Describe how recording studio expenses are treated in relation to the artist’s compensation if the artist’s record label is paying those expenses.

What will be an ideal response?


Recording studio expenses for artists under label contracts are usually counted as part of the
advance payment against future royalty payments to the artist. Some contracts hold that if actual
expenditures are less than budgeted, the difference can be pocketed by the artist (sometimes with the
producer) as a further advance against future royalties. If a recording session is going well, the label
sometimes grants overages—typically 10% or less—without complaints. But in those cases, the
additional sums are also counted against future royalties.

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