Rent Party Blues

How much longer can Austin afford to be the live music capital?

Remember the Lunch: the CSC offices, still largely empty, wrapped around historic landmark the Schneider General Store, around which once stood Liberty Lunch
Remember the Lunch: the CSC offices, still largely empty, wrapped around historic landmark the Schneider General Store, around which once stood Liberty Lunch (Photo By John Anderson)

Downtown, lines mark the spots. Two clubs with the longest lines appear to be the newest: Cubra Libre and the Apple Bar. Both have laid out significant amounts of money renovating old Warehouse District properties, and both are built around different themes -- tapas, and martinis. There's one thing that unites them: Live music isn't part of their strategy. At these clubs, the name of the game is "Pass the Courvoisier," not "Pass the mic."

Welcome to the Live Music Capital of the World, where musicians and club owners have begun asking the same question: Where's the live music capital? Already more accustomed to grim bottom lines, Austin's live music economy started 2003 with a pair of less-than-encouraging signposts: the Mercury's closing in May, and Antone's last-minute bailout from Direct Events.

Add their stories to those of now-shuttered venues that include Liberty Lunch, and the Electric Lounge, (1999); Babe's (2000); and the Hole in the Wall, Empanada Parlour, and Black Cat (2002). Closures and turnovers of non- and semi-regular music venues also impact the local scene; in the last two years SXSW has lost access to more than a dozen venues, including Waterloo Brewing Co., Ruta Maya (which has relocated south), and the Metro.

While it's never been tough finding locals to grouse about Austin's tourist slogan, the wholesale downturn of live music fortunes in the last four years has been nothing short of shocking. Getting a handle on what's behind this sea change in the local club scene takes grasping a cyclical series of economic and societal factors that resembles a snake eating its own tail.

It begins here:

  • There are fewer venues presenting original live music today than there were 10 years ago.

  • Fewer venues means fewer paydays for Austin acts; most musicians report making the same or less money now than they did 10 years ago, even as the cost of living locally has doubled.

  • Commercial real estate agents say commercial-property rents downtown have nearly doubled since 1996.

  • With fewer clubs nurturing local talent and fewer musicians with the economic flexibility to concentrate on their music, club owners say their fan base is shrinking.

    Longtime local music scenesters say ebbs and flows in Austin's commercial and residential markets, live music attendance figures, and the financial inconsistency of local talent may not be unique, and yet they say they can't remember a time in which each factor compounded so neatly with the others. At question, they say, is nothing less than whether what's been widely dubbed "New Austin" has enough financial resources or consumer interest for a sustainable live local music economy.

    The Wolf at the Door

    Jason McMaster isn't hurting for gigs. With his bands Gahdzilla Motor Company and Broken Teeth, the veteran scenester plays regularly at the Flamingo Cantina, Room 710, Stubb's, Red Eyed Fly, and Emo's. And yet, McMaster says he's not making the money he made just five years ago.

    "It wasn't long ago I could call clubs and get a guarantee," says McMaster of what was once traditional nightclub practice: the promise of a minimum payout regardless of door receipts. "It was like, 'Fuck yeah, Jason; it'll be good to have you.' Now it's just so much harder to get people out that everyone's too scared to promise anything."

    McMaster says he's lucky to walk out of a club these days with $50 for his share of a night's work in a fourpiece band. For a weeknight gig, Austin musicians regularly report taking home less than $10 a person. And not only are guarantees largely a thing of the past, so too are "full door" arrangements, a straight turnover of door receipts to the artists on the bills. While it used to be a band was typically paid in direct proportion to what they could draw, most venues now pass their costs for sound, lighting, and security to the artists.

    At a time when patrons say they're going out less because an evening of live music can easily exceed $60 with drinks, and bands saying their paydays are plummeting, bar owners insist they're strapped by increasingly small profit margins and the rising costs of doing business.

