By Jim McCarthy Jun 27, 2012 0 comments

The New Model for Live Entertainment, which Strongly Resembles an Old Model

A few days ago, the Kennedy Center’s Michael Kaiser wrote a piece in the Huffington Post in which he expressed his exasperation with the non-stop drumbeat of people saying that arts (and I would add all live entertainment) organizations need a “new model.”  Here’s the key tidbit:

“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. Expert after expert are calling for ‘new models’ without explaining what these new models are or what specifically they are meant to address, except for a vague unhappiness with how things are working (or not working) now.”

This is a very reasonable position to take.  Brave talk about the future and doing things totally differently is fairly cheap and easy, so he’s right to be frustrated with people who talk about problems but don’t offer solutions.  People who do that are just complaining, which ultimately isn’t all that helpful.

So let me offer a different take: the new business model that will work in the 21st century for arts and live entertainment organizations is the one in which more money comes in than goes out.  It doesn’t have to be much more; it just needs to be enough.

Why is this so important?  Because if your organization has the strength of mission, output and management to generate enough resources (including but not limited to money) to sustain itself and create a cushion of comfort, it will thrive.  It will attract talent; it will survive mistakes; it will be able to test, explore and experiment; it will be able to fund things that have longer payoffs, or things with little to no chance of a payoff because they’re valuable in other ways.

This organization will be able to do all these things because it will own its future.  It’s the organizational equivalent of what Seth Godin calls “picking yourself.”  For some people, this is a radical idea, and there are those take it as a law of nature that organizations cannot possibly deliver great work without accumulating deficits or relying on the caprices of big money donors or government largesse.  I think there’s existence proof that this isn’t the case, whether it’s Cirque Du Soleil or Amanda Palmer or 37 Signals or  one of thousands of successful bootstrapped start ups that have created efficient business models that consistently deliver great products, delighted customers and profit margins.

The key idea here is that good ideas, good delivery and good management win traction in the marketplace.  As a rule, if something’s good and somebody is providing good stewardship over that thing, it will make a mark and endure.  Not always, of course, but it’s much closer to the truth than anything else.

Is it possible in the context of doing things exactly the same way as they’re being done now in organizations who expect to be funded the same way they were in 1982?  Perhaps not.  Does that matter?  Well, why should it?  I often say to Goldstar employees that in order to stay the same, we have to change.  By that, I mean, if we stick to the long-term mission and goals of the company, we’re constantly going to have to change the exact things we do.  Some things, like how we treat each other, our customer and our partners, and our long term belief in the power of live entertainment, don’t change.  The other things, including how we sell tickets, what we charge, how we promote, the code we write, where we reach out to find new customers, could change as soon as they don’t make sense anymore.  They’re just things that were the best ideas to solve problems we had at the time.  Subject to revision.

So, yes, I think there should be a new model for these organizations, and it’s simple: own your future by bringing in a little more money than you spend, without depending on a limited number of private or public sugar-parents.  You see this emerging rapidly, with the more direct connection that organizations now have with supporters or potential supporters, and platforms like Kickstarter and tools of all kinds to maintain and grow that support becoming more and more serious and less like toys.

Surely, some organizations will survive and thrive without adopting this model because they’re special or lucky, just as some companies like Instagram go from zero to $1 billion in value in less than two years without any revenue, but as an example of how to behave, it’s pretty useless.

But the shape of the 21st century for most arts and live entertainment is clear to me.  This new model is, really, the oldest model there is: build an organization with the capability to pay its bills plus a little more, and then, gradually, you can do anything want.

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