Imagine this scene:  You’ve laid down an incredible piano part, a great vocal, and a passable drum groove. You’re thinking this song would be much better with a real drummer on it, and you know just the person. You call them up, send them the track, and they love it. You know how well their performance will integrate into the track, you know how to be flexible and collaborative, and you’re confident this song will soar because of your friend’s influence.

Should you cut your collaborators in on the back end of your compositions? Should you accept this kind of deal if it’s offered to you? Aaron Trumm explores.

But  there’s a problem. When you think about paying for the session, things get a little iffy. Maybe your budget is tight at the moment and you’d rather not spend any more on this track up front—though your friend normally costs more than $250 for a brief session. What can you offer?

For many of us, what may come to mind is offering up a piece of the backend. This way, when you make money, your friend makes money too. It costs you nothing now, and if the song gets big, he makes much more in the long run. Great! But wait. Is it wise to share on the backend, or would it be better to simply scrape together some money and hire your friend as a session player? Which deal is better for you? And which is better for your friend?

The answer depends on a lot of things, where you both are in your careers, the nature of the work, and your preferences. No matter what the particulars, there are some key principles to bear in mind before jumping headlong into any backend-sharing scenario. We’ll take a closer look at some of them today.

These kinds of situations crop up all the time, whether it’s with producers, with engineers, with session musicians, and they can appear at any level in one’s career. To make this decision, you’re going to need to think through what it really means to share a percentage and how that will affect you in the long run.

What Does Backend Even Mean?

First, you should probably know what it means to “share the backend”. At its simplest, this means that when you make money with a track, you will share that income with your friend.

One of the important variables to think about (both in making your pitch and in deciding whether to accept one like it) is to consider how likely the track you’re working on is to make any money at all.

So first, take a look at all the different ways a track can make money.

Rivers Of Revenue

There are many ways a recorded song can potentially make money. You can think of those revenue streams like a river with two major branches:

1.   Songwriting Revenue– Songwriting revenue goes to the writers of songs. Songs are intellectual property defined traditionally as lyric and melody. They exist separately from any performance of them, and any medium those performances may be captured on.

2.   Recording Revenue– Otherwise known as “master rights”, the recording revenue goes to the owners of a specific recording of a song.

To understand the difference between a song and a recording, think of this scenario:

Harry writes a song called “This Is My Song”. Johnny records “This Is My Song” as an acoustic ballad. Suzy records “This Is My Song” as a heavy metal dirge.

Johnny owns his acoustic recording. Suzy owns her heavy metal dirge recording. But Harry owns the song. Harry gets the songwriting revenue on both recordings, but not any of the recording revenue.

Before you even begin, you have a decision to make: Assuming your project is of a song you wrote, you’ll be the owner of both the songwriting and recording revenue. Are you sharing both sides with your drummer friend? Or, are you only sharing the recording side?

Tributaries Of Tribulation

Next, you need to understand the various ways each major branch can make money. This can get really complicated and an in-depth explanation is beyond our scope here, but you can start with understanding some basics, including where money comes from in each branch.

Songwriting

In the songwriting branch, there are several possible revenue streams, all of which are paid to the owners of the song. In the simplest form, they are:

Performance Royalties — These are fees for the broadcast and public performance of songs and are usually paid by Performing Rights Organizations (PROs) like BMI, ASCAP or SESAC

Mechanical Royalties — Traditionally, these are the fees that the owner of a recording (usually a record label) would pay to the writers of the songs.Today, small mechanical royalties may also be paid by digital music services like Spotify.

Sync licensing — These fees are paid to song owners by film, TV and video producers when they want to use a song in a movie, commercial, TV show or other video production. (Note technically, this is a different fee than the fee paid to the owners of the recordings, though in practice both fees are often negotiated at once as part of the same package.)

In the case of sync licensing deals, you might end up owing your collaborator directly. If you intend to shop your songs to music supervisors and you land a license, you’ll have to track what you’re paid and pay your collaborator their share.

For performance royalties you and your partner both need to be registered with a PRO, and in the case of mechanical royalties you may also need sign up with a a publishing admin service.

One of the most important things to understand is that when it comes to songwriting royalties, if someone else records a cover version of your song, you will still be splitting any of the songwriting revenue from that new version with your collaborator.

Recording

When it comes to the recording, revenue is a bit simplerThere are only two main tributaries here:

Sales — If you sell a CD at a show, that’s a sale, and you owe your partner a portion of it. If your distributor pays you 47 cents for streams and downloads, you owe your partner their portion. If you sell a download directly, you owe your partner their portion. Seeing a theme here? If you give a collaborator partial ownership, or “points” on a recording, you’ll need to give them a portion of ever sale,

Master Use Fees — If you sell a license of your track to a TV, film, video or game producer, and earn a “master use fee”, you’ll owe your collaborator their portion. This is technically separate from the songwriting “sync” fee paid to the song owners. (Again, this can be a little confusing, because often these fees are combined from the buyer’s perspective for purposes of simplicity.)

What it boils down to on the recording side is that you will have to track your sales and fees. This can get complicated when you consider that a typical quarterly report from your distributor might have thousands of lines of miniscule transactions for all your songs. It’s your responsibility to track that data—or hire someone to do it for you—to determine how much you owe your friend, and pay them. You’ll also need to track direct sales at your shows or from your website.

This can be a daunting task, especially if you have a lot of collaborators, but there are some services and software available. IDashBookin my own work, and there are relatively affordable monthly services byLabel EngineandRoyalty Worx, as well as plenty of higher-priced services aimed at bigger companies.

