Q&A with Morgan Margolis, CEO of Knitting Factory Entertainment

24 Aug

Photo by Rosemary Ryan

A venue is more than just four walls and a soundboard. Morgan Margolis sees his small touring and venue management firm Knitting Factory Entertainment as a brand with reach into both the consumer world and the music industry. After a successful run co-producing the popular Broadway musical Fela! — nominated for 11 Tony Awards — Margolis’ small company is continuing to diversify its business beyond the four venues it books in the Pacific Northwest. Knitting Factory Entertainment has picked up several venue management contracts in Montana and is entering its third season booking the Outlaw Field Summer Concert Series in Boise, Idaho. The company’s record label is set to release Fela Kuti’s entire back catalog, along with a number of emerging artists, and Margolis has also found success managing bands and moving into merchandising. Venues Today recently caught up with the enterprising CEO to discuss how the Knitting Factory is marketing itself to the music industry and music fans.

You’ve done a lot of work building the brand of Knitting Factory. Are there any marketing icons that you borrow inspiration from?

I follow a lot of the ideas from Richard Branson at Virgin. Whether someone shows up at a venue, or a touring show, or they’re a manager or work for a record label, they know when they get to the Knitting Factory that their experience is going to be incredible. I am trying to create a brand where even if you land in the middle of nowhere, instead of looking for the House of Blues, you’re looking for the Knitting Factory.

How have the company’s branding efforts changed since you took over?

I’ve been the CEO for two years. We were just venues and touring a few years ago, and now we’re management and KF Records, plus our Broadway show. I’m trying to find all of the synergies to keep it working. We’re trying to work merchandising nationally as a company. I want us to be the next CBGB.

Do you have a merchandising deal in place to sell the Knitting Factory as a brand?

That’s my next step. We’ve got some merch for sale online. The merch at our venues is very small. Right now, people who come to the website are looking for tickets, not merch, necessarily. I’ve talked to companies and I’ve spoken with brand managers. I’m willing to pull in someone from the outside. Part of that is determining what our brand means. I have no problem with the Hard Rock chain. They’re a tremendous company, but Hard Rock doesn’t mean music. It means a restaurant or a casino. Right now we’re looking for the right partner and the right grass roots movement for Knitting Factory as a brand. It may mean something different in Brooklyn than it means in Boise.

How has the Kniting Factory’s venue division evolved in the past year?

We’ve become very tertiary, in terms of our venue division, with clubs in Boise, Idaho; Spokane, Wash.; and Reno, Nev. Our marquee room is in Brooklyn, N.Y., near Williamsburg. I don’t go up against Live Nation or AEG that much. Our cap size is much smaller. In Brooklyn, we’re a 300-cap room, and we are able to operate in our space without competition from the big promoters.

You’ve spent two years looking at reopening the Knitting Factory in Los Angeles. How would a venue in Southern California fit within your company?

Routing is a big issue. Routing doesn’t really work unless I’m starting somewhere far south, like in San Diego. From there we can play L.A., San Francisco, and we’re looking at markets like Sacramento (Calif.) and Albuquerque (N.M.). From there we can hit Reno, then Boise, then Spokane and now we’re the exclusive promoter at Wilma Theatre in Missoula, Mont., so routing wise, it works. I think it’s more of a branding initiative than a routing initiative. You’ve got to have a couple national areas. I’m looking at bars and restaurants in Los Angeles, too. I’m looking to drive cash flow, and cash flow in bars and restaurants is much stronger than the music venues. I’m 20 years into this, and I come from the bar side, so I see where the dollars come in. It’s not in ticket sales, not at the club level. Sometimes they say that you might want to open a 7-Eleven or a night club and do bottle service if you want to make money. If you love music and you’re willing to take a risk, then open a music venue. But if you want to get rich, it’s a tough world.

What other initiatives are you undertaking to drive cash flow?

