In a recent address to symphony stakeholders of another city, orchestra guru Bruce Coppock noted: “There is a simple, axiomatic progression: exposure to great music leads to involvement; involvement to engagement; engagement to passion; passion to philanthropy. And philanthropy leads to all kinds of good things.”
A veteran administrator in the field, Coppock made waves recently as the chief architect of a new business model while serving as CEO of The Saint Paul Chamber Orchestra. The model places audiences and relationship building, rather than artistic excellence, at its center.
Sounds a little like heresy, doesn’t it? After all, in the orchestra industry our resources and energy have always focused around artistic excellence: growing the orchestra so that it is capable of producing the highest quality performances for the community.
However, in the Saint Paul model, the emphasis on artistic excellence doesn’t change one whit. It’s not a change in mission, it’s a change in the business model for achieving that mission. And although it delves down to a far level of complexity, the gist of it is laid out simply in the quote above.
It’s about the audience, stupid.
Saint Paul’s Epistle (as we’ll now call it) grew out of an effort by their leadership to address the SPCO’s inability to conform to the industry’s “best practice” business model, which called for a level of earned revenue (primarily ticket sales) corresponding to 45-55% of budget expenses. They determined that this was essentially impossible in Saint Paul due to the market and organizational structure, and that even with perpetual sellouts the best they could achieve was 35%.
My interest was perked by the Saint Paul Epistle when I crunched the numbers and realized that, for slightly different reasons, a similar budgetary constraint exists for the Tacoma Symphony Orchestra.
As a result of their conclusions, the SPCO rejected the traditional “three-legged stool” business revenue model that breaks out different percentages for Contributed, Earned and Endowment revenue, with the orchestra and artistic excellence as the center-seat.
The Saint Paul model can also be thought of as a stool, but with a new center-seat: the audience, patrons and the community. It is the orchestra’s mission to serve these constituents with its mission of artistically vibrant performances and other offerings, and it is from this service that the majority of sustainable revenue will come.
In this model, whether or not that revenue is classed as “earned” or “contributed” is beside the point. The real point is that it comes -- in whatever form -- from the people who are served, touched and affected by the orchestra’s mission. The degree of support generated is in direct proportion to the orchestra’s impact on its stakeholders.
In effect, this model is already at work at all “mission-healthy” orchestras, whether they know it or not -- including the TSO. The most significant stakeholders of an orchestra, with seemingly unlimited growth potential, are the individual people who patronize it: its audience and donors. At the TSO, for example, subscribers and individual donors today account for fully 42% of our revenue. Expand that to include single ticket buyers and gala attendees and the amount rises to 60%.
This is consistent with what they found in Saint Paul, leading them to conclude (as Coppock wrote in Symphony Magazine several years ago): “if we think of ourselves as being in the concert production business, with ticket revenue as our core revenue, we severely limit potential income. However, if we think of ourselves as being in the patron-development business and think of producing concerts as our mission, new horizons appear.”
One of the key concepts in the Saint Paul Epistle is that of sustainability. Orchestras need revenue that is sustainable over time. Corporate and foundation contributions, though important and necessary, tend to fluctuate considerably due to economic conditions and other factors beyond the organization’s control. Revenue from individuals, whether subscribers or donors or both, however, is largely dependent on the value the individual places on the organization. And that perceived value can be cultivated and grown.
As an example, three seasons ago we began focusing on growing our Symphony Chair program, in which donors have their name assigned to specific musician “chairs” in the orchestra. Since 2006-2007, the number of individual donors has increased 40% and the amount of individual gifts nearly 60% -- and this in one of the most severe economic downturns in our national history.
If these things are done in a dry tree, what might happen when it is green? What if we consciously commit ourselves to these principles at the TSO, as they have done at the SPCO? What if we too forego selling artistic excellence as our principal commodity, replacing it with engaging patrons and serving community as the center-seat of our business model? Who knows where it might lead us?
To repeat Bruce Coppock’s words: “Exposure to great music leads to involvement; involvement to engagement; engagement to passion; passion to philanthropy. And philanthropy leads to all kinds of good things.”
What good things? To answer that, we’ll end this blog post by holding our proposed new business model up to the light of the Vision Statement in the TSO's new Strategic Plan:
The Tacoma Symphony Orchestra seeks to change lives through music’s power to communicate. We will capture the imagination of the community with extraordinary performances where the combined energy of the orchestra and audience creates magic. We will foster effective education programs and meaningful community partnerships that bring diverse people together. We will thereby be recognized as an artistic leader and a vital resource. The community will support our patron-friendly, fiscally-sound organization by purchasing tickets regularly and donating generously.