Indie Labels

6 music royalty advance myths busted

In a industry as fast moving as the music business, it’s difficult to keep track of changes to royalty advances. Here, we look at six inaccurate myths surrounding royalty advances, of which every creative should be aware.

Guest post by Alex Heiche of Sound Royalties

When  we launched Sound Royalties in 2014,  our goal was to create a company that fundamentally changed the way royalty advances are structured. Our company set out to offer fair funding for musicians — funding to allow creatives to receive a royalty advance and keep ownership of their copyrights. This new way of doing business is a  needed resource in the music industry, as it creates an option for musicians to obtain funding to safely  invest in their professional and personal goals. In the past, when a music creative took an advance, they often found themselves at risk of losing their royalty copyrights – and many did. 

This new paradigm that Sound Royalties created is dedicated to serving the best interests of   music creatives. The “Sound Royalties Difference” is defined by an obsessive commitment to transparency, starting with protecting the creatives’ copyright ownership. I’m proud that this has redefined the perception of royalty advances, which today are used increasingly by artists, songwriters, producers, plus indie publishers, distributors, and labels to finance creative projects, scale their businesses and careers, or help cover everyday expenses.    

 Our experience is that many creatives aren’t aware of the different ways that royalty advances have evolved over the years, or of the associated benefits. Here are 6 myth-busting facts about royalty advances that every music creative should know: 

  1. Copyrights are not required to be secured as collateral.

The Sound Royalties model is the first one designed specifically to protect creatives from putting their copyrights at risk. Accordingly  there are r no circumstances where ourcustomers are required to forfeit their copyrights.

  1. Royalty advances are a unique and easy way to access financing.

Royalty advances from Sound Royalties are done without a personal guarantee or financial statements and are available to, and beneficial for, people regardless of their credit history.

  1. Dynamic pricing provides multiple customized funding options to best suit your specific situation.

The funding options provided are based on a variety of criteria such as a song or catalog’s age, depth, genre, revenue history and various other factors. 

  1. 100% recoupment is not required. You can receive an advance and potentially still maintain a royalty income stream. 

Unlike other advances, creatives are not required to pay down the full amount of their advance before they can start receiving pass-through income from their royalty streams.

  1. Royalty advances present a valuable alternative to selling your catalog.

A royalty advance allows an individual to retain the lifetime income from their copyrights which can increase in value over time as methods of music consumption continue to evolve and catalog multiples rise.

  1. A royalty advance can help you further your career.

Industry creatives and business operators are realizing that future royalty income can be put to work as business capital to fund new projects and partnerships. 

In the spring of 2020, as COVID-19 forced the cancellation of live shows and concerts, Sound Royalties demonstrated its industry leadership and commitment to music creatives by  offering no-fee, no-cost royalty advances. Over the years, we’ve had the opportunity to work with artists on funding a wide range of exciting projects — from building out recording studios to the creation of new music. 

Just like when we started the company we remain dedicated to serving the needs of music and entertainment professionals. Sound Royalties is proud to be a driving force in changing the landscape of royalty advances.  We will continue to work to empower and dispel myths on the topic as well as to put the needs of creatives first while we navigate through this challenging time.

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