What Kind of Expenses Count as Deductible Advances?

Most artists think of the advance as the amount of money they are paid upon signing or upon completion of the record under a record deal. It is true that that money is called an “advance” and that it is counted as an advance that must be recouped from your royalty account before you receive any royalty payments on sales of your album. What many artists don’t realize, however, is that the record company may also count as advances the recording costs, touring costs, producer costs, promotional expenses and many other expenses associated with turning your music into a marketable product.

This means that as well as repaying itself out of your royalty account for any upfront money it gives you when you close the deal and along the way, the record company will also repay itself for its other expenses – out of your royalties – before you are considered fully “recouped” and entitled to any royalty payments.

Be sure to understand what types of expenses are being considered advances – in addition to your advance payment – before you sign!