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Info You Can Use: Story and Pricing

August 18, 2014

by:

Joe Patti

Seth Godin posted some thoughts about pricing that are worthy of consideration. The fact this post is about three times as long as his usual posts indicates the importance he places on the topic.

He tackled the concept of substitution which is basically what we talk about when we identify movies, television, Netflix, video games, etc as competitors for people’s entertainment dollars and time.

One of the key elements of pricing is realizing that people have choices, and that substitutes are available. This is more nuanced than it sounds, though, and I want to highlight key things to keep in mind when you think about how much to charge and how people might react.

Marketers make two mistakes over and over. They create average, commodity products and expect that people will pay extra for them. Or, in the other direction, they lose their nerve and don’t charge a fair price for the extraordinary work they’re doing, afraid that people will find a substitute.

This second paragraph that essentially summarizes the situation arts organizations face. Arts organizations are either accused of overvaluing their product and charging too much in the face of substitutes. Or they are accused of setting prices too low leading audiences to expect those prices should be the norm for something that cost five times as much to produce.

Godin addresses a number of factors which impact what price someone will pay. The one I felt was most applicable to the arts was:

Some goods are difficult to understand before purchase and use, and most consumers undervalue them and treat them like commodities

[…]

This leads to opportunity and challenge of marketers who choose to sell something that we don’t buy very often and that we can’t tell if it’s better (or if the story is true) until after we buy it. In situations like this, our instinct is to assume that the thing is generic, a commodity, not worth extra.

Having read this, it occurred to me that as arts attendance decreases there is an increasingly likelihood of arts experience meeting the definition of something that is difficult to understand before purchase and use. As a result, people see it as interchangeable with other entertainment options. To be fair, many elements of the experience are interchangeable, but others are not.

According to Godin, what enables you to sell a good or service at a higher price is if it has a story. The example he used are organic eggs. We are all probably aware of some aspect of the story associated with organic eggs: they are better for you; the chickens are handled more humanely; you support small, local farmers; lack of antibiotics and pesticides; locally sourced means a small carbon footprint in production.

Whether these things are completely true or not can be immaterial. If some part of the story resonates with the consumer, they become more willing to pay a higher price.

However, I think the story for the arts almost has to be more powerful than for organic eggs. When you are in the supermarket already, the story of organic eggs and your image as a responsible world citizen doesn’t have to resonate very strongly to divert your decision from one carton to another. If you are in a farmer’s market, the story and your self image are so self-reinforcing by the surrounding booths, it is actually easier to buy more than you intended.

When you are at work or at home making plans, the story offered by the local arts companies has to be pretty strong if it is going to influence your decision away from your usual activities.

Or at least this is the case for performing arts organizations. Visual arts organizations can benefit from impulse decisions. A couple weeks ago I was chatting with a friend at the front desk of the local museum and about five people came in saying they were in town for a funeral and decided to swing by the museum. Not necessarily the first thing that pops to mind when I go to funerals, but they enjoyed themselves.

In either case, if you do have a story, once people start to involve themselves with your organization, they integrate your story into their lives and it becomes easier for them to decide to do so again.

Info You Can Use, Pricing

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Best Practices In Audience Drowning

August 13, 2014

by:

Joe Patti

As immersive arts experiences become increasingly prevalent, there have been some interesting introspective reflections of the experiences recently in The Guardian and Irish Times.

Both pieces mention the competitiveness of returning audience members souring the experience. I wrote about this issue to a greater degree in March so I won’t get into it much here.

In The Guardian article, Myf Warhurst wonders if audiences are really up to the job of being part of a performance.

One the one hand, she seems to feel that an immersive experience can help shift the awareness and focus of a participant in a manner the participant wouldn’t on their own. Citing Marina Abramovic’s installation 512 Hours where participants count rice grains one by one, Myf observes,

“Sure, I could have a stab at this while home alone by switching my phone off and counting the grains from my half-used pack of SunRice. But would I really do it without Abramović’s prompting? I enjoy being part of something creative, conceived by an inquisitive mind, because I know I can’t create such work myself. I like being included in the art-making.”

