A Timely Repost: The Economics of Mid Tier Touring From Someone Who Has Done it For 34 Years

This is directed at young musicians.  I already made my money.  Further I have recurrent rock radio hits that generate revenue if I just sit at home and do nothing. Seriously.  In many ways I don’t really have a dog in the fight so to speak. . I just want to let all those young bands out there touring what the economics of streaming really mean.

There will be no middle class or niche ensemble music unless streaming revenues increase.  Flat price per stream revenue is a net transfer of wealth to top artists and streaming platforms. For those interested in the math on this transfer look here.   IMHO eventually the only albums that will be made at a profit,  are albums one or two people record on a computer and are oriented towards pop markets.  More interesting ensemble albums will be made but they will be made at a loss. Or not at all

But many argue that records are loss leaders for touring profits.  Interesting thought. Unless you do the math. For 95% of even successful artists there really isn’t much profit.  And never mind touring doesn’t compensate songwriters.  This is a repost of my article from 2016.

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It amuses me to no end when people suggest that artists can make up for recorded music revenues with live music revenues. These are people who obviously know little about the live music business. I’m sure the top 1% of touring artists can.  But for most middle tier bands this is not a reality.  The main reason lower level artists tour is that it is the most reliable way to stimulate sales of recordings!  That’s what actually supports the middle class artist.

But there are other issues to be considered before comparing live revenues and recorded music revenues.

First of all: recorded music revenues are largely “net” while live music revenues are “gross.”  You can’t equate revenues before expenses  with revenues after expenses. Apples and oranges (*ahem* NY Times Magazine).  D’oh!

Sure most midlevel artists (like my bands)  will have about two dozen  top markets where they play for 500-1000 people a night. And we strategically place those on a weekends.  And yes you can make $500-$800 per band member on shows like these. Ultimately you have to consider that these are just a small percentage of the shows that a mid level artist plays each year.

The other 80-90% of shows occur in lower population secondary and tertiary markets Sunday through Thursday. These shows naturally have much lower attendance and challenging cost structures  So even a band like my own with multiple radio hits that  does 600 paid  in Boston, 800 paid  Washington DC and 1000 in San Francisco has totally different economics on the other 80-90% of shows that make us a full time band.  No offense but places like Wichita KS and Syracuse NY?  200 on a Monday night in a rock club is actually pretty respectable.  Don’t believe me?  Just look at pollstar.com. Check data for club capacities for your favorite midlevel band.  Or pay for an account and you can see the actual ticket sales.

I’m right.  Trust me.

Sure we could skip these lesser markets and keep going back to our top 25 markets, but eventually you saturate and kill the golden goose.   Play in NY four times a year and suddenly you’re drawing 1/3 attendance. Playing in NY  Every 12-18 months maximizes attendance.   So really bands like mine have two choices.  Play only part time (like Camper Van Beethoven and have other jobs)  or play secondary, tertiary and break even foreign markets where you eek out minimum wage the other 80-90% of the year.  Why?  To sell albums, generate airplay and sometimes a sync licenses. Cause those artist royalties, mechanical royalties, public performance royalties are what is really supporting the band.

Drill down further.

So lets say your average middle tier band play 125 north american shows a year (That’s about saturation after that you start cannibalizing ticket sales from nearby cities).  Forget about those top 25 markets. We know those are decent shows.  What do the other 100 shows really look like? What do those Sunday through Thursday small market shows look like?  Let’s assume an average attendance of 200 at those other shows.

Since most of the “T-shirts and Touring” journalists are too fucking lazy to pick up a calculator and do the math I’ll do it for them.   Very important fact to remember:  my wife is a concert promoter and she books about 300 shows a year. And these are mostly middle tier artists!  Our house is a concert promotion facility. She is constantly in touch with other concert promoters, bands, managers and agents across North America.  We are awash in contracts and settlement sheets.  We know what most middle tier bands do in ticket sales Sunday -Thursday.  We know what most club concert deals look like.  I assure you that few music industry “experts” are this familiar with the day to day data.

