Advances are money paid in anticipation of earnings from the sales of records, royalties or other uses of an artist's music. They are a risk taken by the record company, not the artist; the company expects to recoup the advance through earnings from the recordings it makes, but the money is not repayable if sales are poor.
If on the other hand recordings are never made, the record company would be entitled to recover an advance from you, as the terms of the contract would not have been fulfilled.
Careful budgeting has to take place to make sure that recording costs are covered.
Advances are payable in instalments. The first instalment is usually paid on signing the deal, with other instalments tied to the delivery of recordings and/or release dates.
An advance includes both personal costs and recording costs. Careful budgeting is required to make sure that recording costs are covered. The advance for personal costs should take into account not only rent and other living costs but also transport costs, for instance a bus for touring. Also included are professional costs - fees for the lawyer, accountant and manager. You may also include costs such as rehearsal room hire and buying instruments, and it's also reasonable to expect some help with debts that an artist will undoubtedly have run up in the struggle to get to a record deal in the first place.
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