But she also seems to feel that people may conflate participation under someone else’s guidance and vision with being a creator. (my emphasis)

And I’m starting to think that us regular folk might not be up to the job. Are we really clever or interesting enough to be driving the narrative? I’m not sure I am. I like how art makes me feel like an outsider in someone else’s conversation, how it pushes me to think beyond myself and my own ideas. Is it healthy to be made to feel like we’re now special enough to be included in everything?

[…]

What is it about humans, at this particular time in history, that makes us think we’re special enough to be part of art without having done any of the work to develop the emotional, intellectual or craft level that artists have strived to achieve? Perhaps inviting the audience in isn’t always for the best. Even though I like being included, I’m just not sure I’ve done the hard yards to deserve it.

In the Irish Times article, Peter Crawley wonders “Are we, the audience, drowning in immersive theatre,” referring to how prevalent the format is.

Granted, the vast majority of the theater going public in both the UK and US probably haven’t really encountered an immersive performance experience. Crawley’s reflections urge a consideration that the way these events are executed may promote a self-centric view of what should be a communal experience.

It is not just that audience members have started fighting each other in order to be in a position to be involved in the story.

What you, the audience, have always known is that to sit, watch, engage and reflect is not passive. In an insightful takedown last week of the radio personality Ira Glass, who dismissed Shakespeare’s King Lear as “not relatable”, the New Yorker’s Rebecca Mead argued that while art is a mirror in which we see ourselves, the demand for “relatability” is lazy and vain: art as a selfie.

That sounds like the toxin of our age and, perhaps, a reason to switch off the immersion. “You, the audience”, sounds like a command. “I, the protagonist”, feels lonely. Isn’t it supposed to be about us?

Crawley didn’t link to Rebecca Mead’s article, but I have included it for reference since I was interested to read what she said.

What seems to be relevant to Crawley’s statement was this (my emphasis):

But to demand that a work be “relatable” expresses a different expectation: that the work itself be somehow accommodating to, or reflective of, the experience of the reader or viewer. The reader or viewer remains passive in the face of the book or movie or play: she expects the work to be done for her. If the concept of identification suggested that an individual experiences a work as a mirror in which he might recognize himself, the notion of relatability implies that the work in question serves like a selfie: a flattering confirmation of an individual’s solipsism.

To appreciate “King Lear”—or even “The Catcher in the Rye” or “The Fault in Our Stars”—only to the extent that the work functions as one’s mirror would make for a hopelessly reductive experience. But to reject any work because we feel that it does not reflect us in a shape that we can easily recognize—because it does not exempt us from the active exercise of imagination or the effortful summoning of empathy—is our own failure. It’s a failure that has been dispiritingly sanctioned by the rise of “relatable.” In creating a new word and embracing its self-involved implications, we have circumscribed our own critical capacities. That’s what sucks, not Shakespeare.

What might be an obvious solution is to design the experience as a metaphorical Ropes course where people can only advance/gain access cooperating as a group. Perhaps some, having sacrificed themselves for the good of the group, might get the satisfaction of watching the result of their actions from a hidden room on the sidelines.

But I am sure there are plenty of people like me who are content to watch and ponder and who don’t like to get dragged into participating in the first place. Having to participate and do so as part of a team in order to witness interesting content might be even more off putting. (Though I would much rather participate in a group than to be singled out as an individual.)

(Yes, I intentionally wrote a provocative post title intentionally using another definition of immersion in the spirit of Drew McManus’ little experiment)

Arts in an Age of Technology, Audience Relations, creativity, State of the Arts, Terms and Ideas, Working In The Arts

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Info You Can Use: Fiscal Sponsorship As Apprenticeship Program For Non-Profits

August 12, 2014

by:

Joe Patti

Non-Profit Law blogger Gene Tagaki recently tweeted a link to an article he wrote for the American Bar Association about 5 years ago urging lawyers to consider alternatives to forming non-profits organizations for their clients.

I should note that this article was written before the first Benefit Corporations were legal in the U.S. so that also remains an option to forming a non-profit.

One of the biggest considerations for not forming a non-profit is the fact that there are so many, with more being formed every day, but an ever shrinking supply of funding to support their efforts.

