Royalties, Advances, Recoupment & Retention

It’s a common matter that is often raised by clients disputing what they think they may be owed by Record and Publishing companies.

As exciting as it is to be offered and then sign a deal of either kind what can be forgotten very quickly is that for example: a Record company signs you as an Artist. They have negotiated terms that you mutually agree at the beginning of your recording relationship. You have accepted an ‘Advance’ on future potential income from the sale of your records. The record company has invested considerable sums of monies in the marketing, promotion, manufacturing of your single as well as the expense of creating a promotional video to support your singles release. All of these elements have left your account considerably in the ‘red’ before you have sold one single record.

It is completely the right of the record company to recoup every single penny of their original investment before another penny is paid through to you as a royalty for the accumulative sales of your single and from the publishers royalty balance sheet for broadcasting on commercial radio across the UK and if you are fortunate enough from International transmissions of your single.

This you have to understand and accept can take a considerable amount of time. As collection societies pay through to recording and publishing companies at different periods of time throughout the year. Whereas it may take 6 – 12 months to receive income from UK based sales and broadcasts it can take anywhere between 6 months and two years to finally receive income from foreign sales. A territory in South America such as Argentina will not have the prompt collection network that countries including The United States, France or Germany may have, so therefore it will have a direct impact on the timeline for distribution and collection of broadcasting and record sales. All these factors have to be understood if you as a working songwriter are to stay afloat in such a competitive industry let alone make a career earning sufficient income to exist comfortably.

An element often overlooked by a burgeoning artist/composer is exactly what rights they are assigning to a record company or music publisher and for exactly how long those rights will be owned by the label/publisher. You’ve just been offered the opportunity of your lifetime; a Record deal or a Publishing deal. They’re willing to offer you money for your songs. Put you into a professional recording studio with a named Producer. The last thing you want to practically think about is twenty years into your future career. You can barely think about tomorrow you are so excited. But if you are currently managing your own affairs you need to think about the clause in your contract that refers to ‘Retention Periods’. This is the clause that states how long the record company or publishing company will own your copyright in the sound recording for the record company and the words & music for the music publisher.

It’s early days in your career so more often than not you will not be in a particularly strong position to negotiate the retention period of the contracts and the titles included in those agreements. So there will be a very strong possibility that retention will be for ‘life of copyright’ for those titles on your debut and possibly second and third album. But this may be open for discussion if you are fortunate to have ‘hit’ singles/albums with your debut releases? An important point to keep flagged in your armoury.