Price it (right) and they will come

Say “Saint Paul Chamber Orchestra” to an orchestra activist and the discussion will likely turn to that orchestra’s innovative approach to hiring and firing musicians without the institution of the Music Director. But more important to our field has been their approach to the problem of ticket prices, as described in an article in the most recent issue of Symphony magazine, the publication of the League of American Orchestras (in the interests of full disclosure, I’m a member of the League’s board):

For the Saint Paul Chamber Orchestra, ticket price has been a major concern since well before the current downturn. In 2005, the orchestra took steps towards dramatically lowering ticket prices for its neighborhood concerts, which had not been selling well… the repricing–and subsequent expansion of the number of neighborhood venues–contributed to a 145% growth in the subscriber base for that series….

The SPCO’s pricing strategy continues to be central to its reformulated business model, where one of the keys to sustainability is less reliance on earned income such as box-office income…. Instead, the majority of revenue comes from patrons, who support the organization in a variety of ways. Filling the hall becomes essential, even at the expense of ticket revenue; St. Paul sees concerts as a loss leader…

Still, St. Paul’s continued low ticket pricing raises the obvious question: how can they afford it? “We inevitably reduced our gross ticket income,” says (VP & CEO Jon) Limbacher. “But we reduced our marketing expense dramatically, so our net revenue – even in an environment with much lower prices – is significantly higher than it was before…we’ve cut a million dollars out of our marketing budget.”

The SPCO deserves credit for a fundamental insight: we’re not in the business of maximizing ticket income, whether gross or not. We’re in the business of providing live music. Or, in other words, the bottom line for orchestras is not the bottom line.

If we all started to think more like social service non-profits and less like Broadway shows which just happen to never, ever make a profit, we’d all be better off. We provide a service; we don’t make profits for backers.

The description of concerts as a “loss leader” in the article is misleading; concerts are what we exist to do. If ticket prices are an obstacle to filling the halls and playing to the maximum number of people, then they’re not contributing to our real bottom line.

Go read the whole thing.