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

November 23, 2016

by:

Joe Patti

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.

Finance, Info You Can Use, Management Philosophy, Marketing/PR, New Initiatives, Pricing, State of the Arts, Working In The Arts

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The Real Competition Is Inaction

November 22, 2016

by:

Joe Patti

As he often does, Seth Godin is speaks right to the arts and culture industry when he suggests that we welcome an environment where there is a lot of activity similar to our own rather than viewing it as competition. (my emphasis)

But for the rest of us, in most industries, it turns out that the real competition is inaction. Few markets have expanded to include everyone, and most of those markets (like books and music) have offerings where people buy more than one.

This means that if there’s more good stuff, more people enter the market, the culture gets better, more good work is produced and enjoyed, more people enter the market, and on and on.

So encouraging and promoting the work of your fellow artists, writers, tweeters, designers, singers, painters, speakers, instigators and leaders isn’t just the right thing to do, it’s smart as well.

I think we can all see the truth in the statement that the real enemy is inaction, not the other organization down the street. The big concern more than anything else these days is that people will stay home and disengage.

I believe I have mentioned it previously, but when I am asked to speak to groups about what my organization is doing I take the opportunity to speak about how all the arts and cultural organizations make the community a great place to live. Even if people don’t patronize all the groups, at the very least it engenders some pride and loyalty to the community. At best, my description of what is enjoyable and valuable about these places may inspire a visit.

The other factor is that the existence of other arts and cultural entities helps attract and cultivate a talent pool that you can benefit from.

When I started in my current job, I was a little disappointed in how few students were initiating their own projects compared to where I came from. It took me awhile to realize that the students with whom I previously interacted were regularly working together on projects at four or five other organizations, plus doing a handful of one-off projects for other people in the arts community. Not only had they developed a close rapport among themselves, but they had many hours exposed to a variety of concepts, techniques and processes working for other people.

I bristle at the suggestion someone invest their time and talent for the experience and exposure, (getting paid doesn’t inhibit the absorption of new skills after all), but I certainly saw their abilities and judgment develop as a result of their effort and discipline.

Moreover, my organization benefited from them having gone through this process. It was only later that I realized how much.

This basic concept then supports the idea that perhaps Professional-Amateurs aren’t the threat to “professional” artists that they have been perceived to be.

Art(ist) Education, State of the Arts, Working In The Arts

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If You Give A Teen $100….

November 21, 2016

by:

Joe Patti

Recently James Doeser wrote about a program the Italian government started where they granted a culture voucher worth €500 to anyone who turns 18 before December 31.

It can be used to buy books, pay for entry fees to parks, museums and archaeological sites, and instead of cash for theatre, cinema and concert tickets. The euros in the app are spent by the young people and the arts organisations then reclaim this money off the state.

There is something wickedly disruptive as well as very elegant about this idea. If it works, it will have a profound impact not just on Italian cultural policy but also how other governments around the world approach the issue of arts funding.

Whereas a voucher scheme like the one underway in Italy is an exercise in ‘demand-side’ economics, the vast majority of our cultural policy in the UK is on the ‘supply side’.

While Doeser generally applauds the program as a way to avoid giving additional benefits to people who can already afford them, (it is pretty well recognized that free admission days are attended by people who already attend, not new audiences), he notes some potential issues:

While ‘supply-side’ interventions have their shortcomings, ‘demand-side’ ones are not without complications. There is a host of interesting effects that a scheme of this sort might unleash on the cultural marketplace: ticket price inflation; the prospect of resale (if I am an arts lover and can get €300 of your unused credits for, say, €100 in cash, then we’d both be better off if we can do this deal); and finally whether there will be low take-up and the Italian government is operating like your gym, confident that people will not use their entitlements.

Of course, I got to thinking about how this might be implemented in the U.S.

Ideally, teens would use the money to indulge their curiosity and expanding their horizons buying books, going to museums, taking classes/lessons, buying paint, visiting historical sites, etc,. But the reality is that they may just use the money to pay for additional months of Netflix subscriptions and buying music from the same people they already are without expanding their experience.

There might be a temptation to specify what the money can be spent on that aligned to a definition. However broad the definition was, it would still delineate what was worthwhile and what wasn’t. My only consolation would be that as restrictive as the arts community’s definition of what constituted arts and culture might be, it would still be orders of magnitude broader than that of the politicians authorizing the funding.

Politics aside, allowing the funding to be use for all the activities the NEA defined as arts participation their 2012 survey of public participation in the arts would provide some excellent insight into what types of activities people were actually engaging in. Every time a voucher number was used, it would provide useful data about people’s actual practice rather than their self-perceived practice.

True, if people had a sense that their use was being tracked they may only use it at a museum rather than when they indulged their guilty pleasure marathon viewing of The Three Stooges movies. While their self consciousness may slightly skew the results, it may engender a growing appreciation of arts and cultural activities that may not fully manifest until 20 years later when they are in their 40s.

Certainly, the program could just serve to further enrich big corporations like Apple, Comcast, Google, Time Warner, Disney, etc and not help non-profit arts organizations much at all.

While we can watch what happens with the Italian program, the reality is our cultural norms differ to a large enough degree that we basically can’t use their experience to project what might happen in the U.S. It comes down to something of a thought experiment about how much we trust U.S. teens (or all citizens if you wanted to expand the program) to spend money exploring. How much tolerance would we have for people who didn’t spend the money as we thought they should?

