Diana the musical was on Netflix before it was on Broadway. Dear Evan Hansen is already a movie but has yet to transfer to London. Producers have made fair use of recordings, while lockdowns kept the audience from the theatres. Now, everything is opening up again and it’s interesting to see how live and recorded can work together. How can you create a hybrid business model for musical theatre?

Introduction

No, this blog isn’t two years overdue. Yes, it’s true that when the lockdowns just began, everybody with live products was suddenly turning to the internet. Can we still make some money there? That was the moment when money-making suddenly turned digital.

So why do I write this blog now? The truth is, hybrid business models are here to stay. Many organisations and individuals are struggling to find the right balance now the theatres are opening up again. I would like to offer some help with finding the answers. Also, now that the sector has two years experience of working (only) online, it’s possible to look at it from a broader perspective.

Recently, I had a conversation with Cultuur+Ondernemen, a Dutch non-profit organisation that helps artists from all sectors to develop their entrepreneurial skills. They told me that most of their focus at the moment goes to explaining hybrid business models, as artists struggle between the artistic value of their work (which they feel can be the best appreciated in real life) and earning enough money (in which the online world offers new possibilities for). A struggle (artistic value versus market-oriented) which in science is called ‘The orientation dilemma’ and the internet fits perfectly in this dilemma.

Coming to a hybrid business model

Pre-corona, theatres have long resisted the online world. The belief was that true experience can only be experienced in the physical world of live theatre. The online world was only for the marketing department, to reach as many customers as possible. Think about online discussion forums, newsletters, videos on YouTube and more. Especially the younger audience doesn’t remember a time when musical theatre couldn’t be found online.

Too often in our experience, ‘digital’ is consigned to the marketing department. It’s seen as a communications activity rather than a part of the DNA of a modern user-focused cultural organisation.

Simon Mellor – Deputy Chief Executive Arts & Culture, Arts Council England

Hybrid has taken flight with the emergence of the coronavirus. Some organisations were already forced to have a digital strategy: for example, the Arts Council England required such a strategy if you applied for funding since 2018. However, with the theatres shut, companies had to find other means of income. The internet suddenly became a lifesaver.

Now, with the theatres opening up again, the possibility for a hybrid business model occurs. Most organisations now have some experience with online businesses and try to find a nice balance between the two of them. Some will go back to only offline as they saw online only as an emergency option. Others have found a new means that they will continue to use.

Before we continue, do you need help with transitioning your idea to a product? You might find this article interesting to read first.

What is a hybrid business model?

A business model is a document that describes different aspects of your business (like your goals, your audience, your products) and how you’re going to reach those goals. A while ago, I wrote an article about how to create the perfect business model for film and musical theatre. If you’re not sure what a business model is, I suggest you read that article first. It also makes use of the Business Model Canvas, which can be really useful here.

Hybrid working means that you’re working both online and offline. So your orientation is on both. There is some discussion about the borders of when you’re hybrid. Some say that you’re already hybrid if you do marketing online. Some say you have to put your shows online.

In this article, I want to look at a business model where you receive income both online and offline, in whatever way. Otherwise, there’s a chance that this will become a marketing article. If you’re looking for that, you can find a good article here.

So in this article, a hybrid business model means that you have an income both online and offline, so you have to ‘sell’ something in both worlds. Usually, these are your core business: your musical theatre pieces. 

It’s important to realise that hybrid business models aren’t a goal in themselves. They are a means to achieve other goals. Before you start doing anything, it’s important to ask yourself the question: What do I want to achieve?

• Do you want more income?
• Do you want to reach a broader audience?
• Do you want to have more impact, be seen more?
• Do you want to extend your portfolio of products?
• Get a better connection with your customers?

Next, you decide how online and offline can help you achieve these goals. Once again, fill in the business model canvas that I discuss here, and most of the questions will be answered and your focus becomes clearer.

Don’t go online, because everybody does it. Go online, because – depending on your goal – digital products can have bigger success than offline.

Fear for the hybrid business model

I already mentioned the orientation dilemma, which is about the artistic value of a product versus going where the market leads you. As most organisations and individuals focus largely on artistic value, they are afraid.

The thought is: putting a product on the internet lessens the quality of the product. Think about a video registration of a show: it’s no longer live and thus hasn’t got the same feeling as being in the theatre itself. You don’t get to laugh with the rest of the audience, which is an experience in itself. Also, your view is directed. When you look at a screen, you’re looking at what the camera wants you to see: close-ups or only a part of the stage. In the theatre, you – as an audience member – choose where you’re looking at.

