The Argument of Supply and Demand


Arts Notes with Howard Jang

I recall the discussion of supply and demand in an Economics course I took for my undergraduate degree. I have always been intrigued by the whole discussion of marketplace dictating who survives and who doesn’t. Recently this topic has been a hot button following recent comments by Rocco Landesman, the chairman of the National Endowment of the Arts in the US, who asks “Does the country have more outlets for the arts than it can handle?” Mr. Landesman is a Broadway theatre owner and producer, thus speaks from the perspective of commercial theatre. He made these statements at a conference in Washington, DC in January.

Mr. Landesman goes on to say, “You can either increase demand or decrease supply. Demand is not going to increase. So it is time to think about decreasing supply.” These statements have provoked an intense discussion and have created a significant amount of buzz amongst many of my colleagues south of the border.

Michael Kaiser from the Kennedy Center, who authored the book The Art of the Turnaround about what arts organizations need to do when in crisis, said “My biggest problem with thinning out the field is that what people typically mean is: Thin out the smallest, weakest, least developed.”

Is the same discussion needed here in Canada, or is it the elephant in the room?

I think not, as our community celebrates diversity and the wide range of artistic practice, presentation, and creation. The value we place in this diversity with the support of government, corporations, foundations, donors, and, of course, our audience is what sets us apart.

In a previous message I called for the arts community in general, and the theatre community specifically, to come together and map out our vision for what theatre can be for our community. Now is the time, before we get mired in this basic economic debate. If you are interested in reading some of the discussion, here are a couple of sites:

NEA chairman provokes heated debate: How much art is too much? – Washington Post

What is a mission-failing arts org? Like its opposite, perhaps you know it when you see it. – Diane Ragsdale

I hope you’ll weigh in in the comments section below. We would love to hear from you.

Howard Jang, Executive Director

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9 Responses to The Argument of Supply and Demand

  1. Reno Dikaios says:

    Demand and supply is an interesting starting point for discussion about the arts. Is there too much product, therefore, too much choice that has no demand? If one studies a demand/supply curve, what is most important is the price of the product, or in the case of the arts, what one is willing to pay over another. So, when we talk demand for arts, are we talking about affordable demand or simply, that most entertainment products are priced way beyond what the average consumer could pay.

    If a family of five wants to see a commercial, large theatre show, and let’s face it, this is the biggest market, the suburban family for this scale of theatre, what could they pay? It is not what they must pay but rather, is it affordable, considering they are parking, driving, eating and having drinks, either at the theatre or afterwards. So, could it be that it is not about deleting the small producer but rather, examining the prices. Should there be more fundraising that can pick up the difference in production so that the theatres are full? Again, if we examine a demand/supply curve, only one person will pay that high price. But the majority will pay an average price, therefore, buying supply and creating further demand.

    It is called equilibrium on the demand/supply curve. Perhaps, arts producers should be examining what is the ultimate price or price package opposed to the highest a person would pay? I know for certain, even though there are times I can more than afford to pay the highest price because of my work, I just can’t. So there has to be a certain appeal to even attend for me to, not pay one bill opposed to seeing an evening of theatre. Large, small, independent, commercial, I feel, price is the greatest factor not supply. Without supply, we have no variety and therefore, no market choice.

  2. Arts Club Theatre Company says:

    Thanks Reno for your thoughtful response and addition to this topic.

    I concur that a critical element in the concept of supply and demand is price point and, if I understand what you are saying, accessibility. I agree that price point could encourage or discourage demand but the event itself needs to have a level of attractiveness that has a market at any price.

    The issue we have as producers is that we need a mix of people who will pay “full” price while we develop programs either through subsidy or investment that encourage accessibility to all. I really do believe that the “Canadian” model of somewhere between 20%-33% government support does encourage a wider marketplace; otherwise our prices would be triple what they are now. But more importantly, government support encourages innovation and risk – two critical elements that are required for the arts to thrive. At least that WAS the Canadian model – the current situation threatens the vibrancy of our sector. This is why I call for a fully integrated plan that is owned by the community. –Howard

  3. Susan Weiss says:

    Howard,

    Thank you so very much for raising this topic. I appreciate your thoughtful point of view.

    I want to address the supply/demand issue in terms of an “aging but young at heart” audience, who have, (to me), expressed a concern about “ACCESS”, from their point of view.

    Case in point my, 84 year old Aunt, (a long time Arts Club subscriber), who added her young great niece to the subscribership at the Arts Club.

    My Aunt’s point of view:
    - “I and my circle of friends are active, mobile, and interested in the arts in Vancouver.”
    - “I however cannot go out, comfortably at night.”
    - “I will very much appreciate access to more theatre during the daytime – morning/afternoon matinees one weekdays and perhaps a pre/post encounter at the restaurant facilities at the theatre and, if possible, all in one package.”

    Not an unreasonable request considering that the supply of older/retired, (or not) senior citizens with a disposable income, (not limitless), and is growing by leaps and bounds.

    Quite clearly she, (and on more than one occasion), my Aunt has expressed to me that she, and her friends, (many UBC Emeriti), feel, well just plain left out or forgotten about.

    With all of our current emphasis on developing, cajoling young people as our new/future audiences I believe we are missing an important side of “supply/demand”.

