Pomplamoose and the Economics of Music

Edited to fix some of the financial information- I hadn't initially realized that they have more than one Patreon account.

Recently, the band Pomplamoose went on tour.  Upon returning home, they published the financials from said tour, and the internet has been a bit abuzz about the $11k they lost by touring.  The band seems perfectly happy with this outcome, but working musicians and other professional commentators seem split between congratulating the band on their success, and chastising them for their financial irresponsibility.  They’ve made some very smart decisions, and some others that are very hard to sympathize with.

I’m not actually going to go into Pomplamoose’s music, because what I or anyone else thinks of it isn’t really relevant to the discussion at hand.  Hell, Robert Johnson and Franz Schubert both died penniless while Justin Bieber made a little less than $19 million this year. There’s no accounting for taste, and quite frankly it’s hard for me to not be supportive of anyone that’s out there making art.  

I’m going to weigh in on a few things, but first, let’s break down a few of the facts:

  • Dates:  28 days- September 11 (no comment) through October 11.
  • Cities:  24 shows in 23 cities- Portland OR, Seattle WA, Minneapolis MN, Madison WI, Chicago IL, Cleveland OH (2 shows), Millvale PA, Cambridge MA, NYC, Brooklyn NY, Philadelphia PA, DC, Carrboro NC, Atlanta GA, Nashville TN, Indianapolis IN, St Louis MO, Boulder CO, Scottsdale AZ, LA, and ending in their hometown of San Francisco.
  • Ticket and Merchandise sales: $127,233
  • Tour expenses: $147,802

They also made money from a corporate sponsorship, but we’ll get into that in a moment.

The Good

First and foremost, we need to take a step back and look at where Pomplamoose was before they started the tour, so we can really get an appreciation for what their success actually means.

The band consists of Jack Conte and Nataly Dawn, and they have built their music career largely by covering songs in YouTube videos.  They earn revenue from advertising on their YouTube channel, as well as by selling downloads on iTunes and other sites.  They have done some very interesting work with mashups and projection mapping, and have had over 10 million views on a single video.

Perhaps more importantly, Jack is one of the creators of the crowdfunding website Patreon.  Unlike existing crowdfunding sites like Kickstarter and IndieGoGo that are designed to raise money for a single project, Patron allows supporters to make regular small donations to those who create smaller and more frequent works:  A band might use Kickstarter to raise $5000 for a new album, where a podcaster might use Patreon to raise $5 a month or $1 per episode.  With a large fanbase, this can add up quickly.  Zach Weinersmith of the webcomic Saturday Morning Breakfast Cereal is currently grossing over $100k per year- at an average monthly pledge of a little over $2.50 from each of his 3375 fans.

Despite a $15 million injection of venture capitalist funding, Jack does not draw a salary as CEO of Patreon.  Instead, he and Nataly make approximately $6300 per video through the same patronage system as every other Patreon user. Mind you, this is from their joint Patreon account- They also have individual pages worth over $2000 and a bit less than $5400 per video, respectively.  Then there's the $5000 a month from iTunes and other downloads that they discuss in the original article.  Additionally, they receive an undisclosed amount from YouTube monetization and streaming services, plus endorsement deals and sponsorships.

So, at present, by putting out videos on a regular basis and selling MP3s, I would guess they are grossing in the neighborhood of at least $350,000 per year.

Much of that is dumb luck.  As Darius Kazemi illustrates in his How I Won the Lottery presentation, a career in the arts is a crapshoot.  You can do everything right and still founder in obscurity, you can do nothing of any value and become rich and famous.  The most successful, though, are the ones who persevere, and when they do get lucky, leverage it in smart and creative ways.

I think Pomplamoose has done exactly that.  They dedicated themselves to their art, lucked out when a video went viral, and they made smart moves to retain that audience, keep them engaged, and turn a profit.  Kudos.  That is certainly something to be proud of and something which should inspire other artists.

They are also among the pioneers paving the way for the next generation of professional artists.  Where the old paradigm meant either one in a million multiplatinum fame and fortune,  playing neighborhood dives for slave wages, or being mercilessly exploited by your label, direct artist-to-fan services like CD Baby, social media, and crowdfunding are beginning to make it possible for independent artists to earn a decent middle class living through their art.  Again, this is an area where Pomplamoose has excelled and should be lauded.

