The Mission Paradox Blog

Reading the tea leaves

A few observations and then a conclusion . . .

Some of the newer foundations, like the Bill and Melinda Gates Foundation, don't have an arts and culture giving component.  Since these new foundations tend to have a lot of influence in the field, I'm willing to wager that other new foundations will not have much of an arts section.

Foundations who do have arts giving are going to place an increased emphasis on funding partnerships and collaborations. 

They are going to be far more likely to give $30,000 to an collaboration that has three arts organizations involved then they are to give those three organizations $10,000 each on their own merits. 

Corporate philanthrophy is going to emulate the Chase and Pepsi giving models which really mix marketing and giving together.  No matter how you feel about Pepsi Refresh or Chase Giving, it's pretty clear that this is where the corporate giving world is moving.

Competition for "high net worth" individuals who give to the arts is going to be more intense then ever.

I think that's a reasonable set of observations/predictions

Here's the conclusion . . .

For the next decade, nothing is going to be more important than your ability to get people in the door and then turning a section of your audience into individual donors.

This isn't about cultivating a "rich person", it's about convincing that dentist in your audience to give $1,000 a year, or getting that mid level corporate executive to give $500.

Do programming that excites people, market effectively to get them in and then convert some of them into donors.

It's that simple and that complex.

Those that can do that will thrive, no matter how difficult the economy may be that any particular time.

Those who spend a large amount of time grant writing or chasing corporate dollars will be in a lot of trouble.

 

 

Just money

I understand that I'm late on the whole Chase Community Giving thing but I've been in Vegas getting beat to death at various casinos . . . so forgive the delay.

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Here's my one beef with the $20,000 that Chase is giving . . .

It's only money.

I know it feels like a lot of money, particularly to arts organizations that are working with small budgets, but it isn't . . . not in the big scheme of things.

Even a small arts group can burn through 20K in a flash. 

What I would love to see is a corporate giving program that gives money - even if it is in the sorta American Idol like way Chase is doing it - AND gives winners things such as:

-  An actual relationship with a program officer at Chase so that they could have a chance of getting additional funding in future years.

-  An opportunity to get a suitable Chase employee on their Board of Directors.

-  Training in things such as individual giving, strategy, etc.

Now we have something.  Now we have a program that can help a nonprofit become a sustainable, viable, thing.

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So here's the deal, I can't argue with anybody that is going after the cash.  But I think it's vital that these sorts of things are kept in perspective. 

It's a short term contest for a short term award . . . and you should constantly be asking yourself how much time, energy and equity you want to invest in the short term.

If you've got social media chops and feel like you can pull off the necessary votes without too much hassle, go for it.

But please don't blow too much equity on such pursuits.  And if you get the money, please spend it wisely.

Because it's only money.

And that can only get you so far.

 

The perils of dynamic pricing

Over at 2am theatre Trisha wrote this post on the benefits of dynamic pricing that merits a response.

A quick primer:  This is how she defines dynamic pricing -

Under this model, you advertise your lowest regular adult price, with the phrase “Starts at $XX.” Then you make sure the lowest advertised price requires them to buy early, come to the least popular performance night and sit in the very visible but not very good seats right up front on the side.

If they want a better night, a better seat, or the chance to wait until the last minute, it will cost them more. And if you haven’t advertised your additional prices in advance, you can adjust these numbers on the fly, experimenting until you find the right price breaks for this audience for this particular show.

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About 2 years ago dynamic pricing became the big idea.  I can remember sitting in a conference session and hearing a presenter brag about how he got this idea from the airline industry.

The airline industry.

Think about that for a second.

The airline industry is probably one of the most disliked industries in America.  There are like 2 profitable airlines and the rest are one step away from Chapter 11.

*This* is where we want to get our ideas?

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I understand the concept of dynamic pricing and I understand why its so attractive.  The performing arts are expensive, donations and other forms of contributed revenue are on the slide, so there is a certain logic to finding the ideal price/demand ratio.

But it worries me a bit when people talk about pricing models that could easily add another $10-$15 to a ticket with such . . . enthusiasm.  Particularly when many of us work in nonprofit arts organizations.

The question isn't whether you can use dynamic pricing.  Of course you can.  The question is SHOULD you use dynamic pricing and that strikes me as a much more complex conversation that raises difficult questions:

What message are we sending to the public when we do that sort of thing?