    What is the saying: “don’t count your chickens before they’ve hatched” speaking to the supply side.

    Well there are a lot of “older chickens” out there who have hatched and are a potential lucrative supply to meet a demand – the need to fill our theatres @100%.

    Some food for thought!

    I will be happy to discuss this further!

    Cheers!

    Susan Weiss

  4. Reno Dikaios says:

    Howard, appreciated your feedback and really enjoyed Susan Weiss’s comments – bringing up more interesting points. Following a traditional theatre model whereby shows run mostly during the evenings and only one or two matinees throughout a run, is there audience that could come in simply because of the time shows are held? For instance, not only our wonderful elders but also student groups, those who might easily be able to make a trip of attending a show in the day with their class. There are many schools who would be interested in this idea, not just high schools or elementary students (subject matter permitting) but also, associated schools such as English as a Second Language, etc. I agree that it is important for government to subsidize the arts in Canada as unlike the American model, many businesses have no interest in offering sponsorships, not to the extent that larger American theatres can accomplish. You brought up accessibility in regards to demand which is valid. But unlike other products that have a shelf life, theatre is limited in that if a show is over, it is over and not able to be sold again, restocked or firesaled off. This is much like the hotel business whereby if occupancy is not sold for one month, it is not recoverable. It would be interesting if theatres gave some thought to offering tickets at discounted rates on particular evenings that would otherwise be near empty houses, such as Tuesdays, Wednesdays and especially, Thursdays. For instance, I was discussing this issue at my current office with some of the staff – people who are not involved in the arts. There was a consensus that they would attend on a weeknight if the show was substantially cheaper than on a weekend because the price alone would warrant a group attendance. My point is perhaps “full” price, while ideal and obviously relevant in comparison to production cost, could be gained on weekends, including weekend matinees. Discounted prices, however, throughout the week would garner more box office due to greater attendance. An example would be a 200-seat theatre. Weeknights might average 30 to 40 patrons at a full price. If that price is $ 40 per ticket, roughly, that brings in $ 1200 to $ 1600 for the evening. But a discounted price of $ 20 per ticket at 150 seats would bring in $ 3000 for the evening. So those weeknights could ultimately see almost triple the sales just by offering that discount. When discussing this idea with my office workers, they agreed they would be more than willing to attend on the weeknight regardless of work the next day due to the savings. Anyhow, just an idea and an interesting discussion.

  5. Pingback: SUPPLY AND DEMAND – HOW IS IT IN ARTS AND CULTURE? « Business of the Arts

  6. Tom Durrie says:

    Thanks for opening this discussion.
    Two brief remarks about this issue: If we lament that our grey-haired audiences are dying off, we should remember that dozens of people are turning 65 every day. At the same time, many people in that age group cannot afford regular-priced tickets. Just look at the audiences at the Met in HD and now at the National Theatre in HD, mostly grey heads paying around $18 per ticket. The seats are comfortable, the sightlines are superb, showings are either in the morning (Met) or early evening (NT), and the productions are the best in the world. How can local live theatre compete? I believe this is a serious question that no one is yet asking seriously.

  7. Arts Club Theatre Company says:

    Thank you Susan, Reno, and Tom for your response and, quite honestly, I was surprised and pleased that Susan brought up the issue of access and aging audiences.

    This has been of big interest to me ever since the 2006 Census was released and demographers painted the future picture of the aging population and growth in immigration.

    First, the issue of the aging population will demand that we as producers adapt our business model – this will result in tweaks to things like: the time of day that we raise the curtain and, of course, ticket price points. As well, this may impact the design of the audience chambers to accommodate more accessible seating needs. These are just brainstorm moments for me but are finding their way into the Arts Club’s future planning.

    The other subject of growth in immigration has also a profound impact on the work we do, the investment in community engagement, education programs and, once again, access.

    I often think about the Arts Club’s relevancy in 10 years in a community of over 50% of our population from Asia. Another profound moment for us and one that needs to be considered now.

    Let the dialogue begin.

    Howard

  8. Susan Weiss says:

    Dear Howard,

    Thank you for your comments about the issues I raised regarding aging audiences.

    Just to add to my original comments, my Aunt conveyed to me, (she also brought this up, in detail), is the issue of the design of “audience chambers”, as you call them.

    Her comments and recommendations were: “to add hand-rails where there are stairs in theatres”. (I personally saw her bend over to grab an arm rest to go up and down the stairs in the ARTS Club venues; before I could offer her my arm! Yes, she is “most independent minded” and a tall lady too!).

    I know from personal experience that there are tastefully designed hand rails that could be installed, economically, at the entrance/exit of rows – especially in balcony seating.

    And yes, sometimes, there are polite and kindly patrons who do offer their arm as an assistance, which, I know is appreciated, but, I am still reminded of “the independence” of my Aunt.

    I am pleased that the ARTS Club is forward thinking in its future planning for the next ten years in what its audience will look like and the design accommodations in audience chambers.

    Let’s continue the dialogue, and I look forward to doing so!

    Cheers!

    Susan

  9. Pingback: FOLLOW UP: SUPPLY AND DEMAND – HOW IS IT IN ARTS AND CULTURE? « Business of the Arts

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