When signing a recording contract with a record company, you will expect to be given an advance. This is a one-off payment (or series of payments) which is an advance against your future royalties.
The advance should be non-returnable - you don’t need to pay it back, but….
The advance will be recoupable - repaid to the company out of your royalties when you start selling records
The costs of recording, record producer fees, videos, certain marketing campaigns, tour support and fees such as session musicians may be recoupable from your royalties. The term used to describe this is ‘recoupment’.
What does recoupment mean? Lets take an example..
Artist X signs a recording contract and is paid an advance of £100,000.
No royalties will be paid to the artist until they have earned (recouped) the £100,000 back. When an artist is successful, they can recoup their advance quite quickly. However, in many cases, the advance is never recouped because of the high risk nature of the business.
What size of advance should you expect?
The size of the advance is an indication of how much faith the company has in you – they are willing to risk more money on you because they think you have a better chance of success- in this case you are a ‘high priority signing’
Advances can go from zero to millions of pounds, depending on a variety of factors.
Don't be tempted by the advance alone. A great recording deal may come in the form of a small advance, good royalty rates and total commitment from a small independent label.
Always consider the long term. You need to consider the advantages of a large advance on signing balanced against the fact that the record company will want you contracted to them for a longer period.
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