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A Selection of Texts...

A selection of texts (What are we incubating and to what end?, Waiting for a new business model for the arts, How to avoid a strip-​mall future for the arts sector: Lessons from the boutique label, Pi, and The lesson in my new tree for arts policy makers) by Diane Ragsdale, collected in Blowup Reader 5, Show Me the Money.

What are we incubating and to what end?

      October 2, 2011
      By Diane Ragsdale
      A couple weeks back Thomas Cott published an issue of ‘You’ve Cott Mail’ centered loosely on the theme of innovation and business incubators in the arts world, in which he linked to a post by one of my favorite bloggers/researchers/thinkers, Devon Smith. Devon contrasted the concept of ‘incubator’ in the tech world and the arts world. After reading her post I was curious to read up on technology and business incubators and ask myself what, exactly, arts incubators are incubating and to what end?
      Devon makes the point that in the tech world it is ‘demo or die’ and that, in contrast, many arts incubators tend to be about process without the expectation of a deliverable on a certain time frame. Devon characterizes it as ‘we’re here to support you in however much you get accomplished for however long you are here’. Beyond the expectation to ‘demo or die’, however, there’s something else I learned in my reading: business incubators, philosophically and practically speaking, perceive themselves to be incubating the entire enterprise. At the end of 33 months (the average amount of time spent in a business incubator) it is expected that the startup can leave the nest with a viable business model and product and fly on its own.
      How do these business incubators develop the whole enterprise? Devon talks about this in her post, as well, but I found a couple things particularly interesting. First, while they don’t necessarily provide venture capital, business incubators often serve as brokers and introduce entrepreneurs to venture capitalists, other successful entrepreneurs, or people that have knowledge and skills needed by the startup. Second, a successful tech incubator will provide access to high-​end technology, as well as high-​level marketing support, comprehensive adminstrative support, and hands-​on business planning.
      After reading about business incubators it struck me that it seems important to distinguish the purpose of an ‘incubator’ from (1) a one-​to-​three week ‘workshop’ or ‘residency’, which is meant to give an artist time to further develop a particular project and (2) ‘access to affordable office space, basic equipment, and business classes’ — which seem to be common types of support offered to artists and arts companies. These are not without value; but I would suggest that (particularly when provided by separate hosts) they do not an incubator make, if ‘incubation’ suggests a range of support and services aimed at making a venture viable and launching it into the world with a greater chance at success.
      Devon suggests that art incubators seem to be reluctant to hold the groups they are incuabting accountable for success beyond a ‘good process’ and hypothesizes that perhaps arts incubators are ‘too nice, too forgiving’. I wonder whether the laissez faire nature of many arts incubators is a symptom of two things. (1) The rejection for the past 100 plus years of the notion that great art works can be born of a ‘shared vision’ between patron/investor and artist. (2) The widespread belief in the ‘fine arts world’ that ‘being truly artistic, excellent and innovative’ and ‘keeping an eye to the market with the goal of eventually selling the work to a mainstream audience’ are mutually exclusive endeavors.
      Yes, it’s important to distinguish between the processes that best support the making or preservation of culture and those that best support its exploitation. But distinguishing between these two processes does not suggest that the two cannot coexist or that we should necessarily reject the latter as a goal if we care about the former.
      What is the goal of a successful arts incubator? What should it be? Is it wrong to think that it should be not only about improving the quality of the work but also about discovering avenues by which to exploit it (i.e. derive full value from it) in the marketplace?

 

Waiting for a new business model for the arts.

      January 24, 2011
      By Diane Ragsdale
      What do nonprofit arts people mean when they say ‘the business model is broken’? I’ve heard this phrased decried ad nauseum in the US for at least the past three years. It was a working hypothesis before the economic downturn; now it seems to be a statement of fact. So what model are we talking about? The American ‘nonprofit’ model for the arts? A particular ‘business’ model used by individual organizations? A Stanford business school professor once gave me the following definition: a model is a representation of your beliefs about causality. Perhaps more interesting questions would be, what beliefs about causality underpin our ‘model’, and are they still valid?
      Last year, in his post, One business model to rule them all, Andrew Taylor referenced a comment Clara Miller of Nonprofit Finance Fund made at an Americans for the Arts conference in 2010. She said, ‘There is one business model: reliable revenue that meets or exceeds expenses. Any questions?’ I was at that session. A lot of people chuckled when she made the comment.
      And then I remember thinking: So, which revenue sources are reliable at a nonprofit arts organization? Government arts programs across the country seem to go into duck and cover mode on a regular basis; corporations are often skittish—lavish one year and austere the next; foundations are overly cautious and generally dole out funds one year at a time, being careful to avoid enabling ‘dependency’; fewer and fewer people want to commit to buying a season’s worth of tickets up front; single ticket buyers are notoriously unpredictable; and individual donors are as varied as … well, individuals: some are dependable and loyal but many are fickle and elusive.
      It seems like most arts organizations start each year with very little of their income committed and spend much of the year on pins and needles waiting to see if they will hit their revenue targets. Are we operating under a delusion that there is such thing as ‘reliable revenue that meets or exceeds expenses’ in the arts? And if so, is there a corresponding faulty belief that underpins our business model? For instance, that the arts are valued by our society?
      Is this what we mean by ‘the model is broken’? Or is it something else? I would love to hear reflections on the ‘broken model’. What’s broken? How do we fix it?

