ADVANCES 101

WE ALL HEAR THE STORY OF ARTISTS GETTING HUGE LUMPS OF CASH AS AN “ADVANCE” FROM A LABEL. WE EVEN HEAR STORIES OF PEERS GETTING “ADVANCES” IN THE TENS, HUNDREDS, OR SOMETIMES EVEN THE MILLIONS OF DOLLARS. BUT HOW DO THEY WORK? AND MORE IMPORTANTLY, WHAT COMES WITH THEM? AS WE ALL KNOW, THERE’S NO SUCH THING AS FREE LUNCH.

LET’S WALK THROUGH AN EXAMPLE

LET’S SAY YOU’VE BEEN TEASING A NEW SNIPPET OF A SONG ON TIKTOK. ALL OF A SUDDEN, ONE OF YOUR POSTS HITS. YOU KEEP OPENING YOUR PHONE TO ANOTHER THOUSAND LIKES, ANOTHER 100 PEOPLE COMMENTING “DROP THIS”. YOU CHECK YOUR DMS, AND SURE ENOUGH THE A&RS ARE LINED UP. YOU TAKE SOME MEETINGS, GET A COUPLE FLY OUTS, AND… AN OFFER IS MADE. LET’S TAKE A LOOK.

MAJOR LABEL RECORD DEAL OFFER

ADVANCE: $100K

SPLITS: 80/20

TERM: PERPETUITY

WHAT THEY NEED: YOUR SONG + BACK CATALOG

TO BE QUITE HONEST, THIS DEAL BY INDUSTRY STANDARDS MIGHT NOT BE THAT BAD. HOWEVER, THE KEY WORDS ARE BY INDUSTRY STANDARDS. WHAT THIS AGREEMENT MEANS IS THAT YOU WILL GIVE AWAY THE RIGHTS OF YOUR MUSIC, AND BE AWARDED LITTLE BITS OF MONEY EVERYTIME IT IS SOLD.

NOTICE, I DID NOT SAY THE RIGHTS WERE BOUGHT, SINCE AN ADVANCE IS EXACTLY THAT. IT IS NOT A PURCHASE PRICE, IT IS FRONTING YOU YOUR OWN MONEY FROM YOUR OWN PAYCHECK.

SO, YOU GO THROUGH WITH THE DEAL. YOU GET SOME CASH AND YOUR SONG COMES OUT. SLOWLY YOUR ADVANCE STARTS DEPLETING AS FANS NEED MUSIC VIDEOS, MERCH, AND MORE. YOU NOTICE THAT YOU’RE ALMOST OUT, BUT YOUR SONG HAS MADE $100,000 IN SALES. YOU THINK “PERFECT. NOW I CAN START GETTING SOME ROYALTIES”.

WHEN YOU CHECK YOUR ROYALTY STATEMENTS, YOU’RE SHOCKED TO SEE YOU STILL OWE THE LABEL $80K. “BUT MY SONG MADE $100,000 IN SALES!”

REMEMBER, THE LABEL IS GIVING YOU AN ADVANCE ON YOUR 20%. THEREFORE, ONLY 20% OF SALES GO TOWARDS YOUR RECOUPMENT. THE REST GOES STRAIGHT TO THE POCKETS OF THE LABEL.

HOPEFULLY THAT CLARIFIES HOW AN ADVANCE WORKS. IT’S NOT A FEE. IT’S NOT A LOAN. IT’S CERTAINLY NOT FREE MONEY.