Greatest Loss of 2009: Social Capital
Posted by Allison Fine on March 19, 2009
The biggest problem with having smart friends is that they ask smart questions, and then one is obligated to try and answer; hopefully smartly, but failing that, at least pithily.
Yesterday, my friend Katya Andresen, the magnificent brains behind Katya’as Nonprofit Marketing Blog and the book Robin Hood Marketing, posed this question to me on Twitter: @Afine one in ten arts orgs are on the brink of collapse but movie attendance up – is this a marketing problem?
Katya ws responding to a report yesterday from the AP that Bob Lynch, the President of Americans for the Arts estimated that 10,000 arts organizations will close this year, 10% of the total number.
Certainly some portion of that number are organizations that are poorly managed, or have no real base of local support so that any shaking of the apple cart sends them spiraling downward. But, still, a large percentage represents opera companies, symphonies, museums and theater companies that will be huge cultural losses to those communities, and of a course a huge and heartbreaking loss of jobs.
As Katya suggests there is definitely a business model element to the struggle of local arts organizations. Local performing arts organizations are too labor and capital intensive that makes the cost of participation for casual supporters very high in comparison to movies. It is financially impossible to make a ticket to the opera the same cost as a ticket to Slumdog Millionaire (although once you throw in the cost of popcorn and soda you are getting closer) without a significant subsidy from the government or private donors that doesn’t exist in today’s economy.
Even though the meltdown of the newspaper industry has gotten far more press (from the press, naturally!) than the collapse of local arts organizations, there are pathways that make future local news gathering and dissemination possible. The newspaper problem is a classic business model problem; the process of gathering and reading news has fundamentally changed and organizations are scrambling to catch up with newer, more efficient mechanisms for delivering news to readers. But, there is a marketplace for news as online readership continues to rise, and we are in the messy process of transitioning to a new model.
The problem of trying to figure out a new business model for arts organizations is much more difficult. This is due in part because the cost of delivering the product is largely fixed; there is no way around the fact that orchestras need violinists and cellists. Consumers of news exist in large numbers, some say even growing numbers, but many arts organizations that face the prospect that there may not be enough patrons to support their efforts — ever. It may be that performing arts organizations cover larger regions. For instance, perhaps Hartford, CT cannot sustain a symphony orchestra, but lower New England may be able to. Or that the orchestras get smaller, or that the players aren’t full-time professionals.
Tinkering with the size and catchment area for performing arts organizations (and museums, too) misses a much a bigger problem for communities. The loss of newspapers and arts organizations creates an enormous, perhaps irreplacable, loss of social capital for local communities.
Tom Watson really nailed this issue in a terrific post on the Huffington Post yesterday when he wrote:
As Shirky writes (correctly in my view) the casualty isn’t so much the newspaper (and the companies who operate them), as it is the journalist – and professional journalism itself. And that is a huge loss for society that no one should be welcome with glee (though some digital triumphalists cannot seem to restrain themselves)
And Tom is no luddite, he is the author of CauseWired and works every day to help organizations transition to the Connected Age.
And in a follow up email to me yesterday he made a point that has been overlooked in much of the debate:
Most ‘observers’ don’t know the scale of this disaster – we’re talking
tens of thousands of reporters at thousands of newspaper in thousands
of cities and towns and counties. A whole system of informing the
public commons is dying – blogs simply won’t replace it, citizen
journalists will be a tiny fraction of what went before. It’s truly an
American loss.
We are losing the institutional memories of institutions that are in the business of connecting individuals to one another, to their communities, to beautiful and inspiring stories and works of arts.
I’m not quite as pessimisitc as Tom about the future of local news efforts. The models that we’re discussing and testing right now may not work, but that doesn’t mean that a model for news won’t or can’t exist in the future, a model that is financially sustainable and does a credible job of informing the citizenry and keeping local institutions accountable to the public. But what I don’t know is if or how social media can make up this loss, it may simply be that this is one casualty of the Connected Age. One thing we can do is to insist that the growth of social capital be a part of the discussion and implementation of new models for news and arts organizations.
