IN1380

A Maestro without Borders: How André Rieu Created the Classical Music Market for the Masses

08/2017-6304

This case was written by Mi Ji, Institute Senior Executive Fellow of the INSEAD Blue Ocean Strategy Institute, under the supervision of W. Chan Kim and Renée Mauborgne, Professors of Strategy at INSEAD. It is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.

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“Classical music today is in deep trouble. It is not clear whether we can do more than bear witness…”

Samuel Lipman, pianist and music critic1

“…[Audiences] are aging, and the collapse of arts education in the public schools makes it difficult to find new listeners among a younger, more ethnically diverse urban population. The repertory has grown stuffy and predictable, and daring ventures tend to alienate old, reliable subscribers. Finances are shaky in all the arts, but orchestras . . . are particularly vulnerable.”

Schwarz, K. Robert, New York Times2

In the past few decades, pessimism about the viability of classical music as reflected in the above quotes has been growing. “Classical music is dying.” “There is no money, no interest, no relevance.” “It’s about dead composers and a dying audience…there is no coming back from it.” These are the observations and comments we often see in newspapers about classical music.3 Average music listeners are not enthusiastic about their classical music experience either, as they often feel bored, intimidated and frustrated by the stuffy atmosphere, the pompous etiquette, the elitist repertoire and the impersonal rendition of music at classical orchestral concerts.4 All this seems to suggest a bleak future for the classical music industry.

Classical Music: A Dying Industry with No Future?

As a form of art, classical music has been accorded a high place. But it is a known fact that its market is shrinking and its influence waning among the mass population. It is now viewed as an endangered species that relies increasingly on external support for its financial viability.

1 Samuel Lipman, Music and More: Essays 1975-1991. Evanston: Northwestern University Press, 1992, p25. 2 Robert K. Schwarz, “The Crisis of Tomorrow are Here Today,” New York Times, October 31, “Arts and

Leisure”: 31-32. 3 See, for example, Mark Vanhoenacker, “Classical Music Sales Decline: Is Classical on Death’s Door,”

Slate Magazine, January 21, 2014 (http://www.slate.com/articles/arts/culturebox/2014/01/classical_music_sales_decline_is_classical_on_deat

h_s_door.html, accessed May 23, 2017), “Sunday Dialogue: Is Classical Music Dying,” The New York Times, November 24, 2012 (http://www.nytimes.com/2012/11/25/opinion/sunday/sunday-dialogue-is-classical-music-dying.html, accessed May 23, 2017), Anna Goldworthy, “The Lost Art of Listening: Has Classical Music Become Irrelevant,” The Monthly, October, 2015,

(https://www.themonthly.com.au/issue/2015/october/1443621600/anna-goldsworthy/lost-art-listening, accessed May 23, 2017), “As Interest Wanes, Classical Music Hits Sour Route,” USA Today, April 14, 2015 (https://www.usatoday.com/story/news/nation/2015/04/14/music-industry-jobs/25787067, accessed May 23, 2017), and Simon Behrman, “From Revolution to Irrelevance: How Classical Music Lost Its Audience,” International Socialism, Issue 121, January 2009.

4 See, for example, Richard Dare, “The Awfulness of Classical Music Explained,” blog article, Huffington Post, May 29, 2012

(http://www.huffingtonpost.com/richard-dare/classical-music-concerts_b_1525896.html, accessed May 23, 2017), Samuel Cottell, “Is Classical Music Boring,” CutCommon Magazine, January 19, 2016 (http://www.cutcommonmag.com/is-classical-music-boring/, accessed May 23, 2017).

