#2: How to Make the Education Department Make Money
Create new and alternate revenue streams by monetizing the education department at your cultural organization. Not just for community engagement, Aubrey shares three ways the education team could be a source of alternate revenue, as well as examples of artists and organizations already employing this strategy.
Articles mentioned
Designing a Modern Org Structure
Musicians Monetizing Education
Nathan Cole (LA Philharmonic)Elizabeth Rowe (Boston Symphony)Christopher Still (LA Philharmonic)Rob Knopper (Metropolitan Opera)
Organizations Monetizing Education
Richmond Symphony School of MusicBeth Morrison Projects Producer AcademyCalifornia Symphony Fresh Look
Business Coach on Monetizing Online Education
Jennifer Rosenfeld
TRANSCRIPT
[00:00:00] Hey everyone. It is a beautiful day in Berlin where I am here recording this episode. I'm here because I spoke the other day at the Deutscher Orchestertag conference. And soon. I am heading to Hanover to speak at Classical NEXT. So I have just been enjoying these few weeks here in Europe. If you've been following me on social media, you've seen the pictures along the way. And by the time this episode drops -probably almost exactly at the same time now that I think about it with the time difference -I will be co-leading at classical next the global orchestra meetup. Co-chairing that with Mark Pemberton, he's the head of the Association of British Orchestras and, oh my gosh, so excited about this: also co-leading that session with Liubov Morozova, who is the artistic director of the Kyiv symphony orchestra.
[00:00:53] I'm just blown away that I get to meet this wonderful woman, and the topic we'll be covering together, the three of us, is resilience. So everything Mark and I have to say about resilience and coming out of the pandemic somehow is all off the table when it comes to somebody who's leading their orchestra during a time of war. So follow along on social media if you want to hear more about that, but wow, I just I'm blown away and can't wait to do that session. Later that day at Classical Next, I wrap up my time there with a talk called Epic Fails: Horrible Bosses.
[00:01:28] And we're going to talk about some horror stories about some bad bosses. But also, what does the research say about how we can do better, be better, lead people more effectively? So that's what I've been up to.
[00:01:41] And today in this episode, we are hearing questions on organizational structure, how to monetize education within that, and hopefully your ears perked up at that.
[00:01:51] Thank you to our sponsors, Lume Cube and Descript for their support in making this podcast possible. You'll hear more about them later in the show.
[00:02:01] I'm Aubrey Bergauer, and welcome to my podcast. If we haven't met, I'm known in the arts world for being customer centric, data obsessed, and for growing revenue. The arts are my vehicle to make the change I want to see in this world, like creating places of belonging, pursuing gender and racial equality, developing high performing teams and leaders, and leveraging technology to elevate our work.
[00:02:23] In this show, I'm answering your questions on how to build the vibrant future we know is possible, both for our institutions and for ourselves as offstage administrators and leaders. To submit a question, send a voice recording to hello@aubreybergauer.com.
[00:02:37] Maria’s question about why is education under revenue, not product in my latest article on updating our organizational structure?
[00:02:39]
[00:03:34] Maria, I love that you read my latest article. Love that you were thinking through this, doing it all from Columbia. This is amazing. So for everybody who has not read the article yet, I will link it in the show notes. But what I want to lay out here for the purpose of this conversation is the idea that, in short, I believe the current organizational structure for arts organizations is no longer serving the work that we're doing. And I worked with a consultant at Accenture who does just this, organizational design, and wrote this post outlining a new possible way where we can organize our teams and, mark my word, someday when I'm back leading an organization, I'm going to work with Julian Chender who I wrote the post with, and we're going to do a version of this strategy that I laid out strategy and org structure. So to break it down very quickly for the sake of the question: I grouped the organization instead of siloed departments that we know currently- development, marketing production education, artistic -all of those teams, I broke it down into three main verticals of the organization: revenue, product, and infrastructure. So infrastructure: IT, human resources, that type of thing. Product: everything we put on stage, or if you're a museum, everything you put on the walls at galleries.
[00:04:59] And then revenue is our content, our marketing, our PR, our fundraising. And of course we can divide it up within that, which is a whole separate question, whole separate topic almost to get into it. But I put education in that revenue vertical. And that's where Maria's question is coming from. Why education in the revenue bucket?
[00:05:19] So I'm so glad you asked this question, Maria, because the answer to this particular question is a big topic that we did not have time or space to get into in the blog post. So you are very right to notice that this is a shift.
