Glossary · Money
Recoupment
Recoupment is the process by which a label, publisher or distributor recovers money it advanced to an artist out of that artist's future royalties. Until the advance is recouped, the artist receives no further royalty payments, though the advance is not usually repayable.
An advance is not a gift and it is not a loan. It is a prepayment of royalties, and recoupment is the accounting that follows. The company that paid it keeps your royalty share until the balance reaches zero, and only then do payments resume. If the record never earns enough, most agreements do not ask for the money back — the company loses it. That asymmetry is what people mean when they say an advance is the best money in the business.
The detail that decides everything is what recoups against what, and at which rate. Recoupment happens at your royalty rate, not out of gross revenue. If you are due 20% of income and you took a $20,000 advance, it takes $100,000 of income to clear it, not $20,000. On top of that, agreements often make additional costs recoupable: recording budgets, video costs, independent radio promotion, tour support. Each recoupable line pushes the break-even point further out.
Cross-collateralisation is the clause to watch. It lets the company recoup an unrecouped balance on one project out of a different project's earnings, or recoup a publishing advance out of master income. That single word can keep an artist unrecouped across an entire career.
For a self-releasing artist, recoupment shows up in smaller forms: a distributor advance product, a publishing administrator's advance, a producer paid partly up front against points. The mechanism is identical at every scale — read which income streams the balance can reach.
I release independently and have read a lot of deals; get a music attorney before you sign one.
Related terms
- AdvanceAn advance is money paid to an artist or songwriter up front against royalties they are expected to earn later.
- Co-publishing dealA co-publishing deal is an agreement in which a songwriter assigns part of the publisher share of their compositions to a…
- Publishing administratorA publishing administrator collects a songwriter's publishing royalties worldwide for a commission without taking ownership of…
- Producer pointsProducer points are a producer's percentage share of the sound recording's income, expressed in points where one point equals one…
Definitions on this site describe the United States system. I am an artist who has been through this, not a lawyer.
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