Important to know here is that before corona, most registrations weren’t done in the best quality. Often they were created to be used internally and not for an external audience, thus high quality wasn’t neccessary. Direct live streams usually are of good quality.

“Decades ago, no one would dare make a movie or live TV performance of a Broadway show for fear of drying up potential customers. Why would they schlep to Broadway and pay those prices, the thinking went, if they could see the show for free from their couch?”

David Lefkowitz, a playwright, theatre critic and podcast host in Business Insider

A second fear is that putting a show online is a disservice to their business. They fear losing their audience in the offline world by having (parts of) it online. Why go to the theatre when you can just watch from the comfort of your house? Ironically, this is the opposite of the first fear, as creatives also see both channels as different experiences. In that case, you should expect that the true musical theatre goer will still want to experience the show in real life.

Advantages of a hybrid business model

There are three big advantages of having a hybrid business model.

Have more ‘stages’ to reach a bigger audience

The first is that you have new ‘stages’ to add to your catalogue. Each stage, whether it’s a video channel or a website, is a place to exhibit new and old creative products. Using more stages means reaching a broader and bigger audience. It also allows you to find a new audience and strengthen the connection with the existing audience. A recent study showed that 43% of the digital audience had never attended an in-person performance of the company that presented that show. To give you a few examples:

• A physical theatre has only so many seats before it’s full. Online, you can have unlimited seats. I once watched a live stream, with 50 people in the theatre audience and 2000 people watching it online.
• If someone lives far away, this person can still enjoy the musical theatre play. Even if it’s thousands of kilometres away.
• Online plays are often cheaper, making them accessible to the less fortunate.

More possibilities for the audience

The second advantage is that having both physical and digital options offers more possibilities to the audience. They complement each other instead of competing between both. The more variations you have, the more appealing it is for customers. True success is when online and offline strengthen each other. A couple of examples:

• One example I often love to use is that a play can be in a physical theatre and only in that theatre. But online, there are other possibilities behind a paywall. Maybe there’s a sequel recorded, especially for the camera. Or the main actors give a live stream concert to get more attention for the musical theatre. Either way, both products will strengthen each other. They also offer the possibility of income independently of each other.
• Customers can switch between live and digital, making the step to buying anything easier. In Paris, several museums organized interactive and digital events during corona, leading to a 150% increase on Facebook. Of course, this wasn’t direct revenue as the museums were closed, but it does have positive results from such actions.
• Some customers are orientated on ‘on demand’, they want to choose when they do what. See if you can play with this request.
• Can you offer the audience who can’t be there live, like people living abroad, a possibility to see the show in a different way? Maybe you can make your show digitally available in countries where the play is inaccessible. Or use shows that were in the theatres years ago.
• For individuals: If you use platforms like Patreon or Cameo, you can receive financial awards without any in-between organisation to promote and distribute your work.

More possibilities for the artist

The internet is immense and also offers new creative possibilities for organisations and artists. Let your creativity go free and find a way to combine offline and online. I don’t want to go into the creative process of a product: of course, you can use Zoom for a meeting between creatives. I want to look at business opportunities.

Although not within a hybrid business model, I always like the idea of the mini-musicals from Avbyte. They used to make a musical songs about contemporary events, like the new Sherlock season coming out or Elsa as the only Disney princess without a prince. They had over 1 million subscribers and with the revenue from YouTube and a Patreon account, the two brothers earned a steady income. It also gave them lots of attention from CBS and CNN, ending up with one of them working in Hollywood and the other in New York, both working in the creative sector as writers, producers and composers.  

During the pandemic, Jonathan Cerullo went from live theatre to directing a virtual play where everybody was stuck in their own home. According to Cerullo, ‘he found the experience both rewarding and challenging, but it wasn’t the same as live theatre’. He wouldn’t go virtual completely, but he saw the possibilities for both. More and more producers see how digital will most likely remain a component of theatrical productions. Whether it’s in video, gaming or any other form.

A while ago, I wrote an article about creating a movie from your musical. If you want to dive more into those details, you can find it the article here.

You can think about workshops on new musical plays: why not make them digital available for a small fee?  Either live-streamed or edited afterwards. Release songs on Spotify before the musicals are ready. Deleted scenes behind a paywall. The use of captions or audio descriptions for the disabled audience. Podcasts. You can have actors halfway across the world and still have them in your live digital product.

This blog is certainly not a plea to just put everything on the internet or have the full focus on digital. Having a hybrid business model means that you earn money both online and offline. How you do that, that’s up to you. If you choose to go offline completely, that’s fine as well. Just as long as you make a conscious choice about it.

Whether you put something online or not, is up to you. What do you want to achieve and will this help you reach your goal?  Your answer to this question tells you if putting your product online is the right thing to do.

