How Producers Get Paid :: Producer's 20/20 Vision

Hi guys, welcome to 2020 Vision for Producers. I'm so happy to be doing this series. You know, I love producers because for me personally, I hear the beat before anything. So if the music really sucks me in, that's what makes me pay attention to the lyrics. And I love lyrics, don't get me wrong, but it's the beat that always pulls me into the song. I don't know if you guys are the same or not. I know there's a lot of fans out there that, that do hear the beat before they hear the lyrics. So, um, today I want to talk about how producers get paid, because most of you are doing this because you're trying to earn a living at doing— at least I hope you're doing this because you're trying to earn a living, um, It's definitely important that you perfect your craft and become as great at this as you can possibly be, because it is an art form. And if you're doing this just for the money, it makes it really hard. It's, it's not an easy industry. It's a very expensive industry to be in. And if you're doing it because you think this is the new dope game or this is an easy way to make money, you're going to be really, really, really sad as go down the road. Um, I always, I always compare the music industry to that toy that I had as a child. It was a clown and you could punch it and it would swing down and then it would pop back up because there was a weight in the bottom of it. And it was really a cool toy. It was a lot of fun. You could punch it, it would go down and come back up. And I feel like that's kind of what the music industry is like. It punches you and you've gotta come back up. And if you don't love this, it makes it really hard to spring back up. And my love for hip-hop and for what I do is what has gotten me through a lot of really, really difficult times in the music industry. And I hope that you find the same for yourself, that if and when you hit a difficult time, it's the love of the music that you're making that's gonna get you through it. That's why I'm saying, like, if you're just doing this for money, it's— there's just better ways to make money. You, you may be sadly disappointed. So the way that producers make money, there's a bunch of ways that producers make money, but it's mostly from streaming revenue, it's mostly from publishing revenue. Um, of course there's sync fees, and I'm going to explain each of these in detail in a different video, but what I want to cover today is the initial money that you make as a producer, because when you agree to do a song for someone, very, very often there's an advance involved. And that advance is not just free money. It's not a rate necessarily that somebody pays you for your song. It's really an advance against your royalties. So if you're selling an exclusive beat to someone and they are giving you $1,000 or $500 or $5,000 or $25,000, that amount that they're giving you is not a flat rate. The amount that they're giving you is an advance against your royalties. So that means if they're advancing you $5,000, for example, if they're paying you $5,000 for the beat, it means that $5,000 is the advance against the royalties that going to come in for that song down the road after all of the expenses are, um, are recouped. So it could very possibly be the only money that you're gonna get. If the song is a huge hit record and it goes really far, you can make a lot of money on the back end of your song. There's definitely money there. You're going to make money from performance royalties if a huge radio hit. If it streams really well, you're going to make, um, you're going to make money like from Pandora. You're going to make money through SoundExchange. You're going to make money on the back end of your song. So if you're trying to get on someone's project and you're trying to get a single and you're trying to get, you know, $25,000 or $50,000 as your advance, just understand that there's probably producers out there that are going to be willing to take less money for for the opportunity to have the single on the album or the project or the streaming platform because their goal is to make that back-end money. They understand how the game is played. So just take that into consideration when you're negotiating. I'm not saying to do something for free. I don't think you should ever give away your tracks for free unless you have a deal in place to get paid on the back end. And when you're getting paid on the back end, it's not uncommon to ask for a certain, um, share if you're— if the artist stays independent, but to get a larger share if that song helps them to get a deal and it's picked up then by a major label. There are times where I've done deals where maybe the independent artist is going to pay $1,000 or $1,500 or $500 or $2,500 depending on what your rate is as a producer, they're gonna pay a smaller fee because they're independent and they'd rather put their money into marketing and promotion to build the song to become a bigger song, to get more streaming revenue, to get more, um, sync fees, to get more show money, just to get more money for the artist that's on the track. And then as a major label sees that song moving and wants to do a deal, kind of like Lil Nas X, right, what he did with his song on TikTok, it put him on the map, and then they went back and renegotiated the deal. They renegotiated