Many people who love music have often thought of becoming a music producer. I was one of those people. However, I quickly learned that I did not have the skill or discipline to become good at my craft. However, there are many people out there who truly have a passion for making music.
Since technology is advancing at such a rapid rate, creating music has never been easier. All you need are a few software and you can start creating beats from your bedroom. The crazy thing is, you don’t necessarily need any hardware (except for a computer or phone).
While creating music has become easier, there is still a lot to learn. There is a huge business aspect when it comes to producing. The best part is that the producer can get paid in a few different ways. You can even utilize multiple ways at the same time! Therefore, let’s start by explaining what exactly a music producer is.
1. What Is A Music Producer?
For those of you who don’t know, a music producer is someone who oversees the production of a song. Every genre has producers. However, we’ll be focusing on hip hop music today. This is due to the fact that hip hop has become one of the largest and fastest-growing genres.
Think of the producer as the gears that get everything moving. They can make the beat, sequence the song, help the artist, help audio engineer. Producers are very underrated and are a huge component in the music industry as a whole.
Some notable music producers are Quincy Jones, Kanye West, Dr. Dre, Prince, Lady Gaga, and many more. Chances are you’ve at least heard of one of these people. However, if you’re thinking of becoming a music producer, you’ll need to know how you get paid. There are many different ways that a producer can earn money for their craft. Therefore, we’re going to try and shed light on a few of these options!
There are thousands of musical instruments that can be used. For hip hop producers, there are a few items that can make beat making more efficient. A few items that I personally used were the Native Instruments Maschine MK3, Alesis MIDI Keyboard V49, FL Studios, and the Stanton T.92 M2 USB.
2. Selling Beats
The first thing you can do is to sell your work! This is usually the first step for many up and coming artists/producers. The pricing will vary depending on your portfolio, experience and time put into your beat. I’ve seen beats sell for hundreds of dollars. Furthermore, there are people who sell their beats for $20.
It all depends on you. Many of you may have heard of people receiving thousands of dollars for a beat placement. This may be true. However, it’s practically unheard of in this era.
When going down this avenue it’s important to know that you’re giving the artist permission to create a song and distribute it. However, it can become quite stressful because there are a lot of producers actively reaching out for artists to use their work. This means people often sell their beat for practically nothing. That’ll make it harder for you to sell your beats and earn money for your work.
However, as a producer, there are many ways that you can earn money. Once you become more seasoned and known, selling beats will probably make you the least amount of money.
Before we go onto the next part, it’s important to know about advancements. Let’s say you have an artist who is working with a major record label. You can agree to create a beat for the artist. However, once you get a placement it’s important to know that you are able to receive publishing and royalties (we’ll get into this later on).
You won’t be able to earn and royalties until the record label recoups the money you sold your beat for. This means that if you sell your beat for $2,000, the record label must make that money back before you start garnering royalties of any sort.
Leasing beats is another popular avenue that producers tend to go down. When you sell a beat, you give the artist exclusive rights. However, when you lease, you can attach terms, similar to a car. The artist who leases your music may only use your beat a few times and does not have exclusive rights (depending on your agreement).
Once the lease conditions are up, the artist will have to lease your music again to use it. This is common for mixtapes and demos. However, the beauty is that you can lease your beat to multiple people. Therefore, more than one person can pay you simultaneously for the beat. The kicker is that you still own your music.
Leasing may sound better in some regards. However, there are instances where it may be better to sell the beat. This is typically when artists want to feature it on their album. This is due to the fact that the beat will not be used by anyone else and will be more unique. However, all the information and agreements should be in the contracts.
Some artists will want rights if the song blows up. You set the terms as the producer and are able to cater to individual people. However, in it’s purest form, leasing is a great way to make money and own your music.
4. PublishingMechanical Royalties
Mechanical royalties are money earned from the distribution and sales of music where you had a placement. The amount, set by law, is $.091 per song up to 5 minutes ($1.75 per minute after). However, they are subject to change in the future. With streaming services taking over, this amount may be much lower. However, we’ll talk about that later on in this article.