What are the digital income possibilities?

There are multiple business models online where you can earn money. Once again borrowing from Cultuur+Ondernemen, the most common ones are:

• The freemium model: you can get a service or product for free, but if you want access to a more extended version of it, you have to pay. You can think of Spotify as an example.
• Microtransactions: These are small financial transactions, for a couple of dollars or pounds.
• Razor and blade: you sell something for a small price, in the hope the customer will buy the full or follow-up product for a higher price.
• Subscription: you pay a certain amount per period to have access to the product. Netflix is the perfect example here.
• Licensing: Products are used under a license, so you earn an income every time someone uses your product. Think about the music used in YouTube videos.
• Alternative pricing: depending on the demand, day, time, competition, the price for your product or service fluctuates.

The challenges of a hybrid business model

Naturally, there are also many challenges, both from the creatives and the audience. Where the future will go, is ultimately up to the audience. What do they want to experience? And how? And how can the artist act upon it?

The biggest challenge is whether the audience is prepared to draw their wallet for online content. Why pay if YouTube and many other channels are for free? They have to see the extra value of the digital creative products, even when the main experience of theatre itself – the live experience – is missing. Many feel that the audience is open to it, but may have to get used to this new way of theatre storytelling. Another option is to have the content up for free, but with an income system behind the scenes, like with YouTube that pays per 1000 views.

Another challenge is, as Tamilla Woodard says in Variety, ‘to fight the nostalgia that we all have for theatre as we knew it’. Artists and organisations have to accept digital is now part of the business model and find the right balance in it. This goes back to the fears I mentioned earlier: daring to let go of live musical theatre as the only product of artistic quality.

How do you find the perfect balance between online and offline?

What the right balance is, is dependent on your business model. Create your own business model with the business model canvas and see where the digital world can be an enhancement to your products, not just the marketing.

I’ll share the tips of Cultuur+Ondernemen with you:

1. Make two lists of activities you’re already doing. Which are online and which are offline? Think broader than just your products in this case: how do you communicate? How do you look for funding? Where do you network? How do you sell tickets? Etc. Etc.
2. Look at every activity: how would you like to shape it in the future? Do you want it to be more digital? Do more with podcasts or videos? Make two new lists: one for desired online activities and one for desired offline activities.
3. Look at the picture above. How are your activities spread out? Does it fit you and your way of working? Does it fit in your business model? Do you have everything and can you start or do you need anything?

If you have in mind what you want to change and how it’s much easier to find the balance. You can also quickly see if you want to change everything at once, or try out a small part first.

When should you put a product online for free or a fee?

This paragraph is mostly about offline shows that are later put online. During corona, some organisations put their products online for free or for a small fee. They felt it was important for people to remain experiencing musical theatre: ‘Better have some theatre for free than none at all’, was the thought. You could watch certain musical theatre registrations without paying a dime or for only a few dollars.

Is it a permanent thing or was it desperation that caused this as a once in a lifetime option? To find the answer, we have to once again look at your goals. Cultuur+Ondernemen has created an amazing overview of why and why not you should put something online for free. I’ve taken the liberty to translate it for you:

If you look at the scheme, we can see that the reasons for ‘yes’ are mostly for visibility and because the online product has less value than the ‘real’ product. See how we return to the fear of artistic value? Personally, I believe that most new organisations and individuals will choose yes. They have the most to gain from it as broadcasting your product for all to see will certainly boost your reach and maybe establish your company or yourself as a good artist. Others, who look at it more from an entrepreneurial perspective, will easier choose ‘no’.

Conclusion

It’s up to the musical theatre sector to find the right balance, fitting with their goals and plans. There are many possibilities, but they do require a different way of thinking and working. Are you open to that? Do you have the means for it?

The sector has had a taste of the hybrid business model and has taken its first steps. It’s interesting to see how the sector will further develop. Certainly, as the digital world is also developing: think about the virtual glasses and Meta’s plans. Will we soon sit at home in the theatre and watch a live performance through our glasses? Can we find a digital way to experience the ‘live’ experience of theatre?

It’s a true search to find online high-quality products that keep their artistic value. However, the audience is also willing to accept more. The first results of hybrid models, starting at the beginning of the corona lockdown, show that digital products are mostly a deepening of the show, its theme and one’s knowledge about it. The key is to find a way to match the digital experience to the physical experience.

The most important is to choose what’s best for YOU and YOUR products. Don’t follow what the rest is doing, just because you can. Whatever your choice is, to go offline, online or hybrid: there’s no wrong answer. I just want to become aware of all the possibilities. Now it’s up to you to choose the right path.