To discuss the range of real royalty numbers, we have to
know how strong your bargaining power is. Broadly, I'll divide
that into three categories: New Artist, Midlevel Artist or
New Artist with a Bidding War, and Superstar Artist.
This is someone who has never before had a record deal, or
someone who has been signed but has never sold over 150,000
or so albums per release.
Midlevel Artist or New Artist
with a Bidding War
Either (1) an artist whose last album sold in the 200,000
to 500,000 range, or (2) a new artist being chased by a lot
of labels. When a number of companies are chasing an unsigned
artist, it's not uncommon for the deal to look like a midlevel
deal, and on occasion, even higher. I'm aware of one situation
where an unsigned artist was offered over $1,000,000 for two
albums. (Just so you don't get too jealous, that artist's
records have only had mediocre success).
Sales from 750,000 into the stratosphere. If your sales is
between 500,000 and 750,000, your deal will be in between
Midlevel and Superstar.
For your point of reference, a gold album is one that sells
500,000 U.S. units and a platinum album is one that sells
1,000,000 U.S. units. These sales figures are all certified
by the RIAA (Recording Industry Association of America), an
industry group comprised of record companies.
Using these three categories, and bearing in mind that different
record companies will have slightly different computations
(meaning that these percentages will be worth different pennies
at different places), the following is the current industry
norm for royalties on United States album sales:
If your record company computes royalties on wholesale, you
should roughly double the above figures. These rates are all
for sales of analog cassette albums.
- New Artist Signing to Independent Company:
9% to 13% of SRLP. (SRLP=suggested retail list price. An
approximation of the price received by the retailer).
- New Artist signing to Major or Mini-Major Company:
12% to 14% of SRLP.
- Midlevel Artist:
16% to 18% of SRLP.
- Superstar Artist:
19% to 20% or more of SRLP. Royalties over 20% are rare.
Virtually all of the companies use a 25% packaging deduction
for Cds and most companies discount the actual royalty rate
itselfˇyou might get 75%-85% of the analog rate). Here's an
example: an artist has a 10% royalty rate and the company
is paying him 85% of that rate for royalties on CD sales on
a $15.98 SRLP.
Here's the breakdown:
|Less 25% Packaging-
|Royalty Rate x 8.5%
|Royalty (rounded to penny)
The royalties on your songs, if placed in a compilation album,
are pretty much what you'd think they are. If there are 10
cuts on the album, and yours is one of them, you get one-tenth
of your normal royalty. If you've done two cuts out of the
ten, you get 20%, etc. This process is called Pro-Rata. It
means that your royalty is in proportion to the number of
cuts on the album.
The royalty on compilation albums that are licensed to someone
else by your record company is usually 50% of the company's
licensing receipts. for example, if a record company licenses
your song to a TV-packaged album and gets six cents or seven
cents per selection for CDs, and about four cents or five
cents for cassettes, they pay you half (three cents or three
and ahalf cents for CDs). But remember, in an all-in deal,
your half also includes the producer's royalty!
The answer is that there is a strong custom in the industry
(and indeed you can have the provision inserted in your contract
just by asking), that sideman performances are freely permitted,
on the following conditions:
- The performance must be truly a background performance,
without any solos, duets or "stepping out."
- Your exclusive company must get a "courtesy credit" in
the form of--"Artist appears through the courtesy of_______Records."
Before I started in music I always thought they did that
just to be nice.
- You can't violate your re-recording restrictions for any
selection, even as a background performer.
- If you're a group, no more than two of you can perform
together on any particular session. This is because your
record company doesn't want your distinctive sound showing
up on another label.
There is an exchange of correspondence between the record
companies giving sidemen clearance in each specific instance,
but this is usually just a rubber stamp process (unless one
company is having a fight with the other about something unrelated
to the sideman). After all, if one of the companies makes
an issue of it, they won't have such an easy go the next time
that the other company's artist shows up as a sideman on their
label. The process is something like porcupines dancing carefully
with each other.