Examining The Groupmuse Business Model Part 1

In a field where business models are well defined, it’s always intriguing to see something new come along. One of the latest entries into that arena is Groupmuse, a for-profit business that facilitates house parties which feature classical musicians. Groupmuse founder, Sam Bodkin, launched the first of these events in January, 2013 and since then, the business has grown and received its fair share of positive press from mainstream outlets that include the CBS Nightly News, The Wall Street Journal, and Time Magazine.

Adaptistration People 175Those articles, and others, do an excellent job at profiling the very best aspects of Groupmuse’s goal: help live classical music events become more accessible by providing the opposite of what Bodkin defined in a 4/23/14 Time Magazine article as a “stifling, severe traditional orchestral experience.”

This central observation has been assigned to traditional live classical music events for decades; consequently, Groupmuse deserves positive press for rolling up their sleeves and doing about it.

Having said that, details about Groupmuse’s actual business plan are sparse and the gulf between ideals and implementation can be vast. In order to learn more, I contacted Bodkin to arrange an interview to discuss the company’s business model and how its ongoing $100,000 Kickstarter campaign factors into that plan.

Digging Into The Business Model

Formed as a C corporation and employing four full-time and one part-time administrators, each of which are paid on a monthly basis, Groupmuse’s primary function is squarely focused on helping individuals launch classical music house parties. They present their primary service offering as “an online social network that connects young classical musicians to local audiences through concert house parties.”

Subjective definitions such as “young” and “old” notwithstanding, the element that appears to be loosely defined within that offering is the organization’s actual revenue stream.

According to a 10/26/15 blog post by Bodkin, Groupmuse’s early capitalization came in the form of a quartet of investors that provided $100,000. Bodkin declined to provide any additional details about those investors, whether the company has paid them back, or if they remain a liability on the company’s books.

In addition to large single investors, the group has explored alternative methods for generating unearned income which include producing no less than $1,000 via Fractured Atlas’ Fiscal Sponsorship program.

Adaptistration People 173Beyond investors, Groupmuse’s earned income offerings have mostly been unsuccessful and often seem spur of the moment rather than thorough market research driven offerings.

They used to offer a corporate event program called Groupmuse At Work as well as charging party hosts a $250 fee for organizing private events but Bodkin said both offerings have been discontinued due to low sales and a negative return on investment via admin time and resources (although information for both continue to be available via their website).

The only revenue generating activity currently in motion are what Bodkin defined as “Massivemuse” events produced directly by Groupmuse such as their Symphonie Fantastique event from July, 2015. For these, events, Groupmuse functions exactly like a traditional presenter in that they hire the performers, rent performance space, etc. Beyond that, Groupmuse does receive ancillary revenue in the form of fees from other institutions in exchange for connecting them to their user base.

“Our only revenue generating mechanism is that we help WCRB, owned by WGBH (Boston public media) get members by bringing our Boston Groupmusers to events that they produce for an event-by-event fee,” wrote Bodkin in an email.

Groupmuse’s principal offering, organizing house parties, are member-only yet they do not generate any revenue nor do they require online memberships. There is no fee to attend a party and Groupmuse collects no application or membership fees from musicians to become a potential performer. Consequently, even though they are a commercial enterprise, it appears that the bulk of Groupmuse’s income arrives in the form of investment and contributed revenue.

Bodkin defined Groupmuse as a company in “pre-revenue” phase but for those who work inside the nonprofit performing arts field, the model looks very much like the existing donor supported unearned income model.

From that perspective, there isn’t much about Groupmuse’s business model that is unique or revolutionary; in short, their income structure is nearly parallel to what nonprofit performing arts organizations and artists have been doing for decades.

The Logistics Of Groupmuse Events

Serving as their primary offering, Groupmuse events function in a very straightforward fashion:

  • In order to host or attend a party, you need to create a free Groupmuse user account.
  • Hosting a party is free as is attending. Hosts are not responsible for providing food or drinks.
  • Parties must be able to accommodate no less than 10 attendees. Hosts can reserve up to 2/3 of available slots for Groupmuse members of their choosing but the rest are first come, first serve to any Groupmuse member wishing to attend.
  • Sometimes Groupmuse will provide a party facilitator, otherwise, the host is responsible for all related duties. According to Bodkin, Groupmuse facilitators attend approximately ¼ of events.
  • Musicians must submit application material and be approved by Groupmuse.
  • Groupmuse typically selects which musicians perform although party hosts may select Groupmuse approved musicians directly, but that’s easier said than done as there is no readily available musician directory.
  • For musicians, there is no guaranteed minimum payment, instead, musicians must solicit attendees directly and although encouraged to pay, attendees are under no obligation to do so. Think of it like a busking on a private street, but indoors.
  • Payments are made in cash or credit card via the Groupmuse app and website, where the organization then distributes payments to musicians.

