Before taking on a project, I evaluate the track’s potential to do numbers. At a high level, there are royalties (mechanical, streaming), work-for-hire, and a producer fee.  Here is some info on each one. 

Mechanical Royalties 

As an indie artist, if you’re selling 10,000 physical units and offering 10 points at the statutory minimum rate of $0.091 per unit, that’s $91. In my opinion, points on physical sales have become largely symbolic unless you’re doing big numbers on physical media. 

Streaming Royalties 

Now, let’s talk about streaming. Say your song gets 100,000 streams on Spotify, which is far beyond what most do. At roughly $0.004 per stream, 100,000 streams would generate $400 in total royalties. If I’m offered 10 points, that’s 10% of $400, which is $40.

So, between physical sales and streaming, 10 points may net $131 at best (in this scenario). That’s why points for me have become symbolic. If you are trying to offer only points, hopefully this helps you understand the math behind it and what it really translates into. As a general rule, I advocate for a 50/50 split. 

Producer Fee 

A producer fee (not a work-for-hire) is an upfront payment for the right to use my beat. It is separate from any backend royalties or points. Paying a producer fee for an exclusive license shows commitment on your part and the willingness to make an investment in your music.

If an artist with limited resources is willing to invest in an exclusive beat, it tells me they’re serious and have ambition. Even if the song doesn’t do big numbers, it shows respect for themselves and for me. I value that, and will likely work something out with such an artist. 

Work-for-Hire 

No producer should consider work-for-hire unless there’s decent money on the table and you are OK with giving up your rights. An example of a work-for-hire scenario is when I produced music for a stage play. The client needed to have full control of all the assets, but they also paid me appropriately, so it was a good situation.