The Truth About Recording & Publishing Deal Advances

*this blog was originally posted via ASCAP’s blog here.

Congratulations, you’ve gotten your music career to the point that someone is offering you real money. Why? Because they believe they are going to make a lot more money off you and your music than they are advancing you. Nothing wrong with that. They are in business to make money and the risks associated with funding an artist, producer or songwriter (even one with an established track record) are significant. Still, it is very important that you understand every nuance of the deal and how it will help you achieve your specific goals. Here are some key things to consider when you’re negotiating.

How Much Money Is Actually Guaranteed?

The first question you should ask: “Is the advance amount guaranteed regardless of what happens, or is it based on delivering a certain amount of ‘acceptable’ music within a specific period of time?” What happens if you get sick, hit by a bus or run into life issues that make you unable to meet your contractual commitment? What happens if the record label doesn’t like the album you turn in and deems your product commercially unacceptable (wouldn’t be the first time)? What happens if your music publisher declines to give you credit for a cut on a release by an artist that the publisher doesn’t deem successful enough? This could prevent you from fulfilling the minimum delivery requirement in your publishing contract, which would then prevent you from getting the next advance due under your contract. Life happens, so protect yourself at the onset.

The True Cost

The second question you should ask is, “What am I giving up for this advance?” Are you being asked to give up creative rights, ownership of your music, a higher royalty rate, how you choose to promote your music or how you want your image managed?

Deals by nature are negotiations, and the more leverage you have, the more you are likely to strike a great deal for yourself. Do not assume that just because you are being offered a big advance that the deal is a smart play. What expenses are being charged against your royalties?

Nor should you assume that if the political or popular winds change at your label or publisher (which can definitely happen) they would not move on to their next priority and leave you with the bill. I can’t count the number of albums recorded that record labels “shelved” (i.e. never released). Keep in mind that while your advance may be more money than you have ever had access to, it’s often a drop in the bucket for the record label or music publisher.

Recoupables

It’s essential to understand that the label or publisher will recoup not only your advance but also all of their expenses (e.g. marketing, promotion, tour support, recording costs, legal fees, etc.) from your royalties, NOT the gross income of your catalogue. In plain English: the label or publisher is providing you with a non-recourse loan to finance your career, and their expenses are to be recouped solely from your future royalties. In exchange, you — the artist and/or writer — are giving them a percentage ownership of your music for nothing. Make sure your value is calculated in and you have approval on key expenses that will later be recouped, so you don’t find yourself five years in and never having been paid (like many artists do) because you still haven’t reached the “break even” point.

At the end of the day, the advance you have been offered comes with strings attached….mo’ money, mo’ strings. You absolutely need capital to grow your music career. Just be sure you understand the deal…every detail. Don’t allow any “gotchas” to surface that you are not fully aware of.

About Eli Ball

Eli Ball is founder and CEO of Lyric Financial. Founded in 2007, Lyric Financial is a financial services and technology company that provides innovative financing solutions (advances, loans, and more) to the global music industry. The company’s latest innovation, a virtual ATM platform, empowers creatives to tap into their catalog earnings in less than a minute. Based in Nashville, TN, Lyric Financial will be announcing new partnerships soon. For more information about advances, loans and the vATM, click here.