In his own words, Morgan Margolis is a real move-up-through-the-company guy. Only instead of climbing the corporate ladder one cubical at a time, he’s chosen to make his way in the field of live entertainment. The current President and CEO of Knitting Factory Entertainment took some time to talk to LA Music Blog about his career in the industry, what the Knitting Factory has going on in the near future, and why the closing of the LA location doesn’t mean you’ll never enjoy another Knitting Factory show in Los Angeles.

Knitting Factory

Knitting Factory started in New York and eventually opened a Hollywood branch. Why did they decide to expand?

Exactly why is hard to say. The people that were involved in the initial build out, I think they were thinking the name was starting to get out internationally. They were really big in the worldbeat scene, jazz scene, and afro-beat scene, and they had bites from Berlin and Japan. I think originally Michael Dorf had some interest from investors in Los Angeles as well and felt like he wanted to start getting the Knitting Factory brand to a more national audience. So LA at that point seemed like the right market.

How did you get your start working in music?

Well, I have been in the club/bar industry, not just the music industry, for 20 years. Honestly I came to LA in ’93, and I was running and bar managing Aftershock 16 years ago on Ventura Blvd. Then my next job was bar managing Luna Park on Robertson. So I moved to a more operation managerial role at Robertson. That was my first taste of a straight-up music venue, per say. That was probably around 1994, so I have been on the music side now for 15 years.

How did you end up getting involved with the Knitting Factory?

My old manager ahead of me there who was a GM when I was the secondary manager at Luna Park became the GM of the Knitting Factory in 2000 and brought me over to oversee the operations of the Knitting Factory’s LA venue. I had known of the New York venue because I grew up in New York about 6 blocks from it, so I came over with him.

My story is kind of interesting. To be honest with you, I was an actor. That’s where I stepped into this industry. When I got out of college in ’88, my parents were actors and I went to a high school for the performing arts. I was pursuing acting, and like most actors I was bartending and running bars and waiting tables and doing security. I came from that side. I am a real blue-collar, move-up-through-the-company guy. That’s what brought me to LA, and I was here and I was running the bars in LA. Then in early 2002 or 2003, I moved into more management positions. When a couple of different GMs had left, I decided I wanted to get deeper into it, so I took over as GM in ’04. Then the old CEO bought out the Big Easy, which are big venues in Boise, Idaho and Spokane, Washington. I don’t know if you know that story.

Not really, but I would love to have you expand on it a little bit if possible.

Well, it is kind of the mechanics of how our company expanded. We bought out the Big Easy in Boise and Spokane and Bravo Presents. The Big Easy in Boise is a 1,300 max capacity room and the Big Easy in Spokane is a 1,500 capacity room. Bravo Presents is doing touring shows, mainly in the Pacific Northwest, doing one-off shows. Large shows though, like arena shows and so-forth. So at that point we had a couple of issues with the purchase, and they needed somebody on a national level to kind of go and fix some of the problems that came up. I am giving you the quick story by the way. That job came up and I ended up getting it.

I then became the VP of West Coast Operations. At that point I pushed to change the name to Knitting Factory Concert House because we were trying to branch the company nationally and change the tour division from Bravo Presents to Knitting Factory Presents. It took me a long time to get that done, but eventually we got it done. Then we started having issues with our NY venue, and I became VP of National Operations, so I was overseeing LA, NY, Boise, and Spokane. Then almost a year ago after shuffling through the company, I pushed into the CEO position. So now I run the whole thing as well as our record label, management company, our media division, everything.

That’s really cool to know, because I have a really good friend who has been at the Spokane venue for several years and talks all the time about how many good metal and rock shows happen there.

Yeah that town…it’s funny because we throw a lot of different music in there, and it’s just that the metal and hard rock scene is awesome. If you look at our calendar, we put everything from Matisayu through a country show, but the shows that sell out are those hard-core metal shows. Puddle of Mudd, Gwar, and Mudvayne, but I don’t think people really get the depth of the company at this point. We are doing national touring with Knitting Factory Presents, we just did the Disturbed: The Music as a Weapon tour: 30 dates, then Avenge Sevenfold: 35 dates. We have Mudvayne: Pedal to the Metal tour nationally. I don’t know if everyone realizes that we are Top 14 in Pollstar, that I have Keith Urban up in the arena right now and Bonnie Raitt coming up. There are a lot of heavy heavy things going on with the company; we just kind of stay under the radar.

