Striking musicians: Who will win this stand-off?

The Chicago Symphony Orchestra strike is now in its sixth week with no apparent end in sight. The underlying problems that led to the strike did not begin with the negotiations for this contract. In fact, the problem was identified by economists William Baumol and William Bowen in their 1966 article entitled “Anatomy of the Income Gap,” which appeared in Performing Arts: The Economic Dilemma. As explained by Baumol and Bowen, nonprofit performing arts organizations, no matter how successful artistically, typically suffer from an inevitable “cost disease” of growing financial pressures and an ever-widening gap between income and expenses. The problem of spiraling expenses is persistent in the arts industry because performing arts organizations do not benefit from the productivity gains realized in other sectors of society. A live performance of a 45-minute Schubert quartet will take the same three man-hours to produce as it did a century ago, and always will. In the mid-twentieth century, classical music performance revenues averaged 60 percent of performance expenses. This percentage has precipitously declined over the decades, and now ticket sales revenues typically account for only 25-40 percent of expenses, at best. And few in the industry believe that this income gap can be substantially reduced through increasing ticket prices, which are already as high as the market will bear in most organizations.
It is largely because of the cost disease that performing arts organizations have needed to shift part of the financial burden back to their performers and managers. It is also why the recent wave of demands by musicians’ labor unions has put many symphony orchestras at risk. Interestingly, since the late 1980s, the wages of symphony musicians have increased more rapidly than the wages of most other workers. These pay increases were not strongly correlated with the financial performance of orchestras; rather, musicians’ wages were strongly correlated with private donations to orchestras. Said Robert Flanagan in his book “The Perilous Life of Symphony Orchestras,” (Yale University press, 2012) “The large number of orchestra bankruptcies over the past 20 years demonstrates that a wage policy that ignores measures of an organization’s economic strength will have serious consequences for both musicians and music lovers.
It is no secret that even the great Chicago Symphony Orchestra has been running deficits in some recent years. It is no secret that audiences are aging and not being replaced in equal numbers by younger generations. It is no surprise that many music lovers have turned to cheaper and more convenient methods for enjoying music, even if it is not comparable to the live experience.
The CSO musicians are only the most recent of many orchestras who stop playing until their demands are met. I understand that each aspect of the musicians’ pension plan is of utmost importance to them and to musicians at other orchestras who are lending their support, hoping they will gain if the CSO wins their battle.
But the handwriting is on the wall. Maybe the musicians will win this battle. But we will all lose this war. The longer we wait to become more fiscally responsible, the sooner we are likely to lose our beloved orchestras all together. The League of American Orchestras has been focusing on the severity of this problem for decades. Not only is it nothing new, but it keeps worsening.
The discussion should not be about whether the fine musicians who have devoted their lives to their music are worthy of a better deal. The great musicians I know who do not have a full-time contract but must get performance engagements for every time they playing, hoping they can cobble together enough earnings to survive, also are worthy of a better deal.
But those of us who love live classical music need to support the long term view, which means supporting belt-tightening and sustainability, so that the music can play on.

Churn: 75 percent of audience members who come once to an organization don’t come back, or do they?

According to various industry professionals, seventy five percent of people who attend a performing arts event once don’t return! This situation is commonly known in the industry as “churn” and is a key reason for great alarm about the future of our audiences.

It is critical for arts organizations to segment these one-time attenders and try to learn what brought them to the theater or concert hall the first time. Were they visiting from out of town and unlikely to return any time soon? Did they have a special connection to a particular show or performer? Were they lured back by better prices through another source?

It seems to me that 75% churn is an overstatement since people may be returning and purchasing their tickets through a third party ticket service. Think about the fact that third party providers like Goldstar, Hot Tix, and the like don’t provide patron information to the organization. This means that anyone who goes to a performance at an organization with a third party ticket is unknown to the organization, except for their name. And if patrons buy tickets for their first performance through the organization, then return with a third party tickets, this appears as churn at the organization itself, even if the patron is right there and hasn’t “churned.”

