Finance

Lemonade Stand? Cool Kids Sell Art In Their Frontyards

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A year ago on Quartz a list appeared by former Stanford dean, Julie Lythcott-Haims, outlining what every 18 year old should know.

I briefly toyed with the idea of doing a post about how the arts, especially performing arts, provided experience in most of these areas. Among them were that an 18 year old should know how to: talk to strangers; manage his assignments, workload, and deadlines; handle interpersonal problems; cope with ups and downs, and must be able to take risks.

While, “contribute to the running of a house hold,” another on her list, may not appear to exactly fit into the performing arts, in her reasoning she says this teaches “respect the needs of others, or do their fair share for the good of the whole.” Those are skills you pick up when working as an ensemble.

As I was reading the article, I was envisioning kids in school, after school and summer arts camps/programs acquiring these skills since that is where arts experiences would likely teach these skills prior to someone turning 18.

So when I hit the eighth thing an 18 year old should know, “be able earn and manage money,” I realized that wasn’t something most arts programs would teach kids.

But if we are going to talk about the need for artists to manage and monitor their own careers,including finances, maybe elementary budgeting and accounting skills should be introduced to teen and even tween students.

Oh, but that is such a yucky, boring topic right? The kids want to have have fun making art, that will just scare them away.

I am not suggesting that you pull out your college accounting text. You can introduce cost and pricing in a fun way at an age appropriate level.

With younger kids, you start out saying – You made this painting or ceramic piece and now it is time to sell it. How much will you sell it for? How many do you think you can make in a week? How much could you make if you sell every thing at the end of the week?

This type of instruction hits on the cross-discipline approach schools are looking for these days. You can also get kids excited by the idea of how much money they might make.

Any kid can have a lemonade stand. Cool kids sell paintings, pottery and tickets to sidewalk performances!

Later you introduce the concept of material costs and time invested into the mix and take a more sophisticated approach to pricing. In certain situations maybe you have high school students participate in budgeting production costs for costuming and set building for performances. If they are involved in making the decisions required of a budget cap, all the better.

By connecting the idea that art has monetary value, you create a greater appreciation for art in students when they are young. It isn’t just something you do for fun and shouldn’t expect to be paid for.

While this runs counter to the idea that art should be created for its own sake, not with the goal of remuneration, the absence of this instruction hasn’t prevented people from claiming the arts should be self supporting.

Still, executed poorly the focus can be all about maximizing commercial viability over illustrating a connection between basic economic skills and art. Kids shouldn’t be given a message their work is bad simply because no one has bought it. And let’s not drag 14 year olds into the debate about doing something for exposure vs. being paid.

Given that not every person in an after school program or summer camp is going to enter an arts career, involving some basic economic considerations in art instruction when kids are young can shape attitudes and perception about the validity of arts and cultural endeavors over the long term.

Stuff To Ponder: Expanded Approaches To Pay What You Want Pricing

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A few weeks ago economist Alex Tabarrok wrote about a strange “pay what you want” promotion a shoe company was running. It struck him and many commenters of the Marginal Revolution blog as a psychological experiment with a goal of getting most people to select the set middle range price.

In that same post he linked back to 2012 post where he provided an analysis for why “pay what you want” can make sense for charities and performing arts organizations. The analysis may be difficult to understand, but the bottom line is:

Probably more importantly, pay-what-you-want pricing is going to be advantageous when the seller also sells a complementary good, such as concerts, which benefit from consumption spillovers from the pay-what-you-want good.

Basically, when you offer an option to pay what you want, there should be accompanying options like food, merchandise, other participatory activities that you can earn revenue from. It doesn’t necessarily have to be the movie theatre model where a bag of popcorn is $10. Offering pay what you want simply because you think it is a good idea without any sense of how you can offset the loss of revenue isn’t prudent. If end up with a higher per ticket price than you had before, that is great, but don’t plan on it.

One of the commenters on the 2012 post noted that the site HumbleBundle allows you to pay what you want, but also posts the average price paid in real time.

Currently, if you pay more than the average of $4.14, you can unlock additional content and if you pay more than $14 there is another level of content you can receive.

Having some sort of bonus content or access people will receive for exceeding the average is a smart idea. It rewards those who act early before the average increases as a result of people paying to receive that content (or just being generous). This content or access could be better seating, merchandise, concessions, meet and greet opportunities, invites to other organizational activities, etc.

I got to thinking about how my ticketing system can tell me what the average selling price of my tickets are on demand. I could theoretically manually update that information on the lobby screens simply as a point of information at various intervals just as a bit of psychological social pressure on people to pay close to that or a little more. While I might also choose to update that information on our website, I am not sure the sense of social pressure would be as significant for online sales.

However, if ticketing software providers created a way to export that information to update in real time like HumbleBundle does, it might be possible to create a sense of tension and excitement in lobbies just prior to performances. (Or if handled correctly, even online). Granted, it could be done manually but I know I have better things for my staff to do than constantly run reports and post data to a public screen.

Watching it tick steadily up with every purchase is much more interesting. Especially if you are experience the dual satisfaction of seeing how much money was being raised for the organization while knowing you got access cheaper than a lot of other people – “Whoo hoo!! We collectively moved the price to $15.63 (but I got mine for $4.85!)”

