Can this be a solution to small and medium sized bands struggling to make ends meet?

It’s no longer any secret that most bands out there are struggling to make ends meet.

We see bands of quite considerable size posting articles about their economic situation where band members are working two jobs to finance their musical passion in life. We see article upon article about bands calling it a day and choosing a secure economy instead of “living the dream” on the road.

As a touring musician for almost two decades I truly know the challenges a band faces when it comes to their economic situation in 2016.

In my 20’s it was cool to play in a touring band and it didn’t matter too much if I didn’t have money to pay my bills. It was so exciting to be on the road and play in front of thousands of fans that I didn’t even care about the bills stocking up at home.

But as life moves on, a stable economy becomes more and more important and not many artists manage to keep going through their 30’s when it’s not so cool to be broke and unable to support your family any more.

In the 80’s and 90’s bands for the most part had 3 sources of income:

  1. Album sales
  2. Merchandise sales
  3. Concerts / Live performances

As merchandise is mostly sold on shows, it’s important to understand that the only residual income of these three was in fact the album sales. You recorded the album once, and had royalty checks for those albums two to four times a year….every year for as long as the label was able to sell albums.

This meant that when you took time off touring to enter the studio, you still had something generating money. This is the beauty of residual income. Residual income is the only type of income that can generate some kind of freedom in life as it is not determined by the time you put into it, but it’s a job that you do once and get paid for over and over again.

And this is what makes it so damn hard for artists nowadays. It’s because the residual income is gone.

First you have to understand that ANY business that suddenly loose 1/3 of their income, normally go bankrupt in a very short time. Bands have lost one of the three income streams and it hasn’t really been replaced by anything else.

But you also have to consider the fact that this was the only source of RESIDUAL income! Which actually means that it’s more than a third of it. It was the only income that it was possible to build over time. You could record an album to start a residual income stream. Then when you recorded the next album, you started another income stream. And by the third album you would have a snowballing effect on it as for every album you released, you were able to sell a good amount of catalog releases.

Today you’re basically back to making money in “ordinary” terms like selling your time, however, as a band you have one hour a day where you are able to make all the money for you, your band, your crew and all tour expenses and on top of that make a living. All that income needs to be generated in the one hour you spend on stage + whatever you spend at the merchtable during the evening.

In the last couple of years I’ve made it my mission to study residual income. I’ve become quite obsessed with the thought of setting up income streams instead of selling my precious time in an ordinary job as I think this is the only way to freedom in life and as a musician it’s almost impossible to keep a job while having a fairly active band because you need to put time into the band and you need time off work sometimes for months if you’re going to keep touring. Not many jobs give you that option.

So there must be a way to fix this, right?

I think there are several ways for bands to increase their income, be smarter with the money they earn as well as investment options and possibilities out there, but there’s a huge lack of education in this area.

In later blog entries I’m going to talk more about the different types of options, but now I’m going to present one idea to you guys.

One idea that I’ve been thinking about for almost two years now and I feel that now is the time to let you in on it because as with all opportunity, there’s a window that is closing.

Check this out:

The Keep Of Kalessin Cashback Card!

In my mind, Cashback Solutions from the shopping community Lyoness is a brilliant way to generate residual income for bands, but I’d like to know if there’s something the fans would accept?

Utkast 45301062

We give you this card for free. All holders of this membership will recieve 20% off on any item in our webshop, concert tickets and merch as well as a free song when you sign up to our fanclub which is powered by Lyoness, the world’s biggest shopping community.

In addition to this, you can use this membership on about 400 000 shops worldwide. Especially in Poland, Austria, Italy and Estonia, the network of shops is beginning to be in great number. You can use this card on all Carrefour in Poland and get 5% cashback + shopping points on all your daily groceries which should be enough incentive on it’s own. But more than that, you know that every time you save money on shopping your daily needs of gas, groceries, clothes, music, web shopping and more…..you support the band!

At the time of writing this post there are almost 400 000 shops worldwide where you can use this membership to save money. We’re talking about big chains like Carrefour, Lidl, Sears, iHop, Applebee’s, Red Lobster, Statoil, Shell, McDonalds and more. Many of them are still on giftcard solution, but more and more are moving over to the cashback card in the months to come. In addition to this there are more than 50 000 small and medium sized enterprises and the community is growing with a new SME every 10 minutes! As if this was not enough, you can save money on more than 5000 online shops worldwide incl. Nelly.com, Boozt,com, Rock.com, Platekompaniet.no, AliExpress.com, Zalando.com, Hotels.com and many, many more.

So, the fans gets a whole bunch of benefits like mentioned above and the bands start making residual money on their fans saving money! It’s brilliant! Instead of being stuck with making money only on music and merchandise, we can now tap into the whole household economy of our fans. But not by adding to their household, but by helping them SAVE money on their household!

This also means that when you have a good fanbase that is supportive of the band by choosing to save money, the band will start to have a very solid income stream because people need to shop their daily groceries every day, every week, every year, no matter if we release a new album, a shirt or go on tour.

The amount of shops in the community is growing rapidly so there will be more and more options out there, but for now the four countries mentioned are the ones that are starting to set up big chains of gasoline and groceries, but more countries are coming in 2016 and 2017 so I truly believe that this can have a huge impact on the economy of small and medium sized bands! For sure, we should be open to look into possibilities like this in the market that is changing so rapidly.

