Amishi Parekh, Student, MA Innovation Management
Central Saint Martins College of Arts and Design
Arts organisations today are faced with the unique challenge of managing expectations from both sides of the business: on the supply side there are private sponsors, individual donors and governments who provide funding and set targets for return on investment, and on the demand side there are consumers who are increasingly asking for more from the price of their ticket. Social media and bespoke digital experiences have provided new avenues for people to engage with a cultural brand, however, organisations need to explore ways to generate revenue from digital content.
The music and film industries have experimented with various business models for the sale of content, but there is noticeable tension between owned vs. streamed content, where people are reluctant to pay for something they only have temporary access to. Additionally, the attitude towards digital content is that it should be free.
When creating digital content that complements a physical event, it is essential that the virtual experience is not a facsimile of the physical one but offers something unique. A Pew Research Center (USA) survey found that the three categories of digital content that most people are willing to pay for are music, software, and apps. If they were to charge for the online experience, what if a theatre offered mp3s from the soundtrack of a production, or a museum offered augmented reality apps for download? This would still provide a feeling of ownership in an online environment.
In 2010, NESTA published a report that outlined the factors for measuring innovation within arts organisations. One of the key insights was a disparity between what respondents say they will do as opposed to what they actually do. Whereas a significant percentage of respondents expressed a willingness to make a donation after viewing an exhibition website (Tate Colour Chart), when this was tested through the introduction of a 'call to action' on the site, no donations were made in the course of the campaign. It is possible that Tate’s reputation as a large, world-renowned institution meant that people perceived it as not needing additional funding, especially in such small amounts that can hardly make a difference to an institution of its size.
In stark contrast to the findings of the NESTA report, crowdfunding platforms such as Kickstarter and Sponsume have been extremely successful in generating donations or 'pledges' for creative projects. This year Kickstarter will disburse approximately $100 million to fund projects in the visual arts, film and music. Part of the reason for the success of these platforms is the direct connection that it creates with the artists or creators. Donors or backers feel involved in the process of creation since they are able to interact with the artists through blogs or live chats, and are open to backing projects created by unknown artists. Pledges above a certain amount are rewarded with a unique, non-monetary gift related to the project. In doing so, two essential drivers of online engagement are fulfilled: the opportunity for dialogue and recognition of a person's contribution.
What if lesser-known arts organisations created online spaces where members could track the progress of a theatre production or the development of an installation? This would provide a behind-the-scenes view into how creativity works, and develop an emotional connection with the audience by creating a back-story that would entice viewers to attend the performance or exhibition. Since it is common practice to document work progress, and with the increasingly low costs involved in utilising digital technologies it is now relatively easy to develop such online spaces. In terms of ownership, organisations can explore a different kind of relationship with their audience–transforming them into partners and investors. Organisations could offer tiered membership plans and per-project donations to explore this opportunity as a potential revenue stream.
Micro-donations could lessen an organisation's reliance on receiving very large donations from a small group of individuals. While the challenge lies in developing a large enough audience base for this model to be viable, arts organisations have the advantage of an ever-increasing wealth of exciting and innovative content and a reputation for impeccable standards of quality that is unmatched by other industries. This solid foundation makes it possible to test new models for promotion and generating revenue to ensure that not only do more people have access to the arts but will continue to do so in the future.