Deal Points With Record Advances Part Two

Cost Reimbursement

If the demo deal is dead and the label does not want you, you're free to go elsewhere and shop and gain some interest from another label. Remember the little bit of front money that the label gave you for the demo deal? They are going to want that back. When you sign a full deal with the label that wants you during your demo time from the first label, they want the money back. In the music business the label that signs you is willing to pay back the advance from your demo deal to the label that signed you to the deal. The cost of the advancement will be recoupable from your royalties. However, here is how you can protect yourself:

1. The money should only be paid back if you sign with another label.

2. There is also a time limit. In your demo deal, try to make the time limit a year and no more.

Non-Record Company Demos

Keep in mind that you can sign deals with producers and engineers besides labels companies. Non-record companies can also distribute your record. Since they are not mainstream deals, the rules and clauses are much different.

1. If and when you sign with a label, you will have to pay the producer or engineer back. This term is called a "override". The label will take it out of your royalties about %1 to %2 on your records. Some cases the funder producer or engineer will get a bit of your advance paid to you.
2. The funder may ask for and override on every record. This is a bit much. On a override the funder should only make back twice there investment and no more. Make sure this is in your contract with the funder.
3. The funder's royalty should only be payable after recoupment charges are made to your records. Funders for recording cost don't get an override on.
4. Try to get the label you sign with to pay the override obligation to the funder.

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Deal Points With Record Advances

Demo Deal Advances

Demo deals can be a good way to go these days. How it works is a label will pay you for your demo. It is very little but it is a start. It exchange for the company giving you money for the demo, you have to wait some time usually 30 to 60 days to find out if the label wants to sign you to a full record deal. You need to know that you have to wait until the decision is made by the current label under your demo deal before you can go to another label. You can't shop while you are under a demo deal. A shorter deal the better. If the label wants you, you're required to negotiate a deal with them. If you don't make a deal this is called first refusal or a matching right. All this means if you can cut a nice deal with another label you can't just jump on the offer. You have to go back to the first label and they have the chance to match the offer you received by the second label. During the first refusal, you will not have to come back to the first label if the second offer is more front money. If the offer is less you have to go back to the first label. Just make sure you limit the time  of the demo deal. Try to get 14 business days if possible.