HEC - Montréal - Chair of Arts Management

Company Profile: Hitting a High Note: The Chicago Symphony Orchestra Reverses a Decade of
Decline with New Programs, New Services and New Prices
Author(s): Philippe Ravanas
Source: International Journal of Arts Management, Vol. 10, No. 2 (WINTER 2008), pp. 68-78
Published by: HEC - Montréal - Chair of Arts Management
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 Profile
■^■oMPANY

Hittinga High Note:

The ChicagoSymphony Orchestra
a Decade ofDecline
Reverses
withNew Programs, New Services
and New Prices
Philippe Ravanas

ChicagoSymphony Orchestra is deficitof $2.5 millionon revenuesof only

backy and on themove. The "Worlds $9 million(Cook,2005). Bythetimesheleft,
Best,Chicagos Own"1orchestra recently theorchestras budget,numberofsubscribers
endeda longcycle ofdecreasingsalesand mount- and number of performances had all more
ingdeficitsbyradically the
changing way it does than doubled.
business.Thekey:a fine-tuned combination of But in Chicagoshe founda stageand a
innovative programming, customer service and challenge befittinghermanagerial The
talents.
dynamic pricing. CSO had justreported a $6.4-million deficit
on a $57-million budget."I founda difficult
Chicago,31 August2007.In hersunnyoffice situation," remembers Card."ButI alsofound
justoffof MichiganAvenue,DeborahCard, a staff and an orchestrahungry foran oppor-
President of theChicagoSymphony Orches- tunityto do something different.Theywere
tra,wearsa radiant smile. "This has been a to new
ready explore things." This was exactly
verysuccessful yearin thelifeoftheOrches- whatsheplannedto do.
tra,"shesays.Revenue,attendance, subscrip-
tions,renewals and customer satisfaction- all
-
themainindicatorsareup. Forthefirst time
"Bestin theWorld"
in sixyears,theCSO hasjustreported a bal-
ancedbudget. in the springof 1889 on Fifth
This is an astounding reversalof fortune: Avenuein New York,the Chicago
Justa fewyears ago,themusiccritic forLondon's businessman CharlesNormanFay encoun-
Philippe Ravanas, a native
EveningStandard, NormanLebrecht, wrote, teredTheodoreThomas,a Germanimmigrant of France,is a professorin
"Anabsenteeconductor, an unrealisticgroup andAmericas pre-eminent conductor, he found the Arts,Entertainmentand
ofmusicians andweakmanagement havecon- hisfriend deeplydepressed (Hart, 1974, p. 32). Media ManagementDepartment

spiredtotaketheCSO offtheworldmap.It is Thomas had justlosthis belovedwife. He had of Columbia College Chicago.
He is past Vice-Presidentof
livingon pastvanities, and nowitis livingon failedto finda permanent homeforhistour-
CorporateCommunications
credit"(Jones, 2003). ing orchestra and had disbanded it.Attheage for Euro Disney in Paris and
Card,5 ,1 has brought a breathof fresh air of 54, he felthe had reached the end of his has also workedforChristie's
to thevenerable institution.An accomplished career.Fayasked, "Would you come to Chicago Auction House in London.

violinist
herself, sheisno stranger toorchestral ifwe couldgiveyoua permanent orchestra?" He lecturesextensivelyforthe
Artsand Business Council of
turnaround. Before joiningtheCSO in 2003, Thomasreplied,"I wouldgo to hell if they Americaand is a consultant
shewasExecutive Director oftheSeattleSym- gavemea permanent orchestra!"(AdamsOtis, forthe United Nations and
phony,whereshe had found,upon arrival, a 1924,p. 26) the WorldTrade Organization.

