How to Read the Fine Print and Get a Fair Advance Deal

by | Jul 21, 2021 | Music Contracts & Law

Knowledge in Advance

With all the legitimate criticism of record deals we’ve heard in recent years, advances have gotten a bad rap. They aren’t the kiss of death for an artist; when done right, they can benefit your career. “Advance” shouldn’t be a dirty word, though as a music professional, you owe it to yourself to learn what makes an advance helpful versus shady.

Not all advances are created equal. Advances can be helpful tools when they’re the right fit for what you want to accomplish as an artist. But you often need a scalpel, not a chainsaw.

You can tell what tool you’re being handed by looking closely at your agreement. Whether from a music company or a finance company, advances generally come with all types of fine print. That’s not bad in and of itself; agreements are complicated because life is complicated. Fine print demands close reading, and you should never be afraid to negotiate.

I’ve worked as a producer and in finance, and I’ve seen a lot of contracts. I’m going to share some of the basics of how advances work and what you should look out for before you sign for one. Below are three crucial questions to focus on, as you look through that contract.

Who’s actually giving me the advance?

Sometimes you’ll look at your contract and see something interesting: The distributor/platform offers the advance under a separate financing company using their brand name, like “Distributor Capital, LLC.”

Why do you care? Now you have two contracts with two different companies, one for distribution and one for the advance. And what happens if the distribution company or platform tanks? That separate finance company, run by people you do not know, will continue to control your music and royalties. It may be nearly impossible to get them on the phone if you need help or have concerns.

You want to know who you’re dealing with. You’re offering them extensive access to your assets and your creative life. You may not want to go through with the deal if you can’t have that assurance.

Can the agreement holder sell the rights granted them?

An agreement may allow the company issuing your advance to sell the rights you granted them under the agreement but doesn’t give you the same rights. This means you, your music, or your future royalties may be sold off to someone you don’t know or don’t like without your consent or knowledge. In other words, you are trapped. Think Taylor Swift’s very public beef with her first label, Big Machine, over the sale of her masters to a manager she had a contentious history with. These struggles can feel devastating and can seriously throttle your career.

What’s this actually going to cost me?

Think of this from multiple angles, all of which should be considered before deciding if the deal makes sense for what you are trying to accomplish. There are a few factors you want to be clear about before signing on the dotted line.


You need to understand clearly how much money the advance will actually cost you and how it will be recouped. This cost isn’t the same as the APR (annual percentage rate) you’d consider for car loans, credit cards and mortgages since a) advances are not structured as loans (debt) and b) they are generally non-recourse, meaning you are not personally liable for repayment.

If the advance is from a music company (distributor/label/publisher), ask if it’s recoupable. If so, at what percentage rate and based on what measurement (gross sales vs. net sales after marketing costs, and so on).  What other expenses can they charge you as recoupable?

If the advance is extra-contractual, meaning it’s in addition to any advances guaranteed in your agreement with them, does it extend the term of your agreement until you are recouped or increase the cost of their service? How much better of a royalty rate could you get or how much lower could you get them to go on their fees, if you simply took an advance from a financing company like Lyric Financial? Does that higher rate or fee you are paying for distribution to get an advance continue for the length of the contract (3-5 years) or just until you recoup?

If the advance is from a finance company: What is the breakdown of the costs you are paying (finance fees, processing fees, bank transfer fees, all the fees). If they won’t state these charges clearly (in plain English and in language you can understand) then run—don’t walk!—the other way.


Can you repay your advance more quickly than projected without penalty? Does that reduce the cost of the advance? (Hint: it should!)


This is an important one and it’s easily forgotten as you try to evaluate a deal. Does taking the advance give the company leverage over you in terms of creative or marketing control of your brand or your music?


Many finance companies take control of your artist account by asking you to give them Power of Attorney and/or control of your login and password to monitor your royalty revenues. The problem here is if they are bad actors, they can use that POA or those credentials to block you from monitoring your royalties. And that in turn means you have no way to tell if they are being straight with you or accounting to you accurately and fairly.

No matter what kind of advance you’re looking at, remember, the company making the advance is in it for one reason. They are in business to make money for themselves. They are not in business to make you money. The bigger the advance, the bigger the expectations and demands from the company.

The long-term effect on your life isn’t really their concern. But it should be yours, and if you approach an advance with clear eyes and enough knowledge, you can strike a deal that makes sense for your long-term goals. If you approach an advance practically, you can wield this business tool to your advantage.


Eli Ball is founder and CEO of Lyric Financial, the longest-running music financing company with 15 years and $100 million in financing to its credit.