 

How to avoid a strip-​mall future for the arts sector: Lessons from the boutique label, Pi

      August 22, 2011
      By Diane Ragsdale
      This past week I came across a New York Times article featured on ArtsJournal examining the remarkable success of the indie Jazz label, Pi. The article demonstrates that Pi is bucking trends in the music industry. It is managing to not just keep its head above water at a time when many music labels are struggling, but it is having tremendous impact despite being a relatively small Jazz label focused on the leading edge of its artform.
      Here are a few keys to Pi’s success (which I gleaned from the article):
      (1) Unlike many labels that flood the market with product (often as a hedge against the uncertainty of not knowing which will succeed or not), Pi releases a handful of albums per year and is highly selective in choosing which artists to get behind. Virtually everything it releases meets with critical acclaim. Because it has earned a reputation for consistently putting out great albums and has a very clear niche, it has a devoted (and growing) fan base.
      (2) Given its limited release schedule, and the limited revenue potential of each of its releases (these are not mainstream artists), Pi keeps its overhead low. Its owners are pragmatic and disciplined. By staying small they have been able to maintain artistic integrity.
      (3) Pi has a long courtship with an artist before it makes a commitment. Once in, however, Pi invests deeply in the development of its artists and ensures that each receives sufficient resources, attention, and support from the label. This is a critical factor in the label’s remarkable track record and reputation.
      Pi’s strategies are serving both its artists and its customers.
      Given an overabundance of product and seats to fill on any given night in many communities (relative to current ‘demand’) and (sorry to say) the not-​quite-​ready-​for-​primetime-​quality of much the so-​called ‘professional’ work that is produced and presented in the US, it’s worth considering the lessons of Pi (which are not new, of course).
      It seems that more than a few overleveraged and underperforming professional nonprofit arts organizations need to both better differentiate themselves and hold themselves to higher artistic standards; to right-​size their institutions and reduce fixed costs given the amount of income they can reasonably expect for the forseeable future; and to provide more time, attention, and resources to artists and to the development, production, and thoughtful promotion of artistic works.
      I’d much rather live in a community with a sustainable number of boutique arts organizations than one with a deluxe mall featuring four high-​end department-​stores (the ‘flagship’ orchestra, theater, opera, and ballet companies) that suck up the majority of the resources and a bunch of strip malls made up of undercapitalized retail chains and mom-​and-​pop shops that either saw their best days in 1985 and haven’t been able to make improvements since, or were formed in recent years and (while perhaps promising) are struggling for attention, customers and capital.
      I seriously fear that the strip mall nonprofit arts sector is our future. There are arts boutiques out there, but in many cities they are few and far between and seem endangered.
      How and why so many arts organizations in the US have grown to unsustainable levels in recent decades is a topic that requires more reflection than I can give in a blog post. However, I will say this: it often seems that capacity building in the arts sector is (1) aimed primarily at securing theadministrative futures of arts organizations and (2) resulting in an erosion of quality and distinction in artistic processes and experiences, today. I by no means wish to suggest that the answer to an overbuilt sector is to starve it into a more sustainable state; but it is reasonable to think that we need to seriously rethink how existing resources are distributed (within and among institutions).
      We tend to think of a ‘sustainable state’ for the arts and culture sector as being one in which existing arts organizations have achieved equilibrium and can crank along in perpetuity. This is wrongheaded: even if we could achieve a state in which all existing organizations could secure adequate resources to keep running year-​after-​year, the lack of creative destruction in the sector would eventually lead to its stultification (oh wait, we may be there now). This is one of the consequences of letting some institutions get ‘too big to fail’ (and too big is relative to the size of city you are in and the other arts organizations in your market): the majority of arts sector resources get sucked into the incumbents and rather than creative destruction (reinvention of those firms or their replacement by younger, more innovative ones) we end up with plain old destruction (losing the boutiques and watching the big organizations calcify).
      Pi may or may not last for another 50 years (much less beyond the lives of its owners/founders).But while it exists it is having positive cultural and social impact. That’s more than we can say about many professional nonprofit arts organizations in the US.

