An Untapped Income Opportunity for the Arts

Erik Gensler: Jennifer, welcome to CI to Eye.

Jennifer Rosenfeld: Thanks so much for having me.

Erik Gensler: You believe there’s a whole territory of income creation that arts organizations are leaving on the table. Can you tell me about that idea?

Jennifer Rosenfeld: Absolutely. So, my work over the last few years has really been in the area of online education for musicians, helping musicians create online teaching and coaching businesses, and part of how I’ve gotten to that point and helping others create these kinds of programs has been my own fascination with the online education space and the online coaching space, which is an enormous industry. It’s projected to grow to, I think, $300 billion in 2025. up from I believe $187 billion in 2019—so, industry trends outside of our industry, outside of music, but education, personal development. This is a hugely growing space and the business and marketing practices that are required to create these kinds of programs are, for the most part, email marketing, digital marketing, the kinds of things that arts organizations are doing anyways. So, the big opportunity that I see for new earned income is for arts organizations to start offering educational or experience-oriented programs, either for patrons who have an affinity or an interest, or for the professional fields of the arts. So, when I think of an arts organization, there’s just so much human capital and talent and expertise within that organization, most of which is geared towards the onstage productions that we love so much. Something I think about a lot is, what are the ways that that talents and expertise can be unlocked to create new types of business offers that could create new earned income?

Erik Gensler: I’ve heard that even if you’re a small player in a growing industry, it is much better than being even a big player in a slow-burning industry. So, I love how you positioned that. I’d like to dive into some examples and, perhaps, give you an example of an organization and you tell me how they would do this. So, say you’re a midwestern, $10 million-budgeted LORT theater. They hear this and they’re like, “Hmm, what does she mean? What does that mean for me?”

Jennifer Rosenfeld: Absolutely. So, where I would start with an organization like that is first looking at their email list and reachable audience. What I would do from there … I assume for an organization of that size, it’s probably in the tens of thousands, I’m guessing. So, that’s a large audience and I’d be curious to understand what percentage of that email list is engaging, that has participated in the organization in some way, either as a ticket holder or donor—all the things that I would imagine are typically looked at from the arts marketing perspective. And I would engage in some kind of research or surveying to try to understand, what are the related but perhaps adjacent needs or interests that that community might have, as it pertains to the skillset of the organization? So, you said this is a theater?

Erik Gensler: Theater.

Jennifer Rosenfeld: Okay, so I would perhaps be asking questions like, “Do you have an interest in acting or in behind-the-scenes or in putting on your own productions?” or I’d be trying to get a sense of all the potential interests that could be related to what the organization does that an audience member might share. And it could deal with the artistic production side. It could deal with the craft, the writing, it could be behind the scenes. It could be in the space of, how could exposure to creative ideas and the artmaking process be relevant to other areas of people’s lives? There are so many dimensions that could be pursued but I would undertake a form of research to start to investigate that, first with surveys and then, probably, with one-on-one interviews or focus groups to see if we can try to elevate stories or consumer interest. And then, you know … And these are the things that I imagine an arts organization is doing anyways, in some shape or form, for the purposes of marketing or development. But the standpoint that I would be looking at it for is from the perspective of, “What are new offers that we could create? What new ways of engaging with this population?” So, that could be an online course. It could be a retreat of some kind, perhaps one day in person, but virtual, you know, in our current reality. It could be some form of personalized mentorship. There are so many different directions that it could go in, but I would say it’s sort of that Venn diagram between, “What are the strengths and the skills of this organization?” and “What are the experiences that could be transformative and so deeply meaningful to the audience for this that is not just about watching the art, but about having their own participatory experience?”

Erik Gensler: You said it’s something between single tickets and subscribers and memberships, but that’s an additional offering where there’s a real potential price premium that can result in some meaningful dollars to fill budget gaps and some of the financial challenges that many arts organizations face.

