30 March 2008

Few Chamber Orchestras Are Too Big to Fail: Market Size, Scale and Sustainability

 Saint Paul Chamber Orchestra
The culture of electronic media and the internet and the culture of social interaction continue to erode classical music and chamber music concert attendance. In the U.S., possibly some of this erosion is augmented by the economic downturn, but the trend has been relentlessly underway for many years now. Lifestyle and arts consumption choices of shifting generations continue to thwart traditional concert attendance, despite the fact that there are today more high-quality concert events and more diverse programming than ever before.

How long can this go on? Which organizations are likely to survive? How much does size (assets; revenue; financial strength) insure sustainability? Are there norms that are embodied by the strongest and best of the current contenders in this nonprofit chamber music marketplace, that other organizations in the field ought to aim for? Do the treasury management decisions of such leading organizations constitute norms that others should emulate? As weaker organizations begin to fail, will we see some of them get aggregated by joint-ventures or M&A into other larger ‘survivor’ organizations in the same geographic vicinity? And, if so, what are the financial ratios that potential acquirers should look for in due-diligence?

These are questions that are not readily answerable. But it does seem that tough, Darwinian survival-of-the-fittest times are ahead.

Just as you would do if you were evaluating companies and stocks, it’s helpful to consider the competitive landscape for chamber music ensembles by applying some financial-ratio analysis, to characterize the field quantitatively and monitor the players and the outcomes.

 Form 990 data for 501(c)(3) U.S. chamber orchestras
The log-log plot of the revenue vs. assets-to-revenue ratio shown above is for 35 nonprofit standing chamber orchestra organizations in the U.S. for the most recent year for which data are available, 2006. It provides at-a-glance comparison of top-line revenue and capital-output efficiency. I extracted the data from the federal IRS Form 990 tax documents that are publicly available via Guidestar and other sources. It’s easy to do—took me less than one hour. You may like to do this for your own organization, or for organizations that you make contributions to, to see how they are doing amongst their peers.

The upper-right quadrant contains ensembles that are both highly productive (in terms of revenue generation and free cashflow) and well-endowed. The upper-left quadrant contains ensembles that are very active but are relatively under-capitalized. The lower-right quadrant contains ensembles that are relatively well-endowed but are perhaps under-utilizing their available assets. And the lower-left quadrant contains organizations that are financially at-risk. Although this plot is strictly for standing chamber orchestras, the same sort of statistical distribution and scatter-plot could be done for 501(c)(3) chamber music presenter organizations and other groups. Robert Higgins’s and Richard Bull’s and Murray Dropkin’s books (links below) are particularly good, with regard to understanding and acting upon financial-ratio analysis for nonprofit organizations.

 eMarketer projected social networking annual ad spend
Possibly the most promising strategy for selling to the evolving chamber music market—of all ages—is social networking and Web 2.0 apps. Besides those environments, there are email affinity-marketing services, such as Emma.com, which are significantly more effective and flexible than services that were available several years ago.

When being chased by a bear, your survival first requires that you are not the slowest runner in the woods and that you are running in the best direction for getting away. I seriously doubt that the Federal Reserve will come to the rescue of any chamber music organizations ...

In this regard, the concept of sustainable growth was originally developed by Robert Higgins, Professor of Finance at the School of Business Administration, University of Washington. The sustainable growth rate (SGR) of any enterprise is the maximum rate of growth in sales that can be achieved, given the enterprise’s profitability, asset utilization, and debt (financial leverage) ratios. The variables in the SGR equation are the following:

  1. the net profit margin on new and existing revenues (P);
  2. the asset turnover ratio, which is the ratio of sales revenues to total assets (A);
  3. the retention rate, which is defined as the fraction of earnings retained in the business (R);
  4. the assets to beginning-of-period equity ratio (T).
To compute an orchestra’s SGR, multiply the four variables together, or, in other words, the SGR = P x A x R x T. Alternatively, the SGR equals the retention ratio, times the return on beginning-of-period equity.

The SGR increases when the operating margin increases, the assets to beginning-of-period equity increases, the asset turnover increases, or the retention rate increases. The sustainable growth model assumes that the firm wants to: (a) maintain a target capital structure without issuing new equity; and (b) increase sales as rapidly as market conditions allow.

Since the orchestras we are discussing are not-for-profits, the profit-margin term is a bit tricky. But the net income in the operating fund is a suitable proxy for what profit-margin would be in a for-profit enterprise, so the SGR equation can in fact be used for nonprofits.

