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2/19/2010

Many arts managers are angry with me. They do not appreciate my advice not to cut programming during this recession. I continue to say that creating large, important projects is central to creating fiscal health. Especially when there is less money for the arts (and there is less money for the arts today), arts organizations must compete harder. As donors decide which organizations to continue to support, the institutions that are doing vital, important work are the ones who will continue to be supported. Not only must the work be interesting but the marketing of that work and of the institution as a whole must be aggressive and creative.

One arts leader accused me publicly of living in a parallel universe. He was quite upset that his artistic director and his unionized artists threw my advice in his face when he felt he had to make programming cuts. He was dealing with a substantial budget shortfall and saw no other recourse than to cut programming. He was not amused that his artists kept saying, "Michael Kaiser says this, Michael Kaiser says that."

While they were involved in a labor dispute (since resolved), the musicians of the Cleveland Orchestra created a web site to state their case. One of the pages was titled, "What Michael Kaiser Would Not Do" and listed all the things I suggest in my writing that the musicians believed were being violated by management. I do not think I want to go back to Cleveland very soon!

I am completely sympathetic with the current plight of my fellow arts managers. It is incredibly scary to go to work not certain if there will be enough money to make payroll. Virtually every arts manager I know is dedicated to the field in which they work and wants to produce interesting and important art. They want large audiences. They want big donors. They want a supportive board. And they want their artists to feel cared for and respected.

For the record, I do believe there are times when programming and marketing must be sacrificed but I believe this should be a last resort, not a first resort. I prefer to cut every other cost imaginable, as my staff will tell you, and to continue to focus on new revenue that is generated from big projects and creative institutional marketing efforts.

There are ways to make programming more vital, even if money is scarce. One is to announce exciting projects for three or four years from now. This makes the organization appear to be thriving, energizes donors and the press and gives the organization years to find the necessary resources to do the project.

Another important tool is to form an artistic joint venture. Joint ventures allow arts organizations to mount larger projects, to consider projects that require skills or talents they do not possess, to extend their marketing and fundraising reach and to design the megaprojects that change the history of the organization.

I am truly sorry that I have caused problems for my peers. My goal has been simply to make their lives easier by suggesting ways to increase revenue. It seems that I have failed.

Posted at 7:13 PM by Kaiser, Michael | Permalink | Email this Post | Comments (1)

The Big Project

In these difficult economic times, many arts organizations are working hard to develop programs that do not require many resources. Board members are pressing for small operas, small plays, and small ballets. Many executive directors, understandably concerned about balancing the books at a time when contributed income is still in jeopardy, are concurring.

Unfortunately, these smaller projects, while good for the annual budget, rarely do anything for the image of the organization or its long-term financial health. They rarely excite audience members, donors, board members or the press.

Why does this matter? Because the programming of an organization, and the excitement it generates, is central to the fundraising capacity of the organization. Fundraising is not about board members forcing their friends to contribute; this brute force form of fundraising is rarely sustainable.

The most consistent, faithful donors are those who are excited and surprised by the work of an arts organization. And when the organization is regularly producing large scale projects that attract a great deal of public and press attention, more and more of these donors are likely to become affiliated. Artistic ventures that change the way a community views an organization, therefore, are a strategic, mission-driven way to build financial health.

When I arrived at the Kennedy Center in 2001, during the last period of economic instability, we announced the largest project in our history, a landmark celebration of the works of Stephen Sondheim.

We did this project because we had a point of view about the work. We believed there were many myths about this work that were simply not true. There should always be a curatorial reason for doing any project. Simply ‘filling a slot’ is not good enough.

But we also did this project because I knew that we needed to excite our constituents. We had not produced our own theater at the Kennedy Center for over a decade. We needed to do something to make the press and the public sit up and take notice.

The Sondheim Celebration generated an astonishing amount of press and public interest in the Kennedy Center. It was the opening salvo in a series of projects that were large in scope and true game changers. Projects focusing on the works of Tennessee Williams, the arts of China, and the plays of August Wilson were other mega-projects we mounted over the past nine years.

