From The No Good Deed Goes Unpunished File

by:

Joe Patti

We have been discussing raising our facility rental rates this week. We haven’t raised them in awhile and our expenses are increasing. Also, we wanted to bring our rates more into line with our competitors who charge a lot more and provide a lot less in relation to services.

But the staff doesn’t want me to raise the prices and I am flabbergasted to learn why.

First some background–

The staff works their butts off for our renters. Even though I occasionally have to work when someone is sick, you shouldn’t make the mistake of envisioning me when I tell you how hard they work. Their work ethic preceded my arrival by decades. I did nothing to inspire it.

At many of our non-union competitors, renters are paying for supervisors who are present but don’t do much more and are charged for every microphone, table, chair, etc that is used. My staff likes to be hands on so we either charge a blanket amount for resources or nothing at all because the staff doesn’t want to have to stop to tick off numbers of chairs and tables being set up.

Even though we say we don’t offer design services, the technical director doesn’t want anything on stage to look bad so he and his crew will stay after a rehearsal and work until 4 am to make the show look good.

So I am completely astounded when they ask me not to bring our prices closer to being in line with the norm because they are afraid people will demand more of them. Other than meeting increasing expenses, one of my motivations for raising the prices is to prevent these hard working people from being taken for granted. It amazes me that our competitors can get away with providing less at greater expense and my staff will suffer for providing greater value for the dollar.

Unfortunately, they aren’t entirely imagining that our renters have this outlook, there are quite a few examples historically and in the recent past where people have demanded what they decided they should be getting for what they are paying. My hope is that raising our prices will also provide those looking to get water from a stone a greater disincentive to rent from us. The staff’s fear is that they will expect a corresponding increase in the water yield.

We understand that for a lot of people, our facility serves as a bridge between doing it entirely yourself and needing a full union production crew. Many come to us wanting to increase the production values of their annual event and don’t quite realize what a labor intensive prospect it is. We provide a lot of guidance to people about how to help us help them. They arrive assuring us their show is extremely simple until we start asking questions about their plans. Even though they have a new awareness of what is involved, they still don’t see the staff plugging away at 4 am on their behalf.

We have a lot of very gracious groups that rent from us. Some of which, having dealt with the blank indifference of our competitors, are afraid to offend us lest their only option is to return to them. (I swear we never even suggest they won’t be allowed to return. These are the guys we want to continue renting.) There are even a few that have become so organized over the years, we give the informational literature they send their members to new renters as an example of how to effectively organize one’s group for a production.

Then there are those who tell us they have been producing an event for 25 years, question every expense we estimate in an attempt to save money and then ask us how much they should be charging for tickets. Makes us wonder if they have ever created a budget for their event over the previous 25 years.

Clearly, as we revise our rental application, we in the administrative offices need to think about how we can support the rental staff in keeping renters’ expectations reasonable. Confronting people and telling them they don’t realize what a deal they are getting isn’t likely to be very convincing or productive. Nothing increases the paranoia of people who are anxious they are being ripped off like telling them you are honest as the day is long and aren’t ripping them off. And accusing people of being cheapskates doesn’t help matters much either. As the first line of contact with renters, we in the administrative offices can do a better job of discussing people’s expectations of their rental experience with them early on in the process.

Seek Investors–Just Be Careful Who You Tell

by:

Joe Patti

I have often wrote about the limitations of the 501 (c) (3) non profit status for arts organizations and how there is a need for alternatives. One of the obvious alternatives is to forget about non-profit status and incorporate as a for profit venture in pursuit of your ambitions. If you are just starting out, you and your partners may not have a lot of funding to realize your dreams and decide to seek people to invest in your new company.

According to entertainment lawyer, Gordon Firemark, you want to be very careful about using the Internet to find investors. He sees ads in Internet forums and chat rooms where people are seeking investors for independent films and stage performances. Seeking investors is subject to many securities laws the costs to comply with, Firemark says, are pretty expensive for those trying to produce on a shoestring. There are exemptions that will reduce these burdens, but unfortunately they don’t allow advertising for investors.

Exemptions from Registration: Advertising not permitted.

Although there are several exemptions from registration available, those that are most commonly available to producers of entertainment arise under SEC Regulation D. Unfortunately, these exemptions are intended for private, limited offerings, rather than offers made to the general public. As such, the regulations prohibit the use of advertising in the offer and sale of the securities.

Internet postings seeking investors ARE advertisements.

Lawyers are in agreement that any communication put on the internet for the purpose of raising money via sales of securities WILL be considered an advertisement, and thus, renders the Regulation D exemptions inapplicable. Therefore, by posting in an internet forum, chat room or social networking site, producers often make things much harder for themselves.

One way he suggests to avoid this restriction is by seeking investors who will actively participate in the project. This entails its own set of problems. First, because you will have the investors scrutinizing every choice you make. Second, because the investors share in the liabilities of the project–the very thing that provides them incentive to keep a close eye on things.

