“Supply always comes on the heels of demand.” — Robert Collier

In my first Project MAD post on mission, core values, and goals for my entrepreneurial Musical Arts Development Corp. orchestra model-in-progress, I shared the goal to create and grow demand for live classical music and dominate the community marketshare for musical activity. This post “wades into the weeds” and reveals some of my ideas toward that goal.

This is not intended as another blog post to open discussion about NEA Chairman Rocco Landesman’s much-debated remarks a few months ago about too much supply and not enough demand in the US arts industry. But this post is intended to stress the fundamental importance of demand in an orchestra business model. I will say that I thought Mr. Landesman’s remarks were fair: he was brave enough to confront a brutal fact that arts organizations need to consider.  He followed up his statement with several ideas in which arts organizations might start to influence the demand curve: invest in arts education, take advantage of related demand, offer free samples, embrace technology effectively, and examine the arts infrastructure.  These ideas have brewed in my head since Mr. Landesman’s blog hit the airwaves. That first idea, invest in arts education is now rooted firmly enough to be placed in my mock business plan. But before I outline my strategy, I’d like to provide some context.

Many professional American orchestras today find themselves in a precarious position of fiscal instability. Certainly, the economy has wreaked havoc everywhere. But the high fixed costs required to produce orchestral concert supply are far outpacing public demand for live classical music in general. Orchestras are struggling to leverage philanthropy to make up the necessary difference. But because philanthropy has been too strained to fill the gap, endowment funds (for those orchestras that have them) are being depleted. Fiscal instability is a systemic problem that has resulted in recent cases of orchestra closures, and widespread discussion on the wobbly state of the existing orchestra business model in the USA.  My opinion: the reason things have gotten so bad is that orchestras have forgotten that the primary source of long-term sustainable income for orchestras comes from individual patrons. That is an important statement to remember, because it’s driving almost every decision I make in shaping this new Project MAD business plan.

As demand creeps lower and lower, the cost of concert supply becomes more and more structurally unstable.  Most orchestras’ earned income is only 30 to 50% of the budget.  Worsening demand is eroding it even further.  Individual giving by patrons tends to move in tandem with earned income. So, the extra capital required to balance the budget must come from somewhere. Where do orchestras turn for this? Public and private philanthropy, and for some, endowment income. Sadly, government arts funding continues to get cut, or eliminated (hello, Kansas?), and philanthropy from foundations and corporations continues to get more fickle and increasingly competitive. To me, this means that public and private philanthropy are not really sustainable sources of income. Don’t get me wrong: I believe that public funding for the arts is vitally important and the elimination of any of it is short-sighted – I get the arguments for it. Unfortunately, a growing number of elected policymakers don’t understand the same values. I really think that orchestras seeking a bright future need to wean themselves away from dependence on unsustainable capital resources as much as possible. Grants, public or private, are temporary infusions of operating or project capital, period.

Competition for philanthropic funding has also become intensified due to the challenging economic downturn. Foundations and corporations aren’t disappearing anytime soon, but it is important to note that the playing field has dramatically changed. These funders are increasingly driving their own bus toward specific priorities, and giving rides to a limited number of passengers who happen to be going to their mission destination.  Orchestras have actually developed programming specifically targeted to meet funding priorities in order to have a shot at particular grants, irregardless of their own artistic and strategic vision. It’s sort of like you need and want to go to Dallas, but you end up planning a trip to Pittsburgh because that’s the plane with available seats.  With robust demand-driven funding from patrons who understand that you need to get to Dallas, you gain control again.  But orchestras need rabid-fan demand to advance their own visions and and pave their own way toward success.

There is one more traditional source of long-term operating income for orchestras: endowment interest. When one considers that most orchestra endowment gifts originate from individual arts patrons, I rest my case on my original statement: the only source of long-term sustainable income in the arts is patron-generated. More demand equals more income for an orchestra, it’s that simple.

As I continue to read bad news throughout the orchestra field almost daily now, I keep coming back to this question: Why has the fundamental demand for live classical music gotten so bad? Even more important, what can be done about it? Without a solution, Rocco Landesman is right, we will have to decrease our supply. In Syracuse, Albuquerque, Honolulu, et al., they’ve been forced to go out of business, full supply to no supply. Certainly, there are many “issues” on the supply side in all areas of the orchestra world: governance, administration, finance, and labor. But these issues might not be so severe if demand for symphonic music was in the stratosphere.

So as I think a new orchestra model must start by investing in building demand. I can’t really shape a professional orchestra in concept until I have a clear market strategy that considers demand as a core requirement for the enterprise.