I don’t know the actual extent of third party ticket sales. A couple of box office managers I spoke with told me that it varies according to their inventory levels, which makes sense, of course. But I fear that this situation is becoming an ever larger problem for the organizations. Not only do they not get full price for their tickets, but they can’t get donations from people who they can’t reach. It seems like we are losing more and more audience members through the cracks of the process, much more than through actual churn. Goldstar and others have become much too powerful, don’t you agree?

We can mitigate this problem to some degree by posting someone at the box office, where people go to pick up their tickets before the show, to collect names and contact information of third party ticket buyers. Yes, this requires that extra staff or volunteers be on hand, but it’s worth it! The patron database is the most powerful tool marketers have, and we shouldn’t allow some of our patrons and their attendance behavior to be unknown by the organization’s marketing department. It is critical to be able to reach out to them in the future.

How do we re-engage the people who have come to our organization at half price with Goldstar or Hot Tix tickets? Maybe we need to lure them back to our own box office with an offer of the same discounted price they paid to the third party seller. We know these people have attended in the past, and have potential to be returnees. We need not give them the best seats in the house; this obviously is not a critical factor to them since when they buy through a third party, they have no idea where their seat location is. This way, the organization won’t have to pay a fee to the third party ticket service and will have the opportunity to develop a committed patron over time.

Arts organizations clearly benefit from the exposure, sale of excess inventory, and other values offered by third party ticket sellers. It’s time to focus on harnessing the weak links in the system and turning them around to the organization’s benefit.

The Real Value of Government Support for the Arts in the U.S.

May none but honest and wise men ever rule under this roof.

—President John Adams, upon moving into the new White House.

All of us who are passionate about the arts are repelled by our new administration’s promise to eliminate the NEA, the NEH, and government funding for PBS.  We know that cutting cultural budgets has nothing to do with saving money, but rather it is the reaction of philistines in the Executive branch and Congress who are somehow immune to the power of art to move the soul, lift the spirit, and expand the mind.

What has the NEA meant to the arts in America and what will be the meaning of its loss?

In his famous ordering of national priorities, John Adams, the second president of the U.S., said that he had to study politics and war, so that his sons could study mathematics and philosophy, in order to give their children a right to study painting, poetry, music, and architecture.  Whether Adams intended his generational hierarchy to be literal or figurative, it was nearly two hundred years before the United States government committed itself to a program of sustained, direct support for the arts.

The NEA was signed into law by Lyndon Johnson in 1965 with merely $20 million in grants, but with Johnson’s declaration that:  Art is a nation’s most precious heritage, for it is in our works of art that we reveal to ourselves, and to others, the inner vision which guides us as a nation.

It is this view of art as precious, as a guiding vision, that has represented the true value of our governmental arts agency.

In 2015, the NEA received funding of $148 million, which amounted to a mere .004 percent of the federal budget, or 46 cents per American.  The combination of federal, state, and local funding realized by U.S. arts organizations has been less than 5 percent of organizations’ annual budgets over the years.

Clearly, direct government support has never been a critical factor to help arts organizations survive, or even thrive, in the U.S.

In contrast, in Continental Europe, Australia, and Scandinavian countries, subsidies from national, regional, and local government agencies make up about 60-90 percent of total revenues for most orchestras (and other types of arts organizations). In Canada and the United Kingdom, government sources provide 30-40 percent of orchestras’ revenues.  Arts organizations in these and other countries are heavily dependent on their governments for their very existence.

 The U.S. government, by offering tax deductions for donations to nonpr0fits, gives significant indirect subsidies for gifts from private individuals and corporations. Although U.S. arts managers have long been envious of the substantial direct support their foreign colleagues receive from their governments, the U.S. system has an inherent flexibility the the others do not. When one major private donor or foundation ceases making contributions, the organization has many other funding resources to explore and court. However, in most other countries, when the governments slash their cultural budgets, arts managers have nowhere else to turn, as private philanthropy for the arts barely exists outside the U.S. (It follows that the loss of indirect subsidies could have a highly damaging effect on arts organizations, as well as on all the other nonprofits in the U.S. It remains to be seen what President Trump and his supporters in Congress will do to the tax code in this regard.)

