• Research Impact Enterprises [RIE]

The Birth of A New Model: The For-Profit Opera Company

Updated: Aug 5


Written By: Joel Burcham, DMA.




Just Imagine


Imagine having what has never been created in the United States. Imagine instead of having the traditional patronage model, we create the "For-Profit Opera Company". Imagine if this model is used what we could do, would happen, and the possibilities.

Imagine a modern opera company whose revenue is self-generating and self-sustaining.

This company utilizes multiple streams of revenue to retain comparable staff and set contracts with freelancers similar as to the non-profit opera companies. Plus create and own innovative ways of sharing and educating the public with this art form to make a profit.

Imagine an opera company that hires full-time, leading singers, musicians, technical artists, chorus members, and other artists who work for the company at a competitive salary with benefits. Artists can then reside full-time in or near the location of the company.


This is similar to how the opera companies operate in Germany except through a for-profit revenue and a profit-sharing mechanism model rather than relying on state subsidies.


Meaning that this opera company would be independent from the charity of corporations and individuals. It would also not be dependent upon tax-dollars for support, thus allowing this opera company free to produce operatic content sensitive to the desires and needs of the current and future audience.

Imagine a company that leverages new technologies to make this art form more immersive through both digital and sonic platforms. This company also has its own Research and Development (R&D) department that continues to create and patent new goods and services relevant to dissemination of a 21st-century opera.

Imagine an opera company that can keep ticket prices competitive and potentially even lower than that of comparable theatrical forms, yet at the same time can easily adapt to the market because it operates in the for-profit space.

Opera in the United States: A Brief History

Opera, traditionally is defined as a theatrical production whose dialog is completely sung not spoken. It has existed in both the East and the West for centuries. However, opera in the United States was largely imported from Western Europe. This cultural import coalesced in both New York City with the failed Italian Opera House and in New Orleans by way of the Théâtre d’Orléans in the post-Revolution era.

The Théâtre d’Orléans, launched by entrepreneur and impresario John Davis, hosted American premieres of operas by the most prominent European composers of the time including Auber, Donizetti and Rossini. The company toured the Northeast states, influencing its emerging fine arts crowd, mostly from America’s rising gentry class.

This gentry class of mid-19th-century New York City helped build its first consistently successful opera company, The Academy of Music. Although the Academy of Music used it’s building for all types of events, the opera performances were its crowning jewel and a very exclusive ticket for the richest of New York City. This gentry class, which was a very closed social circle, owned many of the luxury boxes in the Academy’s theater.

During the Reconstruction era the new gentry of America’s Gilded Age, including the families of Cornelius Vanderbilt, JP Morgan and the Roosevelt's, were excluded from the Academy. Thus, a coalition was created to start a new opera company in New York City, the Metropolitan Opera Company, which historian Daniel Snowman, 2010 in New World Overtures called “the product of greed.”

The Met would eventually become the most prominent opera company in America, and arguably the world. The outcome of this battle of gentries would set the model for structure of and further creation of America’s opera companies, the modern patronage model. This model has been copied and tailored throughout America’s operatic history for two centuries.



Opera America: How Non-Profit Opera Companies are Categorized

Opera America, an organization that counts the vast majority of American opera companies as members, categorizes companies at various Budget Levels. The levels range from 1-5, with Budget Level 1 having the largest annual operating budgets of over $15 million. It is interesting to note that the Metropolitan Opera (aka the Met) has been excluded from Opera America’s annual field report. The Met’s annual operating budget is so large, averaging around $300 million for 10 years, that its data would greatly skew the results for the Budget Level 1 category ("Annual Field Report, 2019" - Opera America, 2020).

To give an idea of production costs for a successful US regional opera company, say a Budget Level 3 company with an annual operating budget of between $1- $3 million, consider more data from Opera America’s 2019 Field Report. According to the 2019 Field Report, the average Budget 3 company had total production costs of $1,602,018 which equates to 2/3 of its annual budget 3. An average Budget 3 company will fully produce 3-4 main stage productions per season. In performance spaces that can seat an average 2000 opera goers. So, a rough estimate of production costs per/production range from $450,00 - $550,000.