68 INTERNATIONAL JOURNAL OF ARTS MANAGEMENT

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 HellwaswhatThomashad found18 years The sternand high-minded Thomas set Acknowledgements
earlierwhen,in 1871, he and his orchestra thetonefortheOrchestra, establishingexact- The authorexpresses
arrivedinChicagothemorning aftera firehad ing standardsand demanding disciplinefrom his gratitudeto all
the
ravaged city. The smouldering remains the start.His successor,FrederickStock, the interviewees;
an
presented apocalyptic sight:18,000build- wieldedthebatonfor37 years,from1905 to to his wife,Suellen,
ingsover2,000acres(eightsquarekilometres) 1942, thelongesttenureof anyCSO music who proofreadthe
hadbeenlost,leaving90,000peoplehomeless director.ButitwasFritzReiner, a sarcasticand draft;to DennisRich,
and300 dead.Butthefireprovedto be a rare dictatorial who builtthe Orchestras Chairmanof the
maestro,
- on a grand Arts,Entertainment
exampleofcreative destruction foundation, takingcommandin 1953 aftera and Media Manage-
scale.Rebuilding beganalmostimmediately decade-long rotationofmusicdirectors. While
ment Department
and Chicagobecamethefastest-growing city he was unpopularwithmusicians, Reineris
at ColumbiaCollege
in the world.Between1880 and 1890 its creditedwithbuildingthe Orchestrasbase
Chicago, forhis
populationdoubledto 1 million,of which and instilling
precision and flexibility
(Jones, constant advice
nearlyeightout of tenpeoplewereforeign- 2003). and support; and
bornorofnon-American parentage (Horowitz, Underits earlyconductors, the Chicago to NancyWald,a
2005,p. 164). Symphonybecame knownas an excellent dedicated advocate
Nonetheless,itwasfarfrom beinga cultural American orchestra(Furlong,1974, p. 5). It of the Chicago
hub- a cityofstockyards andrailroads, ofblue- performed under a numberof distinguished SymphonyOrchestra,
a great facilitator
collarworkers and"big shoulders" (Sandburg, guestconductors, includingRichardStrauss,
forthis project and
1916/94,p. 1). Chicagowas as newand raw ArnoldSchoenberg, SergeiProkofiev, Sergei
a dear friend.
as Thomaswas old and burnished. An over- Rachmaninoff and MauriceRavel,butit was
grown boomtown, itlacked the refinement and heardoutsideitsowncity.
stillrarely
artisticawarenessof New Yorkand Boston ThencameGeorgSolti.
(Horowitz, 2005, p. 164). Butit spawnedan Duringhis22 yearsas musicdirector (from
exceptional businesselitewhose aspirations 1969 to 1991), the vigorousand exacting
wouldproveto be cultural as wellas commer- Hungarian-born conductor shapedtheChicago
cial.Bythe1880s,Chicagoscaptains ofindus- Symphony Orchestra intoa virtuosoinstru-
trywere impressively committed tosponsoring ment(Kozinn,1997).Fromthestart, there was
a civicculturalpedigree.Theycravedthetop- an extraordinary synergy between Solti and
tierculturalinstitutions thatwouldlifttheir theChicagoplayers. Withina fewseasonshe
gritty town out of the mud (Jones,2003). developedthe gleamingsound thatwould
Soon aftersecuring Thomass agreement, Fay becomeassociated withtheOrchestra during
convincedotherbusinessleadersto fundan his tenure(Kozinn,1997). With Solti,the
orchestral associationthat would "not be ChicagoSymphony came to greatness on a
dependent uponthesupportofanyone man worldscale(Furlong,1974,p. 5). "Thisis the
or offerits backersany prospectof profits" bestorchestra in theworldtoday.Thereare
(Hart,1974,p. 32). Ifmostofthebackers had equals, but none better,"declaredSolti,who
no specialaffection formusic,theiraffection spokefromexperience (Rubin,1971): He had
forChicagowas specialenough(Horowitz, conductedmostof the majororchestras in
p. 165). Europe and America.

Mjtiyl^l The year 2007 has been an excellent one forthe Chicago SymphonyOrchestra.Revenue, attendance, subscrip-
tions and customersatisfaction - all the main indicators - are up. For the firsttime in six years, the Orchestra
has reporteda balanced budget. But when Deborah Cardjoined the Orchestraas Presidentin 2003, she found a
disastrous situation. She had to reversea long cycle of decreasing sales and mountingdeficitsby radicallychan-
ging all of the Orchestra'sbusiness practices. The key to her success: a fine-tunedcombination of innovative
programming,customerservice and dynamicpricing.Card and her team have proved to be a remarkabletour de
force: They have shown that the decline of classical music does not have to be fatal.

BHffiüfíH
Leadership,marketing,artisticprogramming,customerservice, pricing

VOLUME 10, NUMBER 2 • WINTER 2008 69

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 A 1971 international tour- remarkably, its vastmajority ofseatsweresnappedup byeager
-
first confirmedthe Orchestrasamazing subscribers (Lazare,2001). Intoxicated by its
solidity(Horowitz, 2005,p. 486). By the mid- box office success, in the 1990s the CSO
1970s,ticketsforthe seasonwereregularly enteredintoa viciouscircleof costinflation
sold out beforeopeningnight,as werethe andpriceincreases.
CSO's annualvisitsto New York(Kozinn, In fact,at thattimemostAmerican orches-
1997). The muscularity and sheervolume ofthe traswere violating fiscalprudence(Horowitz,
Chicagosoundbestedall comers(Horowitz, 2005,p. 490). In 1992theAmerican Symphony
p. 486). They so the
reflected raw intensityof Orchestra Leaguereported that orchestra costs
theOrchestras homecitythatStevenRubinof hadriseneightfold since1971,withmorethan
theNewYorkTimesproclaimed, "Solti?That's halftheincrease ascribabletoartistic costs- in
HowYouSpellChicago"(Rubin,1971). part,moneypaid to soloistsand conductors
Although the CSO will foreverbe associ- (Lebrecht, 1997,p. 421). The staggering fees
atedwithSolti,whosememoryis stillcher- ofpopularvirtuosos "hitorchestras likea tax
ishedby Chicagoans,his successor,Daniel billfrom theBorgias," wroteLebrecht. "Between
Barenboim, who servedas conductorfrom 1960 and 1990,thenightly feefora topcon-
1990to2006,alsolefthismark."Theorches- ductorincreasedtwelve-fold [in the United
trathatBarenboim has moldedis a different States], whileindustrial earnings merely quad-
beastaltogether," wroteMichaelHenderson in rupled.In 1910,a top conductor earnedten
theLondonTelegraph. "Whereas thebrasssec- timesas muchfora concert as a factory worker
tionremainsstupendous, of
capable blowing took home in a week. In 1990, he was paid
downthewallsofJericho, thereis a breadth, fifty timesas much"(Lebrecht, p. 173). And
balanceand color thatone did not always fewcommanded morethanBarenboim. From
associatewithSolti"(Henderson, 2006). But 1990 to 2004, themaestro, who collecteda
Barenboims aloofness, arrogance andunabash- secondpaychequefromthe orchestra of the
edlyhigh-brow attitudealienatedmanyOrches- BerlinStateOpera and nevercommitted to
trasupporters. He developeda reputation for morethan13 subscription weeksperseason,
havinga fiery temperand fortakingon more sawhissalary jumpfrom$700,000(Lebrecht,
work- all aroundtheworld- thanhe could p. 173) to $2.14 million(Tindall,2004) - an
handle,leadinghim to cancelengagements increase of200%!
due to illnessor exhaustion. In factLebrecht But thatwasn'tall. In themid-1990sthe
blamesBarenboimformanyof the CSO s CSO launcheda $120-million renovation of
financialdilemmasof theearly2000s (Jones, its OrchestraHall. The temptation to raise
2003). prices across the board, and above inflation,
becamehardto resist,and was strengthened
by a prevailing beliefthatdemandforthe
performing artswas relatively insensitive to
The TippingPoint price. "This apparentpriceinelasticity sug-
gestedthatperforming artsorganizations had
Soltis longanddistinguished career, a certainamountofflexibility, withinthelim-
theOrchestras executivesbecamespoiled. itsofwhichit wouldbe possibleforthemto
As soonas theyannounceda newseason,the raisetheirpriceswithoutcausinga significant

