How Multilevel Music Stores And “Schools” Hurt Private Music Teachers

“Why be the cow when you can be the farmer?”

In my previous article, How Music Teacher Directories Hurt Private Music Teachers, I began with the same quote and compared music teacher directories to farmers using cows for milk (and to the mafia demanding pay for protection against themselves). If those comparisons seem wild and crazy, be sure to read the article to find out why they are not. In that article, I promised to discuss another example of how certain business people exploit private music teachers.

Giving lessons in a music store is one of the best ways to start out teaching. Teachers pay an hourly or monthly fee to rent a teaching studio in a store. A teacher usually gets a considerable number of referrals from this, and stores also benefit from this deal since teachers bring a lot of people into their stores every week, generating sheet music sales and instrument rentals. Perhaps most importantly, it creates great loyalty between teachers and stores. Even after leaving a music store I taught at for several years, I remained loyal to this store, sending them a great deal of sheet music and piano purchase business.

Unfortunately, many stores take it further than the simple rental scenario: they take ownership of the teacher’s students. They do not allow a teacher to keep their students if the teacher wants to move to a different location. If the teacher buys a house and wants to start teaching out of her living room or basement, she will likely be met with financial trouble since the store keeps the students and assigns them to another teacher. This seems fair enough in the context of a university or conservatory since these institutions are accredited. Students need to study with people hired by the university in order to obtain a degree. But in the case of music stores, the only thing that is protected by this “students stay with the store” policy is the store owner’s pocketbook.

This policy infringes on inherent rights that all students have, which is outlined in the MTNA Code of Ethics: “The teacher [or store] shall respect the student’s right to obtain instruction from the teacher of his/her choice.” The fact that someone is willing to enter into an agreement does not mean it is right; contracts can be invalidated in a court of law for a number of reasons, one of which is if they are found to be in conflict with public policy. MTNA’s Code of Ethics may not be strong enough basis to invalidate a contract since it’s just a code by a non-profit organization rather than law passed by U.S. legislature, but the point is that a contract that is unethical does not become more ethical just because it has someone’s signature on it. I suspect this explains why some students follow their teacher even despite the store’s retention policy. I’ve seen it happen several times among colleagues, and it has usually created bitter feelings and possibly even explosive disputes between the teacher and the store.

Music stores aren’t the only ones who do this. Sometimes it’s a private teacher. Suppose a teacher named Barbara becomes impatient with her own ability to trade hours for dollars, and she starts dreaming about taking a little piece of profit from the labor that other teachers perform. She decides to go forward with some plans. But she quickly realizes that in order to make this “please teachers, give me some of your money every month” deal attractive enough for other teachers to actually buy into it, she must make her business appear to be some kind of institution rather than a mere teaching studio. Suddenly, grandma’s living room has now become Barbara’s Piano Academy (she wanted “Barbara’s School of Music”, but Jim’s School of Music down the street would make her title seem like a copycat). Barbara knows that words like academy and school will give people some sense of accreditation or official standing in the music world, when in fact the students in the academy are performing no better than students who take lessons from teachers not affiliated with some “academy” or “school.” Now, instead of having teachers work for her, she has teachers working at the academy. This helps to put people at ease about the idea that each new student the teachers get makes Barbara’s pocketbook fatter.

I’ve read some business articles in music journals (and have attended music business workshops at conferences) that suggest adopting names like this in order to be more “professional”, so I apparently draw the line sooner than others do when it comes to distinguishing between marketing and deception. By definition, marketing seeks to promote virtues and minimize vices of products and services. If this effort goes too far, marketing turns into deception. Owners say they’re trying to promote an image, but sometimes this image is more of a mirage or hallucination. There are many living rooms around the nation that produce more festival trophies, competition winners, excited students, happy parents, and scholarship winners than piano schools and music academies, and truly great teachers don’t even need a title (not even “Smith Piano Studio”)1 to develop a long waiting list. Results speak for themselves, and word of mouth carries far.

