Tag Archives: arts policy

If this isn’t a blip, just what is it?

The news about the bankruptcy filing that will be made in Philadelphia court tomorrow by the venerable Philadelphia Symphony Orchestra has stirred angst around the globe. But the bigger news is hidden in the comment made by the American Symphony Orchestra League’s Jesse Rosen: “This is not a blip.” No, it isn’t, and that’s the real story. So far this year, both Honolulu and Syracuse have seen their orchestras go bankrupt. The eyes of the arts world have been on Detroit for months now, waiting to see if the inevitable will happen there as anticipated. Louisville’s fine orchestra filed for bankruptcy in December, not even making it to the New Year, bailing before those critical last few weeks of the calendar year when big donors in search of tax benefits often save nonprofits. Rumors swirl that the Indianapolis Symphony Orchestra, another wonderful ensemble, may not be far from taking the big step. And there are many other cities large and small throughout the United States where business and civic leaders, board members and donors are having plenty of sotto voce conversations about just what to do when the inevitable hits their back yard.

Bankruptcies aren’t new to the performing arts. Every recession in recent history has forced a few organizations that are under-endowed and over-contracted to face the music. Theater companies, ballet companies, opera companies, orchestras and performing arts venues themselves have all been victims.
But now that we all see the world in the post-Wisconsin-public-employee-union-pension world, different questions are being asked about the long term viability of performing arts institutions.

This is an industry that is firmly union based. When they are asked to save performing arts organizations from bankruptcy, many donors know that what they are really being asked is to maintain union agreements – often agreed upon in far rosier days – and in some cases to preserve or potentially bail out union pension funds. With the Philadelphia Orchestra – as with most of the organizations that have gone to Bankruptcy court before and those that are contemplating the move today – overly generous union contracts that can’t be met in today’s economy are the central issue. Sound familiar?

If you read last week’s post to this blog – and a lot of you did – you’ll remember that we’re thinking a lot about the sea changes impacting the arts. So rather than look at the Philadelphia Orchestra bankruptcy as just another blip, we’re pretty convinced that it is potentially, tragically, better described as a “new normal.” Simply put, too many contracts have promised too much that can’t be met. Too many pensions are underfunded, and depend on the continuation of current generous contract agreements to fund past agreements. Also, endowments are restricted in purpose and can’t be drawn down to meet crises. (Though, truth be told, plenty have been borrowed against steeply enough to cause their own set of problems.) At the same time, performing arts halls that have also granted their own unions lavish contracts – such as the Kimmel, the home of the Philadelphia Orchestra – need to charge every penny possible to stave off their prospective bankruptcies. Operating costs are through the roof. For large systems of performing arts organizations and their halls, the performing arts financial model is barely working, and only for those with the very largest endowments.

At ArtsMarket we’ve been increasingly asked to examine solutions to these developments in many different markets. Business leaders who are increasingly shaking their heads and refusing to bail out individual institutions are seeking larger, systemic adjustments. We’ve heard from many – corporate leaders in particular – that they’ve had it. Many understandably worry at the signals they send to their own employees when they step in to bail out arts union jobs providing six figure wages and generous pensions for jobs that often allow for or even further additional earning opportunities at universities and conservatories. Politicians feel the same way: How can tax payer dollars go to bailing out private sector union workers when public sector unions are up against it? Donors feel it, too. When institutions as venerable as the Philadelphia Orchestra declare bankruptcy – potentially making it possible to liquidate endowments that were never to be liquidated – why would any individual of means write that seven or eight figure check for an endowment meant to keep organizations safe forever? Why not give those dollars to something more pressing, more immediate, and possibly more honest in intent?

Are there solutions to this mess? Sure. But just as the citizens of Wisconsin have learned over their season of public employee union battles, the adjustments are nasty business, no matter what side you are on. First, you have to face reality, hard and uncompromising as it is. As the old saying goes, you have to raise the dragon to slay the dragon. One of our field’s many dragons is that we want a mid-20th Century performing arts system in a 21st Century world. We don’t want the pain of recognizing that our consumer tastes, interests, budgets, and technology have so dramatically and fundamentally changed our arts consumption and behavior that we aren’t ever going back.

