HALIFAX – It can be much harder today for musical artists to make a living at their craft. Digital technology was all but wiped-out album sales and, unless you know the right people, finding venues to play at can be frustrating.
But a Halifax-based business is making it easier every day for artists to find venues and venues to find artists. In 2017 Laura Simpson and Juno award winner Dan Mangan launched Side Door, an online platform that matched artists with places to play.
They are fast becoming the Airbnb of the concert scene in Canada. With Side Door, artists who don’t have an agent, manager, or industry connections, can find an audience.
“Most of the revenue artists earn these days is from touring because streaming really diminished the ability to sell music. So, the touring element is essential to earn an income,” says Simpson.
“Most of the folks who play, like 97 percent of them…don’t have representation. It is with representation that you can get into gigs and you can get on tours. And, beyond that, you’re really fighting for the off-nights and just trying to prove yourself to the bar managers. It could be a real struggle.”
Side Door, which makes its money by taking just under 10 percent of ticket sales, also encourages people to use their own homes and properties as concert venues. Side Door’s philosophy is anywhere can be a stage for music. Side Door has helped accommodate concerts in such unique places as goat farms, barns, and even a National park.
“People who have a space to offer can create this ecosystem. You can be an active participant in a tour route to help artists come out East and play,” says Simpson.
“The environment is really the third character in the scene. You’ve got your audience and your artist, but the place where you’re seeing something – it’s exciting and it can really add to the vibe.”
Simpson and Mangan met through a mutual friend in 2016 when they discovered they both had a similar idea for hosting a house-concert series. From there, the duo’s partnership formed and Side Door became a reality.
Simpson’s love of music and time spent in the music industry also formed the foundation of her business. In a previous career, Simpson was an export development officer, helping run a fund for Music Nova Scotia that helped artists go on tour. In that role, she saw how often artists struggled to make money.
“Oftentimes, people who go and do all the right things still come back having lost money because it’s just such a risky endeavor,” explains Simpson.
The music entrepreneur also discovered years ago how joyful it is to turn one’s home into a concert venue. Side Door now gives her a way to spread that joy to other people.
“My husband and I have been hosting house concerts at our place since 2011. And I do remember there was one night back in 2015 when I was watching a show happening in my backyard and thinking to myself, ‘this doesn’t get much better than this,’” she recalls.
Right now, Side Door hosts 5,000 artists and 2,000 venues and they will be looking to expand more into the United States within the next year. The expansion will be made possible by a $3- million in seed money recently raised by a series of investors. Side Door hopes to put on 100 U.S. concerts in the next six months.
The group that led this big investment is a Vancouver firm called Rhino Ventures. Peter Hung, one of Rhino’s investors, became sold on Side Door after seeing the passion Simpson and Mangan had for their product.
He was particularly impressed with the two’s ambitious goal of helping 100,000 musical artists earn $100,000 a year.
“When we met Dan and Laura for the first time, we were absolutely blown away by the way they conveyed their story and their passion,” recalls Hung. “We do a lot of founder calls every day and Dan and Laura definitely stood out. We felt the emotion they shared with us.”
Hung became emotionally invested in the product when he attended his first virtual concert hosted through Side Door.
“The artist was connecting directly with the audience…people were crying – there were tears, people were singing along,” recalls Hung. “And I was just so captured by that experience. I don’t think that time could ever be erased from my memory.”
The rise in virtual concerts during the Covid-19 pandemic proved to be fruitful for Side Door. Using Zoom, the platform hosted more than 900 concerts, and Simpson believes virtual concerts are here to stay.
“One of the reasons we wanted to do that was so that the audience and the artists could all see each other. People were really turning on their mics and having good communication with the audience.”
“For us and the artists that we worked with, this was our biggest time to date.”
Right now, Side Door is hiring more technical staff and preparing for a world where people will want both in-person and virtual concerts.
“We had to pivot once with the in-person to online last March. And now we are going through another pivot and now the world is changing again, and we have to adapt to going back to in-person and infusing the online with that,” she explains.
“And we really see a bright future for the hybrid model.”
