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I've written this or similar in numerous threads but thought it deserved its own thread. Most of it relates to your weekend warrior bands and unknown originals bands but also, here in Australia at least, to the well known bands with a following and good record sales.
I've been managing pubs and clubs around Australia for well over 20 years and before that I was a roadie for some of Australia's top bands (Paul Kelly and Dragon to name two), a Lazer and lighting operator/installer/designer for big night clubs, a musician and a DJ, so i've seen the scene from many different perspectives.
I'm going to give you a short (not so short) rundown on the venue's perspective. Take into account, this is Aussie dollars and, more importantly, Aussie pay rates for bar staff and security.
Most venues that put on live music now do so because the owner or manager is a live music fan, not to actually make money putting on the band. Why is that? Well, because it's actually very difficult to make money with live music these days as i'll show.
For example, if you put on a soloist or duo for $300 you need to sell an extra $450 just to pay the act. Here in Oz that's a little under 100 schooners (425ml glass) of beer, so you need at least an extra 25 people drinking 4 beers each to cover the act. Sell less than that (over and above your normal sales) and you're losing money on the live music. For a lot of small bars they will usually make more PROFIT from the night by NOT having a live act however as the manager/owner likes live music they will do this and take the hit of $100 or so to their profit line (still making profit.... just not as much) in order to have the vibe of live music. The thing is, this is a small bar with possibly two people on the bar on a usual night (one manager/supervisor and one staff member) and if you get the extra 25 people you need another staff member. So now you're paying over $24/hour for a bartender so add an extra $100 to the costs for the night. That's $400 extra so you need to sell an extra $650 over the bar to simply make what you would have on a normal night.
Now lets ramp this up to a band situation in a medium sized venue.
You want to put on a decent 4 piece and that's going to cost you around $800 which means selling $1200 more in drinks which is about 60 people having 4 drinks each. This is over and above what you would have in the bar on a night without entertainment so you need extra staff. You're probably looking at an extra 2 staff minimum so that adds a minimum of 4 hours each at $24 per hour or 8 hours totalling nearly $200. Your total cost is now $1000 but with these extra bodies there's a good chance that you'll want to put on some security or the local licensing police/laws will demand that you do. Two security will cost you a minimum of 4-5 hours at $45 per hour. Lets call it $400. Your costs are now at least $1400 which means selling an extra $2100 in drinks which is around 100 extra people drinking 4 drinks each. So if you get those people you're now short staffed and need more staff which brings up the costs again. You also need more security....... and on and on it goes. And all this is to just get the same PROFIT that you would get with 15-20 people in your bar on a normal night without a band or with 30-50 people listening to a soloist.
You've also got to take into account that those wages are for Mon-Fri..... Saturday pay rates are nearly $29/hour and Sunday's are over $33/hour. Security rates go up accordingly as well so costs increase again!
A big problem is that you have to take a punt with staffing and security levels for the above scenarios. If you are short staffed too often patrons get the sh1ts and don't come as often or stop coming. If you don't get a big enough crowd too often then your profit level drops or, worse still, you actually lose money on the night.
If you can convince your local patrons to pay a cover charge of $10 then you have a chance of making money on live music but that is getting very difficult these days. People under the age of 28 do not value music. They've grown up being able to either download music for free or simply copying files between each other so even if a group of youngsters like a band usually only one of them pays for the music and the others copy it. This appears to have continued on to live venues where they are happy to pay $15 or more to see some "name" DJ but won't pay $10 to see a good band.
In addition to all of this is that if you do manage to build a good live music venue with good crowds every week you're going to then be on the radar of licensing police as well as the Gaming and Racing inspectors because with any big crowd of people drinking there are always some idiots who cause trouble. Now you're looking at extra stress because it only takes the authorities finding a staff member serving a person who's gotten too drunk on your premises and you've copped one strike which includes a fine of $550-$5500. Get three of these in three years and you may lose your license. This changed recently where if you cop three strikes the licensee is banned from holding a license, so you can employ someone as licensee who you then have to sack if there's three strikes in three years. Good managers are hard to find to help run your pub and by losing your licensee you'll once again have more scrutiny from the authorities.
And you wonder why so many venues would rather have a quiet bar with a decent acoustic soloist providing some music rather than putting on good bands.
I could go on for hours on this subject............
From what I've seen soloists are actually pretty well paid here compared to in the US. The general going rate here is $300-450 for a decent-to-good soloist. Unfortunately the going rate for a decent-to-good three or four piece band is only around the $500-700 mark and gigs booking bands are rare and getting rarer.
I decided live music was dying back in around 2001 when a venue i used to manage would have a line up around the corner with people wanting to pay $15 cover charge to get into the nightclub just to see a Big Brother reality tv evictee as guest DJ (who we happily paid $5000 for as they pulled 600 paying punters at that price) and we'd have to knock back people as we had a full house, but we only got 300 people at the same price to see a nationally known rock act....