First: a cost squeeze is more than just a negative balance sheet. It’s an ongoing thing, something that develops over time. Your expenses keep rising, and your income keeps shrinking. And you think that’s likely to continue.
This was very helpful. With one marketing effort — appeals to get people to subscribe, appeals to existing subscribers to renew their subscriptions — you sold lots of tickets. Takes much less out of your marketing budget than selling single tickets does.
But in the past decade, subscription sales have fallen. There’s a trend throughout our culture toward people not wanting to close off their art and entertainment options by buying tickets too far in advance. There are so many things you might want to do. You might not hear about some of them till close to the date they happen. So why commit yourself to anything?
That’s trouble. As subscription sales fall, ticket income gets less dependable. But there’s more. The subscription audience tends to be older than single-ticket buyers. And as they age, they stop going, simply because they’re old. Last summer, on a plane, I met a telemarketer for a large American orchestra, not one that’s usually thought to be in any trouble. He told me that, lately, when he’s made calls to subscribers, asking them to renew, he’s starting to hear that they’re just too old to continue. Much as they might like to.
I wondered if this was just a one-off anecdote, or a reflection of conditions throughout the orchestra world. From what I hear, it’s something that’s starting to happen everywhere. Which shouldn’t be a surprise. I’ve written about this many times here. The core audience is growing older, and isn’t being replaced.
So now we have two reasons why subscription sales are falling. Which means orchestras have to sell more single tickets. Which means a larger marketing budget. Falling income, rising expenses. A cost squeeze.
Costs of a younger audience
But in your financial planning — your understanding of how you’re going to pay for everything your orchestra does — you’ve assumed you’ll have the income that comes from selling tickets at the existing high prices. If you lower ticket prices, your budget starts to implode. You’re not making the income you thought you could depend on.
Worse still, you have to figure out how to reach the younger audience. How to sell tickets to them. So now your marketing costs rise still higher. Another cost squeeze.
And it gets even worse than that. You also need people to donate money to the orchestra. Older people donate more than younger ones do, simply because they have more money. So by attracting a younger audience, you may well hurt your donated income, too, at least in the long run.
And of course donations are falling in any case. That’ll be the subject of my next post in this series.