RÉSUMÉ L'année 2007 a été excellente pour l'Orchestresymphonique de Chicago. Chiffred'affaires,fréquentation, abonnements et
satisfaction client : tous les indicateurs sont en hausse. Pour la premièrefois depuis six ans, le budget est en équilibre. Mais
quand, en 2003, Deborah Card se joint l'Orchestreen tant que présidente, elle trouve une situation désastreuse. Depuis, elle a
réussi à inverserun long cycle marqué par une érosion des ventes et un déficitcroissant en changeant profondémentla gestion
de l'Orchestre.La clé de son succès : un fin mélange de programmesnovateurs, de services à la clientèle et de prixdynamiques.
Card et son équipe ont réussi un tour de force : ils ont prouvé que le déclin de la musique classique n'était pas une fatalité.

MOTSCLÉS Leadership, marketing,programmationartistique, service clientèle, tarification

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decrease in demand," wroteFrançoisColbert, ing,"shedeclaredsoonafterarriving in 2003.
a marketing professor at HEC Montréal, and "I can'tsay that the biggest challenge is ticket
hisassociates and
(Colbert,Beauregard Vallée, sales, because ticketsales could be about some-
1998). thingelse.You haveto findthe rootcause"
"We probably wereunder-priced in 1990, Qones,2003). In fact,by 1996 theOrchestra
and we wereunderthe impression thatour had reachedthe tippingpoint.Manylapsed
productwouldtolerateanypriceincreases," subscribers werecitingpriceas themainrea-
notesKevin Giglinto,41, who joined the sonwhytheywerenotrenewing theirseason
CSO's marketing teamin 1999 and became tickets.Blindedby the successof the Solti
Vice President forSales and Marketingin years,theCSO simplycontinuedto raiseits
2003. "From1990 to 2000, the Orchestra prices,and attendance startedto erode.The
raiseditsticket ratesfrom5 to 10% eachyear." economicslumpof 2001 accelerated a trend
Overthis10-year period, the CSO's average that was already well in place.
ticketpricedoubled,from$35 to$70 - oneof Grappling withitsfirst glimpseof redink
thehighest ticketpricesin thecountry (Jones, in morethana decade,theCSO wasforced to
2003). take a long, hard look at itsvalue proposition.
Thiscycletooka turnfortheworseduring
the2001/02season.Attendance droppedto
81% - a farcryfromthe96-97% ofthemid-
1990s. For the firsttime in 15 years,the Value
Orchestra accumulated a significantoperating
deficit($1.3 million).To makematters worse, "'TT^he cynic,"wroteOscar Wilde, "knows
theclassicalmusicrecording industry was in A thepriceof everything and thevalueof
disarray and had suspended contractswith nothing." Matching price valuehasalways
and
manyorchestras, includingthe CSO. The been difficult,
particularly forartsorganiza-
downturn intheeconomy hadmadefundrais- tions.The aesthetic valueofa cultural product
ing more difficultfor all arts is
organizations eminently and
personal subjective. Demand/
(Jones, 2003).The Orchestras managerialteam priceelasticity forthesameculturalproduct
of thetimewas quickto attribute theslow- can varyfromone periodof time(a day,a
downinticket salesto theeconomy andaudi- week,a month)toanother. Moreimportantly,
enceskittishness afterthe11 September 2001 it can varyfromone consumersegmentto
terrorist attacks(Kozinn,2001). They also another.In a seminalstudyon the subject,
pointedto threeendemicreasons: moreenter- Colbertand his associatesconcluded:"Not
tainment optionsthaneverbefore, a genera- onlydo theatre patronsas a groupnotforma
tionofyoungadultswithlessmusiceducation monolithic unitin termsof the importance
thantheirparents, and everyone's oversched- theyaccordto thepriceoftheatre tickets,but
uledlife(Jones, 2003). thereis alsoa lackofhomogeneity withineach
Alltrue.ButCardwasprepared todigdeeper. groupofsubscribers and non-subscribers. For
"Ifyou'refeeling crummy, youmay thinkit's instance, low-income subscribers and non-
becauseyou havea plugged-up nose,but it subscribers aremorereluctant to acceptprice
mayreally be becauseyourheartis notwork- increases, whilethe oppositecan be said of

RESUMEN Para la Orquesta Sinfónica de Chicago 2007 fue un año excelente. Volumende ventas, concurrencia,suscripcionesy satisfacción
de la clientela, todos los indicadoresestán en alza y, por vez primeraen seis años, la Orquestagoza de un presupuestoequilibrado.
Sin embargo,en 2003, Deborah Cardal asumirel puesto de presidenta de la Orquestra,se encuentracon una situación desastrosa,
fruto de un largo ciclo marcado por una pérdida constante de ventas y un déficitcreciente,ocio que logra invertirgradas a un
cambio profundode gestión. La llave de su éxito: una sutil combinación de programas innovadores,servidos al clientey política
de precios dinámica. Cardy su equipo lograron toda una hazaña al demostrarque el declive de la música clásica no es una
fatalidad.

