Personnel or Product?

One of the themes I’ve heard incessantly over the course of labor disputes involving the Atlanta Symphony Orchestra, the Minnesota Orchestra, the Metropolitan Opera, the Saint Paul Chamber Orchestra and other ensembles has been that musicians are just too dang expensive, and they have to take huge pay cuts for their respective organizations to survive.

Essentially, leaders from these various organizations have adopted a perspective straight out of the for-profit business world. Swept up in this line of reasoning, managements have repeatedly described their organizations’ financial problems as personnel problems: payroll was just too high.

For example, the management of the Atlanta Symphony Orchestra (ASO) has bemoaned the fact that 24% of their operating costs go towards paying the musicians. Here in Minneapolis, board members decried that musicians’ salaries accounted for 40% of the Minnesota Orchestra’s expenses.

And because they were seeing their problem from a for-profit angle, the managements from each of these organizations tried to lower costs by using a well-established mechanism from the for-profit world—they decided to cut payroll.  The workers were going to have to make concessions… or get cut themselves.

This has been a standard operating procedure in manufacturing and other economic sectors; and if this is your frame of reference, it would seem perfectly logical to reduce the musicians’ pay as a way of reducing overall organizational costs.

But this framework is completely wrong here.  As I have said many times before, the arts groups in question aren’t for-profit businesses… they are non-profit organizations. The entire reason these organizations exist is to make music. As a result, the musicians are not simply personnel, they are also the product.

From this perspective, the fact that musicians only account for 24% for the ASO’s budget is astonishing.  Where on earth is the rest of the money going… administrative overhead?  What would we we think of the Red Cross if only 24% of its budget was going to disaster relief?

When I come to a concert, I am coming to hear a crack ensemble perform music in ways that excite, surprise, and astonish me.  I’m there for the end result, which is glorious music. Anything that interferes with that will lessen the likelihood that I’ll buy a ticket or contribute to the organization.  Reducing the number of performances, or replacing veteran players with younger, cheaper models will have a direct, and measurable effect on the product and, from my perspective, set off a chain reaction that will greatly harm the organization.

To explain what I mean, let’s look at this from a different perspective that may be more understandable—the notion of a restaurant.

Chicago is home to many distinguished eateries, but one of the most spectacular is Rick Bayless’s Topolobampo. Bayless has created a culinary empire by serving glorious, authentic Mexican food with astonishing care and attention to detail. Topolobampo is the crown jewel in this empire, a restaurant that raises Mexican cuisine to a rare art form…  I doubt the president of Mexico’s personal chef could do any better. Guests eating at Topolobampo expect the best, and expect the prices to match. While you don’t have to break the bank to eat there, you certainly can—when you factor appetizers, entrée and dessert, along with an astonishing bottle of amarone that magically brings all the assorted flavors together, a party of two can easily rack up a very large bill. (Let’s just say I know this from personal experience.)

But all restaurants live on painfully thin profit margins. Those highly trained chefs, the crack team of servers, and those rare ingredients come at a cost.  What if Bayless decided to improve his bottom line by adopting a business model closer to that of, say, Chipotle?

He could, for example, choose to move away from fresh, seasonal ingredients and buy bulk products that are canned or frozen. He could create an assembly line that would cook all the food in large batches ahead of time, and simply assemble and warm each plate when orders came in. He could get rid of the sommelier and the hand-selected wines that pair with the specific ingredients and go instead with a corporate partner that would supply bulk wines cheaply. Bayless could further reduce staff by eliminating servers altogether and adopt a “facilitated buffet” service.  He could also have patrons bus their own dishes to eliminate busboys, too. Add in a corporate sponsorship with Coke, and his new, cost-effective restaurant is ready to open, and he and his business manager could dream of all the wonderful profits they would make.

But he would have also eliminated any reason to actually eat there.

The changes he made would have fundamentally changed the product, and while the old expensive elements would have gone away, so would all the things that brought in a profit. In this new restaurant, I would never, ever, pay $200 for my food. That price is predicated on me having a culinary experience, not just grabbing a bite to eat.  I won’t care what kind of discount the restaurant got on its beef if my dish has the consistency of rawhide. I won’t care that the glass of “I-Can’t-Believe-it’s-Cabernet” on the menu is more profitable for the new restaurant to serve… if it makes my food taste like metal, I won’t want to drink it.

At the end of the day, why would I go to a restaurant that’s chasing Chipotle?  If I wanted to go to Chipotle, I’d just go there, instead of a knock-off.

Let me be perfectly clear that I like Chipotle just fine as a restaurant and I don’t want to disparage it or accuse it of unsavory business practices; I won’t, however, go there for a special occasion, buy a Chipotle cook book, sign up for their e-newsletter, or spend more than $10 for my food. I would, however, do all those things for Topolobampo.