Yeah and this is the main reason I really wanted to talk to you. It seems a lot of people know the Knitting Factory, but they don’t know really too much besides the venue aspect of it.

Yeah, exactly. I know when I saw that article come out in Variety, it said “Knitting Factory to Close.” I was like, “Well, we aren’t closing.” I am shutting the LA venue, and I am actually looking to move it, but September 9th my Brooklyn venue opened up, and sometime late-October/early-November my Reno venue opens up. So there is a lot. There is a record label, KF Records. There is High Adventure Management. We also own 40 percent of Partisan Records, which has Deer Tick, so there is a lot of stuff. I don’t mind being under the radar so much, but I don’t want to go to battle with AEG and Live Nation, I will tell you that. Most people don’t. We are in the process of branding our name to be the next CBGBs type brand in merchandising.

Well it is good to see that there is so much more going on with the company, and talking to you has really kind of broadened my personal view of what goes on with Knitting Factory as a company rather than just a venue.

Well as you can see, we are pretty accessible. I run the company and you got to me (laughs). We are a pretty easygoing bunch. It’s a great group of people, and we all work together and are really laid back about it.

How do the major changes in the industry, i.e. digital downloading, lack of CD sales, etc., affect the Knitting Factory as a company?

I am sure you get this a lot when you ask that question, but it’s a broad scope and no one really has their handle on it yet. We are morphing with it. If I had that little crystal ball of how to figure that out it would be great. Everybody throws around that great word “content.” What are we going to do with content, how are we going to sell content, how are we going to film it, stream it, download it, and everyone is trying to figure it out. You just deal with one thing at a time. Advertising, for example. We definitely don’t do the traditional newspaper marketing advertising like we used to. I mean you have the site, and we do marketing through sites like yours and we do it all online. It’s a really small thing, and we have people in-house that deal with the MySpace and Facebook stuff all day long. Blogging, we have started moving in that direction as well.

The label side is difficult in that physical sales don’t work the way they used to, but you know that. The real money now comes in digital sales. It is just a matter of keeping your overhead down. We cut records differently than we used to. You can’t just lay out huge advances anymore. You have to work with the artist, and you need the artist to love who they are working with and have them work as hard as you do. You know how it used to go, you have a band you want and we are going to throw you $100k and we are going to do all the work. Now you have to work together. The artist has to bust their ass as much as we do. Deer Tick is blowing up right now, and they were inside our New York office at one point packaging their CDs along side of our label guys. It is a team effort, and I think that is really important.

We are trying to figure it out as it goes as well. The real direction of our company now is the venue side. We are breaking new artists, and as they get bigger throwing them into our touring division, building out in other markets than just the big national markets. Not just the NYC, LA, and Chicago markets but stepping into the smaller markets like a Boise and a Reno. I think it makes a difference, and it’s much easier to step into those markets because of the Internet. The music is getting to people a lot quicker.

It is crazy to see these changes because so many independent artists are starting to figure out how to do this without a label, but it is usually the more business savvy bands that can work with just a virtual label. I personally don’t think the physical label model will disappear though because you still have those people who are just artists and need help on all levels of the business.

I agree. I actually brought on the management side of things because I thought, “I have seen 80k bands pumping through all my venues and 95% of them aren’t signed and some of those aren’t even represented well.” I am just watching these new, raw bands and thought, “We should get a hold of them.” Not just for the financial sake of it, but because we love the music and I am thinking, “Why isn’t anyone else working with this band?” We are very specific and careful and moving along slowly with High Adventure Management. On the management side of things, we have three artists and that’s it, but when you look at how to market them and merchandise them, it’s different now in that you make your whole marketing plan revolve around “How do we break them online? How is it going to be, this morphing break of this artist in the non-traditional way?” We might have a hand in getting it out there, but it needs to be seen by the multitude of people online.