These projects are expensive. They cannot be developed in a few months; one must plan years in advance to engage the right artists and to attract the necessary resources. But when they do come together, the impact is spectacular and long-lasting. Eight years after the Sondheim celebration, it is still written about and remembered by our growing donor base.

At this time of tightened budgets, arts organizations must continue to develop these mega-projects, perhaps for implementation three or four years from now when there is more funding available. Just talking about projects in advance can generate excitement and have a positive impact. Those who think big at this time when so many others are thinking small will recover more quickly when the economy turns around.

Posted at 7:13 PM by Kaiser, Michael | Permalink | Email this Post | Comments (0)

1/26/2010

The Importance of Midpoint Corrections

January represents the midpoint in the season for many United States arts organizations. By this point, many of us know whether the year is progressing as we had expected when we developed the budget for the year.

For too many of us, the news this season isn't good. A major grant may have been lost, a production may have died at the box office, or a project went wildly over budget. For most organizations, at least one element of the fundraising campaign is not meeting target. At this rate, many arts organizations are headed for a serious deficit for the fiscal year.

So what do we do?

One thing we cannot do is 'hope' that things get better. They rarely do by themselves.

Too many arts managers simply accept the fact that this season is not going well and believe that next year will be better. (And a good percentage of these managers base next year's budget on this year's budget, rather than this year's actual results; this makes next year's budget even more difficult to achieve.) These managers are often so busy planning for next year they forget that there is work to be done to salvage this year.

This month we must split our focus. Of course we must plan for the season ahead, develop our subscription brochures and finish (start?) our budget for next season.

But we must also change course midstream for this season if the results are not good enough. We must cut budgets and accelerate the search for new contributions and new audience members. If we wait until spring, it will be too late to make meaningful budget cuts and to implement revenue-enhancement programs.

Because I talk publically so often about not cutting programming or marketing in the face of fiscal challenges, some people believe that I don't cut budgets at all. This is, of course, untrue, as my staff will readily attest. Virtually every year, somewhere from December to February, I cut the budget if I see that revenue is not what we had expected or costs have gotten out of control.

We cannot wait for our boards to demand cuts; we have to make them ourselves.

I, personally, cannot sleep when I have not figured out how to balance my budget. This is not a happy way to live but it is a healthy one for the organizations I manage.

Posted at 9:10 AM by Kaiser, Michael | Permalink | Email this Post | Comments (0)

Why We Use the Full Orchestra

There is a disturbing trend in the American musical theater. Producers are reducing the size of orchestras for most revivals and new musicals are being written with smaller ensembles versus the large scale orchestras that I grew up expecting to hear in the theater.

I appreciate the pressure to reduce costs of production. Anyone working in the live performing arts appreciates that because we do not increase productivity year in and year out, as other industries do, the arts suffer from a higher rate of inflation than in other sectors. There are no fewer roles in My Fair Lady than when it was written. And we do not perform Fiddler on the Roof faster every year. As a result, costs rise very fast in the live performing arts.

This problem is exacerbated by another economic reality. Because we do not add seats to our theater every year, our real earned income does not grow. Once we fill the seats in the theater, there is no way to increase real ticket revenue. These two problems create a growing gap between expenses and income. It is no wonder so many Broadway shows are forced to close prematurely. Unless every seat is filled, with modest expenditures on marketing, the costs overwhelm the income.

In an effort to fill this gap between expenses and revenue, producers have pursued two strategies: raising ticket prices and lowering costs.

Unfortunately, ticket prices on Broadway have been raised so often that most people cannot attend the theater regularly. This has reduced the pool of potential ticket purchasers substantially, raising the costs of marketing.

So naturally, attention has turned to ways to reduce other costs.

But cutting the size of the orchestra and replacing acoustic instruments with synthesizers does not only reduce cost; it also reduces quality. Some of the audiences may be fooled, but an ensemble of nine instruments cannot produce the same sound, the same overtones, and the same sense of excitement as an orchestra of 28.