PALABRAS
CLAVE Liderazgo, mercadotecnia,programadón artística,servicioal cliente,política de predos

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 subscribers and non-subscribers witha higher Americanorchestras facesimilarchallenges:
incomelevel"(Colbert, and
Beauregard Vallee, As theircore audience ages,howcantheydraw
1998). -
in newlisteners a younger generation raised
By maintaining a narrowpricescale and on musicvideosduringa timewhenmusic
raisingits ticketpricesacrosstheboard,the education nationwide isgenerallyonthewane?
CSO wasprevented fromtakingadvantage of Will thesepotentiallisteners choosetherela-
thesevariations. In fact,it turneditsbackon tively staticexperience ofan orchestra concert,
itsyounger, lessaffluentandmoreprice-sensi- orwilltheyoptforthemorevisually stimulat-
tive customers, who represented a critical ing spectacle?(McCormick,2001) Opera's
future customer base. resurgent popularitywithbabyboomershas
Finally,priceitselfalsoinfluences valueper- led someclassicalmusicexpertsto speculate
ception:Sinceall thatis rareis expensive, we thattraditional orchestraswouldfarebetter at
oftenassumethatall thatis expensive is rare. theboxoffice iftheyoffered something more
ButCSO tickets wereanything butrare.Find- to look at thana groupof musiciansin tux-
ingan emptyseathadbecomeas easyas walk- edoesandblackdresses sittinginfolding chairs
ingup to the box office
on Michigan Avenue on an emptystage(Jones, 2003).
thenightof theperformance (Jones,2006). The CSO promptlytook the lead and
Moreover, thefrequent promotional discounts launched severalprogramming initiatives
aimed
thattheOrchestra offered infuriated traditional at makingthe symphonicexperiencemore
season-ticket holdersand madethemsuspect attractive andaccessible tonewaudiences. Some
thattheirsubscriptions werenot worththe concerts involve collaborations withcelebrated
pricetheyhadpaidforthem. artists in thefieldsof theatre, danceand cin-
In termsofperceived value,theCSO had ema,andattract devotees ofotherartistic disci-
theworstof bothworlds:highprices,which plinestothesymphony. Otherevents areaimed
turned theprice-sensitivecustomers away,and at connecting classicalmusictojazz orto con-
constant discounts, whichalienatedtheprice- temporary compositions. Thesenewprograms
insensitive customers. "Bysetting highprices are often followed or precededbyan informal
and thenoftendiscounting them, we were discussion with the CSO's musicians, artistic
training people to wait forlast-minute dis- planners orguestartists, whosharetheirinsight
counts," remembers Giglinto. "Worse, we were intotheclassicalmusicexperience. In a recent
losing our subscribers,who didn't
understand such encounter, Branford Marsalis,a world-
whythey should commit to us months before renowned jazzsaxophonist whohasalsoplayed
a showandpaysignificantly morethansome- withStingon several albums, pleadedforeclec-
bodywhohadjustentered witha specialoffer. ticism."Manyyoungmusicians aresetintheir
Thatdidn'tseemfairto me.We wereharming taste,"saysMarsalis."Theythinktheyknow
ourbrand.Wehadtoflipourvaluemodeland whattheylike.In fact,theyjustlikewhatthey
rebuild itwithinnovative programming, excel- know.I listento a lot of classicalmusicand
lentcustomer serviceandattractive prices." findit a greatsourceofinspiration. Severalof
have
mycompositions beendirectly influenced
byWagnerandBrahms."
A CSO seriescalledAfterwork Masterworks
was createdin responseto a requestbyaudi-
Programming
encemembers forperformances withan ear-
hasbeena seachangein howpeople lierstarttimeduringtheweek.Itisa collection
buy ticketsfor classicalmusic," says offourrush-hour concertswitha shorter, more
DeborahBorda,President and CEO of the casual,formatand withoutan intermission.
Los AngelesPhilharmonic. "The competition The FridayNightat theMoviesseriesfeatures
fromotherformsofculture, everything from the CSO performing classicsfromthesilver
museumsand theater to danceand opera,is screen.2 The Saturday morningKraftFamily
stifferthanit'severbeen.Andpeople'slivesare MatineeSeries(sponsored byChicago'sKraft
so muchmoreintense andbusy, are
they happy Foods Company) utilizes dance,mimeand
justto havea freenightat homewiththekids narration to introduce children to greatcom-
and a video"(McCormick, 2001). All thebig positions.