[00:05:31] Let me back up though, and start with the second half of your question. So first artistic quality. I do mention it in the article, and it is important. It's important because it is what we do best. One third of the vertical of the organization is our product. So it absolutely is important. I didn't spend a lot of time on it because it is what we do so well already. Arts organizations by far, we have invested in our product. Our artists are phenomenal. It's not where we struggle. This is not to say we don't need to have a conversation about repertoire, programming, or any of those kinds of things, or how do we be inclusive with the artists we engage? How do we be representative? How do we hire more effectively and fairly and equitably the people we bring in as artists? All of that conversation needs to happen. So please hear me saying that. However, the product is so good, that's not where I'm spending the time in the blog post or in this conversation here. But to answer your question, I do mention artistic quality and yes, it is important.
[00:06:32] Alright, education. Traditionally, as many of you all know, education or if we call it community engagement, is not revenue generating. Maybe, I guess in the sense that it's often what we're writing grant applications for or using to pitch to donors. We all know anybody who's done any fundraising, education is always the ticket or often the ticket, I should say.
[00:06:54] But aside from that, it's its own silo, like our other departmental silos. And now when we are talking about this broader conversation of being more relevant in our community, Sometimes, maybe even oftentimes, what we see is that work gets " assigned" quote unquote to our education teams.
[00:07:16] Which is not in full and comprehensive solution to being relevant, to actually engaging our community in which we reside. We call it "community engagement," but, and this gets back to the org structure, there's not one team that handles that for us in my mind. There's not one team that's responsible for making sure we're relevant in the world around us. That is the job of everybody, which going back to the article, that's why that kind of tool or that kind of task is a horizontal slice through all three verticals. It is everybody's job to contribute to how we are relevant in our communities, how we are engaging the community around us. So this is a shift from it's the job of this team, this group of people to no, this is who we are. It's part of our DNA and everybody, no matter who you are in the organization, in some way is contributing to this. Horizontal multiplier is what it's called, the sort of consultant speak on that, according to Julian who I worked with on this. Okay.
[00:08:13] Education in the traditional sense, I do believe still should exist. However, I believe it can be profitable. And I don't believe that's a dirty word. We are a business at the end of the day, we do have a budget to balance. Nonprofit is a tax status. Doesn't mean we can't make money.
[00:08:30] We can definitely make our educational work profitable. How do we do that? Okay. This is a whole other sort of vocabulary word, dive in here.
[00:08:39] There's a concept in business called "vertical integration." And the dictionary would define that or business books would define that as the combination in one company of stages of production that are normally operated by separate companies. An example of that is, I'll start with a modern day example, Amazon.
[00:09:00] Originally when Amazon first started, had warehouses separate from their shipping and distribution. They use ups, they use separate storage warehouses. They basically only operated the website in the early days. Over time, they started taking ownership of all of that. They own their warehouses. Now they own their shipping and distribution, or at least a big part of it. We call that Amazon prime.
[00:09:24] They then started creating their own products, not just selling other people's products. We call that Amazon Basics. They started letting other people sell on their platform. That's called Amazon Marketplace. They started along the way doing their own web hosting, we call that Amazon Web Services. AWS is now the largest web hosting platform in the world. They took these core competencies, and started bringing all of that in house. That is called vertical integration. So to repeat the definition, the combination in one company have multiple stages of production normally operated by separate companies. So that's what Amazon did. They brought it all in house. Another way to say all of this is it's a firm's ability to control the end-to-end customer experience by owning as much of the value or supply chain as possible. Okay.
[00:10:13] Old school example of this: Carnegie Steel. This was before the term even really existed, but he not only ran the mills that made the steel, but also eventually ran and owned and operated the mines where the iron ore was extracted, the coal mines that supplied the coal. He eventually owned the transportation, meaning the trains and ships that were transporting these raw materials to the mill or to the factory. So you get the idea. Owning more of these things that are normally owned by separate companies. Okay. What on earth does all of this have to do with education, and classical music, and this conversation? Because education is where we can employ this strategy to our gain and benefit. And I don't mean just gain and benefit in terms of profit. We will come back to that, but I also mean gain and benefit in terms of it's a vehicle for serving more patrons. So let's recap where we are so far: serving more patrons, gateway to entry, and making money. Like to me, this is ding, ding, ding.