The glory of some of the recent revivals on Broadway, South Pacific and West Side Story come to mind, is that a full orchestra is employed. The feeling one gets simply from hearing the orchestra tune before the curtain rises is an integral part of the magic of live theater.

Unfortunately, to sell higher price tickets, producers have had to resort to stunt casting, bringing major stars from movies and television; in many cases, to pay these celebrities, and the high costs of sets, costumes, stagehands, etc., producers are sacrificing the music in musical theater.

Too many not-for-profit theaters have followed this trend. It is now considered acceptable to perform the great works from the musical theater canon with tiny ensembles and electronic sound. We are in danger of undermining the quality of one of America's great contributions to the world of the arts. At the Kennedy Center, we use the original orchestrations for every musical we produce. Just as we would not reduce the size of our National Symphony Orchestra, or cut the number of swans in Swan Lake, we will not reduce the orchestra size for Mame or Ragtime or Sweeney Todd. Our audiences have come to expect the true sound of a musical. It is time for others to follow suit.

Posted at 9:09 AM by Kaiser, Michael | Permalink | Email this Post | Comments (0)

What I Learned From Ragtime

Having the Kennedy Center production of "Ragtime" mounted on a Broadway stage has been both exciting and an honor. This was the first Kennedy Center musical that was transferred to Broadway. The chance to show our work to a larger audience was truly rewarding for all of us involved.

It was also an educational experience for me.

I have learned to appreciate how much easier it is to sell a show when it is produced by a not-for-profit institution than when it is a stand-alone, for-profit venture, as most Broadway shows are.

When a not-for-profit institution opens a show, we have already pre-sold a substantial sum of tickets to our subscribers. Most of our subscribers have tickets for the first few weeks of a run; this gives us more time to build public awareness, through advertising and word of mouth, for the later weeks when more single tickets must be sold. We also have ongoing marketing channels including newsletters, magazines, websites, and e-communications. The Kennedy Center News, a bi-monthly magazine, regularly reaches 250,000 households alone; our website receives more than five million visits a year. These modes of communications are invaluable in explaining a production, offering group and other discounts, and showcasing the reviews of critics.

When a Broadway musical opens, the marketers must start from ground zero. There are no subscribers; every ticket sale is a single or group ticket sale. There is no loyalty to the producing entity. Excitement about the show, and revenue, must be established from scratch. The first few weeks are not filled with subscribers; one has to find ways to pack the initial houses. And an open-ended run means that one has to sell so many more tickets than the limited runs typically mounted by not-for-profit theater companies.

The not-for-profit institution also has name recognition and a loyal audience base; many ticket buyers are happy to trust the Kennedy Center, or Goodman Theater or Signature Theater.

Only a few knowledgeable theatergoers really know the names and reputations of the producers of Broadway shows. And these days there are so many names above the title that it is hard to decipher who truly is in charge.

Perhaps the major exception to this rule is Disney which operates like an institution. Many ticket-buyers are happy to trust a Disney production, just as they are happy to trust a not-for-profit institution. And while Disney does not have subscriptions, it certainly has the communication channels that are far more potent than even those owned by the largest not-for-profit theater companies.

It would not surprise me to see theater owners and producers collaborating in the future to create mock 'institutions' that can establish permanent brand name, mailing lists, websites, and newsletters that emulate their not-for-profit cousins.

It would make their lives easier and their productions cheaper.

As for me, now that "Ragtime" has closed, I am going to go kiss my marketing department!

Posted at 9:09 AM by Kaiser, Michael | Permalink | Email this Post | Comments (0)

1/4/2010

Why Ticket Prices Must Change

The central challenge facing arts managers is to fill the ever-widening gap between rapidly increasing expenses and earned income, primarily from ticket sales. This gap continues to grow each year since the number of seats we have to sell does not increase but expenses do.

Unfortunately, the favored technique used to fill budget gaps has been increasing ticket prices. When we increase prices, typically at budget time, we hope that a small increase will not be noticeable and we need the added revenue to break even. However, we have been doing this for so long that tickets prices are now too high for many people to afford regularly. It is not unusual to see tickets for major opera companies cost $250 or more and the best theater tickets are now well over the $100 mark in many cities. For two tickets to an opera you can now buy a computer and watch Leontyne Price and Joan Sutherland on YouTube for free!

