Arts entrepreneurship in the music industries

Society itself often has the perception that musicians are flighty, fanciful and undisciplined. Musicians often don’t have an office, staff, insurance against risk or assurances like social security or medical aid. The COVID-19 lockdowns revealed just how many artists did not have unemployment insurance or income protection to fall back on. Some were excluded from relief funds simply because they ran a business that produced art. The question then is, why does this state of play exists in the first place? In considering this question, I would like you to think about the differences between culture and commerce.

Making music is business unusual

There is a significant amount of evidence from cultural entrepreneurial research suggesting that a key point of difference between the arts and ‘for-profit’ entrepreneurship is the strategic placement of earning money in the practice of each. Looking at traditional entrepreneurship as your mode of operation, all you would care about is where money is to be made, how much profit you could achieve and when you would exit and sell the business. These are common business startup considerations and have become well entrenched in societies’ view of entrepreneurship.

But when it comes to the arts, in this case music, the artists may not consider themselves to be an artisan. The difference here is the choice of mindset. The artist can and may have no need to earn money from their art. However, the artist who becomes an artisan makes a choice to enter the marketplace and becomes a worker. As a money earner, the place of culture and art in a market economy suddenly changes our traditional economic view from revolving around the workflow of money to the flow of money around art and culture.

For the economist, this cultural entrepreneurial mindset is hard to grasp. How can the pursuit of art outweigh that of economic exchanges? As mentioned above, the inherent uncertainty and risk for artists makes any economic analysis just as challenging. However, for those artists who become artisanal, and accept an arts entrepreneurship modus operandi, the economics are simple: embrace the traits of risk taking, problem solving and business operations that entrepreneurs adopt and apply them to an artistic practice.

The ‘artrepreneur’

This brings us to a definition of ‘cultural’, ‘arts’ or music entrepreneurship. These ‘adjectives’ merely describe the displacement of money as a goal of the entrepreneur. Money is replaced with passion; however, the use of money to achieve that passion is highly important. So, of those artists who choose a music entrepreneurship path, it is all about the music and the hope of making a living from it.

Therein lies the kicker: many musicians do not consider themselves a ‘business’. I have found in my own practice that the balance between art and business is a thin one. I may offer or take a price cut on my services to just get a job – a musical job – I’d like to do. Many performing musicians may play for free, with the all-too-common suggestion they do it for exposure. Neither of these will fill the payment gap left between the actual rate and the discounted one. It is a ‘passion price’ that is paid when this happens. The artist hopes they will benefit from the returns of their art as opposed to returns in profit. This is referred to by consumer psychologists as the opportunity cost of choosing one consumption option over another. If I were to insist on my value, the customer may not pay the full price, and my passion objective is unfulfilled. Many artists, and fervent managers, will withdraw and leave the industry when this passion cost becomes too high; it is vital for the arts entrepreneur to see the value they are offering and weigh their business decisions accordingly. Simply put, it is the ability to say ‘no’ with the hope that the next opportunity will provide a better value proposition.

An example of this is when a freelance musician turns down an opportunity for exposure for another opportunity that comprises both exposure and payment for time. If the well-being of the artists is factored into this value equation, then the total price also includes the social security costs mentioned earlier. A starving musician may not make the most effective music entrepreneur.

The music professional

Young artists who are in the early stages of their career development must trump the odds and develop their artistic entrepreneurship practice to the point where they can reach this critical mass. Here, the profits from their time and well-being justify their passion. This is only achieved through ‘product development’ and entails fostering in-demand, specialised, intricate and fine skills, often in many different areas and fields besides just playing the piano and guitar or working with a digital audio workstation. A musician who practises at least four hours a day may develop the skills for their chosen instrument, but it is the application of these to drive the ‘music entrepreneurship practice’ forward that changes the need to refine these skills even further.