The concept of sustainable growth can be helpful for planning healthy nonprofit growth. This concept forces managers to consider the financial consequences of sales increases and to set sales growth goals that are consistent with the operating and financial policies of the enterprise. Often, a conflict can arise if growth objectives are not consistent with the value of the organization's sustainable growth. If an orchestra’s sales expand at a rate that exceeds the sustainable rate, one or some combination of the four ratios must change. If an orchestra’s actual revenue growth rate temporarily exceeds the SGR, the required cash can usually be borrowed, against the orchestra’s line-of-credit. When actual growth exceeds the SGR for longer periods, management must formulate a financial strategy from among the following options: (1) permanently increase financial leverage (the issuance of debt); or (2) decrease the total assets to sales ratio. In practice, orchestras may be reluctant to undertake these steps. Orchestras are reluctant to issue debt because of high issue costs, and the unreliable nature of debt funding on terms favorable to the issuer. An orchestra can increase financial leverage only if it has unused debt capacity with assets that can be pledged and its debt-to-fund equity ratio is reasonable in relation to other nonprofits. Orchestras can attempt to liquidate marginal programs or intellectual property (such as trademarked broadcast programs or record labels, or branded educational/outreach content), increase ticket prices, or enhance production efficiencies to improve the financial ratios.

In summary, it is possible for an orchestra to grow too aggressively and rapidly, resulting in reduced liquidity and the need to deplete assets. Shrinking attendance and ticket sales is a worse problem, but it is not the only problem that can happen.

 Joseph Horowitz book



29 March 2008

SR: Chamber Musicians Plugged and Unplugged

 Ahnert & Steffen book, Berlin concerthall

O  ur string quartet is planning to acquire some sound reinforcement (SR) gear, to enable us to better control the sound levels and acoustics in some of the venues where we perform. I feel like the sales guys are genuinely trying to help us, but the fact that we’re classical musicians leads them to try to recommend all sorts of exotic things that they think would please us, like really low total harmonic distortion (THD) specs and so on. Invariably, these seem to us to be over-spec’ed and over-priced. We’re a classical string quartet and, yes, of course the SR requirements are different from what they’d sell to a rock band or to a symphony. But this is after all just a commercial sound system, right? Aren’t there engineering equations that determine what’s really necessary? I feel like the fact that we are acoustic musicians and classically trained and somewhat finicky ... brings out the worst ad hocness in the salesmen’s nature.”
  —  Anonymous.
I  wrap a piece of masking tape around the top three strings (most violinists don’t seem to mind) and clip the mic with a windscreen on the high side between the bridge and tailpiece to that tape.”
  —  Brian Frost, 15-MAR-2007, SR Forum.
W  here precisely do you wrap that tape? I have one young charge who is the keeper of an incalculably expensive Guarneri. I may not touch it.”
  —  Tony Tissot, 15-MAR-2007, SR Forum.
I  f you have four condenser mikes, just position one each on a tall boom above each violin and the viola and another in front of the cello on a short stand with a boom. If the quartet has decent instruments you do not need to have the mikes right on top of the instruments. A distance instrument-to-mike of 25 to 50 cm usually works for me. If you don’t have four condensers, use a dynamic on the cello. If you don’t have three but do have two, try one over the mid-point between the two violins, and one on the viola. "Open up the gain" on the violin pair 3 to 6 dB more than the viola mic.”
  —  Lee Brenkman, 24-FEB-2007, SR Forum.
It does seem that there’s a shortage of reliable guidance for sound engineering for small classical ensembles. Yes, there’s plenty of information on SR for symphonies, and there are quite a few acoustics engineering and architect firms out there that take on those large and well-paying civic projects. But there are not many resources that have detailed information or services for string quartets or other small groups. Some links provided below may be of interest, though.

 Ahnert & Steffen book, Fig. 3.14, required/available peak SPL, as a function of ratio of room volume to reverb time; “symphony” is approx. 10 W curve [conductor’s podium], “string quartet” is approx. 0.1 W curve
It is true that commercial sound work for a full symphony orchestra in an air-conditioned hall imposes fewer demands on an SR system than a commercial sound system for a small ensemble. After all, the peak sound pressure levels (SPL) for an orchestral fortissimo at the conductor’s podium are equivalent to 10 W of power or higher. A single violin’s peak SPL is less than 1/100th of that.