We’re living in a time warp of about 1975. Are we ready to live in 2011? Because if we are, and we recognize that this Philadelphia story is not a blip, we better get busy in rethinking the entire financial and operational model of the performing arts while it is still possible to restructure outside of bankruptcy court.

So just what is the creative economy?

One of my goals whenever I work on a cultural plan is to establish a baseline of the area creative economy, and then to identify ways to grow that economy.  Too often the creative economy – at least in the US – is  narrowly defined.  (Americans for the Arts has done a fabulous job with the conservatively defined arts-centric part of the creative industries, but I think their creative industries data under-represents reality.) (See blogroll for their 2008 update.)  On the other hand, some define the creative economy as anything based on intellectual property, which might be too broad.  ( My geologist friends develop a great deal of intellectual property, but does that make the mining industry a part of the creative economy?  Doubts.) 

So just how do we get to a viable baseline?  Americans for the Arts uses Dunn & Bradstreet as their data source.  In my own searches, I begin with the North American Industrial Classification System, or NAICS codes.  NAICS codes are assigned to every enterprise in North America, and from this we can assess the enterprise impacts, the jobs, the value added, and their total economic value.  As such NAICS can be the key to assessing the bgroadly defined creative economy.  But there are many judgement calls to be made, and this offers an interesting discussion for the arts/cultural development field.  Wouldn’t it be great if we had a standardized way of defining what codes belong to the creative industries and which codes don’t? Something bigger than what we see now from AFTA, but realistic extractions out of NAICS?

Each creativity-based element of NAICS has three components: education and training, jobs and the creation of economic value, and impact – audiences, buyers, users, and those touched economically and socially.  Think about the case we could make if we would work toward a true definition of the worth of our industries.

The first three sets of NAICS codes – ag, mining, utilities – don’t have any sub codes that really seem a part of the creative economy.  The forth, construction, might have a few.  By the fifth, manufacturing, you get into some interesting judgement calls.  For example, I would include the Manufacture of Fine China, Earthenware, and other Pottery; and the manufacture of Pressed, Blown glass, and Glassware in my creative industry profile of a community.  (AFTA includes individual artisan work, but not manufacture.  But many artists and artisans are employed in the manufacturing process, so I’d opt for the larger definition.) But should the manufacture of other glass containeers be included?  Book printing, yes, but should Quick Printing be included?  How about clothing manufacturing?  Do we include it all, or just sub-parts – for example, manufacturing of Schiffli lace?  Or what about food manufacturing?  I guess you would include specialty cheese manufacturing – my neighbor who makes artisan cheeses would argue for that - but what about fruit and vegiatable canning?  Include piano and musical instrument manufacturing – yes.  But what about photographic equipment? (AFTA includes photographic equipment, but excludes musical instruments.)   

 I’d be likely to include all of the economic activity of NAICS code 51 – Information – which in addition to  sound recording and movies includes telecommunications.  

Code grouping 54 codes professional and scientific enterprises.  From these, the normal picks include graphic design, interior design, photographic studios and the like along with the standard inclusion of advertising agencies.  But how about custom computer programming? (That’s where some computer game enterprises can be found, and these are largely considered a part of the creative industries.)  Most defitions already include architectrual and landscape architectural enterprise, but how about mapping? 

The codes (71) for arts, entertainment and recreation are particularly frustrating for those of us in the arts field.  For example, how are we to break out the enterprises/occupations from the grouping “promoters of arts, entertainment and sporting events?”  Does that mean a local NFL franchise and Symphony are in the same code?  (Yes.  AFTA has broken these out using D&B data.)   How about food services codes?  Do we include chefs/fine dining, but not the coffee shops offering up custom lattes? 

The point is, creativity, innovation and foundational arts thinking can be found to shape and influence hundreds of industry classifications, and thousands of job types.  The arts field is even broader than  represented by AFTA’s ground breaking analysis.  And, if as a field we had a broader definition of what is in and out of the “creative industries” of NAICS – which opens the door for many detailed economic profiles at the local level - we’d be better positioned to make the case for what the arts really mean to our economy and our communities.  We’d be able to work toward a far more holistic approach to educating for the creative sector.   And we’d come even closer to assessing the real value of the economy driven by creativity.