# Royalty Advance Deal Mechanics An artist sells future royalty income at a discount for cash today. It is similar to invoice financing.^[Royalty Financing Primer, Utopia for Tenwest / Future Mode, Nov 2026] ## Rules that hold in every deal - The fee comes off each statement first. The funder earns from day one. - Recoupment comes only from the artist's share. - Non-recourse. If the music underperforms, the artist owes nothing extra. The funder takes the loss. ## How one £100 statement splits | Deal | Fees | Recoups | Paid to artist | |---|---|---|---| | beatBread, recouping | £15 distributor + £10.20 funder (24% of the recouping half) | £32.30 | £42.50 | | Future Mode, recouping | £20 (fee is 20% while recouping) | £80 | £0 | | Future Mode, recouped | £15 (standard fee) | £0 | £85 | ## Life of a deal 1. **Advance paid.** Cash out. Sometimes an arrangement fee. 2. **Recouping.** Fee first, then recoup. Any flow-through goes to the artist. 3. **Recouped.** Fee steps down. Artist share steps up. 4. **Term ends.** Funder's claim ends. Control goes back to the artist. - Not recouped at term end: the term rolls until recouped, often with a cap. - Early exit: buy-out at 120–130% of the unrecouped balance. ## Terms - **Flow-through**: the part of the artist share paid out while recouping. 100% recoup means no flow-through. - **Term and rollover**: a fixed period (3–5 years) that rolls until recouped. - **Decay curve**: streams spike at release, fall fast, then flatten. See [[Royalty Financing Is Specialty Finance]]. ## The levers Moving one lever usually means rebalancing another. - Advance size against forecast income - Upfront fee or extra points - Ongoing fee, during and after recoupment - Share that recoups (50–100%) against flow-through - Term, rollover and cap - Buy-out premium and earliest exit date - Scope: named catalogue, or everything (cross-collateralised) Example: £1,000 advance, £100 a month in statements, 20% fee. - 100% recoups: £80 a month, recouped in about 12.5 months. - 50% recoups: £40 a month, recouped in about 25 months. ---- tags: #boat links: [[Music Royalty Financing MOC]] [[beatBread vs Future Mode Deal Terms]]