What happens after the advance is recouped?

• A. The advance is forgiven.
• B. The contract ends.
• C. The advance is recovered and future revenues may be shared.
• D. Royalties stop permanently.

Answer: (C)

Recoupment is the idea that an advance is an advance against future royalties. The moment enough revenue has been earned to cover that upfront payment, the advance is considered recovered. From there on, ongoing revenues are paid out according to the contract’s royalty split, rather than continuing to offset new earnings against the advance. The deal doesn’t automatically end when recoupment happens, and royalties don’t stop permanently—the creator simply begins receiving ongoing royalties under the agreed terms after the advance has been fully earned back. The standard structure is that the advance is recovered first, and then future revenues may be shared.