performing arts and culture. the character of the performing arts “industry” most organizations...
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Performing arts and culture
The character of the performing arts “industry”
• Most organizations are nonprofit, subsidized by government and private foundations grants, and individual contributions
• The audiences are dominated by highly educated individuals in high-income brackets
Audiences by education (2002)
Audiences by income (2002)
The audiences
• The effect of education on attendance at performing arts is substantially stronger than the effect of income
• Members of the professional classes (doctors, lawyers, engineers, teachers, artists) are the big attenders, with CEOs and managers (well paid but less educated) less numerous.
• The pattern holds also for jazz and folk music and even cinema.
Commercial theater
• Mostly Broadway District (On, Off Broadway)
• Most shows are musical reproductions or restorations.
• In New York about 45-50% attendance from tourists
• About 40% of box office receipts from “on-road” performances
Commercial Theater: Top 10 Broadway long runs (2012)
Show Opening season No. performances
Phantom of the Opera 87/88 10,089
Cats 82/83—2000 7,485
Les Miserable 86/87—2003 6,691
Chicago 96/97 6,416
A Chorus Line 75/76—1990 6,137
The Lion King 97/98 6,024
Oh, Calcutta! 76/77—1989 5,959
Beauty and the Beast 93/94—2007 5,461
Rent 95/96—2008 5,123
Hit musical v. hit movie
MusicalPhantom of the Opera
Motion pictureTitanic
Global box office $5 billion $2.8 billion
Average production & premarketing costs
$9 million $200 million
Length of run 25 years 15 years(most earningsduring the first year)
Nonprofit theaters
• Nonprofit theaters preserve, develop, and extend the availability of performing arts (new and “rediscovered” plays, new art directions, new talent).
• Often the source of new production On-Broadway and in other commercial theaters and/or are adapted by Hollywood.
Nonprofit theaters
• Supported by a combination of:
• Subscription fees
• Foundation grants
• Individual contributions
• Ticket and merchandise sale
U.S. nonprofit theater survey
Number of theaters 1,893
Attendance 30,500,000
Performances 172,000
Productions 14,000
Subscribers 1,760,000
Earnings $923,000,000
Contributions $868,000,000
Total Income $1,791,000,000
Expenses $1,667,000,000
Net Assets $124,000,000
Nonprofit theaters contribution to the U.S. economy
• Made a direct contribution of nearly $1.67 billion in the form of payments for goods, services and salaries.
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• The real impact on the economy is far greater: when audience members go to the theatre, they frequently go out to eat, pay for parking, hire babysitters, etc.
Center Theater Group (Los Angeles)
• A non-profit arts organization.
• One of the largest theatre companies in the nation, programming subscription seasons year-round at the Mark Taper Forum, the Ahmanson Theatre and the Kirk Douglas Theatre.
• It has a combined subscription audience of about 60,000 and a total audience exceeding 750,000 a year.
Economic issues in culture-related goods and services
• Demand is highly uncertain (nobody knows)
• Creative workers care greatly about what they produce (art for art’s sake)
• Many creative ventures require diverse skills
• Although the demand for attendance at the performing arts are price-inelastic, the overall income rise or fall have impact on demand.
Economic issues in culture-related goods and services
• Live performances are economically inefficient because performances are “consumed” at the point of production.
• Productivity cannot be raised significantly
Purely economic issue
• Taxpayers financial support for money-losing programs enjoyed by an elite few is a waste of resources better spent elsewhere
• Sol Hurok (Theater producer): “If I would be in this business for business, I wouldn’t be in this business.”
Arguments for public support
• Opens opportunities for development of talented individuals from non-affluent backgrounds
• Has educational benefit, exposing young people to cultural activities that they might not otherwise encounter
• Encourages artistic innovation, which is a source of economic growth
• Arts are public goods that, when provided to individuals, are of collective benefit to other members of the community.
Positive “externalities”
• An externality (spillover): the impact on a party outside of and not directly involved in the transaction.
• An option value to having a supply of culture even if an individual does not currently use the supply.
• A bequest value for future generations unable to express preferences on currently existing markets
• An existence value such as for historic landmark building, which, once destroyed, cannot be rebuilt
• A prestige value even for those who are not interested in art
National Endowment for the Arts
• The NEA funds an array of works and activities in music, theater, and the visual and performance arts.
• NEA grants range from $5,000 to $100,000, but all grant recipients must obtain matching private funding.
• Most grants fall into one of five main categories: creativity, organizational capacity, access, arts learning, and heritage/preservation.
National Endowment for the Arts
• At its inception in 1965, the NEA had a budget of $2.5 million
• The endowment's highest level of federal funding was its $175 million budget in 1991. But controversy over grant recipients led to major budget reductions in late 1999, when annual funding dipped below $100 million.
• Obama administration asks Congress for $200 million for 2010.
The NEA's impact on American culture
• Between 1990 and 2002, the NEA provided support to thirty-five recipients of National Book Awards, National Book Critics Circle Awards, and Pulitzer Prizes in fiction and poetry.
• It funded the regional theatrical production of A Chorus Line that went on to become a Broadway smash in 1975
• Supported Maya Lin's design of the Vietnam Veteran's Memorial, dedicated in Washington, D.C., in 1982.
• The NEA has also made a special effort to recognize American jazz masters through a series of fellowships.
Arguments against public support for the arts (from The Heritage Foundation)
• The arts will have more than enough support without the NEA
• The NEA is welfare for cultural elitists
• NEA funding threatens the independence of art and threatens artistic inspiration
• The NEA promotes politically correct and indecent art
• Funding the NEA disturbs the U.S. tradition of limited government