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Swimming Downstream in the Current of History & New Models Redux

Written by Adam Huttler | posted on the Fractured Atlas blog on Jun 19, 2012 6:30 am

Michael Kaiser is fed up with the ceaseless chatter about the need for “new models” in the arts.

If I hear one more pundit or read one more blog suggesting that ‘old models’ of arts organizations are dying and that ‘new models’ are needed I am going to scream. Expert after expert are calling for ‘new models’ without explaining what these new models are or what specifically they are meant to address, except for a vague unhappiness with how things are working (or not working) now.

As one who has spoken and written frequently on this subject, I feel an obligation to respond.

First, let me say that I know Michael Kaiser and have a great deal of respect for his contributions to the field. Fractured Atlas has benefited from his strategic planning and board development advice. More recently, we’ve partnered with the DeVos Institute on a couple of technology-related professional development projects. It’s a relationship that I hope will continue to grow and evolve.

Second, Kaiser is correct to complain about a lack of specificity in much of this talk. Artists and administrators feel in their bones that something is broken. Every day they read about another venerable institution going under, while the empty seats in their own houses proliferate. This is scary stuff. It feels like an existential threat. But it’s not always easy to tease apart the effects of the current economic crisis from the long-term social and economic trends that are changing our world. Sometimes we get lazy and conflate the two. It’s also a lot easier to observe the problem than it is to propose a credible solution, and a lot less helpful.

From there, however, Kaiser’s perspective and mine diverge.

What exactly do these people mean by ‘old models’ anyway? Do they mean that arts organizations are all going to die and that there will be no more arts institutions in the future? I doubt that will be the case. I predict that in fifty years there will still be large and mid-sized and small organizations producing theater and music and dance. There may be more or less of them than there are today and there may be several venerable organizations that do not survive. But that does not mean that big arts organizations are going to be extinct.

The 19th century railroad barons famously failed to thrive in the 20th century because they thought they were in the railroad business and didn’t realize they were actually in the transportation business. They were so focused on the product they had to sell that they forgot that their real purpose was to fulfill a customer need. In this case, though, the “art experience” is the customer’s need, while the arts organization has become the product we’re selling.

The non-profit arts organization is just a delivery system. We’ve had art for 10,000 years or more, but the modern American arts institution for less than 100. Perhaps in Kaiser’s vision these organizations will radically evolve over the next 50 years. Perhaps they will survive by adapting to changing demographics, the pro-am movement, new tax laws that reduce the value of charitable deductions, and relentless competition for attention from online media. If, however, he’s picturing more or less the same marble-columned institutions that arose in the second half of the 20th century, then I have a hard time believing that a majority will still be standing in 2062.

So what’s the alternative?

Do these experts mean that in the future all art will be created by groups of artists who work on specific, individual projects and then disband? I hope not. That means that every time artists conceive of a project they must start from scratch to find the resources they need. They will not benefit from the family of donors and ticket buyers that current arts organizations count on for support year after year. They will have to reinvent their support bases anew every time they wish to produce art. And they will not benefit from the huge marketing networks that established arts organizations have created. It will be far more difficult and expensive to attract audience members if this scenario obtains. There will be no subscriptions because there will be no organization that can guarantee a series of performances. And the name recognition enjoyed by major arts organizations will be a thing of the past.

You mean like Amanda Palmer? Or how about the artists in Fractured Atlas’s fiscal sponsorship program, who are on pace to raise a collective $10 million this year and serve an audience of over 7 million people?

The frictionless post-internet marketplace is unkind to intermediaries who don’t add a lot of value. Record labels and movie studios are the canaries in this coal mine. Arts institutions aren’t in quite the same position, since their branding power does provide for some ability to showcase “undiscovered” talent. (Record labels, by contrast, are mainly leeches whose market power comes from their iron grip on archaic distribution channels.) Increasingly, however, that same talent can be discovered through viral propagation via online social networks. Yes, we’re still figuring out how that works in practice and as a field we’re a long way from cracking the social media nut, but does anyone doubt that it will happen eventually? At that point, what value does a subscriber database of 10,000 have against Facebook’s audience of 900 million?

I agree with Kaiser that big arts organizations are not going to go extinct. I just think we will have far fewer of them than we have today, and even fewer non-profit corporations operating with annual budgets under $5 million or so. This doesn’t have to be scary! Not every brilliant, creative idea warrants creating a new legal entity that is designed to exist in perpetuity and survive its founders.

