The Business of Music Beatmaker Agreements: An Artist Wants My Beat - What Now?

BY MICHAEL DUBOFF, AN ENTERTAINMENT LAWYER AT EDWARDS CREATIVE LAW – CANADA’S ENTERTAINMENT LAW BOUTIQUE™

Our law firm often receives inquiries from producers and beatmakers who have been contacted by an artist requesting to use their beat. We help both producers and beatmakers understand and negotiate the terms of the beatmaker agreement. If the deal terms are acceptable to both parties, we help the producer to review and provide feedback on the proposed contract. We also help the producer navigate the process until the contract is signed, and then help as requested to ensure guaranteed fees are paid, royalties are flowing, and credit is provided.

Beatmaker Contracts – What are the common deal points?

Up-Front Fee

We suggest the producer require an up-front payment for permission to use their beat. This up-front payment may come in the form of an advance (ideal for the artist) or as a non-recoupable payment (ideal for the producer). Often it falls somewhere in between, such as 50% of the payment being considered an advance (fairly reasonable and standard, however, it depends on the situation).

Composition Split

A general starting point is that the composition split will be 50% for the person or people who wrote the lyrics, and 50% for the beat producer; however, there are usually other factors to consider that may affect the split, especially if there are samples or other producers, remixers, etc.

Recording Royalties

We suggest the producer ask to receive a percentage of the royalties generated from the new sound recording (the master recording) featuring the artist. There are various revenue formulas to determine that entitlement, including that the producer be offered (1) a percentage of artist’s net profit, (2) a percentage of the overall gross revenue or (3) a PPD (purchase price to dealer) percentage of royalties. PPD is more typical when there is a major record label involved. Each formula is different, and the more information we know about the situation the better we can negotiate for you to ensure the entitlements are reasonable.

Payment Schedule

As a producer, ask if you are only paid once other costs are reimbursed. It’s fairly common, but the question is whether it’s reasonable in the circumstances. The concept of “record one” means that your entitlements will be calculated from the time the music is released, but that you are not actually paid until other expenses are reimbursed to the relevant party.

Payor

Who is actually paying you? If the artist uses DistroKid to distribute the recording, it might be reasonable to ask that you be paid directly by DistroKid using DistroKid’s splits function, which allows an artist to automatically split payments to their collaborators including producers and beatmakers (or their manager, mom or mentor). If the artist is signed with a record label, ideally the label is paying you by way of what is referred to as a letter of direction (a.k.a. an LOD).

Digital Performance Royalties

Are you entitled to a share of the featured artist share of these royalties paid by SoundExchange, ACTRA RACS, MROC, etc.?

Credit

What credit are you getting? Where is that credit being included? Will it appear on Spotify, Apple Music, and other important platforms? Getting a credit with a significant artist can open many doors. If you are not credited for your work, it’s harder to prove you actually made the beat.

Additional Considerations

The points above are only some examples of the most relevant deal terms – but they are a good start. Not all the deal terms you want are going to be included in the deal terms you are offered.

When you receive an offer from an artist (especially if they are a “bigger” artist, for example, one with a strong record label behind them), a general suggestion is to not make that same beat available to anyone else – either to buy or lease. If, for example, you have the beat up on YouTube, but also on BeatStars for people to lease or purchase, we generally suggest not making it available for sale or lease to anyone else while the opportunity with the artist is being negotiated.

Also, important to note is that if the beat includes a sample, or it has been leased to someone else, that you are up-front with the artist about that fact, so you can deal with it together, proactively, and avoid anyone being surprised by that fact later on. Similarly relevant are loops – and how you acquired them.

Overall, we want to ensure the deal is reasonable in the circumstances and within the scope of industry standards. Just because something is standard, does not mean that it is reasonable in the circumstances. If you have any questions, Michael can be reached at michael.duboff@edwardslaw.ca