The truth is that, for a long time now, recording artists have already been touring as a way to make money, since they tend not to make any from royalties.
In a traditional record deal, most bands have to spend years paying back their record label the money used for their advance, (which pays for the cost of making their album, and the marketing and other promotional costs associated with it the album), before they ever see a dime. This “up front” money from the label was really a loan, which the labels pay back to themselves by taking money out of the artist’s royalties. The labels, however, couldn’t touch any of the money the band made at concerts, including income from ticket sales, tee shirts, mugs, caps, stickers, posters, programs, and any other merchandise that gets sold at a concert. Also known as merch. Thus bands have always gone on the road, performing. Both to promote their recordings and make money they could actually keep.
So at best, the suggestion that musicians need to tour more frequently to make a living is somewhat redundant. We’re already doing it.
Obviously it is not just the artists that have been feeling the pinch of declining sales, the record labels have as well. To combat this problem record deals are now set up differently. Called a 360 deal, these contracts allow the labels to get a piece of the live sales pie, sometimes up to 50% 1. Under this type of deal, labels get a percentage of all an artist’s income from any revenue source, including, but not limited to, ticket sales, tee shirt sales and any other type of income derived from a band playing live. 2 So even those artists signed to a major label do not necessarily generate more income by doing more concerts and gigs. They are already doing it, but now they’re making less. Nor does increasing the number of gigs that a band does every year do anything to address the problem of illegally obtained music.
To make matters worse, concerts themselves aren’t doing that well. Attendance is down and revenue is dropping. Recently, big name acts like Bon Jovi and Paul McCartney have not been selling out arenas. Live music revenue dropped by 6.7% in the UK according to PRS for Music, the rights collecting organization. 3 Pop star Rhianna, who grabbed tons of free publicity regarding her stormy relationship with Chris Brown, had such bad attendance during her “Loud” tour this spring that her manager advised her to cancel her tour. A source connected with the tour told the New York Post that, “ticket sales in big US cities like Boston are so bad, they will barely cover basics like the lighting and other arena costs.” 4 This also extends to Live Nation, who owns several venues, including 13 House of Blues locations. Many concerts at Live Nation venues are dropping their prices, along with some long time, hard touring, artists like ZZ Top who this year will be dropping the average price of a ticket to $10, an 80% drop. “We’ll find other ways to make money,” says ZZ Top’s manager Carl Stubner. 4
I'm sorry, what did he say? They'll find "other ways" to make money? Don't the experts of the new music paradigm repeatedly tell us that touring, and more of it, is the "other way" to make money? I did miss a memo?
We've looked at how this theory really isn't working for mainstream acts, now let’s look at this from the perspective of an artist in a smaller genre. As we’ve already seen, the smaller the genre, the smaller everything gets: market share, product sales, audience size, support team and income. This has a huge impact on playing live.
Let’s first look at the costs, the money that gets paid out before any comes in. Here are the main costs that can be found on any tour:
Car or Van: Gas; Repairs and maintenance, or Plane: Tickets; Luggage fees; Shuttle or Taxi; Rental car
Lodging: Hotel - Motel
Food: 3 meals per day; Water and snacks for car or plane travel
Equipment Maintenance touring is very hard on your equipment
Shipping Costs Anything that you can’t fit in your vehicle or if you are flying, needs to be shipped ahead. Sometimes it has to be shipped home. This includes product, signage, equipment and anything else for your set up and CD table.
As anybody with a family knows, being on the road is not cheap. Even if you aren’t flying, an average day spent on the road will cost anywhere between $100 to $200 once you factor in lodging, gas and food.
So where does all but the most famous New Age artist perform? For most of us that is a very good question. It certainly won’t be Madison Square Gardens or Staple’s Center.
In my conversations with dozens of artists working in small genres, the biggest complaint about playing live is that there are so few venues to perform in. Unless you are working in pop, rock, country, or some from of R&B, venues for other types of music are slim to none. In the genre I work in, New Age, the average venues for an artist to perform in is the corner of a bookstore, house concerts, and sometimes cultural centers, like a museum or a parks & recreation auditorium. Not the kind of places for a money making concert tour.