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That was not the case 150 years ago, when classical music was the mainstay of popular culture. Emerging from the performances commissioned by the royal courts of Europe, classical music became an independent industry in the 19th century. It was so much a part of daily life in Vienna, for example, that one could often hear Johann Strauss playing his waltzes while strolling through the public gardens. Talented musicians were no longer treated as subordinates of nobles and were worshipped by middle-class fans in vast numbers. As audiences grew bigger, concerts increasingly moved from salons and courts to larger halls destined solely for performance. Professional orchestras were established to deliver the works composers created for their new audience. Many of the top orchestras today such as the Berlin Philharmonic, Vienna Philharmonic, London Symphony Orchestra and the ‘Big Five’ Orchestras in the US, namely the New York Philharmonic, Boston Symphony Orchestra, Chicago Symphony Orchestra, Philadelphia Orchestra and Cleveland Orchestra, were all founded in the late 19th century or early 20th century to meet the rising demand for classical concerts.

In the meantime, new rules and etiquette were created for the full-fledged industry. In an 18th century court, where musicians performed in intimate settings, appreciative clapping, cheering and even conversation were acceptable during a performance. Now, as concert halls became much bigger, the distance between the ensembles performing on stage and their audiences widened and the larger audiences made more noise. As orchestras played unamplified, new requirements for audience demeanour were called for. Composers like Richard Wagner formally demanded the audience to be quiet during the presentation of their works. Respectful fans followed the advice and made it a general rule for concerts. This tradition evolved to become the industry standard: people listened solemnly and reverently, reserving their coughing and clearing of throats for a pause in the music. To ensure the integrity of the musical presentation, they were in general not supposed to clap between movements of the same piece. Attending a live concert became a largely inward and constrained emotional experience. On the other hand, the conductor and his orchestra, dressed sombrely, focused their attention on the music itself rather than interacting with the audience.

While the classical music industry continued to uphold its proud heritage, cultural shifts were taking place in the post-war world as artists like Elvis Presley and the Beatles ushered in the rock ‘n’ roll era and paved the way for the gigantic pop music industry. Easy-listening pop music with its anti-elitist undertones appealed to the younger generation and beyond, bringing them from lofty concert halls to vast stadiums.

Since then, the audience for classical music has been aging. According to various reports, the age of the average American audience for a symphony concert in 1937 was 30.5 By 1982 the average went up to 40. In 1992 it was 45, and in 2002 it reached 49.6 In Australia, the largest proportion of attendees at classical music concerts in 2009-2010 were aged 65-74.7 In France,

5 Margaret Grant, Herman S Hettinger, National Orchestra Survey, American Symphony Orchestras, W.W.

Norton & Company, Inc., 1940. 6 Greg Sandow, “Important Data,” in Greg Sandow on the Future of Classical Music: An Artsjournal Blog,

November 24, 2006, http://www.artsjournal.com/sandow/2006/11/important_data.html, accessed May 23, 2017.

7 Anna Goldsworthy, op. cit.

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a 2008 study by the Ministry of Culture found that 50% of classical concertgoers were aged 55 and over.8

That is not yet the whole story. With the popularization of television media, the advent and development of hi-fi stereo technology, and the availability of multiple formats of live entertainment, the audience size for live classical concerts was shrinking in absolute terms. On the one hand, classical music lovers found ways to enjoy high-quality classical music outside concert halls. In America, an investigation into the potential audience for classical music suggests that most of those who expressed some interest in classical music did not regard the concert hall as the preferred place to listen, with the car being the most frequently used “venue” for classical music, followed by the home.9 Here they could appreciate the magnificence of classical music by selecting the pieces or just the sections they loved the most, at the most convenient time, without having to worry about the attire they should wear or the etiquette they should abide by. On the other hand, for those who loved to attend live entertainment events, there were myriad offerings in the marketplace such as pop concerts, theatre, opera, ballet and Broadway shows.

