1. #1
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    Default Help Understanding a Recording Contract with Producer (Involves Royalties)

    My band is headed into the studio soon with a producer. I received a contract from the producer's management, and there are a few items in it that I don't fully understand. I was wondering if someone could help me out with it a little bit. Here's a portion of the text I'm confused about, specifically what's underlined:

    TERMS: Producer will produce, record and mix 10 songs, hereinafter referred to as “Masters,” for an all-in fund of $xxxxx. Out of said fund, $xxxx will be deemed a recoupable producer advance against royalty and $xxxxx shall be considered a non-recoupable fee against royalty (but shall be a recoupable recording cost) covering all studio related costs and engineering fee. All-in fund does not cover any travel related costs, outside musicians, or mastering. Producer shall be paid 50% prior to commencement of services and 50% upon completion of services.

    ROYALTY: Three (3) points retail (including all third-party license income and direct monies including terrestrial radio, digital radio and other internet steaming). Artist represents that Producer shall not be accounted to on a so called “deemed or constructed” royalty basis, and will paid retroactive to record one after recoupment of only the recording costs of the Master herein. There shall be absolutely no reduction in Producer's royalty for an outside producer, arranger, remixer, or mixer. Notwithstanding the above, for recoupment purpooses, "recording costs" shall not include any costs relating to any equipment purchases for Artist, recoupable video production costs and independent promotion, publicity and marketing and/or any in pocket advances payable to Artist. Producer’s royalty shall not be reduced in any way for any so called “packaging deductions” on any digital exploitations or any other unpackaged format or for any monies spent on TV campaigns or any other marketing or advertising related costs (domestic or international).
    In the first underlined section, what does the contract mean by "recoupable producer advance against royalty"?

    In the second underlined section, is the contract saying the producer doesn't have to be paid a 3 point royalty on album sales until after enough albums have been sold to make up for the recording cost? Am I reading this correctly?

    Also, is it normal for a producer to ask for points? (The genre of music is hard rock / metal). When me and his manager came to an agreement in principle, we never discussed points. Only a flat cost, so I was surprised to see this on the contract.

    Thank you in advance for any help.
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    Default Re: Help Understanding a Recording Contract with Producer (Involves Royalties)

    Recoupable means that the expense will be deducted from whatever royalties are paid before the band gets paid.

    When signing any recording contract always run it by a reputable music lawyer (NOT a general legal practitioner; you need a specialist) before you sign anything. If there's anything out of the ordinary or unfavorable he'll be able to catch it and possibly negotiate better terms. (Beware of sharks though - some music lawyers have gotten rich by fleecing bands.)

    Always get references for your lawyer. I don't know where you're located, by if you want I can give you contact info for my lawyer (who I've know since he was in law school 35 years ago), who is honest and has reasonable rates and represents/has represented some pretty big name acts. He's based out of San Francisco but will do business over the internet if you're not local.
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    Default Re: Help Understanding a Recording Contract with Producer (Involves Royalties)

    Points are normal but this looks to me like it's strung together "cover your ass" boilerplate that wasn't actually written by a lawyer.

    If you understood it to be a flat fee and not an advance in the verbal agreement, you really need to talk to the manager about that. I'm not sure what on Earth three points retail on streaming could mean. A percentage of the band's net income would make a lot more sense. The final contract needs to be run past a lawyer after it clearly reflects your agreement.
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    Default Re: Help Understanding a Recording Contract with Producer (Involves Royalties)

    Thanks for the replies. I still a bit confused. Here's the actual text with the numbers:
    Producer will produce, record and mix 10 songs, hereinafter referred to as “Masters,” for an all-in fund of $25,000.00. Out of said fund, $6,250.00 will be deemed a recoupable producer advance against royalty and $18,250.00 shall be considered a non-recoupable fee against royalty (but shall be a recoupable recording cost) covering all studio related costs and engineering fee.
    Producer shall not be accounted to on a so called “deemed or constructed” royalty basis, and will paid retroactive to record one after recoupment of only the recording costs of the Master herein.
    So royalties will be owed to the producer after the album generates $6,250 of profit (or revenue?), but not until then?

    Am I understanding this correctly?
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    Default Re: Help Understanding a Recording Contract with Producer (Involves Royalties)

    it means that once the record has recouped the 25k it costs to make it, he is paid 3% of retail sales (on ALL records sold, 'back to' the first record sold) except that the first 6250 owed to him is considered to be already 'paid' (as an advance.

    the issues I would have are that typically the producer/engineer portions are more like 50/50. he's taking the big part as a non recoupable fee... I assume he's rationalizing this as "studio time" rather than engineering fee alone.

    and second, I don't see why mastering, travel and musicians are NOT part of recoupable recording expenses.
    but if he can get it, good for him!
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    Default Re: Help Understanding a Recording Contract with Producer (Involves Royalties)

    When I prodded his manager about the royalty, this was his response:

    Fair enough, and I will be accountable to that. Considering it wasn't discussed, I'm not going consider this a deal breaker. However, like I said, this is a standard industry practice. It is extremely rare when it becomes an issue or is not understood, which is why I didn't even think to mention it initially.


    I wanted to clarify that we are talking 3% after recoupment of recording costs and his advance. Since he must recoup the producer advance of $6250, the masters will have to earn $208,370.00 before he's even owed dollar 1 in a royalty. So Ulrich will not even see a royalty unless the album is doing well and generating significant income.


    Again, I apologize for not mentioning beforehand, but I hoping this helps understand how the deal is set up and would work in practice. If it's still an issue, then are you open to 2pts. instead of 3?
    How is he arriving at the $208,370.00 figure?
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    Default Re: Help Understanding a Recording Contract with Producer (Involves Royalties)

    It's unclear to me WHAT aspect you went back to clarify or what he's specifically addressing there.

    I also don't understand where that 200k number comes from.

    Hvaing a lawyer read it really would be smart.
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    Default Re: Help Understanding a Recording Contract with Producer (Involves Royalties)

    I also don't understand where that 200k number comes from.
    I wondered the same then I noticed $6250 is approximately 3% of $208,370 (well 208,333.33 exactly I you make the calculation). So that makes sense
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    Default Re: Help Understanding a Recording Contract with Producer (Involves Royalties)

    Yes. it's an odd way to look at the numbers.

    but, assuming about a 12 dollar, retail CD price, that means selling what?17,000 albums or so?

    that doesn't seem unobtainable...or if it is, why offer a royalty deal?
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    Default Re: Help Understanding a Recording Contract with Producer (Involves Royalties)

    Yes. it's an odd way to look at the numbers.
    Sure. And to me he sounds like he's first trying to intimidate his interlocutor by implying that asking questions about the contract might be a deal breaker, and then minimize the producers interest by making it seem like a big number to reach before he's owed another dollar.
    Standard manipulating procedure if you ask me.
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    Default Re: Help Understanding a Recording Contract with Producer (Involves Royalties)

    okay bottom line is, if it were MY band:

    producer/engineer fee is half recoupable/half not

    if there is a separate studio invoice, that number should be rolled in as part of recoupable recording costs


    ALL recording related costs are recouped as part of the overall recording budget (where else are those expenses coming from?)

    producer is paid on the same schedule as the artiste

    international royalties will be computed on the same basis (i.e. reduced by the same fraction) as artiste's
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    Default Re: Help Understanding a Recording Contract with Producer (Involves Royalties)

    Exactly!
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    Default Re: Help Understanding a Recording Contract with Producer (Involves Royalties)

    I don't really get why this place isn't crowded with a line outside. Pure gold.

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