Making a loss in digital ventures. Is it worth it?

Friday 1st April 2011

According to the Financial Times, “the future of classical music may be hidden in a stuffy room high under eaves of the Berlin Philharmonic Orchestra’s soaring concert hall”. They are, of course, referring to the orchestra’s Digital Concert Hall venture, launched two years ago.

However, it seems “the future of classical music”comes at price. A loss, in fact. Funded by “deep-pocketed sponsor – Deutsche Bank”, the online scheme is yet to break even.

So how worthwhile is this venture? The orchestra establishes itself as a technologically forward organisation in the eyes of the classical music industry, but is a subscription service really “the future”, or just an old model using a new medium? Online streaming is not a new idea in other industries, with broadcasters like Sky and the BBC launching live and post-broadcast streaming online in 2006 and 2007 respectively.

The Digital Concert Hall’s aim is to open up the concerts of the Berlin Philharmonic to a global audience. Compared to the high number of fans currently signed up to the orchestra’s page on facebook (more that 175,000), the Digital Concert Hall has just 5,000 subscribers internationally. Logged in and watching the orchestra’s broadcast live on 18th March were 871 of these people (of course this figure doesn’t include subscribers who view the recording later). The Philharmonie seats 2,400, so in real terms, 5,000 subscribers is only slightly over two sell-out concerts for this stellar orchestra. To judge how effective the Digital Concert Hall is at opening up the orchestra’s concerts to a global audience, it would be interesting to know how many of the scheme’s subscribers have seen the Berlin Philharmonic live “in person”, and how many have never had the opportunity to. To engage 5,000 individuals who have never seen the orchestra perform before is an achievement and a fairly strong base of new support, but I expect many of these subscribers are based in Berlin and the rest of Germany, or have followed the orchestra for a number of years.

The Metropolitan Opera pioneered broadcasting operas into movie theatres with their Live in HD scheme, which has seen them broadcast internationally (and profitably), and is now in its fifth season. A quick search of my local cinema, and I can view their broadcasts seven times in the coming month.

The LA Philharmonic has also dabbled in live cinema broadcasts, when last year they beamed three concerts with their chief conductor Gustavo Dudamel into 450 cinemas in the USA and Canada.

I am sure fans of the Digital Concert Hall will now gladly point out the convenience of watching the Berlin Philharmonic’s concert in your own home at a time that suits you, and this approach obviously has a strong appeal. Within a week, the 2011 YouTube Symphony Orchestra performance – broadcast live on March 20th , throughout the day in various time zones, and subsequently uploaded to YouTube – became the most-watched lived internet concert of all time and the most frequently viewed concert in YouTube’s history, attracting 33 million views worldwide. Clearly, there is a huge market for online concert streaming, but something about the Berlin Philharmonic’s subscription service has not seen the same surge of viewers come forward, despite having the option to purchase subscriptions of varying lengths from 24-hours to 12-months.

Since the launch of the Digital Concert Hall, the orchestra’s recording output has dropped dramatically from 20-25 discs per year to just 5 CDs a year – a worrying wave of the white flag in the war to keep the recording industry afloat despite illegal downloading.

Digital media is becoming increasingly important in the arts. With most major organisations having some form of presence on online social networking sites, it is clear that these channels have enabled them to broadcast to a wider audience, increasing awareness and leading to increased number of ticket or CD sales. But what digital ventures are really shaking up the classical music world, and turning a profit? Depressingly when we put our minds to it, we struggled to think of a single large-scale online or technological venture that hasn’t been funded by a wealthy sponsor, except perhaps a few record labels dealing exclusively in digital downloads who are slowly beginning to emerge on the classical market. If you can think of some good, profitable examples, we’d love to hear them and will happily eat our digital hats if you can prove us wrong!