By Jim McCarthy Feb 13, 2012 2 comments

You Can’t Kill Demand for a Product by Giving it to More People

Imagine professional basketball as a business that is exactly the same as it is now except that you couldn’t watch a game if you weren’t in the stadium when the game happened.

What would that be like?  Would it make the live product more valuable?  Would the teams suddenly make a fortune charging for tickets, merchandise, food and beverages?

Or would it be a business constantly flirting with financial disaster, looking for ways to “build its audience”?

Bet on the latter.  With live competition alone, the NBA would be a smaller, poorer, less culturally relevant institution.  Chances are, many of the arenas that they play in wouldn’t exist at all.  Why would you build a Staples Center for something a few thousand people turned up to see a few dozen times a year?  You would have no idea who Lebron James was, and for all we know, Lebron James, not ever stumbling across basketball as a child, may have found some other interest, or perhaps he never would have developed an extraordinary talent at all.

But let’s be more optimistic.  Lebron spends hours and hours in the gym, getting good at a game that has a passionate, niche following.  There are plenty of  “basketball geeks” who can hardly go a night without going out to the gym and seeing whatever teams are coming through town.  After a win, Thomas Cott, editor of You’ve Cott Game, a popular daily collection of links to stories around the web about basketball, emails Lebron to ask him what keeps him motivated.

“Obviously, you don’t get into professional basketball for the money,” Lebron writes.  “We do it for the love of the game.”

Absurd?

If the NBA only had live revenue, it would be a marginal business instead of a multi-billion dollar enterprise.  Not only would it be smaller because it only had the live product, but the live product would be smaller than it is now.

What makes me think that?  Because every other way in which the NBA can be consumed drives interest in, the consumption of and the value of the live product.  How do I know I want to be in the arena for Game 7 of the finals?  Because I see so much great basketball on TV that I want to get the premium version of that experience whenever it’s possible for me.

But this isn’t a piece about the NBA.  It’s about theatre and the performing arts.  Thomas Cott (the real one, not the basketball one above) sent out a fascinating set of links today about an issue that’s been on my mind lately: the broadcasting of theatre and other performances.  Furtive moves are being made in the direction of broadcasting plays and shows, but there’s a fear that by doing so, the value of the live experience will be lessened.

History does not suggest that this is the case.  At one time, musicians thought records would destroy the value of live performance, but they didn’t.  Then, record makers thought radio would destroy the value of records, but they didn’t. Movie theatres thought VCRs would destroy movie sales, but they didn’t.  In all of those cases, and many others, the greater and more freely available access to these products made people want them more.

Go back to the basketball example.  If the NBA didn’t exist  and it were being started today, would TV be an important part of the business plan?  How about downloadable content on the Internet?

Because the ability to open up multiple ways for people to get access to the same content has two magical benefits:

1.  The extra revenue means you can invest more in the product and the people making the product, and

2. More, maybe millions more, become aware of how great your product is.

So in my view, starting now, but developing in years to come, theatre and performing arts venues should find ways of making the content available in multiple ways.  Forget about “protecting the business model.” The history of business shows us that the main danger is in missing the opportunity by protecting the business model too much.  The recorded music business finally did lose value because instead of finding a way to use and profit from file sharing, that business fought it, badly and clumsily.  And the result was Napster, and the legacy of Napster is that it’s pretty darn hard to sell recorded music.

Is there a Napster lurking in theatre’s future?  I don’t think so.  The dynamics are different.  The four walls of the building can be used as a firewall of sorts, but the cost of using them as a fire wall is that those walls could become a cultural prison.  In the end, it looks like a permanent state of flirting with irrelevance, insolvency and decline.

And really, what fun is that?

So here’s the challenge to a generation of entrepreneurs in theatre and the performing arts: find ways to distribute the content to as many people as possible, as easily as possible.  Build that fan base, create those secondary revenue streams to create the profitability that allows a virtuous cycle of building on success.

It can be done.  The NBA wasn’t always the NBA as we know it now.  As late as 1980, some playoff games had no TV broadcast at all.  Wilt Chamberlain’s 100 point scoring game wasn’t even filmed.

Sound crazy?

Yes it does, but it’s worth stopping to reflect that great performances happen outside of basketball arenas too.  Quite a number of memorable moments, lost forever like Chamberlain’s 100, happen on stages every night, serving no one’s best interest.

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    2 Comments

    • Thomas Cott

      Great post, Jim. I think my sports-crazy nephew is busy copyrighting “You’ve Cott Game” right now for his personal use, or otherwise I’d be right on it.

    • Jim McCarthy

      I knew you’d like that, Thomas! I like thinking of an alternate reality where you’re a hoops maven…

      Here’s a second one I thought of but didn’t use because I wasn’t sure everyone would get the reference: I Cott Next. Your nephew might like that one better. 🙂