Continuing to trace the development of Barbara’s newfound Piano Academy, her next question is who to recruit. Despite the fact that Barbara’s piano teaching colleague (Jane) lives just down the street, Barbara does not even consider asking Jane. You see, while Jane might seriously consider an offer from a real music conservatory or university, Jane would consider it laughable to join this so-called “academy” since she knows she is worth more than she’d be paid, or she’d find out that her students would be charged $10 or $15 more per hour than she’s getting paid. Barbara is therefore forced to find teachers who are either underqualified to teach, who have just begun their teaching career or who have relocated and are not patient enough to build their own studio, or who simply aren’t bothered for whatever reason by the fact that they get all the drawbacks of working for an institution without any of the benefits.

Benefits of working for a real K-12 institution, such as the Carnegie-Mellon Preparatory School, include prestige, access to great students2, access to top-quality grand pianos in teaching studios, access to concert grand pianos and large recital halls, access to the institution’s library, Internet access, and of course we can’t forget definitive results. The CMU Prep School keeps as much as 50% of the students’ tuition before paying teachers – certainly a high price to pay. Tuition there is much higher than going rates, and teachers are almost certainly paid less then they’re worth. But it still seems to be a fair trade considering all of the value the CMU Prep School adds to the exchange between students and teachers.  Another good example of institutions with unquestionable legitimacy would be ones affiliated with the National Guild for Community Arts Education – affiliated organizations can be found in the Member Directory (examples of affiliated organizations in my area would be non-profit organizations Pittsburgh Center for the Arts and Pittsburgh Musical Theater).

Ironically, titles such as “Preparatory School”, “Center for the Arts” and “Musical Theater” are plain and even possibly humble titles since they do as much or more than their titles suggest. I cannot say the same about Barbara’s Piano Academy and Jones School of Music. Their titles suggest institutions when really they’re just payment structures among music teachers and a music teacher boss.

If Barbara is really smart about giving her teachers all the drawbacks of working for an institution without the benefits, she will go out of her way to refer to these teachers not as teachers, but as “independent contractors” for her business. Independent contractors are kind of like employees, except 1) employers cannot held liable for the actions of independent contractors, 2) private contractors do not work regularly for the employer: they only work as and when required, 3) independent contractors must pay 100% of taxes they owe themselves (no employer contribution), 4) independent contractors don’t get benefits that employees get (see previous paragraph), and 5) unlike employees, private contractors are not told what to do in their job or how to do it. Why do I cross out a couple of these characteristics of private contractors? Because Barbara is a cherry picker. Barbara’s cunning strategy here is to define her private contractors in all the ways that benefit Barbara, ignoring everything else. Barbara needs her teachers to work regular hours, and regarding #5, Barbara would surely argue that she directs the teacher to “teach the student” each week (directing the end result of the work) but does not instruct on how to do it, which is what the IRS wants to see with a private contractor relationship. Barbara is in luck, as long as she doesn’t ever provide any training to the teachers in her school. But I still crossed #5 out because many schools and academies out there like Barbara’s do tell their teachers how to teach in one way or another, whether by training teachers, requiring use of certain curriculum made by the school, or by imposing a lesson format onto the teacher such as 15 minutes of warm-up on a keyboard, 15 minutes of ear training on the computer, and 15 minutes of private instruction with the teacher.

So, while Barbara would certainly argue that her “academy” title is all about promoting a positive and professional image to the community, the real reason for the title is to obscure the fact that Barbara has inserted herself as a middle man in transactions that, again, either short change teachers or inflate prices for students. It is a mathematical inevitability that Barbara’s profit margin must come from somewhere. This brings us to perhaps the biggest difference between legitimate and illegitimate music academies: unlike Barbara, the top people who run the CMU Prep School, arts centers and musical theaters do not benefit financially when the institution’s teachers gain students.

Multilevel Music Stores and Schools

I’m going to refer to these stores and schools as MLMSs, which can conveniently stand for both MultiLevel Music Stores and MultiLevel Music Schools at the same time. For those who don’t know, multilevel marketing (MLM) is a business model that seeks to build passive income by recruiting a lot of people “under” you so that you’re paid for the work they do. The most famous example of an MLM business is Amway. Unlike the passive income created by royalties, instrument/apartment rentals, and investments, passive income that results from MLM is created by the continuing labor put forth by others lower in the hierarchy. Applied to music stores, a store owner will become more profitable when more teachers (each with their own students) are under him.