Could dynamic pricing undercut the "case for support" that many nonprofits use to solicit contributed income?

How does your audience change when you put dynamic pricing into place?

The whole concept just feels like a mixed message to me.  On one hand we are determined not to let someone pay $1 less for a ticket then the ratio says they should.

On the other hand we are community organizations that depend on generosity and goodwill to make our way.

Again, I understand the reasons for dynamic pricing.  I'm not some kid standing outside the circle throwing spitballs.  I've devoted my career to helping artists generate more revenue from their art.  But dynamic pricing seems like ones of those things that could easily slide off the rails and turn an organization into something they never intended on becoming.

I've heard advocates of dynamic pricing say things like:

"Nobody is going to notice the difference."

"It's just a few extra dollars."

"If they can pay, they should pay."

And I'm pretty sure the people saying that didn't come into the field hoping that one day those sorts of words would be coming out their mouths.

So I'm going to suggest that you be VERY cautious when using dynamic pricing and that you really consider the long term implications.  If you look at it carefully and decide it's right for you then knock yourself out.

Just be sure you're doing the right thing . . . and not just the easy thing.

The excitement game

I'm constantly reminded of the value of long term artistic planning.  By long term I mean actively thinking about (and making progress toward) projects, partnerships and collaborations that you would love to do 3, 5 even 10 years from now.

I've had the pleasure of observing situations where an artist talks to fans, donors, board, etc. about their artistic hopes and dreams.

When that happens you can feel the excitement level in the room rise.

We talk so much about revenue generation in the for profit and non profit arts that it can easily lead one to believe that we are in the money business.

The truth is that we are in the excitement business. 

Our job is to come up with artistic projects that thrill people . . . that make them want to jump up and be involved.

We are in the emotion business, we have to use our art and our marketing (and our fundraising when applicable) to make people FEEL something.

If you can do that the money will come eventually. (maybe)

But first you have to be willing to think long term.  You've got to be willing to imagine projects that you can't afford right now.  You've got to ponder (and speak about) art that will set the trend and not follow it.

Start thinking about it now.  You know what your art is today.  But where could you be five years from today?

That's what generates the excitement you need over the long haul.

 

Take a look around

Today's must read is this post from the Standford Social Innovation Review:  The Heartache of the Failed Hail Mary.  It gives six signs that your nonprofit is in trouble and is a crucial thing to check out if you are in the nonprofit arts.

Read the whole thing, but I have to add a little bit to one of his six signs.  This is sign number six:

Knights of the Dysfunctional Roundtable: "When you ask most people what kind of event they would like to go to if they had a free night, most might say they would like to go to a concert, see a movie/play or go root for their favorite team.  If you can believe it, I actually love going to board meetings.  I know it is sad and I should be committed but what happens in a gathering of board members can really be interesting.  You can tell a lot about an organization by watching how a board meeting is conducted.  How are the interactions?  Who is talking and is anyone dominating?  Where do they spend their attention?  What mechanisms, if any, are they using to guide themselves? If you can step back and just watch the flow, you probably can get a really good sense of where the organization is.  Make it interesting and watch it with headphones on."

Yes.  Yes.  Yes.

I've gotten to the point where I don't even need to ask somebody what the state of their nonprofit arts organization is.  I can just go to 2-3 Board Meetings and everything becomes clear. 

Once you see who is (or isn't at the meeting) or what questions are (or are not) being asked, you can learn a great deal about whether the organization is headed in a positive direction or off a cliff.

Give the entire thing a read.  It is well worth it.

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On a different track . . . I've got an idea and I want to share it with you guys in the universe and listen for your response.

One of the things I've been hearing from the people who bought Authentic Arts Marketing is that they have a tough time going through the exercises.

So what I'm thinking about is doing a workshop in mid May that would just for people who bought the e-Book. 

Together we would go through the "mantra" and "values" exercises.  The key to pulling this off is that everybody would have to be willing to participate and help each other.  I wouldn't want to be the only one offering ideas.  We would need everyone's wisdom and perspective.

I'm thinking about doing this in Chicago around the last week of May (maybe May 29). If it works, I'm going to find a way to do it for people who have the e-Book but don't live in Chicago.  Maybe a tele-seminar or something like that.

As for price, I'm thinking $35 for people who have the e-Book and $45 for those who don't because I'm going to send them a copy of the e-Book before we all meet.

