This time of year is my prime prospecting time for new performing arts venues that want out of the publishing business. These organizations are just now getting to take a breath after all the hub-bub with the new season kick-off and are scratching their heads wondering why in the world their organization is in the niche publishing business when they are a performing arts venue.
And I can’t agree with them more. Publishing performing arts program books is a tough business, let alone trying to put on the best performance season one can.
But I’ve learned to be very careful when evaluating the current program book publishing situation.
One of the questions in our program book evaluation is “how much current advertising revenue do you have?” And this is where one needs to be very careful.
I can’t tell you how many times performing arts organizations include in their reported revenue to me their trade or barter dollar amount. But unfortunately, you can’t take trades and barters to the printer. They want cold hard cash.
I hear all the time “we’re making a killing on our program books” and after evaluating their true revenue, they’re losing money because of all the trades and barters.
Fake Program Book Ad Revenue
I call this fake program book advertising revenue.
When a performing arts organization is looking high and low for advertising revenue, it can be easy to say, ‘hey I can barter with the guy down the road’.
It usually starts with a little trade such as with your copier vendor to get your copier fixed. Then you start to look around to see what else needs repaired, or better yet, what is costing you so much for services you routinely purchase. Then you see if you can barter ad space in your program book for those services. You think you’ve hit the jackpot, especially if you don’t have a lot of money to spend. And this is how the trade death spiral starts.
What are your ads worth?
You need to assess what your performing arts program book ad revenue is truly worth. How many people see these ads? How many viewers would fit your advertiser’s target market? If you can get your advertisers business in front of quality prospects, this makes your printed program book much more valuable. You could be getting more money by charging for the ad space with cash. Look at what your advertisers charge for the services you are bartering for. Could you charge them more for ad space than your barter agreement? If your answer is yes, then you need to re-evaluate bartering, so that you stop losing money.
Dealing with the IRS:
Did you know you have to report your ad bartering to the IRS? You must document the value of the barter too. The IRS wants it’s cut of the deal.
“I love being audited by the IRS,” said no business owner ever! But, the confusing tax code ordinances for bartering can lead to an unpleasant audit. Forbes presented a great example that shows how the IRS looks at bartering. Let’s say you barter $1000.00 of dental work for $1000.00 dollars of your business service. This swap is looked at as straight income. You can’t claim any medical deductions for the dental work. If you try, you could be looking at an audit. You may be thinking you are keeping more money in your pocket by bartering. But, you may be missing out on tax deductions that really could have you keeping more of your hard-earned money. That’s money that could be re-invested into your performing arts organization.
If your program book advertising sales are high due to lots of trades, you may think you have finally cracked the code to performing arts program book publishing. But, if you are losing tax deductions and valuing your barters incorrectly you could be losing money.
Your performing arts program book advertising space is valuable and should be charged accordingly. Bartering doesn’t help show how profitable your program book is, but cash does. Don’t sell your program book short with fake barter profits. Bartering won’t pay your bills and if you want to have a successful program book you need cash flow, not barter flow. Good selling.