Recoupment, in the music industry, is when a record label pays for a musical artist's expenses, such as for recording and marketing, and later deducts an equal amount from the artist's royalties,[1] which are between 15 and 20 percent of sales revenue.
[2] The practice is common, and most new artists have little choice but to accept it since they lack the negotiating power to obtain a better contract.
The label may even hold the advance and make all disbursements on the band's behalf, ensuring the funds are used exactly as agreed.
[3] *Recoupment deals primarily involve new artists, or those without a proven sales history, so selling 301,000 copies would be fairly unusual.
In this more typical case, the label recoups only $100,000 of the $250,000 advance, along with other non-recoupable expenses incurred in getting the album out into the world.