A point is one percentage point of the artist royalty on a recording, most often used to describe a producer's participation.
The mechanism
Producer points are usually carved out of the artist's royalty rather than added on top, so each point a producer receives reduces the artist's share by the same amount.
A worked example
An artist on 20 points who gives a producer 3 points retains 17. The label's share is unchanged.
What it is confused with
- Publishing splits Points concern the master royalty. Publishing splits concern ownership of the composition, and the two are separate negotiations.
Why it matters
Producer points are commonly agreed casually and paid for the life of the recording, and they come out of the artist rather than the label.
Sources: US Copyright Office
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Related: Recoupment · Black box royalties · 360 deal