There are also online “schools” that work the same way:  they connect students and teachers together, and they do all of the billing, taking a cut for themselves. This presents us with a bit of overlap from my previous article on music teacher directories, because some of these directories do this as well. We are reminded here of the eternal finders fee, because the store never stops making commission off of the weekly transaction between student and teacher. The MLMSs who benefit from the eternal finders fee all have one thing in common: they all do billing for teachers. This is the only means they have to enforce their fee. For this reason, billing is more of a service to the MLMS than it is to the teacher. It is a necessary and inevitable result of the business model.

Even so, are teachers getting a fair deal when MLMSs take profits away from them in exchange for billing? My answer to this question is most definitely no. MuBus.com does billing for only 4%, and they have done so successfully for many years. I don’t know of any music stores or music “schools” who charge just 4% for billing.

Granted, MLMSs (stores and schools, not teaching directories) are also providing teaching space, a piano, and piano tunings.  But renting a studio for $6 per hour should be all that is needed to make plenty of profit from the studio/piano rental time. Using a generously conservative estimate that assumes no teaching during summers, if a store books the studio 30 hours per week (5 hours per day, 6 days per week) at $6/hour (15 non-teaching weeks), this would rake in $6,660/year, and in my experience, these stores usually have four or more studios. The cost of tuning the piano is nothing compared to this income, especially when you consider that the stores must keep their pianos tuned anyway in order to sell them (and I can tell you from experience that these stores do indeed sell the pianos in rental rooms). Most piano stores also usually get a hugely discounted bulk tuning rate from an in-house piano technician.

Is the service of billing even worth 4%? Maybe for some, but under my system of billing, absolutely not! In my studio, people pay the same predictable amount every month, which allows people to add me to their electronic bill pay recurring payments (at least half of my students do this). For those who don’t set up automatic payments, my payment drop box is mounted on the wall, right next to where parents wait for their kids. The late fee policy is printed on the drop box, and so is my mailing address. It’s such an easy system, I don’t have to send bills. There are typically 3 or 4 students each month who need reminder phone calls, and I’m very patient with them since I don’t send them bills that would serve as reminders (I only actually enforce my late fee if it’s the same person late over and over again, which hasn’t happened for many years). Everyone is happy, we almost never talk about money in the lesson, and the 3 or 4 phone calls per month might take 10 minutes per month tops. 4 percent would work out to $100, $200 or $300 per month depending on how many students I have, and this isn’t even close to worth it. I also like having control and oversight over what is happening in my own business, and for that reason, I don’t think I’d allow someone else to do my billing unless they paid me.

MLMSs always take a much bigger cut than just 4%.  Usually it’s more like 30-50% of what the teacher is paid.  Economists define the term exploitation precisely by comparing what workers give with what they get. If an employee makes more profit for a company than what he is compensated for, he is said to be exploited. The degree of exploitation depends on the size of the gap between profit and compensation. With this in mind, it is either the teacher or the student (or student’s parents) who is exploited, depending on whether the MLMS pays the teacher too little or charges the student too much. The former case is an evil that speaks for itself. In the latter case, the increased price of the lesson does not yield any benefit whatsoever to the student. In fact, if I were to teach in a music store, my students would be getting a far worse deal. I would be without my extensive sheet music and CD collections, I probably wouldn’t be able to teach on two pianos, and we would have to deal with the noise of neighboring studios, much like practice rooms at universities. I’ve also noticed that ventilation is often an issue in rental rooms (I’ve seen several stores that use glorified closets with sliding glass doors as teaching rooms). I would also be getting a worse deal from the fact that I’d have to take valuable time out of every day in order to commute to the store.

Of course, some teachers do not have their own pianos, or they are in apartments where they’re not allowed to make noise during the day. From that point of view, the music store provides a very positive service to the teacher. However, this scenario doesn’t change the fact that MLMSs are still getting a lot more out of the deal than they’re putting into it.