There’s also the option of using a distributor that will split up payments and send directly to your partner(s) and many people are moving to that solution. As of this writing there are five such distributors:  DistroKid,Soundrop,RouteNote,OneRPMandSongtradr. The only drawback there is you can’t deduct expenses before paying out – the payments are made and it’s up to you to manage how much you’ve spent. If you’re the only one who will spend money promoting your work, you might consider a little higher percentage for yourself.

Will I See You Again?

Once you’ve considered how you’ll handle money, you should consider the relationship. When you enter into an agreement to share the revenue from a production, you’re bound together forever—or at least until you discontinue the release, in the case of recording-only royalties.

You need to know that you’ll be able to contact your partner, and that they will let you know if their contact info changes. You need to have reliable payment information, and you need their PRO information so you can register songs properly if you’re sharing songwriting. Even if you’re just paying by PayPal, you’d be smart to have a physical address on file, and in the U.S. you’ll need to remember to send them a 1099 tax form if you pay them more than $600 in a year.

Even if you’ve decided to use a distributor that will split monies for you, you’ll still need to contact them if you get paid a sync or master fee or make money in other ways. Another thing to consider is that some distributors require your collaborators to sign up or allthe revenue is frozen. (Your share of it too!). sSome of these distributors have an annual fee for membership, so it might not seem worth it to your friend to join up if they think their royalties won’t cover the expense. (A valid concern.) So choose distributors and deals wisely.

Just as in a marriage, if you do have a falling out down the road, know that you’ll still have to maintain contact sometimes. That can take maturity that some musicians lack. If your friend is likely to disappear or cause a lot of trouble, you may consider just paying them up front instead.

Communication (In Writing) Is Key

If you’ve considered all the ramifications of “getting into bed” with a collaborator and you still think that’s the way to go, then you’ll want to communicate very clearly about everything. You should discuss business up front and, whenever possible, sign paperwork aheadof time.

Speaking of which, all your agreements should be in writing, and you should consult a lawyer to give you boilerplate templates to use for your productions. A proper contract will not only mitigate possible conflict, it’ll also make it a lot more clear how to go about things, and what exactly the deal was for when one of you inevitably forgets.

You’ll need to be clear about what the percentage splits are, who has control, who can pitch the song to new leads and negotiate the terms, who can distribute or sell it, what the title is, what the act is, and what promotional activity is allowed or expected. The more you can talk about, agree to and sign off on ahead of time the better.

A contract is also a good place to gather all the necessary information like real name, email, physical address, phone number, PRO ID number, and any payment information.

It may seem a little overwhelming at first but in the end, but clear communication and complete paperwork doesn’t take a lot of work, and can save a lot of time and effort down the road. In addition, you will not be able to enter into a licensing agreement without signed paperwork documenting all contributors.

The Other Side

There’s another side to this coin. What if you’re the partner? How do you decide whether to allow someone to pay you on the backend or ask for a fee up front?

Consider all of the above and ask yourself whether your potential partner is equipped to handle all that. Ask yourself whether the royalties on the backend will be equal to or more than your potential session fee. And ask yourself if the track is likely to make any money at all. If the answer to any of the above is an absolute “no”, then you obviously won’t say yes, unless you just happen to love the project or the person and don’t really care about the cash.

If you really think that a production will make a lot of money, then 10% of master rights for life may be a wholelot better than a $200 session fee—or even a $2,000 one. You’ll have to balance your need for money now with the possibility of more later.

Of course, from your point of view, the best case is to get your fee andsome backend points. If you can secure that kind of deal, more power to you!

When You Should Just Pay

Even once you’ve educated yourself, set up your systems and put yourself in a position to properly share the backend on a production, you don’t necessarily want to offer that kind of arrangement in every case. In fact, your life will probably be easier if you can do it as little as possible.

Some reasons you might choose to come up with a session fee include:

• The player won’t do a backend deal
• It’s unlikely you’ll maintain contact
• You want to minimize the amount of admin work you have to be responsible for
• You think you will make the session fee back (and then some) and you want to maximize your profit
• The collaborator is flakey or might block release by not filling out paperwork or returning calls and the like
• You want to just use the track and not worry about the credit and who did what
• You’re using a service like SoundBetter to hire a freelancer where backend deals are not part of the program

When you do choose this easier path, it’s a good idea to have your session player sign a waiver that releases you from any further obligation once the fee is paid. You don’t want to have someone come looking for even more money once you’ve finally sold your track or released your album.

It Can Be Great

After reading this, you may feel like sharing the backend is just too much hassle. Admittedly, that’s partly the idea here: to show that “sharing” is a little more involved than a lot of people think, and showing some responsibly is necessary if you want to stay out of trouble.

That said, once you get organized, sharing properly is perfectly doable, and the benefits are undeniable. Sharing credit and revenues can make productions possible even when you have zero budget and it can allow you to work with people you couldn’t afford (if they’re willing.)

Collaboration is one the most fulfilling aspects of making music. Not to mention that when a partner has ownership of a project, there’s a completely different sense of pride and care. It will often help bring out a collaborator’s very best. You need to be generous and you need to show that you’ll live up to your end, but if you do, the results can be magnificent.

Aaron J. Trumm is a vocalist, producer and writer who is always collaborating. Look him up if you have an idea at aarontrumm.comor on Facebook@AaronJTrumm

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