Written by Lindsey Batista, Rock the Dream
A big part of the allure of signing a record deal is getting an advance (aka, the money). There is much to consider before taking a check from a label, however. Understanding how the advance works and the terms of your deal will help you make the right decision.
A common misconception about record deals is that the artist gets paid just for the deal. The payment the artist receives is only an “advance”, and has to be made back for the label. The label is making an investment in you and your brand, and is expecting a return. Your advance might be between $50,000- $350,000 (sometimes much more or much less), but the label will also put much more money into your recording, production, and promotion.
The advance you get is simply a living wage while you work on producing music, plus performing and promoting it. One thing to consider is the size of the label. While a major label has the resources for a large budget, a small label may be limited. A larger advance in this case could mean a smaller marketing and promotion budget, so consider how this will impact your goals. A larger advance does not always mean a better deal.
Keep in mind that this “advance” is just that, a credit that you have to pay back. Regardless of what percentage of revenue you are entitled to in the deal, all of your royalties will be taken by the label until their investment is repaid. This means you have to make back the entire advance, as well as recording costs and other expenses specified in the deal. You can end up personally liable for these costs if your music does not generate enough income, and likely be dropped from the label. It’s a good idea to consult an entertainment lawyer, so you understand what you are signing.
If your “break even” point is far out of reach, you might not see any more money from your music for years to come, if ever. When considering an advance make sure you’re ready for the commitment you are entering, and that it will take you further in the direction of your goals instead of halting you.
Source; Weibe, David Andrew. “How Much Advance Do Record Labels Give, And How Much Should You Try and Get. ” Music Industry How To, https://www.musicindustryhowto.com/how-much-advance-do-record-labels-give-and-how-much-should-you-try-and-get/