No wonder so many people have stopped going to performances. A recent study by the NEA showed that a huge number of people are getting their arts exposure on-line and fewer are coming to the theater. No wonder so many arts organizations are suffering. Without audiences we receive no ticket revenue and the audience members we lose cease to donate as well. The claim that the arts are irrelevant is getting difficult to dispute.

The arts are not irrelevant. I observe this every day during the Kennedy Center's free Millennium Stage performances that attract hundreds of audience members each night with minimal marketing. Our annual Open House in September features performances on each of our stages all day, for free. The most popular events? Ballet and the symphony, which conventional wisdom says are the most irrelevant of all.

If we want to keep, not to mention rebuild, our audiences, we need to rethink our ticket prices and to find other ways to balance our budgets.

We need to find productive ways to lower our costs. Cutting programming is not a good solution, but establishing creative joint ventures and reducing infrastructure are.

And we need to work actively and aggressively to increase fund raising revenue (by producing exciting work and marketing that work well) and use a portion of this revenue to lower ticket prices.

We do not need to lower the prices of all tickets, however. We find that the buyers of the higher price tickets are less price sensitive; they will buy at any cost. That is why the premium price tickets on Broadway continue to sell.

But the audience members who buy lower price seats tend to be very price sensitive; reducing the price of these tickets should have a big impact on audience size.

If we don't, we will find ourselves with fewer and fewer people in our audiences, and an ever-smaller donor base. The arts will, at best, become the exclusive province of the elite, and to the vast majority of people, live arts will become irrelevant.

Posted at 10:59 PM by Kaiser, Michael | Permalink | Email this Post | Comments (2)

12/28/2009

My New Year’s Resolutions

This is the time of year when we look within ourselves and make commitments for improving ourselves and our lives in the coming year.

I, like millions of others, have made New Year's resolutions. Here they are:

1. I will finish my new book. I have been working for well over a year on a book for and about boards of directors of arts organizations. It is called, Fifty Questions Every Board Member Should Ask. It asks and answers many of the most important questions all board members should address, from "What is the role of the Board in artistic planning?" to "How do we evaluate a fund-raising or marketing plan?" I believe there is far too little training available to board members. Board members tend to enter arts organizations with energy, ideas, and generosity. But they frequently end up frustrated and disillusioned. This book is my small contribution to improving the productivity and happiness of board members.

2. I will develop a transition plan for the Kennedy Center. Since our Chairman leaves the Center in mid-2010 and I leave the Center as President at the end of 2011, it is essential that we have a clear and coherent transition plan. Too many arts organizations do not anticipate the issues that will arise when leadership leaves and frequently some challenges arise. I will try to avoid these issues. I am responsible for the quality of our transition.

3. I will focus harder on my international arts management strategy. For six years, I have been working to train arts leaders across the globe. While this work was unfocused at the beginning, a strategy has emerged over time. I hope to identify and train a group of five or ten arts leaders in each country in which we work; ultimately, I hope these leaders become the role models and teachers for their nation. I will spend more time identifying the strongest candidates and far more time working with them in the year ahead.

4. I will assimilate all the materials gathered on The Kennedy Center's "Arts in Crisis" national tour and develop a statement of my observations. It is easy to travel from city to city and make presentations. It is essential that to collate what I have learned and make it available to others.

5. I will try to have the courage and the discipline to practice what I preach. As many people have pointed out to me on my national tour, it is easy to say that one should not cut programming and marketing, that one should strengthen the board, that one should create an institutional marketing effort, that one should take risk but it is far harder to actually do it. I face the same challenges as other arts managers every day and I am tempted not to follow my own prescriptions. I will work hard to continue to pursue my prescribed strategies. This year has tested my resolve more than any other in my career. I will try to stay the course.

Happy New Year!

