There’s nothing better than getting a big advance. It’s validation for your hard work, and it's money you can use to push your career even further. Instead of waiting for the direct deposit to hit your account and doing the math on your expenses for the month, it frees you up to do what you do — make music.
But there's one major problem. The traditional advance system is flawed, and here's why:
- Most traditional advances are too small to make a difference. You get enough to cover a few months, not enough to fund a project. By the time it's recouped, you need another one, and the advance company is counting on that.
- Advance companies often use confusing contracts to their advantage. How long it takes to repay largely depends on your music royalty income. For example, an advance that seems like it will take three years to pay off could actually take five years or longer. Most contracts won’t spell this out, so you have to figure it out yourself.
- Many advances come with a minimum delivery requirement. You're contractually obligated to deliver new songs or albums on the company's schedule. This can sometimes motivate you, but it can also mean the company decides what your next project will be.
With all this said, royalty advances still have a place. Below, we break down the differences between traditional and fixed-rate advances to help you decide which is right for you.
What Is a Traditional Music Advance?
A traditional advance works differently from a typical loan. Instead of making monthly payments, the person or company that gives you the money will keep your royalties until they have recovered the full amount, plus their fee.
This process is called recoupment. The fee usually isn’t described as interest, but it still costs you money. Make sure you figure out the total cost before agreeing to anything.
There are three main ways to get a music advance:
1. Distributor Advances
With TuneCore's Direct Advance, you pay a one-time flat fee, and they take a set percentage of your streaming royalties until you pay back the advance. After that, you start receiving all your royalties again.
These advances are quick and simple to get, but they are usually small because they depend on your current streaming numbers. You can expect enough money to cover a few months, but not to fund an entire project.
2. PRO Advances
Performance royalties from ASCAP, BMI, SESAC, PRS, and STIM provide a steady and reliable source of income, which makes them good collateral.
However, most PROs don’t offer loans directly. Usually, you receive an advance from a publisher or a finance company, and your PRO sends your royalty payments to that company until you repay the advance. After that, your royalties flow directly to you again.
3. Label and Publisher Advances
A label advance is money the label pays you upfront, recovered later from your future recording royalties. Until it's repaid, your share of the recording income goes to the label.
For example, if your royalty rate is 15%, the label keeps 85% and uses the remaining 15% to pay back the advance. Many new contracts are called 360 deals, which also take money from touring and merchandise to repay the advance. If you sign a multi-album deal, royalties from your future albums will also go toward paying back what you owe.
A publisher advance works differently. The publisher pays you upfront, then keeps your entire share of publishing income until the advance is repaid. After that, you start getting your normal share again.
With both types of advances, you never pay out of pocket. Instead, the company will continue collecting your royalty earnings until the advance is fully repaid. Most of these deals also require you to deliver a set number of new songs or albums.
Universal, Sony, and Warner usually provide the largest advances, but they take the longest to recoup.
What Is a Fixed Return Royalty Advance?
A Fixed Return Advance gives you the benefits of a traditional advance without the uncertainty or loss of control. Royalty Exchange offers this type of music advance. Here’s everything you need to know:
How a Fixed Return Advance Works
You offer a portion of your royalty income on our marketplace: one song, a percentage of your back catalog, or everything. It doesn't have to be streaming hits, either. Deals on our marketplace have included hip-hop publishing, 90s R&B, TV production cues, and international label catalogs.
Your listing shows qualified buyers exactly what your catalog earns and where the money comes from — the last 12 months, the 3-year average, the full earnings history. Then buyers compete, so you're never negotiating against a single take-it-or-leave-it number.
What a Fixed Return Advance Costs
The listing shows the repayment amount: one fixed dollar figure that never grows. Compare that to traditional advances, where we've seen effective rates above 27%, hidden in the fine print.
After the deal closes, the buyer receives all payments from your catalog until they reach the fixed amount. No other earnings of yours are affected.
There's also no repayment schedule. If your catalog has a big quarter, the advance is paid off faster, and you start collecting your royalties again sooner. If it has a slow quarter, there's no payment to miss and no penalty.
When Your Royalty Checks Start Coming Back
After the buyer receives the fixed amount, your royalty payments will resume automatically. You don’t need to file anything or make any requests. Your PRO, distributor, or publisher will start paying you again, rather than the buyer.
You can also end the deal early by paying the remaining balance at any time. For example, if your fixed return is $200,000 and the buyer has collected $130,000, you can pay the $70,000 and start collecting your royalty payments again.
Note: The buyer only collects the royalties you choose to offer, and you approve the sale. New music is never part of the deal. You'll keep receiving the royalty payments for any music you didn't include and any music you make afterward.
Music Royalty Advance Examples
In each deal, the fixed return is shown on the listing before buyers make offers. The advance is whatever offer the seller accepts. After that, the buyer collects the catalog's royalties until they receive the fixed return. If the catalog has a slow year, repayment takes longer, but the amount stays the same.
Below are real Fixed Return Advances that took place on the Royalty Exchange marketplace:
- SZA & More Publishing (SZA, Arin Ray): The seller received a $44,900 advance on 7 tracks, including "Seek & Destroy" and "Far" from SZA's Grammy-winning album SOS. The buyer collects the catalog's royalties until they receive $82,600. The extra $37,700 is the cost of the advance. The seller pays it by giving up future royalty income, never out of pocket.
- TV/Film Songwriter Royalties (Ghostbusters, NFL Gameday, Keeping Up with the Kardashians): The seller received $67,900 on 545 tracks placed in film and television, and the buyer collects the royalties until they total $110,000. The $42,100 difference comes from royalties the songs earn over time, not from the seller's pocket.
- Chris Brown "Under The Influence" Publishing: Chris Brown's most-streamed song on Spotify anchors this two-song deal. The seller took a $320,000 advance on the songwriter's share of the two songs. The buyer collects their royalties until they receive $500,000. The $180,000 difference is paid from the songs' future earnings.
Get Started with Royalty Exchange
Now that you know your options for a music advance, the next step is finding out what your music catalog is worth.
Advance companies typically quote a big number up front, then talk you down from it over time. We take a different approach by examining your catalog's earnings, age, genre, and dozens of other attributes to identify its value.
Having analyzed thousands of catalogs in many genres, we can give you the most accurate estimate of what your catalog is worth.
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