In the music industry, “recoupment” is one of the most important—and often misunderstood—concepts in artist, producer, and label agreements. Whether you’re an artist signing your first deal or a rights manager negotiating on behalf of a client, understanding how recoupment works is key to ensuring that every party gets fairly compensated.
At its core, recoupment means that a label, publisher, or investor must recover the money it has spent on an artist’s career before the artist begins to receive additional royalty payments. It’s a cost-recovery mechanism, not a profit share, and it forms the foundation of how most music deals are structured.
How Recoupment Works
Imagine a label gives an artist an advance of ₦20 million. This money isn’t a gift—it’s an upfront payment that must be recovered from future royalties. The label will also spend on other costs such as recording, marketing, videos, and promotion. These expenses, when combined, form what’s known as the recoupable balance.
As the artist’s music earns revenue (from streaming, shows, or licensing), the label first uses the artist’s share of royalties to “recoup” the advance and expenses. Only after the label has fully recovered those costs does the artist start receiving royalty payments directly.
For example, if the artist’s album earns ₦30 million in royalties, and the total recoupable balance is ₦25 million, the label first takes back ₦25 million before the artist sees any cash. The artist would then be entitled to royalties on the remaining ₦5 million.
Not every expense in an artist’s career is recoupable—it depends on what’s agreed in the contract. Common recoupable items include:
advances and recording costs, marketing and promotion expenses, video production costs, tour support etc
Non-recoupable expenses are usually overhead costs, administrative fees, or label operational costs that shouldn’t be charged to the artist’s account.
This is why contract clarity is critical. Vague language around what can or cannot be recouped often leads to disputes and mistrust between artists and labels. Understanding your streaming data, royalty splits, and contract terms has never been more important. A single misinterpretation could mean losing control of revenue that rightly belongs to you.
Recoupment is not unfair—it’s a business safeguard. The problem arises when artists don’t fully grasp what they’re signing. Before entering any deal, creatives should seek professional guidance from a music lawyer or rights administrator who understands royalty accounting and contractual structures.
The goal is not to avoid recoupment but to ensure transparency, fair splits, and mutual benefit. When properly negotiated, recoupment aligns the interests of both the artist and the label—creating a pathway where both can profit and grow sustainably.
#MusicBusiness #MusicLaw #RoyaltyEducation #AfricaMusic #Publishing #RightsManagement