Making money isn’t the only measure of success for news and arts organizations in the future; reconnecting citizens locally to one another; regenerating the social fabric is just as important and necessary to the success of these efforts.
Brian Reich said
I agree on one level — the loss of arts organizations, as well as newspapers, is sad. Arts contribute to education, and the building of community, they stimulate economic activity, and provide culture. Newspapers can also add value – serving as watchdogs, providing guidance about local happenings and insights on important issues. In reality, however, there are far too many arts organizations (and nonprofits generally), and some shrinking of that marketplace should be welcomed. The same is true for newspapers. I don’t want to see newspapers close any more than the next person (I grew up in Seattle reading the PI every day, and Tuesday was a sad day for me personally, and as someone who loves the Emerald City as much today as when I was living there), but the reality is there are far too many newspapers covering the same stories, without adding real value, so some shrinking of that market is needed as well. Our society is changing and the time has come for the organizations that operate in that society to change as well — some will be able to adapt, some will have to close. We should not lament the loss as much as pay attention to what works, and doesn’t, so we can learn the appropriate lessons and come out stronger on the other side.
You see, its not about the business model or the delivery mechanism. Newspapers are dying because people don’t need to rely on one newspaper – online or in print – to get details about what is happening in the world. They can’t, because there isn’t a newspaper out there that does a good job telling the local public what is happening. There are great journalists out there, but our papers are filled with wire stories, not the good local insights they can offer. There are important issues to be discussed, but blogs and chat rooms, even Twitter does more in some cases to host those discussions than the pages of newspapers. For arts organizations the same is true — there are too many options, and not all of them good enough to warrant our time or attention or money.
To be successful today, you must focus on the content – the substance of what you do, and whether that provides something to the community, or audience, that is valued. Many of the arts organizations (and nonprofits) who I work with seem to believe that their offering is unique and that the audience thirsts for what they offer. But they don’t ask the audience what they want, or try to understand how to fit their work into the busy lives of the people who they seek attention from. They measure success by the amount of money raised or open rates on their email and not the inspiration they offer, people they feed, or happiness they bring. That simply won’t work. The audience is in charge (always has been, they just know it even more now). Arts groups don’t want to adapt to what the audience wants, they want the audience to come to them. And when that doesn’t happen, the arts groups often blame the media for not covering the arts or the economy for failing and leaving people without extra income to spend on things other than basics. Its not the audience’s fault. It’s not the media’s fault. It’s not the economy’s fault. Its your fault (arts groups, and everyone else). Its our fault (audience) for not demonstrating even more clearly what we want and expect from the arts and how we are willing to support it.
The reality is, people will spend time and money on things they find valuable and useful in their lives — arts organizations who are struggling to gain audience are not demonstrating their value (and I would argue in many cases are not in fact offering something all that valuable, when you consider how many other groups are doing the same thing, or something very similar). Its pretty straightforward as I see it.
How do you fix it? There is no silver bullet, no one answer. There are hundreds of ways to add value, some involving technology and some not. Launching a blog or opening a Twitter account doesn’t make what you do any more valuable — accessible maybe, but that’s it. Everything is changing – about how people get and share information, about what we see as valuable and how we spend our time. And as a result, how arts organizations (and newspapers, and everyone else) must change as well. This is not a marketing challenge. This is a structural issue. Deliver value and you will be in a position to make money. Offer people something they need, find interesting, or get a lift from and you will have ample opportunity to grow and have an impact.
Change is tough, and it will take time. You will have to experiment, and fail, and learn, and keep trying. But if you focus on the goal of delivering value to the audience (as they define it), it will seem much easier, and it will work out better for everyone.
