OPINION: The Road Ahead. What Will the US Arts Economy Look Like in a Post-COVID World?

The following article may be hard to read for those suffering from the catastrophic personal losses caused by the COVID-19 crisis and the near-universal invocation by arts presenters of Force Majeure. If you are still processing the psychological and financial damage of the arts economy shutdown, or companies laying you off for half your income for the year via a Tweet or “temporarily” laying you off with healthcare benefits, but no pay, please bookmark this article and come back to it when you are ready.

For everyone else, I am not going to sugarcoat it. We are in for the fight of our lives.

Here are my assessments and recommendations for US artists if they want to survive the imminent and likely permanent shift in the performing arts economy:

1) Classical performing artists should be prepared to go at least 18 months without receiving any income from public performances.

2) Classical performing artists may not reach full employment, the ability to make a full-time living from performance alone, again for years.

3) Because of the nature of Force Majeure risk, and the financial incentives of arts companies to wait until the last possible moment to cancel performances and pay nothing, and because that cancellation will not allow artists time to recover financially, artists must make the difficult decision now to strategize and prepare for a permanent change in the nature of their careers.

4) The most effective route to survival in the post-COVID word will require artists to build another set of marketable skills, with training to start immediately.

5) A major part of that realignment is that a second set of income, or ‘dual income’, will be required by most performers.

6) Unfortunately, the most common side-careers of performers in the Pre-COVID era- the restaurant business, retail, hospitality, and administrative and teaching work in the arts- are also some of the most likely sectors to be negatively affected by the COVID-19 crisis. These careers are no longer a haven from the risks of a performing career in the post-COVID era, if, in fact, they ever were.

7) One of the few industries that stands to gain the most from the COVID-19 crisis is Big Tech, specifically ‘FAANG’: Facebook, Amazon, Apple, Netflix, and Google, as well as the network of smaller companies providing support services for the Big Five. They will be poised to clean up in the Post-COVID fire sale in part because of their warchests of $100s of billions of dollars, as well as their role center-stage in the new behaviours of a globally locked-down world.

8) It is my suggestion that laid off or furloughed arts workers train and develop a second set of skills immediately that will fit an entry-level job at one of the Big Tech or Big Tech-adjacent companies poised to thrive in this crisis.

9) The tragic irony of this crisis is that, in the post-COVID era, the person most likely to have a performance career will be the one that can last the longest without performing. If the drought does indeed last 18 months or longer, only the most privileged singers, those with deep reserves of cash or those who already have a dual career or those from advantaged socioeconomic backgrounds, will have a chance at a post-COVID performing career.

10) These recommendations are not intended for artists to quit the arts, but to survive until the arts economy is able to heal itself and recover.

The sections below will flesh out these recommendations based on the most recent political, macroeconomic, and arts business data, as well as the off-the-record testimony provided to me by over a hundred classical arts performers, agents, and administrators. It will also make educated guesses at the types of organizations and performing careers that might have the highest chance of success in a post-COVID world, including prescriptions for my own post-COVID career.

For those administrators and musicians, either furloughed or laid off with benefits, who think they can wait out the crisis, and may be skeptical of predictions at this point in the crisis, I would like to say the following:

Middleclassartist started the global arts conversation on Force Majeure in its March 2nd article and was ahead of the curve on the tragic consequences of it for artists, particularly those performing at the highest levels. Everything published in ‘COVID-19 and the Hidden Consequences of ‘Force Majeure’ came to pass. That doesn’t mean I’m some kind of super-predictor genius that will be right about anything and everything, but it does mean I have a very detailed understanding of what’s going on right now and I am in a unique position, based on the sheer volume of information presented to me anonymously over the last few weeks and my own background in statistics, politics, economics, and data analytics, as well as my background in the industry as a mid-level concert performer for the last nine years, to analyze that information and make some tough calls. Please understand that I have put a great deal of thought and research into this article, and that, based on my record, you should consider the research so far on Middleclassartist and weigh the evidence presented below carefully before responding publicly.