Posted at 11:01 PM by Kaiser, Michael | Permalink | Email this Post | Comments (0)

12/14/2009

The First Big Grant

One of the exciting moments in the life of a young, small or mid-sized arts organization is when it receives its first, large foundation grant. This grant, a recognition of the good work already being performed, typically allows the organization to expand its programming. New staff may be hired, new space may be rented, and sometimes even a building is purchased. But in virtually every case, the infrastructure of the organization is expanded.

The sense of validation that accompanies the awarding of the grant can be moving and life affirming. After years of struggle, a major funding body has recognized your work. The promise of things to come is almost as exciting as the initial grant.

But as exciting as this moment is, and as helpful as it is to have guaranteed funding for a number of years, there is also a hidden pitfall that too many arts managers ignore: the grant will end.

Too many organizations that receive this first big grant build the infrastructure to support their new, increased programming without thinking about the day the grant period ends. It seems so far off after all.

But the day does come when the grant is over and most foundations do not renew their grants automatically. Most organizations don't have a plan to deal with the reduced level of income and don't think about it until that day arrives. By then it is too late. The organization has built an infrastructure but no longer has the foundation grant to support it. All too often, programming has to be slashed, staff has to be laid off and not infrequently, the health of the organization is placed in jeopardy.

This can be a traumatic moment for any arts organization.

I have long lobbied foundations to make their grants to smaller organizations in the form of challenge grants. A challenge grant must be matched by other contributions, often by new gifts or increased gifts from existing donors. By forcing the organization to build a new, larger donor base during the grant period, the transition when the grant is over is eased. The foundation's money might be gone but the new donors attracted by the match help fill the void.

But many foundations simply do not want to do the oversight work required of administering a challenge grant. And if the foundation is not far-sighted enough to give a matching grant, the organization must be disciplined and smart enough to create its own challenge grant. The senior staff and board must use the grant period to build its donor base. A serious, concerted effort to attract new donors must be pursued. The foundation grant gives the organization an imprimatur that can attract new donors.

It is so easy to relax after winning the first big grant and to allow the nascent development effort to lie fallow. But you do so at your peril. It is never fun to get smaller, especially after the successful conclusion of a grant.

Posted at 5:19 PM by Kaiser, Michael | Permalink | Email this Post | Comments (0)

12/7/2009

Are We Forgetting the Mission of the Arts?

Over the past 25 years, I have bristled when anyone says or writes that arts administrators have taken over the arts and that artistic initiatives are taking a back seat to financial concerns. I feel slighted. My work, and the work of my fellow arts managers, after all, is aimed at finding the resources necessary to allow the artists to do their work. If we are not successful, there will be neither the donors nor the audiences required to fund the artists.

But I must admit that the more I travel around the nation and the world, the more I realize that money concerns truly have begun to overwhelm artistic decisions in too many arts organizations. The fear that the organization will not survive has driven many arts organizations to produce safer, more accessible, and, unfortunately, more boring art, especially in this current economic downturn.

This is a deeply scary phenomenon. If arts organizations do not take risk, they cannot create the next great work of art. If not-for-profit arts organizations begin to think like for-profit entertainment companies, we will not produce the next generation of great playwrights, composers, artists and choreographers.

It is already difficult to tell the difference between many not-for-profit theater companies and their for-profit counterparts. Not-for-profit organizations receive a tax advantage because of our educational role, our ability to take risk and our missions which place artistic accomplishment above financial reward. Yet too many of us are ignoring these objectives.

This is not just an American problem. The larger amounts of government funding available in other countries should, and does, allow arts organizations to make bolder choices than their U.S. cousins. But the level of government funding is shrinking in most countries and arts organizations are struggling to find ways to build audiences and attract private donors. Once again, playing it safe is becoming a favored approach.

I understand the motivation. The arts suffer inflation more than other industries and no one is providing us with a cushion to protect us if a risky project fails in spectacular fashion. It is scary to be responsible for the salaries of so many people with so little money coming in. But I also understand that without risk there cannot be art and that the organizations that do the most innovative and exciting work will also have the biggest financial rewards, and thus, ultimately, the most stability.

