Royalty Splits - What You Need To Know

As an artist working with a record label or an agency, you could have wondered how your income gets shared among you and your team. Splitting royalties with featured artists, producers or your team members can be a hassle if you don't understand the processes involved. The business aspect of music doesn't have to scare you. It is pretty easy once you get the basics. You can always get a music lawyer to do this for you but understanding what goes on with royalty splitting would not hurt.

Firstly, know that a track has 2 copyrights; These are sound recording and composition.

Sound recording refers to the recording itself which the artist and producer both contributed to making. It is the final product that gets distributed to streaming services, music stores, radio. It is also called the Master in recording contracts. Record labels represent recording artists and control sounds. Composition is what makes up the track (what the track is composed of). The lyrics of the song itself. This can be referred to as the Song in contracts. Publishing, songwriting and composition all mean the same. Publishing companies represent songwriters and control compositions.

The kind of deal usually struck by an artist and a producer is the type where the producer is given an upfront fee for their work plus some percentage of net royalties. Net royalties are what is left after the producer fee, recording cost and other included costs have been taken out of the profit. What is left is thereafter is what gets split. The royalty percentage to be paid to the producer is determined based on the upfront fee given to the producer. Royalties percentage is given to the producer usually falls between 15% to 25%.

If a producer gets more money upfront, it means his percentage of royalty cut is reduced. If his fee is little upfront, the royalty percentage will be high. On the other hand, an artist could buy out the producer thereby cutting him off from future royalties. In other words, the producer gets a really huge amount of money upfront and gets no further royalty payments. Seeing as upcoming artists don't really have enough money for this type of buying, they go for the usual deal or a 50/50 deal. A 50/50 deal means that there would be no upfront payment given to the producer but the producer gets to share royalties equally with the artist. If you're going for this, draw a contract stating clearly that you are the owner of the song so you don't get restrictions for promoting and marketing your song as this is your responsibility.

Say you had more than one producer who worked on your song, how do you split royalties between them? Not to worry, splitting payments between more than one producer isn't as complicated as it sounds. What happens here is, the producer cut would be shared between themselves. If 40% was for the producer, it is divided between the producers involved in making the song. If you're a part of a band, royalties get split equally between members.

Moving on, publishing/songwriting are different revenue streams from the recording of the song and should be treated as such with regard to payment. If a producer didn't contribute to writing the song but only worked on the track, he should not get any songwriting/publishing credit. On the other hand, if the producer contributed to the writing of the song by co-writing with the artist or even gave a comment and was a sort of inspiration in making the song, they both get co-writing credit and ownership. Whether a producer's contribution was a lot or not, is insignificant. They get a publisher's credit.

Bringing a fully finished song to a producer to work on doesn't entitle them to songwriting ownership as they didn't write the song. Same as a remix, the remixer doesn't get any publishing rights. A remixer normally would get paid out for their services to work on your song. They are not entitled to royalties.

A song split determines the percentage of royalties paid to songwriters from each song. Each writer has a writer's share and a publisher's share as well. If two writers wrote a song, there would be four shares. 2 writer shares and 2 publisher shares. Most writers get their writer share directly from the Performing Rights Organizations (PRO) also known in Nigeria as the Musical Copyright Society Nigeria (MCSN).

And that's about it on what you should know about royalty splits. You can have a record of royalty payments on a split sheet. This will contain what percentage is assigned to the contributors after they must have agreed to the cut.  The terms of the release should be stated clearly and should be signed by all contributors. Include all the necessary details in the sheet. And you're good to go!