Business Model: The Next Frontier

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:

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

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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.

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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.

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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.

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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!

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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.