[00:11:11] Okay. When we think about education, this intersects higher ed. So, often as we know, so much of the time at arts organizations, education programs are relegated to childhood education. Fine. We do the programs in the schools, or we bus the kids to the theater. We know those experiences aren't necessarily driving higher attendance at our events now. So I'm not totally convinced that those need to continue in the way that they currently operate. Fine. I'm not here to say we gotta cancel childhood education for our arts organizations. If we are making money, if it's being funded by grants and donors, fine, there's an argument to keep it. It's not bad. But the intersection of higher education is where this idea of vertical integration really becomes an opportunity for us.
[00:11:57] What we have to ask ourself is "what about classical music or what about our arts organization, wherever you work, whatever discipline, is not normally available?" So going back to the definition, the business term would be to say, what part of the supply chain is not normally owned and operated by an orchestra, for example.
[00:12:17] Last piece to start putting this all together. Because of the pandemic and how it accelerated our collective competency in virtual offerings, that makes this education opportunity we have before us possible. So specifically, what I'm talking about is offering online education and offering it to adults. Even pre pandemic online education was growing. The statistic is that it was expected to grow to, I believe it was $350 billion by 2025. Pre pandemic that was the projection. $350 billion industry was online education by 2025. That's up from $107 billion in 2015. So in other words, pre pandemic, the projection was that over 10 years, online education as an industry would increase by threefold. And they were on track for that before the pandemic.
[00:13:07] So how does this play out? Here are some examples of how this is already working in the arts. One area that we can supplement is individual instruction. So think about this. We're talking about the supply chain, what's normally owned and operated by another provider would be individual instruction, private lessons. Okay. I'm not saying we have to do this. Maybe some musicians want to do this. What if we had a revenue share of what I'm about to explain: 50% to them, maybe 50% to the organization. I'm just throwing this out there as an idea of how do we do this. Okay. So here's an example.
[00:13:41] Nathan Cole, he's in the LA Philharmonic. He is their first associate concertmaster, and he created online offerings that are now over a six figure annual income for him. That is in addition to his LA Phil salary. Other musicians in the LA Phil and Met Opera are doing this too. Elizabeth Rowe at the Boston Symphony. We have so many great examples of really wonderful entrepreneurial musicians already doing this. They are offering online instruction. Sometimes it's prerecorded. I know in Nathan's case, sometime he has a lot of content that's now prerecorded that he's offering. He does some sort of masterclass type situations. Some coaching. Okay.
[00:14:21] Imagine what our musicians could achieve if they had the weight of the organization behind them. How many musicians are hustling for students or trying to use teaching as a way to supplement their income? Unless they have a university gig or a college gig, that's really facilitating all that for them, they're on their own for that. So I just feel like this is an opportunity where if our education teams had this as part of their work, Now we're talking about a way to monetize. And there are plenty of adults in the world who would go bananas for this type of instruction with a professional musician in your symphony orchestra. Oh, my gosh. So we have to open up our thinking beyond this traditional model of the students go to university and study with a professional musician. If you're willing to open up the model a little bit, there is money to be made because there is a completely untapped market out there. Okay. Private instruction, not everyone is as entrepreneurial as these musicians doing that. Christopher Still is another one at the LA Phil. Not every musician is that entrepreneurial. We know that.
[00:15:20] Many are. Maybe some wouldn't want to do this at all, but maybe some would. Wow, I can't wait to run that pilot test someday. Some organizations are already starting to dip their toe in the water of doing this. Monetizing individual instruction.
[00:15:32] Now I have two more ways education can become revenue generating that I want to tell you about, but first we're going to pause for a second to hear from our sponsor. This is a brand I personally choose to work with and that I know arts organizations can benefit from.
[00:15:45] I remember back when I worked on the marketing team at the Seattle opera, like 2006 through 2012, I was there. And that was when I first started producing content: behind the scenes videos, artist interviews, filmed tours of the costume shop and the scene shop all kinds of fun, stuff like that for the organization.
[00:16:05] And back then, I was lucky to work with several videographers and photographers who brought their own very nice equipment: massive lights, cameras, reflectors, tripods microphones on and on. Today though I am blown away by the tools that are available when we don't have the big budgets to put toward all that gear.
[00:16:22] Whether you are a creator doing videos or recordings for yourself or others, or if you're on a marketing team at any sized organization producing a lot of content in house, Lume Cube makes the products that just didn't use to exist even a few years ago. I just got my Edge light to be better lit for my video content. And I have on the way also a portable light that attaches to my phone for when I'm outside or on the go.
