Advance
An upfront payment made by a label or publisher to an artist or songwriter, recouped from future earnings before royalties are paid.
Definition
An advance is a sum of money paid upfront to an artist or songwriter by a record label, publisher, or distributor. It is essentially a loan against future earnings — the artist receives money immediately but must "recoup" (pay back) the advance from their share of royalties before receiving additional royalty payments.
Advances can range from a few thousand dollars for indie deals to tens of millions for major label signings. The size typically reflects the label's projected commercial potential for the artist. Importantly, advances are generally non-recoupable against the artist personally — if the music does not earn enough to cover the advance, the artist does not owe the difference back.
Why It Matters
Advances fund the creation of music — covering recording costs, living expenses, marketing, and touring — that artists might not otherwise afford. They represent a label or publisher's financial bet on an artist's commercial potential.
However, large advances can become golden handcuffs. An artist who receives a $1 million advance must generate $1 million in their share of royalties before seeing additional income. Understanding advance structures and recoupment terms is critical for artists evaluating deals, as a smaller advance with better royalty rates may ultimately be more profitable.
Examples in Practice
A new artist receives a $200,000 advance from an indie label to record their debut album, with the label recouping from the artist's 20% royalty share — meaning the album must generate $1 million in revenue before the artist earns beyond the advance.
A hit songwriter signs a publishing deal with a $500,000 advance, giving the publisher rights to administer their catalogue and take a percentage of future earnings until recoupment.
A distributor offers "advance" deals where artists receive upfront payments based on projected streaming revenue, recouped from actual streaming income over 12-24 months.