I have done my damnedest to keep from cutting staffing and I’ve tried to keep as many employees as I could. We’re keeping our ticket prices down as much as possible. We’re keeping our drink prices really competitive. We’re keeping our legal costs down, too. When we build out venues, it’s been really strong for us in the commercial real estate market, where it used to be that they would just crush you. Everyone’s working five different jobs, myself included. We have our High Adventure management division, where we’re managing artists from new and emerging segments.

How’s the management side of the business?

You know, it’s raw. It’s brand new. We have a film and television division and a video division where we’re just picking up content and distributing. We already have clubs ranging from 300-1,500 cap, and a touring division where we’re doing tours from 10,000-15,000 nationally. We have our own record label, so the management side just seemed to really make sense. I just took on 50-Cent Haircut, who are in the middle of a name change. They’ve been around a long time in L.A. and they’re kind of country-indie-alternative. I haven’t taken on someone big enough that they’re driving dollars yet, but I’m also not putting out heavy dollars either. And that world’s changed, too. Cutting albums doesn’t cost what it cost before. No one’s putting out that kind of money, to make an album. What’s been really positive is that we just did a tour with Jack Lipman, Nikki Lang, and Robert Francis from Atlantic Records.  We thought they’d go through our venues in Boise, Spokane, Reno, and do a free radio show, and we’d get support from Atlantic. We’re going to put in some money and run them up the Pacific Northwest and see if we can get them some radio play. Nikki has a licensing-publishing deal, a pending record deal and we shot her video for next to nothing through all of our contacts. If one of them breaks and we start popping bigger acts, I’m going to have to beef up the management division. But right now I’m drained.

Is managing difficult?

I know every venue in L.A., so I can at least build their L.A. plays. I find in the position I sit as CEO of Knitting Factory that I can at least get the booking agents to respond to me. Also, this summer we have the Botanical Garden series with Chris Isaak, Willie Nelson, Widespread Panic and Barenaked Ladies. As a manager, I can now call their talent buyer and say, “Can we try to put (my artists) Nikki or Jack on as support?”

How is show marketing?

We’re a marketing machine. It’s either really easy and they break really quick like those that come through the Disney or Nickelodeon machine, or they’re just very lucky coming through and somebody pops them. Usually it’s a grind and they just linger.

How’s the national tour side?

You know, for us, knock on wood, last year was actually the best year we’ve ever had. We did the Disturbed tour, and posted 31 dates with Avenged Sevenfold. The other day, we were at Pine Creek Meadows and we thought a show was a wash, and then we had 1,000 tickets sell on walk up. That really surprised us. People are buying tickets differently, and when we see slow sales, we try to do more comps and more radio plays to drum up publicity. You don’t want to train the market so much that they’re just going to wait and get a deal. Our ticket prices at the 1,500-cap in Spokane are very competitive, between $18 and $22 with fees at $2 to $3.

What ticketing provider do you use?

Right now, we’re on TicketFly. We had a deal with Ticketweb, but this national TicketFly offer came up and we’re really happy with how it’s worked out.

What’s the sell for the artists on the national side to hop on with Knitting Factory?

I feel like you’ve got to work with the others guy and I have no problem working with Live Nation and AEG if the deal structure is right for us. But primarily, we’re in tertiary markets and when it comes to club buys, I think we benefit because we open artists to different markets. Music is changing, and the media and the Internet have exposed music to people all over the world. Some fans in small towns know more about L.A. bands that I do. And we treat the artists like gold when they come through our facilities. We’re all hands on deck; all of these guys, myself included, came through the venue side. I know that if I show up at my venue and there’s trash on the floor, I’m going to pick it up. I remember two years ago at one of my venues, we had Dierks Bentley come through, and I just laughed to myself because I was sitting in the bathroom, holding tiles in place with my feet as our guy secured them to the wall. I thought to myself, “This is how it’s always going to be.”

Interviewed for this article: Morgan Margolis, (323) 798-5628

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