My research into demand and the arts has led me to confirm a hypothetical business proposition: MAD should invest deeply in providing music education to its community in order to create and grow demand for live symphonic music. The most compelling piece of research I found in support of this proposition was the 2008 RAND monograph by Laura Zakaras and Julia F. Lowell, entitled Cultivating Demand for the Arts, commissioned by the Wallace Foundation. Here is a brief quote from the executive summary, almost exactly matched to my proposition:

“The authors conclude that greater investment in comprehensive arts learning, particularly for the young, is the most effective strategy for building demand”

While that report was geared toward examining the status quo and potential change in public arts and education policy, the wealth of evidence analyzed and presented within it supports my premise that deeper investment in arts learning directly by arts organizations could lead toward an organic way of building the kind of public demand that can lead toward long-term sustainability. This report was the “smoking gun” I needed to confirm my hypothesis.

The US orchestra industry has responded to the gradual decline of national music education in some typical ways: by producing special youth concerts, offering discounted student pricing, providing musician residency or outreach programs to schools,  and adult enhancement programs such as pre-concert talks, program notes, some broader music lecture series, podcasts, etc. Yet, most educational activities offered by orchestras are limited in their frequency and depth of engagement. While there are strong studies that show a direct correlation between youth arts education and adult participation in arts activities, it is unknown to what degree that orchestras’ youth education programs have correlated to the cultivation of arts demand as adults. So, despite decades of orchestras’ modest investments in educational programming for youth and adults, the shrinking demand trend for classical music today suggests that the state of comprehensive music education, including both school-based and external efforts, is insufficient to stimulate the necessary demand required sustain a professional orchestra of today. It’s also worth noting that adult education programs in orchestras are targeted at people who are already inclined to attend concerts. These peole are seeking to deepen their passion and understanding of what will be presented on stage. They are already part of the demand-side of the equation. Pricing and packaging strategies have been developed and tested in recent years to try to increase adult participation, but those efforts are access strategies, not demand building strategies. Pricing or packaging has no effect on a potential consumer’s aesthetic predisposition toward classical music in general.

In the entrepreneurial spirit, where one sees major problems, therein also lies opportunity.

So here it is: the Musical Arts Development Corporation will invest in building a comprehensive Music School that is tightly branded and aligned with its professional orchestra, and deeply allied with the local education system. There are several ways that a comprehensive music school could be developed.  Major models might include forming a charter or magnet school built around music and the performing arts.  Since I’m envisioning a new organization entirely, and I have no geographic location identified, I’m going to set the major school models aside for now and sketch the music school idea into my plan as an orchestra-owned school with sequential educational and performance programs for all ages, particularly stronger programs for youth.  Structurally, MAD will operate its Music School as a separate subsidiary under the parent MAD Corp., which also governs and oversees the professional orchestra as an equal but separate subsidiary. A lot more information on MAD’s corporate structure will follow in a future post, as there are many ideas I have to share on that topic.

Under the Music School, MAD will establish and support community music ensembles, including a youth orchestra program, a civic orchestra program, and choral programs, including perhaps even a hip teen Glee Club program to capitalize on the current popularity of such groups (and to sort of take Rocco’s advice to capitalize on related demand). It is possible that, again, given a specific locale, that MAD would seek to acquire, merge with, or collaborate closely with pre-existing musical resources. My emphasis behind the MAD Music School model is to create a primary center of musical activity where people of all ages and musical levels are welcomed and encouraged to learn and participate in the joy of making music of all kinds.

Labor Alert! Let me interject here that I’m not saying that MAD’s professional orchestra musicians would be contracted or required to teach in this proposed Music School as part of their job descriptions. I’m not articulating a musician labor strategy at this stage of my brainstorming at all. I do envision that the orchestra’s professional musicians would be integrated into school activities in many ways, but at a high level. I want to be clear that I wouldn’t expect the concertmaster to teach Suzuki violin to four-year olds. Enough said for now.

The MAD Music School would employ music teachers who are qualified to teach along established national and state music standards.  The Music School’s programs would need to be aligned with these standards in a way that smoothly integrates with K-12 music education in local schools (assuming that some music education exists in MAD’s home city), taking up the slack in any area where there might be weakness. The MAD Music School might also function as a teaching lab opportunity for music majors from local universities, where they could gain experience in teaching in both studio and ensemble settings. It would be cool to have Conducting Fellowships for rising young conductors to gain experience conducting the community ensembles, mentored by the Music Director, also serving the professional ensemble as cover conductors. Perhaps these fellows would compete for guest stints on the pro-orchestra podium on occasion. It will be vital for MAD Corp. to advocate intensively for the Music School, as well as for the orchestra throughout the community and state, to seek close collaboration with the school board, local and state arts councils (if they exist), and elected officials, promoting measurable outcomes in musical excellence, community engagement, educational improvement, and economic impact.

