Why capital is as important in classical music as in banking - some thoughts on a sustainable government policy response to the pandemic

A unique experience

Gustav Mahler’s 9th Symphony ended into nothing. It was impossible to see or hear if the players of the Berliner Philharmoniker were still playing. Claudio Abbado, the great maestro so famous for ‘hearing the silence’, held his arms aloft –, the 5,200 capacity audience of the Royal Albert Hall did not dare breathe. After what seemed like an eternity, the hall erupted into an applause that would never end. The late John Drummond, the legendary head of the BBC Proms, would later write: “No one who heard Claudio Abbado’s performance of Mahler’s Ninth Symphony with the Berlin Philharmonic Orchestra will ever forget the extraordinary silence that seemed to suspend time itself at its close. It was one of the most moving moment of my life.”

Drummond will have heard countless performances of Mahler’s Ninth before that August night in 1994, possibly even ones which were musically better. Yet it was the silence after this very performance that was so moving for him and all who were there. Classical music, of all art-forms, has this effect on listeners.

However, this result is not pre-determined by the composer. It comes about because at the moment music is played or sung live it is there and alive, brought to life by the musicians who are sharing their interpretation with the listener: some of it is rehearsed and pre-meditated, but often in a concert, the symbiosis of the musicians, the conductor and the audience creates an experience that is transcendental.

At the heart of this shared experience are soloists or ensembles, whether they are orchestras, chamber groups or choirs. The experience musicians have of performing music and performing together as a team whether it is to create a unique sound or a unique response to a conductor, is like an intangible database. It is not just the result of the experiences of those playing today but, for orchestras like Mahler’s own orchestra, the Vienna Philharmonic, it retains a sound and tradition as a result of only a few players at a time leaving or joining in every year of its 188 year history –ensembles and orchestras are like the giant redwood forests of California, slowly changing as members retire and new ones join: becoming different yet retaining their identity.

Coronavirus and Baroque funding models

So what would happen if ensembles became extinct because the Coronavirus pandemic prevented all but the most financially secure ensembles to continue operating? Just like giant redwood forests falling victim to wildfires and disappearing for ever, ensembles would die out and with it many of the unique experiences only to be found in the performance of classical music.

Sadly, as I write this, we are onto our second or third wave in Europe and COVID is raging across the USA: most of the world’s leading ensembles and opera houses are having to seriously consider their futures.

Since the Renaissance, music was a game of finding yourself a rich patron. Monteverdi, Bach, Haydn and Mozart had fully paid up patrons…and even though it is said that the likes of Beethoven and Schubert escaped this world, they were still very dependent on people liking their music so that some commercial gain was possible, either during their lifetime or after their deaths.

Nothing has changed on this front: orchestras, ensembles and concert halls are still having to raise millions of dollars every year to pay for the next season schedule of concerts and tours as ticket sales just are insufficient to cover cost or ambition. Furthermore, government subsidies are typically assessed and spent in-year on short term plans and then renewed for the following year.

This transitory funding model is really an overhang of the pre-recording era where the only way in which music could be heard would be in a live performance. When recording technology became reliable, millions were poured into recording every work many times over. It made some musicians very rich. The first boom was followed by a second boom when listeners replaced their entire vinyl recording library with CDs in the 1980s and 1990s.

Today, specialised classical music streaming services like idagio pay artists by the second a track is streamed – an entirely unsustainable model for musicians who have both professional expenses and normal lives with families, mortgages etc to pay for. This entire model relies on musicians at least being able to play both in concert halls and in recording studios. But for the first time ever, the music has stopped. Literally. And so has the money.

Global Financial Crisis – Music in crisis

It is here that the crisis besetting the live classical music industry is not unlike that of the banking industry in 2008. Institutions which were adequately well capitalised and everyone was just fine so long as their short-term funding models were not disrupted. And then disaster struck: the entire industry just couldn’t continue operating because of a liquidity crunch entirely unforeseen by pretty much anyone. The industry survived but not without some very high profile casualties such as Lehman Brothers and Bear Stearns.

The G20 policy response was in essence one of intensive care in the short term to shore up those institutions that were systemic by flooding them with liquidity through wholesale nationalisations or asset protection schemes underwritten by governments.

Surprisingly, there is plenty to learn not just from similarities of the crisis, but also from banking as a whole: a successful bank has plenty of capital and liquidity which it can put to work to generate both short- and long-term returns. Capital is a critical as a buffer to absorb any investments gone wrong. A bank’s Asset Liability Management function ensures that, unlike in the financial crisis, none of its balance sheet is too illiquid to meet obligations that arise. The G20 response was short term in nature, but its objectives were strategic. Over time, the G20 framework shaped a whole raft of policy responses aimed at ensuring banks could never expose the world’s economy to such shocks again.

Capital in music

The Balance Sheet is the factory floor of a bank, as well as its safety net when things go wrong. So what is the equivalent of a bank’s balance sheet and capital in classical music?