Bookstores generally do not pay you to perform, including covering your transportation, or the cost of lugging around and setting up your sound system. Some bookstores will let you sell your CDs directly to the customer, but most want you to sell through them and they take a cut. House concerts are typically set up the same. Sometimes you get the added income of a “donation” fee at the door, but it is a donation, not a fixed fee, so you can’t estimate the number of seats and how much potential ticket sales there might be. Some house concert hosts give you all the money, some want a cut. Cultural centers rarely charge admission. If they pay it’s a small honorarium, so you might make $100 for your performance, plus CD sales.
We have to be realistic and understand that none of these venues are set up to pay musicians to come perform. Just like the artists, they are struggling to make money, and cultural centers have a government budget they have to work within. There is no income from ticket sales, parking fees, and food and beverage sales to be able to pay an artist and make a profit.
The logistics of setting up a tour at these types of locations can be a nightmare. First a many of them just don’t understand what it takes to promote a concert. Then many locations have specific days set aside for events and the artist might find themselves with a gap of several days, even a week, without an open venue to perform at. Every day on the road costs money, so everyday you are not performing you are losing money.
Quite often I’ve also experienced what I call the “something to do effect” at these venues. This is especially true of cultural centers that have a weekly, or monthly calendar of performances. People come because it is a free concert and it is, “something to do”. For several years I’ve performed at a culture center as part of their weekly concert series. A large portion of the audience are seniors, bussed in from local assisted living homes, and students fulfilling some course requirement to attend a concert. Neither one of these groups are part of my fan demographic, so the overwhelming majority of them do not buy any product, while the students snatch up all the programs as proof of their attendance...
Those people who attend because they have heard of me or my music, i.e. my fans, who usually already have all of my recordings, so I don’t tend to sell a lot of product to them. Also, not being teenagers they tend to be more conservative in their spending habits. They don’t need any more tee-shirts, posters, mugs, stickers, or hoodies with their favorite artist’s name on it. In other words, they don’t buy Merch, one of the driving forces in the suggestion to tour more.
This is not limited to my experiences. Most of the artists I talk to in my genre experience the same challenges: Small venues with limited days for events, little or no ticket income, a loyal, but small, fan base that already has all their recordings, and a lack of strong merchandise sales. In many ways, for the smaller genre artist, touring turns into being more about promotion than hard sales. You get your name and face out there, but you don’t make much, if any, money. And unlike the big markets of rock, pop, a small genre artist can’t work their way up from the smaller venues to the bigger ones by “paying their dues”. There are no bigger venues to work up to.
Because of the lack of venues and the costs associated with touring on their own, a very popular way to get performances is at a music festival. As was mentioned in the post Omnia Vanitas, there are a lot of these festivals for all sorts of different musical styles or instruments. Fans of a certain style of music, or a particular instrument, will come from all over the country to attend these events. Of the ones that I participate in four don’t pay the artists, three do. Some pay transportation costs, which now days really goes a long way. At least the artist doesn’t lose money just trying to get to the gig.
For the festivals that don’t pay, an artist’s total income is generated by CD sales, giving workshops and lessons, and, if they have them, any product endorsements. Keep in mind that, just like at the smaller venues, a lot of the people who attend these festivals do so because they are already fans of the acts performing and, unless the band has a new CD, these fans most likely already have all their recordings. These festivals also tend to rotate the acts that perform from year to year, so an artist can’t count on income every year from every festival. Competition to get stage time is very fierce, since festivals are one of the few places where the audience is bigger than 50 people sitting in a bookstore.
While hitting the road and touring maybe an essential requirement for the over all career of any recording artist, does that mean it is the best way to deal with declining sales, low streaming royalties and music piracy? Of course not. The suggestion that it will is just another red herring to distract us by those that think music should be free and musicians don't need to be paid for their work and imagination. Getting on a stage doesn't change the buying behavior of the audience. There will always be those in the crowd who aren't leaving with a CD they just purchased of the music they just heard, they intend to get it another way...
2. http://lawyer4musicians.com/2008/03/16/360-dealsits-gonna-be-a-great-year/ also see http://lawyer4musicians.com/2009/03/22/you-spin-me-right-round-like-a-360-record-deal/