More cheery news!
A new report commissioned by the Andrew W. Mellon foundation has been causing a bit of hoopla in the last couple of days; here is a choice bit:
Most major symphony orchestras in the United States regularly spend more money than they take in, and some dip so far into endowments that they risk their long-term survival, according to a new report commissioned by the Andrew W. Mellon Foundation.
'The industry should realize that there is an inherent long-term economic challenge,' said Robert J. Flanagan, the Konosuke Matsushita Professor of International Labor Economics and Policy Analysis at the Stanford Graduate School of Business and the study’s author. 'Nowadays, even if symphonies filled their halls for every concert, the vast majority would still not be able to cover their performance expenses.'
Tell me something we haven't been discussing for years.
Read more here.
I was constructing a reasoned response to yet another study/report/article heralding the demise of the symphony orchestra when I came across this reasoned response by Henry Fogel, president of the League of American Orchestras (of which I am posting highlights, read it in its entirety here).
In the 45 years that I have been professionally associated with symphony orchestras in America, I have lost count of the number of times an alarm has been sounded about the state of crisis in which they exist, sometimes with warnings of the imminent demise of the industry. So far, at least, those alarms have proven to be false ones - and for the most part, symphony orchestras are more vibrant, healthy, and vital now than they have ever been...
The latest alarm bell is a study produced by Prof. Robert J. Flanagan of the Stanford Graduate School of Business. The report was commissioned by The Andrew W. Mellon Foundation, and it studied statistics from the largest American orchestras between 1987 and 2003...
Prof. Flanagan's study provides an opportunity for orchestras to continue to discuss, as they have been doing, the value of understanding the dynamic environment in which they exist, and adapting to it. It confirms what we already know: that orchestras do not operate in a vacuum but are intimately tied to the health of our communities...
The study reaffirms what was suggested by a study done by Baumol and Bowen in 1966, which noted that symphony orchestras do not enjoy the productivity gains achieved in the private sector. It took about 80 musicians 45 minutes to perform Brahms's First Symphony when he wrote it, and it still does, and always will. In the absence of the private sector's productivity gains (like making five times as many widgets in one-half the time), it is logical that operating costs may rise faster than earned revenues...But orchestras have continued to exist and in many cases even thrive by changing the mix of income streams, through endowments and annual fundraising.
The final two-to-three years of Prof. Flanagan's study (2001-2003) coincided with a severe economic downturn, and the psychological damage done to our country by the events of September 11, 2001. No one will dispute that a majority of our non-profit organizations in America suffered economic troubles in that time. It is unfortunate that the post 2004-05 period did not comprise the final period of the study, because the trends were far better in those years. Over the past few years not only have fundraising and overall fiscal performance improved, but ticket sales have as well. After a few years of flat or declining ticket sales during the early 2000s, there was an 18% increase in ticket sale income to orchestra concerts between the 2004-05 season and 2005-06. And, equally encouraging, paid attendance at classical concerts for American orchestras in 2005-06 was 11% up from the previous year, again after a few years of flat or declining attendance...
Prof. Flanagan points to the fact that musicians' wage increases outpaced inflation during the period of his study. I think it is important to note that the 3.8% average annual increase in the salary of the orchestras he studied is 0.1% over the rate of increase for liberal arts college faculty during that same period, 0.2% under the rate of increase for employees of hospitals, and precisely the same rate as other health-service industry employees (these figures are from the U. S. Bureau of Labor Statistics). Thus, musicians' salaries track extremely well with those of other employees in the non-profit sector...
Orchestras that are attentive to changing demands and the very nature of their audiences are not only maintaining but increasing attendance. Orchestras attentive to their entire communities (beyond just their subscribers) are also raising more money, and operating in fiscally balanced ways. As I said earlier, Prof. Flanagan's report is a valuable addition to the research that has been done about orchestras, and will provide the field with useful information that will be of use in continuing to adapt to our environment as it changes. But anyone who draws from it the conclusion that orchestras are in peril runs the risk of subjecting themselves to Mark Twain's famous quote: "The report of my death was an exaggeration."
What would have been tremendously helpful is a comparison of the 17 orchestras who posted surpluses in the timeframe of the study, however: "Flanagan said the study’s scope did not try to identify similarities among the 17 symphonies that usually did have surpluses." Which, to me, is the deepest mystery of all - wouldn't it be nice to identify how some organizations are flourishing (so that others could benefit from their success) rather than publish another round of doom and gloom?
