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Sofar Sounds raises $25m…but are artists being short-changed?

Sofar, which organises shows in homes and other non-traditional venues, is celebrating a "mind-blowing" funding round – but has been attacked for how it pays artists

By IQ on 22 May 2019

UTA's London office hosted a Sofar show in January

UTA's London office hosted a Sofar show in January


Sofar Sounds, the ‘secret gig’ platform which stages shows in people’s living rooms, has secured a US$25 million funding round, bringing total investment to a reported $31m.

The new funds, announced in a blog post by Sofar founder Rafe Offer, will give the UK-born company – which specialises in concerts held in “unusual, spontaneous places”, with show locations kept under wraps until the last minute – will go “directly back to our mission of helping artists and fans connect in a true and meaningful way”, says Offer, including growing the opportunities available to participating artists.

“Ten years ago, when I founded Sofar as a hobby with some friends, I never would have dreamed we’d be where we are today,” he comments. “Today, Sofar Sounds announced a $25m fund raise, led by Battery Ventures and Union Square Ventures, with existing investors Octopus Ventures and Virgin Group also participating in the round.

“It’s absolutely mind-blowing, and I’m excited for the opportunity this creates for Sofar to grow, creating new products for artists and tools for our global community to deliver on our collective mission to support developing artists.”

The new investment has raised questions about Sofar’s business model in the US, with tech news site TechCrunch among those to have condemned the way in which Sofar Sounds remunerates artists.

“You’ll see us investing in a new website, and ramping up our artist-focused team to provide artists support”

In an article entitled ‘Sofar Sounds house concerts raises $25m, but bands get just $100’, TechCrunch writer Josh Constine attacks what he sees as the under-payment of the musicians who form the core of Sofar’s business:

[Sofar’s] goal is expansion – to become the de facto way emerging artists play outside of traditional venues. The 10-year-old startup was born in London out of frustration with pub-goers talking over the bands. Now it’s throwing 600 shows per month across 430 cities around the world, and over 40 of the 25,000 artists who’ve played its gigs have gone on to be nominated for or win Grammys. The startup has enriched culture by offering an alternative to late night, dark and dirty club shows that don’t appeal to hard-working professionals or older listeners.

But it’s also entrenching a long-standing problem: the underpayment of musicians. With streaming replacing higher priced CDs, musicians depend on live performances to earn a living. Sofar is now institutionalising that they should be paid less than what gas and dinner costs a band. And if Sofar suck in attendees that might otherwise attend normal venues or independently organised house shows, it could make it tougher for artists to get paid enough there too. That doesn’t seem fair given how small Sofar’s overhead is.

By comparison, Sofar makes Uber look downright generous. A source who’s worked with Sofar tells me the company keeps a lean team of full-time employees who focus on reserving venues, booking artists, and promotion. All the volunteers who actually put on the shows aren’t paid, and neither are the venue hosts, though at least Sofar pays for insurance. The startup has previously declined to pay first-time Sofar performers, instead providing them a “high-quality” video recording of their gig. When it does pay $100 per act, that often amounts to a tiny shred of the total ticket sales.

“I’m excited for the opportunity this creates for Sofar to grow”

Sofar CEO Jim Lucchese, formerly of Spotify, says the $100 fee “for a showcase slot is definitely fair”, given that Sofar pays venue insurance and local collection society tariffs, for example, but concedes that Sofar shows aren’t “the right move for every type of artist”. (Many shows in other markets, he adds, operate on a pay-what-you-want model, and artists keep “the majority of the money.”)

Speaking to MBW, Lucchese says Sofar plans to further invest in artist services, as well as a new web presence. “You’ll see us investing in a new website, and ramping up our artist-focused team to provide artists support,” he comments. “We also see lots of ways to make touring of Sofar cities more organic for the artist.

“Sofar is […] a global community which will we will continue to build and support, but it should also be seen through the lens of an artist development platform.”

Founded in London in 2009, Sofar Sounds is now active in 430 cities globally, including London, Paris, New York, Los Angeles, Sydney, Buenos Aires and Seoul. It has hosted over 20,000 shows over the past decade, including early performances by Billie Eilish, Bastille, Leon Bridges and Hozier.

 


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