Jennifer Rosenfeld: Absolutely. So, I’m very interested in new types of earned income streams that have a high profit margin, which is the opposite of putting on a production, which has a negative profit margin in nearly all cases. So, the scale magnitude of that really just comes down to a few factors. It comes down to pricing and it comes down to how many people are participating in a given experience. It also comes down to the cost or staff bandwidth to deliver whatever this experience is. So, that combination needs to sort of be figured out within the organization. Part of it, too, is having a realistic understanding of what kind of conversion rate will be possible given their current audience and current reach. Just as an example, in the spring of 2020, I worked with Beth Morrison projects, which is, I would say, budget-wise, I guess, a small-to-medium arts nonprofit that has an incredible track record of producing new works in the opera and theater space, I believe over the last 10 years or so. They’ve been around for a bit longer. They’ve produced over 70 new works and have a very clear expertise in the development of new productions. So, I helped them design an educational offer geared towards the professional community, which they called the Producer Academy and this was a three-month, all-online experience. They had 30 participants, all of whom are experienced artists, independent producers, or aspiring independent producers, as well as executive directors. And I believe they did offer a few scholarship spots, but all told they made around $80,000 from this educational offer, which for them was hugely significant, especially since they had no other form of earned income with all the cancellations. So, that’s just one small example. Obviously, for a much larger organization, that number might not be high enough but, again, this was for a relatively short-duration program in a moderate price point. They sold this offer for about $3,500 and, based on their reputation and reach, they had a huge flood of interest in this.

Erik Gensler: Yeah, I see. I mean, as you’re talking, I’m thinking of all sorts of opportunities. You could teach art appreciation if you’re a museum. You could teach jazz history if you’re a jazz organization. And, really, if you get, you know, really smart scholars or people who are really interested, there is a real premium you can charge for access to the people who will be teaching this and the caliber of influence.

Jennifer Rosenfeld: I think what’s really important is for us to consider, “What do people pay for what ignites desire to do something and to spend money alongside of it?” And, especially in an era where we have lost the ability to go to a concert and experience, well, live performing arts, we’ve seen … I don’t know the statistics, but people are buying chess sets and they’re buying telescopes and they’re buying instruments and finally taking that online course and whatever it is, this is a perfect time where people want to better themselves, want to grow and improve. I personally feel like, in many ways, the performing arts community kind of neglect adult education and basically says, “We do arts education for kids because they’re the future,” and I wonder about what happens to the rest of us who want to keep growing and learning. So, access to the people who have professionally developed that creative instincts and make amazing things happen, I think, is very inspiring and very desirable. And also, having a sense for, “How does this particular avatar or audience member representative, what kind of growth and transformation would they love to achieve in their life? What are they seeking and how could we design a journey that could get them there?”

Erik Gensler: I think marketing and audience development at its very core are education and by deepening somebody’s connection to your organization, particularly around your art form, you’re deepening relationships and it can open all sorts of avenues to building your family of ticket-buyers, subscribers, members, financial supporters, board members, however you think about that. I think, in many ways … I know you sit on a number or you have sat on a number of arts boards and my experience working in arts organizations, often the education department sort of sits in a very different part of the organization than the marketing and audience development piece. And I’ve often thought that was a real missed opportunity. What do you think about that?

Jennifer Rosenfeld: I totally agree. I mean, at the end of the day, I think the education piece is so key to creating interest and a feeling of engagement. Without a doubt, I had talked to my friends who are working in classical music and the performing arts as time to friend, a friend of mine who was saying he’s 10 times more interested to go hear a symphony being performed if he himself played that piece when he was in college or whatever it is. And as a long-time choral singer, I feel the same way. So, I really believe that this is just my hypothesis, that a key to growing the audience overall, or any of these art forms, is adult participation. It doesn’t have to be at a professional level or at the most advanced level, but just that feeling of we have something in common, me and that person on the stage, or I have a deeper appreciation of how hard it is for them to play at that level because I’ve tried. And I just feel like so much of how the arts operate in our society now is we encourage kids to do it. We cheer on the people who are good enough to do it professionally. And then, for the rest of us, we’re supposed to just sort of be a passive observer. It’s not the worst thing, but I just think there’s so much more potential if we can treat the adult population across age demographics as worthy of continuing to be nurtured in their creative potential.

Erik Gensler: Fundamentally, there’s … I mean, I can’t remember exactly the right source for this, but I remember hearing research of the connection between frequency of attending certain types of art events and your knowledge of them. And I mean, I certainly know from myself, like, even when I started practicing yoga, watching ballet took on a whole new meaning because you recognize the strength and challenge around that kind of movement and you … it just allows you to go a little deeper and then you’re a little more interested and that virtuous cycle sort of continues. You said that a number of arts boards and have had the purview of a board member from organizations of various sizes and genre types from your experience as someone who has an MBA and a law degree, and from the experience of running a professional services firm in the arts, what is broken in the nonprofit arts model that … from the sort of governance and board perspective, to start?

