Business Model: The Next Frontier

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Social Innovation Tag Could

In a recent post entitled “Words Like Knives,” arts thought leader Arlene Goldbard expresses her skepticism about words like “quality,” “excellence” and “innovation” when they are applied to artists and their work. “So when the word innovation surfaces,” she writes, “I want to know: who’s asking?” Since I share Goldbard’s distrust of the subjective and ideological nature of such words (I wrote about this several times on my Theatre Ideas blog, including here), but since I intend to talk about innovation in the theatre anyway, I think I’d better precede the discussion with an answer to Goldbard’s question.

Social Innovation Tag CouldAs you’ll see from my bio, I am a long-time blogger, first at Theatre Ideas, and lately at Creative Insubordination (and I have the scars to prove it). I am also a college professor, a group that Goldbard as a rule tends to give the hairy eyeball. Nevertheless, it is my experience as a professor and my deep concern for all of my wonderful students that informs my opinions concerning the direction I’d like the theatre to take. I am also the founder of the Center for Rural Arts Development and Leadership Education (CRADLE), which suggests a couple things: one, that I think the theatre needs to be democratized and decentralized; and two, that I think it is possible to lead a creative life outside of an urban area.

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In other words, I’m a crank.

But enough about me, let’s talk about “innovation.”

When I did a search for books with the word ‘Innovation” in the title, Amazon provided over 54,000 hits. Here is a sample of the first page or two of search results:

And so on. You get the picture. Almost all of these books were written in the past 5 years, and the oldest was from 2001. Clearly, it is a hot topic in the world of business and entrepreneurship.

Then I did a search on “innovation” and “theatre.” Here is what I found:

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That’s it. Three theatre history books and a 1972 design book. And therein lies the problem.

Business is obsessed with innovation, with change, with finding the Next Big Thing. Most of the books I listed above are about encouraging creative disruption in your organization, trying new business models to sell your products.

Theatre? Not so much. I suspect one might argue that theatre people are too busy being innovative to take time to write about it. Fair enough. I don’t see much evidence of that, but then I live in North Carolina, and so unless somebody takes the time to write about it, I’m not going to know. Maybe the whole theatre world changed while I was grading end-of-semester papers. And, of course, the lack of interest in documenting work, indeed the absolute hoarding of new approaches, is part of the problem theatre faces. Still, innovation as it appears in a work of art is not my focus in this post. It’s not that I don’t care about innovative approaches to telling a story on stage, it’s that I don’t think that’s where the action is going to be in the 21st century.

I’m a theatre historian, and as such I am prone to making sweeping generalizations without batting an eye, especially when I am trying to cover 2500 years of theatre history in a single semester course. Here’s an example of such a generality: theatre people spent the first 2000+ years innovating about theatre spaces: they invented the arena theatre of ancient campfire storytelling, the thrust stage of the Greeks and Elizabethans, the moveable stages of the medieval mysteries and commedia, the proscenium of the Italian Renaissance. Throughout most of that time, while storytelling techniques waxed and waned, generally speaking we had a fairly consistent form: plays written in verse with a presentational relationship between the actors and the audience (i.e., usually somebody talked directly to the audience), and a mixture of words, music, and dance. We then spent about 300 years getting really good at writing plays — Shakespeare, Moliere, etc. Then in the 20th century (if you extend the 20th century back to the 1870s), we spent most of our time developing “isms“: realism, naturalism, expressionism, symbolism, dadaism, theatricalism, absurdism, and so on. Postmodernism stands as the end point of the “ism” period, an admission that we’ve pretty much discovered all the isms there are and now all that’s left is to create mashups out of them.