In order to receive your mechanical royalties, you should be associated with an agency that deals with them. For example, in the U.S.A, companies like Harry Fox Agency are able to issue licenses, collect and distribute mechanical royalties. However, these groups are usually specific to their country. For example, German producers would not be able to sign up with the Harry Fox Agency to collect their mechanical royalties.
It’s important to not note how this $0.091 is divided up. Let’s say there are only two people on a track. The writer and you, the producer. That means you own 50% of that publishing on the producer’s side. For example, let’s say you and your artist created a 10 track album. This album went on to sell $1,000 copies. The total amount accumulated would be $0.091 x 10 tracks = $0.91 per album. $0.91 x 1,000 copies = $910.
This money is then paid out to the and divided up among the producer and the writer. Since there are only two people who wrote and producer each track, the money would be split up evenly. This means you, as a producer, would garner $455. If you created the whole track by yourself and included no samples, the full $910 would be yours.
A producer point is a term used to measure how much percentage a producer will get paid from an album sale. 1 point = 1%. However, the amount of points you receive generally depends on how much the artist will receive from album sales. The percentage that you as a producer receive comes out of the artist’s pay.
Think of it like this. The artist will get 20% from the album sales. Therefore, you’ll receive 20% of the artists 20%. For example, the artist receives $2 for every album sold ($10 each album). You’ll receive $0.40. This doesn’t sound like much. However, this isn’t the only way producers get paid (as you already know). Another upside is that this amount can be negotiated. Therefore, don’t expect every single song to yield the same amount of return.
4. Performance Royalties
you will want to join ASCAP (American Society of Composers, Authors, and Publishers) or another similar group. The purpose of ASCAP is to collect performance royalties for songwriters and publishers. ASCAP collects money when your music is played on the radio, television, and/or film (to name a few). Organizations like this make it easy to collect your money.
To put it simply. Mechanical royalties are money earned from the sales and distribution of your music. However, performance royalties are money earned from playing your music.
Let’s say a band makes a cover over an instrumental you created. You’ll earn money if they that music. How about if your music is being played on the radio, restaurant or bar? You’ll still get paid. That’s the beauty of companies like ASCAP. They collect and distribute the money to the rights holders quarterly.
Now, you’re probably wondering how this money is divided up. When you are creating a song, the songwriter typically creates a split sheet. This sheet is used to indicate who is credited and for what percentage. Let say you have multiple writers, they’ll be credited a certain percentage based on how much the contributed to the song.
ASCAP determines the value of your song being played (on the radio for example), collects the money and divides it according to you split sheet percentages. This is an integral part of any producer’s career and should look into their country’s respective performance-rights organizations!
5. Streaming Royalties
Since the age of streaming is taking over, most artists will be earning money through this method. However, the rate of return is much less than your typical mechanical royalty. Let’s say your music is on a streaming platform that pays out $0.0020 per stream and your song gets $10,000 streams. That song would earn $20. However, that whole $20 is not yours. First, 50% goes towards the artist as the content owner, 45% goes to featured artists. Lastly, 5% goes to musicians and non-artists.
Now that you understand that, you need to know about SoundExchange. They’re a company that gathers royalties from streaming platforms and pay them out, similar to ASCAP. However, in order for the producer to get paid, the artist must submit a letter of direction.
Within this letter of direction will be the agreed-upon amounts that the producer will receive out of that 45%. Let’s say that the artist agreed to pay out 20% of that 45%. 45% of $20 = $9. 20% of $9 = $1.80. Therefore, the producer will receive $1.80 per 10,000 streams. However, if you’re the only producer and there are no featured artist, you’ll most likely receive a larger percentage.
6. The Beat Game: The Truth About Hip-Hop Music Production
Before we end off, I wanted to quickly mention the book, The Beat Game. If you’re looking for a book that will give you solid information about this topic, this one is for you. I read it back when I was creating music and it was extremely helpful. It aided greatly in my path to understanding how the music business works. The author is Darrel “Digga” Branch. He’s a seasoned producer who has created hits for artists such as 50 Cent, Cam’ron, Jay-Z and many other artists. Definitely give this book a try!
Christopher is just a man on a mission to help those around him gain financial success. Obsessed with writing about all things finance, this GTA native is constantly learning and sharing his experiences with others.