The Struggles of Small Music Venues: Operating Costs and the Challenge to Stay Profitable

The Struggles of Small Music Venues: Operating Costs and the Challenge to Stay Profitable

Operating as a small or independent music venue has never been an easy path to profitability. The past year has been particularly challenging for these venues, as they continue to face inflated operating costs while trying to keep ticket prices affordable for audiences and take chances on lesser-known artists. While large stadiums have seen music fans roaring back to sold-out shows for iconic artists like Beyoncé and Taylor Swift, smaller independent venues are still struggling to return to pre-pandemic levels of business. According to Stephen Parker, the executive director of the National Independent Venue Association (NIVA), smaller venues lack the economies of scale that larger organizations enjoy, making it harder for them to compete in the post-pandemic landscape.

Recognizing the dire situation faced by small venues, NIVA was founded in 2020 as a means to lobby for government relief during Covid lockdowns. Their efforts were successful, securing $16 billion in federal aid for the industry. However, NIVA’s work doesn’t end there. The organization now focuses on addressing other challenges, such as price gouging in the resell market. One of the key obstacles currently facing NIVA’s network of independent venues, according to Parker, is the need to protect profit margins in the face of rising costs.

First Avenue Productions, a company that operates several venues in Minnesota’s Twin Cities, has experienced a nearly 30% increase in operating costs since before the pandemic. Everything from beer to ice to insurance has become pricier, putting a strain on their limited resources. Dayna Frank, owner and founding member of NIVA, explains that smaller venues don’t have corporate backstops to rely on, making it even more challenging for them to navigate these cost increases. Venue owners like Paul Rizzo of New York City’s The Bitter End have also noticed consumers spending less in general, potentially due to both economic uncertainty and shifting drinking habits among younger generations.

Venue owners have observed a trend among younger music fans, who are drinking less compared to their older counterparts. Some speculate that the legalization of marijuana in many markets may be eating into bar sales, which significantly contribute to a venue’s revenue. Alisha Edmonson and Joe Lapan, co-owners of Songbyrd Music House in Washington, D.C., face the ongoing challenge of pricing concessions in an environment where raw costs are rising, and consumers are spending less. The misconception that small venues should offer prices similar to local bars adds further pressure. While larger venues and stadiums can charge higher prices for drinks, small venues like Songbyrd have to find ways to cover the costs of providing an extra service.

According to NIVA Board President Andre Perry, running a successful small venue is a “very difficult balancing act.” Venue owners must constantly market different acts, take risks on emerging performers, and adapt to their community as the economic landscape evolves. Unlike some small businesses, venue owners are not selling the same product every day. They are aligning a cultural practice with commercial demands, which creates tension. Perry, who has been in the live music industry for two decades, adds that smaller venues often serve under 300 capacity and need support from organizations like NIVA, which provides grants to help start new programs or take chances on emerging artists.

Small music venues continue to face significant challenges when trying to turn a profit. Rising operating costs, limited resources, shifting consumer habits, and the need to constantly adapt to an evolving economic landscape all contribute to the struggles faced by independent venues. However, organizations like NIVA provide a vital support system for these venues, advocating for relief and offering grants to help sustain the vibrancy and diversity of the live music scene. While the path to profitability remains steep, the passion and dedication of venue owners and industry organizations give hope for the future of small music venues.

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