Recap: Demystifying Digital Monetization Session 1
For our first session in our “Demystifying Digital Monetization” summit, we laid out the research we have conducted over the past two months on the development of digital monetization in the arts. We explored the range of digital activities arts organizations have engaged, what seems to be working, and finally what we should take with us beyond the pandemic.
Before jumping into the content, we asked our members on the calls to share some of the work they have been doing in digital during this time for innovation. We were inspired to see so many creative initiatives being put forth, including:
A digital music appreciation series at Royal Irish Academy of Music in Dublin, with 396 sign ups
An online new short play festival that sold out in two weeks and saw 75% attendance at Chicago’s Victory Gardens Theater
Monetized virtual museum tours at Museo Thyssen-Bornemisza in Madrid and Zeitz MOCAA in Cape Town
A new Tik Tok channel at American Ballet Theater in New York
A pay-per-view streaming platform at Australia’s Melbourne Symphony Orchestra
Assessing The Situation
The first item on our agenda for the day was to provide an overview of the rapid transformation the arts world has undergone during the pandemic, specifically around their digital monetization strategy. As one theatre director ABA spoke to during our research put it: “Before the pandemic, we created a plan to expand our digital work that spanned five years. Within three months of the pandemic, we had accomplished all the targets we had planned to take in five years.”
At this point, most arts organizations are trying to monetize digital. In our recent benchmark survey, a majority of respondents are monetizing digital content through earned income, contributed income, or both. And while 31% are not currently monetizing digital, nearly half of this group hopes to do so in the future.
With many organizations in the process of experimentation with digital, there are still a lot of questions around how to monetize effectively. Our session focused on four major areas of concern for arts organizations in this space:
How target audience shapes approaches to digital content
How to approach packaging and pricing
How to select the appropriate video streaming platform
How to prepare for changes in audience needs and behavior as we begin to re-open
Two organizations set the stage for the rest of our discussion, each of which has seen success in digital monetization — but in very different ways.
The Geffen Playhouse in Los Angeles decided that its path forward was to create a digital experience that mirrored the in-person experience. It has created a series of interactive shows designed specifically for the digital space. Small groups joined performances via Zoom, and for several shows ticket holders were sent kits in the mail with a set of items to be used in the show. Small touches like a virtual lounge allowed attendees to connect personally before the show started. The series has brought in more than $2.5 million to help the Geffen keep its team on staff and venue running. This is a great example of a “digital-first” experience whose quality and engagement are high enough to earn significant revenue.
The National Theatre in London has had online archives available for streaming over the past decade, which had garnered over a million views. Their effort got super-charged at the beginning of 2020 when they started weekly releases of free productions on YouTube, bringing in 15 million viewers and over 25,000 donations. Now they are moving to charge for content.
While successful, these cases are challenging to replicate and scale without extensive archives or the time and staff needed to create high-quality interactive content. This leads us to the reality of digital monetization: few organizations will see direct revenue from digital that exceeds costs to produce. There are, however, several important benefits beyond earned income:
Donation success: donations have been a surprise upside for digital content, and often the biggest success for monetization
Audience learning: collect data and learning about audience behavior has made your enterprises more valuable
Improving economics: when we do return, the economics of digital efforts will likely improve, as it will be supplementing live earnings rather than bearing the full burden of operating costs
Future value: it is important to be thinking now about the future role digital will play, which is likely to be an indirect path to revenue
Defining What We Want To Achieve
A crucial first step in shaping your digital monetization strategy is to identify your target audience. When comparing three different arts organizations, we see how their “who” (target audience) and “why” (type of monetization they are aiming towards) shapes the way they approach creating and packaging digital content — the “how.
Of course, these organizations did not turn away other audiences, but their target audience - and their monetization objective led them to ask very different questions about how they would execute on digital content. These shaped the approach they took and kept their efforts focused, rather than scattered.
To further highlight the impact of targeting a specific audience, we shared two case studies. The first was about Scottish Ballet in Glasgow, whose “freemium” membership model created a fantastic opportunity to draw in new, engaged audiences. By building a new structure for digital membership that had low barriers to entry and provided valuable content — “a little give for a lot of get” — the Ballet was able to gather a wealth of audience data that allowed them to tailor customer experiences and build relationships. As a result, they grew their membership base by 20,000, and the organization could now work to draw those members into closer subscriber or donor relationships. To dive deeper, including a look at their intentional use of language to frame the ask for data, you can read the full case study here.
At Pacific Northwest Ballet in Seattle, the focus was on retention of subscription income from its current subscribers. PNB offered a digital season for $190 — the price of its lowest in-person subscription. This tapped into the principle of “anchoring,” the psychological phenomenon that, when you put a number in front of people, it tends to influence their future decision making. By using a familiar number, the Ballet essentially minimized the thought work required for subscribers by giving them something that is in their normal range of spending. The results were strong — $1.4 million in rolled-over revenue, plus nearly a million in new earnings. They also saw large complete rates on viewing of primary content. The complete rates were lower for bonus content, but this was still a valuable learning, as the Ballet could shape future digital content accordingly. The full case study for Pacific Northwest Ballet is available to read here.
Fine-Tuning Pricing and Packaging
In our research, we saw a range of models for monetizing digital work during the pandemic, from individual ticket sales to full subscription packages.
This does not mean that it is necessary to pick just one model — to the contrary, there is reason to believe that it is worth choosing several of the options at once. We recommend combining models as much as possible to maximize revenue. Realizing revenues that exceed costs can be a challenge, so we have to find ways to reach more audiences and increase their spend.
National Theatre is a great example of maximizing these models:
Using different revenue models in combination can attract a large audience who will purchase content in the way they want while also maximizing their willingness-to-pay.
