Will I Get My Royalty Percentage on Every Album Sold?
Let’s say the contract says you will get a 12% royalty on record sales. What does this actually mean? One thing it most certainly does NOT mean is that you will get 12 cents in the dollar for every record sold.
Taken off the top are “packaging” costs (i.e. the jewel case and CD cover) – usually ¼ of the sales price. The record company also takes a hefty deduction for “free goods.” And there are countless other royalty reductions for different types of uses of your album – e.g. CDs being distributed through a record club or for educational purposes will bring in less than your full royalty percentage to your royalty account.
Be sure you understand what your royalty will mean in practice and how it will be calculated -- before you sign!