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 Theseprograms arelong-term investments. ButtheCSO's programming offensive goes
"We haveinfusedthe notionsof returnon beyond the doors of OrchestraHall. To
investment andsustainability in ourprogram- remediate thelossofitsrecording contract, the
mingprocess," saysCard."We tryto develop Orchestra recendy launched itsownlabel,called
concepts that will not onlygenerate excite- CSO Resound, and makes itsrecordings avail-
mentduringtheirlaunchseasonbutalsopass able as digitaldownloadson iTunes."These
thetestoftime.We planon investing in these recordings allow us to significantly broaden
conceptsto make sure theydon't become thereachof thisincredible orchestra and to
stale." sharetheexcitement of each uniqueconcert
The 2005/06seasonwitnessed thelaunch experience withmusic-lovers in Chicagoand
ofthemostambitious programming initiative throughout theworld,"saysCard.
a
yet: Sunday afternoon seriescalled Beyond
theScore.It offers concertgoers an in-depth
look at individualsymphonic masterworks.
The program features a detaileddocumentary Service
on the history and contextof a composer's
music,completewitha narrator and actors orchestrashavebeenviewedas
andfollowed bya performance ofthecompos- stuffy fordecades(Jones,2003). "A cen-
er'swork.Aftersomehesitation, theOrches- turyor so ago,symphonies werethethingto
tra'smusicians havefullyembraced theseries. do andtheplacetogo,notjustforan elitebut
"The first eventwas a toughsell,"saysCard. forthegeneral publicas well,"saysCard."But
"Ourmusicians didn'tknowwhatitwasgoing by the 1950s we intellectualized the whole
to be.Theywereintrigued, thenexcited, and thingandturnedourbackto thepublic.Most
havenowbecomehugeadvocates forit." orchestras acrossthecountry, particularly the
BeyondtheScoreisan overall success.Each largest ones,focused inward and became rather
eventis heavilyattended.Moreover, "a full unwelcoming. Their messageto the public
thirdof thepeopleattending are brandnew seemedto be: cWedo whatwe wantand we
CSO customers. That'stheirgatewayintoa willblessyouwiththeopportunity to buya
symphonic experience," says Giglinto."We ticketto cometo hearwhat we like to play.'It
havealreadysold 1,200 subscriptions to the becamea socialthingto do fortheelite.That
Beyond the Score series,and havehad a renewal workedfora whilebecausepeoplewereproud
rateof92.7%." Betteryet,it is acclaimedby oftheir orchestras andstillreally wantedtohear
thecritics."WithBeyondtheScoretheCSO them.Not anylonger. We nowhaveso many
hasfounda meansto deepenlisteners' under- vehicles formusic,from TV to CDs. Andcus-
standingof selected masterworks without tomer service has improvedin almostevery
dumbingdown the musicfornewcomers," industry. We haveto provideour customers
writesthe ChicagoTribunes Johnvon Rhein. withan unparalleled experience."
"Ithascreated commonground on whichnew- For moreand moreCSO customers, this
biesandseasonedconcertgoers canmeet, learn experience startsonline."I joined the Orches-
and be entertained" (vonRhein,2005). The train 1999 as theDirectorof e-Commerce,
NewYorkPhilharmonic hasbeenseducedby precisely toredesign ourWebsite,"remembers
theconcept. It has decided to present two of Giglinto. "The board had clearlystatedthe
theCSO's BeyondtheScoreprograms during coremission of thisnew site:sellingtickets. I
itsown2007/08season. gathered a cross-departmental teamto deter-
Thesenewprograms havecontributed to a mineothercontentthatwouldsupportthis
surgein attendance, from81% in 2001/02to coremission.It helpedus establish theWeb
85% in 2006/07.Theyhavealso brought a sitearchitecture. We alsogatheredgreatdeal
a
youngeraudienceto the Symphony, drop- of patronfeedbackto make buyingtickets
ping theaverageage of attendees from early onlineeasy.We alsowantedto makesurethat
sixtiesto late fifties (Cook, 2005). This is theWeb sitewas an extension of our on-site
quitean achievement in thefieldof classical facilitiesand reflectedour image."
music,whichconstantly lamentstheagingof The CSO's Web siteis particularly easyto
itsaudience. use. It includesa seat-finder tool thatallows