Most major symphony orchestras in the United States regularly spend more money than they take in, and some dip so far into endowments that they risk their long-term survival, according to a new report commissioned by the Andrew W. Mellon Foundation.
'The industry should realize that there is an inherent long-term economic challenge,' said Robert J. Flanagan, the Konosuke Matsushita Professor of International Labor Economics and Policy Analysis at the Stanford Graduate School of Business and the study’s author. 'Nowadays, even if symphonies filled their halls for every concert, the vast majority would still not be able to cover their performance expenses.'
Tell me something we haven't been discussing for years.
Read more here.
I was constructing a reasoned response to yet another study/report/article heralding the demise of the symphony orchestra when I came across this reasoned response by Henry Fogel, president of the League of American Orchestras (of which I am posting highlights, read it in its entirety here).
In the 45 years that I have been professionally associated with symphony orchestras in America, I have lost count of the number of times an alarm has been sounded about the state of crisis in which they exist, sometimes with warnings of the imminent demise of the industry. So far, at least, those alarms have proven to be false ones - and for the most part, symphony orchestras are more vibrant, healthy, and vital now than they have ever been...
The latest alarm bell is a study produced by Prof. Robert J. Flanagan of the Stanford Graduate School of Business. The report was commissioned by The Andrew W. Mellon Foundation, and it studied statistics from the largest American orchestras between 1987 and 2003...
Prof. Flanagan's study provides an opportunity for orchestras to continue to discuss, as they have been doing, the value of understanding the dynamic environment in which they exist, and adapting to it. It confirms what we already know: that orchestras do not operate in a vacuum but are intimately tied to the health of our communities...
The study reaffirms what was suggested by a study done by Baumol and Bowen in 1966, which noted that symphony orchestras do not enjoy the productivity gains achieved in the private sector. It took about 80 musicians 45 minutes to perform Brahms's First Symphony when he wrote it, and it still does, and always will. In the absence of the private sector's productivity gains (like making five times as many widgets in one-half the time), it is logical that operating costs may rise faster than earned revenues...But orchestras have continued to exist and in many cases even thrive by changing the mix of income streams, through endowments and annual fundraising.
The final two-to-three years of Prof. Flanagan's study (2001-2003) coincided with a severe economic downturn, and the psychological damage done to our country by the events of September 11, 2001. No one will dispute that a majority of our non-profit organizations in America suffered economic troubles in that time. It is unfortunate that the post 2004-05 period did not comprise the final period of the study, because the trends were far better in those years. Over the past few years not only have fundraising and overall fiscal performance improved, but ticket sales have as well. After a few years of flat or declining ticket sales during the early 2000s, there was an 18% increase in ticket sale income to orchestra concerts between the 2004-05 season and 2005-06. And, equally encouraging, paid attendance at classical concerts for American orchestras in 2005-06 was 11% up from the previous year, again after a few years of flat or declining attendance...
Prof. Flanagan points to the fact that musicians' wage increases outpaced inflation during the period of his study. I think it is important to note that the 3.8% average annual increase in the salary of the orchestras he studied is 0.1% over the rate of increase for liberal arts college faculty during that same period, 0.2% under the rate of increase for employees of hospitals, and precisely the same rate as other health-service industry employees (these figures are from the U. S. Bureau of Labor Statistics). Thus, musicians' salaries track extremely well with those of other employees in the non-profit sector...
Orchestras that are attentive to changing demands and the very nature of their audiences are not only maintaining but increasing attendance. Orchestras attentive to their entire communities (beyond just their subscribers) are also raising more money, and operating in fiscally balanced ways. As I said earlier, Prof. Flanagan's report is a valuable addition to the research that has been done about orchestras, and will provide the field with useful information that will be of use in continuing to adapt to our environment as it changes. But anyone who draws from it the conclusion that orchestras are in peril runs the risk of subjecting themselves to Mark Twain's famous quote: "The report of my death was an exaggeration."
What would have been tremendously helpful is a comparison of the 17 orchestras who posted surpluses in the timeframe of the study, however: "Flanagan said the study’s scope did not try to identify similarities among the 17 symphonies that usually did have surpluses." Which, to me, is the deepest mystery of all - wouldn't it be nice to identify how some organizations are flourishing (so that others could benefit from their success) rather than publish another round of doom and gloom?
