Why ticket sales matter

Sorry for my silence here. I'm trying to find a livable rhythm for my life -- but then that's a long story. I've had a few projects that claimed priority time, and I haven't wanted to be obsessive about this blog. But I shouldn't neglect it, either.

When I posted some time ago about the new NEA stats, about attendance at classical music events, and their potentially dire implications for the future of mainstream classical music institutions, some people objected in comments and elsewhere that ticket sales didn't really matter that much. Live performances could be replaced by Internet events, went one theory, and donors would support that. The transition might even be starting to happen.

If only! Reminds me of newspapers. Someday, just maybe, they'll make their money online. But despite major attention to newspaper websites, the money isn't there yet. Nor is there any clear model for getting it there. And newspaper revenue -- still depending, just as in the old days, on advertising, including classified ads -- continues to tank.

Classical music isn't that dire yet (though I know one city where the CEO of the orchestra and the publisher of the newspaper make black-humor jokes about whose industry is in worse shape). But here's why the traditional classical music funding model -- which depends on live ticket sales -- still is in force.

Classical music institutions get their money from three sources. Earned income (which at this point is overwhelmingly from ticket sales), donations from individuals, and donations from institutions (mainly corporations and foundations; income from government grants is very small).

Earned income makes up -- approximately -- 25% to 40% of total revenue. Orchestras tend to get a lower percentage; opera companies tend to get a higher one. Of course this is a major chunk of the money these institutions need. Now remember that they're working full time -- more than full time -- to get the money, from all their sources. Remember that each year is a new challenge. Remember that donations don't come easily, and that the donor pool might be shrinking, rather than growing, because younger people -- just as they don't buy tickets to classical performances -- also don't tend to donate to classical music institutions, or in fact to any arts groups. Remember that if interest in classical music (as measured by the NEA data) seems to be declining, than donations should decline, along with ticket sales.

So how can an organization simply ramp up donations, if ticket sales fall? Try telling the development department that they have to raise a lot more money this year, because ticket sales are soft. They'll try to get the job done, but they won't tell you it's easy.

As for Internet revenue somehow making up for declining ticket sales, well, show me the money. The analogy with newspapers holds here. It's easy to generate lots of activity online, but the online activity doesn't as yet make much money, and I don't believe there's any model showing how someday it will. Downloads of classical music outstripped CD sales even when there still were record stores, but they made only a fraction of what CD sales earned.

And streaming performances? Well, they're live performances! And they cost a lot of money on top of the live performance, as the Met certainly demonstrates with its streaming to movie theaters, which looks like a smashing success, but took quite a while to break even. Will the movie showings ever bring the Met substantial income? No one knows yet.

And now let's look at donations. Where do they come from? Believe it or not, they come from live performances. This is the most crucial point I can make. Take individual donations. The donors, for the most part, are subscribers. And that's how classical music institutions find them. It[s a familiar mantra, for those who know the inside drill. You try to work with your single-ticket buyers, to make them subscribers. You work with your subscribers, to turn them into donors. You work with your donors to get them to give more and more, and finally to leave money for you in their wills. But it all starts with live performances. If people stop going to them, well, maybe you can find donors somewhere else, but the model for that doesn't yet exist.

That's especially true because one big reason that people donate -- and also that institutions donate -- is community pride. Corporate donations are almost always local. They come from local corporations, and from local branches of national and international companies. And what do you do to encourage corporations to donate? You bring their executives to performances, you introduce them to the music director, you wine them and dine them, give them boxes to sit in, and (along with other donors) a special place to go at intermission. You also plaster the corporation's name around the community. Individual donors -- especially large ones -- are wooed in much the same ways.

The entire fundraising effort is build around live performances, and more generally around the institution's real-time presence in the community. I've heard orchestras detail their plans for greater community involvement, more cooperation with other local institutions, more presence at local events, everywhere from schools to shopping malls. And why do they do this? To get people to donate more money.

I'll repeat my main point. Live performance income is only one part -- though a large part -- of classical music revenue. But donations, both individual and corporate, depend just as much on live performance. (This may be less true of foundation income, because there are national foundations that give to institutions all over the country. But foundation income, I believe, has been declining, and at any rate isn't as dependable or abundant as local individual and corporate donations.)

This how things are done now. Can it change? Maybe. Is there any sign -- of the tangible kind that shows up on balance sheets -- that the change is happening now? I don't think so. If anyone can show me that I'm wrong, I'd be happy to hear the reasons. But, please, give me numbers. Show me that some bright, attractive, brand-new, hopeful program from the XYZ Symphony really brings in money equivalent to what the old ways get -- and don't just speculate that it might bring in the cash; show me that it actually does -- and then I'll be convinced.

(Which means, if I'm right about this, that orchestras really might be as badly off as newspapers, or at least will be if we project current trends into the future. The current picture isn't nearly as bad. We don't see orchestras drowning in red ink yet, losing huge sums every year. We don't see some of the biggest orchestras going bankrupt, as some of the biggest newspapers have. And let's hope it never happens.)