Do’s and Don’ts: Recording Contract Recoupments: Nothing is Free!
Nothing is Free!
Record companies can make the once ordinary and everyday person morph into the next America’s Most Loved, Most Beautiful, or Most Sexy Person of the Year. Artists should know that record labels do not shell out money for wardrobe, stylists, dentists, plastic surgeons and etc. at no cost. You should consider these purchases as an advancement against your royalties. If you didn’t think about it before, reread your contract. Recoupments are the reason most megastars find themselves with a small paycheck during a pay cycle and later in bankruptcy court.
Recoupment is the process of keeping money to cover any and all advances. It is important to keep up with your recoupable costs. For example if a record company gives an artist $15,000 as an advance for signing a new record deal then the first $15,000 the Artist receives in royalties goes to the record company to recoup the advance given to the Artist. Expenses that are recoupable are recording costs, promotional costs, touring costs and music video costs to name a few. Other recoupable costs include (but in no way limited to) wardrobe, photoshoots and housing.
If your royalties do not cover your advances then any unrecouped monies are considered your deficit, and you will need to recoup your deficit before you, the Artist, can make any money.
Written by: LaQuita R. Stokes, Attorney at Law for Corbin Johnson, Stokes & Glass: An Association of Attorneys
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