“Ron Mattocks, author of Zone of Insolvency: How Nonprofits Avoid Hidden Liabilities and Build Financial Strength, asserts that as many as one-third of the nation’s 1.4 million registered nonprofits operate in the zone of insolvency.
[…]
If a nonprofit is insufficiently prepared to compete and operate in such an environment, the end product may be gross inefficiencies, frustrated founders, disillusioned donors, and fewer resources ultimately reaching its intended beneficiaries.”

There is also the issue of whether the founders have a realistic business plan that is viable amid the economic conditions present. Takagi also spends some time cautioning against founder’s assumptions of the amount of control they can legally exert over the organization.

Among the alternatives to forming a non-profit Tagaki suggests is actually working with an existing non-profit. I often wondered, if people are able to muster the resources to create an entirely new non-profit that overlaps or competes with an existing one, why not first approach the existing non-profit first proposing to enhance their efforts with an ancillary or complementary program.

That is pretty much what Tagaki suggests:

When appropriate, lawyers should make their clients aware of the following benefits of working with an existing nonprofit:

-Avoidance of start-up costs and administrative burdens of a new nonprofit.
-Increased efficiency in furthering the charitable mission by using an established infrastructure.
-Opportunity to gain experience and expertise in running a nonprofit.
-Development of connections in the nonprofit community.

Collaborating with an existing nonprofit is an alternative that may be considered even where the contemplated charitable idea is not currently being implemented by an existing nonprofit. A nonprofit with a compatible mission may be receptive to implementing and operating a new program, particularly if a volunteer is willing to bring resources to the table. Alternatively, the nonprofit may have institutional knowledge relating to the charitable idea and its implementation. Moreover, the nonprofit may open doors and leverage assets that might not be otherwise readily available, such as

-Existing resources, including staff, volunteers, infrastructure, and systems.
-In-house experience and expertise, which may allow the contemplated program to be launched and operated efficiently and in compliance with the law.
-Donor and business relationships, including with institutional funders, nonprofit leaders, allied organizations, and the media.
-Goodwill, which may provide the program with name recognition and built-in public trust.

The other alternative he suggests is a Fiscal Sponsorship where a project is housed within the auspices of an existing non-profit. It allows the project to take advantage of the non-profit’s status without needing to create a separate entity. If the sponsorship agreement is written correctly, the project has the freedom to move to another non-profit or perhaps spin off as a separate non-profit once they have experienced sufficient growth. Fiscal sponsorship arrangements have been used to host short term projects or as an incubator for fledgling non-profits.

The Sponsor usually retains a portion of the gifts as a fee (5-10 percent is common) and allocates the rest to the Project. The Project Initiators may serve as employees or volunteers of the Sponsor delegated with the responsibility of operating the Project. They also may retain the right to move the Project to another Sponsor or to a new exempt organization created to permanently house the Project. Any such rights should be precisely spelled out in the fiscal sponsorship agreement.

Fiscal sponsorship may provide a Project with immediate tax-exempt status, advantageous treatment as a public charity (i.e., nonprivate foundation) without independently passing a public support test, some degree of administrative support, and a governing body that has a duty to ensure that the Project is operating in compliance with applicable laws. The Project Initiators must weigh such benefits against a lack of autonomy; their limited control over the Project, which remains under the ultimate control of the Sponsor; and the sponsorship fees.

The trade-off aside, if a fiscal sponsorship agreement is written well it can be an extremely helpful process of essentially testing the viability of a concept and learning how to run a non-profit organization without incurring the start up costs.

I was not aware that this option really existed. It might almost be better if aspiring non-profits pursued this option more regularly. Even if it didn’t result in new organizations spinning off all that often, it could potentially create more robust non-profit organizations. (Perhaps even resulting in more nimble sponsored programs growing to subsume their nominal sponsoring parent.)

Since the fiscal sponsorship option is relatively unknown as an option, perhaps the biggest hurdle will be getting both parties prepared and willing to engage in such an arrangement.

