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The music industry is a billion naira industry, with investment and sponsorship from the high and mighty.  Lots of money move in circulation so it is only normal that an investor would want Return on his Investment.

In music business, there are certain terminologies that need to be well understood before one should sign a record deal. Since income and revenue is the crux of recording deals, we look to demystify these terms for comprehension.

Flowing from the last article on “Debunking the Myth about Advances in Recording deals” (Read here), “Advances” was deconstructed to highlight its nature, both good and bad. We look to differentiate between “Advances” and “Expenses” (if there are any differences).

Advances are often misconstrued as expenses.   Literally, to ‘Advance’ is a forward movement or to move forward in a purposeful way. Expenses, however, consist of the economic cost, a business incurs through its operation to earn revenue.

Now in music business terms, Advances are sums of money or gifts paid or given to an artiste on account of future royalties. They’re paid (or given) when the artiste signs to the label or during the term, while Expenses are sums of money used by the record company in running the business.

Simply put, Expenses are incidental to the running of the company.

“Expenses” in music business  mean all expenses incurred by the record company during the term of a record  Agreement  including but not limited to Recording Costs,Editing costs, Distribution fees, Licensing fees, and other payments to third parties done  on Artiste’s behalf.

Expenses cover promotion, marketing and advertising costs  expended in furtherance of the sale of Records produced from the  Masters; costs to create merchandise; any other costs, fees, or expenses directly related to the representation or exploitation of Artiste consistent with the terms of the signed Agreement.

Advances are sums of money or gifts paid or given to the artiste for his sole use. As against expenses which are used for the running of the company via funding certain operations on behalf of the artiste, for the sole purpose of raising income for the company.

While Advances are to be recouped from future record sales or royalty payments due to the artiste, expenses are to be deducted from the profit of the company generated as a result of its business.

An Advance is practically debt owed by an artiste to the record company, debt that shall be paid back; Expenses on the other hand are running costs of the company, the company is liable for its expenses (just like any other business).

Thus, an artiste is unconcerned with the expenses of the company and should  by no means be made liable for it.