As the US gradually becomes vaccinated, performing arts organization leaders are faced with the Hamletian dilemma of whether to continue to offer digital streaming of live performances after theaters reopen. While most everyone acknowledges that streaming has been a critical lifeline to audiences and communities during the pandemic, many arts leaders may erroneously assume that there will no longer be an imperative to continue streaming once audiences can attend the live performances that are at the core of their missions.
There are several compelling reasons, however, why arts groups should consider a hybrid strategy of offering live and digital performance content, at least for the next year or so. To be most effective, each organization should develop a post-COVID digital strategy based on its unique circumstances and objectives, informed by the inherent differences in the way music, theatre, and dance performances are optimally captured and distributed electronically.
The Why of Streaming
Although audience research indicates most ticket buyers are eager to resume attending live performances, there are a number of nuances in the data that support the case for performing arts groups to offer both live and digital performances next season:
- There is wide divergence as to when audiences say they will feel comfortable being in crowded spaces again, even after herd immunity is reached. At least 15% to 20% do not see themselves attending until after January 2022. Some will not attend until masks and social distancing are no longer necessary, some are concerned about how long vaccine immunity will last, and some who are vaccinated worry about transmitting the virus.
- Even when most audience members are ready to return to the theater, some will choose not to get vaccinated, some have underlying health conditions that make them especially vulnerable to COVID-19, some will remain fearful of venturing out, and some will have become accustomed to at-home entertainment. Though it is impossible to predict with certainty, it would not be surprising if these audience segments collectively represent 15% to 20% of an organization’s pre-COVID audience, which many arts groups were already struggling to maintain.
- In the face of audience apprehension, or the risk that a resurgence of COVID-19 could require venues to shut down again, offering ticket buyers the option of deciding at the last minute whether to experience a performance in-person or at home could increase their willingness to purchase subscriptions or other future ticket packages, and decrease the need for organizations to offer cancellation refunds.
The benefits of reaching those audience members who are not ready to attend live performances, or providing an effective ticket purchase insurance policy to retain those who are, justifies the incremental production and distribution streaming costs. The financial calculus should not be contingent, however, on the unlikely realization of sufficient earned or contributed revenue to cover the cost of streaming. Non-profit arts groups have always sought philanthropic support to cover the net margin loss[1] from live performances and educational activities. Why should the standard for digital distribution be any different? The strategic financial questions each arts group should ask about digital distribution are:
- What are the incremental costs of capturing and distributing our content at an acceptable quality standard?
- How many people can we reach with our digital offerings?
- What is the net cost[2] of serving that digital audience on a total and per person basis, relative to the subsidy required for our live performances?
- Is the incremental philanthropy required to subsidize the streaming of our content attainable and justified, relative to our goals and objectives?
If, hypothetically, an arts group subsidizes $50 of each ticket to a live audience of 1,200 (i.e., $60,000 total), would it not be fulfilling its mission if it spent an incremental $30,000[3] to reach an incremental digital audience of 1,200 (i.e., $25 per ticket subsidy)? Although it would certainly not be easy in today’s environment to raise philanthropic support to cover the incremental $30K in net streaming costs, and an equal challenge to reach such a large digital audience, some donors will surely applaud this kind of holistic cost/benefit analysis of a hybrid live and digital strategy.
The How of Streaming
The lens through which an arts group should decide whether and how to offer future digital programming is materially different from whatever motivations drove an organization’s pandemic streaming strategy. The decisions should also be based on the unique goals and objectives of each institution, which can best be determined by answering several key strategic questions:
- What are the primary objectives of your digital strategy? Are you trying to use streaming as a marketing tool to sell more tickets to your live performances to new audiences with a digital-first strategy, or to drive loyalty and retain your existing audiences? Or do you view streaming as a separate product line that is as core to your mission as live performances?
- Who are your targeted audiences? Are you primarily trying to serve regional audiences, or do you believe your organization has a sufficiently prominent artistic profile to attract national or international interest in your streaming content? Do you seek to use digital content to expand access to those with economic or physical barriers who cannot attend live performances?
- What kind of program content does your targeted audience want? Will your streaming audiences be interested in consuming full performances of staged works, perhaps with some added value content about the works performed or social media interaction with artists (e.g., Dance Theatre of Harlem, Mint Theater, Goodman Theatre, etc.)? Or are they looking for the kind of highly produced, made-for-streaming content (e.g., BalletX, Boston Lyric Opera, Opera Philadelphia, Weston Playhouse, etc.) that they have come to expect from at-home entertainment? Will the audiences for digital versions of full performances be interested only in the excitement of watching a truly “live” event at a scheduled time, or will they prefer the flexibility of watching on-demand content when convenient for them? With increased competition from myriad online entertainment options, and declining audience attention spans, should you offer shorter excerpts instead of full-length performances?
- Should access to your digital content be monetized or otherwise restricted? Does it make sense to monetize access via pay-per-view or subscription fees to digital streaming, to offer digital access only to ticket buyers to live performances, or not to limit access at all, but to use free digital content as an audience development strategy to entice people to attend live performances? Should end-users have temporary access to the digital content, via live or on-demand streaming, or permanent control via downloads or podcasts? Will touring guest artists allow unrestricted digital distribution or, to avoid depressing demand for their live performances, insist on geofencing of local streaming?
- How should contractual agreements with content creators be structured for hybrid live and digital performances? Pre-COVID, basic employment agreements governed pay to performers, designers and production personnel for live performances, usually with ancillary rights clearance agreements in place that determined what content creators were paid for digital distribution to audiences beyond those in the theater. While those agreements may still make sense when an arts group licenses content through a retail distributor, should arts groups and those they employ agree to modifications to those agreements when the digital distribution is necessary to generate ticket revenue from core audiences to cover the live performance costs?
The answers to these questions should help each arts group determine what kind of streaming content to offer and whether to distribute it only on its own website and social media platforms via an OTT[4] platform (e.g., Boxcast, Brightcove, Vimeo, etc.), or in collaboration with other arts groups through an international retail distributor (e.g., DG Stage, Idagio Global Concert Hall, Marquee TV, Medici.tv, etc.). The answers should also help each group decide whether to offer a handful of programs or follow the examples set by the Berlin Philharmonic, the Detroit Symphony Orchestra, the Metropolitan Opera, and A.C.T., Woolly Mammoth and other theaters in the National Theatre Network, and make much of their programming available for digital distribution, as part of a shift to make it as central to their missions as live performances.
When COVD-19 shut down all in-person arts activity, most performing arts organizations quickly came to see digital distribution as an essential part of their strategy to remain in the hearts and minds of their audiences and communities. As we all eagerly await the end of a pandemic that has been devastatingly disruptive to the lives of everyone in the arts world, the question is whether electronic media projects will return to the ancillary, “nice to have” role they played in the pre-pandemic activity calendars and operating budgets for most arts organizations. Alternatively, moving digital distribution of performing arts content to center stage as an institutional imperative could be added to the very short list of good things to come out of COVID-19.
[1] Variable revenue less variable expense.
[2] Incremental digital revenue, if any, less incremental digital expense. See #4 in the “How of Streaming” section below for a discussion of the pros and cons of monetizing digital content.
[3] These production costs assume that cameras and other production equipment must be rented and could be lower if there is enough streaming activity to justify a capital investment in the purchase of some equipment.
[4] An over-the-top (OTT) Internet media service is one that is offered directly by content creators to viewers, through a technical platform that bypasses retail distributors of aggregated content.