Gas Prices Put the Squeeze on Bands

by ekramer on June 27, 2008

With CD sales taking a nosedive in recent years, bands and the music industry as a whole have been relying more on touring to earn revenue. Some artists make up to 80 percent of their revenue through touring. The current spike in gas prices now threatens those returns. WFPL’s Elizabeth Kramer reports.

The Louisville-based band VHS or Beta just finished a three-month cross-country tour. Band member Mark Palgy says the gas tank was the star.

“We would not have believed it if five years ago you would have said that gas prices were like over $4 a gallon,” Palgy says. “I mean, I remember filling up our tank and being like, “$60 to fill up a tank!” Now, it’s like $100 — $100 every time we fill up. It’s unbelievable.”

Palgy is far from alone. Bands across the country are feeling the pinch. Palgy’s band is signed to a recording label, but many without contracts have scrapped plans to tour or have limited touring to their home region. Recording labels basically loan money to musicians to get in front of audiences. They know more of their money is going to pay for gas, but they haven’t found any new strategies to deal with high gas prices.

That includes the ATO label, which handles David Gray and My Morning Jacket.  Jonathan Eshak works for ATO. He says touring is essential and the price of gas is just another expense.

“You have to evaluate how you are going to allocate your funding for the band,” says Eshak. If you are providing tour support than it’s just money you can’t spend on making, whatever, a music video. You have to allocate that much money to touring.”

That idea is playing out with another ATO band, The Whigs, which played to a packed club in Lexington last week with the Louisville band Wax Fang. The Whigs has been traveling almost non-stop since last October.

The band and its label have been more cautious in routing shows, and clustering dates regionally, but the tour has not been cut back, says guitarist, Parker Gispert.

“We released a record and whether the gas prices are $5 or $1 a gallon, we got to be out there supporting the record and touring behind this album, you know,” Gispert says. “There’s people in these cities who you want to play for.”

Two years ago, Scott Carney founded Wax Fang, which doesn’t have a contract and lacks the money a label can provide. Carney says this year it has mostly played in cities close to home with a few distant destinations, traveling in a gas-guzzling van.

“So far this year, we’ve been to — well, we went to South by Southwest again, which is all the way down in Austin,” Carney says. “And we have been to Chicago a few times. We’ve been to New York — probably done about 10 to 15,000 miles.”

The music industry’s dilemmas have spurred talk of new business models that aren’t based on CD sales. One that is getting some buzz is 360 deals. These are contracts where one company handles touring as well as music distribution, merchandise sales and licensing revenue, among other facets of a band’s career for a cut of the artists’ profits. But there’s not much revenue for new artists, who don’t have a large fan base ready to shell out money for tickets and merchandise.

In the clubs, bands are asking for larger guarantees — that upfront money the band will get no matter how many tickets a show sells. While that can help bands cover gas costs, it isn’t a long-term strategy.

“Certainly when they know that their expenses have gone up their more likely to ask for a higher guarantee. But it always has to be supported by the marketplace,” says Gary Bongiovanni, editor in chief of the trade magazine Pollstar. “The only strategy is to really tighten your belt and in some cases limit the geography you’re going to tour, if you can afford it.”

And the issue of affordability seems to have already hit audience members, who are not turning out at some of this year’s largest concerts. Recent reports show that ticket sales for Bonnaroo were down this year and tickets are selling slow for once sure sell-out artists like Bruce Springsteen and Nine Inch Nails.

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