The same holds true with an orchestra. Cheaper musicians and pops concerts might look more profitable on paper, but I certainly won’t spend $80 a ticket to hear them. I won’t buy this orchestra’s recordings since I can most likely find better ones performed by better ensembles. If I’m not inspired, I probably won’t contribute more than a small, token amount, and I certainly won’t give to a capital campaign. And since there are so many artistic and musical ensembles to support, this new “profitable” orchestra will most likely drop off my radar altogether.

Let me be clear.  I’m not going to a concert to help your bottom line… I’m going so I can have an experience.  If I can’t get this experience with the you, I’ll go somewhere else where I can.  And if I do walk away, how much time and effort will you have spend to break through my indifference to get me to support you again? To trust you again?  Your orchestra or opera house might have a profitable year in the short-term… but it will do so at the expense of long-term prospects and support.

Why go down that road?

So as the ASO is contemplating another lockout of its musicians, I say this:  No business thrives by diluting and diminishing their core product. And since the musicians are your core product, I would advise changing your frame of reference to reflect that.

 

Xochipilli

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14 thoughts on “Personnel or Product?

  1. Thanks again for a compelling case for not treating an orchestra and it’s musicians as a collection of interchangeable cogs and widgets. Another great discussion of what an orchestra is – product, personnel, or more accurately, ART, was written for Adaptistration’s 2013 Labor Day cross blog event by Cleveland Orchestra bassist, Henry Peyrebrune. An orchestra is truly a miraculous organism that is more than the sum of its parts, It doesn’t fit into a commodity model without becoming less than it should be. http://www.insidethearts.com/blog/the-holy-grail/

    Liked by 1 person

  2. So true. As you mentioned, we saw this in the Met Opera battle, even as they had raised ticket prices. So to use the restaurant theme, let’s raise prices and dilute the product. It doesn’t make sense. And doesn’t it make you wonder (well it makes me wonder) that the leaders of these organizations do not understand this?

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  3. The same reasoning is applied to University faculty. The failure of the business model was apparent before it was adopted. Yet in many sectors employees are paid as peasants and chief administrators like aristocrats. This would make an organization more acceptable to the one per centers who supposedly support the organization.

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  4. If these for-profit “experts” did the same thing in their businesses, they would fail, and the shareholders would give them the boot. But their arrogance convinces them that it will work elsewhere.

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  5. Excellent post.
    The “experience” is what elevates a world-class orchestra from a regional, per-service, token cultural product. You know it, your readers know it. But I’m afraid the average concertgoer can’t really tell the difference, and this is what management is counting on. If a string section cuts a stand, replaces retirees with forever temporary subs, hires cheaper and less experienced guest conductors, eliminates big repertoire because it requires extra brass, if an orchestra like Atlanta can’t pay a player enough to prevent them from moving to Dallas…this will impact the morale and long-term integrity of the ensemble, but Joe Blow Ticket Buyer might not be affected. Or at least he won’t realize he is affected.

    There is a documentary, “Spinning Plates”, about another famed Chicago restaurant, Alinea. It is amazing how many comments on Netflix ridicule the artistry of its chef, Grant Achatz. In classical music, it’s like people can’t tell the difference between Chipotle and Rick Bayless, or don’t want to. It is this mentality among their boards and audiences that the big orchestras have to overcome.

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    • I really would like to believe you’re wrong about the public not being able to tell the differences in quality. That has been my experience here in Minneapolis, where people really have made that distinction. To this larger question, I’ve revisited an earlier posts about this topic, and the dangers of cutting simply to save money because no one will notice. They do. Click here, if you’d care to read.

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    • I agree with all of this, except for your characterization of regional orchestras as a “token cultural product.” It is not just wealthy patrons living in major cities who deserve to have access to live orchestral music, and it is not just orchestras the size and budget of Atlanta that are important to the cultural fabric of their communities. Not all, but many small regional orchestras are able to form extraordinary connections to their communities. I played in one recently where it seemed like every cab driver and bus patron town knew and had an opinion on my conductor, certainly a change from the situation in the big city where I grew up. These orchestras may not be glamorous but they bring music to people who need it, often have robust outreach and education programs, and provide valuable experience to young musicians just getting started in the professional world.

      I certainly don’t mean to suggest, of course, that the ASO should be downsized to this status– simply that these orchestras have a place and also deserve the support of musical world.

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      • Hi Anna, I fully agree about the importance of community ensembles. I wrote the following in regards to the Met Opera dispute (here’s the link to the article), but I think it is quite appropriate here:

        “And a quick word on why I’m optimistic. I work with great professional companies, but I also work with a wide range of wonderful community arts organizations. And I see nothing but strength in these “under the radar” groups, who feed the public’s appetite for music, use music to engage people in creative ways, and keep the performing tradition alive. Large-scale groups like the Met (or here, like the Minnesota Orchestra) are critical for keeping the musical ecosystem alive; they model professional norms, demonstrate how the art form exists at its highest level, and provide a wealth of employment opportunities, which encourages others to pursue careers in the music industry. They are vital. But so are the community groups working at the ground level. They keep people personally engaged in the arts. They provide vehicles for personal creative expression. And they foster community.

