Record producers are music industry professionals who supervise the recording of a record. Producer duties can range those of a musical engineer, overseeing the capturing of sound on tape, to those of an artist, offering creative direction to the musicians. The compensation of a record producer varies widely, with some making little to no money and others making millions.
Music producers are either hired by the record label to which an artist is signed or by the artists themselves. In either case, their task is relatively the same: to help the band produce the highest-quality record possible. The strategies employed to do this vary widely. Some producers will change various elements of a song as it is being recorded, such as by altering the arrangement, taking away or adding an instrument, or even rewriting part of the song. However, others are more hands-off, letting the artist play what he wishes and limiting the producer's participation to tweaking the recording.
According Megan Perry and Ron Fair, authors of "How to Be a Record Producer in the Digital Era," because the duties of record producers vary, so does the structure by which they are compensated. While some record producers may be compensated only as producers, those who make significant contributions may also receive songwriter credit, entitling them to royalties.
The compensation structure for producers varies greatly. Many producers will accept a flat fee for producing a record. Others, however, are paid by the time it takes to produce a record, usually by the day or the week. Some producers may instead be paid in the form of royalties on the record's sale. For example, a producer may receive a percentage of all gross revenues on the record. It is also not uncommon for producers to be compensated in a combination of ways, such as a flat fee plus a percentage of the revenues. Some producers also own their own studios, in which case the producer will be compensated for the price of renting the space, as well.
According to sound engineer Leopoldo Lopes, a producer generally commands 2.5 percent to three percent of an album's revenues, depending on his reputation and skills. Newer producers charge one to two percent, established producers charge two to four percent, while famous producers will receive five to six percent. If an album sells well, this can translate into millions of dollars. For example, a producer receiving five percent on a platinum record (a record that has sold a million copies), with each copy selling at $20, would receive $1 million.
Producers generally will get advances on these fees as well. New producers receive between zero and $3,500 per song; mid-level producer get $3,500 to $7,500 per song; and famous produces receive an advance of between $10,000 and $15,000 per song.