Audiotalk-business

The Studio Business
What does the client want?
Economic Reality
Real Life Business Models
Additional Income
How to save money
Your Market Survey
The Digital Time Bomb
Advertising and Sales
Marketing means to listen!
The Future Studio
Record industry crisis
Band Legal Status
Myths of the Industry

          How to Save Money         

Cl;ick here to go to the introduction!

Click here to find out about the studio building!

Click here to go to the studio business chapter!

Click here to go to the chapter on studio types!

Click here to go to the chapter on people!

Click here to go to the index!

Click here to find out about types of equipment!

Click here to go to the project chapter!

Click here to go to all the links and downloads!

Saving
 
So, let's look at how to save money. Did you know for example that if you leave your equipment on overnight, you could be wasting the equivalent of a new Mercedes every five years and you are more than halving the life expectancy of your equipment? Never before, has saving money been so important!
 
The Tale of the Prodigal Studio
 
Some years ago, I was asked to visit a studio run by a husband and wife team who were in difficulties.  He was the audio engineer and his wife looked after the children, and did all the day-to-day office work.  They believed that they were just the victims of bad luck and a downturn in trade.  I’d been called in to do some PR work in the hope that it would pull things around, but it soon became apparent that they had far bigger problems.
 
The studio began back in the early eighties in a rented building when business was good.  After just two years, they were able to make the down payment on a farmhouse with outbuildings suitable for conversion.  Being thrifty, the husband decided to do the conversion himself.  It was an old, sandstone house and he lined the walls with a wood frame and glasswool and plasterboard.
 
The used desk was a real bargain.  It was a very large and impressive, but needed some attention. With its wide channel strips and its very chunky buttons, it was quite a beast and impressed the customers.
 
By the time I came along, the studio was in difficulties.  The desk needed a recap, so in order to keep things more or less stable, the studio was left on day and night.  The 2" multitrack was traded in for a first generation DAW that was no longer state of the art.  They had to place a second mortgage on the house at a one percent higher rate to finance the upgrade and keep going.  And then, to top it all, the soundproofing materials were starting to rot and the studio stank as a result.
 
The wife had been offered an outside job, but they decided that she should stay in the business and push it forward until times got better and business picked up.  Everything was invested in the studio, so that was where they wanted to put all their efforts.
 
Well, business never did get any better and they folded two years later.
 
They may appear to have made every mistake in the book.  But if you think about it, each and ever step they took made sense to them at the time and each and every one of us has done something similar at some time or other.
 
Designing disaster
 
The DIY studio-build was a mistake.  Even the local bricky could (and in the end, did) tell them that glass fibre next to an old sandstone wall will rot.  Add to that, a rather substandard finish, and one realises that the owners had wasted thousands of Pounds in building materials, only to have to tear the lot down and start again, just to stay open.
 
A Cap in Time
 
They wasted money by skimping on maintenance.  The desk probably needed a recap when they bought it, so by the time it was making funny noises, the faulty capacitors were probably helping other components into the grave.
 
Collin Adshead, owner of Audio Maintenance advocates a DIY approach.  "If you are good with a soldering iron, there is nothing to stop you performing the recap yourself."  He points out though, that you will still need a technician to test and calibrate your desk.  "But don’t delay!" he warns.  "If the desk needs recapping, do it, otherwise DC can get into the audio path and damage other components such as switches."
 
But before you rush out to get that big, beautiful bargain, it pays to talk to someone like Collin about the cost of maintenance.  He points out that some desks need recapping fairly often and it is usually the largest and most complex desks where the recapping is the most difficult and therefore the most expensive.
 
"You will need a really good desoldering station and they cost a great deal when new, so buy a used one and then just sell it when you have finished."
 
"And don’t use contact spray!" he adds.  "If switches and pots are faulty, replace them.  Contact spray only delays the inevitable and can lead to other problems by attracting dirt."
 
Attention K-Mart Shoppers!
 
The purchase of the first generation digital recording system was another mistake.  Nothing loses its value quite as quickly as a new technology and once the market had become used to digital recording and editing, customers were asking for 24-bit, not their 16-bit workstation.  But in general, they had done a good job in pressing for the best price on everything, and this fact went a long way to the initial success of the studio.
 
