Q&A with Achal Dhillon: Is there such thing as too big of an advance?

At beatBread we believe in putting artists in control – of their music, their careers, and who they partner with. While we provide the funding that can help unlock that freedom, we’ve found many artists also want guidance on how to make the most of their funding.  

So, beatBread’s been sitting down with industry experts to gain insight from them on how artists can be successful. Recently, we talked with Achal Dhillon, CEO and founder of The Music Federation. Launched in 2012, The Music Federation is an expansive group of music business members around the world - including artists, record labels, artist management companies, live promoters, agents, artists and other creatives and service providers.

Here’s what Achal had to say when we chatted with him about advances, and how artists can navigate the challenges that come with them.  

What are some of the most common challenges you think artists face when it comes to planning how to spend an advance? 

Dhillon: When artists are soliciting an advance, they are typically concerned with the aspects of the artist’s business – recording costs, funding for radio plugging, living costs, and marketing costs. They generally have marketing knowledge, but no capital. Most artists are using financing to propagate their business, but do not know exactly where to put funds.   

Financial independence results in making music in the way that they want. Having access to funding means they can maintain their independence. Artists are generally bombarded with [messages] of radio plugging and other ways to stay independent, but without it actually allowing them to stay independent or fund their cost of living.    

And what’s your advice on how to navigate those challenges?    

Dhillon: Prioritize staying financially independent as long as possible and paying for living expenses. Learn how to count what is going out versus what is coming in. Lots of artists are not even making [a] living standard wage. Protect your brand. Only do deals with people you actually trust. Be sensible.   

Mental health is extremely important to overall well-being and artistry. Artists can spend too much time dealing with administration functions. Financial independence, ability to choose, and [making] your own decisions are all positive for mental health. 

Aim for the middle tier – you can buy a house and achieve financial independence without becoming a household name. Be smart about your finances. There are many ways to make money off music: streaming, live shows, records, licensing, audio-visuals, performance rights, publishing, writing, synchronization, selling your works, merchandise, [and] micro licensing. There is automation for merchandise – Music Federation is working on this. Sponsorship deals – [but] not as common for developing artists.   

What are some of the factors you think artists need to weigh when deciding to take an advance?   

Dhillon: When you take an advance you need to be make sure you have a living wage and that you can repay the advance. Not being able to recoup is a huge issue. Make sure you are considering what you actually need the advance for – weigh your options like you are buying a car or house.   

 Independent sources like beatBread are Release Partner Agnostic. Taking an advance from sources like this means the whole process is transparent – the artist and beatBread have the same goals. Taking money from a source, like a distributor or record company, means you are sacrificing your ability to choose – no release. Direct signings and distributors (like Orchards, ADA, and distributors) do not align with developing artists – they make money off streaming so you do not fully own your copy rights. [An] institution financing partner needs to have the same agenda as you. Financing from someone that doesn’t have the same agenda is a honey trap. All roads lead to larger companies. 

Is there such a thing as too little or too big of an advance?   

Dhillon: This is relative to the size of the artist and recoupment. $1,000 in the hands of a brand new artist can be similar to $10,000 in the hands of an established artist. You need to be pragmatic and honest – the size of the advance needs to make a difference in what you need it for and you have to be able to recoup.    

Usually to get your first commercial release up and running, it is around $2,000 to $3,000. The minimum and max is relative to the artist. $1 million is no longer rare.   

Is there a certain thing(s) you suggest artists prioritize when planning how to spend an advance?  

Dhillon: Artists need to spend their advance on things that are already working. If live shows make money, then funnel the advance there. Same for merchandising, recording, streaming, performance rights, etc. Funnel money into money generating streams. As long as your cost of living is covered, make sure you maintain your bottom line.