Jennifer Rosenfeld: Well, that’s a big question. And first, I just want to say that with all of my board experiences, I think it’s really remarkable how deeply committed and passionate and well-intentioned, I would say, everyone is in managing these very complex organizations that have a complicated chain of command and organizational structure, that in my case, I believe it sometimes can create misaligned incentives and some challenges but at the end of the day, I have so much respect for anyone who is a participant in or is working in the arts management space because it’s so hard and the passion is the most important thing and that is certainly there. I guess, what comes to mind as where I see things as being broken is in a few areas. One, I believe this with regards to money. So, the nonprofit model, my understanding of why it exists for the performing arts space for the most part, is because we know that organizations cannot sustainably put on productions without contributed income. That’s just what it’s been and there’s a part of me that’s really curious to challenge that assumption and look at, “Well, what if it were possible for an organization to not need to be reliant on donor funding, on grants or governments or foundation funding so that they could just do the programming that they do and generate the income to support that?” whether that is actually possible. I don’t know yet; I haven’t really run that experiment. But the reasons why I would love to see it attempted are because, having sat on major arts boards, I have heard so intimately the challenges of contributed income. Year after year, the donor environment gets more competitive. Major donors tend to be older in years and while, perhaps, there are going to be some great planned gifts coming down the pipeline, I’m just not convinced that the next generation of major donors is going to contribute at the weight that major arts organizations have been used to. At the same time, I’ve heard on and on about how foundations are shifting priorities away from the arts, which either disqualifies arts organizations for funding or requires them to develop new programs to make them eligible for foundation funding—which is not necessarily a bad thing, because these are great programs that are being developed, but it means that the organization is becoming, once again, more diversified in its activity, is more scattered in its staff time, and still has the need to cover general operating. So, I just see arts organizations being put in a tougher and tougher situation if they’re looking at contributed income as the way to close an increasingly large gap in order to just deliver their core services. So, all of that just makes me nervous and makes me feel really stressed out on behalf of the folks running arts organizations, which is why I would love to see more money flowing in, in ways that are complimentary to the core mission, that build audiences for the core mission, and also money that is not coming with strings attached, either based on donor personalities or based on where it’s directed for projects. So, that’s a big piece, is just the money and creating other alternatives for it to flow in. And I think part of it, too, is, there’s a lot of assumptions around willingness to pay around how our art is perceived, around how it’s valued. That we tend to be working in this very extreme zone of low-price ticket or enormous major gift as the way that we make this work and I just think there’s so much more room in the middle that normal people can participate in and would be glad to participate in that has not yet been explored. So, that’s the big thing: money. And I would say the other thing that I see as broken is just the siloed nature, which you are speaking to, whether it’s by department or if there is an artist union in place. Oftentimes, that can create a lot of divisiveness between who gets to be in different conversations. And I think it’s, you know, in the case of orchestras, for instance, oftentimes the union either guidelines or just the way it’s by administration makes it impossible for the administration to access all the talent, knowledge, and desired support that is already there with the musicians.

Erik Gensler: Yeah, and I think COVID and this whole pandemic has really opened up a whole new moment for hopefully rethinking some of those relationships between administrators and the unions. I think that’s really, really insightful and it ties so nicely to the first piece of this, which is talking about these additional ways, because those could be so high-margin. They’re so connected to mission and core. It allows for current staff to participate and can really solve some of these financial challenges. I think it’s just such a thoughtful, great idea. And you’re not just saying this as an idea; you’ve done this with classical musicians and as traditional operations for performing arts organizations have halted this spring and summer, many musicians are excelling in new, online businesses during the pandemic period that you’ve helped them with. Tell us a bit about that.