Allison Fine said
I am in complete agreement, Brian, with most of what you say here. In particular, it is frustrating and disappointing when organizations that are intended to educate and involve their communities in their efforts intentionally or intentionally push them away or ignore them. I hate going into an art museum and feel that the curator just assumed that all of the visitors had a thoroughly understanding of the artwork, its significance and connection to the other pieces on display because they are so immersed in it. Two quick points to build on this conversation:
1. I think I’m just a wee bit more sentimental as to what the loss of some of these institutions means to their communities. They may be slow on the uptake, may even resistent changing their approaches to invite more meaningful participation of their community members, but their loss is still devastating to many people and has a negative impact on those communities.
2. The transition you describe is right on the money. Organizations need to change their orientation towards their communities, open themselves up and stop viewing their readers or audiences as passive mutes. As part of this reinvention, I hope that the creation of social capital will be part of the equation of what is good and necessary to strengthen communities and institutions in the future.
Thanks for your thoughtful comment, I am fascinated by the conversation.
Tom Watson said
Allison – good thinking tying the arts crisis to the demise of paid print journalists – it really is a loss of social capital, and the winds of change have several origins.
I’m not necessarily a pessimist about the future: there can be models that work for journalism. The nonprofit/philanthropic model can work when no possible market-driven revenue plan is possible – there have been a number of worthy small-scale efforts, particularly in inner city nabes and in rural areas, where creating professional news channels really does improve both the quality of life and civic engagement. And I think the ‘membership’ model may work if what we used to know as newspapers begin to think of themselves as low-fee service associations, with news as the biggest service. And who knows, perhaps you could tie arts funding in there too.
I love the digital medium – I’m way too immersed! But I’m also sensible to the fact that most people aren’t, and many people never will be. So how can you possibly replace that civic engagement, that (eminently flawed by still important) social capital?
Brian Reich said
I hear you, and let me respond quickly to your two points:
1. I was sentimental once, and still am from time to time, but I have definitely become hardened (and a little frustrated). I feel obligated to take a tougher stance, to show these groups some tough love, to hold them to a higher standard. Why? Two reasons: First, I’ve been working with and talking to arts organizations (and nonprofits) for years about the shifts that were taking place in our society and what they mean. I don’t think that they were surprised by what has happened as much as unwilling (or in some cases unable) to change their behavior. Second, we have a special opportunity now to use technology to have an impact on our society, to change the way we operate, to fix the problems that have been created by not responding to the shifts in society. If we continue to give groups a pass, lament their failures – we won’t as quickly be shifting to what we need to do.
Their loss is devastating, but if we look at their loss as an opportunity to learn and rebuild even stronger, there is no telling where our society could go from here (and I mean that in the positive way).
2. I couldn’t agree more. The creation of social capital is critical – its part of the new currency of our economy and community going forward. Dollars and cents aren’t the only way to define success. Organizational size is not the best metric for who has the potential to have impact. There are intangibles and qualitative considerations that are now central to how successful and sustainable organizations must operate.
Definitely an important discussion, and one I hope we can continue – here and offline.
Beth Kanter said
I ending up writing a long comment and just turned it into a blog post
http://beth.typepad.com/beths_blog/2009/03/the-crumbling-of-nonprofit-arts-organizations-what-models-will-rise-from-the-ashes.html
Anyway, I wonder if arts organizations need to be also doing “social capital impact analysis” along with economic impact analysis?
Ian David Moss said
Hi Allison,
Great post. Interestingly, I wrote an article comparing the economics of newspapers and symphony orchestras last year — here it is: http://createquity.blogspot.com/2008/04/newspapers-and-symphony-orchestras.html
I’m strongly in favor of newspapers moving to a nonprofit model…it has its problems but in the end they are both creating public goods that cannot be paid for adequately by the direct beneficiaries of those goods. That’s what the nonprofit was created for.
