Term Advance

Royalty Exchange Introduces 'Term Advance' Financing Revolution

Royalty Exchange, the online marketplace for royalties, has introduced a new financing option for creators called Term Advance.

Unlike most advances, Term Advance reverts creators’ royalty income after a fixed period of time… no matter what. It’s more like a temporary sale rather than a loan.

With traditional advances, artists’ earnings are funneled to the advance company until a fixed amount of money is repaid. The terms of these deals often carry high effective interest rates, and expensive penalties if the repayment schedule is not met. And since the size of these advances are so small, artists typically just get a new advance once the old one is paid off.

Royalty Exchange’s Term Advance offers a departure from this cycle of debt. There’s no obligation to repay a fixed amount.

Creators decide what part of their catalog they take the advance on, while they continue to collect royalties on the part they keep. Anything earned from new music projects created following the advance belongs solely to them and is not subject to recoupment.

Since 2016, creators have raised over $14 million on Royalty Exchange selling a slice of their royalties to investors who compete to offer best possible price. Term Advance takes advantage of this same competitive marketplace, which ensures creators still get the best deal, but adds the option to regain their royalty stream at the end of the term.

“Royalty Exchange exists to give creators more options, not less,” said Royalty Exchange CEO Matthew Smith. “For example, under the Term Advance scenario, an artist could temporarily sell 25% of an existing catalog. This provides a larger lump sum in return than any traditional advance could provide. The investor collects 25% of that catalog for the term of the advance. The artist collects the other 75%. When the term of the advance is over, that 25% reverts back to the artist. And any new work created after the advance is not affected at any time.”

To learn more about Term Advance, how it works, and how it benefits creators, please read this blog post.