Music Producer Royalty Standard
Version 1.1 · Release 2025‑06‑17
Developed by the Professional Producers Association of Canada (PMPAC)
Status: Approved for peer review │ > Document ID: PMPAC‑STD‑PR‑1.1 │ > Supersedes: N/A
Overview (TL;DR)
A clear benchmark for producer royalties that translates the traditional major-label "points" model (typically 2–5 points) into a 15–25% share of Net Master Revenue for today's digital and indie landscape. While complex major-label deals are governed by their own structures and legal frameworks, this standard provides independent artists, small labels, and self-releasing producers with a transparent baseline for negotiating fair compensation in the streaming era. Unlike the "2-5" points model, the "15-25% of Net Master Revenue" framework adapts seamlessly across various deal structures and revenue scenarios.
TABLE OF CONTENTS
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Royalty Standard – Requirements
6.1 Royalty Base & Calculation
6.2 Minimum Remuneration Levels
6.3 Advance, Recoupment & Direct Monies
1 President’s Foreword
Dear Colleagues and Partners in the Music Ecosystem,
For decades our industry has relied on the PPD-based “points” system (typically 2–5 % of a wholesale album price) to pay producers. In an era when a CD sold for $10, that model delivered meaningful returns. But streaming has changed the maths beyond recognition: today, one Spotify stream generates roughly $0.004 in gross master revenue. Three per cent of that is $0.00012—less than a tenth of a cent. Even at a million streams, a producer on 3 % earns about $120, often after months of recoupment delays. This is plainly unsustainable for the people who architect the very sound of our recordings.
The Professional Producers Association of Canada (PMPAC) therefore presents, for peer review, the first national standard for producer remuneration. Grounded in comparative research across Canada, the U.S., and the U.K., and calibrated to streaming-era economics, the Standard replaces the obsolete PPD model with a net-receipts framework—a transparent share (15–25 %) of the revenue actually earned by a master. This approach keeps producers aligned with artists and labels, scales with success, and recognises the producer’s creative stake in every stream, sync, and sale. (Simply put, the legacy major-label model of 2–5 points equates roughly to a 15–25 % share of Net Master Revenue under modern independent digital frameworks.)
Importantly, this Standard is not intended to override or alter bespoke terms negotiated within existing major-label agreements. Major-label deals often involve complex advance structures, multi-album commitments, and negotiated cross-collateralization provisions; those arrangements remain governed by their own legal and commercial frameworks. Instead, this Standard—and its accompanying calculator—serves primarily to clarify and guide fair remuneration practices in independent and smaller-scale contexts, where transparent benchmarks are often lacking. By codifying adjusted percentage ranges and a clear methodology for indie releases, self-released projects, and smaller label partnerships, we provide producers and independent stakeholders with the tools to negotiate confidently in today’s music economy. For reference: under legacy major-label PPD systems, 2–5 points translates in indie/digital terms to approximately a 15–25 % share of Net Master Revenue.
By adopting this Standard we affirm a simple principle: those who create must participate fairly in the revenues their work generates. I invite artists, labels, legal professionals, and policymakers to integrate these requirements into every new master-recording agreement in which they apply—particularly within independent and emerging contexts—ensuring Canada remains a leader in progressive, sustainable music business practice.
Thank you for lending your expertise to this peer-review phase. Together we can lock in a fairer future for producers and, by extension, a healthier music ecosystem for everyone.
In solidarity,
Byram Joseph
President, Professional Producers Association of Canada (PMPAC)
2 Normative References
3 Purpose & Objectives
This Standard defines the minimum royalty remuneration for music producers of commercially released sound recordings—ensuring consistency, transparency, and fairness across every deal structure and distribution format—while also codifying an equitable, data-driven benchmark endorsed by creators, labels, legal experts, and economists, one that aligns Canada with progressive global practices, embeds clear reporting and audit rights, and serves as a single authoritative reference point for sustainable growth of the music industry at home and abroad.
4 Scope
Applies to any agreement in which a Producer contributes materially to the creation, arrangement, direction, or technical realization of a master recording intended for public release in any market.
Exclusions: purely commissioned advertising jingles, audio‑post projects, and works explicitly designated as “work‑for‑hire” before recording commences.
5 Terms & Definitions
Producer – The individual(s) credited as producer/co‑producer/executive producer responsible for creative and/or technical oversight of the master.
Royalty Base – The monetary figure against which percentages are applied:
• PPD – Published Price to Dealer for physical units.