In the U.S., the arts have blossomed on their own, without government intervention. The nation’s first permanent, independent, and disciplined orchestra, the Boston Symphony Orchestra, was founded in 1881 by philanthropist Henry Higginson who asserted that he alone was responsible for the orchestra’s concerts, both financially and artistically.Other orchestras soon developed in a similar manner. A cultural emphasis began to surge in the 1930s with courses in art and music being taught in all major universities and radio broadcasts of music to towns large and small. In the 1950s, major foundations began infusing millions of dollars of capital financing into the infrastructure of the nation’s arts organizations.

In the thirty years from the mid-1950s to the mid-1980s, the arts sustained rapid and persistent growth. In 1955 the arts received $15 million in contributions from foundations and corporations; by 1990 that amount had increased to $500 million. From 1965 to 2010, the number of professional orchestras in the United States increased from 58 to more than 1,200 (including community orchestras); opera companies from 27 to more than 120; dance companies from 37 to 250; and professional resident theater companies from 12 to more than 1,400. In addition, there are literally thousands of nonprofit presenting organizations that engage artists and groups to perform in their halls: youth symphonies, university theaters, dance groups, and more. A promotion boom that began in the 1970s  made arts attendance more accessible and compelling to greater numbers of people, and expanding attendance levels stimulated the growth of new and larger performing arts organizations.  The visual arts enjoyed even greater growth in attendance numbers; in 2015, there were more than 61 million visits to the 215 art museums in the U.S., Canada, and Mexico (according to the Art Museum Directors of America).

All this has been accomplished by compelling art and fine artists; by talented, highly professional arts managers who do so much with so little; by donors who infuse the organizations they cherish with donations large and small; by tireless, committed volunteers, and by the passionate audiences of millions of people who treasure art-going experiences.

We lovers of the arts will make our voices heard loudly in resistance to the elimination of the agencies that represent some of humanity’s best and highest values and that speak to how we view our nation and want it to be viewed by others. And we will continue to nourish the world of arts that provides us so much nourishment, as has been done in this country with or without the NEA. It is up to us to guarantee that the arts will thrive and prosper, whatever the “official” decree.

Art establishes the basic human truths which must serve as the touchstones of our judgment.    John F. Kennedy

To my readers: Much of the content  and many of the information sources in this blog can be found in my book:

Standing Room Only: Marketing Insights for Engaging Performing Arts Audiences. 

http://www.artsmarketinginsights.comsmall - book cover.jpg

Anticipation and the Unexpected

As I write this blog, I am eagerly anticipating this evening’s seventh game of the World Series. Although I have lived in the Chicago area most of my life, I have never been much of a baseball fan and, until this past week, haven’t watched the games. But it is incredibly compelling to get caught up in all the current excitement.  Will the Cubs finally break their 108 year drought? (Indians fans: I know you are similarly on the edge of your seats, but I hope you understand my perspective.)

Two keys to the excitement sports fans experience are anticipation and the unexpected. Anticipation is a factor throughout each game: every pitch, every at-bat engages viewers. By the nature of the game, what happens at each play is unexpected, even if viewers anticipate that the relief pitcher will strike out the next batter.

You are probably reading this after the winner has been determined and wondering why I wrote something so time-limited. Naturally, it is because I am pondering how can the arts capture some similar excitement. Of course, we all well know about the magic of “Hamilton” and how even people who rarely attend theater are talking about how they got tickets to see this amazing show, or are boasting about the fact that they have seen it. Even teenagers are excited about “Hamilton,” and some young people I know actually know the words to all the songs, which means they know the entire script, since it is largely sung through.

