Loss leaders – some thoughts for unsigned bands
Posted in Petulance, Resources for Bands, Unsigned on August 5th, 2009 by Alex
It’s not coincidence that the vast majority of the bands and musicians we see most frequently are also pretty well off financially. This privileged clique has billion pound corporations behind them, huge record deals, they get money for just turning up places. They are conspicuous because they have a load of money to promote themselves (and experienced professionals to help them do it) and from this they make more money. They also represent a tiny fraction of all recording artists, the vast majority of whom make little or no money from their art.
Perhaps it’s the lure of big bucks that leads unsigned bands to assume that they should make money from their efforts from day one. It’s just as likely that they’ve shelled a bunch of money for demo recordings and they need to cover costs. This is fair enough, but it’s also a very short sighted view. Let me explain.
Ever since serial smug twat Trent Reznor had his say on the matter of unsigned bands giving their stuff away for free I’ve been pondering the problem of new bands being able to support their art. This week journalist and industry observer Cosmo Lee had his say on his blog Invisible Oranges. Both these guys make very compelling points, but still I see dissent among unsigned bands who see it as only fair that they can recoup their investment.
Now, I’m not in a band, I don’t even work in the music industry. I do however work in the business arena, and from that perspective this attitude seems absurd. I’ll start out by saying that bands are NOT businessmen (for the most part) and should not be expected to be. Their job is to make music. To be able to continue doing this, and not end up in crippling debt, they need to have some income to support this. Having a job on the side is not usually enough – a lot of these kids want to make a career out of making music. This is a noble cause, and they should be commended for it, but it’s not easy to do so.
So, despite the fact that the primary motivator is, and should be, music, some consideration should, in most cases, be given to making money.
Now, for the sake of comparison let’s look at small businesses. I’ll use an (imaginary) example – Jenny is a hobby jewellery maker (really evil looking gothic stuff with pentagrams and shit). She’s been making stuff in her spare time and selling it on at cost to her mates, mainly for the love of it. One day she realises that she’s selling so much that she could make a career out of this. So she decides to quit her job and start her jewellery making business. Now, with her kit in the garage, she’ll never be able to pump out enough merchandise to support her doing this full time. So she’ll need to invest in some new kit and probably rent some a bigger space to house it. Also, although she’s selling a good amount of stuff now, she’ll need to sell a lot more to make the venture even break even. So she’ll need to promote herself – to advertise in trade and music magazines costs more money. So she borrows some cash from her parents and the rest from the bank. The understanding is that she’ll pay back the bank in monthly instalments immediately, and will start paying her parents back when she starts making a profit – her projections say in 3 years time (taking into account overheads, tax etc.), although depending on sales this could be more or less. In the meantime, she will take a salary of a bit above minimum wage to cover her living expenses.
This is a very common scenario. MUCH more common than instances of bands starting out. Jenny does not expect to recoup her initial investment as soon as she makes it, it will take time.
Now, back to the bands. Music is NOT a commodity any more for the most part – it’s freely available and easily exchanged. Jewellery is tangible and, assuming that the materials are worth something and workmanship is good, is a commodity. Jenny will more than likely receive money for her wares, but her business will not make money (ie. Profit), for a long time. The business will remain in negative equity and she personally will be living on the breadline.
Unsigned bands may expect (and be able) to sell CD’s or even MP3’s, but is this a sensible idea? Without a significant fan base, and their music being easy to exchange, it’s unlikely that they’ll recoup any investment at all. All that they are doing is making it harder for folks to hear their music.
Jenny had to shell out cash to promote herself. For bands, this is traditionally a role that record labels perform. For record labels this is a difficult task, for unsigned bands it’s nigh on impossible. One way of promoting yourself is to make your music freely available and encourage folks to share it. Get people to record your shows, and put them on Youtube. Take any opportunity you can to get your music heard, it is, after all, your wares, not the CD on which it’s recorded.
Once you’ve got a few people at your shows you can start really capitalising on this by selling merchandise, and maybe you can afford to make a really nice digipack version of your demo – something that people will really want to own (they probably already own the music contained therein).
Will you get return on your investment at this point? Hell no! You won’t even get it if/when a record label signs you. You may not even see it after scoring your first Gold record. This stuff takes time, effort, talent (sometimes) and a lot of luck (always).
If you don’t like to think of this outlay as an initial investment, call it a loss leader, a well understood retail tactic of offloading stuff at a loss, under the understanding that this will get poeple hooked in and coming back for more.
I’m not saying that bands should run themselves like a business, but business is in the business of making money, and you would be wise to pay heed of this. Unless you’re the next Artic Monkeys, it’s unlikely that you’ll see that cash rolling in from just being a band, so if you want to survive, be smart and forward thinking.