Also, I’ve noticed that multilevel music schools produce their own music books more often than private teachers do. When there are several hundred students enrolled, the owners quickly realize that they’re missing out on an additional money-making opportunity by having students purchase (heaven forbid) legitimately published and pedagogically-researched method books. So they make their own books. There is usually no attempt to publish these books with a publishing company since that would be allowing a middle man in the picture (remember, being the middle man is what these schools are all about). They also know the books simply wouldn’t sell to anyone other than those in the school who are required to purchase the books since there is no real research that goes into these books other than the teacher’s own experience3.

Build Your Own Studio

My advice to teachers just starting out in a music store is to choose a store that allows teachers to leave with their students, even if it’s a store that gets less volume of calls. I think it’s better to build your own independent studio slowly than to build the MLMS owner’s human property quickly. Don’t choose a store that bills your clients for you unless you’re extremely certain that collecting payments is a burden you cannot tolerate. If so, I would suggest that your payment or billing system is probably too complicated. And remember that MuBus.com is happy to do your billing for just 4%.

Even better, choose one that charges a fixed studio rental rate per hour (or per month), rather than per student.  They should have no concern over how many students you have, whether you use the rental time for teaching or practicing, etc.; they should only concern themselves with making sure nobody else walks into the studio while you’re renting it. You are already paying them for your studio time – it’s a fair trade, and that’s all that any transaction should ever be. Fair. If the store needs to charge more per hour for their studio rentals, so be it. At least it does not try to exert artificial ownership over you or your students. And remember, you’re already doing them a favor by bringing 30 or 40 people in week after week (boosting instrument, sheet music, and music supply sales) and creating word-of-mouth advertising for them. Even if they found your students for you, you’re still the one who brings them back every week.

Best yet, find out how much money you would need to pay in order to “own” your studio. “Ownership” here is still renting, but it’s renting without having to worry about anyone else ever using the same room – it becomes completely “your” studio. You may not be trusting enough to keep your most valuable things in the studio (remember that store employees still have access to your studio), but at least you’d be free to come and go as you please during store hours, you could decorate the walls with pictures, keep sheet music and CDs in a music cabinet (if you trust the store), and possibly even keep your own piano there if you live in an apartment but own a grand piano.

Notice that my advice here only speaks of music stores. I don’t believe any of the “Barbara’s Music Academy” places out there would merely charge you X dollars per hour to rent their studios for any purpose you choose (practicing or teaching). They are in business to make money off of you and your students. One does not simply call up Barbara’s Piano Academy and ask to rent one of her studios for a couple hours each week. At least some music stores are only in business to make money off of the renting of their space and equipment.

Final Words

We’ve all seen the journal and magazine articles that discuss how underpaid our nation’s teachers are. If there is any truth to this, then MLMS owners would have to be part of the problem, because they take a cut of the teacher’s earnings that is not proportional to what they are doing to earn that cut. No finders fee is that valuable, and through a lot of experience talking to teachers both inside and outside of these MLMS arrangements, I’ve sensed that the vast majority of teachers who settle for this are either teachers who haven’t taken the time to really think this deal through (and/or who don’t realize how much they are really worth), or teachers who are desperate and/or impatient to get students. When prices or price structures can only be set based on adequate ignorance/naivety or desperation on the part of the consumer (or in this case, the “private contractor” teacher), this is borderline scamming. Every salesman knows that it’s easier to rip off uninformed customers than informed ones. Be an informed, independent teacher. Don’t become one of the cows of MLMS farmers.

(c) 2012 Cerebroom

  1. I say this as one with such a title for my business. Calling my business “Twedt Piano Studio” describes to people exactly what my business is without the slightest hint of deception. My only point in saying that great teachers don’t need this title is to say that while these business titles are nice and don’t deceive anyone, they also provide very little benefit to the teacher who is truly in demand for their exceptional teaching.
  2. Bear in mind that more prestige attracts better students, and better students leads to more prestige – the classic “chicken or egg” dilemma.
  3. I once heard, “95% of all drivers think they’re above-average drivers.” I think of this when I hear some teacher with X number of years experience touting that his experience alone is substantial enough to counter the experience, research and collaboration that goes into some of the more prominent method books out there. The percentage of book-publishing teachers who think their own books are above average is probably very near 100%.