Business model chartSo we up until now innovated about space and about form — what’s next? Well, in my opinion, the next area for innovation is (drum roll, please) in theatre’s business model. (Sorry, Leonard, I think most of your readers just navigated away from this page…) Back in 1947, Albert Einstein said, “I know not with what weapons World War III will be fought, but World War IV will be fought with sticks and stones.” Well, without a new business model (or, better yet, many new models), I predict theatre will end up back gathered in a circle on the threshing floor telling stories around the fire, the theatrical equivalent of sticks and stones.

Here’s the problem: a business model that, on the one hand (the profit hand), leads to tickets selling for $120+ each, and on the other hand (the non-profit hand), leads to a reliance on unearned income for 50% of operating expenses is vulnerable to any twitch of our unstable global economy. Don’t believe me? Check out attendance on Broadway following the Great Recession, or the number of nonprofit theatres that closed or almost closed during the same period. Despite the skepticism of people like Michael Kaiser (“If I hear one more pundit or read one more blog suggesting that ‘old models’ of arts organizations are dying and that ‘new models’ are needed I am going to scream“), something’s gotta change.

It’s not as if this is boring stuff — everywhere else, this is where the action is. Seth Godin decides to finance his last book, The Icarus Deception, through Kickstarter and Amazon’s CreateSpace instead of a traditional publisher, sets a $40,000 goal, and ends up raising $287,000 representing thousands and thousands of advance sales. iTunes, Netflix, Spotify, the Huffington Post — all represent revolutionary changes to the business model of their various markets. Here’s a link to 29 different business models for videogames. Twenty-nine!

Meanwhile, regional theatres still base their business model on Danny Newman’s 1977 Subscribe Now!, which has been continually in print since its first print run and is the leading arts administration book in history, and William J Baumol’s and William G Bowen’s The Performing Arts: Economic Dilemma, which told us that the business model for the arts would never be sustainable. The result? We put so little thought into innovation and business model that we think that creating flex passes is groundbreaking! Read cutting edge theatre blogs and it is clear that we think we can revive theatre’s relevance if we could just master Twitter, Facebook, and Four Square, as if theatre would once again be popular if only people knew we were doing shows. Meanwhile, 58% of Actors Equity members didn’t make a dime doing theatre last year, and 87% made less than they’d have made flipping burgers for minimum wage. Happy birthday, Actors Equity!

Folks, this business model is dead. And if we don’t start thinking about this stuff, the house of cards is going to collapse. Sure, keep trying to make the product more dynamic — surely we can come up with something more hip than most of the Pulitzer Prize winning plays of the past decade — but at the same time, we need to transform our way of doing business. Pull together a blue ribbon panel of radical theatre thought leaders (no, not Michael Kaiser and Rocco Landesman — people like Diane Ragsdale, David Dower and Polly Carl, Dudley Cocke and Doug Borwick) and make them spend a week locked in a room with Steve Blank, Seth Godin, Daniel Pink, Alexander Osterwalder, Chris Anderson and a handful of venture capitalists. Then make American Theatre Magazine devote an entire issue to what they figure out — you listening, Jim O’Quinn?

Maybe that would get the ball rolling.

  • I’m struck in this piece how you slip back and forth from talking about the business of running a theater and on the other hand the relevance of theater in society, as if they were one and the same thing.
    I think Kaiser is correct when he says “Expert after expert are calling for ‘new models’ without explaining what these new models are or what specifically they are meant to address, except for a vague unhappiness with how things are working (or not working) now.” And one model I don’t hear anyone in your field fighting for or even suggesting is that the arts need public tax dollar funding. No one believes that we all would be able to drive over highways or fly in the skies without those systems being subsidized by our tax dollars. The same with our police or fire departments, healthcare, banking system. Yet when it comes to the arts we have been led to believe that the arts should be both as relevant and function like a WalMart and if it can’t then there is something broken or dead in the arts model.

