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Four Things Indie Venue Owners Must Do to Survive the Pandemic (Guest Column)

The live music industry has been crushed by COVID-19, pulling the plugs on essentially all major concerts and festivals around the globe. Even worse, many industry “insiders” believe live music won’t return to any sense of “normalcy” until late 2021, at the earliest. As Stephen Sternschein, founder of Heard Presents in Austin, explains it, the majority of independent clubs had enough cash and good will to make it six months without shows.

We’re entering month eight.

I recently spoke with Sternschein, a founding member of the National Independent Venue Association about creating a list of things venues can do to stay afloat during the COVID-19 pandemic, a sort of “Live Music Club Pandemic Survival Guide” offering paint-by-numbers “best practices” that all clubs should try to implement right now to stem the red tide. Below I’ve distilled his advice into four helpful tips.

Rule 1: Aggressively Develop Your Brand

Indie clubs connect artists and fans through intimate shows that generate lasting memories and artist/fan relationships. Venues effectively “sell” a specialized music lifestyle — not just a product — and should think of themselves as lifestyle brands. And the trick for any brand — in fact, the real opportunity — is to build one that engenders customer loyalty and takes them on a full 360-degree journey of engagement online and offline.

“I pay a lot of attention to the promoters’ names at the bottom of concert posters,” says Sternschein. “And it shows how little most people think about creating the consumer/promoter relationship.”

Promoters’ names are usually only in the fine print. Time to change that and promote the club and promoter experience, elevating the brand in the process.

“The answer is starting with an e-commerce approach, focusing on how we can offer curated music discovery and our products to larger audiences online,” Sternschein notes. To make up lost income generated by one customer in one of his clubs — he tells me he needs “100 to 1,000 people engaging with us digitally.” Remember, these venues are digital storefronts first — that is usually the entry point of customer brand engagement.

Rule 2: “Sell” Your Lifestyle Brand, Be Entrepreneurial & Try Everything

With this context, these are the ways Sternschein is trying to make up the massive COVID-19 financial gap. It’s worth noting that he thinks none of these efforts will replace what has been lost, the goal is to generate enough income to survive the pandemic and be in a position to reopen fully when it is safe to do so.

First, raise ticket prices for those fortunate few who can physically attend shows legally allowed to take place with significantly limited capacity. Not ideal, but a necessity for all clubs in order to pay the rent. Second, livestream those club performances and monetize them online. It’s certainly no replacement for the in-venue live experience, but it’s a start. Livestreaming should be thought of as brand engagement augmentation, rather than in-club show replacement. Livestreaming, of course, also enables both club owners and the performing musicians to expand their footprint and reach new audiences. So take your shows — such as they are — and amplify them online.

But Sternschein cautions club owners to be careful here, because countless unproven livestreaming companies abound, and most offer more hype than substance. He counsels venues not to enter into lengthy livestreaming exclusivity commitments, even if offered tempting video equipment. Most, he feels, are tech companies that don’t understand the real magic of smaller clubs.

“Artists don’t care about someone who watches the livestream for 30 seconds and think it’s cool. Artists care about building deep relationships with their fans that last 30 years.” He urges club owners to follow a more cautious higher quality, lower volume “Vimeo” approach over a more ordinary “Triller” approach that targets the masses. Sternschein works with BulldogDM as his preferred production partner, and Billboard has written about a number of companies that provide high-end capabilities — Joel and Benji Madden’s Veeps, which works with a number of artists like Liam Payne and LP, Cisco Adler’s NoCap, which streams shows for groups like the Dirty Heads and Donavon Frankenreiter, and Mandolin, which streams shows at City Winery and the Ryman Auditorium.

Third, sell branded merchandise online — T-shirts, posters, anything you can think of. These sales can generate some predictable income. And here’s another great idea: offer your customers an innovative new branded club monthly subscription service that celebrates your particular club’s unique music lifestyle. Create content “packages” for a fixed monthly price that deliver previously unavailable experiences and also lead to valuable recurring revenue certainty. This is the famed “rundle” concept (recurring revenue bundle) that NYU’s Scott Galloway advocates for Disney.

The most important thing is to just try. Take action. In Sternschein’s words, “The possibilities are exciting. These are not new business models. These are just business models that are being put together right for the first time.”

Rule 3: Be Scrappy and Tenacious About The Basics. Renegotiate Your Rent and Other Deals

Sternschein advises all club owners to try to renegotiate all their agreements if they haven’t already, especially long-term lease agreements that are impossible to justify under lockdown conditions. One approach he suggests is to propose payments of just “triple net” lease fees for now (i.e., taxes, common area charges and insurance) in lieu of full rent payments. To incentivize landlords to accommodate, try offering what Sternschein calls a “floating rent” for 10 years — a percentage of lucrative liquor sales once clubs re-open, for example, that can give the landlord more upside over time. Create new partnerships, rather than adversarial payment confrontations. It’s a pure “win-win” (or, at least, “save-save”).

Rule 4: Collaborate, Advocate & Experiment Together

Sternschein and his colleagues formed NIVA when they saw the virus on the wall to give club owners and promoters real opportunities and some much needed hope. NIVA’s biggest initiative to date is upcoming — a massive “Save Our Stages” livestream event hosted by YouTube Oct. 16–18 and featuring many of the biggest names in music. This three-day event will raise donations for the NIVA Emergency Relief Fund, so independent venues don’t shutter forever as they wait for federal assistance.

Sternschein says NIVA chose YouTube as a strategic partner because they can deliver massive reach and that its leadership includes “music people who understand the critical existential crisis and have become champions of our industry.”

The YouTube partnership is a bridge of support for what NIVA hopes to accomplish. In Sternschein’s words, “There’s not a long-term outcome for our members that we’re sure of, but we’re trying everything in the hope of being successful. I want NIVA to be the lifeboat that gets us to the day we get to a vaccine that gets our industry back to life.”

Peter Csathy is chairman of CREATV Media, a media, entertainment and technology advisory firm for the live and experiential entertainment industries.

Coronavirus

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