Onto the tour.  Theories about tax avoidance notwithstanding, it’s hard to accept an $11k loss as a smart business move.  The band, however, seems happy with that figure, and we should pay attention to why.  In their own words,

“We knew it would be an expensive endeavor, and we still chose to make the investment. We could have played a duo show instead of hiring six people to tour with us. That would have saved us over $50,000, but it was important at this stage in Pomplamoose’s career to put on a wild and crazy rock show. We wanted to be invited back to every venue, and we wanted our fans to bring their friends next time. The loss was an investment in future tours.”

They then go on to describe their Patreon page and download sales.  Essentially, the band seems more concerned with their monthly income from non-gig sources, and while they don’t come right out and say so, it seems safe to assume that they are counting on the live performances to boost those other revenue streams.  While this is the exact opposite from the route most bands take, in their specific circumstance, it very well may work.  I would be more skeptical had they not already reached the point they have with those avenues.

It is also true that putting on a series of well-received and highly attended shows will help them with future bookings.  The shows they did do were at well known and respected venues- The Aladdin, the Filmore.  Their internet success allowed them to completely skip over the dues-paying dive bar and basement club phase which most touring bands struggle against for years.  I believe that some of the vitriol coming from other musicians stems from jealousy regarding that fact, but again, this is something for which the band should be lauded, and the rest of us should learn from.

On a related note, at $48k in salaries and $17.5k for food and lodging, they paid their staff of four backing players, a tour manager, and front of house engineer very well, and provided comfortable accommodations with a generous per diem.  Again, while it is a far cry from the luxury seen by A-list celebrities, it comes as a shock and is seen as downright decadent by those touring musicians who have spent their years of touring sleeping on floors and living off peanut butter and charity.

The band was also able to secure a sponsorship of almost $9000 from a computer company, whose machines they use for both music production and for their light / projection show.

Overall, we are looking at a successful act who was able to afford to put the show first while taking it easy on tour and being able to write off any losses as a promotional opportunity.  Good for them.

The Bad

To anyone who came out of the punk or DIY school of music, Pomplamoose’s account is mind-numbingly wasteful and foolish.  Thousands of musicians have built careers on low cost tours playing shows 1/20th the size of theirs, and it’s very hard not to question some of their choices.  There is a certain romanticized credibility that comes with suffering for your art, and when you’ve spent 6 weeks sleeping in a Ford Escort, playing for 30 people a night, and still managing to turn a profit, it’s unbelievable that someone can sell $100k in tickets and not break even.

But again, this is a band which chose not to sleep on floors or cut corners, because they didn’t have to.  As much as the dead-broke couch-surfing old punk rocker in me cringes at some of their choices (to the point where it actually physically hurts me to defend them on this), I can’t really fault someone making six figures a year for wanting to travel in style.  I know I would if I had the chance.

That said, the businessman in me sees some serious missteps that need to be addressed.

First and foremost, live shows are, and have always been, a (if not the) primary income source for musicians.  That’s a simple fact across the board, whether it’s a classical violinist, the girl with the guitar down at the corner cafe, or the Rolling Stones.  Gigs equal money, and everything else- albums, radio play, etc.- is just another way to get butts in seats.  While I can see how Pomplamoose is leveraging their live shows to boost online revenue, we still have to admit that it is the direct opposite of everything which has worked since the first wandering bards.

Now, it’s true that things are changing, and there are always exceptions.  My own experience playing the Pagan festival circuit was extremely counterintuitive- Low pay with very high CD sales, while gigs on the bar circuit were just the opposite.  Pomplamoose seems to be taking a calculated risk and I wish them the best, but I simply can’t let it go without some basic business wisdom:  A high margin bestseller should not be your loss leader.

Secondly, the band lost money on rentals where they should have invested in something with long term amortization.  Road cases and backline equipment are the first things to come to mind here, but transportation also stands out.

I’m sorry, but any musician worth his input jack should already have professional gear in sturdy cases.  This is just a given, and there is no reason they should have had to spend money on this.  The same goes for a band’s backline, but I’m willing to cut them some slack because they are primarily a recording band rather than a gigging band, and because they wanted to do something extra special.  Still, some of it I can’t overlook.

