The Expanding Market for Orchestral Musicby Philip Ehrensaft
/ December 1, 2001
The Expanding Market for Orchestral Music
Is this the crisis that wasn’t ? According to
standard economic and demographic variables, the market for orchestral music
should be increasing, and this is indeed the case in the U.S. Between the
1997-98 and 1999-2000 seasons, the sector’s revenue went up by 16.5% to US $1.27
billion while expenses went up only 9.8%. This yielded a surplus of roughly US
$84 million. The situation in Canada, however, is less clear-cut, but this is
not caused by fundamental market factors. Our story involves abrupt senior
government cuts in funding plus the very weak fiscal powers of Canadian cities
to use the performing arts as vehicles for urban
hair, immigration and the increasing market
The “regression equation”--one of the preferred tools for understanding economies--shows that for classical orchestras, the likelihood of money being spent on orchestral music is linked to consumers’ increasing age, education, and income. Graying of classical music audiences is most often viewed as a serious problem rather than a valuable asset. Economic demographer David Foote offers telling arguments as to why aging baby-boomers are likely to increase the classical music market.
As families finish paying for their offspring’s education and mortgages, they have more money for discretionary items such as tickets to classical concerts. The people now in the post-40 age brackets are better educated and wealthier than ever, while post-65 groups are healthier and more mobile than previously.
This means that more than sufficient cash will flow into the classical music market, especially for orchestral music. Classical recordings may be a tiny slice of the world market, but the latter is a huge, growing pie. There is a rapidly expanding middle-class audience in countries like China who want a bite of just this part of the pie. Multinationals may no longer have much interest in classical recordings, but independent producers plus the Internet can deliver the goods. This is industrial restructuring, not disappearing markets.
Demographic growth in the U.S. is largely dependent on immigration from Asia and Latin America, both regions where there is a strong potential market for classical orchestral music. A walk through any conservatory will indicate the disproportionate number of students from the former group.
The happy state of affairs for the sector as a whole doesn’t apply to all orchestras, however. When the American Symphony Orchestra League first started its database for the 1990-91 season, only 51% of symphony orchestras reported surpluses. One reason was the North American recession. By 1999-2000, the proportion had risen to 71%.
This still leaves a substantial proportion of orchestras in trouble. What chance do orchestras in deficit have to pull out of this situation ? Let’s take extreme cases : eight U.S. orchestras were technically bankrupt in 1990-91. All but one recovered. This would be a good track record for any economic sector. Orchestras’ financial troubles don’t seem particularly linked to size or region, that is, there is no orchestral sub-sector which is particularly vulnerable. Orchestras get in and out of trouble for a variety of reasons, and the large majority work their way out.
Income from 1999-2000 ticket sales, US $482 million, was up 11% over that two years earlier, and 53% over the level at the beginning of the decade. The ratio of box office to subscription tickets increased. Over the past three decades, there has also been a decrease in the average number of tickets sold per subscription. This means that more people are attending symphony concerts than before, hardly a sign of a dying audience. It also suggests that a good sales strategy is to focus on increasing the average number of tickets purchased by people already attending one or several concerts.
However, the total number of tickets sold was estimated at a steady 32 million seats over the two-year period. Increased ticket prices thus accounted for the 11% increase in sales. This is a potential but not insoluble problem. On the other hand, the number of seats was up 5 million since the beginning of the decade.
A good working hypothesis is that the “real price” of orchestral tickets, measured in terms of the time people have to work in order to buy a ticket, is lower now than during “the good old days” when people weren’t anguishing over the death of classical music. Finally, it is worth noting that individuals and foundations donated 22.5% more money (US $188 million) in the most recent season compared to two years earlier. This was double the figure at the beginning of the decade.
Canadian orchestras singing the blues
North of the border, the Canadian situation is less happy, but not disastrous. A look at the music component of Statistics Canada’s survey of nonprofit performing arts ensembles (the most recent survey information is for the 1998-99 season) shows that total attendance decreased by 5% between the 1996-97 and 1998-99 seasons but income increased by 14%. A series of supporting graphs can be found on La Scena Musicale’s web page (see Fig. 1). While subscription sales were down by 8%, this was more than compensated for by a 25% increase in box office sales. Fewer tickets were sold but at higher prices. Domestic touring fees increased 13%; those for tours abroad were up 11%.
When measured up against costs, the music sector had a deficit of $2.9 million. This isn’t catastrophic compared to total revenue of $57.3 million. Most of this deficit, $1.7 million, was generated in Ontario, which had brutal cuts in provincial government funding that could indeed be qualified as catastrophic. Next was Quebec with $882,000, a lower burden in both absolute terms and relative to revenue of $14.7 million.
More troubling is the decrease in attendance, especially when we consider that this happened during an economic recovery and that the decrease of 9% from the 1990-91 season is even bigger.
ýmployment in classical music is also a mixed picture. The number of people employed declined by 10% but wages and salaries went up by 10%. The net result is that fewer people are working for higher salaries. What is distinctly troubling is that the number of volunteers has declined by 22%, which runs quite contrary to the government’s current idea that volunteering would help pick up the slack caused by budget cuts.
A modest 5% increase in overall government funding was the result of a mixed bag : a 13% increase in provincial grants, flat levels of federal funding, and a 2% decrease in municipal grants. Taking a longer view, federal grants were 7% less than 1998-89, even before taking account of the toll exercised by inflation on arts organizations’ expenses. The 13% average for all provinces hides more than it reveals. Ontario, for example, cut its funding of the performing arts by 21% while Quebec’s funding went up 16%. The latter province’s funding for music, opera, dance and theatre amounted to $10.90 per resident, not princely but a much better deal than Ontario’s $1.26.
Conclusion : Canada versus the U.S.
Why the difference between the U.S. and Canada ? I don’t think it is due to changing preferences or demography. These don’t differ much between the two countries. My guess would be a widening income gap between the two countries, related in turn to our pitiful dollar and slumbering productivity, plus higher unemployment and economic insecurity. For a certain number of potential ticket purchasers, all of this plus price increases are incentives to stay home.
The final element in the picture is private donations by individuals and companies, which went up here by a modest 5% from levels already lower than in the U.S. Once again, there is a great deal of provincial variation around the national average. In Ontario, private contributions of $13 million to music were slightly greater than grants from all levels of government. Quebec’s $6.3 million in private donations amounted to 38% of the amount given by governments.
The figures for Quebec, nevertheless, belie the argument that it is very difficult to raise private money for art music in this province. The figures for both provinces indicate a level of private support that clearly contradicts arguments that classical music is a dying sector.
These private contributions also involve indirect government spending, termed “tax expenditures,” because tax revenues go down when individuals and companies claim charitable contributions. The disservice that senior governments have imposed on the arts was to cut direct spending at a pace that could not be realistically matched by creating new patterns of indirect spending via private contributions. This was an
external shock to a market fundamentally favourable to classical