Sunday, August 17, 2014

Disruption: Free vs Paid at the Edinburgh Fringe

Tim Harford - Adapt
Tim Harford’s book ‘Adapt’ is interesting in many ways, particularly on the subject of technological disruption:

'Disruptive innovations are disruptive precisely because the new technology doesn’t appeal to the traditional customers: it is different and for their purposes, it’s inferior'

In this way Kodak looked at early iterations of digital cameras and pronounced the technology (correctly) inferior to film without understanding why digital cameras would appeal so strongly to consumers for their immediacy, convenience and cheapness.

For ‘technology’ you can also read ‘creative products’

Nica Burns (Head of the Edinburgh Comedy Awards) interviewed in the Scotsman in 2013, while being generally supportive of the free fringe, worried (also correctly) that

‘on the downside, a lot of performers come to the Fringe when they are simply not ready. They’ve not done the work, they’re not good enough and the public go along and have an absolutely terrible experience’

without necessarily taking into account the huge benefit that the free fringe brings to performers, who can put on shows without loosing thousands of pounds, and to festival goers who can sample new and upcoming acts without risking a small fortune on tickets.

One of the first symptoms of a market being disrupted is the voice of the incumbent market leaders worrying about the poor quality of a cheaper and popular new product entering that market.

The free fringe, with minor variations between operators, works by not charging performers anything for hiring of venues or punters anything for tickets. Venues and promoters make their money from food and beverage sales and from sponsorship. Some free festival promoters charge a small administration fee to the acts appearing under their banner. Crucially it has now become completely acceptable for performers to ask for donations at the end of their shows.

By way of contrast, performers appearing as part of the regular fringe pay to hire a venue, pay for equipment, for technical support and can easily rack up costs (including food and accommodation which apply to the free fringe too) of £10,000 for a full month run at the festival. Ticket sales do little to take the sting out of the costs – after deductions, splits etc. a performer would need to sell something like 100 tickets per performance to break even.

This year I have been mainly to shows at the paid fringe from new and up-and-coming acts and have rarely been sitting with more than 25 people. That model is broken, especially when the free model is available as an alternative. This is the age of Kickstarter and crowd funding after all. Consumers have very quickly become used to and enamoured of the model of donating to creative endeavours that they are interested in. Why should the fringe not be the same?

Anecdotally, attendances at the paid fringe are significantly down this year, many performers are struggling to get audiences to come to their shows and are fed up. They go to a free show (to save money) and are envious of the happy crowds for shows which may not be achieving the quality that their own show or other paid shows achieve but which are playing to full houses and for which people seem to be willing to donate an average of about £2 each.

My prediction, not particularly controversial, is that the free fringe will decimate the paid fringe next year unless the big operators act quickly and decisively to fully embrace it. Performers will simply not turn up at expensive venues to play to empty houses when their friends are playing for free to packed houses just around the corner … and making money.

Not all of the big promoters in Edinburgh will be able to adapt quickly. They will have long terms leases on venues and multi-year deals with suppliers. If other industries are anything to go by there will be consolidation, casualties and desperate defensive ploys, some of which will make things worse.

There are solutions of course. People will still pay to see artists that they can be reasonably sure will deliver for them; people they know, who have been on TV or whose show has been on tour and done some business elsewhere, performers who are in some way 'validated'.

One group I saw (Casual Violence) had 2 shows in Edinburgh – a sketch show in the free fringe, regularly full and turning people away, and a paid show – doing well because of the number of people unable to get into the free show and willing to part with money to go and see the paid one. Also, they were very good at plugging the paid show at the end of the free one (and visa versa) – and asking for donations.

But it feels like the paid fringe is going to be under siege in the same way that record companies have been – the artists don’t like the terms any more and the punters are reluctant to pay unless it’s a choice rather than an obligation. Some new models need to be tried – festival passes for example – the closest the festival will get to a subscription model.

The free festivals will have to sort our their terms too, already you can see the signs of battles ahead (see PBH’s Free Festival Performer’s Terms). The more popular the free fringe becomes the harder it will be for performers to get good slots and to get noticed and the more they will have to spend on marketing themselves. There are three main free festival promoters at the moment, PBH's Free Festival, Laughing Horse and Freestival. There will be more next year is my guess.

But it’s so interesting to see disruption at work in this way. We look at disruption a lot at our Compnay Wildseed Studios. Often we are working with new and up and coming talent in a new way and working on early stage projects at a cost base that big media companies can never really hope to get close to. We have, for example,  made a feature film, Hungerford, for less than £25k that has been premiered at the NFT and which we will sell to new platforms that need great product at a very different price point and that appeals to the 13 to 24 year old generation that TV finds so hard to engage.

Of course our products are technically less sophisticated than those of our longer-established peers with their huge budgets. But when we get the spirit of the films and shows that we are creating right, they are in no way inferior and therein lies opportunity.