Jennifer Rosenfeld: Yeah, I’ll share a few examples, but part of why I’m so excited to talk to you about this is because if individuals are able to have the kind of success that I’ll describe in just a second, really operating totally on their own, I don’t see why an organization couldn’t do as well, if not better, when they actually have the team infrastructure and marketing expertise to pull this off. So, that’s why I see great potential to just share a few examples of what I’ve seen happen this year. I run a relatively small coaching consulting practice. In 2020, I’ve worked with about 25 to 30 clients, most of whom are high level of classical or jazz musicians. And collectively, my clients have earned over $2.1 million this year, and that includes several individuals who have earned several hundred thousand dollars—in many cases, earning more through their online business than they did through their real job. So, a number of my clients are members of major orchestras. I have several clients who are members of the LA Philharmonic, members of the Boston symphony, Metropolitan Opera Orchestra. I also have clients who are university professors, independent touring artists, that sort of the kind of person that I work with. And the clients who I work with tend to be people who’ve had an interest in online education before the pandemic happened. They were already bought into it. They saw the promise of it, not necessarily as being a perfect replacement to in-person instruction, but seeing it as having certain advantages in different dimensions relative to the traditional way of working. And a lot of what I help clients do when they are music instructors is transition out of an hourly pricing model into a high-priced package model. So, for instance, if I talk to a musician who, you know, working in a major city, sort of at the top of their market would be charging $200 an hour—you know, pretty good—I’ve helped musicians like that transition instead into offering, say, a six-month program where they charged $5,000 per person. Instead of having a weekly private lesson, they have a monthly private lesson. They have various group activities over the course of the month. There might be pre-recorded content. For example, one of my clients, Nathan Cole, he’s a violinist in the LA Phil. When he launched his program, the Virtuoso Master Course, for the first time in 2019, it was a program like this, a six-month program. He charged $5,000 and he got 20 students enrolled. So, you can do the math, but that was six figures for him right there. You know, it was very, very meaningful for his life and also made him realize that he can finally have a teaching environment that is suited to his preferences, where he can build long-term relationships, get to see his students weekly, also without having an enormous impact on his schedule, which is already very busy.

Erik Gensler: Yeah, and from a student perspective, they’re getting the value. In fact, they’re getting a lot of touch points with him and you’re asking him to charge for the value rather than his time. So, it’s sort of … and it could be beneficial to him and beneficial to the students.

Jennifer Rosenfeld: Exactly, and when he and I first started working on that program, the challenge I posed to him was, “Could you design a six-month program where people would get better results than if they took six months of weekly private lessons with you?” and it was a fun challenge for him because he said, “Absolutely, I can do that. And, in fact, there are students who I see weekly for months on end and they’re not progressing nearly as much as they could if I had the time and the context to give them all the other things they need beyond just repertoire coaching in that lesson.” So, it opens up a whole scope of instructional possibility and, like you said, ultimately is geared towards delivering the student a better result. And the fact that all my clients are staying in business, their students re-enroll, I think really speaks to the fact that their programs are delivering.

Erik Gensler: So, I listened to this and I’m an arts administrator at a smaller organization. I don’t have the brand name of the LA Phil. I don’t have someone who has that sort of online reputation. What would you say to me? But I have a curious of trying this and I see the potential.

Jennifer Rosenfeld: It all starts with building community and that’s what we do in the arts, right? So, sure, great if you have an email list of 10,000 people, but a lot of people don’t and I don’t have that and you don’t necessarily need that to start creating new sources of earned income. It’s really just looking at who is already around me, who are my super-fans, who loves what I’m doing, and how can I do more for them and give them more reasons to spend money with me because I’m going to give them the experiences that they want? So, it could be doing a Zoom workshop. You know, you could survey the whatever size lists you have, say, “We’d love to do a free workshop that gives you an insight into how we do our amazing artistic thing. Which of these topics would be interesting to you do a workshop on that topic?” and see what happens. So … And the other thing that I’ll say that’s really critical to the approach that I teach is, when we are enrolling people in programs that are expensive, you know, several thousand dollars, that requires a conversation, just like any other development process. If there’s a real similarity there, it’s not the sort of thing where someone is going to click to buy a $5,000 experience. They need to talk to someone. So, this way of working absolutely requires us to be engaging in regular conversation, but that’s where the magic happens, anyways, and that’s where we build connection and trust. And I honestly think it’s easy to enroll people in higher-price packages if you’re having conversations than it is to just market to them to buy a thing that costs a few hundred dollars. That’s not so easy, actually.

Erik Gensler: You believe that creative people have a leg up when it comes to the business side of their careers. What do you mean by that?

Jennifer Rosenfeld: Yeah, you know, there’s a lot of dimensions to business and I think as creatives, we can have a lot of beliefs and fears about what business means and from that, take away, “Oh, that’s not me. I couldn’t ever do that.” For instance, some stereotypes you might have are that being good at business means that you have to be good at spreadsheets and all this technical financial projection stuff and, “Oh, and you have to be really good at sales and be a hustler and push things in front of people all the time.” It’s not to say that there’s no place for either of those things, but I really think of, “What is the essence of being in business? It’s creating, creating something valuable that people want and then building the relationships to help them understand it and experience it.” And that’s what we do in the arts, right? We are creating things and for some of us, perhaps, just doing it for ourselves is enough. But if we want people to experience and be impacted by what we have to offer, we need to build relationships. We need to find a way to communicate. So, I’ve seen business as a very human-centered experience. Maybe not all business is that—I’m sure not all of it is—but the kind of business that I’ve run is it’s been about personal growth. It’s been about becoming, you know, friends and colleagues with wonderful people. It’s been about coming up with creative solutions. Yes, I do some spreadsheets on occasion, but that’s not what makes me good at my job. So, I feel like creative people totally have a leg up when it comes to that connection.