Adaptistration People 144It’s worth pointing out that Groupmuse embraces what might be best defined as some of the more negative aspects the shared economy model in that the lion’s share of an event’s structural costs, typically unseen by most attendees, must be absorbed by the host. This includes all necessary insurance and that the hosting location is Americans with Disabilities Act compliant. For traditional presenters and performers, these are not insubstantial expenses and Groupmuse passes the responsibility of those costs on to party hosts.

Consequently, if problems along those lines appear, the buck stops with Groupmuse users, not the company.

Did a Groupmuse attendee require medical attention due to an accident inside the party location? Too bad, it’s the host’s problem. Did a musician break a $20,000 instrument becasue inadequate lighting made it impossible to see the edge of a step-down? Too bad, it’s the musician’s loss.

Unfortunately, none of these risks are made expressly clear via any existing event host or musician agreements, I had to learn about details directly from Bodkin by asking. And even then, it required several follow-up email messages in order to obtain all of the details.

The only policy or legal disclaimer oriented content at Groupmuse is their Standards page, which covers basic online interaction between users and suggested guidelines for party environments.

The Kickstarter Campaign

Adaptistration People 033In the absence of a successful and established revenue stream, Groupmuse operates by way of unearned income focused direct support. Initially, it secured $100,000 from four investors but it appears those wells have run dry and the latest effort is a Kickstarter campaign to raise an additional $100,000 in order to fund a single year of activity.

Their Kickstarter page focuses on Groupmuse’s history and its stronger appeal points related to separating elitism from live classical music events. However, there is no information about how the money will be spent, their incopme/expense structure, nor any future plans for generating revenue.

“We’re a young company that hasn’t figured out the nuts-and-bolts of running a business,” said Bodkin. “There was no research into business models and maybe I [selected our corporate structure] without enough due diligence but I am exploring the potential benefits of converting to benefit corporation status.”

Bodkin was unaware of the alternative L3C business entity (a low-profit limited liability company that provides the ability to generate investments and foundation support in socially beneficial, for-profit ventures), but confirmed that there is no time table for potential conversion and for the foreseeable future, Groupmuse will remain with C corporation status.

When asked about how the $100,000 they hope to raise will be spent, Bodkin confirmed that none of the funds would be allocated for musicians, instead, it will be used for administrative salary, operating costs, and web production expenses related to expanding their existing house party offerings to new cities.

“Although it wouldn’t be too much of a burden and we could do something like allocating some of the Kickstarter money for a minimum musician payment, is isn’t something we are going to do right now,” said Bodkin.

Although Groupmuse appears to be figuring things out as they go, they have done an excellent job at co-opting a great deal of traditional nonprofit nomenclature, all of which helps provide a patina of legitimacy.

Their Kickstarter reward labels would feel right at home inside old-school donor level terminology thanks to their “Patron,” “Benefactor,” “Angel” and “Patron Saint” reward levels.

All of this projects what some might define as a sense of irony in that although Groupmuse has positioned itself to be the antithesis of a traditional nonprofit performing arts organization, you could drop a typical arts administrator into their operational and administrative culture and s/he would feel right at home.

During a recent Reddit interview, some of the participants took issue with Bodkin’s approach to business by characterizing a sense of disingenuousness. During a question about how Groupmuse will begin generating a profit, one participant interjected with pointed criticism.

“…yes, you need sustainable revenue to cover costs. But Groupmuse is not the thing being bought and sold. The music is.

Sure, there are out-of-touch classical music non-profits. You can be a responsive, adaptive, creative, modern classical-music non-profit that facilitates the grass roots. The fact that big symphony orchestras name halls after rich people has absolutely nothing to do with the costs of running small house concerts and paying musicians.

You want to be fast, but maybe it would be better to be good, to do the right thing for the community, find a way to pay for it, and then let it grow “organically,” a word you keep using.

Your final paragraph reeks of the hubris of tech-industry solutionism. We’re smart people with big ideas; we’re going to change the world by growing fast and imposing our vision everywhere we can!”

