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Why Artists Should Build Sustainable Businesses

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https://mjmagazine.org/

by Dan Runcie

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why artists should build sustainable businesses

In my recent interview with Talib Kweli, he shared this quote that I’ve thought a lot about:

“I was touring before the pandemic. I was doing 200 shows a year… how was I doing that? That’s not sustainable. I was on some superhuman shit… I got a lot of shows coming up, but I can’t let it get back to 200 a year… 20 years straight, I did that for 20 years.”

I felt tired just reading that.

This is the reality for most successful talents though. Live performances on the road are where many artists and entertainers make most of their money. Touring is still one of the best ways to grow a fanbase. But the artists really have to love living on the road to do it for that many nights per year.

It’s ironic to think about the touring grind given the remote work vs in-office debates in Corporate America. Many 9 – 5 workers will never go back to a job that requires them to commute 200+ days per year again. Imagine doing that in a different city every night?! Artists’ travel is on another level.

The dream is for artists to have the autonomy to do live performances on their terms. But to get there, they have to shift the business model for how they operate and take a few risks.

changing the economics

There are three main ways for artists to get off the touring grind without taking a financial hit:

– Make more money per show

– Make more money from the underlying music

– Make more money from other revenue streams

Let’s start with the first and break each one down.

making more money per show

Artists can make more money per show by increasing price or increasing capacity. But price increases for concert tickets are a polarizing subject. Those post-pandemic ticket prices keep getting higher. When artists try to capture their market value with dynamic pricing or selling their own tickets on secondary markets, the backlash begins. Artists can earn more per show at upscale events like Las Vegas residencies, but that limits the audience reach.

Meanwhile, increasing capacity is great, but the demand from fans needs to justify any venue upgrades. A few years ago I broke down how much time Beyonce saved by upgrading from her 132-show ‘Mrs. Carter’ arena tour in 2013 to her 49-show ‘Formation’ stadium tour in 2016 (while earning similar revenue from both). But Beyonce is one of only a handful of artists who can command the jump from 15,000-capacity arenas to 60,000+ capacity stadiums around the world. For artists with smaller followings, the venue size jump from nightclub to the theater can help, but it’s still a grind.

make more money from the underlying art

Music streaming payouts aren’t high, but the economics are better for artists who own their music assets. Russ has earned over $10 million from streaming independently. He can be more selective about when he goes on tour.

The superstar artists who have signed more favorable deals are also making more from their art. Republic Records artists like Taylor Swift, The Weeknd, and Drake have released albums at a faster rate in recent years since signing more lucrative deals (which I doubt is a coincidence). It’s been four years since any of them have been on tour. Some of that’s pandemic-related, but several other artists at their level have hit the road in that span.

But again, these are superstars who are still topping the charts. It takes leverage to get there, and it’s very tough for an artist whose biggest commercial success happened over a decade ago.

building sustainable businesses

The best way for artists and creatives to get off the grind is to build or invest in successful companies. Artists have a distribution advantage given the audience they have built through the content they create and the shows they’ve performed in. Media and content businesses are most lucrative when used as a platform to sell other products. Look at beats by dre, Ace of Spades, Fenty Beauty, and Verzuz. The artists behind those companies grew them and sold at least part of them.

But this is also the hardest level to attain. If an artist is performing 200 times a year (and creating new music to perform at those shows), they may not have the energy to think about building a business. Plus, artists can’t “sell” their touring business in the same way they can sell another business.

This is likely why Talib Kweli, Dave Chappelle, and others have invested in Luminary. The podcasting company was already home to the Midnight Miracles podcast with Yasiin Bey. So it wasn’t a surprise when the newest Black Star album was also a Luminary exclusive. I’m still skeptical about Luminary’s broader strategy around paywalled podcasting content, but the opportunity gives Talib, Yasiin, and Dave an ownership opportunity in a platform.

To be clear, touring isn’t going anywhere, and it shouldn’t. Even the billionaire moguls still understand the importance of building a fanbase in real life. But if the ‘200+ shows per year’ artists could maintain the same revenue by only doing 50 shows per year, a majority would take that opportunity.

It takes time to build an audience that can be used to help build a sustainable business. Not everyone can build a billion-dollar consumer brand off of their name and likeness. But there are several levels to get there. It’s a slow journey, but the pursuit of that goal is how artists can move on from living out of tour buses and hotel rooms.

Dan Runcie

Dan Runcie

Founder of Trapital

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