Written by Derek Manns, Co-founder & CEO Stagehand
Photo by Freckle Face Media Co.
Last quarter was Live Nation’s best quarter ever, they are selling out stadiums at an average ticket price of $252 and meanwhile small music venues struggle to keep their doors open. It would seem that the world of arts, culture & entertainment is trending in the same direction as the rest of the world. The rich are getting richer while the little guys tread water or decline. Local musicians will tell you that performing live is the only place left where they can make money. Earnings from recorded music are insignificant with the top 10% of musicians taking home 99.4% of the streaming revenue. Even local restaurants can’t make money, Restaurants Canada recently reported that 51% of Canadian restaurants are either losing money or just breaking even. At this rate an evening out will soon consist of ordering a Happy Meal through Skip the Dishes while streaming the latest Taylor Swift concert. Awesome.
There is a growing void in local culture… the well will eventually run dry if the ecosystem for emerging artists no longer exists. Who will replace Lady Gaga and Bruce Springsteen when they are gone? Is it Tik Tok? Maybe OpenAI will generate custom content based on your favorite prompts from today’s biggest stars… I hope not but sadly it is no longer science fiction.
Supporting the little guy
Despite the valuable role that the “little guys” (small venues, emerging artists) play as a catalyst for local culture, they are very difficult for strategic funders to support and there are a few reasons for that.
Small businesses are outsiders to the traditional arts and culture ecosystem. Small venues are usually run by scrappy entrepreneurs, they are much more t-shirt and jeans vs. suit and tie. They typically don’t know how the funding system works, it is not part of their MO to look for grants much less apply for them. They are perpetually short of time and they don’t have anyone on staff (like a grant writer) that can do this work for them.
They are “For Profit” businesses. Despite the previously stated fact that most small venues are not making money, as a legal entity they are “for profit” businesses and this excludes them from the majority of public funding for arts and culture. It doesn’t matter that a coffee shop might offer the first opportunity for a young artist to get up on stage and perform, there is less political risk in supporting not-for-profit organizations. Ironically this same principle does not seem to apply to sports teams or their wealthy owners, see point above about the rich getting richer.
Efficiency required to support a large number of small businesses. Historically a disproportionate amount of arts & culture funding has gone to large organizations like the Ballet or the Opera. It is a simple fact that it is easier to administer large grants to a small number of large organizations rather than many small grants to many small organizations.
Opportunities for technology
So what has changed? What is different now that makes it possible to support a broader, more inclusive view of the cultural landscape? Simply put, technology has changed. Technology is scalable and there are countless examples of how it is now possible to support millions of users. To that end, last summer we had a chance to run a unique pilot in support of grassroots musicians and small venues. Many of you will have heard about the concept of microfinance, but normally you hear about it in the context of a developing nation. Microfinance consists of many small financial incentives often paid to individuals to allow them to start a business or to provide a service. There are a lot of small venues and emerging artists on the withering savannahs of the grassroots music scene so we wanted to see if the microfinance concept would apply here also.
We had the small sum of $4,000 left over from a different funded program so we proposed an experiment. We would deliver “micro-grants” directly to artists to perform in small venues. The micro-grants would be $100 each and they would be paid directly to the artist, the venue would never have access to the money. The venue was free to augment artist compensation in other ways, and the venues were responsible for their own programming. If they didn’t already have a Stagehand venue profile they needed to set one up and do all programming from there. In exchange for help paying an artist to activate their space the venue would give us back some valuable data about the event. The data would be both quantitative measures like food and beverage sales, cover charges and attendance, and also qualitative measures like their overall satisfaction with various aspects of the event.
Five venues quickly stepped up and hired 35 different artists who performed 40 times over an eight week period. These venues were mostly clustered in the Music Mile area of Calgary but also extended into the suburbs. The venues made all of their own programming decisions and payments were processed through the Stagehand platform directly to the artist after their performance. The following were the venues that participated including the % of funding that was allocated.
While the sample size was not large enough to draw definitive conclusions here is some data that may lead to other questions or further investigation:
60% of performers were male, 35% were female, 5% identified as other
The most popular artist genre that venues programmed was Singer/Songwriter, second was Folk and third was Pop.
The most lucrative time for food and beverage sales for a performance that featured live music is Sunday Brunch.
The genre that correlated to the most food and beverage sales was R&B.
Largest audience size was 98.
Venues rated the artist talent at an average of 4.6 (5 being the highest).
Artist professionalism was rated at an average of 4.7.
What else did we learn?
Beyond the raw data here is some other things that were learned during the course of the pilot:
Abundance of talent. There were far more talented artists willing and able to perform than there were spots available. The venues indicated a high degree of satisfaction with the artists that did perform.
Don’t show me the money. Venues prefer that the money be paid directly to the artists. If the money flows through the venue it creates an audit exposure and more work for them. Venues are happy to earn their money based on food and beverage sales.
No silver bullets but everything helps. Simply having a performer does not guarantee a full room and a profitable event. Promotion needs to be the joint responsibility of the venue and the artist and the more persistent you are with these programs the more you will train people’s habits and build a following.
More promotion needed. The grassroots industry as a whole would benefit from better promotion. The majority of the general public is surprised at the level of talent that is available in the local community.
A little means a lot. $100 does not seem like a lot of money but as one of the venue owners explained, if they are only making 10% profit on their gross revenue then for the venue to take $100 out of their earnings they would need to sell an additional $1000 of food and beverage just to break even. If you are a small venue with 50 seats this required amount of additional sales represents a significant barrier to being able to hire musicians.
Harness the entrepreneurial spirit. These micro-grants were small but sufficient for venues to open their doors to local artists and book and promote performances on a weekly basis. Small businesses/entrepreneurs will do a lot of work that benefits local artists if they believe it has a positive impact on their business and community. Don’t underestimate what can be achieved for relatively small but well-planned incentives.
Accountability by design. After an artist finished their gig they were prompted to confirm it on the platform. Confirmation notified the micro-grant payor that they could process payment for the performance which was done at the click of a button. Automation means that the administrative work like payment can be done in seconds, all transactions are recorded and reports can be generated on demand.
Small venues have always played an integral role in launching artists' careers. Bob Dylan started in the cafes of Greenwich Village, Ed Sheeran was a busker on the streets of London. Building a grassroots community where artists and small venues can work together helps both artist and venue and it builds local culture and identity. It’s a win-win-win.
The venues we worked with were enthusiastic about participating in the micro-grants program; they were willing to provide meaningful data about the impact of performances in their venue in exchange for indirect assistance by way of small grants that were paid directly to the artists that performed. For the artists, demand for these types of performance opportunities was high. It was clear that there were far more talented local artists who were willing and able to perform than could be programmed in this pilot.
We are all sensitive to the rising cost of living, including tax increases, so it is important that all public investments in arts and culture are made in the most effective and transparent way possible. Historically there have been very real barriers to making investments in a fragmented and at times chaotic grassroots music scene. But technology is providing opportunities for scale and transparency that need to be explored. Micro-grants are just one way that we could be more inclusive in funding arts and culture with a view towards building more vibrant and cultural communities.