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 patrons toseethephysical layoutofthetheatre DynamicPricing
andchecktheviewofthestagefromeachseat
section.In 2004 theWebsiteartsjournal.com observing variationsinpriceelasticity
examined70 Americanorchestra Web sites fromone customer segmentto another,
and testedtheirfunctionality. It rankedthem theCSO developeda dynamic pricing policy,
by how well theypresentedtheirconcert setting different pricesforthesameseataccord-
schedule,sold tickets,providedinformation ingto eachsegment's behaviour. It rescaledits
and facilitated making donations. The clear rates based on four parameters: (1) place of
winnerwas theCSO (McManus,2004). "If theseatrelative tothestage,(2) programming,
peoplefeelcomfortable withtheflow," explains (3) timeanddateoftheshow,and (4) timeof
Giglinto, "they feelcomfortable givingustheir purchase.
credit-card numbers." Andso theydid. From Place of theseat relativeto thestage.Previ-
2000 to 2007, annualonlineticketsalesrose ously,the CSO followedcommonindustry
from$220,000to $3.5 million. practiceand scaleditsticketpricesaccording
Enhancingthe customerexperiencealso to a seat'sdistancefromthestage.This prac-
requires constant attention to service,particu- ticeassumesthatpatronsprefer to sitcloseto
larlyon the part of those people who are in the stageand arewillingto paymoreforthis
directcontactwiththe audience."We have proximity. A detailed,seat-by-seat, analysis of
to makeour guestshappythemomentthey theOrchestra's bookings revealeda more com-
arrive,"stresses Giglinto,whoseresponsibil- plexpicture."We lookedcloselyat our sales
itiesextendto customer service."It requires recordsforeach seat:whatseatswere100%
attention to everydetail:If you havea great subscribed, 95% subscribed, 90% andso on,"
time at the concertand the usherdoesn't explainsGiglinto."We realizedthatthemost
answeryou when you tell him goodnight, covetedseatswerenotthosecloseto thestage
you'llleaveus on a sournote.We'vedeveloped butthoserightat thecentreofourmainfloor.
a training seriesaroundtheideaofG.R.E.A.T. The further fromthecentre inevery direction,
service.G standsforGive thebenefit of the thelessattractive theseats."He thusreconfig-
doubt,R forRespondwithinterest, E for uredthepricescalein a succession ofconcen-
Engageothers andsmile, A forAnticipate needs, tricsquares.As a result,thenumberof price
andT forTakeactionandexceedexpectations. categories forthehallwentfrom13 to20. The
We'vecreateda committee calledCSO2 [for CSO raisedthepriceforitshighlydemanded
Customer ServiceOrganization], whichmon- seatsfrom$1 10 to $190 andlowered theprice
itorsservicequalityacrossthe organization forseatsinlessdesirable locations from$60 to
and has developedan incentive program that $27. Its averagepricedid notchangesignifi-
rewards who
employees givegreat serviceto our cantly,but itspricerangewidened,allowing
guests. Our ushers and box officeemployees customers to buytickets thatfittheirbudget.
haveboughtintoit. They now realizemore "Wewantedtoremove thepricebarrier, andit
thaneverthattheyarean integral part of the worked," saysGiglinto. "In our surveys, the
atthe
experience Symphony. We've seena clear number of peoplementioning priceas a reason
improvement in our customersatisfaction fornotrenewing theirsubscriptions dropped
surveys." from20% to 6%."
The CSO s flexible exchange policyisa good Programming. Usingits saleshistory from
illustration ofitscustomer service orientation. thepast70 seasons, theCSO assesses theattract-
Fora $5 handlingfee(waivedforsubscribers ivenessofeachfuture concertbycomparing it
ofa 10-concert series),a patroncan exchange to past performances. It thenmeasuresthe
anyticket without restriction,evenon theday potential oftheconcert tobe aboveorbelowthe
of theconcert."It'sdifficult to resella ticket projected average occupancy fortheforthcom-
that'sreturned thedayof theevent,"admits ingseasonandadjustsitspricesaccordingly.
Giglinto, "butthecommitment ofa subscriber Timeanddateoftheshow. The CSO's price
is moreimportant to us thantheloss of the scalereflects demandvariations forthreefac-
ticket."Eighty-five percent of the CSO's sub- tors:hour of the or
day(matinee evening), day
scriberstakeadvantage ofthisservice andmake oftheweek(midweek orweekend)andperiod
at leastoneexchange duringtheseason. oftheyear(seasons,schoolholidays, etc.).

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 Timeofpurchase. Bydoingawaywithmost teamanalysespastsalesand adjuststheprice
specialoffers,and byoffering subscriptions for or seatallotment foreach category, to better
sale or renewalseveralweeksbeforethebox matchdemand.
officeopensforindividual sales,thecompany
hasreverted backtooffering subscribers prior-
ity access to the best seats at thebestprice.
Thisincentive tobuyearly andinbulk,coupled Yield
Management
witha flexibleexchange policy, hasa cleareffect
on subscription sales."Thispastyear,oursub- performing artsorganizations
rate
scription jumped from 64% to 67% of Historically,
did not have the means to reactto poor
our totalticketssold," saysGiglinto."The attendance, takeadvantage ofan audiencesuc-
subscription retention rate, which for years cess, and better match pricewithcustomer
at
lingered 81-82%, reached 87%." Subscrip- value.They would typically settheirpricescale
tionsoffertwo advantages oversingle-ticket before the start of the season and reviewit
sales.First,theyimprove cashflowsincethey beforethe startof the next season. Until
arepaid weeksor monthsbeforetheseason recently, it seemeddifficult, evenimpossible,
starts.
Second,selling subscriptions costs about to change the number of seatsor thepriceof
10 centsonthedollarinmarketing andadmin- each categoryduringa season.This is now
istrative
expenses, whereas selling individual tick- feasible.
etscancost25 centsonthedollar(McCormick, The evolutionof information technology
2001). and onlinedistribution, theaccumulation of
TheCSO alsousespricetosellexcessinven- consumer information in largedatabasesand
tory and attracta younger audience to itsdoors. the manipulation of data withpowerful math-
Students canbuy$10 tickets, which guarantee ematical tools havegiven birth to a new scien-
accessto theconcert butnotto a specific seat. tificpricing technique calledyieldmanagement
Twoweeksbeforeeveryshow,themarketing (alsocalledrevenuemanagement). This tech-
teamassessestheprojected numberofunsold nique calculatesthe best pricingpolicyfor
seatsfortheevent.It keepsa marginforlast- optimizing profitsgenerated by thesale of a
minutesales,defines an allotment forstudent productor service, basedon real-time model-
ticketsand thenoffers theseticketsonline. lingand forecasting ofdemandbehaviour per
Two hours beforethe show, the box office team market micro-segment. It offers an excellent
looksatthelocationoftheseatsactually unsold solutionto theproblemofcomparing supply
andplacesstudents in thebestseatsavailable. and demanddue to differentiated pricing and
Beforethis programwas established,the systematic controloftheinventory forsalein
Orchestra wouldsell 1,200 student tickets a each All
pricecategory. players benefit from
yearat $15 each.Thosewererush,cash-only usingthis concept: The producergains in
ticketsand no customer information wascol- increased turnover and revenue;theend-user
lected.Todaythe CSO sells 10 timesmore enjoyslowerpricesforthe same qualityof
student tickets.Sincethesetickets areoffered service.3
onlyonline,theCSO collectsthenameand Thispricing methodwasfirst developed for
e-mailaddressof each buyerand can send theairline industry (Cross,1997,p. 3), andthat
him/her additionaloffersin orderto build is precisely wheretheCSO wentforinspira-
loyalty.The wordhas spreadamongstudents tion.JaneQuinn,Giglinto's predecessor, real-
and theCSO barelyhas to marketthispro- izedthatperforming artsorganizations shared
gram. "Our subscribers support this initia- many characteristics with airlines:Theircap-
adds
tive," Giglinto. "They wouldn't like to be acity is fixed but demand for their services
seatednextto somebodytheirown age who fluctuates; theirvariable costs are low; their
paid$10 whentheypaid $65 fortheirticket, inventory is perishable (their services cannot
buttheylovetheideathatwe'rebringing in a be storedifleftunsold);theirservices can be
new,younger audience - they see it as part of sold through reservation before the date of
ourmission." and
production consumption; and demand/
The CSO reviews itspricescaleregularly. priceelasticity fortheirservicesvariesfrom
Before thestart ofa newseason,themarketing one consumersegmentto another(Ingold,

