A Record Label Advance: What It Is And How It Affects Artists

By February 14, 2020Record Labels

You’ve doubtless heard about advances that artists receive from a record label after signing a contract.

But you may be wondering exactly how advances work and how big you can expect yours to be.

Well, keep reading, because we’re about to give you the scoop on record label advances and how they can affect you as an artist. 

What is an Advance?

The first thing artists need to realize is that an advance will need to be paid back (or “recouped”) out of their future earnings.  It’s a loan.

It’s not a payment just for being awesome.

Any money advanced to you is “owed” back to the label before they give you any additional money from your royalties.

Not only that, but in most cases, the label is entitled to make back its production and marketing costs before paying you more, as well.

The good news is that if your record should fail to sell to expectations, you aren’t responsible for paying back the advance money.

This is how the record label is taking a risk on your success.

That’s why they choose very carefully what artists they decide to sign.

Likewise, you should look carefully at any potential contracts, and watch out for so-called 360 deals that give the label all profits from all streams of revenue.


When an Advance Could be Necessary


If you’ve hit a wall in terms of your ability to invest in your music, you may need the ready capital a record label can provide.

With better equipment at their disposal, they can take your song recording quality up a notch, or perhaps several.

If you don’t have enough time, money, or resources to organize a tour, especially one that takes you across the country or abroad, a label can set that up for you.

When producing an album, the costs to master, print hard copies, and distribute may be out of your reach.

A label has the network, staff, and funds to make all of this happen.

A record label will generally have better resources and expertise, but nobody will care for your music like you will.

It’s still on you to keep track of how things are going and speak up if your work isn’t being cared for as it should be.

When an Advance Might be a Bad Idea

Always have a professional look over any recording deals before you sign them.

Not only does your advance come out of your future profits, but the label will also recoup its investments.

That means that they can pay themselves back for marketing, production, and distribution costs before any of the royalties land in your bank account.

Pay very close attention to the terms of any recoup clauses in a potential contract.

Some unwary artists may not see any money after the advance for several years after signing.

Consider asking for a cap on this recoup, or limiting what the label can claim under this clause.

Another thing to watch for is the control a label has over whether your music is considered “marketable.”

If your deal requires you to produce a certain number of songs or albums per year, a label could decide that you’re not honoring your contract and never declare your loan (the advance) to be paid back.

This kind of thing is more often employed by larger labels–independent labels tend to be more upfront about their terms.

Even so, remember that a label is a business, and their job is to make money.

It’s your job as an artist to look out for yourself and ask advice from knowledgeable industry professionals that are on your side.

How Much Can You Expect?

Advances are based upon your expected sales.

Since no one knows how your music will sell until the label actually distributes it, this will depend on someone’s educated guess.

Based on knowing the market, and how well you’ve sold in the past, a record label will try to decide exactly how much money they can give you upfront.

An advance for a smaller artist without a track record may run around $500-$2,500 for a single, and $2,500-$7,500 for EPs.

Unless you have the proven ability to sell thousands of records, your advance is unlikely to be any larger.

Also realize that large advance offers could be compensation for less ideal terms elsewhere.

So what should you do?

Remember the pros and cons of accepting a record label advance, and consider other aspects, like retaining master rights.

Looking for ways to keep control of your music could be more profitable than an advance in the long term.

Don’t spend all the money right away if you do get the advance.

How GigFaster Can Help

You can learn more about how to book gigs with email in our free 3-video course at GigFaster University.

How To Book Gigs - 3 Video Course

Click here to enroll for free and take the course now.

Remember, if you want to succeed, never quit!

Craig Kelley

About Craig Kelley

Craig helps indie artists book more gigs, promote their music and submit to record labels @ GigFaster and GigFaster University . His latest release is his 7th album, Not So Blue. His band has supported Grammy artists including Kenny Wayne Shepherd, Rick Derringer, Gary Hoey, Joan Jett, Fuel and many more. http://craigkelley.com He is also the host of The 5 Minute Podcast For Musicians.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.