In the components of the Exclusive Recording Artiste Agreement or Recording Contract, the Artiste Advance is the part that is of immediate benefit to the artiste in the deal. The artiste receives an Advance from the label in exchange for the exclusive license to own/publish and exploit the Sound Recording Copyright and the Copyright in the Compositions of the songs the artiste will record for the label. It leads us to the definition of the artiste advance.
You may be familiar with the word Advance and not with its meaning.
An Advance is an advanced payment (cash or check) of Royalties that the label pays the artiste, primarily to record an album.
Ideally, the record label recoups or recovers the Advance from the artiste’s record sales.
Types of Artiste Advance
There are two types of Artiste Advance an artiste may receive based on the clauses of his Recording Contract
1. Personal Advances
This Advance is earmarked for the artiste’s personal use only – clothing, trips, debauchery, investment, giveaway, or dorime. The record label will not require the artiste to keep records or receipts of spending. The artiste decides how they spend this advance. The label recoups this advance from the artiste’s royalties.
2. Album Fund Advances
This Advance is well known. The Advance covers the cost of producing the artiste’s album for the label. It means the artiste must make do with the provided fund, ensuring it covers their recording sessions, producers, arrangers, engineers, and sometimes, personal expenses (if no personal advance is given) for the album production. It is the Advance where receipts and records are kept.
The leftover cash after the album is produced will be given to the artiste as Personal Advance. Suppose the artiste exhausts their Advance before their album is ready, the artiste may be required to cover the deficit with their personal funds, or the label could terminate their contract.
In a traditional record deal, the money spent on an artiste and their album are only recoupable from the artiste’s royalties – except in a 360-degree deal.
Even in some well-negotiated deals, some of the label’s expenses will not be recouped from the artiste’s royalties.
1. Music Video
The label provides the cost for music videos that promotes artiste’s singles and albums during album cycles. Although it is recoupable from the artiste’s royalties, the artiste and his team can press for a 50% cost split, i.e. the label only recoups 50% of the music video cost.
2. Independent Promotion
Independent promoters usually claim to have a SPECIAL relationship with radio programmers and charge labels a fee to promote the artiste’s single(s) on the radio. The label and artiste can also split this cost 50-50 if the deal is negotiated correctly.
Independent Labels that enter a 50-50 deal with an artiste usually recoup all of their expenses – Album Fund Advances, Personal Advances, independent promoter, and music video costs – from the artiste’s royalties.
In the scenario where the label has not recouped the Advance but sold a significant amount of album copies, the record label can move ahead to recording a second album, giving the artiste a second Advance. The deficit from the previous Advance will be included in the new one. This transfer of deficit is called Cross-Collaterisation.
Artistes should negotiate for as much Advance as they can from the label. Some artists may not receive royalties until 2-3 years after album release. This happens when the record label is yet to recoup the Artiste‘s Advance through record sales.