VOLUME 10, NUMBER 2 • WINTER 2008 75

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All use subject to JSTOR Terms and Conditions
 Mcmahon-Beattie and Yeoman,2000, p. 4). yieldmanagement allowsustotakeshort-term
Therefore, arts
performing organizations fit trendsintoconsideration. Lastyearwechanged
themodelforyieldmanagement. Indeed,the thepricesof40 outof230 performances. Yield
existence ofscalpers (unofficialticketresellers) management certainlydeservesthe timewe
andtheoftenexorbitant pricestheychargefor investinit:Eachyear,thisprocessbrings usup
ticketsto popularshowsand eventsare evi- to $250,000in additional revenues."
denceofthedemandmanagement potential in Althoughtheperforming artsseemsto be
thisfield(TalluriandVanRyzin, 2004,p. 567). an industrytailor-made foryieldmanagement,
In thefallof 1999,Quinn recruited Steve thereare stillrelatively fewreportedimple-
Scully from United Airlines(also based in mentations (Talluriand Van Ryzin,2004,
Chicago),wherehehadworkedon yieldman- p. 572). The CSO is clearlya pioneerin the
agement(Lazare,2001). At theCSO, Scully field.
laidthegroundwork fora pricing processthat
themarketing teamhassincerefined.
Scullysfirststepwastounlockthedatathat
wouldhelptheCSO to betterunderstand its
customers. ThankstoTessitura, theartsindus-
Change
try'scutting-edge clientrelationship manage- Orchestrastransformation was not
mentsoftware (Ravanas,2007), theOrchestra entirely painless.Card had to cut costs
collectsa wealthof consumerdata,whichit (theCSO s administrative staff
wentfrom126
uses to analyse,anticipateand reactto cus- employees to 105) (Cook, 2005), renegotiate
tomerbehaviour. It thenstructures itsprices the musicians'contractsto reducepension
accordingly. Monthsbeforethe startof the costs,and instila newspiritof fiscalrespon-
season,the CSO reviewsits past sales and sibility throughout theorganization. "Wewere
adjusts all ofits prices.Every week duringthe livingtoohighon thehog,"remembers Card.
season,itrecalculates thebestpricing structure "Whenyou don'thavetightbudgetary con-
foroptimizing revenues, basedon real-time trols,moneyburnsa holein yourpocketand
modellingand the forecasting of demand you tendto spendit everywhere. We havea
behaviour per customer micro-segment. Instead differentattitude aboutourbusinessnow.We
ofsetting firm pricesforindividual tickets, the talkaboutreturn on investment all thetime.
CSO publishes theminimum price for a given We have to remember that everydollarwe
seat("from for
$29," instance) and allows this spendis a dollarthatsomeonegivesto us in
pricetofluctuate withdemand,charging more thebeliefwe'regoingto do something good
fordesirable seats. withit"(Cook,2005).
"We scrutinize thesalesforall ofourcon- Amongthosewho balkedat the effort:
certsregularly and highlighthigh-demand Barenboim, who,despitehis extravagant sal-
concerts as increased revenueopportunities," ary,did not deignto meetwithprospective
explainsMelanieKalnins,Managerof Mar- donors:"I can'tstandgoingout to one more
ketingand Sales Analysis."We look at the dinnerwithsomeMrs.So-and-Sowhomight
number oftickets soldforeachpricecategory, leavea milliondollarsto the ChicagoSym-
thepaceatwhichtheyaresold,andcompareit phonyOrchestra. It'storture.Andtheadmin-
to historic trends. We thenincreasetheprice istrators act likeyou'rebeingdisloyalif you
ofthecategories thatsellthebestandthefast- refuse"(Shelden,2004). Immediately after
est.We tendto be morecautiousat thebegin- Barenboimsdeparturein 2006, the Dutch
ningofa season,becausewe needaffirmation conductorBernardHaitinkwas appointed
thatpreliminary strongtrendswillcontinue. Principal Conductor andtheFrench composer
Butas theseasonprogresses, wegainassurance andconductor PierreBoulez,whohasbeenthe
thatanticipated 'hot'concerts continue tosell, Orchestras mainguestconductor since1995,
andwe decideto raiseprices." becameConductorEmeritus.
"Wefirst trytobuilda scaleso thatwedon't "Changeis difficult," concedesCard,"par-
havetochangepricesduringtheseason,"adds ticularly whenyou havepeoplewho'vebeen
Giglinto. "Wetryto anticipate theattendance aroundfora longtime,andparticularly when
foreach concertand priceaccordingly. But you'vehad thesuccessthe CSO had during

