Archive for the ‘Business Model’ Category

The Space

Wednesday, April 14th, 2010

So in the previous post, I described the business model for a CRADLE arts organization. Today, I’d like to describe what the space might look like.

This morning, I met with Tim Riddle of Del-Tec Homes, which is headquartered here in Asheville NC. Del-Tec creates beautiful round homes and buildings that are shipped all over the world and then built on-site.

It is my hope that Del-Tec will become a partner of CRADLE, and provide the buildings we will use across the nation. Let me explain why.

1. The roundness. In addition to the unique look of a Del-Tec home, the round design puts all of the weight-bearing walls on the outside. Because of this, the inside walls can be configured in whatever way is most appropriate, so that if needs change, they can be easily reconfigured without costly renovation costs. This flexibility allows the CRADLE organization to accommodate new directions without abandoning a site to build another. Furthermore, should a CRADLE affiliate for some reason be unable to survive, the building could be reconfigured and sold as a private residence.

2. The roundness (part 2). A Del-Tec building has a roof that rests on the outside walls and then rises to a central point, providing a high, open ceiling with beams that can serve as supports for lighting equipment.

3. The greenness. Del-Tec buildings are energy efficient. Indeed, studies have shown that you can save up to 45% on utilities. This is true for a number of reasons. First, there is a tighter building envelope, because the buildings are built to specific design specs in a quality controlled factory environment. As a result, for instance, windows are installed tighter. Also, a circular building has less exterior surface than a rectangular home of the same size, which translates into higher energy efficiency. In addition, Del-Tec has integrated passive solar into its designs, and is also able to easily install solar panels on the roof. In fact, the Del-Tec factory itself is run on 100% renewable energy through on-site energy generation and renewable energy credits. Del-Tec homes are built with sustainably harvested lumber, recycled content roofing, and environmentally preferred building materials. According to their brochures, “Our focus is to build homes responsibly by minimizing environmental impact and providing a sustainable structure that is healthy to live in, durable, and highly energy efficient.

4. The modularity. Del-Tecs come in many different sizes, and include “connects” and “wings” that can be added to the central unit to create additional spaces for specific purposes. For instance, there might be a smaller wing with separate rooms for music lessons, or another that would serve as a dance studio or a painting studio. Each would be designed in advance, so that each affiliate could choose which add-ons would be most appropriate to that community. Better yet, these additions can be made later in the life of an affiliate organization, when it might need to expand its programming.

5. And the cost? Right now, Del-Tec is changing its pricing structure, so I don’t know. But from past pricing, I believe that a basic building can be built for less than $500,000. However, that is really a ballpark at this time. If it is much more expensive, then this option will have to be reconsidered.

But why not renovate a pre-existing building? Wouldn’t that be a better solution? From one perspective, repurposing a vacant downtown retail space, for instance, would have several advantages. For instance, many small communities want to use the arts to revitalize the downtown area, and there would probably not be the space to build a new building. Even if there was, a Del-Tec might clash with the architectural style of the area. Furthermore, occupying an existing building would, in essence, be like recycling something.

While I would not rule out a renovation project entirely, and there might be some communities where it really is the best option, in the long run the renovation of old buildings to meet modern code, especially for a performance space, can be expensive. To make an old building green adds another layer of expense as well. But the strongest argument for a new building may be psychological.

It is my hope that CRADLE will help to make the arts a central part of the life of whatever small community we are invited to join, and as such I would like to avoid the old “hermit crab” notion of the arts making do with cast-offs. I want an affiliate organization to be an attractive, though not opulent, destination for community members. I want the place to be as aesthetically pleasing as the creative work that exists inside of it.

It is my intention to apply for a Ford Foundation “Space for Change” grant to develop the prototype of a CRADLE building, and then to build it as part of a pilot project. To that end, I am now looking for communities who would like to partner with CRADLE in this endeavor. I am looking for a community of less than 20,000 – 25,000 population (although there is some flexibility) that is not a suburban bedroom community for a metropolitan area. Ideally, there would be some level of diversity in the community, whether that means race, class, ethnicity, age or whatever. I would like there to be support from community leaders, and a willingness to commit to the development of CRADLE’s mission. This does not necessarily mean an investment of public money — it is my intention that CRADLE become economically sustainable very quickly — but simply a positive show of support. I will discuss this more in the future, but in the meantime, if you know of a community that would fit our requirements, please let me know about it in the comments, or by emailing me at swalters@unca.edu.

Ideas? Comments? I’d love to hear from you!

(Netflix + YouTube) / (time = money)

Monday, March 29th, 2010

I have been trying to conceive of a new business model for CRADLE, one that be sustainable and unplug as much as possible from the grant-addicted non-profit mode’. It is expressed in the equation in the subject line: (Netflix + YouTube) / (time = money). Breathe, mathphobics — it will be OK.

