The cost squeeze — ticket sales

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.

So one part of the orchestra cost squeeze — which I started writing about in a recent post — centers on ticket sales. In the past, orchestras sold most of their tickets to subscribers, people who bought several tickets (maybe many tickets), before each season started. And did it year after year. 

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 there’s more. Because your core audience is aging, you need to attract younger people. To sell tickets to younger people, you have to lower your ticket prices. (This seems to be the gospel, now, among orchestra marketers.) 

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. 
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Comments

  1. Pamela Frame says

    First, This is not news. I’ve been hearing this cry “the audience is getting older” for decades. What has changed?

    Second, if the answer is to attract younger audience members and attract them as donors, eventually they, too, will become older donors, who tend to be larger donors.

    If cities don’t believe that they need culture, let them try it. I think they will find out that they can’t afford NOT to have orchestras and museums and their ilk! Those are the ‘frills’ which attract business to your cities.

  2. says

    What I’m wondering is why there aren’t ways in which operating costs can be cut in this scenario. Obviously, marketing goes up, but, for instance, why doesn’t an opera company use strpped down productions to offset that? Why can’t they renogotiate rent costs? Are all of the people being paid by orchestras under completely non-negotiable contracts? How about having orchestra members play small chamber gigs outside of the orchestra hall to help raise extra money (which could double as marketing as well)?

    I wouldn’t be surprised if every one of these things has been considered a billion times over, but the very idea of ‘structural deficit’ makes little sense to me. It’s as if one were saying that there is literaly no possibility of changing the business model/strategy of an organization.

  3. James Glicker says

    Greg,

    One thing i wonder about is pricing. When I ran the Baltimore Symphony we did a regression analysis that attributed 90% of the fall in attendance between 1999 and 2004 to price increases. We proved statistically that all the money we thought we’d make by increasing prices was drained away by attendance declines, not unlike filling a tub with a big hole in it.

    But David Modell, the President of the Baltimore Ravens, once told me how the NFL created an atmosphere of ‘seat scarcity’ -fed by stories about 20 year waiting lists for season tickets. In fact, he said, the NFL did have trouble filling stadiums in certain markets at certain economic cycles. He asked me why i thought the new Yankee stadium was being built with 8,000 fewer seats than the old one–the feeling of scarcity increases the percentage of subscriptions (season tickets) because you ‘might not be able to get any’ later.

    Compare this to the standard symphony orchestra, which floods the market with concerts. You can always show up at the last minute and get a seat. Why bother buying a subscription?

    I thought the solution was to expand the number and type of venues that we appeared in; thereby reducing the supply at each spot, but that soon turned out to be a money-losing idea when you took into account the additional costs of ferrying the musicians in buses to other locations, and the IATSE members who had to be hired at each venue…….oops, I’m getting a BSO flashback. I worked so hard to stop those.

  4. John O'Connor says

    Orchestras touch such a small percentage of the total population. What’s the reasoning behind targeting younger people as best the solution to attendance problems? I’m sure this has been considered by others much more intelligent and experienced than myself, but what’s wrong with trying to attract new old audiences too, or any age group for that matter? Do we think we’ve tapped out the older segment of the population? Is it because the younger audience is more desirable?

    People do get old and can’t come anymore no matter what age they started attending. I think you’d have to look at the total percent of your renewing subscribers that stop because they’re too old and track that over a few years to determine if it’s a trend in your specific market.

    What if we start thinking of “supply” as the total population instead of how much artistic product we offer? What if we focus more on how to package the orchestra experience in different ways to appeal to all segments? Price is certainly one barrier to entry. Perception is another important one.

  5. Roger E Yates says

    As a chamber music concert organiser I find all these remarks to be relevant however there seems to be a lack of understanding as to the deeper reason for the existing state of affairs as to why audience numbers are on the decline.

    It is a question of needs. The majority of people simply have no need of profound music. They can live without it…. Indeed they do live without it just as they live without any form of cultural activity worthy of the name.

    There is not the hunger for sublime art simply because there is not the hunger for life in it´s true reality.

  6. says

    I appreciate James Glicker’s comments about pricing and the NFL, and it makes a lot of sense. (Though for my values and for my series, I would hate to see classical music become as elitist as professional sport.)

    For years, the discussion around decline in attendance has been focused on external, environmental causes: aging audiences, lack of music education, changes in society’s aesthetic values, competition from other entertainment-oriented industries, the economy.

    As an industry, we tend to continue with decades-old performance models. “If it ain’t broke, don’t fix it” is assumed when it comes to how we deliver our art. We find external factors to explain the decline in audiences, and we continue to use decades-old business models to try to turn the decline around.

    As individual producers and organizations start to challenge our business models — and recognize that how and what we perform is the core of these models — I hope more of us will interrogate and re-engage “why” we we play and produce music, and use that “why” to inform how performances relate to interact with audiences.