There are also people in the industry who are publicly telling everyone that, despite having no working musicians on staff and no funds available to pay them, the company will proceed next season, business as usual. I understand and support their position that they must present the best possible face on the crisis to donors and the public, in order to survive.

However, to those people I say: the house is on fire and you are telling everyone to go down to the basement and shelter in place. What we need to do instead is save as many of our friends and colleagues as we can for as long as we can. And that involves telling some uncomfortable truths.

Now that those criticisms are addressed, I will proceed with the case at hand.

The Road Ahead for Arts Presenters

The arts development teams for the 2020-2021 season will have a Herculean task on their hands:

· Due to cancellations they may be facing 2019-2020 funding shortfalls of, by one estimate, at least 20% if they invoked Force Majeure and didn’t pay artists, and a much larger shortfall if they did pay them;

· Due to the coming recession, one which will likely far exceed that of the Great Recession in breadth and depth, we can expect American giving to drop precipitously, no less than the Great Recession’s 8% loss.

· The incentives of donors and board members may change in a post-COVID world and may shift away from culture as a top priority.

· With no end to social distancing in sight, arts presenters cannot credibly say they are opening their doors in the Fall.

The current budget shortfalls

We have an estimate now on the percentage of lost revenue for the Met Opera from the 2019-2020 season for cancelling due to Force Majeure: roughly 20% of its yearly $300 million+ budget.

The Metropolitan Opera’s loss from cancelling through the end of the season is estimated at $60 million, about 20% of its yearly budget. And that is not including the fees saved by laying off orchestral players, chorus singers, soloists, and stagehands with no pay. If a company ignored the Force Majeure clause and paid its artists (Editor’s note: Thank you.) and then must cancel their summer or 2020-2021 season, the figure would likely be much, much higher than 20% of total yearly revenue.

The coming recession

We are headed for a major recession based on job loss numbers, the likes of which we have not since 1982.

The Bank of America is “forecasting a total of 3 million jobs lost” this week, a number that “shatters the standards set even during the worst points of the financial crisis and the early-1980s recession”.

From the jobs numbers trickling in, although we won’t have a full estimate until April, the COVID-19 crisis will likely cause “layoffs on a scale that the U.S. has never seen before” with one economist estimating an unemployment rate of over 10% with roughly 18 million Americans unemployed, a 300% increase from February.

While we don’t know the full impact of COVID-19 on the global economy yet, what we do know is that we have never fully shut off the US economy for months and tried to turn it back on again. And that the consequences of this will be much worse than those from the Great Recession, an event that rocked the classical arts industry and led to the closures of established companies like New York City Opera.

In addition, the usual economic tools to fight global economic depression, if social distancing continues, will be useless. The standard economic approach to fighting a depression or recession, founded by John Maynard Keynes and adopted by most countries during the Great Recession, is to massively increase government expenditures to grow spending and investment and lower taxes to create demand for services.

Unfortunately, the Keynesian methods cannot work in an economy shut down by social distancing. Imagine, for example, the federal government gave your opera company a $100,000, interest-free loan today and a payroll tax cut. What could you possibly spend that on? Are you going to reopen your organization for pizza delivery and groceries? Are you going to Zoom your orchestra rehearsals? Advertise on Facebook for your free streaming broadcasts?At best, it would be spent on maintaining the status quo for a few more months, keeping workers temporarily in jobs that, in effect, no longer exist until social distancing ends, and paying for monthly capital costs such as rent, inventory, payroll, and marketing in order to prevent bankruptcy.

Social distancing hits the power button off on the economy, and until distancing is permanently stopped, we will not be able to grow or spend our way out of this crisis.

Wealthy donors, particularly the major household-name donors, will be much less likely to give in a post-COVID world.

While there is no doubt the current economic situation will be much worse than the Great Recession, we can use it as a baseline for how fundraising will be affected.

In 2009, American giving dropped by 8.3%:

(Source: Russell Sage Foundation and the Stanford Center on Poverty and Inequality)

The giving drop-off in 2009 was, indeed temporary. However, giving did not reach pre-recession rates again until 2014. Six years is a long time to wait.