When building out a package model, there are nine important considerations to examine:
Time scarcity
Package flexibility
Availability
Price flexibility
Amount of content
Viewing options
Package frequency
Length of commitment
Variety of content
Each of these comes with its own set of tradeoffs. For example, in the category of package flexibility, if you err towards individual tickets a subscription model may not work, so you have to maximize the number of individual tickets you sell. But if you err towards tiers of subscription, then you will want to find ways to discourage de-bundling and downgrading.
When making decisions on package elements, it is important to engage in continuous experimentation. An example of this in action comes from the Philadelphia Orchestra. They took a structured test-and-learn approach, iterating quickly on their content, paywall, and pricing approaches to uncover their audience’s preferences. For example, they tested their paywall and purchase process with their gala before using it for ticketing and successfully experimented with price increases. You can read more about their case study and results here.
Pricing is another important conversation when framing digital offerings. We highlighted several examples from pricing research, particularly the concept of “pay-what-you-will.” This works especially well in the arts, as it is a strategy best suited for situations where customers identify with the seller beyond the product. Important to note, however, is that over time it becomes more effective to settle on just one price.
Given the higher success rates of contributed income in digital during the pandemic, we looked at ways to effectively ask for donations. The good news is, it seems that there is no bad time to ask someone to donate, from sponsorship of a production to post-consumption.
We also shared some of the more creative ways we have seen arts organizations ask for donations, from framing it as a form of “applause,” to reminding audiences to consider how many people will be watching when determining an amount to give, to even simply requiring a number be input into the donation box — it can be difficult to type in “$0.”
Aligning Technology Choices With Objectives
Technology choices are a moving target for many organizations right now — and the video streaming platform world is a crowded space. To help, we broke all platforms down into four groups within two larger categories. The first consists of platforms where an arts organization puts content onto a third party site. The second consists of streaming services that enable arts organizations to host digital content on their own site.
We’ve gathered examples of these platforms, plus some arts organizations using them, here:
Just like in any other technology decision, no video streaming platform does everything. Therefore, it is important to understand the trade-offs you might make when selecting one — or more — platforms.
Broadly, there are two categories of trade-offs to keep in mind. The first is whether a platform is more audience-friendly or whether it focuses more on benefit to the organization. This includes:
Ease of access for audiences vs. ease of monetization
Audience-familiar technology vs. ease of technology integration with internal systems
Broad reach of content vs. ability to capture audience data
Lower cost vs. higher ability to brand the platform
The second is how much expert support you can receive from a platform versus how much control your organization can have over the technology. Considerations here include:
Access to production support vs. control over the audience experience
Access to distribution support vs. control over ticketing and pricing
During a platform search, it is important to stay in the driver’s seat. The first step is to have a team discussion about which considerations are most important, including which are must-haves, nice-to-haves, and deal breakers. With this foundation in place, you can compile a physical checklist to bring to all vendor conversations. Platforms will try to guide you to their strengths — a checklist will allow you to get the information you need to make an informed decision, while also providing the ability to make more direct comparisons between services. We have gathered a bank of potential considerations for your checklist here:
What Should We Take Beyond The Pandemic?
While it may be tempting to lay down the burden of digital once we return to live, we at ABA believe that our needs are too great, the opportunity too large, and the capabilities we have developed too valuable to decommission the digital engine.
Digital seems well-suited to the challenges that have been present in the arts for years now, including declining subscriber bases and the need to attract more new, and particularly younger, audiences and donors. Digital content can be a great avenue for experimentation, especially as we look to reinvigorate our artforms with innovative new expressions of art.
During this time we have seen the opportunities digital content has provided for learning about our audiences, testing the appeal of innovative art, expanding community engagement, and more. All of the new digital capabilities arts organizations have built over the past year can continue to be of immense value in these areas.
We have envisioned three distinct phases for continuing your work in digital as the arts reopen:
This is a precarious time for the arts, as more and more industries open up and our audiences begin shaping return behaviors without us. It is important to monitor their behavior and take intentional steps to our approach — especially during that transition period.
Fortunately, we can start getting glimpses of the future from countries who have begun the reopening process. The Australian Ballet in Melbourne is one such organization that has returned to live performances while maintaining a digital initiative. They have elected to film one ballet performance in their first season back, and to stream it via a “virtual seat” on their website. Importantly, they will be able to repurpose this content for a variety of uses down the line. You can read more about their televised sports-inspired approach in our case study here.
Once again, having a target audience will be key when beginning to plan returns to live attendance. There are different potential groups that an organization can frame content for, based on whether digital is seen as its own experience or as a complement to the live offerings. There are several questions to ask when determining which target audience might be most appropriate:
The structure has four parts:
Discover: look for what we admire in what we have done so far. What digital work would we like to take with us into whatever future we create?
Dream: keeping in mind all those structural challenges our industry is facing, what are we going to do to be more sustainable in 10 years and how can digital help?
Design: put together an initial design for our approach, including assembling a diverse team and building customer voice into the design process.
Deploy: think about testing aspects of our digital experiences with audiences separately from the full roll out.
The past year has been one of learning and innovation in the arts. We ended the session with three encouragements for the road ahead:
Keep an active conversation about where your digital learning and your long term structural challenges have the largest overlap.
Keep the experiments going and keep an explicit log of your learning from every success and failure.
Keep your target customer at the center of your experimentation as a balance to your own assumptions about what’s worthy of pursuit.
As always, ABA is here to help as you move forward in your strategic steps in digital monetization, during this week’s meetings and beyond. Contact your member advisor to discuss potential next steps as we continue to work together.