Thus, average production costs for a reputable median opera company are still considerably expensive. All of these funds come from the generosity of and cooperation of private and corporate donors, as well as multiple grant sources. Financially speaking, opera in America is funded by abundance. When the economy is bullish, donors give more to the arts. In bear markets, donors give less.

Either way, the operatic economy is dependent on the mercy, or generosity of those with extra income. Yet, the American economy largely operates on free-market capitalism. Why can’t the fine arts also operate within the for-profit sector of the economy?


Capitalism in the Context of The Non-Profit and For-Profit Opera Company at Scale

Similar to the non-profit opera companies, a for-profit company can self-allot its revenue according to the company’s mission and core values. However, and in contrast to the non-profit structure, a for-profit company will be able to self-generate revenue from the success of the goods and services that it sells.

The success that comes directly from a customer-base and a brand, instead of indirectly through a guild of patrons, makes a company more directly accountable and socially responsible to a potentially larger and more diverse group of supporters. When a company increases its impact like this, there is more reciprocity between a company and its respective audience.


Furthermore, if free-market capitalism is working well with robust competition in place and price-points remain competitive, it becomes easier to assess and attribute value. If popular appeal increases in this type of market, the capital needed to sustain an organization at its infancy through its entire lifecycle becomes a very attractive approach through a for-profit corporate model.


Consider the experience of Jane Chen, a social entrepreneur who founded Embrace Infant Warmer, an organization dedicated to providing goods and services to regulate the temperature of newborn babies. She wrote in a February 2013 article in the Harvard Business Review.


We debated at length the merits of each type of structure and came to the conclusion that the fundamental difference between a for-profit and a nonprofit organization is where it can source capital. A for-profit can raise money from private investors, for which it must give equity or dividends to shareholders; ultimately, a return on investment is expected. A nonprofit, on the other hand, can seek donations from individuals, foundations and corporations. Such stakeholders generally expect a “social return” on capital.


Jane Chen and her start-up team decided to launch Embrace as a non-profit 501(c)(3) to better mitigate risk. However, because they were developing new medical technologies to achieve Embrace’s mission, they needed access to more abundant capital to fund these innovations. Thus, they created a separate, for-profit organization called Embrace Innovations to leverage the organization’s ability to raise capital from venture capitalists, as Chen also explains in the Harvard Business Review, 2013:

The for-profit arm, Embrace Innovations, would raise money from venture capitalists — though our first screening criteria would be investors who were aligned with our social mission. It would license the technology by paying a royalty for every product sold. The for-profit arm would be responsible for the capital-intensive aspects of the work, including manufacturing, clinical testing and R&D. And, importantly, it would set up the sales and distribution infrastructure to sell the product to those who could afford to pay for it, while still focusing on bottom of the pyramid markets.


Opera companies have similar need for innovation, both artistically and technologically. Every live, full production is a new product-service that needs funding to cover multiple production costs which can be quite high.

The current American opera model utilizes freelance, independently contracted musicians to supply the artistic personnel needs of the company. Meaning that US opera companies do not offer salaried, secure leading singer positions with benefits residing near the location of the company. The US opera singer’s life is a gigging life. This includes the singing personnel, stage direction personnel, technical theater personnel and much of the orchestral personnel are paid with freelance fees for service.


This structure has enabled many of the non-profit 501(c)(3) opera companies in the US to provide full-time, salaried positions to its administrative and office staff, along with the salary of a resident conductor. Meaning that only in America’s biggest opera houses can the singing, stage direction, technical theater, and much of the orchestral personnel contracted positions afford someone a comfortable material lifestyle.

This model has remained in-tact for decades, with success. It allowed the US to produce some of the 20th-Century’s greatest operatic voices in the world. Opera greats like Marilyn Horne, Richard Tucker, Leonard Warren, Leontyne Price, Robert Merrill, Jerome Hines, Samuel Ramey, Carol Vaness, and Renée Fleming to name a few.

This successful model, specifically in the 20th century, resulted in the increase of classical singing training programs and degrees in US colleges, conservatories, and universities. Thus, a major supply of trained and degree awarded classical singers were created in the US as opera became popular in the US during the 20th century.


However all of this began to rapidly change in the 21st Century. Both the quantity and quality (well-paying, secure, benefited) of operatic singing jobs decreased, COVID-19 notwithstanding. Consider what Fred Cohn writes in a 2020 Opera America article entitled The American Singer: 1970-2020, quoting artist manager Ana De Archuleta.