  • Richard — I think without a functioning business model, one that doesn’t rely on wooing the rich, then theatre’s social relevance is, well, irrelevant. As far as government funding is concerned, look, I’m 55 years old, and people have been thumping their chests about that one since before I was a teen. I’m tired of waiting, and I am tired seeing my talented students unable to share their talents because the system is dysfunctional. Furthermore, even with the pittance the government ponies up, the arts end up a political football — to hell with them. Finally, in addition to being a college theatre teacher, I am a farmer wannabe, and having read the history of how the government has totally screwed up agriculture in this country — a way of life that, at one time, was both creative and stubbornly individualistic — I am no longer convinced that government involvement in the arts is worth the costs. I want to focus on creating a self-sustaining and independent theatre system that is scattered across the country democratically.

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  • Emiliy Sojourn

    My first question, whenever anyone begins to question theatre’s ability to “adapt” or to “innovate”, is this: how are you defining “theatre”?

    More often than not, people define theatre is that large structure over there where they have plays onstage, brightly lit and featuring sets and costumes and sound systems.

    But I disagree that’s the definition of theater and, as such, I question the premise that “theatre” is not innovating.

    As someone who has worked the business end of a world-class performing arts center and who has worked the onstage end of many “by-the-seat-of-our-pants” companies, my definition of theater is anything that involves human beings telling stories to one another. Yes, YouTube is theatre, as is cable TV and Netflix series and the improv troupe who plays on the streets during rush hour. Theatre is Julian Boal’s legislative theatre and theatre brought to those with developmental disabilities and podcasts telling mystery stories.

    “But you’re missing my point.” I hear you say.

    I don’t think I am.

    The building with the lights and the plush seats and the season subscriptions is but a DELIVERY METHOD of theater, much like Greek amphitheaters or the small inns in which Shakespeare’s companies performed. These delivery methods have their day and then they die away.

    To say that “theatre” hasn’t innovated when plays can be co-written on Twitter or actors can act alongside life-sized holograms is just not accurate. People might not consider these innovations because some might not consider these to be “proper” theatre. And that’s the problem, they are.

    I think what you’re saying is that there hasn’t been much innovation in the 19th Century delivery method model of theatre which is, (to put it bluntly,) dying out.

    And is that such a bad thing?

    In recent years I have found MUCH more satisfaction in seeing the plays of Ten Thousand Things, a Minneapolis company which sends Equity actors out to jails and nursing homes and homeless shelters than I have at the world famous Guthrie Theater across the street. Personally, I am inspired by Boal’s Theatre of the Oppressed which was created to be diametrically opposed to the commodification of drama and exists to use theatre as a means of civic discourse.

    “Theatre” adapts and innovates all the time. It always has.

    Delivery methods innovate until they reach a natural stopping place. Maybe it’s time to leave the 19th Century and embrace the innovative possibilities of the 21st Century.

    Some people are even making quite a lot of money doing just that.

  • It’s not the business model, it’s the culture. Theatre administration – indeed arts administration in general – is not a culture of innovation, it’s a deeply conservative, insular, self-absorbed, tradition-bound system that, because it believes itself to be superior to the marketplace, refuses to anticipate or even respond to changing market conditions (a.k.a. innovation). Innovation only happens in businesses that measure their relevance and worth by the extent to which consumers are willing to buy their products. In the arts, we measure our relevance and worth by our self-perpetuating insistence that we are relevant and valuable. People who sit around convincing themselves that they’re relevant and valuable don’t innovate, they do what they’ve always done and blame the world around them for failing to recognize their relevance and value.

  • Richard Kooyman

    “I want to focus on creating a self-sustaining and independent theatre system that is scattered across the country democratically.” Well good luck with that nice little day dream because Costco or Co-America ain’t getting on board that vague train.
    The excuse that big government is bad is not only the party line of those who want you to exactly think that way, it just isn’t true. Bad leadership leads to bad government. Good leadership does the opposite. For twenty years we had a NEA, warts and all, that worked better than what is happening today, until it was killed by political conservatives who didn’t like the content.
    I follow a half a dozen of your fellow comrades all saying the same thing as you but none are coming up with any solution based on the capitalistic model. I can come up with two reasons why that model is bad for the arts for every one you bring up against governmental support.
    We don’t even live in a real democracy, yet you expect art to be?