All this has led to a contracting market for classical music concerts. In 1982, merely 13% of American adults reportedly attended at least one classical concert event. Twenty years later, in 2012, this figure was further reduced to 8.8%.10 And a study by the League of American Orchestras shows that classical concert audiences declined by 10.5% between 2010 and 2014.11 Depending on the general economic conditions, ticket pricing strategies and many other factors, concert attendance fluctuates. Generally speaking, the industry sells 70% of seating capacity at best.12

A full-size orchestra typically employs 90-110 full-time musicians. On top of this, top-tier orchestras often have several hundred managerial staff members, artistic support people and part-time musicians on the payroll. A 2012 study shows that the median number of employees in 13 top orchestras in the US was 617.13 On average, each orchestra gives more than 170 concerts per year.14 Big concert halls normally have a maximum seating capacity for about 2,000 people. To maximize revenue, orchestras normally employ a price discrimination strategy for different seating positions in a concert hall. Overall price levels also vary depending on the standing of the orchestra in the industry. For first-class orchestras, the average price typically ranges between $130 and $300.

8 Limelight Magazine, “Music Briefing: Ageing Audiences,” October 19, 2012, http://www.limelightmagazine.com.au/Article/319863%2Cmusical-briefing-ageing-audiences.aspx,

accessed May 23, 2017. 9 John S. and James L. Knight Foundation, “Classical Music Consumer Segmentation Study: How

Americans Relate to Classical Music and Their Local Orchestras,” October 2002. 10 “Share of adults attending a classical music event at least once in the past 12 months in the United States

from 1982 to 2012,” Statistica, Inc. (NY) 11 Zannie Giraud Voss, Glenn B. Boss and Karen Yair with Kristen Lega,“Orchestra Facts: 2006-2014: A

Study of Orchestra Finances and Operations,” League of American Orchestras, November 2016. 12 Robert J. Flanagan, The Perilous Life of Symphony Orchestras: Artistic Triumphs and Economic

Challenges, New Haven: Yale University Press, 2012. 13 “Report of Executive Compensation in Orchestras and Performing Arts Centers,” Wilson Group, June

2012. 14 Robert J. Flanagan, op.cit. , pp42-43.

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As musicologists and critics have been lamenting the situation and talking about the death of classical music, orchestras have reacted by giving more concerts and hiring more superstar conductors and guest soloists with the hope of drawing in more customers and, with them, more revenue. For example, the Boston Symphony Orchestra nowadays gives more than 250 concerts annually. But artistic pay and benefits of the orchestra industry have been higher than any other arts and cultural sector. In 2014 they accounted for nearly half (46%) of the average budget of American orchestras.15 Top orchestras often pay over $1 million per year to their leading conductor/music director, and top guest soloists are said to earn $30,000 to 70,000 per appearance.

Some orchestras have also made efforts to attract new audiences to their concerts. Programs like “Student Advantage" or “Under 18s Free”, for example, offer price discounts to young people as well as free tickets for minors. Many orchestras have also held free educational concerts, aiming to nurture interest among young people. These efforts to boost demand, however, have failed to increase revenue significantly, while incurring further marketing and production costs, putting even more pressure on orchestras’ rapidly disappearing profit margins.

Traditional orchestras have had to rely heavily on financial support from philanthropic organizations and public institutions to survive. During the first decade of the 21st century, the ‘big five’ orchestras in the US ran deficits in the millions of dollars. The Philadelphia Orchestra filed for bankruptcy in 2011 and some others imposed pay-cuts on their musicians.16 From 2012 to 2014, as the US economy emerged from the financial crisis of 2008, the general outlook appeared to have marginally improved. However, a recent study shows that when investment income (e.g., earnings from endowment funds) was excluded, revenues from performance activities on top of the current charitable income orchestras received, simply could not support orchestras to break even. For 2014, the average orchestra would have ended up with a deficit of $1.4 million, and shortfalls would have been the norm for all orchestras with annual expenses greater than $300,000.17 This calls into question the sustainability of the industry’s common business model during possible economic downturns, when revenues from investment would shrink drastically. In fact, if orchestras were to rely solely on their performance earned revenues, as pop artists do, almost none could survive.