Such a once-in-a-lifetime (maybe, if we are lucky, once-in-a decade) masterpiece can’t serve as a guide for the rest of us theater managers and marketers who are seeking a bit of magic to excite our current and potential audiences.

Let’s thrill some audience members and create anticipation for others by taking some small steps at our performances:

  • You have some unclaimed prime seats open for this evening’s performance, such as house seats or box seats. Why not offer them to last-minute ticket buyers as a free upgrade — even and especially new single ticket buyers. This will give them an extraordinary and most memorable experience at the performance and one that will certainly be retold to others with enthusiasm and great appreciation of this special privilege.
  • Alternatively, as people arrive at the theater, offer unsold desirable seats to patrons who have tickets in the upper balcony or otherwise less desirable seats.
  • Before the audience arrives, put a note on the seats of select audience members inviting them backstage after the show to meet performers and take a brief tour of backstage activity. You can select these guests at random, or you can be strategic in your choice: for example, invite people you have determined are good candidates to get more involved in your organization, but not those who have already received such benefits.
  • Offer special benefits to people who are celebrating an occasion of their own.  If we know a birthday, anniversary, or other occasion is being celebrated, we can leave a special candy or flower on the celebrants’ seats, offer them a complimentary beverage of their choice at intermission, invite them backstage after the show, or any other benefit that works for your organization to show your patrons that they are special to you. How do we know when patrons are celebrating an occasion at one of our performances? We should collect this information as people purchase tickets and regularly contact subscribers to ask them to email us if they will be celebrating an occasion at a performance.

These types of special offers are bound to generate pleasurable reactions from the unexpected and highly appreciated personal attention, anticipation among future attenders, and therefore, the kind of buzz every organization seeks.

If you implement any of my ideas, or try others of your own along this line of thinking, please email me about your initiatives and their results.  I’d love to hear from you.

Go Cubs!

 

Birds of a Feather, part two

In my last blog, I wrote about some ways to capitalize on the fact that word of mouth — recommendations from others one knows — is by far the best way to attract people to performances. Today I will talk about two very effective, direct methods for building your audience, capitalizing on the benefits of word-of-mouth: gift certificates and gift tickets for subscribers. These approaches actually function as word-of-mouth recommendations — but with actual tickets or ticket vouchers attached.

In his book, The Tipping Point: How Little Things Can Make a Big Difference, Malcolm Gladwell describes the power of connectors–acquaintances who give us access to opportunities and worlds to which we don’t belong.  People’s reference groups usually have a direct influence on their attitudes or behavior. Reference groups include informal primary groups such as family, friends, neighbors, and coworkers,  and more formal secondary groups, such as religious and professional groups. Often the best connectors are opinion leaders, those people who are respected, whose opinions are valued by others who want to emulate them.

Most people like to attend cultural events with friends or others whose company they enjoy. A study of Cleveland’s cultural patrons undertaken to compare the relative importance of peer group influences and childhood arts education for later arts attendance found that mere exposure of children to culture appears to have little effect on later attendance habits. Rather, adult reference groups are so important that where they are absent, the effects of childhood exposure and education tend to dissipate. Furthermore, since leisure-time activities have a strong social component, group affiliations are highly influential for involvement and attendance patterns.

Gift certificates: A pair of tickets to a particular event, a voucher to be used anytime during the season, a membership (if offered), or a subscription to the organization is a great way for the gift giver to share with his or her recipient(s) an experience the giver highly values and believes that the recipient will also enjoy. Arts marketers can promote gift certificates at holiday time, graduations, and continuously for people who want to gift arts events tickets for special occasions such as birthdays, Mother’s or Father’s Day, anniversaries, weddings or as shower gifts, and so on. Because special occasions occur all year long, the organization should regularly have messages in program book inserts, emails, prominently displayed on the website, and in its social media outlets. (Give the gift of music/theater/dance, a gift that will keep on giving all season long!)

