre.

3.  Recording Budget and Recording Costs:  You should always prepare a recording budget and have a good handle on what
your record is costing as you make it.  The producer may have his own studio and lots of plugins or outboard gear, as well as a “protégé” who is often an engineer.  The producer or the commercial studio may also have keyboards, special or rare microphones, food services, messengers to look more like tape ops, and other goodies.  Make sure you know before you start recording how much of this you are being charged separately for, especially rental fees.  You would expect to pay for hard drives, but you might not expect to pay a rental fee for plugins or outboard gear.    The recording budget becomes part of your producer agreement.

4.  Recording Fund or Recording Budget and Advance: Producers have “fixed” and “contingent” compensation.  “Fixed” compensation refers to an advance against royalties, and “contingent compensation” is a royalty (or more accurately, a share of your royalties) on sales or license fees of the recordings they produce.  It’s called “fixed” because the advance is a fixed amount you pay “up front”, and it’s called “contingent” because the royalty is contingent on sales or license fees.  Remember, an “advance” is just another word for a pre-payment of future royalties.

There are generally two ways a producer receives cash compensation, remembering that the recording budget (exclusive of the producer advance) is the payment of out of pocket costs and is not typically compensatory to the producer.  (When you use the producer’s own studio this becomes a little blurred, but we will discuss this further below.)

The first way is that you decide on a budget with the producer and pay that money separately.  This exposes you to the dreaded overbudget payments, but if you have good controls over the costs, you may decide to go this route.  Some record labels like this approach.  In addition to the budget for “out of pocket” recording costs, you will also pay the producer an advance.

Another way to get to the same place with less risk to you is the “recording fund.”  This is a “keep the change” arrangement with the producer where you say no matter what happens, the most I am paying for my record is $X, and if the record costs less than $X, the producer can “keep the change.”  You should still have a budget in this scenario, but it is more of a guideline.

So let’s say that you have a recording budget of $30,000.  You might offer the producer a recording fund of $50,000.  If the record really did cost $30,000, then there would be $20,000 left over.  The producer would then “keep the change” and put $20,000 in his pocket as his fixed compensation.

The advantage to the recording fund is that you know that the record—probably—is not going to cost you more than $50,000.  This happy result is most likely to occur if:

–you have budgeted well for the recording costs and you haven’t forced the producer to accept an unrealistically low recording fund sothat the producer has too low a margin;

–the producer is using his own studio and staff;

–there is little likelihood of “trainwreck events” like illness, members quitting, unprofessional behavior, or the producer deciding to take a more lucrative project and make you wait;

–you win the inevitable arguments about who is responsible for unforeseen overbudget amounts.

To be continued–next Recoupable vs. Nonrecoupable Payments, Recoupment Rates