Best,
Ian
Katya said
Wow. What a great answer to my Tweet. This is FASCINATING. I blogged it all at http://www.nonprofitmarketingblog.com/comments/why_are_arts_orgs_and_newspapers_folding_faster_than_you_can_say_a-i-g/
IMPACTMAX said
A great exchange of ideas. I’d take it a step farther than failing arts organizations/ newspapers and the loss that means to communities. Maybe arts and other nonprofits should start thinking about doing social capital impact analysis–but they need help. The loss of social capital is a huge national issue that’s being obscured by economic panic. Has anybody heard of Canada’s Genuine Progress Index? The idea came from California researchers in the mid-1990s but Canada and the EU have done the most with implementing it. They developed a new set of indicators to try to give a better measure of national well-being than Gross Domestic Product and other economic data. In Canada, it has five categories: time use, natural capital, human and social capital, human impact on the environment, and living standards. Why aren’t we moving more quickly toward these kinds of assessments in the US? Like The Nation magazine asked in its cover article this week on “The Perfect Storm for Nonprofits”–why aren’t there high visibility national hearings right now on the state of the nonprofit sector and implications for our society? Where does the groundswell for that kind of thing begin? (Not from politicians I’m betting.) Has it begun? This loss can’t just be the concern of nonprofits, but maybe they could be catalysts for raising its visibility. Can social media play a role? http://www.gpiatlantic.org/gpi.htm (If I have strayed too far off topic–forgive me. Thank all of you for raising these issues!)
Allison Fine said
I don’t think you’ve strayed at all. I wonder if the Civic Health Index sponsored by the National Conference on Citizenship is close to what you’re thinking about? http://www.ncoc.net/index.php?tray=topic&tid=top5&cid=9
Lucy Bernholz said
Allison
First of all, great post – I love it when someone ties together two seemingly disparate things – community news and community arts – with a meaningful thread. And I agree that both of these things – arts and newspapers – contribute to social capital and their loss will diminish social capital. However, I’m not quite as sure about some other elements of this. I don’t think they face the same kinds of problems, nor are there business models challenged in quite the same way (which you note, as do comments above). The arts are one of the most resilient elements of humanity – we are human partly because of art, humans will always make and seek art, art will always bring us together (and, sometimes, drive us apart) – but the arts organization as we know it is a creation of a certain moment (admittedly a moment that is 00s of years old in some cases). Don’t get me wrong – I love art and art orgs – but I worry less about them, and maybe not from a rational stance. The arts are, I think, proof that some things come back stronger the harder they get whacked. The arts always get whacked when economies tank. This doesn’t make it OK and don’t take me for a art-hating hard-heart, (I think I’m just the opposite). I just feel like we’ve seen this moment before, new structural types will emerge, and the arts will thrive again in some way we could never have planned. I think of artists like water – water always finds the lowest point and artists always find the highest ground.
Journalism, real news, reporting, editing – now that is in danger. The danger may be to the same extent as the arts – but we’ve not seen this cycle before. And what will keep news/journalism/reporting going, in whatever medium it lives on, is truly unknown. I thought Stephen Johnson’s piece on this, “Old Growth Media..” (http://www.stevenberlinjohnson.com/2009/03/the-following-is-a-speech-i-gave-yesterday-at-the-south-by-southwest-interactive-festival-in-austiniif-you-happened-to-being.html) was brilliant – and it fell short in answering the “what’s next question.” We don’t know what is next. And that is just plain scary.
Thanks for linking the two – only by looking at familiar things in new ways can we find new insights and possible answers -
Lucy Bernholz said
Oh, and another thought and question. The big and small white newspapers are dying – and this is sad, scary, and will affect our communities in ways we don’t fully understand yet. But what about neighborhood papers and ethnic media? They may not be the answer to the wither media question, but they have a lot to add to the discussion of social capital. In SF, neighborhood papers seem as thick and abundant as ever, there are several in Spanish and Chinese…what do we know about these media nationally?
