Blog | Economics | Theatre

A Short Note On The Economics of the Performing Arts

. 2 min read

I Demoni (The Demons) directed by Peter Stein and performed by the Tieffe Teatro Milano is one of this season's most sought after arts events. It's a 12-hour theatre marathon. It will be performed at all the world's premier performing arts festivals, but tickets are few, since they only do two or three performances at each festival.

I was lucky to get a ticket. I'll be seeing the show in Amsterdam where it will be performed twice. So check back in June to read whether it was worth it.

The ticket price gives an interesting insight into the economics of the performing arts. In the Netherlands tickets for the show cost 35 euro. In New York, where the production will be performed as part of the Lincoln Festival, tickets come in at 175 and 225 dollar. There are no arbitrage opportunities though, because of the time and money it would take to fly up and down to Amsterdam.

35 euro is the standard ticket price for most dance and theatre performances during the Holland Festival. But The Demons lasts 12 hours, whereas Rechnitz (Der Würgeengel), a new play by Elfriede Jelinek, which I'm also going to see, lasts 1 hour and 50 minutes. So The Demons costs about 2.90 euro per hour of paid entertainment and intellectual nourishment. (You would have to add your own shadow wage to arrive at the virtual per hour price. To see The Demons you have to forsake an additional 10 hours of income, but that's not the point I'm trying to make).

Lawyers, consultants and so on charge a per hour fee. Even in cinema you often have to pay more for longer movies or 3D movies, such as Avatar.

So something is amiss here. Would there have been less demand for the tickets if they had been priced at double, triple or, why not, four times the current price? In New York perhaps, but not at the prices in The Netherlands.

It could be that because the opportunity costs are so high the actual ticket price has to be low to persuade people to spend an entire day inside a theatre, but I don't think that is the case.

Of course, even at 10 times the ticket price the company would still make a loss. The question is whether there would be an audience for a performance such as The Demons if tickets were priced so as to cover the costs. It is only through government subsidies (mostly) and sponsors that productions such as these are possible.

The problem is that, because the production and the performance are subsidised anyway, there is no incentive for theatres and festivals to raise prices. First category tickets for a performance by Dutch National Opera cost 110 euro. It really doesn't make a lot of sense to me.

I should also point out that The Demons comes with a cast of 30 actors plus support staff. For 30 euro you can also attend a performance by Viktoria Mullova who will play 1 hour and 15 minutes of Bach's sonatas and partitas for solo violin.

Update: Buyer's remorse. My review of I Demoni.

Read the story in The New York Times.