What are Royalties in the Music Business?
For a non-writing artist, royalties are the main source of income from the sale of their album. Somewhere in a recording contract you can bet that there will be pages devoted to how artist will get paid (and how artists won’t get paid). A Royalty is a percentage of the profits generated from the sale of albums. When you hear people talk about “points” on an album they are really talking about percentage points. If you get a producer who won’t charge you up front but asks for 3 “points” on your album, they are asking for 3% of the sale price of the album. Percentage points for an artist can be from around 8 to 25% of the sale price of the album (a brand new artist will be on the low end of this and an established artist will be on the high end). That sounds pretty good…at first. Record companies have all sorts of ways of making that number shrink.