In Europe, where orchestras are heavily supported by government subsidies, cuts in public financing in the cultural sector have threatened the existence of some orchestras and resulted in the downscaling of others. According to the German Orchestra Association, between 1992 and 2012, the number of German cultural orchestras fell from 168 to 132, representing a decrease of over 20%. In the same period, budget shortfalls led orchestras to cut positions or leave some musician seats empty, as the orchestras could not afford to fill them.18

15 Zannie Giraud Voss et al., op.cit. 16 See Robert J. Flanagan, op.cit., Chapters 1 & 6. 17 Zannie Giraud Voss et al., op.cit. 18 “Schleichender Abbau von Musikerstellen – Zahl der deutschen Kulturorchester sinkt weiter,” NMZ,

January 24, 2012. https://www.nmz.de/kiz/nachrichten/schleichender-abbau-von-musikerstellen-zahl-der-deutschen-kulturorchester-sinkt-weit, accessed May 24, 2017.

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Enter André Rieu

Yet these difficulties were never relevant to André Rieu and his Johann Strauss Orchestra, which he started in 1987. Since then, Rieu has been one of the biggest male touring artists in the world in all music genres – from pop to hip hop to classical – for over a decade. In the first half of 2009, for example, he sold out more stadiums than Bruce Springsteen, with $57.4 million in gross revenue, according to Billboard Magazine. Only Madonna, Tina Turner and Britney Spears earned more revenue during the same period. Rieu plays for over 700,000 fans every year and has sold more than 40 million CDs worldwide.

As a child, Rieu received an orthodox training in classical music. His father was a conductor of the Maastricht Symphony Orchestra in the Netherlands. He and his five siblings grew up in a house where the classical canon was revered. Rieu started the violin when he was five and later on attended conservatories in Belgium, finally receiving his degree, the "Premier Prix" from the Royal Conservatory of Brussels. He also spent 10 years playing in the Limburg Symphony Orchestra in Maastricht, his hometown.

While fascinated by the world of music, even as a child he found himself frustrated with the sombre atmosphere of concerts. No one smiled – players, conductor and audience alike. Everyone appeared so serious and stiff, even though the music to him radiated so much joy, love and life. As he later commented, “The classical music world is so snobbish. I think there are people who use classical music to say, 'I am better than you, because I know all the rules and you don’t’. You’re not allowed to have fun or entertain.” To Rieu, music should above all bring joy and freedom rather than being a constraint and a burden. “Why don’t you put some flowers on stage? Why do you have the girls always in black dresses? Why do the people always look so serious? Why does the conductor turn his back to the audience? No wonder classical music was dying.” He questioned those “pompous orchestras”.19

It was in this spirit that he started his own Johann Strauss Orchestra. Since the orchestra gave its first performance in 1988, Rieu has been taking classical music to people and places that rarely show an interest in it. Today he is known as “the maestro for the masses”.20

André Rieu: Making People Waltz – and Happy

An André Rieu concert is an entirely different experience. While traditional classical concerts are normally hosted in noble, solemn concert halls, André Rieu’s concerts take place in stadiums or arenas, on city squares or in courtyards of castles. There are generally three venue sizes for Rieu’s concerts: world-stadium-tour venues of between 25,000-35,000 capacity, regular outdoor shows that play to around 10,000, and indoor concerts that draw crowds of between 4,000 and 10,000. Even the smallest of his concerts accommodates twice the

19 Julia Llewellyn Smith, “King of Schmaltz André Rieu Waltzs towards a No. 1 Clash with Pop Prince

Robbie Williams,” Telegraph, November 11, 2012. http://www.telegraph.co.uk/culture/music/music-news/9669220/King-of-schmaltz-André-Rieu-waltzes-towards-a-No-1-clash-with-pop-prince-Robbie-Williams.html, accessed May 24, 2017.

20 Nina Siegal, “A Maestro for the Masses, if Not the Critics,” New York Times, December 21, 2016. https://www.nytimes.com/2016/12/21/arts/André-rieu-dutch-violinist-dazzles.html?_r=0, accessed May 24, 2017.

