Sunday, November 9, 2014

Most Music Venues: Broken Business Model Here's Why

Just finishing up here at the Elm City Music Festival, a lot topics popped up that referred to the scene and the smaller venues that base their business of showcasing original independent music. I also had a great conversation thread on Facebook with a lot of musicians in the Philly scene regarding the same topic. So I decided to do a comprehensive blog breaking down the reality of venues and where so many go wrong and have a broken business plan. I thought this would be great to share and feel free to add your comments below.

Being a booker/promoter/former club owner for over 20 years I really never really liked when people used the term "Support the Scene", it’s more like support my bar or establishment.  It's “supporting artists” and music you personally like, people go out to shows to experience music that they like to hear. It’s more like "support the music you like". Is there a so called music scene in Philly, yes of course there is, if not all the clubs would be closed. But people fall into that term because bars are falling, they make excuses why nobody's at your show or a scapegoat why nobody's at shows.

The problem is and it’s something I struggled with after my 10+ years at The Grape St Pub (Philly), is that many bar/venues owners don't get it. The goal for a bar/venue is to put asses in seats so you can sell alcohol. Where the model fails is that they rely 100% on the artists to fill their room. Venues do not promote or do different programming to get people in their bar. That's why places close or fail because they work off a broken business model. You want people to go to your venue because they want to. The Grape St. was so successful because we had a lot to offer to the common person and we just happen to have great music there. People loved to hang there. This is why like R5 Promotions has been successful also at various venues they created an environment that people wanted to be apart off.

Also looking a lineups lately at several venues I say what the hell are people thinking of with building shows, it seems bookers/promoters lost the art of putting together cohesive shows and try to do shows based on draw which equivalent to a winning the lottery. Which never really works, people come for one band and then leave. When there is a real cohesive bill and right promotions the odds are people will stay for the entire night. This includes bars/venues actually programming their place correctly with liquor programs, real promotions (adding bands to your schedule of events and a Facebook post is not promotion), building relations with outside vendors to enhance the experience for your customer and having a staff that is about hospitality, fun, engaging, etc.
On the financial side of things the major problem too is that all promoters/booking agents have when the clubs put the cost of doing business on the bands also. I always hate adding production costs into a deduction in bands payment this is at most clubs. Sound/Door/Security is really an operating cost for the bar/venue - sorry owners it is. So putting on shows you’re a min $200-$300 in the hole before you open the doors. Then it goes back to my above comment that they rely on the bands to make them money with no real return. Every bar/venue owner would fight me on this but reality is when shows are booked correctly, you build your business first than the music; money will be there. High cover charges are set to cover these costs which really scares away the public. If you’re in the city, parking sucks, so you’re looking at $15-20 to park on the weekend and then $10 cover. So your already spent $25-30 bucks before you enter to see your favorite band. And the way the most venues/bars work is out of the $10 a portion goes to production, than the promoter, and then the band. Oh yeah, because most venues have put the cost of the promoter/booking agents on you the artist. Again another fail in most bar business plans. Reality is several bar/venues use the booking agents as free labor, do not pay they but rely them to pack the bars, do their promo, handle all the scheduling, handle staffing, handle payouts and then want you to take o cut of the artist money for you pay. This is a BS model and why your business will fail.
Realistically the cover charge should go to the bands 100% but these venues set the tone not to make this happen.
For local shows I really like to see $5-$8 cover charges which all the money goes to the band w/ no added deduction costs. If venues actually really worked on their business, setup correctly and the artists draw is a plus.
The problem the wrong people go into the bar/restaurant/venue business. My normal job (yeah music business doesn't pay well for is a consultant/designer/dealer for Food Service Equipment and I designs of these places along with consult them on business operations. You wouldn't believe the some of the people who try and open bars and think people are just going to come to their place because they think their shit doesn't stink. It goes all around where they think these are easy investments and the cash comes in by relying on other people for their success. Again a bad business model, who in their right mind would put out 200-600gs and rely on someone else for your business success. Hiring a great team to have a successful club is one thing but leaving your lively hood on someone else is insane.
As people know over the years I have always been on the band side of things. If people were in rooms over the years dealing with all the behind of the scenes BS they would be really shocked. Some of the ideas and shit I heard that owners wanted to do was insane and resulted in heated arguments.
Now to be the devil’s advocate once, it costs a bar in the 125-300 person cap about $40,000.00 to operate a month. It may be low I'm going on costs from the Grape St Days. So the bars do have to make a nut to break even, but if you know a number you have to hit to break even, I as an owner would make sure I fill the calendar up with additional events to bring in other cash. If these owners did the leg work these venues wouldn't have to rely on band draws all the time to pay the bills. They are stuck in this broken model. I have venue owners say you go figure out special events... really??? Isn't that your job...

 Most bands are aware of the situation they are in with local bars. Bands can make decent money with the right club and booker, bands that packed bars for me have been paid $500-800 for an hour set which is decent cash for a local band. I think I paid $2000 to local band for an hour set 2 years back. But that also is my being a booking agent and not rely on the bar to cut me a percentage from the bar. So there are ways to make cash it’s just finding the right place and developing a real crowd.

So, like most of you I am tired of bar/venues owners using excuses or blaming the artists for their failing business plans. The reality is your lack of knowledge, game plans and failure to build your business is the way you’re failing not the entertainment.
Jim Thorpe
DVT Entertainment,
Liberty Musicfest
Dewey Beach Music Conference
ELM City Musicfest