Questions and answers about
the UK economy.

#economicsfest: How can the arts recover?

Since the arts world needs crowds, it has become one of the major economic victims of Covid-19. Uncertainty about the future of big gatherings and how to make them safe is hitting organisations, staff and the army of freelancers who make this sector work.

The arts industry has a fundamental problem: it relies heavily on in-person attendance at live events. Businesses in this sector – from theatres and art galleries to comedy clubs and festivals – run venues where social interaction occurs, usually in large groups. Both travel and gatherings are currently banned by the government. Even after lockdowns lift, many may fear live events or be encouraged to avoid them. Relying on crowds is something of a curse.

With these concerns in mind, I attended the Bristol Festival of Economics online panel –  Ground Zero: How to Revive the Arts World When Crowds Are Banned – with Giorgio Fazio (Newcastle University), Liz Harkman (Bristol Festivals Network), Tom Paine (Team Love) and Ruth Towse (Bournemouth University), hosted by Andrew Kelly, director of the Festival of Ideas.

Access the recording here

Even prior to the pandemic, the arts industry’s labour market was notoriously precarious, with a large proportion of workers topping up their living in non-arts jobs, or even leaving the industry all together as they became older or had children (Oakley, 2009).

This financial and professional uncertainty has increased as lockdowns have been put in place. Across the world, artists, performers and venues have adapted, offering online events and exhibitions, in order to generate income and to provide relief to the public in a time when wellbeing is paramount. Coming months and years will reveal whether this shift is temporary or permanent.

Related question: What do we know about the impact of coronavirus on the creative industries?

A new normal?

As the news of the first effective vaccines was announced, Netflix’s share price dropped dramatically, as did those of Zoom and other digital collaboration platforms. While this may indicate investors predicting a return to ‘real life’ consumption of the arts, the shares quickly rebounded perhaps because the date of vaccine availability remains uncertain.

Related question: Data: The vaccine and the stock market

One problem is simple: cost. Putting on traditional, large-scale live performances is notoriously expensive. Arts organisations will have to decide whether to invest in making performances available digitally. Since there is little evidence that audiences are willing to pay pre-pandemic ticket prices for virtual content, this may not be a workable model of production for many.

Another problem is capacity. Most theatres, concert halls and opera houses need to sell on average 60% of their tickets to break even. As a result, reduced, socially distanced audiences are not viable, even in the short term. Combined with the competition that online streaming platforms provide, the medium-term future looks bleak.

Can arts organisations (and artists) make it work?

One panel member gave a strikingly raw first-hand account of how the economics of lockdown plays out. Tom Paine, whose firm runs festival and music events, explained how an entire year of events was cancelled. A company that had previously been growing and gradually building reserves suddenly lost an entire year’s ticket sales, a huge revenue hit that left the firm relying on loans.

The impact on jobs was just as striking: the company’s workforce – both full-time and thousands of part-timers and freelancers – production designers, lighting assistants, sound engineers, support staff and security specialists – were all put at risk. This part of the account would be particularly interesting to economists and policy-makers researching or working with small businesses.

The new digital model that some arts companies have adopted is not suitable for music event companies, Tom Paine explained. Their productions costs have not reduced, and audiences appear to be reticent to pay when there is so much free content available. Many promoters and producers are concerned that only the biggest brands and companies have the reach to make cheaper online events feasible economically.

Liz Harkman suggested that arts organisations also face a problem of saturation. Wide availability of digitally streamed productions makes it hard to capture a large audience. She also noted that easy access is paradoxical since online events are ‘competing with daily life’. The financial and social investment that attending a live event requires – making the time to travel or hiring a babysitter – is lacking. As a result, the experiences for audiences can be less rewarding.

The problem lies in an economy of attention: there was already significant competition for audiences prior to Covid-19. For example, as Ruth Towse noted, classical music is an international market in which the most successful streamed performances have been those by the ‘superstars’ of the industry, rather than small and medium-sized organisations, which have suffered as a result. There is a risk that many who train as artists frequently do not make their living solely from their art, so a narrow spotlight on the most well-known artists, as well as uncertainty from the pandemic, could increase this trend.

Related question: How is coronavirus affecting the self-employed?
Related question: What will be the effect of coronavirus on gig economy workers?

A way forward?

In the short term, payroll jobs have been protected by the Coronavirus Job Retention Scheme, and subsequently by the Culture Recovery Fund. Yet workers in the sector have still fallen through the cracks, particularly those who are self-employed. Others who top up their incomes with a second job in hospitality or tourism have faced an additional blow. What is the way forward for arts sector firms and workers?

The Culture Recovery Fund is scheduled to end in March 2021. Despite helping to keep many organisations afloat, Tom Paine explained that many firms did not apply because the process was too complex, or they were falsely under the impression that they were ineligible. Even those that have been able to access funds are concerned about next year.

Uncertainty, and the inability to insure against it, continue to drag, Paine said. Festivals and other large-scale events take months, sometimes years of planning to produce. Companies that put them on are struggling to take out insurance against the pandemic, making it hard to plan for densely attended events in the spring of 2021 and beyond.

While mass testing could also make live events a practical proposition, restrictions on international travel may prevent well-known acts drawing the sizeable audiences needed. Again, the answer may be smaller events, with knock-on effects on employment.

The government has a role to play here, Liz Harkman suggested. In particular, spending should focus on supporting the sector to upgrade workforce skills and diversify events. Clearer rules would help: there is currently no standard for how live events can be made Covid-19-secure. This creates a fear of liability for a mass breakout and undermines commercial confidence.

Despite this jeopardy, Giorgio Fazio argued that gains have been made through the sector beginning to learn which models of production suit it best. His pointed to data showing that the appetite for cultural content has increased dramatically during lockdown, a trend that could well continue beyond the pandemic. He suggested a scheme similar to ‘Eat Out to Help Out’, which could support the arts and facilitate any changes that the sector may need to make.

Whatever the solution, the panel agreed that many organisations and artists will not survive financially beyond the pandemic. This vital sector needs further state support and a clear, realistic road map for how audiences can return safely, equitably and profitably.

Related question: What financial support is needed for artists and the arts in the pandemic?

Where can I find out more?

Who are experts on this question?

Author: Samuel Taylor
Photo by Nainoa Shizuru on Unsplash
Recent Questions
View all articles
Do you have a question surrounding any of these topics? Or are you an economist and have an answer?
Ask a Question
Submit Evidence