Upon being offered a record deal, most artists are very interested in the amount of money they will be paid to record the album. The money which a label pays to an artist to sign and record an album is called an "advance". However, as this article will point out, an advance is similar to a loan and thus it has to be paid back, or "recouped", from the artist's royalties. In other words, the advance has to be paid back in full before the artist sees any money.
There are essentially two kinds of advances. First, there is what is known as a "signing advance". A signing advance is a sum paid to an artist to induce the artist to sign the deal. Generally, this money will be used by the artist to live on while the artist is making and promoting the record. The other type of advance, which is more widely used today, is called the "recording fund". A recording fund is a set amount of money which is utilized to record the album. Whatever the artist does not spend on recording costs, the artist gets to keep. The label normally prefers to offer a recording fund because it is tied to a recording budget which the label has preapproved. Hence, this tends to keep the artist from recording a terrible album in order to pocket the majority of the money.
[part 2 next week]
Ben McLane Esq