Labels: the business of music
posted by Sarah at
10:17 AM
7 Comments:
Yes, figuring out how those 17 orchestras managed to make a surplus would be extremely helpful to all orchestras.
Is it a human characteristic to focus on the gloom? Is it somehow more interesting than the sunshine like villains are more interesting than heroes, the end of the world more interesting than what we have?
When television was invented, it was supposed to kill radio.
When the computer turned into a personal tool of expression, it was supposed to obliterate books.
Internet music is now supposed to be the demise of CDs; internet movies the demise of movie theaters and DVDs.
This aspect of the human brain (I guess) is what also feeds tabloid frenzies, entertainment media of the sleazy kind, and the fascination with watching train wrecks, and perhaps, forensic TV shows.....and O. J. Simpson, Britney Spears, etc.
How to get that question about the surpluses to the people who have the answers?
Is it a human characteristic to focus on the gloom?
I don't know about that, but it is definitely a characteristic of the Mellon Foundation, which commissions a study like this every few years, and always seems to get exactly the same result.
Specifically, the studies are commissioned by something called the Elephant Task Force, which aims to bring musicians, orchestra managers, and other observers together to discuss issues facing the industry.
Unfortunately, the group has become a bit of a haven for the kind of ideologues who believe fervently that classical music is dying, with orchestras leading the charge, and those types are usually expert at picking and choosing informational tidbits that suit their predisposition. Choosing an expert in labor relations across for-profit industries to study the non-profit world is a fine way to insure that you get this type of result.
Why does their agenda seem to want to believe classical music is dying, is there something else to the story?
I don't mean to suggest that everyone on the task force believes this. But for some both inside and outside the industry, it has become an article of faith that the problems faced by symphony orchestras are systemic rather than cyclical. (In other words, they believe that it isn't that our business model is highly susceptible to changes in the broader economy; it's that our entire model is broken and needs to be overhauled or scrapped.)
Now, this is a good debate to have, because if there is a systemic problem, it needs to be addressed. But too many people on both sides of the debate have become so locked into their opinions that they only look for the evidence that supports their side. It's become like the nature vs. nurture argument - intractable and understood by only a fraction of the people who hold strong opinions on one side or the other.
Sam,
I've learned that it is sometimes difficult to have a conversation when I'm being critical, but virtually every fact you list in your first comment is incorrect.
Please do read the statement from the Elephant Task Force regarding this report. It's at: http://www.orchestraforum.org/news-blog
Actually, Henry, most of what I said in that first comment, and my second, is echoed in the statement you linked to. I assume you're objecting to my characterization of some of the task force participants as ideologues, and I think there we'll just have to agree to disagree.
I know that you've worked hard as a member of the task force in the past (I don't actually know whether you're still involved,) and as I said, I think the cyclical vs. systemic discussion is important, but I think you would have to agree that Mellon is regarded with a high degree of suspicion by a lot of musicians...
Some, one of the reasons for the "high degree of suspicion" is the very type of broad dismissal of the Mellon participants as ideologues that you made. I'm glad you're backtracking on that.
But let's not waste more time on ad hominem arguments -
The cyclical/structural issue is exactly what the ETF asked Flanagan to study, although he went quite a bit beyond that question in his final report.
What he found was not something new, but he was able to quantify the relationship between cyclical and structural effects on orchestras.
The answer is simply that the economic cycle does have a strong effect of ticket sales and contributed income, but that income from ticket sales covers less of the expense budget over time regardless of the cyclical variation. However, contributed income has increased at a rate to (barely) make up the difference.
How does this affect us?
In the late 90's my orchestra was increasing its expenditures at a robust rate because money was coming in faster than it had in the past. It turns out that a good part of that was due to the strong economy, and we had a bit of whiplash when the cycle turned.
Similarly, when someone is looking back 3 years at the end of a recession, and using those 3 years to project a trend for their orchestra's finances, it will be overly negative because the business cycle will turn upward again.
Nevertheless, in either case, the orchestra will have to raise more in contributions every year to cover the difference between earned income and expenses, but the needed rate of growth will be between the rates shown by both examples.
In my opinion, that's useful information, and it's good to have it somewhat quantified.
I would rather have us (the orchestra biz) spend our time trying to increase interest in our music than arguing over the future based on short-term trends.
The truth is that classical music is not dying, but it is growing v - e- r - y slowly. I'd like to get to the reasons for that and address them.
Post a Comment
Subscribe to Post Comments [Atom]
<< Home