Royalties and Advances

1
Royalties and Advances
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What is an advance?

• An advance is a sum of money paid to an artist on
  each option of a record contract
• An advance is based on how well the record label
  perceives you will sell your product
• This money is repayable through the sale of music
  to various sources

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What kind of sources?

• Album sales
• Radio Play
• Licensing for media / TV
• Licensing for sampling

4
Cool, lots of money!!

• Not quite The money you receive as an advance
  pays for your recording costs and your producer.
• Recording is not cheap (neither is a good
  producer!!)

5
How much should I get?

• The advance figure will vary for each artist
• New artist signing to Indie label
• 10-50k
• New artist signing to major
• 75 150k
• Mid-level
• 150 400k
• Superstar
• The skys the limit!!

6
Whats an option?

• An option is the basically the release of an
  album to the public.
• A record company will usually only exercise each
  option when it is happy with the performance of
  the sales of the last option
• Each option can reward the artist with a higher
  advance (but this will need to be repaid)

7
Whats a royalty?

• A royalty is paid when the music of an artist is
  used commercially
• For example, a royalty is paid when a record is
  played on air or an album is sold
• A royalty point is a percentage of the money
  earned on a record 10 is ten points.

8
I should be able to pay back the advance quickly
then?

• Not at all!! Heres a standard breakdown of how
  your royalties would be computed
• CD 11.98
• Less Packaging (20) -2.39
• Royalty Base 9.59
• Royalty Rate (14, less 3 for Producer) x11
• Gross royalty 1.05
• X500,000 525,000
• Less 15 free goods -78,750
• 446,250
• Less recording costs -200,000
• Less promotion -75,000
• Less Video Costs -75,000
• Total 96,250