At the same time, I’m optimistic that the explosion of artistic production in recent years will continue, just outside of an institutional context. Witness the 100+ new applications for fiscal sponsorship that Fractured Atlas receives every month, or the 72 hours of video that are uploaded to YouTube every minute. When I meet grad students who aspire to careers in the business side of the arts, they are increasingly tax-status agnostic, and open-minded about using whatever tool fits the job at hand.

Quoth Kaiser:

Do they mean that large-scale arts projects will be replaced by smaller ones? That would be a shame. As much as I truly enjoy a chamber-sized program, I also enjoy large scale works. Are we never to experience Mahler’s Symphony of a Thousand again? Or Der Rosenkavalier? Or Swan Lake? Must we toss out an entire canon of great works in an effort to make way for the new? Of course we must invest in new operas and dances and works of theater. But we can also cherish the great works that have formed the foundation of our culture.

Here again: I don’t see Mahler going away, I just see the distribution changing. Producing art at that scale requires enormous fixed costs. As long as you’re performing in a 1,000-seat house, ticket prices must be exorbitant, and even then you still need substantial charitable subsidy to balance the books. But what if the distribution model completely changed? The Metropolitan Opera is broadcasting in HD video to movie theaters across the country. Fifty years from now, I suspect we’ll look back on that as a crude early experiment that laid the groundwork for currently unimaginable aesthetic experiences, like virtual reality immersion and environmental projection. If Mahler’s symphony can be performed “live” for an audience of millions, then suddenly the economics look pretty healthy. Of course, it only takes one arts institution to do that, not 1,000.

Look, I’m no futurist and I’m certainly not clairvoyant. I don’t know exactly how our field is going to evolve over the next 50 or 100 years. But I’m certain it’s going to change, and in some pretty radical ways. It strikes me that each of us has three options in the face of that change:

  1. You can wring your hands in powerless panic, a la the experts and pundits that Kaiser references.
  2. You can deny that change is at hand and keep on manufacturing buggy whips while brand new Model Ts drive past outside.
  3. Or you can remind yourself that you’re in the art business, not the organization business, and do your best to swim downstream in the current of history.

I know which one I’d choose.

 

New Models Redux

Adam Huttler | posted on the Fractured Atlas blog on Jun 29, 2012 10:56 am

In our last episode, I responded to Michael Kaiser’s frustration with “new models” chatter.

Well, this week he’s back with New Models, Part 2, and you knew I wasn’t going to just sit here (even if I am supposedly on vacation!) Kaiser once again criticizes the critics for a lack of specificity:

The constant drumbeat for new models for arts organizations is deafening. But none of the experts calling for the creation of new models is being very specific about what these new models should be or even what specific problems they are meant to address.

Who knows if I meet the definition of “expert”, but I’m happy to offer a few thoughts about what exactly is broken with the traditional arts organization construct: administrative bloat, unhealthy risk-aversion, and chronic undercapitalization, to name the first three that spring to mind.

Administrative Bloat – In the 1960s and 1970s, Carnegie Hall had fewer than 15 employees. Fundraising was done by volunteers. Yet despite that skeletal infrastructure, the stage was graced by the likes of Vladimir Horowitz, The Beatles, Frank Sinatra, Itzhak Perlman, and Luciano Pavarotti.

Today, Carnegie Hall still boasts world-class performances by top-tier artists. But to accomplish that, it employs a professional staff of over 200 and spends $5 million per year on fundraising, out of a total institutional budget of $85 million.

So what the heck happened in the last 30-40 years? The non-profit cultural sector grew up. We professionalized our organizations. Our org charts were modeled after the rock stars of corporate America, industrial titans like General Motors and US Steel. We started pursuing masters’ degrees in arts administration. In short, we became (superficially) “business-like”.

Like living organisms, corporations (including non-profits) pursue self-perpetuation above all else. Even more darkly, they exhibit a persistent bias towards growth, favoring it over more rational metrics like (for-profit) return on equity or (non-profit) mission impact. To paraphrase Edward Abbey, growth for the sake of growth is the ideology of cancer.

Organizational infrastructure is a beast that demands to be fed. As the growth of non-profit arts organizations – both in numbers and size – continues to outpace the growth of both audiences and funding, we must ask ourselves where the money will come from to feed this monster. Is art itself to become solely a luxury item? Or do we keep cutting expenses, inevitably including artist fees and production costs? There is no third option, short of a radical change in distribution models along the lines of what I suggested in my last post.