Thoughts? What experiences, if any, have you had? I know a number of places are doing pay what you want/can, but I am not clear if they are supplementing their income with related goods and services or if they have found a way to energize audiences around the practice in a productive manner.

Who’s Afraid Of The Big Bad Accounts Ledger?

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This weekend I got to do something I waited an entire year to do…go to Decatur, IL. Your first response may be to wonder why the heck I was looking forward to that for an entire year. The reason is because the Society for Arts Entrepreneurship Education conference was being held at Millikin University.

At last year’s conference, I had learned about Millikin’s student run arts businesses and was eager to see it in person. I will just say the experience did not disappoint. Though I am still slogging through my notes from various sessions at different student run ventures so my readers will need to be patient for at least another day before learning more about that portion of the experience.

What I wanted to discuss today is a session I attended on one of the bugbears central to arts entrepreneurship — financial literacy. When people talk about artists needing to be more business minded, that is probably one of the top three issues they envision needing attention.

Of the seven people on the panel, two were accountants that work closely with artists, Jessica Jones and Elaine Grogan Luttrull. It was something that Jessica said that really gelled the whole subject for me. She mentioned that there is an emotional and cultural barrier everyone experiences when it comes to money and finances. It isn’t just people in the arts and it isn’t about numbers being inherently intimidating. She said that she has helped engineers and scientists who work with numbers all day and they have the same issues as everyone else when it comes to finances.

I don’t remember if it was Elaine or Jessica who mentioned it, but they were somewhat opposed to the concept that people should learn “basic skills” because the term means different things to different people. A CPA can look at materials and identify revenues sources in seconds whereas other people need to make an effort and consider the skills far from basic. Jessica commented that you can’t just carve out a top 10 or 20 list of things people need to know, rather people need to become comfortable with the language, concepts and terminology so they know what to ask and how to understand a conversation about their financial situation.

Ken Weiss from University of North Carolina reinforced this idea saying that it isn’t just important for people to know terminology, but the relevance. His school does a session on intellectual property, copyright, trademarks, etc. with a guest speaker who gets the students engaged by helping them understand how these issues help their career.

This idea emerged multiple times in different sessions at the conference. People discussed how their students had the “a-ha!” moment when they came to the realization that they needed to know something for themselves and not just because the professor said they need to know it.

One of the two CPAs spoke about how helpful it was for people to learn what resources were available in terms of things like software to handle accounting, sales records, etc., and then create operational plans and procedures based on whatever resources were most suited to their needs.

That way you aren’t constantly faced with the prospect of processing your numbers and you can spend the majority of your time doing the work you love. Sometimes the biggest impediment is being unaware that these resources exist and being intimidated by the thought of keeping track of it all. Ultimately it comes back to haunt you when it comes time to report your income for taxes.

Others on the panel commented that some arts disciplines were worse than others in recognizing the need to teach students skills to help manage their careers. However with the general concern about university students taking on so much debt, many schools are moving toward making financial literacy a skill that all students must possess.

Overhead By Any Other Name

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FastCoExist recently continued its discussion about how a poor view of non-profit overhead cost is limiting the good such organizations can do by offering some “rebranding” suggestions in order to help change perceptions.

As an illustration of how the concept that non-profits must restrict their overhead cost is a severe impediment toward doing good, they cite a lawsuit against Architecture for Humanity.  The group was experiencing huge program growth, but was limited by donors to only devoting 10% to overhead costs. Because they dipped into program money to fund their growth, they have been taken to court accused of looting the funds.

Many company donations, the suit alleges, were earmarked for project costs. As overhead rose and things got more desperate, those got tapped to cover broader expenses. The plaintiff is calling that looting. The suit shows pretty clearly how groups—even if their rapid growth is woefully mismanaged—can be trapped by antiquated views on things like “overhead” and “indirect costs.”

[Update: Issues like this are why it is good to have Directors and Officers Insurance]

FastCoExist spoke to two brand naming experts who mulled over various concepts for changing how overhead costs are viewed by changing the terminology. The article go through various ideas they discarded to come up with the following suggestions.

From Margaret Wolfson of River + Wolf:

1: Circle funds
2: Encompass funds
3: Vessel funds
4: Core funds

Anthony Shore of Operative Words suggested:

1: Operations costs
2: Operational costs
3: Direct operations costs
4: General operational costs

The author of a Bridgespan report on paying overhead costs noted that this latter set of terms may not be appropriate because “not all operational costs are indirect, and not all indirect costs are operational.”

The naming experts made some additional suggestions that sounded a bit like arts organization donor categories so maybe we are already heading in the right direction and just need to find more sexy language:

Wolfson’s other idea is to award branded titles for budget line items, so folks who cover electrical costs could consider themselves “Illuminators” while those picking up the hardware and software tab would be “Digital Drivers.”

The point is, words definitely do matter. The final expression might end up being a bit unsexy, but only metaphorically. As Shore puts it: “What could be more sexy than dramatically influencing how much money pours into the critical, staying-afloat initiatives within an organization?”