Incentives and priorities of wealthy donors may change drastically in a Post-COVID world. For example, the biggest story I posted on Middleclassartist before the epidemic, involving over 100 hours of research, focused on young artist programs, and how they charge artists unnecessary $35 application fees. This was a huge deal two months ago to singers in my industry.

Now I am writing about the survival of my industry. The Young Artist piece seems, in retrospect, quaint.

Donors and board members are not ATMs- they are humans with complex needs and wants, families, and business empires. They may work in construction, retail, oil and gas, and other industries that will be massacred by an upset in the global supply chain and plummeting demand. They will have kids in Little League whose games are cancelled, because the coaches and umpires are too sick to play. Their retirement and college funds may be devastated. They may have to let many of their close friends go from their business and require additional infusions of capital from the government or private equity to weather the storm. The alumni relations for private schools and universities, where donors are also likely board members, may reach out to them to fill in heavy losses in their endowments. They may have a family member or friend who is diagnosed with COVID-19 and struggles to make it due to dwindling medical supplies and understaffed hospitals. In other words, those private sources we rely on to help us through every crisis will be having crises of their own, and they may reconsider their standing million dollar a year donation to an A-level house, orchestra, ballet company, or performing arts center, given the financial demands inflicted upon them, their family, and their business.

Social distancing will likely continue through the summer

It is highly unlikely based on current US COVID-19 data and our federal government’s chaotic, improvisatory response that the outbreak will mirror the five-month success of China or the lightning-quick turnaround of South Korea. It’s much more likely based on recent COVID-19 death by country statistics that we are closer to an Italy than a China.

For example, China used “temperature checkpoints and pervasive digital surveillance programs to track people’s movements” in order to keep COVID-19 in check.

In the US, the White House denied the outbreak until recently, ridiculed or contradicted its public health professionals and still, two months after the initial January 19th outbreak, does not have a publicly available test in my home state of Washington.

In China, the population has followed the strict orders of its government and the streets are empty.

This past Friday, my Governor, Jay Inslee, begged residents to stay at home and shelter in place voluntarily, calling current gatherings “reckless”. This is a picture of Alki, our local beach, a day later:

According to the NYT’s Upshot research, based on the current trajectory we have an even worse progression than Italy:

We are the hockey stick on the chart. We are not even close to the success of South Korea. We are progressing significantly faster than China. Based on this data, if we are very lucky, we will be Italy.

If the trends in COVID-19 data hold, we will certainly be looking at social distancing into the summer and potentially into the fall. Some experts suggest that at least some social distancing will need to be maintained until a vaccine is developed in 12-18 months. The uncertainty around social distancing would lead to more cancelled concerts, more Force Majeure invokes, more lost fees, and more challenges to fundraising. Social distancing would prevent us from performing and earning income from our art and, with a vaccine potentially 12-18 months out of development, there is a significant chance that our 2020-2021 season will be at least partially cancelled.

If our next season involves more Force Majeure, again we will not learn about cancelled performances until too late, due to the financial incentives of presenting organizations to wait until the last minute to invoke the clause. By then, we will have no ability to earn income and may be out an entire season of income.

The Business Winners in a Post-COVID World

In the post-COVID world, which industry is most likely to grow, expand, and hire on a massive scale? This new world will be a Gold Rush for any business with cash on hand, able to snatch up companies for pennies on the dollar, and Big Tech is selling the shovels. Specifically, those with the most to gain are what tech industry insiders call FAANG: Facebook, Amazon, Apple, Netflix and Alphabet (Google).

In a lockdown, habits and behaviours change. And they may change permanently. What are those new habits? Searching “Coronavirus news” on Google. Watching Netflix. Checking their iPhones (Apple) 100 times a day. Working from home, staying in constant contact with colleagues using Microsoft Teams software. Surfing social media (Twitter, Facebook). Talking to their friends online (Slack, WhatsApp, iMessage).

