Recouplable cost is a standard term found in most record-label contracts, applied to the initial investment made by the label. When a recoupable cost clause is added to an agreement, the record label claims 100% of all royalties generated until the initial investment has been repaid.
For example, if a label advances $100,000 to an artist for one album and two singles, the artist would have to pay back $100,000 from the sales of one album and two singles before personal profit.
Depending on the agreement type and the contract, the record label can established various cost as either recoupable or non-recoupable. Under a traditional recording deal, recording costs are recoupable. Under a net profit deal, marketing, promotion, tour support, recording, and corporate costs are all recoupable. Sometimes, the label will also include “overhead fees” (calculated as a percentage of the label’s gross revenue) as recoupable expenses.
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