        During the Minnesota Orchestra lockout, this ecosystem was threatened. But it didn’t die—it actually demonstrated its health and resilience. Deprived of its top-level concerts, the public flooded community performances… many groups reported record numbers of attendees. And the public was engaged as never before; the lockout also forced everyone in the entire network to reflect on why music was important for them. Gathered together, the public fought to re-establish the greater musical ecosystem, and took active steps to ensure it would not be threatened again. These efforts have been hugely successful—concerts at Orchestra Hall have had phenomenal sales, and musicians and the community are connecting in a wide variety of new ways. Audience advocacy groups have sprung up, and music is actively discussed.”

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  6. What an ill conceived argument to a real problem of access and accessibility. If you really want a symphony experience to only be available to those who can afford to eat a $200 meal, you will only have a few years left to hear one. Art shouldn’t just be for those who can pay the highest price. It’s shocking that you believe it should be. Moreover, it is completely disingenuous to claim that the only direct expenses for putting on a performance are musicians’ salaries – that would only be true, if the musicians we’re performing to no one in someone’s backyard. But presumably you would like to play to an audience and attracting audiences costs money as does the venue, the programs, the tickets, etc. etc. And if you would like to know where all the money is going, there is no need to pose a hypothetical question (“where on earth is all this money going…administrative overhead?”); simply read the organization’s Form 990.

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    • Hello Rachel and thanks for the comment. Allow me point out briefly that in addition to being a performer myself, I have worked in arts management for many years and serve as a board member of a large arts organization here in Minneapolis, and I work with a variety of professional and community arts groups. Part of my day job is finding support for arts access programs, and please rest assured that issues of arts access are near and dear to my heart.

      But that’s not my point here; I feel this post isn’t about access, but rather the issue of value. And getting what you pay for.

      To your point, I don’t want art restricted to people who pay $200 for dinner, and never suggested I did. I mentioned, “While you don’t have to break the bank to eat there, you certainly can…” Over the course of my writings I’ve repeatedly critiqued the Minnesota Orchestra and the Metropolitan Opera for pricing themselves out of reach, and pointed out how this wipes out broad-based support for the organization and creates a death spiral of irrelevance.

      The ASO can (and I’m sure, does) have plans and programs that increase access, but they have to be done in the context of the real-world cost of running a world-class orchestra and the needs of the community. But that is a much larger, richer topic of discussion.

      In terms of the artist fees being 24% of expenses. Yes, I do realize the importance of the staff, and need for an organization to engage in marketing, fundraising, and so forth. Again, I’ve worked in arts management for years, and had many of these jobs myself. And it is because of my experience that I find the 24% number jaw-dropping. As I mentioned, the comparison number with the Minnesota Orchestra is 40%… and the Minnesota Orchestra owns and runs its own performing arts venue. I’ve served on many grant review panels in my time, and allow me to point out that funders are indeed very curious about what percentage of the budget goes into programming, and react badly when the costs of administrative overhead grow too large.

      Finally, about the hypothetical question. I would point out that it wasn’t an accountant/auditor’s question, but rather a question of organizational priorities. You are correct, I can—and have—looked up the ASO’s 990s. More specifically, I’ve looked at the 990 of the Robert W Woodruff Arts Center, Inc., as they are the holder of the 501 (c) 3 status in question. And while the 990 can give basic information, it cannot tell anything about why resources are allocated the way they are. What is the rationale? What are the benefits and liabilities? Are there better ways to use funds? Is the organization making wise decisions? These questions can’t be answered in a tax document, but are critical to understanding the current situation.

      But thanks for the comment, and glad that arts access is a area of concern for you—I fully agree that it is an incredibly important topic right now.

      Liked by 1 person

  7. It’s unfortunate to see the consumer demand for symphonies and orchestras decline sharply year after year. However, the price of attending an orchestral concert is simply inelastic relative to consumer budgets. Consumers are now (and have been) substituting their consumption patterns due to lower barriers of entry for distribution in the market place. This actually does make more musicians/artists/performers & organizations lose market share. That, and the “product” of the orchestra/symphony biz has not kept up with evolving with the times. Granted, the compositions themselves can’t be redone (mostly), but every other aspect of the venue can.

    In short, in the next few years or so, the notion of going to see an orchestral showing will be way less commonplace because the market has moved on via its invisible hand. It is folly to blame anyone or anything on the issue. Also, artists should really consider diversifying their market clout whereby they have a backup and/or another set of skills they’ve cultivated to help subsidize their art or transition to a different sector. All too often, many artists can feel entitled to their craft, assuming that the rational expectation is that everyone else on the planet should listen to them by a sort of divine rite. If a business were setup that way or a marriage it would quickly end in failure or divorce.

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