If I had to argue for the reason children must study music, it would be that beside all the developmental benefits, these skills can be developed at an early age. And should that child, now an adult, wish to apply these skills to entrepreneurship, they can shape them to solve real arts business challenges. Bear in mind that the arts are still at the forefront of this business structure – and getting paid enough to survive is the function of such a business. Here, a little help is needed from sponsors to make it into professional viability. Funding for the arts is not a foreign concept, but funding a so-called business in the arts has the same tainted perceptions as artists themselves. The benefit to society and not that of the entrepreneur tends to change the conversation around grant funding (where the money is intended to benefit society) to loan funding, where the arts entrepreneur must now repay the loan out of their nonexistent profits.

There is currently no arts entrepreneurship business structure that allows access to resources for the arts incubation stage. The structures of non-profit organisations and for-profit companies have no middle ground that can accommodate the arts entrepreneur who must operate without profits for a considerable time to reach sustainability. Many arts incubators do exists, however, and it would be a good idea for aspiring arts entrepreneurs to enrol themselves. Outside of this, there has been a considerable shift in arts education to reflect these ideas. Two decades ago, there was no such curricula of bringing business education to the arts, yet today almost any arts degree will have some business component to it.

The characteristics of the arts entrepreneur include those of the arts professional. Such a person must see themselves in the same light as that of any business professional. A music professional will have the high-level skills, coupled with the attributes of speed, client orientation, service delivery and high labour valuation. None of these should take away from the music, but the same creativity used in the craft can also be applied to operational management systems, customer relationship management, marketing and after-sales services.

Balancing the arts entrepreneurship mindset

The argument goes like this: if a musician is practicing many hours a day to stay highly skilled, how do they similarly practice all these business ideals? And the simple answer is: within the benefits of growth. In commerce, we could consider the economies of scale and scope. These business terms, relating to the growth of a company, mean that many startups may be one-person outfits, but as you apply entrepreneurship philosophies you would eventually take on staff, delegate activities and essentially create more, which would drive up production levels. This is called ‘economies of scale’. You may also create multiple services or products with a similar theme. So, while you offer session musician services (playing on recordings for a fee), you may also make amapiano or hip hop beats to license or sell in the meantime. Both offerings may require different business models, but are interconnected in your arts entrepreneurship practice.

In changing your mindset about how to live off your art, you can move from being a bedroom musician to an in-demand music producer. The work stress is about the same as any job, and balancing your ambitions against the realities of getting people to part with their hard earned cash is a real battle. Artists may be passionate about their art, but an arts entrepreneur faces incredible mental health challenges as a result. Remember, this is part of valuing your offering, and yes there is a psychological cost that must be considered, yet the reward of your passion should never be undervalued. Society may diminish these rewards, often for the reasons that artists ‘have fun’, ‘get to do what they love’ or ‘don’t have real jobs’. Ironically, the same feelings about millionaires tend to be justified. Your creative output is constantly being judged and sometimes you don’t get to enjoy total artistic control of the work. Think of the principal artists who record for a record label, which curbs their artistic temperament to meet the commercial demands of the record-buying public.

The role of monetary profit, too, has been inflated out of proportion by society. Yes, some recording artists do make significant sums of money, and so the idea that there must be lots of money in this industry drives many to play the gambit of the recorded music sector by recording and releasing songs and finding promotional opportunities. Considering that 95% of these types of music professionals don’t break even means that it is not the sustainable business model I am trying to describe here.

In conclusion, artists may be featherbrained if they opt for the excuse that their art needs to remain pure – the figurative ‘lotto ticket’ to win big. But you can have both. In the dance of entrepreneurship, the artist must negotiate and strategise their ultimate triumph to produce art that is commercially viable. This creates economic freedom that enables artists to enjoy sustainable careers.

Jonathan G. Shaw is the lecturer of the Music Business Studies course at the Wits School of Arts in Johannesburg, South Africa, as well as a recognised music producer, audio engineer, policy expert and educational presenter. Shaw is the author of the book ‘The South African Music Business’, now in its third edition, and a PhD (Music) candidate at Wits University.