So if anybody out there thinks such a thing would be valuable, email me at mission.paradox@yahoo.com and let me know.  Obviously no one is committed at this point, but I would like to measure interest in such a thing.

The value chain

If you want to make a living through art, then you have to understand the difference between adding more and adding value.

Technology has made it incredibly easy for anybody to add more to the marketplace.  If a musician is so inclined, she can her songs recorded, mixed and placed on a newly designed website for sale in a matter of days.

If a group of actors want to do a performance, they can search the web for possible venues, have scripts delivered to their house, send out some emails to possible audience and have a show up in a few weeks.

Because of this, people (many of whom wouldn't self identify as artists) have gone about adding more to the marketplace. 

But if you want to make a living from such things you can't just add more.

You can't be just another thing in a sea of things.

You have to add value, which is WAY, WAY, harder then adding more.

That value can come from multiple sources, ticket sales, donations, merchandise, etc.

My point is that ultimately you must have a base of people that perceive value in your work.

One of the biggest challenges to accomplishing this in the arts, particularly the live performing arts, is simply a matter of scale.

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My little business, Mission Paradox, is easy to run.  It has no overhead, no extra office, no employees.  Since I operate on such a small scale, I can focus on delivering value to a pretty tiny group of people and everything is fine.  99.99% of the people in the world will never know about what I do and that's fine as long as the people who know about what I do see the value in it.

Performing arts organizations are much larger in scope.  If you run a dance company and you want to employ five dancers and two administrators full time and pay each of them $40,000 then you are talking about $280,000 a year . . . every year.  And that's before all the other necessary expenses.

That's a big number, which means that particular dance company needs to deliver a lot of freakin' value.

The problem is that we assume the art itself has sufficient enough value to build an entire organization around it.  Maybe it does.  Maybe it doesn't.

If it doesn't, then you have to find ways to deliver additional value.  You may need a heightened and more engaged relationship with your audience.  You may need to be seen as civic resource to your town.

It may be years or decades before your art evolves to the point where it can consistently bring in big revenue numbers on its own merit.  So you have to be willing to look at the entire value chain and constantly ask yourself where you (and your team) can use your artistic skills to bring value to a group of people.

Let me say this again, this isn't easy.  Every day tons of arts organizations start up.  Most of them are just adding more.  Developing value and the tools to demonstrate and promote that value isn't a walk in the park.

But it's one way to turn your dream of making a living from art into a reality.

 

 

 

Land of Confusion

If you work in the live performing arts, visuals arts or noncommerical media . . . and don't spend most of your time in a state of confusion . . . then you simply aren't considering the issues deeply enough.

Pick your issue, (marketing, organizational structure, artistic decisions, diversity, etc.) and you're walking into a minefield of conflicting agendas, destroyed assumptions and difficult decisions.

I believe the people that will be successful in this environment are those that are willing to be confused the longest.  The world we operate in is complex, but truly effective answers only come when we embrace that complexity . . and the confusion that comes along with it.

Instead of grasping the easy to say - but often meaningless - solution (More Facebook ads, More new work, More people of color) it's your job to find answers that work within the context of your unique situation.

Your ability to do that is what's going to make you invaluable to your fellow artists, employees and the field in general.

Avoid the easy answer.

Embrace the confusion.

That's the path.

 

 

 

 

Four Lessons

Over at his blog, Chad Bauman did an excellent post on how Marketing Directors kill new work.  He's talking about the theatre world, but I think his observations could apply to any art form.

Here an excerpt:

"Marketing directors are like anyone else; we are creatures of habit. If we have been in the job for awhile, we start to develop systems for marketing products. We know how to market musicals, new plays, African-American work, political satire, etc. But what happens when the Artistic Director brings us something that we can't pigeon hole?"

"Well, I guess that depends on the person sitting in the marketing director's chair. Some of us get excited as it presents an opportunity to learn and grow, and a chance to build our audience base.  Others might be daunted, and instead of facing the challenge, they retreat to the comfort of the known."

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Marketing Directors, for better or worse, are more important to the process then ever.

Why?

Well this Crain's Chicago article helps to explain a lot.  It talks about how theatres are more and more reliant on ticket sales.  It's becoming more and more difficult for arts organization to fundraise effectively and many of them feel like they have to rely on ticket sales to pick up the slack.