76 INTERNATIONALJOURNAL OF ARTS MANAGEMENT

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All use subject to JSTOR Terms and Conditions
the Soltiyears.The organization believedit Kozinn,A. 1997. "SirGeorgSolti,84, Chicago'sVir-
ownedthissuccessand thatitsrobustnature tuosoConductor."New YorkTimes,6 September.
would protectit againsteverything. But I Kozinn,A. 2001. "SeveralOrchestrasAre Troubled
Financially." New YorkTimes,25 October.
believethatyoucan'tjust sitand letthingsbe Lazare,L. 2001. "CSO's Mystery Man Sounds Clar-
the way theyare becauseotherwise they're ion Call forNew Audiences."ChicagoSun-Times,
eventuallygoing to die.We had to stopturn- 15 August.
ing ourback to our audience.Fortunately,we Lebrecht, N. 1997. WhoKilledClassicalMusic?Maes-
had enoughpeoplecommitted to push this tros,Managers,and Corporate Politics.Secaucus,
NJ: Carol PublishingGroup.
through."
tourde McCormick,B. 2001. "Orchestrating a Reboundat
Cardandherteamarea remarkable
CSO " CrainsChicagoBusiness. 12 March.
force:They have proven that the decline of
McManus, D. 2004. TheBestOrchestra WebsiteIs in
classicalmusicdoes not haveto be fatal.In
Chicago, www.artjournal.com,16 September
viewof the renewedvitality of the Chicago (consulted21 September2007).
Symphony Orchestra, andthe confidence with Ravanas,P. 2007. "A Quiet Revolution:The Metro-
whichit embraces itsfuture,one has to con- politanOpera ReinventsClient RelationsMan-
"
clude,as MarkTwaindidafter readinghisown agement.Internationaljournal ofArtsManagement,
in that
error, the of Vol. 9, n° 3, p. 78-87.
obituary published reports
itsdeathweregreatly of "ReportsofItsDeath AreExaggerated." 2007. Econo-
exaggerated("Reports
mist,3 May.
ItsDeathAreExaggerated, 2007). Rubin,S. 1971. "Solti?That'sHow You SpellChicago."
New YorkTimes,25 April.
Notes Sandburg,C. 1916/94.ChicagoPoems.Mineóla,NY:
Dover.
1. CSO subscriber
guide2007/08. I Don't ThinkJackie
Shelden,M. 2004. "My Affair?
2. CSO annualreportfor2005,p. 13. Knew."Telegraph, 15 July.
ofYieldManagement
3. Definition (consulted
www.optims.com Talluri,K., and G. Van Ryzin.2004. The Theory and
2 October2007). York:
PracticeofRevenue Management.New Springer.
Tindall, B. 2004. "The Plight of the White-Tie
Worker."New YorkTimes,4 July.
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VOLUME 10, NUMBER 2 • WINTER 2008 77

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 ■JJJJÜ.U!« FINANCIAL
HIGHLIGHTS

Year ended 30 June 2007 30 June 2006 30 June 2005 30 June 2004

Total operatingrevenue 57,388 55,563 54,931 55,420

and support(contributed)

Total operatingexpenses 57,275 56,300 56,278 57,759

Operatingsurplus (deficit) 113 (737) (1,347) (2,339)

arein thousands
Note:Allamounts ofdollars.

■JJJJ!I»U!MREVENUE
BREAKDOWN
ENDED
(YEAR 30 JUNE
2006)

Source of revenue % of total revenue

Earned income 52
Box office 45
Other(retail, rentals,etc.) 7

income
Contributed 48

Fundraising 32
Endowmentwithdrawal 16

Tntal 100

UJJJÜ.UU ASSETS

Year ended 30 June 2007 30 June 2006 30 June 2005 30 June 2004

Endowmentand other 317,210 286,709 276,657 272,037

long-terminvestments
Total assets 465,291 434,463 422,215 420,132

Bonds payable 144,025 144,025 144,025 145,650

Net assets 295,794 261,990 242,075 244,418

arein thousands
Note:Allamounts ofdollars.

■JJJJÜ.UM CONCERT
HIGHLIGHTS

Year ended 30 June 2007 30 June 2006 30 June 2005 30 June 2004

Numberof ticketssold 395,772 393,232 376,525 365,422

Numberof concerts3 263 260 259 257

a presentedon tourand CSO concertsofferedby
Figuresincludefreeand non-ticketedconcerts,CSO performances
presentersotherthanthe CSOAssociation.The numberoffreeconcertsand non-SymphonyCentereventsvariesfrom
yearto year.

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