2023 State of the Industry Scouting Report

Key news, stats, workflows, agreements, and terms are our gift to you in our 1st Annual State of the Industry Scouting Report.‍

Before you read this, it would be great if you could fill out this survey for us so that we can better understand how to help you in 2024.

Top Creator News‍

This year, there were so many stories that really caught our attention and here’s our top 5 stories with the significance that they have for music creators.

• State of the Music Creator Economy - This amazing synopsis of the Music Industry for Creators is very promising. The music creator economy grew by 12% in 2022 and is poised to go from revenue of $6 Billion to $10 Billion by 2030. As a creator, this is a great sign that the music creator economy will continue to grow. As a Creator, what’s your plan to make sure your revenue is continuing to grow?

• The Global Value Of Music Copyright Surpassed $41.5B - Record labels and the sound recordings  accounted for $26 billion of the $41.5 billion total, representing a 62.7% share, while music publishers and the composition accounted for 37% of the value of Music Copyright. Do you have your music copyrights in order or are you still watching from the sidelines?

• Copyright royalty board (CRB) confirms streaming royalty rate for songwriters for 2018-2022 - The CRB decided to increase the streaming royalty rate for songwriters for 2018 - 2022 to 15.1%. This is the largest increase for Songwriters in the history of the CRB. Let’s not forget that For the 2023-2027 period, Spotify, Apple, Amazon, YouTube and Pandora have agreed to raise songwriter and publisher royalties gradually to 15.35% of revenue. Have you registered the Publishing for all of your catalog so that you can collect your share of the increased songwriting revenue?

• How Producers REALLY Make Money Off A Hit Song - BeatStars Publishing Member, Entrepreneur, and Grammy Nominated Producer, KXVI, broke down what it takes for a Producer to get paid in this very complex music business. This is such a simple and eloquent explanation of what it takes to get paid. Have you been paid for all of our placements and closed all the deals related to  your intellectual property?

• TikTok becomes first non-game app to reach $10B in consumer spending - No matter what people say, TikTok is still very much the place to be when you’re marketing and promoting your products. Their app reached $10 Billion in Consumer Spending this year and is on pace to grow even more in the tears to come?  As a Music Creator, when was the last time that you marketed your latest product release to the global TikTok audience?

‍Creator Key Stats 

After reviewing and surveying 150+ Producer Deals from 2023, here’s what we found.

Average Producer Advance: 

• $2,714.04 per co-producer on a track with two producers.
• This is about an average $5,428.04 Advance per track
• Now that Producers understand the averages, we should all negotiate to have this number go up in 2024.

Average Producer Royalty:

• 1.60% per co-producer on a track with two producers
•  This is about an average of a 3.20% Producer Royalty per track
• This number makes it clear that Producers should never take less than a three (3%) percent royalty when negotiating Master Points.

Average Publishing Split:

• 30.39% Publishing Split for one Producer
• This number shows that there is often multiple collaborators on a track and a Producer should stick to receiving at least 25% of the Publishing when there are two Producers on a track.

Average Amount of Time it takes to Negotiate a Placement:

• 19.27 days
• From start to finish, the contracts portion of any producer negotiation takes about 19.27 days from start to finish.
• We’re working on something to cut this time down.

Highest Negotiated Non-Exclusive Placement of 2023: 

• We negotiated a $50,000 non-exclusive license with $10,000 up front and the option to sell the track exclusively for an additional $40,000 at the Producer’s option. 

• Moral of the story: If you build enough leverage in your business, you can get hefty licensing fees for the use of your work and maintain your ownership.

Simple Workflow of how a Producer gets Paid for a Placement

Top 5 Agreements for a Producer

Non-Exclusive License:

• A non-exclusive license agreement between a producer and an artist or record label grants the non-exclusive right to use the producer's work (such as a beat or instrumental track) for a specific project without exclusivity. The producer can continue to license the same work to others simultaneously and make more recurring revenue. 

Master and Composition Sample License:

• A master and composition sample license agreement allows an artist or record label to use small portions or samples of existing musical compositions (composition) and sound recordings (master) for incorporation into their work, subject to legal clearance and payment of appropriate royalties. This is a more sophisticated non-exclusive license. This can be used by a Producer to keep ownership of their work so that they can continue to sell their work non-exclusively, while giving the Artist or Record Label the rights that they need.

Exclusive License:

• An exclusive license agreement grants exclusive rights to a specific musical work or production to one party, typically an artist or record label. The producer agrees not to license or sell the same work to anyone else during the exclusivity period.

Writer Split Sheet:

• A writer split sheet is a document that outlines the ownership and distribution of songwriting credits and royalties among multiple songwriters. It helps ensure fair compensation for each songwriter's contributions to a song, which makes it easy for each party to register their publishing.

Session Musician Agreement:

• A session musician agreement is a contract between a musician and a recording artist or producer. It defines the terms of the musician's participation in a recording session, including compensation, rights, and usage of their performances. This is very important so that when you do any traditional Producer Agreement,you can be sure of what's owed to any one that you may have contracted to play or perform on your beat.

Top 5 Terms that Music Creators should know

Producer Advance:

• An advance is an upfront payment made by an artist or record label to a Producer against future earnings from record sales and royalties. It’s always key to get the best Advance possible and have it 100% paid on Execution of the Agreement.

Master Points:

• Master points, often referred to as points, are a share of the revenue generated from the sale or streaming of a music recording that is paid to the Producer. 3-5% is the going industry standard for Master points on a major label release.

Music Publishing:

• Music Publishing refers to the ownership and administration of songwriting copyrights. Music creators, such as songwriters and composers, earn royalties through publishing when their songs are used in various media, including recordings, television, films, and commercials. This is one of the most slept on income streams.

SoundExchange:

• SoundExchange is responsible for collecting and distributing digital performance royalties to artists, producers, labels, and recording rights owners when music is played on non-interactive digital platforms like internet radio and streaming services. As a Producer, I always ask for a SoundExchange LOD.

Letter of Direction (LOD):

• A letter of direction is a document that authorizes the label or distributor to pay the Producer royalties on behalf of an Artist when the Artist gets paid.  This is usually a one page document the the Artist submits to the label or distributor. As stated above, you should always ask for a separate SoundExchange LOD.