 Carnegie Hall, Stern Auditorium, Yamaha PM1D mixer
Let’s assume that your SR loudspeakers can deliver a level Lp = 110 dB at the ears of listener who is at the furthest distance from the stage—equivalent to the fortissimo for a full orchestra at the conductor’s podium. If the diffuse ambient noise level from a typical concert hall’s air-conditioning system is 32 dB at such a listener’s seat, then Lpdiff = Lp2 – Lp1 = (110 – 32) = 78 dB. If you add 6 dB to avoid undesired addition of levels, you get 84 dB. So you calculate that the THD target for the hall and those peak SPLs is 100 x 10 ( -84 / 20 ) = 0.006%. You can confer with an acoustics engineer or a sound designer at an architect firm for a more expert and precise answer than the crude suggestion I’m making here, but you can imagine from the calculation above that you probably won’t be needing amplifier gear whose THD specs are better than about 0.01%.

 Sokol book
If the air-handling HVAC is turned off, though, and if the audience is really attentive and really quiet and if there’s zero street noise coming in through the concert hall walls and roof, then the diffuse ambient noise level will typically be closer to about 18 dB instead of 32 dB, in which case Lpdiff = 92 dB, or, with an extra margin of 6 dB, make that 98 dB. With that you get is 100 x 10 ( -98 / 20 ) = 0.001% THD, about an order of magnitude better than the figure we calculated before. So you naturally wonder whether a sound system could be that good, to take advantage of such a quiet space to provide those dynamics, with a sound so clean that it’s indistinguishable from unreinforced acoustics.

Part of the answer to this question is that you need to think about every element in the audio chain—from the mics, to mixer, to amplifiers, to loudspeakers. The loudspeakers that are available for practical SR systems are, at best, not better than about 1% THD. And, in general, carefully thought-out designs for contemporary commercial sound work (including symphonic venues) have THD around 0.8%. And a THD of 0.8% represents 20 log10 (0.8 / 100) = –42 dB in terms of signal-to-noise ratio (SNR).

For a harmonic to equal this amplitude, you’d have 42 + 32 = 74 dB with the air conditioning “on”, or 42 + 18 = 60 dB with the air conditioning “off”.

 Stark book, Fig 3.3, typical Sound Pressure Levels (SPL), in decibels
In other words, if you’re buying SR gear with fabulously better THD specs (lower than, say, 0.8%) then you wouldn’t actually be deriving any benefit from those specs unless (a) your venues are tremendously quiet and (b) the musical passages include delicate pianissimos below 70 dB SPL.

 Central Studios, Utrecht Incidentally, one of the venues where I’ve witnessed heavy-duty SR and mixing gear deployed pretty unsuccessfully was the Oude Muziek Festival in Utrecht in 2007. The Sampson-Bezuidenhout concert was held in the CentralStudios facility, in Studio-1. There were about 3,000 persons packed into that cavernous 1,000 m2 (volume = 10,000 m3) hall, which is about twice as deep as it is wide. The miking of the performers was scanty. The reverb from front-of-house to rear was far too large, and the delays and phasing of the reinforcement loudspeaker arrays were wrong. Much of the ensemble’s sound was never captured by the mics and what was captured was piped and amplified in such a way that confusing delayed reflections arrived at your ears hundreds of milliseconds after the reinforced sound. The vocal parts tolerated this somewhat better than Kristian Bezuidenhout’s fortepiano.

 Ahnert & Steffen book, Fig. 3.14, required loudspeaker power, as a function of level difference L - Lk in dB and distance from source to listener in m; design for ‘L – Lk = 0 dB’ curve
According to Ahnert’s and Frank’s book (p. 285) the required amp power in Watts is a function of the ratio of the volume of the room and the mean reverberation time:

           P = 0.10 x V / T,

where V is in m3 and T is in sec. (See also top graph, above, the one at the very top of this post.)

 Ahnert & Steffen book, Fig. 3.15, reverb required (in seconds, referenced to 500 Hz) by volume of room (in m3); “chamber music” is curve 3, curve 2 is “symphony”, curve 1 is “organ”; CentralStudios should’ve been SR-tuned to 2.0 sec according to this …
CentralStudios’ equipment has the requisite power. But on this occasion the power available was under-utilized. Possibly the sound-check with the empty hall was not subsequently amended when the hall filled with people.

 Central Studios, Sampson & Bezuidenhout concert, Oude Muziek Utrecht 2007
Even in Row 11 where I sat, the sound was weak—it was difficult to hear the direct sound from the performers on-stage, and it was difficult to make sense of the disparate SR and reflected sounds impinging on us from further to the rear.

