Watching Spinal Tap made me wonder: Who pays the costs when a rock band goes on tour? Is it the record company? What if the band is not promoting a new album? Do they pay their own costs?
It varies. A record contract frequently contains an amount for tour support. For a newly signed band, this may not relate to a particular album but rather to establishing a presence in some market. But often there are sums to support releases.
These may be purely advances or partially recoupable. Most money record companies give you are effectively contingent loans: you pay them back through royalties earned in sales (or, more commonly, you never quite recoup). If tour support is only partially recoupable, that means that the record company is giving the band some money to go out and earn the record company some of its royalties rather than loaning the band some money that will be paid back by taking the band’s share.