Friday, March 14, 2014
It's been awhile since RAW Tucson hosted an event here in town (the last one I see was in November at Club Congress and the organization's website for says our location is currently "coming soon"), but for awhile, every time there was a RAW event, someone in the arts community would ask me what I thought of it. I never could really answer, because it didn't make a lot of sense to me. Why would anyone pay $300 (or sell tickets to make up that charge) to be a part of a one-night-only show that promises to launch your career/build exposure/all the other bullshit people say to artists to take their money?
Well, alt-weekly Cincinnati City Beat looked into RAW's business practices this week and - perhaps not surprisingly - they find the business model is more like Herbalife than an arts organization:
RAW’s claim to have empowered more than 15,000 artists last year suggests the company is looking at millions of dollars in annual revenue, and the income likely doesn’t end there. RAW’s ever-growing audience opens the door for sponsorships of its awards series and classified advertisements on its website, plus additional door and drink sales at dozens of events around the world every month.
If RAW’s revenue potential isn’t enough to pique one’s interest in this emerging international company, its similarities to multi-level marketing operations (MLM) might be. The U.S. Securities and Exchange Commission frequently sues operators of large-scale pyramid schemes for violating federal securities laws through MLM programs. The Federal Trade Commission doesn’t take kindly to them, either.
Ayla Benjamin, who ran RAW’s Cincinnati chapter for seven months in 2012 through local marketing firm Spotlight 360, compares RAW to Mary Kay and Pure Romance — multi-level marketing firms that allow “consultants” to run their own small businesses using the company’s name and products.
“There are people who decide to get involved with those companies and they are very successful,” Benjamin says.
The SEC’s Office of Investor Education and Advocacy details six pyramid scheme warning signs, including “no genuine product or service” and “emphasis on recruiting.”
“In an MLM program, you typically get paid for products or services that you and the distributors in your ‘downline’ (i.e., participants you recruit and their recruits) sell to others,” according to the SEC.
[RAW founder Heidi] Luerra flatly denies that RAW is a scam.
“My response to anyone that assumes we are a scam or a pyramid scheme is simply that we’re not,” Luerra wrote to CityBeat. “I believe that there is misinformation and miseducation occurring by individuals who simply have an opinion — and in fact were once very enthusiastic about participating in RAW.”
The entire article is worth a read, but another troubling section regards an attempt by RAW to silence their critics:
Luerra asked her directors to email any “stoked-on-RAW artists” who might be willing to write positive testimonials on key sites where each director was supposed to open RAW accounts, including Twitter, Pinterest, Google Plus and various community government websites. She later updated the staff in a page titled “Stupid Blogs Update,” which detailed plans to employ a search engine optimization (SEO) company to bump positive feedback above stories criticizing the company.
The plan was in full force by last May, when Luerra sent the staff an email introducing “Operation: Dumbo Drop.”
“Welcome to your first edition of our super secret mission, Operation: Dumbo Drop (not to be confused with the Disney movie),” she wrote. “In relation to the blogs we told you about we’re taking some strides to get this off the front page of our Google search. We just met with an SEO specialist and will hopefully be able to bring in the big dawgs soon. In the meantime (since we have a small army involved with RAW), we can really make some headway on our own.”
CityBeat asked Luerra in an email why she started the SEO campaign, and once again she prefaced the response in a litigious tone: “Note: This again references company information that was disseminated illegally and said parties are now in breach of contract.”
She then answered the question: “The SEO campaign was created to simply help others understand who we are and what we do without being clouded by misguided and misinformed individuals.”
In addition to detailing Operation: Dumbo Drop and the “mucho margaritas” Luerra and the gang planned to consume during a corporate retreat at the Samba Vallarta Resort in Mexico from Jan. 21-25, the documents detailed ticket sale totals for hundreds of events between February and December of 2013. RAW sold more than 30,000 tickets in April and May alone, with Nashville, Phoenix, Baltimore, Milwaukee, Dallas, Austin, Texas, Hartford, Conn., Omaha, Neb., and Riverside, Calif., breaking their own records during the two-month period. Thirty-thousand tickets should have brought in somewhere between $450,000 and $500,000, depending on how many were sold at a higher price at the door.
Things would be simpler in RAW’s world if every location operated as smoothly as Phoenix, where a single event on Oct. 17 sold 852 tickets, totaling $12,915. Because a subcontractor ran the Phoenix chapter, RAW took back $3,300 in upfront costs and a $2,000 franchise fee, leaving $7,615 for showcase director Laura Fischer.
I contacted current Tucson RAW host Chezale Rodriguez-Wells via Facebook message who said that she's waiting to hear from RAW higher-ups about the future of the organization in Tucson.