About Chad

Chad is a pianist, composer, piano teacher and blogger with a Masters Degree in Piano Performance. He received the 2005 Nevada Arts Council Fellowship Grant for the composing and performing on his Ostinato CD.
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6 Responses to How Multilevel Music Stores And “Schools” Hurt Private Music Teachers

  1. Pingback: Tips for First-Year Teachers | LaDona's Music Studio

  2. Joy Morin says:

    Very thorough article!

  3. Pingback: Cerebroom – How Music Teacher Directories Hurt Private Music Teachers

  4. Very interesting article, and you have clearly thought through this carefully. However, as a former owner of a music lessons company with a 5,000 sq ft building and up to 20 teachers, I know how much it costs to retain each student. And our teachers were W2 employees, some of whom were salaried. There are non-compete clauses in many businesses, so to try to challenge that here because of the MTNA ethics seems to me to be forgetting about all of the expenses that the business paid in order for that teacher to have those students to teach. That’s the trade off, and the teacher knows it going in. If a teacher isn’t capable of getting his or her own students without a store or company, then that’s what the company is there to provide. Plus, the company is providing the electricity, the facilities, paying for the maintenance of the piano, and in my prior case- the recital hall (which was in our building), and much much more. You have to remember all that the business is offering before making it sound like such an unfair deal.

    • Chad says:

      Thanks for bringing up these points, which prompts a discussion relevant (but not already covered by) the article.

      The FTC recently went after MTNA over a couple issues, and one of them was that there was wording in MTNA’s code of ethics that discouraged teachers from prospecting the students of other teachers. This too is about retaining students. While I believe the FTC was way out of line in terms of what they put the MTNA staff through (hundreds of cumulative hours digging up past documentation), I’ve always agreed with the overall position of the FTC even before the current administration decided to go after non-profits – namely that it is absolutely and solely up to the student who they study with. Any explicit or implicit policy whatsoever that infringes on the inherent right of students to seek instruction from whomever they wish is an anti-trust issue, plain and simple. No teacher or business has even the remote ethical right to tell a student who they can and can’t study with, whether it’s out of a sense of colleague camaraderie (MTNA) or protecting one’s pocketbook (non-compete clauses). I can’t imagine being told as a piano student that I can no longer study with my beloved teacher because the two teachers want to preserve their friendship, or (even worse!) because the owner of the business wants to protect their middle man income.

      One of the things the FTC looks for when evaluating in the area of anti-trust is whether or not the non-compete clause serves the public interest. There is absolutely nothing you can do in the time of a couple months or even one year to turn a severely underqualified teacher – a teacher who shouldn’t be teaching in the first place – into a teacher who should. I couldn’t do it even training the teacher privately for an hour every day for a year, and neither could the best university piano pedagogy program in the world. Any training you boast is going to be superficial compared to the huge amount of quality instruction someone must receive (and the thousands of hours of mindful practicing) over the course of 1-2 decades to be able to truly honor the tremendous responsibility we all have to our students, especially our most ambitious, gifted students who actually have a shot at, say, successfully auditioning for a very competitive post-secondary music program. Above, you mention the non-compete clause in connection to those teachers who can’t otherwise retain students. I think it’s going to seem obvious to any reader of that comment that there is something wrong with the picture of providing a steady, artificial stream of students to teachers who can’t retain them. Again, being in the public interest is a crucial part of the necessity of any non-compete clause, and we must consider that enabling underqualified teachers to this degree is perhaps not in the best public interest.

      You mentioned electricity, tuning of pianos, facilities, recital hall, etc. as if I didn’t address those things in my article, but I did. Do a CTRL-F search for the word “Granted.” That paragraph talks about piano stores, but in your case, I would argue that you should simply figure out what hourly rate is necessary for you to make a profit and just charge that rate. If such a business model is not possible to maintain because you’d lose too many teachers who take their students to their own homes, then I personally feel that this business model is not meant to be – those teachers who don’t stay obviously feel that the your provided services of “electricity” and other things are not worth staying over. I think it’s a red flag when the only way a business can exist is to 1) employ mostly teachers who for good reason have low retention of students on their own, 2) all but force those teachers to stay once established, and 3) all but force students to stay with your business when they otherwise may not want to.

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