• Net Master Revenue (NMR) – Gross receipts from all exploitation of the master, less third‑party distribution fees (≤15%) and transaction processing fees. Marketing, overhead, or label advances shall not be deducted.
Point – One percentage point (1 %) of the Royalty Base.
Direct‑Monies – One‑off or usage‑based income streams paid directly to rights‑holders (e.g., sync fees, micro‑licensing, YouTube CID, SoundExchange performance royalties).
Recoupment – Recovery of advances/production costs out of royalties before backend disbursement.
6 Royalty Standard – Requirements
6.1 Royalty Base & Hierarchy
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For digital & streaming exploitation, royalties shall be computed on Net Master Revenue (NMR).
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For physical formats, royalties may be computed on PPD but must convert to an equal or higher monetary return than the NMR method.
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Where multiple Producers are engaged, the aggregate Producer share defined below is divided as mutually agreed in writing.
6.2 Minimum Remuneration Levels
Exploitation Context Mandatory Producer Share
All master‑recording revenues (streams, sales, sync, neighbouring‑rights)≥ 15 % of NMR
Projects with total production budget < CAD 20 k≥ 20 % of NMR (higher share offsets lower production fee's or advances)
Self‑released / no‑label projects Recommended 20–25 % of NMR
Note: Labels or artists shall not reduce the Producer share below the stated minima except where multiple producers together exceed the threshold; in such case, the share is divided but not reduced overall.
6.3 Advance, Recoupment & Direct‑Monies
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Producer Fee's: Negotiable; paid 50 % on commencement, 50 % on delivery.
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Advances (optional): Negotiable; paid 50 % on commencement, 50 % on delivery.
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Advance Recoupment: Backend royalties payable once the cumulative Producer advance is fully recouped from Producer royalties only.
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Direct‑Monies: Producer receives the same percentage share of any Direct‑Monies as their royalty percentage (e.g., if Producer receives 20 % of NMR, they receive 20 % of any sync fee).
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SoundExchange/ACTRA: Featured artist shall execute Letters of Direction allocating to the Producer a share proportionate to §6.2.
7 Rationale & Economic Analysis
Independent research (see §2) shows Producers currently capture ≈ 2–4 % of total streaming revenue, despite bearing critical creative responsibility. Under the streaming‑dominant revenue mix (69 % of global market, IFPI 2025) a 15–25 % NMR share aligns Producer earnings with their historical share of artist royalties under legacy “points” yet yields sustainable income in the digital era. Economic modeling (Appendix B) demonstrates that on a track generating CAD 1 million in streaming revenue, a Producer under the legacy 4‑point model earns ≈ CAD 20 k after recoupment; under this Standard at 20 % NMR they would earn ≈ CAD 140 k – a level proportionate to creative input and risk.
8 Implementation & Compliance
Effective Date: Applies to recording agreements executed on or after 01 October 2025.
Contract Clause: The following wording (or materially similar) must appear in all compliant agreements:
“Producer shall receive not less than ___ % of Net Master Revenue from all exploitation of the Master, payable concurrently with payments to the Artist/Label, and an equivalent share of all Direct‑Monies.”
Recommended Aggregators with Automatic Split-Pay Support (For Independent releases):
• SoundCloud for Artists – Split Pay assigns collaborator percentages prior to release.
• Symphonic Distribution – SplitShare dashboard automates collaborator payouts.
• STEM – Smart-contract style routing with audit dashboards.
• ONErpm – Automated splits and monthly statements.
• Amuse Pro – Per-release revenue-share assignments within the app.
• TuneCore Splits (beta 2025) – Allows collaborators to set and update revenue percentages.
9 Reporting & Transparency
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Rights‑holders must furnish Producers with royalty statements annually at a minimum.
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Statements shall detail stream counts, gross receipts, deductions, NMR, and Producer share.
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Upon written notice, Producers are entitled to audit statements once per fiscal year.¹
¹ Producers are advised to ensure that a clear "Right to Audit clause" mirroring this entitlement is expressly included in every producer agreement.
10 Review & Revision Procedure
This Standard is reviewed on a three‑year cycle by the PMPAC Standards Committee. Proposed amendments undergo a 60‑day public comment period. Revisions are published with incremented version numbers (e.g., v1.1, v2.0).
11 Acknowledgements
PMPAC thanks the following contributors :
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12 Appendices
Appendix A – Model Producer Agreement Clause
Appendix B – Glossary of Royalty Types
© 2025 Professional Music Producers Association of Canada. This document may be reproduced unaltered for educational or contractual use provided attribution is given.