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Thursday, June 2, 2011

Making Your Own Music-Money And Royalties

Royalties And Money

Now I will get to what is the big one. The money side of your bands royalties. The proceeds between the bands/artists and the record companies is a bit complicated and very detailed. I will mention here how computations use to work, and how it is structure today. The reason being that some deals today use the older structures which is the older system. So, I am going into the math side of this which you must know as a band or artist.

1. The artist royalty is a percentage of the wholesale price. This is referred to as PPD which means published price to dealers. Sometimes it is referred to as BPD, base price to dealers. Each royalty percentage is know as a point. Let's just say if you have 20% royalty, you would have earned 20 points. An example would be say CD wholesale price is $20 times 20% equals $2. This is the simple math to understand it. Royalties are paid for every single record sold. Keep in mind every record sold. Companies do give away free goods, known as special free goods. This free goods started when companies wanted to push a big amount of albums. To get the record stores to stock a lot of the records they may give away say 5% or 10% of all records shipped. Free goods are consider discounts but still cost the record company money so they don't count as royalties.

Making Your Own Music And Promotional Copies

Records that are given away for promotional purposes like radio station copies are also free goods. These are actually marked as "not for sale". These copies are strictly for DJ's and the radio station. So, the artist and the record labels don't make a dime on these marked promotional copies.


Records are only sold on a 100% return privilege. This means if the record shop can't sell them they can ship them back and get a credit or refund for the albums that didn't sell. The reason for the return is so the record stores don't get stuck with product they can't sell. Remember that a record stores space cost them money because they pay rent for the space.

Next post I will talk about more on royalties with albums. If you want to record at home click here for a great music making software.