 Central Studios, Utrecht
 Central Studios, Utrecht, Studio 2, setup for refreshments at interval


27 March 2008

Dave Moulton: Golden Ears and Just-in-Time Spectral Management for Chamber Musicians

 Dave Moulton

M  astering [engineering recordings] is an art, not a science. It involves a lot of technical craft and control, plus practice.”
  —  Dave Moulton.
Your plane is delayed by bad weather, and you land in late afternoon at the airport of the city where your performance tonight is to occur. The taxi whisks you to the performance hall where you greet the presenter and observe the production people busily getting the stage ready. You have less than 2 hours before the performance begins. You should be focusing, centering, warming up, getting your game-face on. You should be taking deep breaths.

But wait! The house has a much taller ceiling than you thought it would have. The acoustic reflective panels on-stage are adjustable, but at the moment they seem to be in a perverse flat configuration that lets a lot of sound leak out into the wings. What was the last gig played in here anyway, some break-away faction from Cirque du Soleil? The whole acoustic ‘feel’ of the place is horrifically drier than your ensemble is used to. And there’s an odd acoustic ‘sweet spot’ slightly to the left of center-stage. What the hell! Where in this catastrophe of a venue is the best location for the harpsichord? Precisely where should the other ensemble members be placed, so that the solo passages of each will be heard and so that the balance of the group will have some hope of realizing your artistic vision?

Very few musicians receive any formal training in how to cope with this part of performance. As a result, it’s an incredibly stressful and agonizing thing for most ensembles and individual musicians. And yet it’s possible for you to systematically acquire skills that will help you make accurate acoustics decisions confidently and quickly. How do you train your ears to immediately recognize what you and your ensemble members need to do to deliver your best?

Golden Ears is one way—Dave Moulton’s CD-based audio ear-training course. It’s not perfect pitch or interval training. Instead, it aims to teach your ears to hear the frequencies, the signal processing, the compression, the left-right stereo imaging, the distortion, and the amplitudes in acoustic media. The course is self-paced and available as a set of eight audio CDs. To use it properly, you’ll need a set of good speakers or headphones. I use the Bose noise-cancelling headphones, to make sure that ambient noise around my house doesn’t confuse my ears when I’m practicing with the Golden Ears CDs.

 Moulton book
Moulton basically puts forty years of his recording studio, performance and teaching experience on these CDs. There are hundreds of exercises on the CDs that systematically take you through different dimensions of acoustic spectrum and timbre and electronic equalization (EQ) and processing of sound. While the main purpose of the course is to help recording engineers and producers to understand and be able to describe the elements that recorded tracks contain—their spectrum, dynamics, reverb and other audio qualities—with the goal of insightfully adjusting them in recording gigs or in post-production, the course is just as relevant for sound-reinforcement engineering in live performances and for classical musicians and presenters who work in traditional non-reinforced acoustic settings.

In a way, Moulton’s educational process is a little like a culinary course for chefs—helping them to quickly assess deficiencies in a dish, and equipping them with the ability to know instantly how to salvage a dish that suffers from imbalances in flavor.

Once you get a feel for the acoustic ‘ingredients’, you can take better control of the weird performance hall you find yourself in, take control of the hall’s sound-reinforcement control board, take charge with the presenter’s or the hall’s sound engineering staff, or take control and better utilize your own recording gear and approach the process of tracking, mixing and engineering with more confidence and less time consumed in trial-and-error. You can consistently ‘cook’ a better ‘dish’.

 Golden Ears audio course
How does the course work? There are four volumes, with two CDs per volume, each covering different components of the recording process. In Volume 2, after you’ve followed instructions for optimizing your listening set-up, you go through a series of A/B drills using excerpts of recorded music. The first recording (A) is the reference piece and the second (B) is a clone of the first with an applied amount of as-yet-undisclosed signal processing, frequency boost, delays, etc. Your task is to learn to identify the difference between the two recordings. To assist you, Moulton limits the number of options and groups them into six families of effects: amplitude change, distortion, compression, equalization, stereophony, time-delay, and reverberation. The drills are progressively more difficult. After you’ve completed your first pass through them, you can do the drills in random order to practice and improve your skills. The course materials are automatically randomized so you can’t identify any drill until it’s over. Golden Ears teaches you:

  • to recognize the effects of compression on a various music signals;
  • to identify fast and slow compressor attack and release times;
  • to correctly identify musically important EQ problems;
  • to recognize when loudness is the only difference between two signals;
  • to distinguish ranges of 1 - 10% and 10 - 30% Total Harmonic Distortion (THD) in recorded music or in sound reinforcement rigs used for live performances in larger chamber music venues;
  • to recognize abnormalities in stereo imaging (reverse image, mono summation, polarity reversal, pseudo-stereo, etc.) ;
  • to identify channel-to-channel time differences over a 1 to 50 msec range; and
  • to correctly recognize and manage gated and ungated reverb.
Moulton is a pro engineer and producer. He holds degrees from Bard College and The Juilliard School of Music. In the 1960s and 70s, he owned and operated his own commercial recording studio in New York. Previously at SUNY and the University of Massachusetts at Lowell, he was in the 1980s and early 1990s Chairman of the Music Production and Engineering Dept. at Berklee College of Music in Boston. He is now teaching privately and at the Museum of Fine Arts in Boston. He has worked as a studio designer and has designed playback room configurations for recording studios and wide-dispersion acoustic lens arrays for performance venues. In 2000 he (with Curt Wittig) received a Grammy nomination for the CD recording of music by George Crumb performed by the Philadelphia-based ensemble, Orchestra 2001. Dave wrote and produced Golden Ears in 1994, based on traditional music school ear-training techniques.

 Orchestra 2001 CD
The first two CDs each have a series of 14 EQ drills, each drill consisting of ten short bursts of sound with EQ applied and cancelled as you listen. First there is a warm-up for each drill, where Moulton describes what’s coming. Then the drill begins. For example, drillset_1/example_1 has ten seconds of pink noise, and for a few seconds an octave band centered around 500 Hz is boosted by 12 dB. Drillset_1/example_2 does the same thing to an octave centered around 63 Hz, and so on, until all of the octaves of the human hearing range from 31 Hz to 16 KHz have been covered—all ten octaves in random order. The manual is well-written. The comprehensiveness of the drills enables you to discover and make note of your own hearing deficits in a systematic way. If you do this with other members of your ensemble, you can identify certain aspects where one or another ensemble member has particular strengths. More likely, doing this together will confirm in an objective way which one of you is actually the most skillful and accurate acoustician (for purposes of reconnoitering with venue engineers and production people), rather than who merely has the strongest opinions and the most insistent expression of them.

After the pink noise drills, Moulton conducts more exercises involving applications of EQ, except this time they are done to musical excerpts. Next, there are more reps of EQ apps, this time with octaves being cut instead of boosted. Vol. 2 also has two CDs, this time with a wide variety of signal processing applied to a vast number of musical selections and styles. You can assess and practice your perceptions of things like amplitude changes, distortion, compression (including recognizing slow and quick attack and release times), some different examples of EQ, stereo/mono/pseudo-mono switching, time delays (including time differences over a 1 – 50 msec range), and reverbs. Vols. 3 and 4 extend the skillset into progressively more detailed and exotic effects that are important for performance and for recording/engineering.

Some effects are simple and easy to recognize, like a 3 dB amplitude boost. Yet, depending on the texture and timbre of the music, even something so simple as this may be difficult to hear. It may be even more difficult in high or low registers. Other effects are more obvious—clipping distortion, long reberbs, etc. But most are somewhere in the middling range of subtlety, like ‘left channel mids (1 KHz) boosted by 6 dB while right channel highs (10 KHz) cut by 6 dB.’ You can refine your ears to hear subtle EQ cuts and boosts within narrow intervals of a fourth or a fifth, and to readily hear multiple frequency bands at once. After 20 or so hours with these CDs, you’ll be able to quickly diagnose what’s going on acoustically in any performance venue and intelligently strategize what to do about it—to make the best of the situation you’re in.

In summary, all the hundreds of drills on these CDs train you to hear and to recognize problems in all these areas and across the whole span of registers—before you go on-stage or before you exit the recording studio. By revisiting the CDs before you travel to give a concert in an unfamiliar hall, or by revisiting the CDs a few days before you start a recording gig, you can refresh your familiarity and refresh your confidence to be able to quickly amend and improve the acoustics that will affect the music you make.

In effect, for those of us who are not recording engineers or conductors in our day-jobs, rehearsing our ears to recognize and thoughtfully manage these ‘macro’ acoustics effects is a very important yet under-recognized aspect of our art. The Moulton CDs are an efficient way to establish and maintain a mastery of this.

 iZotope sound 2hrs ago

 Prosser book