It’s just different. I mean my office is in the NBC/Universal building. I have 10 floors of Universal people below me, and I am in my office upstairs. There are a couple of labels up here also, and I stop on each one of those floors and I go, “My god, what are these guys going to do?” These huge companies, I wonder what there are going to do. I feel for all the employees that are working there because there is no way that they are going to have longevity unless someone comes out with something new. We are all just working on figuring out how to move forward with it. For Knitting Factory, that is just a small piece of my business. We have been doing a lot branding with film and TV as well and making those contacts.

Tell us about some other projects the Knitting Factory is currently working on.

Well as I mentioned before we are partners in Partisan Records, so that’s a big one because Deer Tick is exploding right now. We have a few other partnerships happening with DVDs that are being released. Gogol Bordello has a documentary coming out, and we are branded on there. That’s just a few of the things we have going on. I can’t really say too much, but once more things release, I will get back to you. Also our website is being redesigned and re-launched very soon, and as soon as it re-launches you can see everything coming up from the record label to the venues.

So for those who live in LA and might have read the Variety article about the close of the Knitting Factory, explain a little more about the changes happening here in LA with the venue and the reasoning behind closing the LA location.

I am glad you asked that. Essentially the reason we never closed the LA location before is that we were in a lease that ran 10 years plus 2 five-year options. We had to weigh out our options a couple of years ago when we were having problems in that location: the cost of shutting it down and moving versus just paying out the lease. So we thought we might as well stay here rather than just handing the landlord a check for 5 years of lease money. That would have just been insane to do. We have had issues with the building and safety departments, our conditional use permit, with the landlord…I mean it has just been fodder for many articles at this point, but the reality is that we were the anchor tenant in that community. We came in when it was a rough area over there, and we were in an entertainment plot. We had the Hollywood Entertainment Museum, we had Tower Records, and we had the movie theater above us. It was an entertainment complex and they slowly turned it into a retail complex, so we are now sitting in this mini-mall with no signage. It’s also a corridor where we get street closures non-stop, so it’s very difficult on a big show, at least once every ten days, to have people get into that corridor.

That’s a lot of the reasons, and rent just got higher and higher and overhead just got higher and higher. The layout of the room has never been bad. We love that there has always been three rooms, but booking it always is a monster. Essentially when we shut this one down, we are shutting down three venues at once. All three rooms are going, and it’s a drag for me. Mind you I came up through this company in that venue, so it’s very hard and people need to know how personally rough this is for me to make that decision in the end.

I will open an LA venue, and I have been looking for 2 years now to find the right property. I viewed four properties yesterday, so the reality is that I am not going anywhere, and that we might be down for 6 to 8 months because we have to rebuild out or get new permits, but I am going to open something up in LA. It may morph into something completely different though. Our Brooklyn venue is more of the front neighborhood tavern with hardwood floors and 12 beers on tap at all times and the back room is a 350-capacity room. It is more of like a Spaceland type room, and I may go that route here just because you need to have a revenue center and you need people to want to come down on more than just a show night and want to hang out in the bar.

We all love the music, but the reality of this is that it is a business too. The simplest fact is that venue in that location is hemorrhaging, and we were losing way too much money, and it was being carried by the rest of the company. As a company the reality is “Do I need to be in LA?” No, I don’t. I am in New York and spread around the country. Do I want to be here? Yes. Do I think we can make a difference in the music scene? Yes, I think we can. But I want to be clear and specific because of the competition level here. I have very little competition in Boise or Reno. LA, New York, I am up against 25-30 venues for every show. We are an all-ages venue, and there is a positive for that, but there are also some negatives that come with that. I have three kids of my own, and I want them to be able to see shows as well. Realize, though, that doing an all ages venue you lose your bar. You just pay a band 90% of the door, and you are staffing…you are upside down before you open your eyes. Even though we have 10-15k a month come through our doors, the outside public looks at us and says, “How could they be losing money? Look at all the people they have coming through.” I just want to make sure people understand that there is a specific reason that we are closing this specific location and not just getting rid of an LA venue.

For more info on the Knitting Factory check out:

www.knittingfactory.com

Make sure you also check out the show calendar as October is the last month the LA venue will be open for a while!