Subscribe not?

The current economic model for our industry is built largely on the subscription model best described by the late, great Danny Newman in his book Subscribe Now! So this news was shocking even to your been there, done that blogger:

Gustavo Dudamel, the new music director of the Los Angeles Philharmonic, may be the hottest conductor on the classical scene, but box-office figures from Walt Disney Concert Hall show that even the young Venezuelan isn’t entirely recession-proof.

Subscription tickets, which went on sale in February and account for a majority of total sales, have fallen 7% from last year, the final year of Esa-Pekka Salonen’s tenure with the orchestra.

That was at least partly offset by an uptick in the sale of single tickets. The orchestra says purchases of individual tickets that went on sale Sunday were approximately 50% above the sales from the same day last year, resulting in several sold-out performances well in advance of Oct. 8, the official start of the 2009-10 season…

…six performances had sold out or were close to sold out, all featuring Dudamel on the podium. In addition, Dudamel-led concerts accounted for seven of the top 10 requested performances at the box office on Sunday.

Among the most popular Dudamel appearances are the Mahler Symphony No. 1 concerts in October; performances of Verdi’s Requiem, set for early November; and a series of concerts with violinist Gil Shaham in late November. The Oct. 8 inaugural gala is also a top draw, with a limited number of tickets still available for purchase.

The box-office rush comes as the Philharmonic is rolling out an elaborate marketing campaign that features Dudamel on posters, banners and billboards around the city. In late July, the orchestra began putting up banners of Dudamel around Disney Hall. In addition, there are 12 static billboards and five digital billboards around the city. This year’s marketing campaign is significantly larger than in previous years, with more placements across all forms of media, according to the Philharmonic.

…What remains uncertain is whether Dudamel’s arrival will generate enough box-office interest in the months to come to offset the subscription decline. The Philharmonic said it expects to see devoted Dudamel fans buying more tickets closer to the start of the season.
“The ‘Dudamel effect’ is a phenomenon that we’re well aware of,” Manocha said. “But we’re really just learning how to handle it.”

Dudamel is the hottest ticket in the orchestra business these days, and arguably the hottest conductor (in terms of name recognition and public curiousity, at least) since Bernstein or von Karajan. The idea that subscriptions actually fell for his first season, compared to the last season of a long-time music director, is a little like hearing that the sun rose an hour later than scheduled yesterday.

So what’s the explanation? It’s unlikely to be bad execution on the part of the marketing department of the LA Phil, given that orchestra’s reputation for managerial excellence. It could be the recession; certainly the downturn has been up-ending expectations throughout the industry (my orchestra took a pay cut for the first season of our new music director, which was hardly what we were expecting to happen when his appointment was announced early in 2008).

Or it could be something more global. Orchestra managements have been complaining for decades that the subscription model has been slowly collapsing, that the rates of subscription renewals have been slowly declining, and that the number of concerts sold per subscription customer have been declining. I would guess, without knowing anything specific about what’s happening in LA, that management is indeed succeeding in selling Dudamel to a new demographic – but that the new demographic has never bought tickets by subscription, and has no knowledge of, or sympathy for, why it can make sense to do so.

An echo of this news items is happening in my home town as well. This is my orchestra’s first season with our new Music Director, Edo de Waart. But subscription sales have fallen slightly here compared to last season as well:

“We’re just thrilled we are where we’re at,” said Susan Loris, vice president of marketing and communications at the Milwaukee Symphony Orchestra. The MSO, the area’s largest performing arts group, has reduced costs, including instituting pay cuts for musicians.

Season ticket revenue is running about 2% behind last year’s mark, Loris said.

Those ticket sales totaled around $2.1 million during the 2008-’09 season. The group’s total annual revenue is around $16 million, with season ticket sales providing 58% of the orchestra’s “earned revenue,” which the MSO gets from performances, including single-ticket sales, and recorded music sales. Additional revenue comes from donors, including groups such as the United Performing Arts Fund.

The season ticket sales, with patrons buying subscriptions to various concert packages, provide a steady revenue base. They also help maintain cash flow by providing revenue long before performances occur. Finally, it costs the orchestra much less to sell a season ticket than a single-performance ticket.

“We always see our subscription revenue as the lifeblood of the institution,” Loris said.

She said this season’s lagging subscription sales appear linked to people’s concerns about the economy. There’s also a letdown from last year’s season, which included the farewell for longtime MSO conductor and music director Andreas Delfs, and concerts that featured two stars of the classical music world: soprano Renee Fleming and violinist Itzhak Perlman. And there has been a general shift among orchestra patrons throughout the country to more single-ticket purchases that occur closer to concert dates.

Given all those factors, season ticket sales are going reasonably well, Loris said. The orchestra’s season starts this week, and new conductor and music director Edo de Waart makes his debut Sept. 26.

Is this bad news for orchestras? Only if one expects to net significant income from ticket sales. But I’m beginning to suspect that may not be a viable model for too much longer either.