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) ShowOpening seasonNo. performances Phantom of the Opera87/8810,089 Cats82/83—20007,485 Les Miserable86/87—20036,691 Chicago96/976,416 A Chorus Line75/76—19906,137 The Lion King97/986,024 Oh, Calcutta!76/77—19895,959 Beauty and the Beast93/94—20075,461 Rent95/96—20085,123

Hit musical v. hit movie Musical Phantom of the Opera Motion picture Titanic Global box office$5 billion$2.8 billion Average production & premarketing costs $9 million$200 million Length of run25 years15 years (most earnings during 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 theaters1,893 Attendance30,500,000 Performances172,000 Productions14,000 Subscribers1,760,000 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. 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 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 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