Lazy Thoughts #2 — The Numbers
First, just a massive thank you to everyone who has already donated or become a Supporter or Community Member.
We're now closer to 100 than we are to 50, and that's honestly a little bit extraordinary after just a week. I don't want to lean too heavily on all that platitudinal nonsense, but genuinely: a huge thank you to everyone (whoops, there I go anyway).
THE NUMBERS
There is often a lot of discussion about how challenging things are in the live music and music industries generally, accompanied usually by a lot of vague commentary about challenging conditions, without ever really calling out the specifics. Today I want to talk about the specifics. Or at least, what they look like from our end.
I’m not sharing any of this for dramatic effect. I’m sharing it because it is really important people understand the economic realities facing independent music organisations today. Those realities have shaped almost every decision we've made over the past few years and, ultimately, led us to the new model we're now putting in place. It's no good doing great things if you eventually run out of money and everything stops.
So here's a rough breakdown of what it costs to open the doors each and every night at Lazy Thinking:
• Staff: $430. Two staff, minimum 4-5 hour shifts
• Rent: $140
• Electricity, gas and utilities: $45
• Software, internet and subscriptions: $30
• Miscellaneous overheads (insurance, licences, cleaning supplies, pest control, rubbish collection, equipment maintenance, etc.): $75
• Food and beverage stock: approximately $100
Total: around $810 a night before a ticket, drink or half-serve of fries is sold.
The actual revenue required to break even is higher than that because every beer and burger we sell has a cost attached to it. In practice, to cover our costs, we need to clear around $1,000 every night we trade. With our approach to programming, which prioritises new, emerging and independent artists, we do that less than 15% of the time.
Between 1 February and 30 May this year, Lazy Thinking generated $89,000 in revenue. That's what we brought in.
Over the same period, our operating costs were just over $133,000.
So that's more than $44,000 over that four-month period alone that we needed to find elsewhere to keep the lights on.
We manage to plug this gap each and every month with the help of a small handful of very generous supporters who make donations, the very occasional one-off government grant and targeted fundraising campaigns like the one we are running right now.
It is always challenging and extraordinarily time-consuming. But we find a way.
Somehow we've not only managed to keep the doors open, but also convince people to help us expand what we do. The residency program is my current favourite exempt format (I’ve put a lot of work into it recently so look it’s pretty top of mind). Three months ago it didn't exist. Today we have accommodation for artists, a studio, a rural retreat, a stipend and a growing network of people donating resources, time and expertise to help make it possible. I still find that slightly ridiculous.
It's incredibly hard. But it's also intensely exciting. It suggests that when people see something they genuinely believe is worthwhile, they're willing to help build it.
I'm telling you all of this not to paint a dour or negative picture, but actually for the opposite reason. I consider us one of the lucky ones. Somehow, we've managed to keep the doors open. And more than that, we've managed to find people willing to help us do more than simply survive.
Remember my first one of these a few weeks ago. We realised almost immediately that Lazy Thinking would never work commercially. Ever. Not even close.
The room is too small. The overheads are far too high. And cultural changes mean alcohol sales are way, way lower than they were even 20 years ago (which we're actually really supportive of). Young people have far less spending power than previous generations. And we've also been living through a multifaceted cost-of-living crisis and broader economic apocalypse for years now.
These are the reality of the economics of the industry at the moment.
So what are we left with? The old models, with their dependence on the sale of alcohol. Or a hodgepodge collection of funding sources used to survive: self-generated income, occasional grants, sporadic donations from supporters and ad hoc fundraising.
Or we try something new.
The way I've always positioned it in my head (which at any given time contains far too many constantly shifting Lazy Thinking 4D chess pieces and is a space that demands simplification) is that there are two parts to our new model.
On the one hand, Lazy Thinking ramps up everything it does. It finds and creates new and more meaningful ways of supporting independent and emerging artists.
The now-launched residency program. The relaunched record label, with its emphasis on helping new and emerging artists release music. The sync work, which tries to create licensing opportunities for new and emerging artists. The free open-access education program (Lazy Thinking Learning) we're working on launching later this year.
In short, to evolve Lazy Thinking and move it more conspicuously away from being simply a venue and towards being a quick significantly broader organisation that provides multiple forms of meaningful support for independent artists.
And just as importantly, to use this new structure as a way of motivating people to support us in far greater numbers. I've always been a huge believer that people will support things they believe are genuine, authentic and providing real value to human life.
THE CHARITY
Just a quick update on this, which we've been talking about for a while now.
The decision to change our operating model to a charity was to build a structure that could access philanthropy and government support while ensuring the organisation remains focused on supporting artists and the broader community. It also means that if the organisation ever generates a surplus, that money is reinvested back into artists, programs and charitable activities rather than distributed to individuals.
The final piece of that puzzle is DGR status (Deductible Gift Recipient status), which allows supporters to make tax-deductible donations. The ATO advised us some time ago that we wouldn't receive full DGR status until an outstanding tax obligation had been paid in full. The economic conditions being what they are have meant progress on that has been a little slower than we'd have liked. We are, though, finally, finally very nearly over the line. These things do just take more time i the current economic environment.
In the meantime, the Australian Cultural Fund (who have been hugely supportive of us generally and what we do) are ensuring that donations made through our current fundraising campaign remain fully tax-deductible.
HOW WE WORK WITH ARTISTS
Finally, to finish off, we thought we'd pop the hood a little on how the venue side of things currently works with artists.
Here’s the go. It’s actually crazy simple.
• We don't charge venue hire fees
• We provide a sound engineer and backline at no cost
• Artists are paid from ticket sales. Artists receive 75% of ticket revenue and the venue receives 25%.
• Artists are never asked to underwrite the financial risk of a quiet show
• We absorb the losses when a show doesn't cover its costs
• We count members attending shows as full-paying attendees when calculating artist payments
It means we hold the risk rather than the artists. That's important as an organisation that holds multiple shows every week for very new and emerging artists that clear between $100 and $300 in total sales. That includes the combined total of tickets, drinks and food. Remember the earlier section about needing to clear around $1,000 a night just to cover our costs.
These shows remain a really important part of what Lazy Thinking has always done. We believe very strongly that new and emerging artists need places to play, experiment, make mistakes and build an audience before they're asked to carry significant financial risk themselves.
End of update thing from me. And just a heads up that we do also regularly share our accounts and financial information with major donors and philanthropic partners, and we're always happy to do the same for anyone genuinely interested in understanding how the organisation works.
Fair warning though: governance documents, artist agreements and financial statements are shit breakfast reading.
We’re committed to being here for a thousand years and continuing to quickly grow the ways we support artists. Help us do that.