An orchestra’s recording archive is not the answer: no one, apart from the most devout music geek, will pay money for any recording of superstars of the past like Ginette Neveu, Guido Cantelli or a concert recording of Teodor Currentzis and his 2019 Verdi Requiem of which there are many. The answer must lie in the present.

Content in of itself cannot be the answer: content-rich organisations like the Berliner Philharmoniker who were, at a click of a mouse, able to offer their Digital Content Hall content for free during the first global lockdowns, have not fared much better than those who had limited content like the Philharmonia Orchestra who streamed a legendary Beethoven 9 from 1970 conducted by an 85 year-old Otto Klemperer and rapidly spun up an innovative Philharmonia Sessions series on their YouTube channel. The Berliner’s Digital Concert Hall has never been profitable, underwritten by large corporate sponsors and the most exciting element of the Beethoven 9 stream was the unorthodox chat of those watching who were suddenly able to share their reactions to the music with their fellow listeners without interrupting those who just wanted to focus on the music (there is a new idea for modern concert going!!).

Scanning news and social media during the first lockdowns it became rapidly apparent that the biggest issues for musicians had become the absence of cashflow from the next rehearsal, concert or recording. It was, however, physically impossible because almost no ensemble could, by itself, put on a revenue generating gig. For a while, of course, any form of coming together was illegal. So ingenuity was the name of the game for a few weeks: Igor Levit and Daniel Hope had hugely successful runs of mini-concerts streamed from their living rooms, Stile Antico did something they couldn’t do in live concerts as an ensemble of 12 singers and used the powers of technology to record Thomas Tallis’s 48-part Spem in Allium. The Philharmonia Orchestra ran its wonderful (but free-to-view) “Sessions”. But apart from fantastic advertisements (and cashflow from patrons), it wasn’t the same as live performances.

During April and May, it became more noticeable that the Culture Ministries had to do something for classical music that was similar to the multitude of furlough schemes. Various injections of funds, although hugely welcome, came and went…but only to replicate some of the old cashflows. Some ensembles are exploring the conversion of public subsidies to regular salaries or in-house furlough schemes for their freelancer musicians.

However, as the rules started becoming clearer, and people figured out a way of operating within them, something truly extraordinary, yet so obvious, also happened: those ensembles that had access to a physical bricks and mortar space were suddenly able to do something.

The London Symphony Orchestra has its owns brick and mortar asset: St. Luke’s church in London. So the orchestra was able to get together its musicians and star music director Sir Simon Rattle and rehearse.

The Wigmore Hall, the global temple of chamber music, collaborated with BBC Radio 3 to invite (and pay!) some of the greatest musicians of the world to perform to an empty hall and a thirsty concert-going public watching live-streams every lunchtime for a month.

Most impressively, the Voces8 Foundation which had leased one of the Wren churches in the city as its rehearsal and performance space long before the pandemic (more bricks and mortar!), put on “Live from London” with some of the great vocal ensembles of the United Kingdom offering pay-per-view tickets for a series of eight concerts live-streamed and accessible for a number of weeks after. The price was less than a usual concert but the quality, and even the programme notes, were the highest.

Interestingly, Voces8 managed to effectively cut out the vast majority of the classical music eco-system, having purchased the streaming equipment in double quick time and booking the ensembles (almost) without involvement of their agents. At the last count, Voces8 sold 40,000+ “digital seats” and reaching paying viewers in 60 countries.

Government policy and innovation responses

As we embark on uncertain times (at the time of writing all concerts in Europe are being cancelled until well into 2021), it is becoming ever more apparent that the old ecosystem where ensembles could book third- party venues via their agents won’t work – not least because those venues will never be able to fill their seats to make their halls economically viable.

It is therefore vital that the response to the pandemic is not just to ensure classical music has enough liquidity to survive the shock, through government subsidies and furlough schemes. Just like the response of governments during the financial crisis, policy should now focus on capitalising classical music ensembles with access to venues where they can perform, rehearse and record safely, coupled with some safe premium seating which wealthy patrons should underwrite through debenture-type arrangement so successful in financing sports stadiums. Most importantly, investment must focus on coupling these venues with technology that allows classical musicians to reach pay-per-view audiences.

Back in the early 19th century this was, in spirit, the innovation introduced by Schubert and his friends with achieved with his celebrated Schubertiade evenings where he took his own music straight into benefactors’ living rooms. Maybe the right approach is to renew Schubert’s approach and come up with the Schubertiade model of the 21st century.

5 considerations for government policy and classical music ensembles:

1.      Invest in bricks and mortar venues to secure rehearsal and performance spaces controlled by ensembles

2.      Invest in digital equipment, either linked to the physical venues or owned by ensembles to enable rapid and flexible digital distribution

3.      Invest in partnerships with digital platforms such as idagio to secure widest possible audience

4.      Convert subsidies and other funds into furlough or permanent salary schemes for freelance musicians to avoid reliance on paid concerts

5.      Review contractual model with agents to ensure fees are paid for services delivered.