And who is managing this massive increase in traffic? Who is leading in the web services space? It’s Big Tech again: Amazon, Microsoft, and Google. These companies also have an unholy amount of cash on hand to a) build loyalty with their employees by paying them in full through the crisis, securing their position in the market once the crisis has ended; and b) expand exponentially into every corner of the American economy while their smaller business rivals are laying off workers, and hire hundreds of thousands of workers to make it happen. Apple, for example has $207 billion in emergency cash on hand. That is not a typo: $207 billion.

These companies and the supporting tech companies in the Big Five ecosystem are making huge investments in labor and capital even now. Amazon is currently hiring over 100,000 employees for its warehouses to keep up with online demand. Katie Gonzales of the People’s Music School is tracking over 100 companies, mostly tech, with over 1500 remote jobs open in February 2020. (Thanks, James Dargan for the link.)

If performers are out a full season of partial or full income from performing, they should be looking very carefully at the Big Five companies and the types of white-collar, stable jobs they have posted. With at least three to five months of time on their hands and no performing jobs to train for, artists would be better positioned for the Fall by developing a secondary set of skills that matches the Big Five needs.

This could include Software Engineering, UX Design, Data Science, Front-end Web Development, Product Management, Data Analytics, and Digital Marketing, through a paid online, part-time, or full-time crash-course like General Assembly, the University of Washington; or free online courses (MOOCs) like EdX or Udemy.

For singers and coaches fluent in multiple languages, you could build an independent business in translation and copy editing or technical writing in multiple languages for Big Tech’s inevitable global expansion.

Highly paid non-technical fields at companies like Google include Human Resources, a field that hires from a wide variety of educational backgrounds and experience.

Sound engineers and graphic designers make a competitive salary with benefits building new VR experiences at video game companies like Microsoft’s Xbox, Bungie, and Valve.

There are many, many ways to train for a dual career while your performance career, at no fault of your own, is on hold. It will be a difficult road, but starting 1,000 hours of training over the next six months in a career outside performance will not only take your mind off the psychological trauma you’ve faced, but provide you with direction at a time when we are all feeling rudderless, powerless, and afraid.

The Artist Winners in a Post-COVID World

When our industry comes out the other end of this extinction-level event, there will be classical music to perform in the world and as an artist, if you have survived financially, you will perform it. However, the organizations poised for success in a Post-COVID world may look very different than the ones we see today.

Organizations will be leaner. They will trim labor and capital costs to survive. They may pay for only a few calls a year. They will likely fly in people less often, working more often with local and regional musicians. They will spend less on marketing, PR, and advertising. They will probably be tied to larger institutions for financial security, like prestigious universities with endowments. They will have a heavy online recording, rehearsal, and performance presence on social media. They will probably share administration costs between performers on a volunteer basis or low-income basis. They may build local in terms of donorship from the artist and academic community, small and medium-sized businesses, and the occasional big fish in the region.

Groups like the Kronos Quartet, small chamber ensembles that share responsibilities like the Zohn Collective or Eighth blackbird, small vocal ensembles like Roomful of Teeth and Voces8 are all the types of group that will survive and thrive in the Post-COVID world.

Where will I be in this new world?

With a dual career already in place, I will be OK. I will be singing for the rest of my adult life and I will keep working as a data analyst as long as my firm will keep me.

I will be working with the people that had my back: groups like Conspirare, True Concord, and others who fought for us in our greatest hour of need.

I will be performing locally with the people I care about, hopefully still at the Seattle Symphony, and I’ll be posting everything I sing online for my global community. (Maybe we’ll all work together to find a financially viable model for streaming along the way.)

I will be recording music with my friends who were with me in this terrible time, who I know will be lifelong friends due to the incredible trauma we’ve endured and shared together.

I will write about the music business as an independent journalist and play with my son Remy every chance I get.

I will spend as much time as I can outside. I will eat out with my wife at our favorite local burger joint. I will go to as many concerts as I can to support my friends. I will meet those friends in person for coffee and we will talk about what was done to us.

I will heal. In time.

My greatest hope is to see my friends on the other side.

I hope we all make it there.

ZF