For adults, MAD will not only employ instrumental teachers capable of giving lessons to students of any age, but the school will engage musicologists, composers, and/or music journalists capable of teaching sequential courses in general music appreciation.  Educational programming to enhance concert attendance would remain intact, but I envision expanding upon the pre-concert lecture idea with amore in-depth lecture series option that might include greater backstage access to the music development process: open rehearsals, discussions with the Music Director and soloists, even briefly, for an extra cost, of course. At my former orchestra, the Annapolis Symphony, we developed a Symphony Study program for adults, launching it with a course all about Beethoven’s Ninth Symphony, which was programmed as a season finale. For approximately $80 per person, approximately 24 patrons enjoyed a four-week in-depth course all about Beethoven’s Ninth and its impact on the future of symphonic repertoire, taught by Dr. Rachel Franklin, a musicologist and pianist from the University of Maryland (who still lectures for the ASO regularly). For the final class held the week of the concert, participants were invited to attend a choral rehearsal with the Annapolis Chorale as well as one of the joint rehearsals with the orchestra, chorus, and soloists, to see how the work was put together behind the scenes. It was a tremendous success. Post-program evaluations could not have been more positive. I’m proud that their extended Symphony Study program is still being offered each year.

In the MAD Music School, general music courses will also be designed for adults who are simply curious to learn something about classical music as an activity in and of itself, without an link to programming or attendance at all.  A course might be designed to introduce participants to orchestral instruments at an adult level, maybe with principals of the orchestra invited to give prepared demonstrations of techniques for their instrument, discussing favorite music and talking about fiendish passages in the orchestral literature for their instrument.  This would help curious adults to get to know some of the musicians personally as human beings and as individually talented artists, hopefully sparking the type of fascination that helps cultivate concert demand. Some of these general music courses could be out-sourced off-site in community centers and/or libraries that offer other adult enrichment programs, too.

Now is a good time to mention that the concept of an orchestra-sponsored music school is not entirely new. I found exactly one professional orchestra in the United States that already closely demonstrates this model: the Rhode Island Philharmonic and Music School. Their success, including opening their new Carter Center for Music Education and Performance, is an example to watch closely. There are several other American orchestras that sponsor and operate youth orchestras or civic orchestras and choruses, with good success.  But except for the Rhode Island Phil, I’m not aware of any other orchestra so substantially invested in music education and civic music making under the orchestra’s control.

All activities and programs of MAD’s orchestra and music school need to communicate a strong brand message that MAD is the center for musical activity in the community.  A strong branding strategy supports the latter half of my original goal statement: …to dominate the community marketshare for musical activity. My intent is to have MAD own as much of the cultural marketshare for “music” in its community as is possible: through its core orchestral performances, heavy music education programming through the Music School, through youth and civic performance programming, through presenting other genres of music in a curated fashion (a la Chicago Symphony’s Symphony Center Presents projects), and through collaborating in performance projects with related musical arts organizations, such as opera, dance, or theatre. You might even find an intimate chamber music ’club’ and/or a jazz cabaret featuring quality live music thrown into the MAD business mix, just to gain a few more marketshare points. A future post will delve into programming strategies in much greater depth.

Obviously, the MAD Music School needs to be funded in a way that makes it affordable and accessible to the broadest possible audience, particularly for youth.  I believe that arts education, especially for youth, makes a much more compelling case for gifts and grants than the case for professional arts production itself.  By having a dedicated music school aligned with the professional symphony, however, I think the case for philanthropic support has even greater weight for both sides of the enterprise. Add in the cooperation of local schools, businesses, colleges, parents, and possibly even government leaders, the case for support rises even more. But the fiscal model on the school side of MAD will not be entirely subsidized. I do intend to charge people for the quality music educational services offered there. And I believe many people are starving for creative outlets, including music making, in their lives. Marketed with precision, I believe people will pay for many of the Music School services they want to participate in. Philanthropy will potentially help with building an endowment for overhead, access for low-income students via scholarships and subsidies, and provide special capital for enticing enhancements such as guest artists in residence, master classes, and other special events. I will be writing extensively about financial strategy later as Project MAD continues to evolve beyond broad concepts into more distinct shape.

Also, incorporating a Music School into the MAD business plan will have direct impact on specific facility needs.  I’ll be exploring facilities in a future chapter as well.

There is much food for thought in this chapter, so I’ll conclude here. Stay tuned for the next Project MAD brainstorm in a couple of weeks.

Postscript: After publishing this post this morning, I noted Michael Kaiser’s new blog entry at Huffington Post. His concluding comment sings to me: “The only way to assure success for any not for profit is to build a sustained and growing revenue producing capability.” Could I ask for a better Amen?