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Royalties and Advances

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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 ... – PowerPoint PPT presentation

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Title: Royalties and Advances


1
Royalties and Advances
2
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

3
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
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