  • Richard — Wow! “Comrades” AND capitalism. Thank you for wishing us good luck — we’ll need it. I prefer to fight for a new way than accept the current dysfunction. I just looked at Michael Kaiser’s “Art of the Turnaround” — Kaiser seems to think, like you, that all it needs is a strong leader telling positive stories to make everything all right. I couldn’t disagree more.

    Emily — I suspect we agree much more than we disagree. I have very little interest in the Guthrie or Broadway — this is the business model I reject, and Im not all that interested in helping them to tinker with it around the edges. Like you, I think we need to rethink from the starting point, a theatrical Descartes, if you will. So it isn’t about the building, for sure, or the traditional delivery system. However, I WOULD insist on the “live” aspect, the localized, face-to-face, breathing-the-same-air definition that has held sway since Aeschylus. So I can’t go to electronically mediated stories as a substitute. If that is the definition, then we should just shut down the live stuff and let the mass media take over the storytelling function. But I believe in a locally-specific theatre — like farmers markets instead of industrial farming.

    Trevor — I agree wholeheartedly — for all the chest thumping about how creative they are, theatre artists are deeply traditiional and conservative. Steve Blank, in “The Startup Owners Manual” insists that entrepreneurs need to “get out of the building” and talk to customers. Say something like this to an artist and they will immediately accuse you of “pandering.” We have created a completely insular system that, because it is insular, relies on massive infusions of unearned income (or government largess, as Richard wants). It makes the arts responsive only to the rich, and only the rich in certain urban areas. That has to change.

    Thanks to all three of you for responding!

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  • Seems like this topic is bubbling all over the place. Among many others, I was asked by Caridad Svich to write about Artistic Innovation in prep for the latest TCG conference, where it was a key focus. Here’s a link to some of the many responses to her request. http://www.tcgcircle.org/category/artistry/

    And of course there is no better place in the American theater right now to see where the playing field is being nationally leveled and innovated than http://www.howlround.com/

  • Douglas — Thank you for your comment. I particularly agree with you about the difference between small “i” and big “I” innovation. So much of what I see in discussions among theatre people is a confusion of the two — people think they’ve made an Innovation when they’ve really barely made an innovation. While I did not attend the TCG conference, when I checked into the live stream I saw a lot of this confusion.

    As I say in the article, making innovation within the art form itself is important — God knows we need it. But without a big “I” Innovation in the business model, in the structure of our business, soon nothing else will matter.

    Yes, HowlRound is The Place for Innovation right now. We need another hundred David Dowers and Polly Carls.

    • Respectfully, Howlround could reach out to non-Howlrounders more than they do. They’re not, again respectfully, the only innovators, or people who are interested in innovation, out there.

  • Leonard — You (respectfully) make me laugh. ;-) No, of course Howlround is not the only game in town — it is more like ArtsJournal, which collects a bunch of innovative voices. And lkike Clyde Fitch is becoming as well, in a more eclectic fashion.

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  • Thank you for this. It is very encouraging. I am currently in the early stages of building a theatre company on a new model of sorts. The concept is to use the “artist-manager” role you mentioned in “A New Education for a New Theatre” along with minimalist shows and to bring them to community-building venues. What I mean by community-building venues are venues that are already concerned with building community within them. This (hopefully) will lend a built in core audience on which to build. We are starting in churches (which I realize could be awkward), but I hope, if successful, what we learn will be transferable to other community-building venues like community centers, bars, ect… Well, I won’t bore you with all the ins-and-outs of my theory since, as of yet, it’s still mostly theory. (I’ve had modest success with a couple pilot shows, but we’ll see what a season looks like.) Thanks for writing. I look forward to hearing more.