The gist of it for opera singers comes down to this statement: There are about 80 freelance opera singers worldwide who are constantly engaged, then there are about 8,000 freelance opera singers worldwide who do not have a job. A trend toward smaller fees has its own impact on what it means to be fully employed. The rule of thumb has been that three freelance engagements per season are enough to make a living for the entire year. However, with the current tendency to pay lower fees, this may not apply anymore.

Compare this sobering data point with another, even more sobering point of data, which Fred Cohn also illuminates in July 1, 2020 Opera America Magazine.


Another factor adding to the competitiveness of the field is that learning institutions are sending an ever-increasing population of singers into the marketplace. According to figures from the National Association of Schools of Music, this year 579 singers received master’s or doctoral degrees in voice and opera. Clearly, the job market will not offer sustained careers to more than a fraction of this cohort.


Concluding Remarks

This unbalanced ratio between talent and opportunity can be corrected with more job opportunities. More job opportunities can be created with for-profit opera companies that generate their revenue.


Opera companies like these can exist in smaller, semi-urban areas with growing economies, cultural diversity, and community support. What is needed is an innovative product/service with high profitability ready to take market, funded by venture capital investment.


If successful, this model can be duplicated and possibly franchised. More opera companies can then be launched around the country providing good jobs to the heavy supply of talented artists ready to work. Make no mistake about it, the Return on Investment (ROI) would be both financial and cultural as the beauty of the acoustic singing voice adds great value to bank accounts and peoples’ souls in American cities.






References


Chen, Jane. “Should Your Business Be a Non-Profit or For-Profit?” Harvard Business Review 91, 2 (2013): 0017-8012, https://hbr.org/2013/02/should-your-business-be-nonpro.

Cohn, Fred. “The American Singer 1970-2020,” Opera America Magazine, July 1, 2020,

https://www.operaamerica.org/r/audiences-community/5585/the-american-singer-1970-to-2020.

Snowman, Daniel. “New World Overtures.” History Today, Vol. 60, Issue 1 (2010): 35-41, https://web.a.ebscohost.com/ehost/detail/detail?vid=2&sid=d2407eb1-18e0-42af-bff5-fdf80aa0bd20%40sessionmgr4008&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#AN=48006542&db=a9h or https://www.historytoday.com/archive/opera-america-new-world-overtures.

“Annual Field Report 2019,” Opera America, January 1, 2020, https://www.operaamerica.org/media/0ofbqu5h/fy2019-annual-field-report.pdf.






Biography


American tenor Joel Burcham, DMA., has firmly established himself as a young professional in the world of opera and classical music. He is known for his dominant stage presence as demonstrated through sensitive acting and "effortless command of his voice, "further described by Chris Shull of the Wichita Eagle as a tenor voice of "clarion tone and operatic power." "Burcham's soft voice," declared Jim Edwards of the Chicago Tribune, "was lyrical and smooth as silk but when he opened up his voice, beautiful loud steely notes poured forth." This versatile tenor voice has appropriately enabled Dr. Burcham to command leading roles with several of North America's top companies.


Joel has sung 35 principal tenor roles with companies such as Utah Opera, Central City Opera, Opera Omaha, Madison Opera, Opera Fort Collins, Opera Theatre of the Rockies and Painted Sky Opera. Some Joel’s strongest roles include Alfredo, Don José, Pinkerton, Cavaradossi and Faust. An active concert soloist, Joel has sung with Hawaii Symphony, Colorado International Mahler Festival, South Bend Symphony, Omaha Symphony, Madison Symphony and the Classical Music Festival in Eisenstadt, Austria in works including Beethoven’s 9th Symphony and Missa Solemnis, Haydn’s Creation and The Seasons, Verdi Missa Di Requiem, Britten’s Serenade for Tenor, Horn and Strings, and Handel’s Messiah.


Dr. Burcham has Voice Performance degrees from University of Wisconsin-Madison (DMA), University of Arkansas (MM) and Southern Illinois University at Edwardsville (BM). He currently serves as Associate Professor of Voice and past Voice Area Chair at the University of Oklahoma (OU). He has also served as President of the Board of Painted Sky Opera in Oklahoma City, Oklahoma.









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