So why not cut administrative overhead? Well, the really perverse part is that this administrative infrastructure probably is necessary in the context of a non-profit organization. It can’t be slashed without negative consequences, like incomplete compliance with charity regulations or uncompetitive fundraising. When the beast can’t be cured, it must be killed.

Unhealthy Risk Aversion and Fear of Failure – Let’s imagine that someone offers you a bet. He’s going to flip a coin; if it’s heads you lose $100; if it’s tails you win nothing. You’d be pretty stupid to take that bet, right? Well this isn’t so different from the position in which managers of non-profit organizations find themselves.

I realize that few if any of us got into this field because we were motivated by personal financial gain, but on some level, incentives matter. They influence our behavior, even if only on an unconscious level. Unlike their for-profit counterparts, non-profit employees and board members can’t own stock, so when an organization experiences great success there’s almost no participation in the “upside”. Sure, you might get a raise or a promotion, but there is literally zero chance you’ll find yourself in Bill Gates’s or Mark Zuckerberg’s shoes.

Make no mistake, though – you can still be fired!

So what’s the rational response when you’re exposed on the downside but have no access to the upside? Extreme conservatism. There’s a reason we keep producing The Nutcracker year after year. Meanwhile, institutional funders almost universally say they are comfortable with failure (and no doubt a few really are), but in a system where the only available reward is professional prestige, who can blame them for being cautious in practice?

Meanwhile, Silicon Valley has FailCon, “a one-day conference for technology entrepreneurs, investors, developers and designers to study their own and others’ failures and prepare for success.” That’s what it looks like to appreciate failure as an authentic precondition for success.

Ours is an industry that desperately needs risk-takers and innovators, both in the art we’re producing and the businesses we’re running. The shocking, wonderful news is that the very best and brightest desperately want to work with us! Last year’s senior class at Harvard University named a career in the arts as the single most popular dream destination. Yet despite that desire, most of them will go on to careers in finance, law, technology, or other industries. We can’t continue to dismiss anyone who wants to make a buck or two.

Chronic Undercapitalization – For decades, our sector has frowned upon surplus budgets and retained earnings, making it impossible to accrue reserves. As a result, we live perpetually on the razor’s edge of survival, permanently dependent on philanthropic support.

Recently, efforts like the National Capitalization Project have sought to address this issue, and they are moving the needle in some important areas. But let’s be honest: a $100K cash reserve doesn’t really change anything. We need war chests. We need the financial freedom to take on hugely ambitious projects with game-changing potential but high probability of failure. When undertaking a project like that, we shouldn’t have to compromise quality or scope because it’s unseemly for a non-profit to aim too high. (Do you have any idea what it’s like to compete with a start-up that has received $50 million in venture capital funding?)

The artists who will experience the greatest success – both creatively and financially – in the 21st century will be those who can move fluidly between the non-commercial and commercial realms. When you want to engage in pure artistic exploration without any ambition of financial success, then by all means do it leanly if you can. But when it’s time to go big, let’s find ourselves the resources to go really big.

No doubt you can expand on the catalog of dysfunction, so let’s leave that as an exercise for the reader.

Kaiser goes on to observe:

Many are suggesting…that board structures be eliminated in favor of other models of governance.

This honestly isn’t a complaint I’ve heard frequently, though I suppose it comes up from time-to-time. For my part, I’m not suggesting that arts organizations should operate without boards. I’m suggesting that:

  1. Artists are increasingly better off operating outside a strict, traditional institutional context. Holly Sidford, one of my own brilliant and supportive board members, observed that the future is in lateral, not hierarchical strategies, and depends on a more democratic distribution of access and involvement. From a structural standpoint, this could play out in many different ways – network-models, cluster management, representational governance, etc.
  2. A board that serves primarily a fundraising function is a double-edged sword. Sure, in the hands of a maestro like Kaiser it can be deftly managed and become a powerful asset. But he’s giving his peers too much credit if he thinks most of us share this skill set at the requisite level of expertise (and in fact he does acknowledge that many boards are poorly managed). I’ve seen more than one fundraising-centric board descend into a morass of dilettantish meddling. Kaiser suggests that the problem is in the insufficient education of both managers and board members. Surely better field-wide understanding of what a healthy board-staff dynamic looks like would be a good thing, but I don’t share his optimism that it would actually solve the underlying problem.

