The Berliner Philharmoniker’s Digital Forte
Making classical music trendy through the power of digital technology.
Through harnessing the power of digital technology, institutions such as the Berliner Philharmoniker (the Berlin Philharmonic, ranked as one of the top orchestras worldwide[i]) have pioneered the use of streaming their concerts “as a new medium for classical music with the launch of the Digital Concert Hall in 2009”[ii]. For a music genre that’s often thought of as old-fashioned, this is a pretty radical development. The hope is that this marriage of technology and art will make classical music more accessible, and therefore sustainable in the long run.
The Berliner Philharmoniker make almost all of their musical programmes available online. The sound and HD is of top quality standard[iii]. Paying subscribers are offered over 40 live transmissions every season (approximately one concert a week) and have access to a video archive of more than 200 concert recordings. Subscribers can select from the archive what concert they wish to listen to, by repertoire, conductor and year.[iv] This is in addition to the selection of documentary films and some 150 interviews with artists. Viewers are able to view a concert online either via ticket, or by subscription (with weekly, monthly and annual options priced at €9.90, €19.90 and €149.00 respectively). Concerts and projects from the orchestra’s education programme are also transmitted (free of charge) and made available in the video archive.[v] This creates the potential to introduce famous works of music visually in the classroom.[vi]
The Digital Concert Hall subscriber base grows every year by 25-30%.[vii] The aggregated community now comprises 450,000 subscribers, with almost 700,000 “likes” on Facebook and 30 million hits on YouTube.[viii] Although 30 percent of users watch the content on mobile devices, over half of those do so through a Wi-Fi connection to their computer or smart TV. The rest are equally divided between smart TVs and computers.[ix]
Since 2010, the Philharmonic has also made selected programs available live in HD to cinemas. In terms of geographical breakdown, it currently streams three performances a season to 80 cinemas in Germany and 40 in other European countries. Tickets sell at a rate of about 50 percent to 60 percent in Germany, and slightly less in the rest of Europe.[x] Other plans for the Digital Concert Hall include streaming content from the concert hall that does not necessarily involve the Berlin Philharmonic. For example, content could be of a chamber music concert or a city festival featuring other orchestras. Also in the offing is an app in Chinese to meet the demands of that particular market.[xi]
Part of what has driven this creative innovation is the belief “that high-quality recordings can command a premium price” – as opposed to the “free-for-all” model employed by people posting on platforms such as YouTube and Vimeo.[xii] In addition, options for commercial recording and TV concerts have been in decline, and classical music has been pushed further into special interest channels[xiii]. The orchestra is able to try to withstand this development by building its own distribution channel via digital technology, positioning it for tomorrow.[xiv]
What are the challenges for the orchestra going forward? Of critical importance was that they were not able to undertake this project without the help of Deutsche Bank, which recently renewed its contract for another five years of funding. In addition, Sony has also provided support; in 2012 they provided the microphones and HD cameras mounted around the auditorium and stage.[xv] While such partnerships are powerful, and the Berliner Philhamoniker is able to earn revenue in an area where many musical organisations are streaming for free, they must make greater efforts to break even. Almost half their fees are used to pay copyright holders and performers. The rest is invested back into the Digital Concert Hall, for example to generate new content and build technological infrastructure[xvi]. Another challenge the orchestra will face is the presence of rivals in the digital space, such as the New York Philharmonic who currently have partnerships with Spotify, iTunes and Roku.
Thus, the Berliner Philharmoniker must leverage their capabilities in order to stay relevant and increase their financial sustainability. They could do this by ramping up efforts to expand the Digital Concert Hall’s reach internationally. Roughly 25% of the orchestra’s supporters come from Germany, 20% from Japan, 20% from the US. This is followed by England and European countries that make up around 5% of the audience. There is burgeoning interest from emerging market countries such as Korea, Brazil and Taiwan.[xvii] There is also an untapped market in China, where the younger generation’s interest in classical music has been piqued by artists such as Lang Lang and Yuja Wang. The Digital Concert Hall should increase its marketing efforts to further penetrate these markets.
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Student comments on The Berliner Philharmoniker’s Digital Forte
I really like the fact that, by trying to reinvent its business through digitalization, the Berliner Philharmoniker is making classical music available to a greater number of people. From your post, I had the impression that they already have the infrastructure in place (especially from Sony), so I believe scaling this up (entering new markets) would probably cost less than what it has cost so far, which is a positive. But maybe it is still not enough to bring them to breakeven, which makes me wonder if they should be rethinking their agreements with copyright holders and performers (could incentives be better aligned?), as well as working with other partners in “innovative” events (i.e.: beverage companies & open air events, or art expositions with the “appropriate” soundtrack, etc.). I think innovation can be extremely powerful considering competitors’ choice of business model and value proposition, especially as the Berliner Philharmoniker grows into markets that wouldn’t be traditional consumers of classical music. Let’s wait and see!
I agree with you and the commenter that the Berliner Philharmoniker will likely have to innovate beyond high-quality streaming in order to break even. As it plans for the future, it may want to look to LA. The LA philharmonic is combining VR with Beethoven by giving its audience Samsung VR headsets during a special performance (https://www.fastcompany.com/3050709/tech-forecast/the-la-philharmonic-goes-virtual-with-oculuss-help). The LA Phil also brought its VR app into the community, creating a mobile viewing station that reached over 10,000 Angelenos (http://www.laphil.com/vanbeethoven). Moving forward, orchestras will have to innovate their content as well as their outreach.
It is very cool that such a historic organisation is actively looking to “move with the times” in this way. As T@HBS mentioned, scale will likely reduce the Berliner Philharmoniker’s dependence on outside funding. One way they might attract audiences in emerging markets is through programming targeted at local tastes, rather than just broadcasting content preferred by existing audiences.
I do also worry that consumers aren’t necessarily experiencing the “high-quality recordings” that are commanding a premium price if 50% of them are listening via their phones! This might encourage defection to e.g. Spotify or Youtube over time. I wonder whether there is potential to use the partnership with Sony to encourage users to ensure they are listening to these recordings using similarly high quality hardware.
Super interesting piece. Surely the right move in our digital age where we can access music from anywhere, with any device at any time.
I am wondering which effects this digitalisation strategy will have on ticket sales and live performance guests. Will this be a way to access a new listener base who will maybe go to a concert at some point or who simply can’t so based on their geographic location or will in the future the Philharmoniker only play without an audience as all guests are tuned in via the internet. Especially when the quality of audio and video are further improving.