It's well documented that The Fifth Beatle was on EMI staff salary during the Beatles' early and big selling years. He had to resign and go freelance in order to get royalties. From that recent Arena documentary he's obviously still pretty sore about it, and who can blame him?

I'll generalise :-

Some producers will be engaged on a "flat fee" basis, but most will get an advance and a royalty.

A producer will normally get a royalty on sales of records, not broadcast or any other ancillary use.

Rates will vary from, say, 2% of dealer price (about £9 for a physical album) up to 5% perhaps, for a "name" producer.

The producer royalty will normally be deducted from the artist royalty. So, band get 25% of dealer, less the 5% paid to the producer. So, if you have a band with 4 or 5 members, there's a reasonable chance that the producer can get paid as much if not more, than a band member.

The beauty of it, for a good producer, is that they do their work on the record, and that's it, on to the next project. No promotion, touring etc that goes with being in a band.

And if you've been around a long time, and worked on lots of records that still sell, then there's lots of income streams coming in, from work that maybe took a few months 30 years ago!

To paraphrase Danny Baker, some of them live in solid gold houses...

The record company (normally) will be investing in vasto studio costs so presumably the role of the producer is to take the unformed ideas of the band, rework them, dissuade them from the crap ones, hire other musicians as required to supplement or replace band members, deal with the A&R guys, encourage/direct & record the performances & choose them & edit them together & mix them AND be aware of what's currently selling as a background consideration to the musical / recording choices they make.

And put up with the drummers endless flatulence

So the record won't often exist without the producers input, making them worth the money. Bands often get better at all of this and need their producers less - equally they more frequently delude themselves they no longer need a producer and disappear up their own arses, especially on the self-editing.

Some producers forget how much their artists help them and drift off into messianic delusions

Some partnerships just work and endure - Beatles/Martin - Bowie/Visconti - more prosaically Hot Chocolate/Most.

Owing to two factors:

1. The dramatic decline in record sales means that the producers can't command the fees they once commanded and any royalty income they get is far less than it used to be.
2. The availability of desk top recording technology means that less albums are made in the traditional studio set-up.

I was told recently that if you wanted to book a day in Britain's best-known studio you could negotiate the rate down to a couple of hundred of quid (including engineer), almost to the level where a middle aged hobby musician might consider it worth treating himself.

and computer based recording has changed music production in so many ways over the past ten years, for better and for worse. There was a brilliant article in an issue of the Word mag last year (Mr. Hepworth?) describing all the world famous and legendary studios, such as Muscle Shoals and Olympic, that have closed down for lack of business.

In the book 'Perfect Sound Forever' (by Greg Milner) the author relates the story of a famous band recording The Beatles 'Getting Better' (for a Sgt. Peppers anniversary) at Abbey Road studios with the original engineer, (Geoff Emerick?) in attendance. After many takes he becomes exasperated with the bands inability to nail a take. He tells the film cameramen to go away, has a meeting with the band for a couple of hours, then they get into the studio and record strictly under the engineer's directions. The band were so used to recording with computers where the engineer would later take the tracks away and mix all the best bits together into one that they had to be taught the dynamics of playing a song together in the studio. All thanks to the engineer (they were actually very grateful by the way). Reading this book also made me realise how a lot of producers and engineers (Glyn Johns for example) have worked on and contributed to an incredible amount of music. Although I do remember hearing that Charlie Watts was not impressed with Steve Lilywhite caught trying to tune Charlie's Gretsch drums as Charlie returned from the loo.