How To Structure Payment Deals When Collaborating With Other Musicians

The reason so many artists have extreme reactions to the idea of collaboration is because they’ve either experienced incredible highs or ridiculous lows in working with others.

There are plenty of shades of grey in between, of course, and we can’t just fixate on either extreme and conclude that collaboration is either absolute good or absolute bad.

With that in mind, there are many variables that can affect your outcome, from communication to payment.

In this guide, I’m going to offer some tips on how to structure payment deals when you’re collaborating with other musicians.

What Type Of Collaboration Is It?

Before we talk about some of the technical details of copyright and how a song’s royalties are to be distributed, we need to identify the type of collaboration you’re involved in.

Some of the more common collaborative projects involving money include:

• Arrangement. Hiring someone to create a fresh arrangement of a song or being the arranger.
• Bands. The ultimate collaborative vehicle, each member of a band must always be aware of their responsibilities and how they’re going to be paid.
• Co-writes. When two or more songwriters get together to collaborate on a song.
• Guest appearances. When one artist appears on another’s album to sing or play an instrument.
• Production. Any time you’re working with an engineer or producer, there is a collaborative relationship.
• Sessions. When you hire other musicians to play on your album or accompany you live. Or, vice versa.

But that isn’t to say there aren’t other types of collaboration (some involving money, some not), including but not limited to:

• YouTube videos. You’ve probably seen some of your favorite YouTube personalities in each other’s videos, whether it’s Davie504 and Rob Scallon, or Jared Dines and Stevie T. Collaborations often take the form of quid pro quo – both personalities appear in each other’s video.
• Other types of content. Blog posts, guest posts, interviews, podcast appearances… you just never know what you might ask others to do or what others might ask you to be a part of.

Although you should never overestimate your ability to rake in the dough with your project, regardless of the collaboration, it’s best to be upfront about how money will be distributed to avoid misunderstandings.

And, please don’t be one of those people that pressures others to sign a contract within an hour. You should be more considerate than that, and hopefully your potential collaborators are smart enough to walk away from it.

I understand you might want to test others and how serious they might be but giving them less than a few days (preferably a week) to decide is just inhumane.

Anyway, you need to identify what kind of collaboration you’re planning to or are already involved in. If you don’t know, you probably won’t be able to structure payment deals in a way that makes sense for you and who you’re collaborating with (i.e. get out of it as soon as possible!).

With that in mind, at the end of the day, this isn’t all that complicated. The main thing you need to understand, before going any further, is how copyrights work.

Recording Copyrights – Sound Recording & Composition

We’ve covered this in detail in other guides, so I’m not going to offer a thorough explanation here, but basically there are two copyrights for every recording – 1) the sound recording and 2) the composition.

Sound recordings are also known as masters, and they are a product of the artist and the producer, meaning both parties are involved in making the sound recording/master.

The composition is also called the song. Songwriters are responsible for writing the composition.

And, artists are responsible for the sound recordings.

It works that way because in mainstream music, the songwriter and the recording artist often aren’t one and the same. Much of the time, there’s someone writing the song and someone else performing the song.

As an independent, however, this may not apply, because you're often responsible for the writing and recording.

If you were to record a cover song, the sound recording would be yours, but the composition would not.

For the most part, producers aren’t entitled to composition ownership, but they would be if they had a hand in writing the song. This is important to know, because if you get a producer to make a beat for you, they would be entitled to composition (although buyout would still be an option).

Then we have publishing. Publishing is basically another term for songwriting and composition. But of course, we also have publishing companies.

Publishing companies represent songwriters. They own the compositions.

This is like how record labels represent artists. They control the sound recordings.

Of course, if there aren’t any publishing companies or record labels involved, you would need to structure your own deals, and that's essentially what we're looking at here.

How To Structure Payment Deals With Producers

I continue to hear horror stories from artists who have had bad experiences with producers.

Whether producers were untrustworthy and dishonest from the start or just assumed the artist knew the deal, collaborations can turn sour when no one knows what their commitments or responsibilities are.

I will be honest and submit to you that I had issues with a producer who agreed to record my second album but ultimately didn’t fulfill on his commitments. That was in 2008, and that album still hasn’t seen the light of day.

I admit that I was kind of bitter about how that turned out. But I now know I couldn’t have gotten a better lesson in fuzzy collaboration deals!

Anyway, working with a producer need not be complicated. Typically, producers are paid a flat fee plus some of the royalties, usually somewhere in the range of 15 to 25%, after recording costs, producer’s fee, distribution, manufacturing and so forth.

If you’re not planning to release the song, then the flat fee is all the producer would get, but you’d need to work out what that looks like in advance.

Could you negotiate having the producer take a larger cut of the royalties and waive their flat fee? That’s certainly a possibility, but they probably wouldn’t agree to something like that if they thought your song wasn’t going to make it big.

The key is that you can usually reduce royalty entitlement by paying more upfront. The opposite would also be true, in the sense that, you could pay a smaller flat fee and give more royalty to the producer.

You should also know that you can sometimes buy out your producer, so you are not owing any royalties, but this will obviously cost more.

If you can’t pay the producer’s fee, then the standard is a 50/50 split with the producer maintaining ownership of the track. If this is the deal you cut, ensure that you maintain “admin” privileges over the track, however, as you will likely be the one releasing and promoting it.