that deal because it was a lease, it was not an exclusive track. But irregardless, you should have a deal in place where if a major label comes along and has a bigger budget, then you should be paid more money for that track. And you can put that into an agreement today before the artist has a major deal. It's sort of like saying, when you get more money, I get more money too as a producer. And there's nothing wrong with that. I automatically do that when negotiating deals for my clients because I know that if somebody makes a hit record and they're not paid properly, when it comes time to make more music for that artist— and there's usually some magic that happens there when a track is really successful you want to go back to that producer and try to recreate that magic, at least get a second single, right, or a third single. And at that point, that producer's so salty because they feel a little cheated because they weren't paid properly. There's enough money in this for everybody. So if you take care of the people that do right by you and everybody gets paid, you're gonna have the relationships. And that's going to be a topic of another video that I make because relationships are so important in this industry, you want to build a great relationship with the artist. The artist wants to build a great relationship with the producer so that you guys can keep making money together. So you can have your attorney, and all of you should have an entertainment attorney. The artist should have an entertainment attorney, and the producer should have an entertainment attorney. And the agreement should be for a certain amount of money up front, if, if that's your business model. I know there's a lot of producers out here that just do beats on the back end, The majority of people that I work with get paid on the back end. They don't get advances up front unless they've got a track record of success where they've made a bunch of hit records. Then they're going to go and get that advance from the artist or the independent label. But in fairness, I only work with independent labels, and they're not— they're not equipped to give big advances to producers. They'd rather put the money into the marketing and promotion so that everybody gets paid and that the song grows. And they build a relationship of success instead of putting all of the money into the advance and then not having enough money to shoot a proper video or to market and promote the song to get it to the next level. You don't just put a song out and poof, magic happens and it just takes off. I have seen that happen, but that's like standing in the middle of a field waiting for lightning to strike you. It's just not realistic. It's not a business model. It's more luck than preparation. And the way that I try to build careers in my company is I prepare for as much as possible. I still hope for luck because luck is where opportunity meets preparedness, but I don't depend on luck. I don't just put it out and do this, you know, hoping that fans are going to share a song with each other. It doesn't happen that way. You still have to have a budget. And most people that are independent don't have unlimited budgets. Most major labels don't have unlimited budgets either, but just bear in mind that when you're taking money for a track, it is an advance, and it's an advance against your royalties. So it's just a matter of whether you believe in that artist enough where you want to get the money today because you don't think it's going to go anywhere, or you're willing to wait until the song blows up a little bit to get that backend. And again, you can work a deal where you get a larger fee from a situation if the artist gets signed or, or gets picked up by a major label. You can then get a larger advance and a larger share of the backend, but you negotiate that before any of that happens, because once a major label steps in they're going to step in with their attorneys and they're going to try to get it as cheaply as possible. So if you work a deal ahead, there isn't much they can do but just fulfill that contract. So guys, think about all of the consequences. If you feel like your song can really take off, don't hit the artist over the head for a huge advance in the beginning. Try to get as much of it as you can on the back end. And you, you're even able to get more on the back end because you're willing to wait and you're willing to take the risk of success with the artist. But just make sure that they've got a budget to market and promote, because if they don't, the song's probably not going to live up to its potential. Okay guys, thanks for tuning in. You will see one of these every day. You will see this exact episode on my IGTV all day for the next 24 hours, and then it will live on in infamy on my YouTube channel, which is youtube.com thisiswendyday. Go and check out the YouTube channel if you've missed the last 2 episodes of this, um, and then also check out all of the other educational stuff that I've got on my YouTube channel. And use this as a starting point. Go and do research. See what other people have to say about production and producers. You're especially going to need to do that when I start talking about exclusive beats and leased beats. Because I have a very different perspective than other people in the marketplace. Okay guys, talk to you soon. Bye.