Tuesday, December 27, 2011

Economic Law Applies to the Arts: Handel Edition

Georg Friederich Handel
While browsing through Newman Flower's biography of Handel the other day, I came across a passage explaining why his opera Deborah failed and was surprised to see that much of the blame due to entrepreneurial error. In addition to other factors such as the lack of assistance from Court patronage (due to the public's being dissatisfied with its perceived preoccupation with all things German), Handel decided to significantly increase his ticket prices. He was led to do so because of his successes in the immediate past.

Raising prices was a mistake, because as the law of demand implies, many fewer buyers patronized his performances because they refused to pay the higher prices. And he did so at the worst possible time.

As Flower relates the story:
The greatest mistake of all was made by Handel himself. He increased the prices of admission all round. The boxes were a guinea: sets in the gallery half a guinea, so that only 120 people paid for admission to the first performance; the others forced themselves in.

Handel could not have made a greater blunder, for increased prices were at that time the principal topic of conversation. Sir Robert Walpole was floundering in a morass of the national excises, and, to save the Government from bankruptcy, he had revived the salt tax the year before, and now was about to impose a tax on tobacco, and two shillings on spirits and wine. The people were flaming. The muddle had been brought about by Walpole's reduction of a shilling off the land tax, which benefited, of course, the moneyed classes. Therefore he was not taxing the multitude to release those who had money enough to sp;are for taxation purposes. National hatred against Walpole surged up once; there should be, the mob declared, no taxation of the commodities of life. For Handel to put up his prices on top of the commotion, meant adding fuel to fire. They could not do without salt, tobacco, or wine, but they could do without Handel. Such was the import of the outcry.

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