An advance is money paid to an artist up front against future earnings, charged to the artist's account and repaid out of their share of revenue.
The mechanism
It is a prepayment rather than a fee. The artist receives it immediately and earns nothing further until their share of revenue has repaid it in full.
A worked example
A $200,000 advance at a 20% rate is repaid once the artist's share reaches $200,000, which requires roughly $1,000,000 of revenue.
What it is confused with
- A fee A fee is kept. An advance is repaid from money the artist would otherwise have received.
- Recoupment The advance is the sum. Recoupment is the process of recovering it.
Why it matters
The headline number in most deal announcements is an advance, which means it is a loan being reported as an income figure.
Sources: US Copyright Office
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Related: Recoupment · Black box royalties · 360 deal