The Producer Files Issue #16
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In this issue (#16) of The Producer Files:
ϟ Breakdown: Using the ‘sliding scale’ to dial in the perfect deal structure for your rates and royalties on projects
ϟ Highlight: DL brings on producer & YouTuber Nathan James Larsen as an advising client.
ϟ Plus our recs (recommendations) of the week!
Breakdown: Using the ‘sliding scale’ to dial in the perfect deal structure for your rates and royalties on projects
Written by Dark Label CEO & multi-platinum producer Aaron Ferrucci:
I just had a great call with one of our clients who was struggling with the idea of "working for free" when they found an artist they really loved but who couldn't afford their services. They were in a unique position because they needed portfolio to demonstrate their quality to potential clients, as their current music didn't showcase their true ability. They were also concerned that working for free may make artists not take them seriously when it came to charging fees later on. This has come up a couple times on live streams so I thought it would be useful to share. Here's my take on things and what we discussed:
First, let me explain what a "fee" or "advance" is. It's an upfront payment of royalties on the master side, sometimes split 50/50 between a non-recoupable fee and a recoupable fee. The split depends on the quality of the producer's catalog and associated artists. The master side refers to the money collected by the distributor, which could be a major label or an independent label/distributor (artist-funded). The distributor or financier takes on the risk by paying the producer an advance of royalties that may or may not be recouped depending on how well the song sells. This risk shift allows distributors to command a greater percentage of the master.
However, there are times when I approach deals differently. If I find an artist I truly believe in but who can't afford my full fee, I explore alternate deal structures. For example, I may offer them 50% or even 25% of my fee and take a larger share of the master. This way, both the artist and I take on some risk. The producer's risk is not getting paid if the song doesn't sell, while the artist's risk is giving the producers a larger portion of the earnings if the song becomes successful. Let's say the song generates $100k profit, and I own 50%. I would receive $50k. However, if I took an upfront payment of $5k and 5% of the master, I would need to recoup my advance of $5k first, which would also fulfill the 5% from the profit.
I hope this example changes the bias around "working for free." I see it as investing in your career (if you've met your monthly economics, more on that later). I've done many records for little to no fee (but with good master splits), and it has brought me ample opportunities. It allowed me to connect with great people and showcase my quality as a producer. Now, I'm not suggesting that you guys waive all your fees. There are two main scenarios where this approach holds a lot of value:
If you have no or a small portfolio, having no fee allows you to create great music and show potential clients what you're capable of.
When you find an artist you truly believe in and want to invest in their record and career, splitting the master can be extremely lucrative if the record succeeds. It's also great to 'break' an artist as a producer and developing an artist early on is one way to do it.
Now let's address the hesitancy. They were fearful that working for no fee would lead to other artists not taking them seriously. We should flip this perspective. You're not working for free; instead, you're taking on more risk and increasing your potential upside. It's a shift in the deal structure. I often discuss a "sliding scale" when talking about deal structure on my streams. This is the ratio between Fee: Master Points. If you believe in the artist, consider accepting a lower advance and a larger share of the master. However, if you're not excited about the artist or the project, treat it as client work. Charge your normal fee and take 5-15% of the master, depending on the distribution arrangement.
Adjusting your sliding scale: If both you and the artist have a clear understanding of how money is generated from a record and where it's supposed to be paid, they will understand how the ratio between the fee and master royalties affects everyone involved. For instance, the artist might come to you and request a higher percentage of the record because they plan to invest a significant amount in marketing the record. In that case, you can increase your fee and lower your royalty. On the other hand, you might propose a fee, but in return, you're willing to lower your royalty. When dealing with new clients, structure the deal in a way that makes you comfortable. If you still need to meet your economics for the month, you can charge a fee and decrease the percentage. However, if you have already met your economics and have found an artist you genuinely believe in and want to invest in, you can lower your fee and increase your share of the master. Creating truly great records is always valuable and fun...; it's an investment in your career. Even if they don't sell like crazy or launch that particular artist's career, they serve as excellent examples of your quality and can help you attract independent clients and strengthen your portfolio.
I never like to miss the chance of working on great music if I can make it work, learning about alternate deal structures allowed me to do this in a way where I didn't feel ripped off or taken advantage of.
HIGHLIGHT: Dark Label welcomes producer & YouTuber Nathan James Larsen
This week we're excited to welcome music producer, songwriter, and composer Nathan James Larsen into our network. You may know Nathan from his wildly popular music production YouTube channel with nearly 200k subscribers. Looking forward to working with him on expanding his career into new territories while also having the rest of our network learn from him when it comes to using YouTube to build highly profitable music brands. Teamwork makes the dream work.
*Listen to the Dark Label Spotify Playlist Here
Recs of the week
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Recs of the week 〰️
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