At the Kennedy Center, I know that I need to achieve fiscal balance every year. But it is not accomplished by selecting only safe works. I think of every season as if it were a stock portfolio; balancing the riskier projects with safer, more accessible programs. This season, for example we have a large VSA arts festival devoted to artists with disabilities and co-producing a world premiere play by Terrence McNally; neither project is assured to be successful. These are balanced by productions of Mary Poppins and A Streetcar Named Desire starring Cate Blanchett, two sure winners. If every season does not have a few wonderful, surprising moments, than I will not be able to maintain the interest of my large donor and audience bases. Without their support we obviously cannot continue to build a larger, more diverse calendar of performance and educational programming.

When I hear artists evaluating a project based on audience size, a project's attractiveness to donors, and other measures of financial success, it makes me sad. While every artist must be realistic about the fiscal implications of a given work, this should not be their primary concern. We need our artists to be thinking expansively, to be challenging themselves to be truly creative and to be challenging their administrators to find the resources required.

But boards and administrative staffs have bullied their artists and dulled their creative impulses.

Maybe money is taking over the arts after all.

Posted at 5:21 PM by Kaiser, Michael | Permalink | Email this Post | Comments (0)

11/30/2009

My Visit to Kansas City

One of the stops on my Arts in Crisis tour that I looked forward to most was the visit to Kansas City, Missouri. 24 years ago I started my arts management career in Kansas City, running the Kansas City Ballet. Going back to the Lyric Theatre, where the Ballet gave many memorable performances, was a true homecoming.

The visit did not disappoint. Approximately 750 people showed up for my session, far more than in any other city. The session began with the entire Kansas City Symphony performing the Academic Festival Overture by Brahms. This was the first time a musical ensemble performed before my session and it set the perfect tone. (This piece is special to me since it was written for the German town of Breslau, now part of Poland, where my father was born and raised.) Michael Stern, the dynamic music director of the Symphony conducted the orchestra and my interview.

Sitting on the stage of the Lyric Theater, I could not help but remember the first years of my career, both the successes and the failures. The very first performances during my tenure were a disaster. I had wasted the entire marketing budget on a clever idea that we could not implement well. We sold fewer tickets to those performances than to any other in the history of the company. It was not an auspicious debut but it taught me so much about the scale required for a strong marketing effort.

For our next set of performances, we built a relationship with the Girl Scouts who purchased thousands of tickets; these sales resulted in the first sell out performances in our history. Some of my board members, who were used to buying tickets minutes before a performance, were both thrilled and annoyed that they simply could not buy a ticket to the final performance!

And by the end of that season, we had a new relationship with Alvin Ailey that allowed us to perform many of his works to great acclaim. The artistic growth of the company was due entirely to the good taste of Todd Bolender, our Artistic Director. His vision, complemented by a strong institutional marketing drive, allowed the company to thrive.

The Kansas City Ballet is a classic example of an art-focused turnaround. Without Todd's strong repertory choices, his able support team of ballet mistress Una Kai and school director Diana Adams, and the guest artists he attracted to set ballets and teach (John Taras, Violette Verdy and Melissa Hayden my first year alone), the company could not have attracted the press attention nor negotiated a debut tour to New York City that were so central to our success.

The substantial community of arts sponsors came to think of the company differently. I joke that the tag line for the company when I arrived was 'the ballet company that can't make payroll." And it was true. Every two weeks we called around town to see who could contribute something so we could pay the dancers their meager wages. After the artistic and marketing successes of our first season, the community came to think of the Kansas City Ballet as the 'hot organization' in the city. Not surprisingly, we were able to increase our fund-raising and ticket revenue substantially and pay off our entire accumulated deficit in one season.

What is important about this story is that the staff of the Kansas City Ballet was very small – only four full-time people on the administrative team. It does not take a large organization to develop important art nor to create a stronger marketing profile.

The lessons I learned in Kansas City paved the way for the remainder of my career. Sitting on the Lyric Theater stage, surrounded by so many friends and colleagues, board members and donors, I felt a tremendous surge of gratitude.

Posted at 5:25 PM by Kaiser, Michael | Permalink | Email this Post | Comments (0)

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