The business of classical music in the United States and Europe has been in decline for decades, and some worry it might be terminal. According to the US National Endowment for the Arts, the percentage of Americans attending classical music concerts dropped 29 percent between 1982 and 2008. By 2012, only 8.8 percent of the US adult population attended a classical music event in the previous year.
This shrinking audience is also an aging audience, with 35-54 year-olds far less likely to go to classical concerts than those in previous generations. The future for classical music doesn’t portend well: with budget cuts in school systems across the United States, fewer and fewer schools offer classical music instrumental or voice training that may develop the concert-goers of the future. In Europe, a similar refrain is playing, as state-funded orchestras are losing crucial financing due to austerity measures.
Against these elegiac overtones, Oliver Wyman has been working diligently to redefine the business model for classical music. Through pro bono work led by Alan McIntyre, Simon Glynn, Bob Orr, and others, Oliver Wyman has worked with orchestras in London, Boston, Stamford, and Houston, and with the Brooklyn Academy of Music in New York City. Consulting teams have tackled issues as diverse as audience segmentation, orchestra branding, the impact of programming on tickets sales, and the revenue and cost impacts of new concert halls.
The overarching mission is simple and stark: help save classical music. The projects also provide great exposure to the management and boards of these organizations, which are usually full of industry leaders and influencers in that city, as well as the hundreds of patrons on whose support these institutions rely on for survival. This helps local Oliver Wyman staff develop stronger connections with the communities we live in and also give back.
“We tell clients, if your grandkids are going to hear Beethoven played live by world-class professional musicians, here’s how the business model needs to change,” says Alan McIntyre, a Partner in our New York office and a Board Member of the American League of Symphony Orchestras as well as Chairman of the Board of the Stamford Symphony in Connecticut.
Traditionally, symphony orchestras have relied on two primary revenue streams: earned income from ticket sales and unearned income from sponsorships and personal donations from patrons. Both sources of income have been under pressure as ticket sales have declined and corporations have sought other outlets for their philanthropy. As a result, many orchestras have come to rely more and more on personal philanthropy, but as the audience shrinks, so does the pool of potential donors.
It’s time to get creative with the revenue models and create more flexible programming and subscription options that can stabilize and grow the audience for classical music.
One example: an orchestra often requires a subscriber to commit to a season of 10+ concerts on specific dates and times. But modern arts customers demand more flexibility in scheduling. Oliver Wyman is currently working with leading orchestras in the US on ways to provide more flexibility in subscriptions and also how to create “membership benefits” that are less attached to specific concerts but which strengthen the sense of emotional connection with the orchestra.
For each engagement, Oliver Wyman brings lessons learned from previous work within the performing arts sector. That application of cumulative knowledge contrasts with many of our competitors, who tend to approach their pro bono work as local projects that employ general consulting methodologies. Clients have recognized the difference.
“At Oliver Wyman, our DNA is industry specialization,” says Alan McIntyre. “And we find that also translates well into our pro bono work where our cumulative experience in classical music is now really differentiating us in the eyes of performing arts organizations.”
Stamford Symphony Orchestra knew its repertoire far better than it knew the people who purchased tickets. To help the orchestra build its audience, Oliver Wyman analyzed a decade of subscriber and individual ticket sales data. The orchestra’s most valuable audience – current and potential season subscribers – turned out to be empty-nest couples over the age of 55. The data also showed that individual ticket sales varied by as much as 70% depending on the concert program.
Our insights helped the Stamford Symphony Orchestra redirect its slender marketing budget to an older demographic via traditional channels, with less investment in digital and social media. The orchestra is also calibrating its artistic choices with an eye toward popular appeal to elevate sales to occasional concert goers.
The Houston Symphony is poised to achieve global stature, but their current home is a 50 year-old general purpose performance space that they share with another institution.
Oliver Wyman is helping the Houston Symphony sort through the myriad issues that surround building a new world-class concert hall in Houston.
And there are many: size, design, patron experience impact, new revenue sources, construction and operating expenses, and programming. We are creating a model that will enable the Houston Symphony to gauge how variables like these interact, so that decision-makers can rehearse strategic options before committing and strike the most harmonious balance.
London has a host of great orchestras, which makes it a joy for classical music fans, but a tough competitive environment for the orchestras themselves. Standing out in a crowded field was the challenge for The London Symphony Orchestra, LSO, the city’s premier orchestra, but more recognized as such internationally than at home. (The recent appointment of Sir Simon Rattle as conductor will help change that.) The board asked us to help the LSO clarify and express its unique position among orchestras, so that it could engage a wider audience while staying true to its core.
Our colleagues at Lippincott worked with the LSO to develop its brand positioning, helping it to capitalize on its place in the world’s spotlight during the London 2012 Olympic Games and to communicate with more accessible messaging and with renewed confidence. Meanwhile, Oliver Wyman consultants worked with the orchestra – which is owned by its players – to strengthen ties to donors.
New York’s Brooklyn Academy of Music, BAM, is famous for its genre-defying mix of programming and media, from Shakespeare to South Asian dance to the avant-garde. When BAM asked Oliver Wyman to analyze their audience in order to sharpen marketing campaigns, the results were as surprising as their offerings.
Unlike Oliver Wyman’s symphony orchestra clients, BAM has no “core” audience. Instead, each show attracts a different audience. Seventy percent of ticket buyers attend only one show a year; 50% of the audience is new every year. Our client wasn’t marketing to a static fan base, it was marketing to a moving parade.
This meant that BAM needed to target discrete interests rather than try to sell across genres, yet one of their biggest marketing expenses was a comprehensive season brochure and mailing campaign that tried to market everything they did to every potential audience member. To help them be more targeted, we developed a way to segment audiences based on how often they attended performances and the types of performances they selected, so that marketing investments would reflect their value to BAM. We also helped them think about how the idea of “membership,” as distinct from attending performances, could be used to strengthen the audiences’ engagement with BAM.