ReferenceLoading the volume
ReferenceLoading the volume
No. 15Financial Terms
Also called recoup, recoupable advance, unrecouped balance, recoupable costs
The label recoups its advance from your royalty share, not from its own margin, before you see any money.
Watch closely
Recoupment structure is standard, but the breadth of recoupable costs determines whether you ever see royalty income.
Recoupment is the process by which the label recovers its advance from the artist's earned royalties. Until every recoupable dollar is covered, the artist receives nothing, even if the record is profitable for the label. Critically, only the artist's royalty percentage is used to recoup; the label keeps its own margin from day one.
An artist on 20% royalties recouping a $200k advance needs to generate $1 million in label revenue before receiving a penny. Meanwhile the label has earned $800k on the same recordings. Most artists never officially 'recoup.'
The same clause is drafted three ways. These are the positions we see, worst first, so you can tell at a glance which one is in front of you.
The drafting language and the negotiation moves for this clause are part of the workspace.
You have read what the clause means and where the risk sits. The rest is the side-by-side of how it reads when it is against you and when it is not, plus the specific moves that get it there.