If you’re going to be doing any kind of recording as part of your collaborative endeavor, then know that you will be owing the producer a certain amount of money.

How To Structure Payment Deals With Songwriting/Co-Writes

As you’ve already seen, publishing belongs to the songwriter. Easy enough.

The best idea is to split the deal 50/50, 25/25/25/25, or whatever the case may be. Basically, everyone contributing should get an equal share.

If your song was fully written upon entering the studio, and all your producer did was help you build the track, they are not owed royalties on composition.

If you end up collaborating on a brand-new song from scratch, then the producer should be given co-writing credit. Yes, in this instance, even if you already have a co-writer, the producer would be considered another co-writer (so, you would need to split the publishing three ways).

Typically, a song is owned equally by everyone who wrote it, even if all someone contributed was a single word. This is industry standard.

How To Structure Payment Deals With Your Band

Also see above (How To Structure Payment Deals With Songwriting/Co-Writes), as most of what was said there totally applies here.

The main thing to figure out is how you’re going to split publishing.

Bands like Van Halen and Coldplay have always split the composition equally, four ways (because there are four members in each band). This is probably the best way to do it if you want to keep your band happy.

There are other situations, of course, where one person keeps a bigger piece of the pie. If they are responsible for most of the lyrics and music, this can work. Of course, resentment can still build over time with other band members if the deal isn't properly understood.

Again, you must do what’s right for everyone involved, if you have any interest in maintaining professionalism and your relationships.

How To Structure Payment Deals For Other Types Of Collaborations

As already noted, there are other types of collaborations that frequently occur in the music industry.

As an independent artist, you are free to negotiate and structure these deals how you see fit.

With that in mind, here are some basic guidelines to follow in a few different situations.

Arrangers

Arrangers are typically owed a flat fee for their services. If you want to include them in the composition, you could, but this isn’t always necessary.

Guest Appearances

Prolific artists like David Bowie have been known to make many guest appearances on other people’s albums. Similarly, this happens a lot in the hip hop and R&B scenes today.

In most instances, a flat fee is all you need to pay, though your collaborator’s fee is going to vary based on how much they expect to be paid and their overall notoriety.

Remixes

Remixes are considered derivative works and typically don’t require a new copyright.

If you’re getting a specific producer to remix your song, there’s a good chance you’ll need to pay them a flat fee for their work.

Typically, remixers don’t have ownership over anything, publishing or master. Just hire them for their services and buy them out.

Session Players

As with arrangers, session players can be paid a flat fee for their services. You may want to include them in the composition if they end up writing unique parts, but otherwise this isn’t necessary.

Other

Again, there are other collaborative situations where money may or may not change hands. My recommendation would be to come up with an agreement that's workable for everyone involved.

For content collaborations like YouTube videos, you should probably just work on a quid pro quo basis.

Communication & Negotiation Tips

In most instances, it’s safe to assume everyone goes into a collaborative situation with the best of intentions.

With that in mind, communication is where things tend to fall apart and there are a couple of reasons for this. One is that we tend to assume too much and the other is that we think everyone else is thinking what we’re thinking.

This is rarely if ever the case, and if there’s anything that’s been sitting in your mind that you haven’t voiced, others might not be seeing what you’re seeing.

So, it’s important to get everything out in the open, even things you might consider awkward or uncomfortable.

Here are several tips on how to communicate and negotiate with your collaborative partners.

Keep It Simple

The biggest mistake artists tend to make is over-complicating the matter.

Expectations, responsibilities and payment structures can all be laid out on a one-page document with room enough for everyone’s signatures.

If you’re not doing it this way, then a lot can go wrong.

Keep your communication as clear and concise as possible, and if you can, do it all over email so you have a record of when the communication took place, what was said, and what was agreed to.

Make It Clear

Again, everyone needs to know what their responsibilities are and how much they’re going to be paid for their work.

Don’t say things like, “we’ll see what happens” or “we’ll work it out later.” I’ve made this mistake myself, and it turned out badly.

Be exact with every detail and ensure everyone involved understands and signs off on it.

Get It All In Writing

I don’t like bringing paperwork into situations where it doesn’t belong, but in a collaborative deal, it 100% belongs, because you can never be sure of anyone else's intentions.

As already noted, a one-page agreement is all you need, and it doesn’t necessarily need to be reviewed by an attorney to be legal, binding and enforceable (though this extra step can’t hurt).

You can also take advantage of resources like LegalZoom, where you can find templates for various legal documents. Use this as a starting point.

Final Thoughts – Strike Up Your Own Deal!

Rules and conventions exist for a reason. They make it easier to navigate the deals that come your way and set up an agreement that’s satisfactory for both parties.

But that’s the great thing about being an independent – you can negotiate and strike up your own deals. Of course, everyone involved still needs to agree on the terms. You don’t want to force a contract on others – that could be grounds for long-held resentment and even legal action.

Keep it simple. Do what you think makes sense and do what’s fair. Don’t take advantage of people. Hold to these rules and you should be fine.

Get out the documents and pen when everyone is on the same page and clearly understands their responsibilities as well as what they’re owed.