After reading some threads on the Napster issue I was wondering how much exactly do artist and songwriters get from the sale of CDs.
I've heard that usually the artist gets 12 points and the producer gets 3. Does this mean 12% and 3% of the total sale value of the CD? Who pays them? The record label?
Then how do the songwriters and publishers paid? Based on the Statuetory rate? And this rate is split 50-50 between the songwriter and the publisher, right? An they are paid also by the record label right?
So lets say a record company sells a CD for $10.
Then the artist would get $10 x 0.12 = $1.20
the producer would get $10 x 0.03 = $0.30
Assuming that the CD includes 10, 5 minute, songs of the same sognwriter and published by the same publisher, and also assuming they are paid the full statuetory rate 0f 1.32 cents per minute per song:
The songwriter and publisher would get: 10 songs x 5 minutes x $0.0132 = $0.66 (This is split between the songwriter and publisher. If the songwriter is his/her own publisher he/she keeps the whole $0.66)
So the record company gets to keep $10 - ($1.20 + $0.30 + $0.66) = $7.84
If this analysis is correct, then we see that the record companies get the biggest piece of the pie and that's why they are so pissed of about Napster.
Please, correct me where I am wrong in the calculations of royialties.