The Private Theater, aka “Dynamic Pricing”
I make my living in the not-for-profit theater. Back in the ‘80s I got my Equity card in one of them (The Alley, in Houston), and those not-for-profits continue to be, with very rare exceptions, where the plays I write have been produced. And over the past few years—by some ridiculous good fortune—I’ve been able to support myself through those productions alone. I’m comfortable. I’m not complaining.
But, once upon a time our institutions went by the quaint name “the non-profits,” a bit of obsolete terminology that went out of fashion around the Reagan administration when for some reason the name subtly mutated from “non-profit” to “not-for-profit.” I’m not sure why this hair-splitting happened, but it’s always felt sort of grammatically weaselly—it’s like saying, well, sure, ya know, we’re not really supposed to make a profit (it says so on our letterhead), but on the other hand if we should happen to turn a profit in a given season (wink, wink)… We’re not for profit, but we’re not necessarily against it.
I mention this because in the last couple of seasons I’ve become aware of a ticket scheme already practiced by some of our larger regional theaters, and currently under consideration at some where my plays are produced. Basically, what these theaters are choosing to do is reserve a bank of premium seats which can vary in price according to demand. That demand rises from an especially good review, say, or the presence of a Hollywood star in the cast, etc. When the demand goes up, those seats would suddenly command a considerably higher price, allowing preferential access for those best able to pay. And this practice goes by a very catchy and newfangled name. It’s being called “dynamic pricing.” But it’s not a new practice. It’s actually quite old, and has a more familiar name. It’s called scalping.
The argument for it goes like this: In any regular season there will be plays that only a few people want to see (like those I write) and then there are those that many, many people want to see (The Santaland Diaries). So why not follow the model of every other business and maximize profits on one product so as to subsidize the others? After all, we live in a market culture, in which it has been demonstrated that market principles always produce optimal results, right? Our boards of directors certainly tell us so. They tell us we have to compete in the marketplace for our audience. And after all, scalping—or price-gouging, if you prefer—already works for airlines and sports teams and hotels and Broadway shows and nobody seems to complain—at least, not those that can afford them. And furthermore, like it or not, pretty soon everybody will be doing it. So hey, why fight it?
But there’s one little problem with that way of thinking. Here’s the problem: Our theaters are not airlines, or sports teams, or hotels, nor are they Broadway shows. Our theaters don’t pay any taxes. And the reason that we don’t is because we lose money. Intentionally. It’s what’s supposed to happen. And we’ve always accepted that as a condition of our existence. And yes, that means that we are perpetually on the verge of financial collapse. I get that. But we enjoy that tax-exempt status precisely because we can’t cut it in the marketplace. For that matter, neither can churches or libraries. We are exempt from paying taxes because in some quaint, bygone era we imagined that these institutions provided their own return to the community that they served—with equal access to all (like I said, quaint).
And look, some of the very artistic directors who have come to embrace this policy are people I consider personal friends. And let us extend them our sympathy, for they have the miserable task of scurrying about year after year, tin cup in hand, tying themselves into knots for a few measly donations, all so they can make a payroll. It’s no surprise they’re looking for a quick fix—any fix—to their perpetual problems.
An artistic director at a big theater (a person I like very much, by the way) told me last year that he considered himself a “redistributionist” because he takes money from wealthy patrons and gives it back to the theater—now, he doesn’t give a raise to the actors, mind you, or to the crew; he doesn’t lower ticket prices. No, he gives it back in the form of a new patron’s lounge where you can buy expensive cocktails—provided you have enough money left over after you’ve bought your tickets. But that’s not a problem for our boards of directors and our donors—those whose money we’re supposedly redistributing.
Our boards are always stocked with people who know all about money. It’s their job. And these folks are simply—helpfully—sharing some of their financial strategies with us silly little idealistic theater people. Because the truth is, they don’t want live theater to die any more than we do. They attend a couple of times a year when they need to entertain a client with a new account. The wealthy have always been patrons of the theater. They just don’t like having to wait in line with the rest of us.** But they already have an advantage when it comes to getting the best seats in the house. Go to any basketball game or Rolling Stones concert—any for-profit venture. There they are, front and center: Hedge fund managers, law-firm partners, advertising executives, because gosh darn it, they’ve earned it. It's part of the ongoing sky-boxification of everything in the US: Not only do the wealthy have an advantage ipso facto, but we further institute policies to enhance those pre-existing advantages. That's taking the law of the jungle and making it worse.
To turn our theaters—our public institutions—into yet another clubhouse where the velvet rope is preferentially pulled aside for those waving the largest wads of cash—that, to me, is an unacceptable solution.
And if, as my friends at prominent theater companies would argue, "it's not profit if it is re-directed into next season's budget" (rather than the CEO’s pocket)—well sure, but that's the same argument corporations make when they sequester their profits offshore for supposed future use. For that matter, why not do dynamic pricing and stash the profits in a Cayman Islands account? Same reasoning—"as long as we're not touching the profits this year they shouldn't be taxed." I smell BS.
And hey, if the market ideologues are in fact correct, and the demand dries up for the product that we offer then yes, we will have to change—improve, innovate, maybe even fire some people (sadly)—maybe produce smaller plays (how much smaller can they get?), maybe even hire the occasional Hollywood celebrity (All The Way) to star in them. There are all sorts of measures we can and do take to remain vital. But to turn our theaters—our public institutions—into yet another clubhouse where the velvet rope is preferentially pulled aside for those waving the largest wads of cash—that, to me, is an unacceptable solution. Because then you’re no longer running a not-for-profit, you’re just making a profit and finding creative ways to hide it. And in that case, you’d better start paying your taxes, like the rest of us do.
**For a far more eloquent discussion of queues versus markets—including how it pertains to the Delacorte Theater and its ticket lines—I would suggest Michael Sandel’s terrific book What Money Can’t Buy.