[00:16:47] They also have ring lights and other video conference lights if you want to improve your zoom set up or your desk set up. All to say, I am a fan. And now I'm an even bigger fan because they are making this podcast possible with their support of creators. And if you want to give LUME cube a try, they're giving you a discount with code AUBREYBERGAUER10. I'll put the link on my website podcast page and show notes as well. Thank you to Lume Cube for supporting the business side of the arts. I'm super grateful.
[00:17:17] Another area of education and the supply chain that's normally owned elsewhere is adult music 101, music theory, any kind of music history, any type of class like that. Normally when adults want to learn about classical music, they have basically two options that I could think of. They have the option to go to a preconcert lecture. Or some organizations do community talks in the library or things like that. So option to go to one of these types of talks or lectures. Problem with that, is it that they're usually made for aficionados. We're preaching to the already converted in those cases because it's afficionados that normally come. So we know our audience and we're speaking to them, but that's really leaving out a huge segment of the adult market available to us.
[00:18:02] The other option adults have, if they want to learn more about classical music, is to attend some sort of continuing ed program. This goes right back to higher education, continuing education. Offered by these schools. Now I didn't realize this at the time, but we have proof of concept of this back at the California Symphony. So what we started was this idea of adult education. We knew that there was this gap. We had uncovered from all of our Orchestra X research, this gap in knowledge because public schools aren't teaching the music education the way they used to decades ago. And we knew from our research that people wanted to learn, but there wasn't really an opportunity for that. Outside of, like I said, higher ed or something like that, or the pre-concert talk. So we said, what if we offer adult education? At the time, we weren't really thinking about how to make it profitable. But since I've left they've really upped their game. I'm so proud of them and just really interested in and inspired by what they've done here. So to lay it out, the original class structure we developed was four weeks at $25 each. So the first year we ran this, I can't remember what year that was. Maybe 2017. I can't remember. We sold out. The room we had at the local library was 75 people. Sold out. Most of those people were new. Had only been to California Symphony zero or once before ever. Almost all of them. So we were capturing the group we wanted, meaning not aficionados, sold it out. Were able to convert those people to ticket buyers. Next year, the library let us get a bigger room. Their largest room fit a hundred people. We sold it out again. By that time, the curriculum was already developed. This was in-person. It was all pre pandemic. So both of those iterations of the course ended up with something like $10,000 in new ticket sales.
[00:19:50] All right. Not bad for a prospect pool of 75 or a hundred people. But summer of 2020 is where this gets more interesting. I was not there. I left in summer of 2019. So all of this that I'm about to tell you is the good work that they did without any contribution from my part to give credit where credit is due. So summer of 2020, as we know, we're all virtual by then. They moved this class to online. And they had 300 people register.
[00:20:15] If they kept that price, that's $7,500 for one class at a dirt cheap price. And as a reminder, all of the curriculum was already developed. All the collateral was already developed, three years ago, I think, at that point. So they made that with very little effort; so fascinating to me. So that went well. And so then they were doing it again, the following, like February or March, I think. So spring of 2021 at this point. Now they had it with prerecorded content they captured the summer before. So every iteration of this kept getting easier and easier .
[00:20:50] So now, or at least then they were getting $25 per person or whatever they were charging at the time for pushing play.
[00:20:58] That is high profit margin. And that is the point of all of this: that we can get to a point where we are educating people, providing a service, they are paying for that service because they want that education in their life because we are providing something that the market is not really offering otherwise.
[00:21:17] And we're spending very little to do it. Streaming online? 70 people, 80 people on stage? We know that's expensive. One instructor to however many people register for the zoom room or whatever platform is. Such a different model, such high profit margin.
[00:21:35] There are a few other orchestras that I know that were doing that. Richmond Symphony had a full slate of virtual education they rolled out during the pandemic.
[00:21:43] And then one more area I want to talk about because I'm so fascinated with this idea of monetizing education. So we've talked about individual instruction. We've talked about adult 101 level education.