Congratulations on your successful retirement! At a stage when most people are focussed on decumulation, you’re asking about establishing an approach for long-term, tax-efficient investing inside your corporation. Let’s walk through these important considerations:
Investment decisions: robo-advisor or DIY—and ETFs or bank stocks?
A robo-advisor is a great choice for automated, tax-efficient and low-cost investing. A robo-advisor will be able to set you up with a portfolio of low-cost, widely diversified ETFs. Regular rebalancing, quarterly reporting and ease of use will make this option attractive if you are looking for a hands-off approach. Most of the leading robo-advisor platforms in Canada will help you set up a corporate account.
If you’re comfortable being a little bit more hands-on, you might consider implementing a multi-ETF model portfolio. This approach will require you to open an account at a brokerage and do some regular investment maintenance, including allocating cash, reinvesting dividends and rebalancing.
Alternatively, you could also consider implementing an asset-allocation ETF solution. These “all-in-one” ETFs are available in different stock/bond allocations to suit your risk preferences, and they are globally diversified.
You mention tax-efficiency being important to you. Broad index-based ETFs track an underlying market index. The stocks and bonds in these indices do not change often, so there isn’t a lot of buying and selling of stocks—also known as “turnover”—happening inside of your ETFs. A portfolio with low turnover will not stir up a lot of unwanted capital gains in years that you don’t want to take money out of your accounts, and less turnover means less tax payable year-to-year, leaving more of your money working for you. All in all, tax efficiency is a huge benefit of an index fund ETF approach to investing, especially if you’re investing inside of a corporation.
You also mentioned bank stocks as an alternative. I can understand the appeal of this approach, as buying stocks of Canada’s large financial institutions has proven to be an effective strategy over the past several years. Unfortunately, the past performance of any investment strategy does not tell us much about its performance in the future. And, in the case of bank stocks, your investment will be very concentrated on a single sector, in a single country. This approach to investing carries risks that can be easily diversified away by using broad, globally diversified index-based ETFs. (In fact, Nobel Prize laureate Harry Markowitz famously called diversification “the only free lunch in investing.”)
Understanding the ins and outs of corporate investing
Investing inside of a corporation can be complicated. A corporation is taxed differently than an individual in Canada. As individuals, we are taxed based on a progressive income tax system, meaning higher amounts of income are taxed at higher rates. In your case, if you are earning (or realizing) a lower income in retirement, your last dollar of income is likely taxed at a lower rate than it was while you were working. When you combine lower tax rates with other benefits that the tax system provides to seniors—such as pension income splitting and age credits—it is possible that you will not be taxed at the high end of the marginal tax table in retirement.
Passive investment income generated inside a corporation, on the other hand, is taxed at a single flat rate of around 50% in Ontario, or close to the highest marginal tax rate. Passive income tax rates are so high because the Canada Revenue Agency (CRA) doesn’t want us to have an unfair tax advantage by investing our portfolios inside corporations.
(Bloomberg) — Poland played down the impact of a draft law ousting U.S.-based Discovery Inc. as a senior Washington official warned that a perceived erosion in media freedom could hit investment sentiment toward the nation.
The ruling party wants to pass legislation that will force Discovery to sell control of its Polish unit TVN, the largest privately owned television group in the country. The media regulator has also for more than a year not extended the broadcasting license for TVN24, the group’s news channel whose award-winning investigative reports have unveiled corruption at various government levels.
The draft law proposes to ban companies from outside the European Union, as well as the associated economic areas of Iceland, Liechtenstein and Norway, from directly or indirectly controlling television and radio stations. That would only impact Discovery, one of the biggest U.S. investors in Poland.
“This law only imposes the obligation to find a capital partner in the European Economic Area, and does not infringe anyone’s freedom of expression,” Marek Suski, a ruling party lawmaker and promoter of the TVN bill, told public radio on Friday. “I think that great American lawyers will find a way to do this.”
The legislation — which the ruling party wants to approve in parliament next month — has already prompted concern from the U.S. and the EU.
U.S. companies have invested more than $62 billion in Poland, second only to Germany, and provide employment for 267,000 people, according to the American Chamber of Commerce.
