How Will My Royalty Percentage be Calculated?
Even counting the royalty percentage the way the industry counts it (see previous FAQ), will you actually receive royalty payments for each record sold? Almost certainly the answer is no, if industry practice is being followed.
The contract will generally allow for the record company to be repaid all advances before they have to pay you a penny in royalties. In industry lingo, you need to be fully “recouped” before you receive any royalty payments.
The record company set up an account for you and place royalty payments into it. It uses that account to pay itself back for the advances and expenses associated with producing and distributing the record. Only when all the company’s advances have been repaid out of your royalty account will the company starts to pay you royalties.
This means that, even with a high percentage royalty rate and strong sales, no royalty payments may ever reach your wallet. Make sure you understand when and how much you can realistically expect to be paid under the deal – before you sign!