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• Back in the day, the record label would finance artist’s project up front in the form of an advance. The advance usually amounted to a loan which the artist had to repay. The record label would finance the recording, distribution and promotion of the artist project and then “recoup” the money after the project started selling. Although it seems fair on the surface, the record label would charge the artist for much more than what the record label provided. The record label would not only bill the artist for the things mentioned above, but they would deduct artist royalties for damaged goods, record club discounts and a wealth of other expenses. In addition the record label would take these deductions from the artists’ gross earnings.
• Although the record label would allow an artist to audit the record company’s books, many artists didn’t conduct any audits. Artists were generally afraid of angering the record labels by asking the record labels to show the expenses and deductions in writing. This justifiable fear kept artist’s in their place – under the record labels’ control.