Sofar Sounds Opens Its Books on Event Profits After Artists Ask Where the Money Goes

Jules and the Jinks
@ingramlee

Jules and the Jinks perform at a Sofar Sounds event in New York on June 26, 2019.

CEO Jim Lucchese breaks down the secret concert company's cash flow, showing it earns just $176 per show.

Sofar Sounds, the global series of intimate concerts, recently surveyed about 5,000 artists who have performed at one of the company's shows over its 10-year history, looking for constructive feedback about the experience. One question came up again and again: Where does all the money go?

It wasn't surprising to Sofar Sounds CEO Jim Lucchese. The company's business practices have been scrutinized over the past year, with some arguing that Sofar -- which uses unpaid volunteers to supplement staff at its network of secret-lineup shows -- isn't paying performers enough. The New York State Department of Labor is conducting an ongoing investigation into Sofar's use of unpaid volunteers, which was first reported in August within a widely-shared Talkhouse essay by musician John Colpitts (a.k.a. Kid Millions).

In regards to the money question, Lucchese says, "I thought, 'Well, this is something we can just answer now. So why don’t I just reach back out to the same artists and lay it all out for them, and make sure they understand how it all works?'"

On Thursday (Dec. 19), he did just that by publishing a blog post breaking down the cash flow at a typical Sofar-operated event. In about 375 cities around the world, Sofar series operate independently, with 90% of them putting on free shows where all the money collected pass-the-hat style goes to show expenses and artists. The rest of those independent cities sell tickets online and pay a flat fee of $100 per act in the U.S. (regardless of how many members are in the act).

Lucchese opened the books on shows in the roughly 30 Sofar-operated major cities, where Sofar sells tickets in advance, pays the artists the same flat rate, but also has a small team of local employees who book, organize and run all the events. Using Boston as an example, Lucchese points out that the net income per show -- after paying local staff and covering show costs (such as insurance and licensing fees) and event marketing (to promote the show) -- comes out to $476. 

After paying each of three acts $100, then, the net income to Sofar is just $176.

Currently, the profit split between artists and Sofar at the average major city, Sofar-operated event is 63% to 37%. Starting Feb. 1, 2020, Lucchese says Sofar will raise compensation at larger Sofar-operated shows, with the goal of increasing the average profit split for their standard show format (3 artists and 20-25 minute sets) to 70/30 across Sofar-operated cities, in favor of the artist."

Acts at smaller shows will still be guaranteed $100 each, since at that scale the new profit split could actually result in lower artist fees. Lucchese says the company is still figuring out exactly what will differentiate a “larger show”  from a “smaller show."

None of these figures include centralized company costs -- like the team that runs the Sofar website, its ticketing and event booking systems, and its marketing and finance teams. While he insists he wants to pay artists as much as possible, Lucchese acknowledges that he must make sure the company survives, too. "It’s all about striking a balance where the payment in the room that night is fair, while making sure you can continue to sustain operations and grow," he explains.

Even so, some in the music community raised their eyebrows when Sofar announced $25 million in new funds from investors in May, including existing investor Virgin Group, whose founder Richard Branson's financial support of Sofar stretches back to 2016. At the time, Lucchese and Sofar Sounds founder Rafe Offer told Billboard that the funds would be used to increase payments to artists at shows, increase the number of sponsored Sofar Shows (which result in more money for artists), and support Sofar staff. Both Lucchese and Offer continue to insist that Sofar's main value for artists is exposure.

Now, Sofar plans to continue the conversation with a new "artist advisory group." Starting in February, the group will meet every six months to review artist compensation, share feedback and findings, and make adjustments accordingly. 

Lucchese's letter comes on the heels of Sofar's announcement in September that it will augment unpaid volunteers with paid part-time "Sofar Crew" members, in addition to other efforts to improve the experience for staffers and performers.

Asked why he felt compelled to include his personal email at the end of the letter -- and whether he feels apprehensive about the types of messages he might receive, Lucchese says, "I view these musicians as our customers, so I want to be as transparent and open as possible."

He continues, "I really want artists to feel like they can reach out to me. That’s how we’re going to get better. This is a company that’s built and run by musicians, for musicians and I want to make sure that all the artists feel that."

See the cash flow breakdown below, and the full blog post here.

Average Cash Flow At A Sofar Sounds-Operated Show In Boston

Income

Average ticket price: $19.52
Average # of paid guests per show (excludes guest list, etc): 63
Avg Gross income: $1,230

Expenses per show

Local staff: $463
2 local full-time staff putting on ~30+ shows/month, local facilities, and Sofar Crew per show (in 2019, we started rolling out Sofar Crew—part-time, paid event staff—across Sofar-operated cities).

Show costs: $197
Insurance, licensing fees, A/V at ~20% of shows and payment processing.

Show marketing: $94
Advertising to fill the room for that specific show.

Net income

Average net income per show: $476
Total artist compensation: $300 ($100 x 3 acts)
Net income to Sofar (per show): $176

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