From the course: An Insider's Guide to Today's Music Biz: 7 Record Labels

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Recoupment

Recoupment

From the course: An Insider's Guide to Today's Music Biz: 7 Record Labels

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Recoupment

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- Here's why your royalties are always less than what you might've expected. The concept is called recoupment and it's an important idea to get your arms around because it's going to come up a lot in this discussion about record deals. Here's how it works. Those advances you got when you signed to the label are recoupable against your future royalties. What that means is that whatever royalties you earn on records sold will not be paid until you recoup those advances. If you've earned more in royalities than you've taken in advances, then your account is recouped and everything is good. You'll be seeing a royalty check every six months. If, on the other hand, you've taken more in advances than you've earned in royalties, you are unrecouped and your royalty account will be in a quote on quote deficit position. That unrecouped balance will follow you around from one album to the next until it's recouped or you're dropped from the label. The longer it takes an act to break, the more…

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