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Info You Can Use: Kickstarting Your Taxes

April 10, 2013

by:

Joe Patti

Salon has an important article to read if you are an artist trying to use Kickstarter to fund a project. Apparently people don’t realize the money they receive via Kickstarter is considered taxable income by the IRS.

In short, money raised from Kickstarter and other crowdfunding platforms is considered to be taxable income. Amazon Payments, which handles the credit card transactions for Kickstarter, disburses the funds to the project creator and sends them a 1099-K, a tax form that reports “Merchant Card and Third Party Network Payments” to the IRS. In this particular case, a pledge made by a fan to a project would be considered a third-party network payment.

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“Although musicians may not necessarily be selling something via Kickstarter, they are still entering into a transaction with their backers,” he noted. “If they reach their goal of ‘X’ amount of dollars, they have certain conditions they’ve agreed to make. They should consider the money as income because the IRS defines gross income from ‘whatever source derived,’ unless specially excluded.”

The article also notes that artists often underestimate the cost and logistics of making good on their promises. One woman promised her supporters tickets to a show so when she exceeded her allocation of comp tickets, she had to buy the rest herself. Another ended up spending $10,000 in postage mailing out the items she promised.

Kickstarter also brings an issue artists have faced with their patrons since time immemorial–their desire to be involved in all the decisions.

The issue for Dawn was intensified by her raising five times the amount of her set goal. Suddenly, fans were complaining that she didn’t really need the whole $104,000 to record the album. Dawn countered by noting that not only did she use all of her Kickstarter funds, but she also opened four separate credit cards and dipped into her life savings to cover the difference.

One of those interviewed for the article suggested that anyone thinking of launching a campaign consult with an accountant or business manager first to plan for the tax liabilities and expenses the campaign will entail.

Art(ist) Education, Arts in an Age of Technology, Audience Relations, Business Models, Fundraising, Info You Can Use, Working In The Arts

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Wrestling With Your Audience Composition

April 9, 2013

by:

Joe Patti

I am rather busy wrapping things up here at work and preparing to move, but I wanted to make a nod in The Mission Paradox blog’s direction for a post he made about reinventing one’s organization.

Adam Thurman had been tweeting in advance of his post about how many times he attended Wrestlemania and how wrestling held lessons for arts and cultural organizations so I was curious to see what he had to say.

I had watched wrestling once upon a time, but drifted away for various reasons, including the fact the basic plot was pretty repetitive.

Yes, you could say that about arts organizations which revive the classics. Romeo and Juliet aren’t ever gonna get any less dead (though you never know…) But these days, there are probably more people for whom the classics are brand new than repeats.

But you have to admit, while the basic formula does repeat itself, there is a heck of a lot of drama that goes on before anyone ever enters the ring. Much of it harkens back to some basic archetypes with which people can identify: heroic journeys, villains, anti-heroes, talismans of power, ethical quandaries.

Thurman addresses some interesting facts I wasn’t aware of about how wrestling giant WWE reinvented itself twice in order to appeal to changing demographics and tastes.

Audience Relations, Management Philosophy, Marketing/PR

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Kids Say The Same Old Things

April 8, 2013

by:

Joe Patti

I heard a kid tell a joke the other day that was probably pretty old when I told it to my parents 30 odd years ago. I frequently amaze my nephews by beating them to the punchline on knock knock jokes and riddles that I remember from my childhood.

But recently, I got to wondering who is preserving the valuable fart humor and bad puns of our youth? I am guessing parents aren’t largely responsible for teaching jokes like “How do you make a tissue dance? Put some boogie in it.”

My guess is that older kids/siblings pass these things on to the younger ones insuring the continuity of the best and worst kids jokes around. Even if each successive generation is learning these jokes from adults, the kids are enthusiastically passing them around their schools and playgrounds.

This makes me think it is all the more important to get kids involved with seeing and participating in arts and cultural activities when they are young. Not only does it introduce the idea that this is something people do, it can help to acculturate their friends as well.

Granted, kids chatting about their experience all over the school yard isn’t going to immediately transform into increased admissions at performing arts centers and museums. An adult tells another adult that his kids had fun at a Colonial times reenactment village, they might go next weekend. A kid tells another kid about the musket and cannon demonstration and imaginations are fired for hours, maybe days to come.

Arts and culture doesn’t have a lock on firing kids’ imaginations. There are a lot of things that will, and in the grand scheme of things, a few incidents as a kid aren’t going to make a specific impression that carries over to adulthood. After all, one hopes people’s sense of humor will evolve past the bad jokes of their youth.

But I have this itching suspicion that word of mouth among kids is greatly underestimated in its power to influence the adult that kid will become. The oral history preservation of these bad jokes hints at this.

Seeing a play may not be as compelling to a kid as talking about farts, but whatever a kid feels about their experience, they will share if they see it makes a connection with another kid. If the other kid has had a comparable experience and can talk about it, then both kids learn at an early age that these experiences can be used as a the basis of a relationship with someone else.

Art(ist) Education, Audience Relations

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Consuming Art By The Pound

April 3, 2013

by:

Joe Patti

For awhile there one of the biggest areas of discussion was about whether arts organizations should be like airlines an adopt dynamic pricing that responded to the demand for the show. I haven’t read much about it lately, but suspect some people are toying with the idea.

But another option has presented itself, again via airlines. Samoan Air announced that they were going to start charging people to fly based on their weight. This is because one of the biggest costs for airlines is fuel and weight determines how much fuel is necessary for a flight.

There is a certain logic behind this decision. When you ship cargo, you pay based on weight and size. It is only humans which pay a flat “piece” rate for themselves and their luggage.

So can the arts do the same? Can we charge by how much art a person consumes by their presence?

Don’t we do this to a degree already?

Tiered pricing for seating is based what we project the value of that seat is in terms of sight lines, acoustics and perhaps prestige. But when we charge one price for adults, another for students, another for senior citizens and another for kids under 12, that is due to the fact that adults are at the prime of their facilities and so are able to gain the most enjoyment and enlightenment from the experience, correct?

Yes, my facetious tone is meant to be obvious. Since people come to art with different experiences and backgrounds, it is impossible to measure who is “consuming” more from their interactions with it.

The fact of the matter is, the different level of pricing is based on the recognition that students and seniors don’t often have the income to attend. Kids pricing is to encourage/facilitate parents to bringing their kids. Military rate is good PR to recognize their services.

The reality is, the whole set up is something of a social contract with our audience where the people who don’t qualify for any discounts are pretty much in the position of subsidizing the experience for those who do qualify.

Thinking about it in this context, I wonder if we don’t really do enough to thank all those full price buyers for essentially voluntarily participating in this artificial construct. Maybe slip them a Hershey’s Kiss or a thank you note when we rip their tickets at the door.

One of the arguments against dynamic pricing is the same you might make against charging people in the same manner as cargo. For many organizations, price is part of the relationship they have with their community. On its own, pricing won’t build loyalty or relationships, but it can be an ingredient because it acknowledges something about the other person.

I make my suggestion about rewarding full price buyers with candy with some degree of seriousness because I think audiences can take their discounts for granted and it might be beneficial for all those involved to acknowledge that the discount only works with the tacit participation of many others.

Audience Relations, Marketing/PR, New Initiatives

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