Recoupment
The process of recovering advances and costs from an artist's royalties before paying additional income.
Definition
Recoupment is the process by which record labels and publishers recover advances and certain expenses from an artist's royalties before paying additional income. Until recouped, royalties earned go toward the advance balance rather than to the artist.
What costs are recoupable varies by contract—recording costs, video production, tour support, and marketing may all be recoupable depending on terms. Understanding recoupable vs. non-recoupable expenses is critical for evaluating deals.
Why It Matters
Recoupment determines when artists start seeing royalty income beyond their advance. Deals with extensive recoupable expenses may never pay out; deals with limited recoupment pay out faster.
Artists who understand recoupment negotiate better deals and make informed decisions about approving recoupable expenses.
Examples in Practice
A band's platinum album doesn't recoup because their contract made elaborate music videos and tour support recoupable against modest royalty rates.
An artist negotiates marketing expenses as non-recoupable, ensuring label investment doesn't increase their recoupment hurdle.
A songwriter's publishing advance recoups within two years from sync placements, creating ongoing royalty income thereafter.