Monopolistic Competition

"Good art, well marketed."

This statement is Kennedy Center Exec. Dir. Michael Kaiser's mantra for running successful arts organizations.

It's really as simple as that, he asserts.

In his new book The Art of the Turnaround Kaiser argues that unique and exciting programming, aggressively marketed, is absolutely essential for an organization to "create the financial strength needed to pursue its mission in a consistent manner." From his broad experience in working with troubled arts organizations (see www.artsincrisis.org) Kaiser demonstrates that arts organizations cannot save their way to health; in fact cutting the budget in strategic areas, like artistic programming, will hurt the organization in the long-run.

These ideas fully fit with the idea of monopolistic competition that we discussed in class this week. If the art your organization produces is not interesting or important enough to generate widespread support and interest, and not differentiated through aggressive marketing, consumers will easily substitute from the multitude of other arts and entertainment experiences available. Kaiser cites that since he has managed the Kennedy Center, they have increased their performing arts programming budget to over $100 million each year, and as a result, their contributed income has doubled and they have sustained operating surpluses every year for the last six years. Clearly, mounting new and exciting performances has its risks (sunk costs)--but hey--entrepreneurs can manage risk, right? And clearly it's calculated risk that aims to create sustainability for the organization in the long-run, employing a perspective that is able to look past just the current season to where the organization is headed in the future.