Recoupment
The process by which a label or publisher recovers an advance from an artist's future royalties.
What it means
Recoupment is the accounting process through which a record label, music publisher, or other entity recovers an advance payment from the future royalties earned by the music. When an artist receives an advance, the label begins deducting the artist's share of royalties to repay the advance. Until the full advance amount has been recouped, the artist receives no additional royalty payments beyond the advance. Once recoupment is complete, the artist begins receiving their contractual royalty rate on all subsequent earnings. Understanding recoupment is crucial because it directly affects when — and if — an artist starts earning ongoing royalties from their music. The recoupment rate depends on the artist's royalty rate in the contract. For example, if an artist receives a $10,000 advance with a 20% royalty rate, and the recording generates $50,000 in gross revenue, the artist's recoupable share is $10,000 (20% of $50,000), which exactly covers the advance. The label has been collecting the remaining $40,000 (80%) throughout this period. Many artists never fully recoup their advances, which means they never see royalties beyond the initial advance payment. For ambient and meditation music creators, understanding recoupment terms is essential when evaluating deals — a larger advance may seem attractive, but a longer recoupment period means delayed access to ongoing royalty income.
Technical details
Recoupment calculations can be complex depending on the contract structure. Key variables include: the recoupment rate (which royalty rate is used — the all-in rate or a net rate after deductions), whether recording costs, marketing expenses, and video costs are also recoupable, cross-collateralization provisions (whether revenues from one project can recoup advances from another), and territory-specific accounting (whether international and domestic revenues are pooled for recoupment purposes). In publishing deals, recoupment is typically at-source, meaning the advance is recouped from gross publishing revenue before any administration fees are deducted. In label deals, recoupment may be calculated on net revenue after distribution fees, packaging deductions, and other contractual reductions, which effectively slows the recoupment rate. The Music Modernization Act provisions and direct licensing initiatives have made recoupment accounting more transparent, but artists should still request detailed royalty statements and audit rights in their contracts.
Frequently asked questions
Want to monetize your catalog?
SPACE buys music catalogs in ambient, lo-fi, and meditation genres.
Apply Now