04/15/2013 08:30 am ET Updated Jun 15, 2013

A Transitional Decade

The leadership of the Metropolitan Opera recently announced that they were lowering most of their ticket prices for next season. At the same time, they announced that it is now clear that their highly successful movie theater broadcasts are cannibalizing ticket sales for their live performances. Neither development is surprising; when movie theater tickets for an opera performance are $25 and seats in the Met for the same performance are $380, audiences are going to change their attendance habits.

This is an important moment for all arts managers, particularly for those with large budgets and high fixed artistic costs. The Metropolitan Opera might be our largest performing arts organization but it is hardly unique. Many of us are facing both the aftereffects of decades of increasing ticket prices as well as the emergence of new forms of entertainment, many of which are virtually cost free. There will be pressure on us to reduce ticket prices while maintaining (or improving) artistic quality.

The question is, if ticket prices are reduced how will we balance our books? The answer must be a radical increase in ticket sales as prices are reduced (which I believe is unlikely), a jump in fundraising (which I believe is entirely possible though many of my peers disagree) or a dramatic reduction in costs.

It is no wonder that orchestra boards across the nation are looking to reduce the salaries of musicians so dramatically and why several ballet and opera companies are being pressured to reduce numbers of performances. Many boards are as dubious as I am that we will see a large increase in demand for tickets. And most arts boards will do anything to lower annual fundraising requirements; suggesting that fundraising needs to jump considerably is anathema. So the logical step appears to be lowering cost. The labor problems in Detroit, and Louisville and Minneapolis and schisms between board members and artistic directors in many companies are just the beginning. Don't be surprised to see labor actions and departing artistic leaders across the nation in the coming years.

I have never been frightened by fundraising. I am convinced that if the artistic product is exciting and the marketing is strong we can find new sources of contributed revenue. I do not think that massive cost reductions are necessary. In fact, I worry that the efforts of some organizations to reduce costs will make them uninteresting and uncompetitive and they will actually lose more money. But I do believe that there will need to be some adjustment to cost structures, especially for the highest priced talent like guest soloists, conductors, choreographers, etc. I am already witnessing a softening in the fee demands of all but the most famous artists. (Not coincidentally, these fee reductions are coming at a time when European arts organizations are losing large amounts of their government funding and cannot afford to pay high fees either.)

The next 10 years or so will be challenging. It is not going to be pretty or fun for anyone in the field.

One must hope that a new equilibrium will emerge that allows artists to work for a fair wage while allowing the best arts organizations to create new revenue and expense profiles that are supportable and sustainable.