4.0 Advances

4.1 Relevant Factors

For many writers the advances are the most critical factor. Advances vary dramatically. A would-be recording artist struggling to find a record deal but able to attract publisher interest may be pleased to secure an advance on signing a publishing deal of £10,000 (perhaps less) since this may provide vital funding at a time when the artist is struggling to keep his or her project together. If the writer has secured a valuable recording contract he or she might expect ten times as much. Various factors will affect what the publisher is prepared to pay. We saw in Part II how publishers may vary in their approach. We looked at what we fancifully described as the piggy bank approach, the more scientific approach and what we described as the maverick approach. Of course, none of these approaches is quite real. The publisher will make an assessment of the writer’s talent. If there is an element of competition for the writer then the level of any advance will largely be dictated by market forces. Otherwise, the most crucial factors are likely to be what the writer needs and what he or she is prepared to accept. The publisher will assess the entire set up including the proven abilities and track record not only of the writer but also of those close to the writer including the management team. If a record deal is not yet in place the publisher’s assessment of what should be risked by way of an advance payment will largely depend upon what record deal the publisher believes may be achieved.

4.2 Payment Schedule

Having agreed an advance the publisher will try to reduce its risk by spreading payment. The suggestion may be that 25% of the advance for the first album is payable upon signature a further 25% upon commencement of recording a further 25% upon UK release and perhaps a final 25% only upon release in the US or some other specified overseas territory.

4.3 Deferred Advances

If a singer songwriter signs a publishing deal before a record deal is in place then probably there will only be a relatively modest advance upon signing. However, usually, this will be followed by a more significant advance upon signature of a record deal with a major record company (with a further advance usually payable upon release of the first album).

4.4 Option Advances

So far as any option periods are concerned typically the advance for each period will be calculated in accordance with a formula (often two thirds of the royalty earnings from the previous album) but subject to a minimum and a maximum payment. The minimum payment will usually be not less than the advance for the first album and the maximum figure is often double the minimum figure. For example, in the case of a four album deal if there is an advance of £75,000 for the first album then the advances for the subsequent albums might be calculated in accordance with a formula but subject to a minimum payment of perhaps £75,000 again for the second album (and a maximum of £150,000) with perhaps a minimum of £100,000 (maximum £200,000) for the third album and perhaps a minimum of £125,000 (maximum £250,000) for the fourth. Alternatively, the option advances are sometimes fixed amounts (rather than calculated in accordance with a royalty earnings formula) with generous increments but so that in each case the option advances may be reduced by the amount of any unrecouped balance. On this basis, if the advance for the first album is £75,000 the publisher might agree advances of £100,000, £150,000 and £200,000 respectively for three option albums. Using this example, if the first album is disappointing and generates only £25,000 in royalties (leaving an unrecouped balance of £50,000 from the initial £75,000 advance) then the publisher might exercise its option to continue with a second album upon payment of a reduced advance (i.e. £50,000 being the £100,000 agreed for the second album less the £50,000 unrecouped balance).