    The Black Cat, gutted
    The Black Cat, gutted (Photo By John Anderson)

    Along with a TABC tax of 14% on alcohol sales that comes off the top, venues say they're seeing their bottom line shrink significantly just from the impact of rising rent. Considering Antone's recent bailout, some scenesters wonder whether the club should've stayed in its less glamorous digs on the Drag.

    Neil François, a commercial real estate broker for McAllister & Associates and a onetime bar owner himself, says Downtown rent has nearly doubled since 1995. A 5,000-square-foot space on Sixth Street now rents for just over $1 a square foot, not including the property taxes and insurance costs landowners pass along to their tenants. A similar spot in the Warehouse District might run 25% higher.

    "Real estate prices may not be escalating as quickly as they did two or three years ago, but from six to eight years ago, there's probably 25% more T.A.B. licenses downtown," estimates François. "It seems that when one place closes, there's more than one party interested in renovating an existing building and opening a new concept. And since there's not much threat of having a vacant building downtown, prices have stayed high."

    It's no secret that the bulk of those new nightclubs don't offer live music. In a list of 45 nightclubs in the new issue of Study Breaks, a magazine geared toward UT students, only two original live music clubs are listed.

    "It's obvious why there aren't more when you consider it's almost impossible to open a club when you're looking at $10,000 a month in rent," says Stubb's owner/booker Charles Attal.

    Indeed, most local nightclub owners say it's simply not profitable to operate a live music venue. Not only does one lose square footage to a stage, there's also the additional infrastructure to pay for -- stage managers, lights, sound, and talent brokers.

    "It's so much easier and cost effective to put a DJ in the corner than it is to effectively book and advertise live music," concurs François.

    Worse still, club owners say their wholesale alcohol costs are rising at a time when there's more competition from nonmusic venues with a lower overhead.

    "The cost of a bottle of tequila has risen substantially in the last five years," says 30-year nightclub veteran Tim O'Connor, whose Direct Events recently added the management duties of Antone's to their other holdings: the Backyard, Austin Music Hall, and La Zona Rosa. "That's not something you can pass all the way through to the consumer."

    Not only are music venues complaining that their bar receipts aren't covering their rent, they're also saying it's become increasingly hard to ward off new businesses vying for their space at the end of a lease. Variations on that scenario are behind the closure of Steamboat's original Sixth Street location, the Hole in the Wall, and the Mercury. Subsequently, as club owners tighten their belts, musicians say clubs are also tightening their talent pool.

    "It used to be that you developed new bands by having them open for bands that were already established and had big draws," says the Mercury's Mark Collins. "But when there are fewer headliners that draw well, you've got a real problem breaking new bands."

    The result, of course, is a vicious cycle: New bands aren't given the chance to develop a draw at a time when clubs complain there aren't enough bands that can draw well. Sound familiar? It's exactly what's happening with major labels and their artist rosters.

    "It seems like the bottom line is cutting off the artistic community at the knees," says Guy Forsyth, who credits his draw to the patience a decade ago of 311, Joe's Generic, the Black Cat, Chicago House, and Antone's. "Commercial rent has gone up to the point that it's hard to go through that first stage of artistry.

    "They can't gamble on the educational phase of an artist, because they already owe a huge backlog of taxes and rent. They're just trying to pay the wolf at the door."

    Destination Known

    While location, location, location has long been the guiding force behind successful businesses, destination, destination, destination might have overtaken it. Bars off the beaten Downtown path, like the Continental Club, the Saxon Pub, Broken Spoke, and the Back Room, are not only surviving, they're thriving.
    Mark Collins at the Mercury
    Mark Collins at the Mercury (Photo By John Anderson)

    For starters, they're generally less prone to rental hikes. On top of that, not only are their semicaptive audiences less likely to run down the block between sets to drink elsewhere, they cultivate a regular neighborhood clientele less likely to stray during lean times.