 

In the relatively fair North American market ( assume it’s worse everywhere else especially in UK).
ON AVERAGE
Buy ticket: $22-$30+taxes Ticket face value $20
Ticket Charge $2-$10 bucks 50% to venue/ 50% to ticketing agency 0% to artist.
$20 Face Value
$8 (40%) goes to venue (rent/security/staff/pa/lighting/promoter profit)
$12 (60%) to artist. But this is artist gross!
Then artist pays.
$1.20 (10% of 60%) to agent
$1.80 (15%of 60%) to manager
$1.20 (non-resident state withholding tax average 10%)(Grrrrrrr… total government rent-seeking activity).
$7.80 (39%) adjusted gross to artist on every ticket.
Then the artist pays crew, transportation, hotels, fuel, meals, insurance etc
Let’s look and see how that works.
Take moderately popular middle class touring band. Bare bones. 4 band members and two crew. 200 paid on a monday night in Tulsa OK. $20 face value on the ticket.
Artist adjusted gross $1560
Typical daily expenses.
$300 2 crew salaries (low ball!)
$150 van/trailer rental or depreciation (300 miles a day) + insurance
$90 fuel
$450 hotels (two star or lower)
$150 meals or per diems
$100 amortize misc/overhead (supplies, accounting costs, tax filings in 40-50 states, repairs, storage, rehearsal space etc etc).
$210 amortize day off /travel days (6 days on 1 day off)
$1,450 approximate daily expense.
Each band member (4) makes $27.50 before tax. or 0.7% of face value of each ticket.
Sure the band members might make $500-$800 bucks a show in their best markets on a friday or saturday night. But if you are very lucky that’s 25 shows a year.
The other hundred shows a year look like this.

That’s why you see stories like this:

http://www.metalinjection.net/latest-news/breakups/thy-art-is-murder-vocalist-quits-over-finances-i-cant-live-like-this-anymore

And don’t tell me stupid shit like this (these are actually taken from Facebook comments:

  1. Get a $1500 used van.  Yeah what happens when it breaks down in Bend OR?   What’s that gonna cost you to get out of that?
  2. Play 7 nights a week. Uh Every notice the space on map between Kansas City and Denver?  Or Bozeman Montana and Fargo ND? Voices don’t work 21 nights in a row.   Drivers fall asleep behind the wheel and everyone dies.
  3. Sell more merch.  Most bands do $3 dollars a head in merch. Anybody who tells you anything different is bad at math or lying.  If it’s t-shirts 20-35% of that goes to club.  Then you you have to pay for the cost of making the shirts.  Then if you have a dumb design or color (fuchsia  is not in this year!) you wipe out your entire profit.   The only place to reliably make money on merch IS BY SELLING YOUR CDS AT SHOWS. RECORDED MUSIC!!!
  4. Get a corporate sponsor.   Yep that’s easy to do when you sell thousands of concert tickets a night and millions of CDs.  Not so much for middle tier of bands. Forget it if you are playing any music remotely controversial.
  5. Play more mainstream music.   Sure let’s all be as mainstream as fucking possible. That’s what made American rock and roll so great, being as mainstream as possible to maximize popularity.
  6. But <insert name> went from playing midsize clubs to arenas. Sure this happens. Just like every once in a while someone walks out of the casino $50,000 richer. But on average and over the long term most don’t. They walk out poorer. Most mid tier artists will not be playing arenas next year. 
  7. <insert  fake music business expert bullshit here> submit your own.

Face it.  Recorded music sales support the bulk of touring activity for anything that isn’t mainstream crap.

 

 

 

About Dr. David C Lowery

Platinum selling singer songwriter for the bands Cracker and Camper Van Beethoven; platinum selling producer; founder of pitch-a-tent records; founder Sound of Music Studios; platinum selling music publisher; angel investor; digital skeptic; college lecturer and founder of the University of Georgia Terry College Artists' Rights Symposium.