ABSTRACT
Arts organizations working in the declining economic sector are losing touch with the audiences they used to be able to rely on to support their work. Fewer people are buying tickets to see the shows they put on, or buying them at commercially sustainable rather than fire-sale prices. Producers can stay in business in a declining economic context only if funders agree to cover their mounting losses.
This chapter considers an influential proposition in cultural economics: the “cost disease” theory, suggesting that live performing arts organizations are doomed to outspend their income. Ever-increasing arts subsidy is the price that governments will have to pay to maintain production standards, along with decent terms and conditions of employment for artists working in the subsidized sector. The cost disease theory, though useful as a lobbying counter in negotiation with governments needing economic persuasion to support their arts, twists political, economic and artistic strands of argument together in rather an unhelpful way—obfuscating policy choices which actually exist, and which arts funders need both courage and permission to consider making.
