Definition:

Reserves refers to the percentage of royalties you are due from record sales that your record label withholds. Reserves are related to returns. Because some of the records that are ordered by stores will be returned to the label, your record label will only pay you a percentage of the royalties you are supposed to get, so they can cover some of the losses they may make when your records come back as returns.


The percentage of royalties your record label holds back as reserves depends on your sales history (if you have any) and whether or not there are plans for you to release more albums with the label.

After a pre-determined amount of time, your label will release the reserves - provided, of course, that you are actually due those royalties after any returns have come in. This process, also called liquidating reserves, can take up to a few years.

Your record contract should spell out all of the specifics regarding how the label will handle your reserves.