Glossary · Economics

Advance

also filed under: signing advance, recording fund

An advance is money paid to an artist up front against future earnings, charged to the artist's account and repaid out of their share of revenue.

The mechanism

It is a prepayment rather than a fee. The artist receives it immediately and earns nothing further until their share of revenue has repaid it in full.

A worked example

A $200,000 advance at a 20% rate is repaid once the artist's share reaches $200,000, which requires roughly $1,000,000 of revenue.

What it is confused with

Why it matters

The headline number in most deal announcements is an advance, which means it is a loan being reported as an income figure.

Sources: US Copyright Office
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Related: Recoupment · Black box royalties · 360 deal