Transportation is the big one. For the cost of renting the van and trailer, the band very likely could have purchased an RV or converted bus.  Not only does this have the potential to make for a more comfortable trip, but it could offset its own cost by being used again for the next tour, or rented out or sold afterwards.  Having a refrigerator, stove, and microwave on board also means healthier food at lower costs.  With their financial means, they could have purchased a $30k used RV, toured extremely comfortably, and then sold it for nearly what they paid- At a much lower total loss than renting.

Third, we need to address the missed opportunities to save money without cutting corners or making sacrifices.

The band has already demonstrated through their endorsement of Lenovo and their Hyundai commercial that they are able to win corporate sponsorship.  In addition to this, they booked a total of 112 room nights at various hotels.  With this in mind, there is no reason they should have spent as much as they did on lodging.

  • They could have attempted to secure free rooms through an endorsement/sponsorship deal.

  • They could have simply booked all the rooms at once through a national chain for a substantial discount.  Corporate rates are regularly 20% off.

  • At the very least, they could have used a loyalty program like Marriott Rewards or Choice Privileges to get discounts and buy-X-nights-get-1-free deals.

The thing about hotels?  It also goes for restaurants.  “Hi- If you give us a discount card good at any of your locations, we’ll mention our gratitude to our 450,000 YouTube subscribers.”

But the truth is that they shouldn’t have had to worry about food or lodging at all.  It is common practice for bands to include provisions for catering and hotels in their contract rider- The part of the contract which addresses details such as how many inputs the band needs into the PA system, how long they need their dressing room available before the show, what parts of the backstage area can be accessed by whom, and how the venue handles advertising.  If you read the riders for any professional band, you’ll see plenty of specific requests for favorite food and drink.  In many of these cases, the band asks for enough to bring on the road with them- Because every item provided by the venue is one that doesn’t need to come out of the band’s pocket.

As we’ve already said, Pomplamoose used their YouTube fame to bypass the small dive gigs and go straight to larger venues. Your average bar band gets a free dinner for playing to 30 people, and lesser selling acts than theirs have asked for quite a bit more. After selling over 1100 tickets for a single show, it was entirely within their power to ask the venue to provide them with hotel rooms and backstage catering.  

The Ugly

Finally, we should address the elephant in the room, which is Jack’s ownership of Patreon.  As others have brought up, this puts him in an interesting position even when his association is not exactly a secret.

It has been suggested that Pomplamoose could afford to lose money not because they plan to make it up in download sales, but because their example benefits Jack’s company:  “See? No matter how successful a band is, touring will lose money- Try Patreon instead”. The narrative of their loss on tour nicely fits the narrative which Patreon is selling.

I hope this isn’t true, but I love a good conspiracy theory and the thought of it bugs me just enough that I couldn’t finish this without mentioning it.  The truth is that I absolutely love everything about Patreon, and think that at the end of the day it will be one of the most empowering tools an artist has available to them- But I would have felt better if this story had come from someone other than Pomplamoose.

The Takeaway

Pomplamoose is not a touring band- They are a YouTube band who occasionally do shows for fun. I believe their tour was never intended to make money: If we are to be charitable, it was a promotional vehicle for their proven revenue source.  If we are more cynical, it was a vacation they could write off on their taxes.  There is a temptation for working bands to view them as "being born on third and thinking they hit a home run", but their situation is closer to an actress who begins a music career already at the top: Able to do so because of having already proven her ability to sing, dance, and command an audience.

The music business is going through the most drastic change that any industry has seen since Ford invented the assembly line.  New tools allow artists to fund and produce works and connect directly with their audience without the need for traditional business models like record labels.

At the same time, there are basic principles that apply across the board no matter what business you’re in- Love your product, respect your customers, don’t spend where you don’t have to, and always, always ask what the latest innovation can do for you.

Pomplamoose has been extremely successful at using the internet to it’s fullest potential, and has given us a rare and much needed look at the real costs of a national tour, and for that we should be thankful.  Yet, we can also clearly see where you or I may have been able to do more with less.  

It’s easy to second guess someone else’s business decisions from the comfort of our laptops, but when all is said and done the fact remains that Jack and Nataly are carving trails into a new landscape where the old rules no longer apply, and the new ones are still being written. We should appreciate the risks and leaps they take, and I urge any of you who may be inclined to do so to learn from both their successes and missteps.