    "I go to the Continental without even knowing who's playing," notes Attal. "It's just a warm, fun place to hang out. You can't build that kind of character or loyalty overnight."

    So-called "destination venues" may be the upside to what Downtown club owners have been complaining about: residential flight further north and south that makes driving downtown two or three times a week less likely.

    "During the boom, we not only had more construction workers living in our neighborhood, we also had an influx of college students, because rent on campus got so high," says the Back Room's Mark Olivarez. "We were the neighborhood bar 5 to 8pm for blue-collar workers and 10pm to 2am for college students."

    While the Back Room hasn't been immune to increased property taxes and higher alcohol costs, Olivarez says he knows full well that his club's format (metal, hard rock) and built-in drinking crowd has afforded them a rare luxury of being able to spend time developing new talent. The Back Room is also unique in that it's a relatively large room making the bulk of its nut from local talent; most club owners today say the overhead associated with rooms over a capacity of 300 makes it difficult to break even on anything less than a full house.

    In turn, some musicians and club owners claim that the number of larger venues still left standing makes it difficult for a band to be perceived as successful. Bands that packed the Hole in the Wall may be drawing the same crowd today at the Mercury or Antone's, and still face a room that's three-quarters empty. It's a scenario that's left some wondering if there's perhaps an unintended, yet natural, upside to the recent run of club closures.

    "If everyone is making less money today than five years ago, imagine if there were twice as many clubs," says singer-songwriter Beaver Nelson. "There would be half as many dollars to go around, because there's simply not enough people seeing music.

    "There's never been a shortage of bands in town, but for a while it almost seemed like you had clubs more proportionate to the number of bands than the numbers of customers in town.

    "I'm certainly not endorsing or excited by clubs closing, but I wonder: If your selection is cut in half, won't there be more people going to a specific club they like rather than having to figure out who's who and where's where out of a list of 111 venues?"

    Living on Fumes

    During the real estate boom of the late Nineties, Beaver Nelson fell into a classic Austin musician day job -- house painting. More property changing hands meant more houses to paint. Even though it afforded Nelson some stability, it was hardly a dream scenario.

    "It's almost impossible to sniff paint fumes 55 hours a week and then play gigs," he offers. Nonetheless, Nelson is in an increasingly rare class of Austin musicians: homeowner. Although real estate experts say ownership is the best way to fix costs and avoid incremental rental increases, for most Austin musicians, residential real estate is priced out of reach.

    "It's a double whammy for musicians," says onetime local record store owner turned real estate agent Joe Bryson. "Living costs are escalating, yet the club market they're making their money in is starting to shrink. They're getting squeezed from both ends."

    Bryson says real estate prices aren't rising 20-30% a year as they once did at the turn of the millennium, but they're not dropping either. Olivarez, meanwhile, points a finger at Austin's high tech boom/bust.

    "For a time, musicians could supplement their income with good-paying gigs," he posits. "But once they got laid off, only the lucky ones found another job, and even then, it was for half the money. And yet, rent and utilities didn't go down. I've seen good bands break up because it was impossible to live around here."

    At the same time, many Austin musicians say they feel like they have to overplay the market just to scrape together enough money to pay for promotion, taxes, and rehearsal space.

    The factors leading up to Sound Exchange's demise look like an I-35 pileup.
    The factors leading up to Sound Exchange's demise look like an I-35 pileup. (Photo By John Anderson)

    "It's fucking expensive," sighs McMaster. "It's tough for a rock band to make shit money and then go to their shit day job and still have enough money to lock out a rehearsal space or studio to hone their craft and get better between shifts. You wind up playing two or three times a week, and it weakens our draw, which in turn weakens your ability to get guarantees."

    McMaster is the first to admit that he's lucky to overplay at all. Increasingly, clubs are cutting back on multiband bills early in the week or cutting out their early-week shows altogether. For example, Tim O'Connor says it just wasn't feasible to keep La Zona Rosa's smaller indoor room open seven days a week.