I generally offer discounts to patrons who purchase multiple gift certificates, such as “buy four and get one free,” whether the purchase is for single tickets or subscriptions. The ratio of purchased to free tickets depends on what works best in your organization. Many attenders see this as a one-stop shopping opportunity for holiday gifts for colleagues and for many special occasions. When I attend a bridal shower, I often arrive bearing a cookie jar, filled with the sweetest gift of all: a voucher for tickets to a local theater or a membership at a museum I think the bride and groom would enjoy.

Gift tickets with subscription orders (or for orders of multiple tickets): Performing arts organizations can attract new audience members and offer a benefit to subscribers at the same time. When people subscribe to a series of four or five shows (or more, depending on the organization’s production schedule and goals), the organization can give subscribers a gift of one complimentary ticket to be used by a guest at a performance of their choice, according to availability. A subscribing couple will receive a pair of guest tickets. In this way, the subscribers can host friends for a performance at no cost to them. In turn, the guests are likely to offer to host a dinner before or after the show. This becomes a wonderful, social way for the organization to thank subscribers and to bring in new audience members, many of whom would not have attended without this invitation.

Collect guests’ contact information!: In order to make these programs beneficial for the organization as well as for the patrons, the marketing department must be sure to collect the guests’ contact information before their tickets are distributed so the guests can be added to the mailing list and be followed-up with appropriately.

The most important policy is to keep customers involved. If you involve them, engage them, make your offerings interesting and beneficial for them, they will talk, and they will involve others.

 

 

Setting the Right Ticket Prices: My Interview with William Rader, founder of WellAttended

In this interview with William Rader, founder of WellAttended, I discuss how to set ticket prices, ways to upsell tickets, the best ways to offer discounts, and how to add value to tickets. I also explain the best ways to increase your audience attendance with the birds of a feather principle. Please listen by clicking this link:

https://wellattended.com/blog/011-setting-the-right-ticket-prices-joanne-bernstein/

 

Birds of a Feather

While we are still relishing the joys of summer and before the birds depart for warmer climes (if you live in the north, as I do), this is a good time to prepare strategies for attracting new audience members to your performances.
We all know that word of mouth is, and always has been, the greatest resource for attracting people to attend shows, so it is in our best interest to capitalize on the “birds of a feather” principle: that people who attend your shows are highly likely to know others who would enjoy them also.
Asking patrons to encourage others to attend your shows is a long-standing common practice. However, many of the efforts I have seen are lacking in two main regards.
1. Marketers send emails to people who have seen a show asking the patron to tell their family and friends about it. The problem here is that most people have difficulty putting into words what made the show special and worth seeing for them. Yet, marketers and artistic personnel are experts at crafting copy about their shows. So send patrons messages that will bring alive the experience in exciting and meaningful ways. Include brief but intriguing stories about the performers, the playwright or composer or choreographer, about the set design, and so on. In other words, help people to tell the story of what they loved about the show and enhance that with enriching details.
2. All too often, I have seen organizations offer $5 off the price of a ticket to anyone who is recommended by a friend who has seen the show. I see this as a negative tactic, for multiple reasons. A savings of $5 is not enough to stimulate someone to buy a ticket they would not have bought otherwise. Even though this is a small amount of money, it sounds like an act of desperation: “We’ll do anything, almost anything, to get more people in the door.” The real problem here is in focusing the conversation on price. Offering discounts has become an all too common and actually a very lazy way for marketers to alert people to the value of the live performing arts experience.

What people really care about is value, not price. If people are motivated to buy tickets, they will certainly take advantage of a $5 discount, but the value of the experience will be reduced in their minds. We need to do a better job of communicating the true value of the art, the experience, the uniqueness, the live event. We need to stop talking in jargon that means nothing to most patrons. I have seen an organization promote an upcoming show as “Midwest Premiere!”  (Who, outside the industry, cares about this?) “Rising star” is overused and basically meaningless. Explain what makes this performer special. And so on.

Spend some of the remaining quiet summer hours creating engaging messages that will bring alive the attendance experience for your potential attenders. Then watch this strategy help populate your nest.