There are some other options he suggests could also be available. But of course, he suggests anyone considering any of the aforementioned consult a lawyer before pursuing them.

When Your Agent Truly Works For You

by:

Joe Patti

This weekend, Drew McManus and I had a brief email exchange about the Chicago Tribune piece he discusses on Adaptistration today. My organization and most of my presenting partners don’t contract for orchestra related services. Chamber music groups are about it. However, we deal with many of the same agents. I mentioned in an email to Drew that we hadn’t really seen a reduction in fees this year. However, if the reduction in programming I have seen among my partners is echoed across the country, I thought perhaps we would see low fees in the following season. I also suggested that maybe the agents would boost the fees of the marquee artists to offset the loss of revenue from others and the A-list artists would only appear in the places that could bear the higher costs but suffer no significant loss of income.

I hoped that there might be a silver lining and the economic downturn might provide opportunities where the quality emerging artist finds success doing what they have always done–work their butts off providing a consistently great product for little money, make a reputation for said effort and gain employment at venues which may not have considered them a year or two ago.

Drew responded such a thing may not come to pass under the auspices of agents. He noted that a lot of the emerging and mid-level people had been increasingly marginalized by their agencies over the years in favor of names that sold themselves. (I am greatly paraphrasing.)

I wonder if agents really can hold all the cards anymore now that technology enables artists to to make direct appeals and handle inquiries online. I am not sure about the situation with classical music but from what I have heard, fewer presenters are attending the booking conferences in favor of researching prospective performances online. This from an agent whose artists seem pretty happy.

How long though before presenters move from following up with an agent after a visit to the agency website to corresponding with the artist directly? There have already been a couple events where I have worked so extensively with the artist, I wondered why I had spoken to the agent at all. It seemed all the agent did was assure the artist they weren’t being cheated.

That might be the type of model that emerges. If an artist is touring, it is difficult to field questions and make decisions about future dates. Some centralized source that manages information will likely be important. But it doesn’t necessarily have to be a formal agency anymore. It could be a cooperative effort by artists where employees located across the country work from home to respond to inquires. Artists would still be represented by an agent(s), but in this case, the artists retain much more power in choosing which people will represent them.

If the promotional information all resides on the artists’ websites, all that is needed is a well designed central web presence to differentiate the members from others of their genre in a web search and help move it to the top of the search. Obviously, there shouldn’t be too many artists listed on the central site lest the visitor get overwhelmed by the choices.

Actually, heck with one site. If the cooperative is smart, they have a lot of specialty sites to appeal to different niches. The one for bars and clubs positions the members with one type of image. The one for colleges gives another. If there are 40-50 groups in a cooperative maybe an individual group appears with 15 others on one site that appeals to colleges, with a slightly different mix on one for small venues, on another for clubs and another for folk festivals.

Personal contact with presenters and other probable buyers is likely to always retain some importance. So perhaps the cooperative arranges for one or more of their telecommuters living near a city with a high frequency of tours to attend their performances as each group passes through so their agent can speak intelligently at conferences.

Depending on the design of the cooperatives, there could still be a lot of inequities in the representation. The groups which bring more money to the cooperative either directly or by the frequency of their performances might demand more prominent placement on websites or aggressive pushes at conferences. The larger groups may insist on agents in places their tours frequent more often leaving the others more weakly represented. They may run into a Catch-22–the small groups insist their agents book them in Raleigh so the agent can see them. Unfortunately, because the agent hasn’t seen them, she can’t speak with enough conviction to get the group a booking in Raleigh. (The solution being, if the closest the group gets to the agent is Atlanta, buy a plane ticket to Atlanta.) Over time, a group might move from one cooperative to another that better represents their philosophies.

Maybe these sort of arrangements won’t emerge but I feel pretty confident in saying that the continued development and use of technology is going to change the agent-artist dynamic over the next few years. I wouldn’t be surprised at all if the next five years brought a significant shift with agents either playing a much diminished role or being valuable for entirely different reasons than they are now.

Info You Can Use To Keep Your Employees

by:

Joe Patti

If you aren’t already aware, part of the federal recovery package that applies to the arts provides funding to protect jobs threatened by the economic downturn.

What is really helpful is that you can apply for funding through the NEA, your regional arts organization (New England Foundation for the Arts, Mid Atlantic Arts Foundation, Southern Arts Federation, Western States Arts Federation) and your state arts council (each state may vary). I don’t see anything on the Arts Midwest or Mid-America Arts Alliance sites, but there isn’t anything on the Western States site either and I know they are distributing funds so it is worth an inquiry if you are served by those groups.

If you get awarded by more than one entity, you can only accept one. But the ability to submit to three different places does increase the opportunities for getting an award and choose among the best funding.

The regional and state arts groups have different criteria for awards within the umbrella of the NEA guidelines. If you are interested in applying, you better move quickly. Of those I have seen, the deadlines are end of May/first week of June.