    "It's tough, because we're conditioning people to go out less by not presenting live music as a seven-day-a-week deal," he states. "Musicians that had four dates a month to count on don't have those dates, so it's a vicious cycle. How are they going to pay their rent?

    "But as a club, you have to be there next year. You have to do everything possible to stay in the business. You have to be in spring training to play the season. And if you're out, everybody loses."

    Death Watch

    Two weeks ago, Sound Exchange closed its doors after 23 years of business. The record store's motto, "Bitter people with no future selling music," became prophetic. While music retailers falling on hard times is a national phenomenon, it seems to have hit Austin hard: The Drag's Technophilia was the first causality, while there's long been a death watch on Tower's sole Texas location. Even Waterloo isn't entirely safe; the indie retailer says it's threatened by Smart Growth initiatives at Sixth and Lamar.

    The factors leading up to Sound Exchange's demise look like an I-35 pileup: Residential rent hikes on campus slowly ate away at the store's customer base as students moved off campus. Meanwhile, the store's rent increased even as past closures/neighbors like Toy Joy and Quakenbush's sat empty for years. Taken together, there simply wasn't room for Sound Exchange in "New Austin," says the store's former manager Craig Koon.

    "Mall culture has finally won, and kids aren't being taught there are alternatives, nor would they probably care," he says. "I'm 37, and people my age didn't grow up going to the mall or Blockbuster for entertainment, if only because you knew the clerks would be cool and turn you on to stuff at the independent stores. Then you went to clubs and bought the records.

    "But now, a lot of people that supported the Hole in the Wall or our store, they're gone. They were forced out of town to find a cheaper town to live in."

    While Sound Exchange eventually closed because a new lease couldn't be worked out between tenant and landlord, what's clear is that Austin musicians have one less place to sell their records, post their fliers, or generate word-of-mouth buzz. The bankruptcy of the Mars Music chain and the closure of its local outlet obviously wasn't caused by local economics, but it impacts Austin's music infrastructure nevertheless. Another domino down.

    Worse still, there's not a club owner in town that doesn't think Austin will see more prominent club closures in 2003. Because, whether it's real estate on the Drag or downtown, experts say there are no real signs of correction in the real estate market.

    If anything, the live music economy only faces more threats; a cluster of clubs on Red River may be thriving, but it's unclear what impact they might face from the new sound ordinance. Equally threatening is the City Council's planned revision of Austin's nonsmoking ordinances.

    At this point, solutions are few, and dire predictions are plentiful. One popular theory is that things have to get worse before they can get better. For his part, Tim O'Connor says he's an advocate of clubs banding together for political clout and resource sharing, something he's already done by co-producing shows with Stubb's Attal, who will likely begin placing shows at Antone's that he would have put into the Mercury.

    "I'm not suggesting everybody get in the same bathtub and use the same soap, but I am suggesting we do some collective resource gathering," explains O'Connor. "If we exchange information and speak with one voice at the council, we might be able to better map our case for what we add to the city's bottom line."

    Although a 2001 study on local music's impact revealed more than $616 million in economic activity, almost 11,200 jobs, and over $11 million in city tax revenues, there's a growing feeling that the goose laying the golden eggs may be leaving the nest and the City Council couldn't care less.

    After all, Austin's live music scene is a major component in the quality-of-life promise that ushered in the relocation boom and brought in the high tech companies in the first place. Many warn that next month it'll be easy to look at South by Southwest and believe all is right. A few months later, things will once again look rosy during the Austin City Limits Music Festival.

    Then again -- and finally, perhaps -- as bad as things are, even those doing the most bellyaching about the state of the local music economy say they can't think of a scene anywhere that compares to Austin's.

    "Is it still a scene unlike any other?" asks Forsyth. "I think so. If you know of another one, let me know. I'm sure whoever lives there is doing a better job hiding it." end story

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