[00:21:56] And the third example I want to talk about is professional development and arts administration training. We know that the training we get as administrators is not the same as the training our artists get for the work they do, in terms of it's not as intense, it's not as robust. We only now have, in the last, what, 10 years or 15 years or so, these masters of arts administration programs, this is rising. This is good that these programs exist now, but it's still fledgling compared to the rigor of the training our professional artists receive. So this is also an area of opportunity for us. And an awesome example of who's done this already is Beth Morrison Projects. So Beth Morrison Projects, they are a opera, musical theater maybe, organization based in New York. They are known for bringing new works to the stage, and they created during the pandemic what they called their Producers Academy. They created online courses, and they were like one week intensives, I think. How do you bring a work to stage from commission to production? How do you do the fundraising necessary? How do you do the budgeting necessary? What does touring look like for an organization? All of these things that are so necessary in terms of skill development for our field. Currently, they're only taught if you do get one of those master's in arts administration/ master's in arts management credentials. So again, filling in a void completely. And I forget their first run of that program, I think they made $80,000 or something like that was the stat I heard. So not bad. Any organization of any size would not sneeze at $80,000. And that was their first debut out of the gate.
[00:23:40] So I just want to end this by quoting Jennifer Rosenfeld. She is the mastermind of this type of work. She is the business coach who's worked with all of these musicians that I said before. I believe even was involved in the Beth Morrison Projects example, I just gave.
[00:23:56] And total plug here. I'm bringing her in for my panel at the League of American Orchestras conference in early June to talk about this topic more. So total kudos to Jennifer. If you want to hear more, she's going to be talking about it, but she says this: she says online education is about creating high-profit margin.
[00:24:13] Great, that matches everything we've said so far. She says producing a concert on stage is the opposite of that. It's negative profit margin. We know that. I'm telling you things you already know. When we put a concert on stage, we lose money. That's why we're non-profits. That's why we have to fundraise. We know ticket sales don't cover it.
[00:24:31] Online education completely flips that. Getting access to adult education is not readily available. There is a market for this and a hunger for this, and it is so much cheaper, meaning less expense on the P & L to produce for such a higher return.
[00:24:50] I get so fired up by this because I see so much opportunity there and a more direct relation to future ticket sales than our childhood education programs, where you got to wait 20 years to see a return on that investment. And to be blunt, the data isn't showing that those people actually do come. So all right. Education can be monetized, part of an organizational structure. I guarantee you, I'm going to do this someday at an organization.
[00:25:13] Thanks for the question, Maria.
[00:25:16] Hey off stagers. Is that what I should call you? Okay, you're here listening to this podcast where I'm answering questions. And one of the questions I get asked the most is if I offer coaching and mentoring. The short answer on this is yes, but here's the honest problem. It's usually fairly costly because I can bill an organization a lot more for some hours of my time than I can an individual.
[00:25:37] So I've been thinking about this a lot, and I decided to create an opportunity to address this. It's a group coaching course called the Summer Uplevel. We're meeting four weeks this summer, twice a week, first on Monday evenings to cover topics like managing up to your boss or a board, how to stand out in job applications, and getting buy in for your ideas. And then there's a second meeting later each week to get coaching around those topics or other topics you want to make sure we cover.
[00:26:02] Those small groups are with like-minded peers who are at a similar place in their careers as you. So for example, if you're a mid career person and trying to get to that next level of responsibility, say, like a department head, you'll be with other people in a similar place with similar experience and similar goals. If you're an executive director wanting coaching, you'll be with other executive directors. If you're a student, you'll be with other students. You get the idea.
[00:26:24] You'll also get a one-on-one session with me so that we can really dive into your specific situation, your goals, and strategize how you can get there.
[00:26:31] If you are the kind of person who has an idea or goal in mind for yourself, even if it's vague or loosely formed and you want clarity or support in making that happen, then the Summer Uplevel is for you. Please consider this a personal invitation as I really did make this for you, and I'd love to work with you. Visit my website, aubreybergauer.com/summeruplevel to get the details and register.
[00:26:54]
[00:26:56] That's all for today, folks. Thanks so much for listening, and keep up with more content like this by following me on LinkedIn, Instagram or Twitter @AubreyBergauer. And Definitely hit that follow button to subscribe to this podcast. And I have one more favor to ask: if you liked what you heard here, will you please leave a review and rating? I've learned it really does make a huge difference, and I'd be so grateful for your help and support in that. Thanks again. See you next time on The Offstage Mic.
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[00:27:24] The Offstage Mic was produced by me, Aubrey Bergauer, and made possible by Descript. I used to Descript to record, edit, set audio levels, and make the trailer as well as the video teasers on social media. I couldn't have done it without them. And I recommend any marketing team or individual creator should definitely use this tool too. Thanks again to Descript for making this project and many others I've done possible. This is a production of Changing the Narrative.