Royalties Shelby Edmunds

Artists get a percentage of their album sales - this percentage is called a Royalty

• Recording artists can earn royalties from CD sales and don't earn royalties though

• Recording artists don't earn royalties off of public performances (TV, Radio) - due to copyright law but also when the song is played on radio more CD's would be sold of the song.

• Artists can earn royalties from a public performance - in a digital arena (webcast), in a non-interactive way (cant chose songs listened to) or the listener is subscribed to the service.

• This was done via the Digital Performance Rights in Sound Recordings Act of 1995

• Songwriters can earn royalties from public performances and from record sales.

However artists and songwriters do not earn royalties in the same way this is because:

• The percentage received is a negotiating point however usually it falls between 10% and 20%

• New artists usually get the lower end around 10%

• If you have a royalty of 10% and a CD sells for £15 then the band should get £1.50 for the sale of each CD

• However there is a 1 in 20 chance that you make a major album and so many artists don’t make that much money

• The retail price of an album is different from the wholesale price - many recording contracts pay based on wholesale rather than retail prices

The cost of:recording an albumpromoting the albumproducing music videos for singlestouring for the albummay all be deducted from the royalty check as they cost a lot of money.

Retail sales may mark up the wholesale price when they’re on the shelf however things like discounts can cut into the wholesale price

Deducting from Royalties

The manager gets around 20%

Royalties can also be reduced by the recording contract to withhold 25% of the band's royalties for a packaging charge also for free CDs- some record company's give away free CDs to a vendor and If so the band will be paid nothing for the free CDs.Also the record company will

usually set an advance of royalties so that the band has money to create the albums however once this is made back the company will deduct this from the royalties.

Any money remaining from this gets divided between the band members

Usually only artists whose albums have gone gold or platinum actually make money

There is another way to pay royalties

This is typically used outside of the US and with Indie labels

This method includes:• the record company and

artists splitting the net profits of an album - usually to 50/50

• To calculate the net profits - take the gross receipts (all money made by the album through wholesale) and deduct all of the direct costs.

Direct costs include:• Time in the studio • Cost to record the album• Hiring producers• Hiring technicians• Packaging price• Shipping costs (to retailers)• Marketing• Advertising• promotion• Warehousing costs• Legal costs• Taxes• Personnel costs• Royalties paid to songwriters

From a record deal there is no guarantee that an artist will make money and has to risk the 5% of becoming a hit

Artists should push to get the highest royalty rate possible – usually the first offer is negotiable