Allison Fine said
I had several conversations last year with Juana Ponce de Leon (best name ever!!) of the New York Community Media Alliance, a nonprofit that monitors and supports ethnic newspapers and online media in New York. At that time, she said that ethnic newspapers was not experiencing the same kind of downturn as mainstream media because they are often the only media outlets for new immigratns and don’t have the online competition that other media were facing. But that was a year ago when ad revenue hadn’t yet dried up, not sure what the story is today.
Barbara Schaffer Bacon said
There are, as you say, cultural institutions that have not engaged the public in meaningful ways or mantained a sense of relevance in their communities and some that don’t or can’t have a sustainable business model. Some sugest that a winnowing out is not the worst thing. But there are promising new models. I look to many exemplary small and medium sized cultural organizations that foster excellence in artistic production and presentation but do so closer to the ground in small towns and urban neighborhoods around the country. Diaspora Vibe in Miami, Wing Luke Asian Museum in Seattle and Cornerstone Theater in LA are three examples. They promote art, artists and cultural expression as a catalyst for engagement around civic, social and community issues. They demonstrate resourceful leadership and many have successfully encoded true diversity into their core values, mission and practice. Unfortunately, these organizations are creating social and creative capital but come to this downturn undercapitalized themselves.
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rettsyndrome said
FROZEN ASSETS -
Not sure what percentage this would include, but I have read about several arts organizations who are folding because they are legally not allowed to access their endowment — once the value drops below the rate the donors invested at, it is not allowed to be liquidated.
Allison Fine said
I’ve never heard that – sounds like perfect collision of awful events conspiring against these groups. Where are those AIG bonuses to support some of these groups, eh?
Amy Kincaid said
On the Media did a radio story on the financial strength, yes strength, of ethnic newspapers earlier this week: http://www.onthemedia.org/transcripts/2009/03/13/03
bpick said
Thanks for posting this–a topic worth thinking about, I think!
When you say, “Making money isn’t the only measure of success for news and arts organizations in the future; reconnecting citizens locally to one another; regenerating the social fabric is just as important and necessary to the success of these efforts,” I think:
If an organization is pulling in a great deal of money but not using it well or efficiently, then making money is actually a bad measure of success. The best measure is the degree to which the organization is accomplishing its mission, part of which, for an arts organization, involves generating social fabric?
While it’s true that the return on social capital isn’t an easily quantifiable metric, my hunch is that it’s not always as elusive as we might think. Last month the Nevada Opera Association was about to close its doors, but decided to try to rally its community of supporters before folding. Using a combination of online and offline fundraising efforts, they raised $100,000 in private donations to fund their 2009 programming season. The full story is here: http://www.onlinefundraisingblog.com/2009/02/nevada-opera-update/
So, the Nevada Opera Association put a price on their programming, and their supporters rose to the challenge of helping them meet their fundraising goal. What’s particularly interesting is the evidence of all the social capital they have built, which you can see in the comments section of their fundraising page: http://www.firstgiving.com/nevadaoperafriends. They received tons of messages about how important and impactful their programming has been in the community, and even received donations from other arts organizations!
Would this kind of appeal work for every organization? Probably not. But the Nevada Opera Association found a way out of a tough spot by using their social capital to generate even more. There are lessons here for every arts organization, and perhaps even the papers, too!
jenifer said
the ASC of Charlotte Meck’s fundraising dollars were down 1/3 – they will lay off 8 employees and there will be more per group that they support…very disheartening time for them and me ( a patron and donor) but as a non prof communications strategist – great – maybe now they will open up to advisement from professionals
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Judy Myers Anderson said
I’m reading Clay Shirky’s book about the impact of social networking, which discusses the demise of communities in the traditional sense and the building of community ties through on-line social networks. This discussion is one of the first I’ve read that really felt to me like a roundtable discussion with colleagues in a “community.” Great discussion!
Allison Fine said
Welcome aboard, Judy!
Allison