You're negotiating royalty percentages with record labels. How can you ensure a fair deal for yourself?

Understanding your music rights is key for fair royalty negotiations. Mechanical royalties are paid when a song is reproduced (CDs, digital downloads, streams). Performance royalties are earned when a song is publicly played (radio, TV, streaming). Sync rights involve your music used in films, TV, or ads, with fees varying based on usage. Familiarize yourself with these basics: mechanical royalties (reproduction), performance royalties (public play), and sync rights (media usage). This knowledge helps you understand entitlements and leverage better deals in negotiations.

Before negotiating with any record label, research the current industry standards for royalty rates. These rates vary by format (physical, downloads, streaming) and the artist's reputation. Understanding these benchmarks helps you identify below-standard offers. Remember, royalty rates are often negotiable. Having this knowledge positions you to argue for a fairer percentage.

One of the most critical aspects of negotiating royalties is understanding the importance of ownership. Retaining the rights to your master recordings can be more valuable in the long run than a higher royalty rate. Ownership gives you control over how your music is used and opens up additional revenue streams. When negotiating, weigh the benefits of a higher royalty rate against the potential long-term gains of maintaining ownership.

Open communication -- both between the artist and its team of advisors, and between the artist's team writ large and the label's representatives -- is crucial to getting to deal terms (royalty rates or otherwise) that are fundamentally fair to the artist, and that hopefully set the stage for a mutually beneficial relationship for all concerned parties. One can't effectively negotiate on behalf of an artist without knowing what is truly important to the artist. The artist may care more about, say, creative control, or the duration of the term, or the amount of product owed, or the passive 360 participation rate owed to the label, rather than a 0.5% swing in the base royalty rate for LP1. The artist must communicate what is important to them.

Hire the best entertainment lawyer in the music business with a good reputation, and someone who believes in your music or your artist who has a successful record of negotiating good deals and finalising them. Hire an accountant who has experience in music royalties income to ensure they can have access to your royalty accounts in each accounting period (at least every 6 months) Do your research - what are the current standard royalties. Understand how streaming works, how you can make money from your music and how it all works. Prepare a budget so that you can ensure you have sufficient funds to make the music. Be realistic and don’t be too greedy and don’t blow it. Labels are taking a huge risk. Always remember advances are just a loan.