Again, the article focuses on Chicago theatre, but it could apply to any art form in any town.

So if you put Chad's post and the Crain's article together you get a pretty clear picture of the arts world right now. 

Arts organizations are becoming more reliant on selling tickets, which puts increased power, pressure and responsibility in the hands of marketing directors.

I think there are four  vital lessons to take away from all this.

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Lesson 1 - For marketing directors

It's crucial that we define the relationship we are going to have with our organization.  At my day job I feel like it's my responsibility to say "Yes" to whatever choice the AD makes.  I'm never going to tell him that I can't find an audience for a play.

But that doesn't make me a rubber stamp.  Another part of my responsibility is to make accurate financial projections about what the work will bring in. 

I'll never say I can't market a show but I'll ALSO never inflate (or deflate) what the work will bring in via ticket sales.

So that's my particular relationship with my arts organization.  I don't question the choices.  I set accurate financial projections and then I work like hell to beat those projections.

A different marketing director may choose a different path . . . that's fine.  What matters is that you know and can explain what that relationship is.

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Lesson 2 - For organization leaders

It's also important that organizational leaders create environments that empower marketing directors.  A commenter on Chad's blog explains the situtation some people find themselves in:

 At the end of the day, the number-one metric by which these Marketing Directors are measured is dollars earned, and they're rewarded or punished based on whether they make their budgeted goals. And at the companies I know, these same Marketing Directors are woefully under-resourced, both in terms of marketing dollars and the staff needed to do some of the innovative audience development work necessary to properly build an audience for a new work.

Too many marketing folks are given high expectations on one hand and very little money, staff, autonomy or real power on the other.  I'm fortunate enough not to be in that situation, but a lot of other people are and the organization suffers because of it.

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Lesson 3:  For emerging arts organizations with inexperienced/new marketing staff

Every couple of days I hear from a person who was essentially thrown in the marketing role out of  necessity.

Maybe it's an artist who is currently performing with the organization but now has to take over marketing as well.

Maybe it's a former intern who is now handling marketing because there is no one else around to do it.

You get the idea.

It is vital that an organization give these people the training and skills they need to be successful at their jobs.

I can't stress this enough . . . . MARKETING IS NOT EASY.   It is incredibly unfair that we take these new or inexperienced people, throw them into the choppy waters that are arts marketing and expect them to swim on their own.

There are a lot of ways to give them the help they need.  Of course I would remiss if I didn't mention that I coach a lot of marketing directors.  I'm working with two of them as we speak.

But there are other choices.  You can buy them some books on marketing.  You can enroll them in a few marketing classes at a community college.

Either way you (the organization) MUST invest in making these people successful.

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Lesson 4 - For everybody 

Reliance on ticket sales/earned revenue is not necessarily a good thing

A healthy arts organization, particularly a nonprofit one, has to be able to get revenue from ticket sales and donations.  It's REALLY difficult to be overly reliant on ticket sales AND make strong artistic choices.

It's not impossible.  I've seen it done.  But it's tough.

I know we are going through a hard time for fundraising and every Development Director in the country has my sympathy.  I wouldn't trade jobs with them. 

But long term, a healthy arts organization needs both audience and donors to make it.

Scale Up: Why the Nonprofit Model (Still) Works for the Arts

Part of me can't believe I'm writing this.  But I think it's something that needs to be said.

The nonprofit model, also known as the 501c3 model, for producing art has been given a bad rap.

The latest example of this is this article "Is the Not For Profit Structure Model Self Destructive" by James Undercofler(h/t to Thomas Cott).  The entire article is worth reading but here's a selected highlight:

So, is the NFP too cumbersome in its structure to impede the flow of artistry it is created to facilitate?  As a one-size-fits-all model, the answer is absolutely "YES."  For small start-ups, and for perpetual start-ups, the requirements to achieve NFP status, as well as the ongoing requirements, from financial reporting to maintenance of a fiduciary board, often overshadow the creation and presentation of artwork. 

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I disagree.

I think the NFP model allows us the opportunity to let creativity flow.  Just because some of us (many of us?) haven't taken advantage of the opportunity doesn't mean that it is there.

To explain the opportunity, I need to talk a little bit about scale.  Stay with me, I may need a minute to make my point.

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"Live" is expensive.