The Reddit discussion response brings up an intriguing element within Groupmuse’s business plan by way of how they handle their musician performers.

I spent a good deal of time talking to and exchanging emails with Bodkin on this topic and there’s so much content here, it rose to the level of needing a mutually exclusive article. Consequently, we’ll be focusing on those issues via tomorrow’s Part 2 installment.

Data(less) Driven Decision Making

Adaptistration People 131Although there’s a good deal of leeway related to how startups maintain records of user activity in order to quantify results, Groupmuse appears to have a larger than expected disconnect between its goals and the data needed to measure success.

Currently, Groupmuse’s free to host and attend party structure combined with the pass-the-hat musician payment model (more on that tomorrow via Part 2) does little to help build a sense of quantifiable value for the live classical music experience.
At their About page, Groupmuse celebrates “bring[ing] hundreds of new listeners to classical music” and Bodkin leverages that as a panacea for reversing declines in average attendance at traditional live classical music venues.

“People should just go and get into the music and experience it on their own terms,” Bodkin said [in an interview for a 2014 Time Magazine article]. “Then hopefully a lot of them will get really turned on by Beethoven, because, ‘Wow, this guy I heard about so much is actually pretty rocking,’ and then they go see the big show at Carnegie Hall.”

When asked about Groupmuse’s efforts to quantify whether or not their party attendees convert into paying ticket buyers, Bodkin confirmed that no work in that area has been done nor are there plans to initiate that sort of data acquisition and analysis.

Consequently, the claim that Groupmuse events will help generate a new audience is, at best, ambiguous given the gulf between engraining a generation of attendees to associate a pay-what-you-wish perspective and the reality of earned income driven events.

Throughout our exchanges, Bodkin repeatedly apologized for a lack of data to quantify the organization’s accomplishments and practices. At the same time, he indicated a desire to begin compiling some of that data, but none of those efforts will be related to their Kickstarter campaign. So for now, although the rhetoric Bodkin expressed in the Time article certainly sounds nice, its tangible value is not only untested and unmeasured, but there are no plans to make good on those shortcomings any time soon.

More Borrowed Than New

As of now, Groupmuse has very little by way of revenue stream development even though current income is unable to satisfy existing salary and production expenses. Their primary product does not generate revenue nor does the free membership based social media inspired website.

According to Bodkin, the only substantive revenue generating activity is the Kickstarter campaign but the majority of those funds will be allocated toward administrative salaries and web development.

Thanks to liberal use of nonprofit nomenclature, Groupmuse projects a familiar façade of being in the business of public good.

Under the surface, their business model closely mimics traditional enterprises that have been in place for decades in that they operate thanks to the largesse of unearned income. But the one area where Groupmuse is very different, and it is far from insignificant, is they have shed artistic labor costs and related event based structural legacy expenses all while allocating the bulk of existing revenue to administrative compensation.

In part 2, we’ll take a much closer look at those issues and more.

About Drew McManus

"I hear that every time you show up to work with an orchestra, people get fired." Those were the first words out of an executive's mouth after her board chair introduced us. That executive is now a dear colleague and friend but the day that consulting contract began with her orchestra, she was convinced I was a hatchet-man brought in by the board to clean house.

I understand where the trepidation comes from as a great deal of my consulting and technology provider work for arts organizations involves due diligence, separating fact from fiction, interpreting spin, as well as performance review and oversight. So yes, sometimes that work results in one or two individuals "aggressively embracing career change" but far more often than not, it reinforces and clarifies exactly what works and why.

In short, it doesn't matter if you know where all the bodies are buried if you can't keep your own clients out of the ground, and I'm fortunate enough to say that for more than 15 years, I've done exactly that for groups of all budget size from Qatar to Kathmandu.

For fun, I write a daily blog about the orchestra business, provide a platform for arts insiders to speak their mind, keep track of what people in this business get paid, help write a satirical cartoon about orchestra life, hack the arts, and love a good coffee drink.

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2 thoughts on “Examining The Groupmuse Business Model Part 1

  1. Thanks, Drew, for this. Long have I watched this company get a lot of attention, and long have I wondered “how exactly will this generate sustaining revenue, let alone a profit?” It’s nice for someone to be asking these tough questions, rather than being hypnotized by the sunny light cast on Groupmuse in media coverage. It’s not that we don’t wish Mr. Bodkin success, it’s that we would like to know that he has a plan to achieve that success, rather than simply a bright idea — seductive to those who think classical music desperately needs to be saved from itself — that has no second act.

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