By Jim McCarthy Sep 2, 2010 4 comments

Is Theatre Oversupplied or Underdemanded?

A couple weeks ago, I had an interesting discussion with @aaronmandersen on Twitter about supply and demand in the world of theatre. His contention, if I’m stating it correctly, is that the market for theatre is in equilibrium. Yet, many taking part in the discussion felt that surely, theatre was either oversupplied or underdemanded.  I told him I’d think about the topic, and so I have, Aaron.

The first thought is this:  of course, the market is in equilibrium.  That’s how markets work unless distorted by some external force.  For example, if the government forcibly took $1000 from every family in Illinois and created a fund to pay actors in small non-profit theatres in Chicago $250,000 per year, that would create a tremendous distortion of the market.  What would the outcome be?  At first, the actors, who are used to working for basically nothing, would be delighted, but about a nanosecond later, they’d realize it had become harder than ever, and perhaps impossible, to get a job acting in a small theatre in Chicago.  That’s an externality that would distort the market.

But let’s assume no major distortions are influencing the market.  What markets do is find sea level.  It turns out that a lot of people would like to make a living as an actor because it’s more fun and engaging than filling out TPS reports for Lumberg in the bowels of the Initech office.  The fact that so many people are willing to work for so little in the theatre is a testament to the fact that lots of people find this compelling as a career choice.

Note that this doesn’t bear any necessary relationship to the number of people who find theatre compelling as a way to spend their money in the marketplace.  I love to golf, but very, very few people are going to pay to watch me do it, unless they want a chuckle and don’t have a youtube account so they can watch Merton instead.

So for the sake of argument, go with me on the equilibrium thing because there’s a bigger question afoot.  Why do people feel that there’s either a supply or demand problem in theatre?  No one asks is hand soap is oversupplied or under-demanded.  What’s underneath this desire to say that something is out of whack?

Every marketer who’s ever worked for me (and not just the marketers who’ve worked for me) is familiar (read: sick of hearing) a three word phrase that I would like to insert in this discussion, and here it is:

Compared to What?

Under-demanded, for example, compared to what?  If there’s not enough demand, by what standard, exactly, is it not enough?  If there’s too much supply, what do you mean by that?  Too much to ensure every participant in the market a good living?  Perhaps.  Certainly not too much to be able to claim that there’s a theatre “product” out there for all consumers.  Is either of those an important measuring stick?

Well, that’s entirely up to you.

And that’s the point.  It’s all really about what we want.  I say that there’s not as much demand in the marketplace for live entertainment because it’s my desire that the industry grow.   That more people go see live entertainment, including theatre.  I don’t take the marketplace as a given.  We have to grow it, and that’s why I’ve devoted the last 8 years of my life to getting people out more (and a few million tickets later, I’m happy to say I feel we’ve been able to do that.)

So when you think about this issue, the question isn’t whether there’s too much supply or not enough demand.  By definition, the market is Goldilocks:  just right.  The real question is what do we want it to be and what are we going to do to see that come true?

My answer is simple:  I want the industry to grow in every way.  I believe people want live entertainment more than they actually manage to consume it, and that’s on us in the industry.  The good news in that is that we can change it.

Who’s with me?

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    • Carol Harnett

      Hi Jim,

      Interesting read. Being a physiologist, I only had micro and macroeconomics, but a lot of what you laid out rang a familiar bell.

      From my perspective as someone who usually gets to Broadway six to 10 times a year, I’d add that I’m only going about four times a year now. It’s not the economy. It’s the type of plays that are opening. I’m not a huge fan of plays that go from the big screen to the stage, that is, I liked the movie, Legally Blonde, but I don’t need to see it on stage. Clearly, there is a market for that…particularly with tourists so I assume that’s why those plays are being produced.

      So, the good news for smaller theaters, is that I go to shows at those venues more often than before.

      To my advantage, however, is that it’s pretty easy to get tickets to plays I want to see like American Idiot. A few years ago, that would not have been the case. Maybe theater owners and producers are more comfortable when there’s a huge demand for tickets…which I guess would imply that the theater is out of balance…supply being less than demand.

      Thanks for post.

    • Aaron

      Wow! It’s like a customized blog post. I’m honored.

      I am 100% in favor of building the size of the pie that everybody in theater needs to share, but that doesn’t mean I’m going to take a pass on competing for what share of the pie I think companies I work with can get. 🙂 In addition to equilibrium, I’m also a big believer in creative destruction, which is often brought about through competition.

      Of course, one could make an argument that screens (film, television, computer, phone, etc) have wracked live performance with both creative and entirely uncreative destruction… I’ll grant that, but it’s a different topic.

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