Live theatre.  Live dance.  Even the relative liveness that comes from an arts gallery or museum.

All of them cost a ton of money to produce properly.

Why?

Because the arts are both labor intensive and capital intensive.

This means they require a lot of people and a lot of equipment (sound boards, lights, etc.)

Labor and capital intensive businesses are inherently expensive.

Now I know this is the point where some of you will tell me about how you produced an epic musical and ran it for 5 weeks for $5,000.  Good for you.  But the truth is the only way you could pull that off is by underpaying (or not paying) damn near everybody, including yourself. 

So I'll stick to my point.  You, me, all of us, we are in an expensive line of work.

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For an expensive line of work to be viable, it has to be able to scale.  Avatar may have cost a billion dollars to make, but they made it back through their ability to distribute the film to a whole lot of people.

The live experience is far more difficult to scale.  It can not be distributed in the same way DVD's, cell phones and other tech based items can.

What the nonprofit model provides us is the opportunity to scale up in a different way.

James Cameron had a network of movie theatres.

You and I have individual donors (the key to it all), foundations, Boards, etc.  These are the tools we have to make our big, expensive, slow business viable in a world where damn near everything else is trying to find a way to get smaller, cheaper and faster.

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In James's article he lauches into some of the typical complaints about the NFP model.

-  Board members are clueless about how the business works.  Yes, many of them are.  But only because we allow it.  We don't have to let these people on our Boards, nor does it take an act of God to remove them once they are on.  We get the Board members we deserve.

-  Writing grants and other administrative duties are too cumbersome.  First, I know many funders are trying to find way to make their grant applications less complex and lengthy.  Second, even if the admin duties are a bit of chore they are a necessary part of doing business.  Do you think the guy that runs the coffee shop I go to every morning likes doing profit/loss statements and managing inventory?  Some things are just part of the job.

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Here's the deal.

The NFP model is about the long haul.  It's about building an artistic legacy.  It's about serving a defined group of people and then depending on those people to support your work.

The issue is that many artists aren't interested in all that.

They are worried about this play, this album, this moment in time.

That's an acceptable choice.  But it's not a choice that fits the NFP model.

What we have right now are a bunch of organizations that are really just failed for profit businesses. 

They couldn't find a way to make their art economically viable in the for profit realm so they throw on the cloak of nonprofit status and hope that nobody notices how self serving they really are.

Then they wonder why they can't raise money.  They wonder why nobody is just going to hand them a check because they REALLY, REALLY, want to do this piece of art.

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I'll agree with James on this.  The NFP model isn't for everybody.

I'll go a step further and say that it isn't for most people.  Many people who apply for 501c3 status are making a significant mistake.

But the mistake isn't the model, it's the misunderstanding of what the model is for.

Some of the greatest, most creative, most risky art this world has ever seen has been produced by nonprofit arts organizations.

It's still one of the most viable ways we have of giving scale to what essentially can not be scaled.

But what I'm hearing more and more are individuals blaming the model for their own bad decisions.

They do safe, tame, redundant work and then turn around and place the blame on the system instead of taking responsibility for their own lack of courage and creativity.

Yes, the NFP model has it's limitations.  It isn't a perfect system.  But to say that the system itself stifles creativity removes the responsbility from outselves and places it on an invisible "other".

I don't think that's the way to go.

 

 

Two ways to the top

If you are in a nonprofit arts organization and you want to pay a "living wage" to anyone, artist or administrator the money has to come from two sources:

1.  Individual donations

2.  Ticket sales, or some similar type of earned revenue

That's it.

That's the list.

There is no foundation, no government source that is EVER going to provide sufficient income to consistently pay a living wage.

If you want the wage, you are going to have to build the infrastructure and capacity necessary to get actual money out of the pockets of actual people.

"But Adam, we don't want to focus on this things, we want to focus on the art."

Fine.  Cool.  I understand that building the sort of relationships and connections you need for audience and donors is a lot of work.  I know from experience that it is easier to write a grant. 

I also understand that you may find it hard to justify bringing in (and paying) fundraisers and marketers when you don't even have the money to pay the artists.

I get all of that.

But there is NO BUSINESS (nonprofit or otherwise) that can neglect the revenue side of the equation on one hand and then be worried about wages on the other.

It's your choice.

Develop the skills necessary to fundraise and market your work or live on the whims of foundations and government sources.