A friend of mine once bought a prestige reverb unit for 15000 from an equipment discounter, safe in the knowledge that they were in the past always they were always the cheapest.  At the same time, I bought the same reverb from my authorised dealer for 9000.  OK, that was more luck than judgement on my part, but it does go to show that one should always check every price for every purchase. 6000 is a great deal of money to just give away!
 
Also remember clients are paying you to achieve a final product.  Having the most expensive system may not be your comparative advantage.  Or as John Cornfield of Sawmills Studio puts it, "I prefer to use Soundscape, rather than ProTools. Apart from being far cheaper, I just find that it is a better system.  And people are paying for my engineering, not for which system I use!"
 
Turn it off!
 
Our couple had been told that large pieces of equipment should be left running all the time.  I have since become aware of many studio owners who believe that this is the right thing to do, so, for the purposes of this article, rather than just voice my opinion, I went to the top and spoke to Graham Langley, former owner of Amek and of course a very famous console designer.
 
His advice - "Turn it off!  There is no reason to leave equipment on over night.  Not only does it waste electricity, but it shortens the life of the desk.  To put it bluntly, if you leave it on all the time, it won’t last very long!"
 
Collin Adshead also points out that there is no valid reason for leaving equipment on for long periods when it is not being used, but some very good reasons for turning things off at night.  "The one factor that has the largest effect on the life expectancy of a capacitor is heat.  By leaving things on when they are not being used, you are helping to dry out the capacitors and that means having to perform a recap sooner."
 
Electricity Costs
 
If maintenance requires an expert, working out your electricity costs is simple arithmetic.   You need to know two things - the power consumption in kilowatts and the cost, which is stated on your electricity bill and is usually somewhere around 7.5p or 15 Cents per kilowatt hour.  Your electricity meter will tell you how many kilowatt hours you are using in one hour.
 
In this particular case, the desk used 3kW, the machines used 2kW and the air conditioning another 2kW.  That meant that every hour they burnt off about 54p.  The studio was used for 60 hours a week, so the machines were running for an extra 108 hours, when they should been switched off and that comes to 58.21, or 2910 each and every 50-week year.  Over a ten-year period that is ten times as much, or the cost of a really nice brand new luxury car.  Add interest and the cost of at least two recaps, and you can double that figure!  Now you begin to see just how wasteful leaving things running overnight really is.
 
Just leaving a rack full of converters and an Apple Mac on overnight can add 4000 over ten years.  Add all the other items in the studio, and you might just want to hit that circuit breaker!
 
Very Interesting
 
Our couple added one percentage point onto their 20-year mortgage because the new finance company was prepared to allow them a few months mortgage holiday.  This may have helped their liquidity for a while, but just one percent increase from 4% to 5% adds 13% to the cost of your house.  Moving from 8% to 9% adds a thumping 16% to your overall costs.  On long-term agreements like mortgages, small movements in interest has a large effect on the final cost.  So it always pays to compare rates and work out what the real cost will be.
 
You’re Fired!
 
Companies (and studios) fail because their management, for whatever reason, could not cope.  They are then, by definition, incompetent.  One of the biggest savings any company can make is to get rid of unnecessary staff.  The wife should have left the company and gone out to work.
 
Although the studio had a good reputation and was still able to draw clients, there just was not enough trade and, more importantly, not enough profit to support two people.  Also the husband could have partially left the company - in other words, apart from looking after the children, taken on other engineering work such as repairs and maintenance.  Rather than trying to play catch-up, caught between demo customers that only want to record for one day and a desk that needed renovating, his time would have been better spent, closing the studio for a few months and recapping that mixer.
 
As we discussed in the previous chapter, there are many ways for a studio to earn money, beyond just hiring out the rooms for recording music.  Our studio owner was missing opportunities and therefore wasting money by not exploring every avenue.  Armed with additional income from both partners and with lower costs, that studio could have made a profit.  The name and reputation of the studio would have helped the husband get outside work.  As things stood, not only was it too late to change, but the couple were not prepared to face reality.
 
Reality
 
The old days are over.  If you run a studio today, you must calculate each and every cost factor as if you were a supermarket discounter.  A good businessman looks at every aspect of his business and seeks out waste and tries to eliminate it.  Just because recording music has always been a rather cosy cottage industry, does not mean that you can afford to think any differently.
 
 

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The Byre Recording Studio