”This is a very significant American investment here in Poland,” Derek Chollet, a counselor at the State Department, told TVN24 in an interview during his visit to Warsaw on Thursday.
Failure to extend the Discovery unit’s broadcasting permit “will have implications for future U.S. investments. But it’s also a question of values” as “media freedom is absolutely crucial — a free press is important to empowering society,” he said.
Equity markets appear to be taking a breather as we move from early to mid-cycle in the post-COVID recovery, with market participants trying to figure out what that means and where we go from here. Many are wondering if we have seen peak earnings and peak growth, and if the rise of the variant will cause another shutdown.
You can see this in the muted reaction to some recent impressive quarterly earnings reports in the United States, with some high expectations already priced into share prices. And then investors hit the panic button on Monday, taking the S&P 500 and S&P TSX down to 3.5 per cent from its recent high, while the Canadian dollar has now lost all of its gains and is now flat on the year.
During these times its important to remember that markets don’t always go up and near-term volatility doesn’t necessarily imply that a looming meltdown is on the horizon. For example, did you know that we’ve counted that the S&P 500 has fallen more than two per cent eight times this year alone?
However, market corrections are quite common and can actually be quite healthy as they flush out those participants on the margin (excuse the pun) without the wherewithal to stand by their longer-term convictions. In that regard, looking ahead there are three main factors worth watching, not only as to the sustainability of this post-COVID recovery but also overreactions allowing for the opportunity to rebalance portfolios.
The bond market
We continue to believe that this very much is still a central bank-driven market environment. Macro policy will weigh heavily as markets react to indications of where the Fed and other central banks are positioning. For example, markets corrected more than 15 per cent when Bernanke signalled tapering back in 2010, and some argue that the tech bubble was burst when Greenspan indicated hikes were coming in early 2000.
That said, this time around central banks are in a bit of a pickle with rising inflationary pressures offset by the need to keep debt servicing costs down for massive government fiscal programs currently being funded by printing money. In addition, we’ve read that there are a record amount of job openings, but wages aren’t high enough to entice those unemployed going off government assistance.
This is where the bond market can be a good indicator and worth keeping a close eye on, but at the same time recognizing they don’t always get it right. More recently, long-term U.S. Treasuries (20 year +) have rocketed nearly 12 per cent from their May lows, nearly recouping all of their losses this year-to-date. For those overweight bonds, especially longer-dated ones, we wonder if they’re being given a rare second chance?
Don’t kid yourself. Despite the plethora of talk around the transition to clean energy, high oil prices still have a material impact on the economic recovery in the U.S. Five of the last six recessions have been preceded by a spike in the price of crude oil, with the only exception being the recession in 2020 caused by the COVID lockdowns.
The good news is that WTI oil prices have fallen from last week’s highs of nearly $75.50, down more than 11 per cent to below $67 a barrel on Monday. This couldn’t come at a better time as main street is in the midst of struggling with supply chain shortages causing inflationary pressures in key household staples such as food, clothing and gasoline.
Household spending & anti-vaxxers
We received some good news out of U.S. retail sales last Friday, showing a rebound month-over-month in consumer spending, which is a primary driver of GDP growth. People are tired of being locked up and have now been given a taste of what it’s like to experience a pre-COVID world again. This also appears to be in its early stages, as U.S. households are still sitting on quite the nest egg, having accumulated trillions in excess savings during the pandemic.
Looking forward, the trillion-dollar question, therefore, is if the stupidity of those choosing not to get vaccinated is greater than many expect, resulting in the rise of the variant this fall and forcing another lockdown. We hate to position portfolios around stupidity, but it is a risk nonetheless and worth keeping a very close eye on.
In conclusion, pullbacks are signs of a healthy market and more so, given they present a great chance to reposition and rebalance portfolios. This can be a rather difficult thing to do in today’s headline-grabbing environment, but it helps to strip out the noise, have a long-term plan and deploy some form of near-term active risk-management.
Martin Pelletier, CFA, is a portfolio manager at Wellington-Altus Private Counsel Inc. (formerly TriVest Wealth Counsel Ltd.), a private client and institutional investment firm specializing in discretionary risk-managed portfolios, investment audit/oversight and advanced tax and estate planning.
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