Business models for the arts

June 7, 2009

Andrew Taylor asks a deceptively simple question over at The Artful Manager – what’s your business model? It’s a question I imagine a lot of the attendees at Theatre Forum’s annual conference might usefully attempt to answer. Andrew quotes from Seth Godin’s blog in which the elements of a business model are distilled into four questions.

1. What compelling reason exists for people to give you money? (or votes or donations)
2. How do you acquire what you’re selling for less than it costs to sell it?
3. What structural insulation do you have from relentless commoditization and a price war?
4, How will strangers find out about the business and decide to become customers?

I agree with Andrew in that the answers to questions 1 and 2 are ‘relatively’ straightforward

1. We create work that people are passionate about, and want to experience — or want their friends, neighbors, children, or great-grandchildren to experience.
2. We don’t and we can’t (nonprofits are designed, after all, to deliver goods and services at below their total cost). So we access revenue beyond the traditional market in the form of gifts, grants, and subsidies (while we also reduce our costs through volunteers, low wages, deferred maintenance, and number shuffling).

Questions 3 and 4 are a wee bit more problematic. Question 3 in particular is a complex one because as well as commoditisation and a price wars (although we don’t see too many of the latter) there’s also the competition between all other cultural activity (and none!) and the perceived value of the arts in relation to health, jobs etc. I haven’t seen much evidence of theatre practitioners really re-evaluating the marketing model – as Andrew suggests – it tends to be retrospective and generally speaking we ask people to take enormous risks in parting with their cash in return for the promise of quality and satisfaction. On top of this traditional marketing strategies continue to be used and social networking, new media are eschewed in favour of more tried and tested methodologies.
I hope as part of the Theatre Forum Conference this week we get an opportunity to delve into some of these issues in more detail.