The rest of Kaiser’s piece takes a turn toward the philosophical:

Yes, the world is changing — it has always been changing. Tastes change, needs change. We must adapt to new technologies, new art forms, new ways of communicating. We face a plethora of new forms of entertainment that compete mightily, and at far lower costs, than in the past. And this will have implications…. I fully expect the world of the arts to look different in 20 years. I want it to look different, to grow, to evolve.

But that does not mean that we have to discard an entire way of working, losing the tremendous advantages enjoyed by successful arts organizations. I believe firmly that well-run arts organizations that appreciate how the world is changing, and react accordingly, that engage board members, that excite audiences, that create important work, that grow and change with the times, will survive and thrive for decades to come.

I’m glad he agrees that we are living through a transition to a new era. For the record, I do not intend to suggest that we should “discard an entire way of working.” However, we have a responsibility to examine the status quo unsentimentally and with brutal honesty. Where there are things we do that work really well, by all means let’s keep and refine them. We can’t be afraid to scrap the rest.

As for Kaiser’s primary complaint, that none of the advocates for “new models” has much to offer in the way of specifics about what should come next: I’m neither arrogant nor naive enough to claim that I can paint a perfect picture. More than anything else, I’m arguing for aggressive and ambitious experimentation. But to avoid being accused of copping out, I’ll over a few semi-specific ideas of the future as I see it:

Leaner, More Flexible Legal, Financial, and Administrative Structures – More and more artists are realizing that they don’t need corporations to make art, and increasingly they can get away without them for marketing it, too. Business entities are not sacred — they are tools, and we should use the right ones for the job:

  • Fiscal sponsorship allows us to raise charitable dollars without charitable bloat.
  • L3Cs are useful for undertaking capital-intensive work in the fuzzy area between commercial and non-commercial activity.
  • Shared management technology spreads infrastructure costs across thousands of artists and organizations, while letting each retain its artistic autonomy.
  • Crowdfunding makes it possible for individual artists and collaborative projects to ramp up fundraising as needed without having to maintain a professional development staff.

Traditional organizations will continue to exist, but there will be fewer of them, they will be very large, and they will serve primarily presentational rather than generative roles. The good ones will adapt their business models to facilitate collaboration across sprawling networks of outside content providers. They will still have boards, but the balance of emphasis on those boards will shift from fundraising to advisory.

Radically Different Distribution Channels – Internet-enabled distribution channels are still in their infancy and will open up untold opportunities as they mature. So far they’ve mainly been about (a) using the internet to share already digital media with less friction than used to be involved in making your girlfriend a mix tape, and (b) democratizing access to the mass market. These are critical steps, but Spotify and YouTube aren’t the end game. I’m waiting for the day when artists and technologists join forces to create fundamentally new aesthetic experiences. This will influence our working models because it will radically alter the economics of production and supply.

More Artists, but Fewer Full-Time Professional Artists – This is the one I’m least confident about, which is perhaps a good thing because it’s bittersweet. As the pro-am revolution continues to unfold, art-making will become a nearly universal experience of modern life. Access and influence will be democratized, and the culture wars will fade into the rear-view mirror. The bad news is that, as art-making becomes less marginalized, there will be fewer opportunities to make art a career, at least without substantial financial subsidy. Of course, this is how it worked for most of human history, and how it still works throughout much of the modern world. This isn’t a “new model” so much as a really, really old one.

Perhaps from Kaiser’s perspective, at the helm of a truly great flagship institution, surviving this wonderful and terrifying future does in fact depend on subtle tacks and continued skillful management. That is not a viable long-term strategy for most of us, however. The next 10-20 years will be revolutionary, not evolutionary. There will be lots of “creative destruction” along the way. If we can keep our eyes and minds open and our feet nimble, then we just might make it. Better yet, we may even have a part to play in shaping the world to come.

About Adam Huttler

Adam Huttler is Fractured Atlas’s founder and Executive Director. He has a B.A. from Sarah Lawrence College and an M.B.A. from New York University. Since forming Fractured Atlas in 1998, he has grown the organization from a one-man-band housed in an East Harlem studio apartment to a broad-based national service organization with an annual budget of $12 million. Adam serves on a number of boards and steering committees, including those of the Performing Arts Alliance, the National Network of Fiscal Sponsors, NYC’s One Percent for Culture campaign, Bay Area Video Coalition, and the Institute for Culture in the Service of Community Sustainability.

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