Erik Gensler: Absolutely. I mean, I’d second that for myself, too, and the people around me and we figured out the spreadsheets over the years, but that’s certainly not why we came to work to start, for sure. How do you think the arts ecosystem will look—and this is a really broad question—on the other side of the pandemic? I sort of see the pandemic as a real accelerant and so you mentioned the idea of artists as entrepreneurs, either building on that or other things that are going to look different in, say, 18 months from now.

Jennifer Rosenfeld: Well, I mean, I have no idea. It’s hard to say. There’s so much uncertainty and, you know, I … My playground is a very small sector of the industry and I don’t envy those who have to figure out what the future of live performance is going to look like and how to exist between now and then. These are some really complex issues. But I guess the dream that I have that I would love to see since the majority of my clients—and the people who I feel like I’m here to really help are the individual creators—is I would love to see them be financially liberated from the institutions that have sort of held them captive. And that might sound dramatic but that is kind of what our industry has been, which isn’t the 20th, 21st century, at least with musicians, safety and security have been sought out in the form of employment with orchestras, with universities, with other types of employers. And there’s this real sense of, “Someone else is going to give me the opportunity so I have to do all the right things to please the gatekeeper and get them to say, ‘Yes, this is sort of the prevailing strategy of how you can become a professional musician.’” And I’m not saying that it’s a bad system, there are certain things about it that are fine and/or great. I really just care about each individual’s happiness and them being good with their path. But what we’ve seen this year with so much of that stability just being ripped away, I think it’s opening up the space for many creatives to ask themselves, “How can I be the provider of my own security financially, in terms of work opportunities?” and the more creatives who can answer that question and find a solution so that in the future, they only say yes to the jobs that they really want to do —they don’t feel like they have to play that wedding gig, or, you know, do that weekend of performances unless they really want to—I think what that will open up is a few things. One is more financially empowered professional artists means that those skills can be passed down to the next generation. And I think that is really, really important because in the field, we do have a culture of education and mentorship that is very dear to us. But I talked to a lot of traditional educators who say, “There’s a part of me that feels kind of conflicted about mentoring students to go into this field when there are so few job opportunities. It’s so hard to make it.” And yeah, there are good reasons to feel sort of morally conflicted about that. But if an educator can say, “Not only will I teach you how to be great playing the violin; I’m going to teach you how to navigate your career professionally. I’m going to teach you how to run your studio so that you can support yourself well and have a family and not have to wait until you’re 40 to get a dog,” or whatever it is. So, I think there’s that, that we can pass down those lessons from the source of knowledge. And that is so fundamentally different from how it works today. If a student goes to a major conservatory to study an instrument, their teacher has pretty much nothing to say about anything beyond the instrument. So, of course, that’s a generalization, but it holds up a lot of times. The other thing that I would say about what I see as the future is, if musicians or creatives can care for their own financial security and do it in a way that does not perpetuate the cycle of burnout and overwork, so much time and energy will be freed up for creative and artistic production. And that just makes … When I look at all the artists that I work with and who struggled so much to make ends meet and are so exhausted from it, what all could be created if they had 30% more bandwidth to express themselves and to make great art. So, that’s what I hope to see in the future is just greater proliferation of amazing art by creators who say, “I want to make this thing. I don’t need to do it for the money because I’m actually okay in that category, but this is something that I need to make.”

Erik Gensler: Really, or even taking that 30% of time to rest because that’s okay, too. So, we’ve come to your final question and we call this your “CI to Eye moment.” And the question is, if you could broadcast to the executive directors, leadership teams, staff, and board of thousands of arts organizations, what advice would you provide to them right now?

Jennifer Rosenfeld: I guess I’ll start with—I don’t know if this is advice per se—but what I want you to know is there is more money available to you than you realize and it does not have to be from your current donor base. It can be from ticket holders, but that’s the main thing I want you to know is if you’re willing to consider other options for how the public can engage with you beyond just, “Buy a ticket,” or, “Make a donation,” there’s a whole world of connection and also income that is available to you and I invite you to just start exploring the possibility of what that could look like.

Erik Gensler: Jennifer, that is amazing advice. Thank you so much.