By Joanna Woronkowicz and Doug Noonan
Why does the arts sector, in policy and practice, keep looking at itself from the stage rather than from the seats? Since Baumol and Bowen diagnosed the “cost disease” of live performance in the 1960s, analysts have taken the cost structure of producers as their point of departure; Caves (2002) framed the creative industries through seven producer-centric properties; Throsby modeled artists as miniature firms; public agencies subsidized bricks, mortar, and payrolls. The supply lens became so habitual that it now passes for common sense. Yet value in the arts is ultimately realized in demand—in the countless choices people make to watch, listen, remix, or ignore.
The cost-side fixation might have been defensible when culture moved mainly through large, capital-intensive institutions, but digital transformation has changed the economics of access. Distribution costs have collapsed toward zero; informal and amateur creativity flourishes on phones and laptops; time and attention, not ticket revenue, are the new scarce resources. Most cultural accounts do not track this shift because what matters to audiences—minutes of engagement, surplus enjoyment, the psychic payoff of making and sharing—rarely leaves an accounting trail. The result is a widening gap between “the state of the discourse,” which is still tethered to professional producers, and “the state of the arts economy,” where value circulates through informal networks and digital platforms.
Empirical evidence shows just how wide the gap has become. For every dollar that flows to professional arts payrolls, unpaid creators generate almost two dollars’ worth of value, live and recorded audiences extract more than two-and-a-half dollars, and leisure reading alone delivers nearly seven. Taken together, the demand-side contribution towers over the supply side by roughly ten to one. Whenever policy overlooks that surplus, it inevitably mis-prices the sector and misallocates resources.
Producer dominance is not merely an analytic habit; it is embedded in political economy. Artists, cultural nonprofits, and their patrons form compact, well-organized interest groups, whereas audiences are diffuse and unorganized. Olson’s logic predicts the outcome: concentrated suppliers win subsidies, diffuse consumers get rhetoric. Tax codes amplify the bias by rewarding donations to institutions, not participation by households. Normative hierarchies reinforce it, casting “great art” as a merit good that enlightened elites must bestow on the public, who are presumed to need improvement rather than agency. Under these incentives, supply keeps expanding even as seats go empty, leading to chronic oversupply, precarious producers, and a creeping legitimacy crisis.
A demand-centered reframing would start by letting audiences steer a portion of public funds. Converting a slice of operating grants into cultural vouchers or match-savings accounts would shift purchasing power directly to households and reveal real preferences. Public support could be indexed to robust engagement metrics—unique visitors, hours of participation, co-creation—rather than to the sheer number of productions mounted. The tax code could extend credits to ticket purchases, streaming subscriptions, or the DIY tools that turn consumers into creators. Investments in open-licensed archives, maker spaces, and remix rights would raise the psychic return on participation, while a modernized data regime could publish an “attention GDP” alongside conventional value-added, finally giving non-market demand a seat at the policy table.
Cost-disease arguments will not disappear—live performance remains labor-intensive—but digital efficiencies and hybrid formats have already softened the blow. When a string quartet can stream to thousands at negligible extra cost, the rationale for pumping ever more money into fixed repertory cycles weakens. The marginal subsidy dollar may now yield higher social returns when it lowers barriers for audiences rather than padding operating budgets.
None of this denies the intrinsic worth of art created for its own sake; it simply recognizes that large swaths of the sector live or die by whether people choose to watch, read, play, or remix. Re-balancing cultural policy toward demand is therefore not a betrayal of artistic integrity but a prerequisite for the arts’ continued relevance. Counting the audience—time, attention, surplus enjoyment—does more than sharpen our metrics. It grounds the case for public support in the lived experiences of citizens and, paradoxically, may offer the strongest argument yet for why the arts matter.
If the demand-side lens resonates—or rankles—let us know. Tell us where you’ve seen supply-heavy thinking help or hinder real-world practice, and share any examples of audience-driven funding or metrics that inspire you (or make you wary). Drop us a line, tag us on social, or simply reflect on how this argument squares with your own experience. The exchange of perspectives is the point; the sharper the challenge, the sharper our collective thinking.