It is well known that non-profits start new programs in order to garner funding to support their main goals. It would be easy for a sponsoring organization to starve the program it agreed to house of the resources it needs to succeed. From the other side, as Tagaki mentioned, once you bring your program under the auspices of a fiscal sponsor, their priorities need to become your priorities to a large degree.

Business Models, Info You Can Use, Legal Topics, Working In The Arts

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Info You Can Use: Treating Different Audiences Differently

August 11, 2014

by:

Joe Patti

It often seems one of the hardest things to do in the performing arts is to correctly anticipate audience interest in a show. Related to that is gauging the best way to market and position an individual show to a specific audience segment.

I recently faced a situation where anticipating audience interest wasn’t difficult, but an opportunity to fumble the marketing and interaction with the target audience segment presented itself. This seemed like a good illustration of what is meant when we talk about understanding and treating audience segments differently.

Every year my department and a community arts organization partner on a nine show presenting season. This year there are a few shows that I wanted to do outside the season. Since our season brochure is one of our best tools for promoting the shows, I decided to list those two events as extras that could be purchased in addition to a season subscription.

There is a whole separate potential issue we may face with people thinking those shows were part of their season subscription. We used an entirely different color scheme and separated the events on the order form with explanatory text. We won’t know if that is sufficient until those events come up in the Spring.

The community organization’s board of directors asked if I was including those two shows, why wasn’t also including our annual concert by the Oak Ridge Boys as well. I explained that the audience for our subscription season was different from our Oak Ridge Boys audience. The board member noted that she attended the Oak Ridge Boys and the subscription series. I replied that the concert audience had different expectations and needs, trying to avoid saying that the Oak Ridge Boys audience was a lot more enthusiastic than our subscription audience.

I wrote her an email later explaining that it was better to keep the Oak Ridge Boys concert listed separately for a number of reasons. The first is the enthusiasm of the Oak Ridge Boys audience. The day we open sales, they flood the phone lines and line up out the door. They are used to hitting redial over and over until they get through. A subscriber would likely become angry if they were trying to resubscribe on the same day as Oak Ridge Boys tickets go on sale and the phone rang busy for an hour.

On the other hand, because we mail the brochure out at non-profit bulk rate which has a variable delivery rate, the Oak Ridge Boys fans would become angry if they received the brochure after the on sale date. Since we hold a subscriber’s seats from the previous year for 6-8 weeks after the re-subscription campaign begins, the brochure arrival date is not problematic.

What we do for the Oak Ridge Boys fans is mail a postcard to everyone who purchased the year before announcing a special pre-sale date that falls before the date announced on our website and in the newspapers.

Today was that special presale date and we were swamped. We sold more tickets in one day than we have sold in 4 weeks to the most popular Broadway show in our series, a show I expect will sell out.

Even though the subscription campaign started a month ago and the box office staff had been calling the last 25 people reminding them to resubscribe for two weeks, someone showed up this morning to renew their subscription and got caught in the horde. She was fine with having to wait awhile and a little incredulous at the crowd and the ever present din of the telephones.

As I stood watching over the activity in the box office today, I was reminded about that meeting where it was suggested I put Oak Ridge Boys in the brochure. In truth, it had occurred to me before anyone even suggested it. But I realized it would have been a mistake to treat the Oak Ridge fans like our season subscribers. While subscribers are generally content to keep the same seats year after year, the Oak Ridge Boys fans largely strive to get better seats than those they had last year.

I suspect there are expectations characteristic to people who only subscribe or buy single tickets to our classics, broadway or variety series that I could be doing a better job of fulfilling. Those might be difficult to identify because they have been wrapped up so closely with other subscribers for so long that they may not really think about needing to be treated differently.

However, one of the two additional shows I am doing this year is targeted at high school and college students with the intent of developing an additional series tailored to them. They definitely have different expectations of their experience that I will need to learn to meet.

And even people who fall into one segment may exhibit entirely different behaviors as members of a another audience segment. That board member who mentioned they were both subscribers and Oak Ridge Boys attendees– her husband was 4th out of around 75 waiting when we opened the ticket office this morning.

Audience Relations, Marketing/PR, State of the Arts

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