 

The lesson in my new tree for arts policy makers

      August 28, 2011
      By Diane Ragsdale
      About my tree:
      Last month my husband and I hired a small family-​owned landscaping business to help us renovate the small gardens in the front and back of our house. They planted three new trees, two of which are young (thin) but already quite tall. They planted the trees with support poles on either side to ensure they grow straight. As I have never had a garden I asked how many weeks the poles would need to stay. The answer: three years.
      About the production houses in the Netherlands:
      For years the Netherlands has had a unique system of support for promising performance artists and theater makers who have finished their training: dedicated production houses. As I understand it, these houses are often affiliated with larger theaters, drawing on resources they can provide, but are funded by the government and operate independently. They provide multiyear production support for artists after university (e.g. cash resources so artists can invest time in the research and development of their works and pay other artists, tech support, dramaturgy, promotion, etc.). During these post-​grad residencies the emphasis is on strengthening the artist’s work.
      I was with a gathering of artistic directors and performing arts curators last week at which we met several artists, including two that had come through this system and who spoke of the importance of the production houses in helping them become better artists and develop successful careers. We asked how long the support lasted. Their initial residencies were three years.
      About the funding cuts in the Netherlands:
      Among the many orchestras, dance companies, and other arts organizations that are going to be defunded in 2013, the Ministry of Culture has determined to shut down all 23 production houses in the Netherlands. This strikes me as a particularly unenlightened decision. For one, these production houses are relatively inexpensive to operate (they are a big bang for a small investment); second, the production houses play a critical role in the arts ecosystem here; third, they seem to help the Netherlands attract and retain truly talented theater/performance artists.
      I am unsettled by what appears to be a strategy in the Netherlands of maintaining investments to the most high profile fine arts organizations while leaving many smaller organizations, artist companies, and intermediary organizations to fend for themselves. The rhetoric that is being perpetuated in the case of the production houses is that they will be taken under the wing of bigger institutions or become more entrepreneurial and find other sources of support. Given the short timeframe (the cuts go into effect in 2013) both scenarios seem highly unrealistic.
      In any event, it seems that not many in the arts sector are buying the rhetoric. Quite a number of the artistic directors and artists our group met with spoke of planning to leave the Netherlands by 2013. Of course, as someone said to me a few days ago, this could be considered a positive outcome from the standpoint of the government.
      Pfffffff. Cue the flashback reel of the US in the 80s and 90s.
      The Netherlands is not alone in wanting to encourage private sector support for the arts. But there are smart ways and not-​so-​smart ways of doing this.
      About ArtSupport Australia:
      Several years ago now (after changing the tax laws to make it easier and more beneficial for individuals to set up small trusts and foundations), the Australia Arts Council started an arm’s length organization, run by visionary Louise Walsh, whose role is to broker relationships between small and midsized arts organizations and small private family foundations and trusts. ArtSupport Australia (ASA) meets with donors, talks to them about the importance of supporting the arts, and identifies organizations that might fit with their values; it mentors arts organizations to help them develop realistic funding strategies and prepare effective proposals; and it makes matches between the two. It’s a brilliant system and has had tremendous positive impact over the years.
      While Kickstarter and other crowdfunding models seem to be working for some types of individual artists and projects and larger institutions have the capacity to buy fundraising expertise and (as a result of being high profile) tend to be attractive major private donors and foundations, a mechanism for connecting smaller family foundations with smaller and midsized arts organizations and ensembles/companies seems like a missing cog in many arts funding systems (including in the US). Even community foundations and donor advised funds aren’t really set up to fulfill this particular role.
      When ArtSupport Australia was founded it received three years of support from the government. Even before the end of the initial funding period it was clear that it was working and the government has funded it consistently ever since. There’s an important tangential point here: a big part of what makes ASA work (which, not unlike the production houses, is a lean organization that provides big bang for the buck) is that the Australia Arts Council is committed to funding it. It would change ASA (and compromise its mission) if it suddenly had to raise all of its operating expenses by skimming off a percentage of every gift or competing against the organizations it exists to support by competing directly for support from private donors.
      Over the past year I’ve been asked rather frequently for my thoughts on how to encourage private support for the arts in the Netherlands, in light of the pending cuts. I’ve directed people to an an essay I wrote about some of the issues we face with the US system and I’ve said the same thing to everyone: the ArtSupport Australia model is brilliant and I think it would work very well in the Netherlands. I could easily imagine such a system, for instance, helping to broker relationships between a number of enlightened families, individuals and small firms and the production houses here.
      ***
      As I’ve written before, cutting off the sprinklers to the grass and small shrubs while continuing to water the old, tall trees is not the path to a vibrant arts and culture sector. Too often, arts policy makers develop policies that demonstrate a fundamental lack of understanding about such things as: the interdependencies between large organizations and small ones, and the commercial arts sector and the subsidized sector; what makes a city attractive to artists; how good artists become great artists; what motivates donors to give; how difficult it is for some very worthy organizations to be competitive in the funding process; and the time and personal connections that it takes for donors and arts organizations to form relationships that are beneficial and that will be sustained through good economic times and bad ones.
      My young tree needs supports if it is going to become a healthy, large tree. Young artists need developmental support if they are going to become great artists. Countries without a culture of asking and giving need a support system if effective long term relationships are going to be built between private donors and the arts sector, particularly if there is a hope that more than just the large, historically leading organizations will be supported by private donors. Policy makers need to be smarter about how the arts ecosystem works so that they know where to provide support structures and for how long.
      Australia got it right. I’ll be interested to see what the Netherlands does in the coming months and years.

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