Do you see the bigger picture here?

Your fans travel to your show, they fill up their car with gas and they use your bands cashback card to save 5-10% on gas. They go to hotels.com and book their hotel for the night. They save money on the hotel and you make money by them saving money! Your band is now making money not only on the show, but from their entire trip and their entire household.

Here’s an example of what’s possible to earn from these cashback-cards.

Let’s say that your band issues 1000 cards. It’s all free for the fans and we give away benefits in our webshops and on tour.

In the norwegian market we expect to be able to see an average of 5000 NOK to 10 000 NOK a month on these memberships when the infrastructure is up and running which is about 600 to 1200 euro.

But let’s keep it to a european standard and say that you’re able to issue 1000 of these cards and fans shop on average for 300 euro per month on groceries, gasoline, restaurants, bars, clothes, hairdressers, insurance, mobile phones, electronics and more through these memberships. The fans save 10-30% on their own shopping. The band makes up to 1% on their shopping volume. So in this case the band would make between 1500 and 3000 euro a month from these fans saving money. And this is still when you’re not touring!

Imagine if you as a band are able to issue 3000 cards, 5000 cards or even 10 000 cards?

More residual income means more time to focus on producing music, more time to go on the road, more money to put into shows etc. So this is a big WIN – WIN for bands and fans!

Morningstar Music is the acting management for Keep Of Kalessin and will be running a pilot for this project with 100 limited cards that can be used to save money on more than 500 big chains, 50 000 SME and more than 5000 online shops worldwide.

If you’d like to read more about it and participate in this pilot project, please go to http://www.keepofkalessin.com/#!fanclub/cfvg and apply! It’s 100% free and you’ll get our new digital EP for free on top of that! You can then also download the app to see all the shops in your area where you can save money.

Also, if you’re a band, label or management interested in more information about this project, please just drop us a line on mail@morningstarmusic.no and we’ll be happy to provide you with more information.

Hope you guys liked this post and feel free to comment! 🙂

 

16 comments

  1. This is idea is…interesting!

    I see several issues, things I’d like to see the development of, will keep a close eye on this pilot!

    Jens
    Borknagar

    Like

  2. Like I’ve written on Facebook: This is bloody brilliant! This is the best and most thorough and thought-out solution I’ve read so far! Of course, there’s still the problem of the card not being available everywhere yet, but I see the bigger picture and I’m 100% behind that! I mean, I use AliExpres all the time and Hotels most of the time, so that alone would generate a good percent of revenue if you take into account a bunch of other fans like me. All the best with the pilot project, I really hope this lives.
    There will of course be those who think this is “major sell-out” but I guess those people don’t really realize how grave the music industry situation is.

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  3. I registered for the card, because firstly I can see a benefit to me as a family man with lots of expenses and secondly I would like to support bands that make the music I like. Since supporting you will not add to my usual expenses, I will happily do it 🙂
    PS. I thought you get something when we listen to your songs on Spotify etc. Is it really that little? 😦 I would always pick Spotify over YouTube because I thought you get a share.

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    1. Thank you so much Nik! This is absolutely the best way to support the band! And to save money at the same time! 🙂 Spotify gives us 0,003 euro per stream, but that is divided between the record label and the band. So there’s extremely little that we can earn from that!

      However if you compare this to the cashback card, if you shop groceries at Carrefour for 1 euro, we get 0,005 euro! So, you can see that this can be a huge benefit for us!

      Like

  4. That is indeed an interesting idea.
    Is it possible to see which shops are concerned before registering?
    I doubt this exists in France…

    Cheers.

    Like

  5. Great idea, but is there not an issue if too many bands issue their own card? Say I’m a fan of n number of bands who issue a card – at some point I’d have to choose which band to support. Whether when deciding which card to get, or at the point I make an applicable transaction. You don’t want too many similar bands with a similar (or the same) audience trying the same thing, otherwise the potential income will be reduced. Do I get a KoK card or a Borknagar card? Do I use my KoK card for this week’s shop, or my Dimmu card? Also, what if an amount of fans get the card but don’t use it in a way that generates income for your band, and only uses it for money off your merch, tickets etc.?

    Hell, if it was something we could use in the UK you could count me in. I’d use it when buying KoK CDs, so you’d get a double hit 😉 So I hope it works and you have answers to demolish the above points.

    Like

  6. Hi
    I love the idea and i joined immediately. But after i checked out the Lyoness website i found out i can only use this card in online stores – many of them from US to wich i need to add customs fee if i order. I did not find one single physical store in my city (Aarhus – 2nd largest city in denmark) where i can use this Card.

    I can not use the card for all the purposes you mention in my daily life, unfortunately.

    If i order something online i will try to find a store to support KoK – otherwise i will continue to buy vinyl records as to support my favorite bands (and my vinyl collection)

    best regards

    Like

  7. I don’t know, man. It sounds cool at first, but a bit shady. Too good to be true in a way. But I guess we can wait and see…

    Like

  8. I’d be happy to support KoK with the few euros I gain from the finnish shopping chains’ cashback cards. Too bad the big chains in Finland aren’t likely to join this international thing. I did join, though, and will use the card on online shopping 🙂

    Like

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