The Washington Post reports that Forum Theater will not charge an advance price on tickets, but instead will have audience members pay after the show, whatever amount they think is right:
Michael Dove, Forum’s artistic director, says that he has long been concerned about what it means to be a nonprofit theater — an enterprise supported to some degree by taxpayers — that is beyond the financial reach of many consumers. “The one thing I wanted to take a crack at is how do we make theater accessible to everyone, and get past the idea that it’s only for someone in a certain economic bracket,” he said. …
Theater companies, like other nonprofit performing arts institutions, are sensitive to perceptions that ticket prices are prohibitive. They create varieties of programs, ranging from pay-your-age offers for young adults, to software-guided pricing that rises and falls according to demand, to mitigate the high cost of theater-going. But few companies are lean enough to turn the occasional practice of pay-what-you-can performances into a routine facet of their business.
The story seems to be a bit confused as to what this ticket-pricing strategy is really about (how exactly does dynamic pricing ‘mitigate the high cost of theater-going’?), so let’s try to break it down.
Producing a play costs money, and the revenue to cover costs has to come from somewhere – donations or ticket sales or ancillary sales. As long as there is a high cost of theatre production, there has to be a high cost of theatre-going, if the company is not to go into bankruptcy – tanstaafl and all that. So what does pay-as-you-will ticketing do? It allows the possibility for those with limited means to attend a show more cheaply, or even for free. That’s great, but if the company is to continue producing shows at the same cost, there needs to be a corresponding increase in revenue from some other source. I see two possibilities there. One is that donations might increase in response to the policy. The other is that enough audience members will actually pay more than what would have been the revenue-maximizing ticket price, when the hat is passed around at the end of the show.
If a theatre company or museum is to adopt this strategy, it has to have some idea of where the revenue is coming from, one that is not just based upon wishful thinking. I’ve not seen any study (beyond the anecdotal) that the strategy works – if you know of any let me know.
There was the instance in 2007 when the band Radiohead sold their album, In Rainbows, on a pay-what-you-can basis. My understanding is that even this extremely popular band that doesn’t have to do much to get people to buy their records figured out this strategy didn’t work in generating revenue.
Here’s a study where the author’s conclude that charging a low fixed-price is better than allowing consumer to pay what they can. They find that the latter strategy actually dissuades people from purchasing the product altogether since they feel bad for not paying what they think the product is actually worth: http://www.pnas.org/content/early/2012/04/17/1120893109
In the blogosphere I can think of at least one, and maybe three or four, examples. That said, a blog as a business is obviously not remotely the same thing as producing a play or engaging in an artistic enterprise. The pay-what-you-wish movement in the theatre does pop up in New York City often — I’d have to google and check, but I’m pretty sure at least two of the 10 biggest Off-Broadway nonprofit theatres employ the strategy from time to time, but always on a limited basis. (Side note: pay-your-age? With the graying of the American demographic, that’s your increased income right there.)
The piece missing for me is where the philanthropy might or should come from to support this idea — for it’s the philanthropic sector, too, where additional revenue could come from if this idea is pitched effectively by various powers-that-be. (This is where better overall arts advocacy could also yield results.) Arts leaders, in other words, would do the field well by pushing, pulling, pressuring, cajoling, enticing, guilting, persuading or otherwise directing philanthropies to support pay-what-you-wish initiatives as part of holistic approaches to growing audiences for the whole field — so maybe not just for theatre, not just an institution, not just one town but in some kind of scalable manner. I suppose TCG’s Free Night of Theatre already tried this.
Still, if 20 theatres in DC did it — for a week, say — that would be a much bigger story and, to my earlier point, a much more compelling reason for a foundation or corporation to support the initiative and cover the difference. And that, come to think of it, might encourage people to pay-what-they-wish in higher numbers and amounts than perhaps they would have initially.
Yes, a properly implemented Dynamic Pricing programs is supposed to support pricing accessibility. It is an attempt to reverse the perverse strategy of putting tickets on sale at full price, and then discount them as the performance approaches. This discourages people from buying and encourages them to wait until tickets are marked down. In a Dynamic Pricing program, tickets start out lower priced and go up when there is a great deal of demand. There is still accessibility, but it requires commitment to buy the tickets early. And further, sell-out shows will then have an even greater box office gross, which will more greatly subsidize the ticketing strategy of the organization.
That’s the theory…
It’s unfair to imply that Forum’s strategy here is based on “wishful thinking” about audience members paying more than before overall because the show is “worth it.” As the article you cite clearly explains, Forum was not heavily reliant on ticket revenue, and they clearly expect it to go down, not up. Yes, philanthropy will have to play a role here to make up the difference, not just by attracting increased donations but from active application of this idea in grant proposals and pitches to individual philanthropists. Only the biggest gifts make headlines (Target’s free museum nights), but that doesn’t mean that free/very cheap tickets haven’t had success in generating contribution revenue.
Free night of theater and pay-what-you-will nights work really well for poor theater insiders who are very familiar with the theater scene and know to watch closely for those nights, or for those who are only interested in going to the theater once or twice a year and even then only if it’s free. What becomes possible with an entire season that is essentially free or very inexpensive is the creation of a community around the theater company, repeat visitors who can afford to attend any night a show is playing, not just during that one special week or the very first night of previews before reviews come out. THAT’S how you build an audience.
Ironically, this post popped into my feed reader just after this one: http://museumnotes.blogspot.com/2013/08/pay-as-you-will-experiment-in-free.html
about a children’s museum that successfully implemented a “pay what you wish” admissions model that increased attendance, earned revenue, and participant diversity. Children’s museums are VERY different than theaters, but still.