1. Netflix: Netflix is a great model. Pay a monthly fee rather than buying tickets. Make this fee reasonable, and provide a family package that can be used by anyone in the family. But the important part of the Netflix model is variety: there needs to be a lot of different options.

The problem is that even a company of ten artists can’t create enough content to provide enough variety, especially in our current 4 – 6 week rehearsal traditions. One need only look at ACT, which is a big theatre, but it can only itself provide a few options, which is why it is beginning to partner with other organizations. This is where YouTube comes in.

2. YouTube: the artistic staff of a CRADLE organization has two functions: 1) create their own work, and 2) facilitate the work of others. The first function is necessary, otherwise why would any trained artists want to devote their time? The second function, however, is what provides the variety necessary. So in addition to the performances by the artists, there are performances by people in the community. Maybe there is a dance troupe that needs a place to perform: they’re in; maybe there are some storytellers or comedians who need a venue: they’re in; maybe there is a community choir who wants to sing: they’re in. The possibilities are endless: lectures, classes, meetings, displays of art, quilting or knitting groups, political meetings, improv or No Shame theatre events, dance classes, music lessons. Have a coffee house or bar where people can hang out.  The goal is to keep the space humming with activity, beacuse ultimately the priority is the creation of community, or what Robert Putnam calls social capital — face-to-face interaction. And your monthly membership fee gets you into everything free of charge. And yes, this means that everything needs to be created lightly: no monster sets for the productions — they need to come down, possibly after each performance (see my description of Sir Peter Hall’s Old Vic company, as well as Virginia Tech’s experiments with a system they called RALPH).

And like YouTube, the “quality” of these events will vary, and that’s OK. The artistic staff’s job is not to serve as gatekeepers, but rather to encourage community creativity and to provide as much variety as possible. The artists can lead through their own work, of course, providing things to aspire to. And they can (and should) help improve skills through teaching as well as facilitation. But if you buy a monthly membership, you are buying a chance to be a creator.

3. (Time = Money): But will there be an audience for all these events? After all, the long tail Chris Anderson described in a book by the same name means that there are some things that are only of interest to a few people. There are a lot of unwatched YouTube videos. Again, attendance is irrelevant, because what is being purchased are the options.

However, if your goal is to get as many people spending face-to-face time together as possible, if you want people to try out a variety of arts events, then there needs to be a little extra motivation. After all, we are all pretty content at home, and have lots of entertainment options there. Getting in the car and driving someplace requires a little push. That’s where (time = money) comes in.

Let’s say you buy a monthly subscription for $40, and you get a membership card that resembles a credit card with a swipe area. When you attend an event, your card gets swiped, and it is recorded in a database. Here’s the key: each time you attend an event or hang out in the coffee shop for an hour or more, a certain amount is subtracted from your next month’s fee. So if I come home from work and that night there is a choir concert, and I’m not totally certain that it really is something I want to do, but I’m sort of interested — the fact that it will subtract money from next month’s bill just might provide the little boost I need to get away from Kate and John and head over to the theatre. I might be willing to take risks I wouldn’t normally take if my time will not be wasted, but will be credited toward the future. So the result might be to create an atmosphere where risk is encouraged — or at least not discouraged. (P.S. I stole this idea from Chris Anderson’s Free: the Future of a Radical Price. He described a  Danish health club that charged members only when they didn’t work out once a week. The motivation of members was completely changed.)

Oh, and if you provide an event, it is an automatic full reduction for the next month for everybody involved.

But what if everybody kept coming to see things? How would you pay for the next month’s rent and salaries? Good question. First, members will always have to pay a small monthly fee no matter how much they attend — membership should never be completely free. The gap between what they pay and full price, which is necessary to keep the operation going, is paid by sponsors and advertisers. A sponsor might subsidize 25 members each month, and in exchange they get some sort of advertising option (and I don’t mean an ad in the program — how many of those ads do you actually look at?). A local government might sponsor some memberships in the interest of promoting community building. A foundation might do so out of an interest in the arts, or an individual might sponsor one or two a month just out of the goodness of their heart. A local business (and I think all advertisers need to be local businesses, not chains or multinational corporations) would sponsor because they want to reach the community. The difference is that they pay more the more people attend, so you are selling access to guaranteed eyes. In the traditional model, an advertiser buys space in the program for the same price no matter how many people actually attend; in this model, it is a sliding scale according to attendance.

I know this is a different way of thinking about the arts, and I’m certain that the model can be improved with the suggestions of others. But as a starting point, it accomplishes several things: 1) it gives full-time work to a core number of artists (the size would vary according to the number of memberships); 2) it encourages arts attendance by providing an extrinsic motivation in addition to the intrinsic motivation of a specific arts event; 3) it builds community by promoting face-to-face interaction; 4) it encourages local arts — arts by, for, and with the community; 5) it is sustainable.

Scott Walters (director)
swalters@cradlearts.org
(828) 989-9468