Yes, I know this doesn’t even factor in that there are hundreds of thousands of teens out there that have a much more dire need to use even a $50-$100 subsidy for food, shelter and medical care.

And yes, there is also the fact that right now the goal of most arts advocates is to have federal arts funding equal $1 for every citizen so $50 is a pipe dream. Since the population of 18 year olds is only a small segment of the population, the grant could be more than $1, but it would likely still divert a lot of funding from somewhere else even if the federal budget were raised.

But ignoring the fact that the current federal arts budget is far from sufficient and that social services for teens and families are also lacking in comparison with places like Italy, would it freak you out to think about what the 18 year old population of the U.S. would likely spend $100 culture voucher on?

Parents will likely recognize that the title of today’s entry is inspired by “If You Give A Mouse A Cookie…” While the kid in the story is run a little ragged in the book I bet most arts organizations would be thrilled to have an audience as engaged and participatory as the mouse.

State of the Arts, Terms and Ideas, Working In The Arts

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Frank Discussion About Outreach, New Audiences Efforts In The Community

November 16, 2016

by:

Joe Patti

A couple of good articles on the influence non-profits in the community came out this week. CityLab noted that in some communities, non-profits were exhibiting greater influence and leadership than politicians that represented those districts.

Based on his observations, he argues in the journal American Sociological Review, the role of nonprofits in disadvantaged city neighborhood has been changing. They’re no longer just extensions of the state or representatives of a few interest groups. They’re “legitimate representatives of poor urban neighborhoods,” and in many cases, “supersede” elected officials.

[…]

What’s happening now is that these organizations are directly negotiating for resources from public and private sector entities that hold the proverbial purse strings. Community organizations are now authoritative voices at the table, and often regarded by both private companies and bureaucrats as more invested and deeply knowledgable representatives of the neighborhoods. In Boston, “district-based elected officials, by contrast, attended ribbon cuttings and groundbreakings but were largely absent from substantive discussions of redevelopment planning,” Levine writes.

When I read this earlier this week, I thought it was interesting but didn’t think most arts organizations were deeply involved enough in their communities to wield this type of influence.

As luck would have it, I didn’t have to think too long about how I might express this in a blog post because Ronia Holmes does it so well in a post that came out today on TRG Arts’ blog.

Her post, “Your organization sucks at “community” and let me tell you why” is a must read if your arts organization conducts outreach activities or talks about attracting new audiences. I plan to distribute it to my board and partners in other arts organizations.

She makes some very frank statements which may be uncomfortable to read, but they are reasonable and empathize with the position in which arts organizations find themselves.

Almost too much to quote but I will try to keep it brief:

Disinvested communities are not devoid of arts and culture. In America particularly, communities who historically have been excluded from the table have responded by building their own tables, using whatever resources could be scraped together. Marginalized communities have established organizations that don’t treat them or their cultural output as deviations from the norm to be celebrated for diversity, but as fundamental components of society. The organizations they created, and continue to create, are replete with artists, leaders, decision-makers, and workers who look like and are part of the community they serve, who share similar lived experiences, and have a deep understanding of what programming will truly resonate.

Referring to arts organizations which are not native to these disinvested communities:

Rather than grapple with these deeply ingrained failings, most organizations have opted to substitute narrative for action. They have amended their written missions and values in order to recast themselves as inclusive organizations meant for all. They turn to the community and say, “Now we’ve got a space here for you!”

And they fail to hear this critical question: “Why should we abandon our own table for a small chair at yours?”

The following about seeking new audiences really grabbed my attention:

There is a pervasive idea that a “new” audience must be a “diverse” one, and community-building is co-opted as a tactic for patron acquisition. The hard truth is that the disinvested communities targeted by so many outreach programs simply do not have the resources to—or, frankly, the interest in—sustaining these organizations. The model of operation on which most organizations operate need constant and high influxes of cash, and the lion’s share of affluence still rests with white patrons.

The reality is that most arts organizations don’t need a “diverse” audience—they need an audience with discretionary income. Yet the almost maniacal focus on community-building keeps organizations trapped in cycles of trying to sell to—not engage with, but sell to—audiences that don’t have that resource. In the meantime, organizations are unable to concentrate fully on patron retention and loyalty, and identifying and building audiences that are able and willing to fill the funding gaps.

[…]

Every year, organizations jump through hoops to secure restricted grants that necessitate yet another outreach program or diversity week or community partnership, hoping that if they impress the funders enough they will be given money that can be used for what the organization actually has a mission to do.

If real, authentic, genuine community building isn’t central to your mission, if it isn’t your raison d’être, then you shouldn’t be doing it. Because chances are that not only are you doing it badly, you’re doing it at the expense of your real mission. The mission of most arts organizations—the real mission—is simple: to present an art form. And that’s ok. We need organizations that prioritize preservation, development, and presentation of an art form, and I for one don’t think any organization should be penalized for it.

As much as I quoted here, there is a lot I left out. Even though I probably flirted with tl;dnr eight paragraphs ago, I hope this sample is enough to make you want to read more of what she said.

While it is not the final word on the subject, I think we probably recognize the truth in what she says about outreach efforts. The futility of grant chasing has been acknowledged for quite awhile. These are ideas that need continued discussion.

While we would like to be in a position where our organizations are viewed as leaders in the community like those in the CityLab article, most arts organizations really lack the resources and mission to fulfill that role.

Advocacy, Fundraising, Government Relations, State of the Arts, Working In The Arts

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