Recoupment concerns recovering an advance paid by the distributor to which party?

• A. The recipient of the advance
• B. The distributor itself
• C. The audience
• D. The venue

Answer: (A)

Recoupment is the process of reclaiming money a distributor advances to a creator or producer from the project’s future earnings. The advance is paid to the recipient of the funds—the talent or producer—and is recouped out of their ongoing royalties or profits as the project earns revenue. It isn’t paid back by the audience or the venue; those are sources of revenue to the distributor, but the repayment obligation lies with the recipient’s earnings from the project. For instance, if a distributor gives an upfront payment to an artist, that amount is recouped from the artist’s future royalties until the advance is fully recovered, after which the artist would begin receiving additional earnings.