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maximum capacity of a regular classical concert. But Rieu has never had to worry about how to fill them – his concerts have always been packed with fans. At the Telstra Dome in Melbourne, Australia, for example, Rieu drew 76,000 fans in a three-night engagement on his 2008 world stadium tour. In Romania, 12,500 tickets for Rieu’s 2015 concert in Bucharest were sold out half a year in advance and in just three hours.

In a world where top orchestras struggle to fill a concert hall, the popularity of André Rieu as a classical artist appears to be inexplicable. Yet a closer look suggests that his concerts are almost everything a traditional classical concert is not.

There is no requirement or peer pressure for dress code. People come to Rieu’s concerts dressed in the way they feel comfortable, without having to worry about being “out of place”. On a stage complete with flowers, performers are not dressed in the subdued black and white attire characteristic of a classical orchestra; while the men are in relatively classic eveningwear, female performers wear dazzling taffeta ballgowns. Instead of performing unamplified like traditional orchestras, André Rieu uses amplification and sound reinforcement equipment for his concerts so that high-quality sound reaches every corner of the vast venues. Moreover, a huge panoramic backdrop and side screens provide cinematic quality throughout, making it a feast not only for the ears but also for the eyes. Not only do audiences hear the music, they are dazzled by colourful lighting, fireworks that erupt in synchronization with the climax of the music, and aesthetic performances ranging from waltzing in graceful costumes to ice-skating against a dreamland stage background.

The traditional separation between the orchestra and concertgoers is gone. Rieu’s musicians are relaxed and seem to have as much fun as the audience. Not only do they enjoy playing the music, they often dance, clap, sway and even whistle to the music. As the conductor and violinist himself, André Rieu does not turn his back to the audience. Instead he faces them, talks to them and interacts with them throughout the entire performance. Sometimes he will lead his orchestra to enter the venue from the rear and walk through the audience towards the stage, smiling, waving and winking at cheerful fans giving him a standing ovation, drawing closer to see him better, then parting with respect to let him through as he approaches. On the stage, not only does Rieu lead his orchestra with “[his] bow, [his] head, and [his] whole body”, he also stirs up the audience with jokes and gestures, and leads them to make waves, sway and jump in sync with the music. His fans are fascinated by his “rock-star demeanour”, his “piercing eyes that can look at you from the stage, find you in an audience…and make you waltz.” André Rieu introduces each song to the audience. He also gives a lot of room to his orchestra and singers. Together, he and his orchestra take the stage with humour and a genuine affection for the audience.

Rieu and his orchestra seldom play the heavy and solemn genre of classical music typically played by traditional orchestras. When Rieu set up his orchestra, he named it the Johann Strauss Orchestra with the intention of keeping the music of the waltz king alive. As a child, Rieu attended his father’s concerts and noticed that “when he played waltzes as encores, the audience seemed different. They smiled; they started to move in their seats. This music still had a magic power to move people.” This was exactly what Rieu wanted to do: to play music that everyone – not only the educated few – could enjoy and love. The waltz has therefore become the dominant rhythm of his concerts and Rieu is hailed as the new waltz king by the media and his fans. When he does play music beyond the waltz repertoire, he often changes the time signature slightly to “make everything waltzable”.

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Rieu only plays music that “speaks to the heart.” He picks tunes that are most familiar to average listeners and performs the “best bits”. This means forgoing the complex and challenging pieces of classical music that tend to be more intellectual than emotional in favour of popular ones and including only the highlights for easier listening. For example, he reduced Ravel’s Bolero from 22 minutes to 4 minutes.

Yet waltzes and other familiar and short classical melodies are not the only music Rieu plays. He will also intersperse “The Blue Danube” with “Feed The Birds” from Mary Poppins, Elvis Presley’s “Are You Lonesome Tonight?” or Celine Dion’s “My Heart Will Go On”. His concerts create a joyful and epic experience for the audiences by mixing well-known classical pieces, pop songs and movie themes – anything that touches the heart.

At Rieu’s concerts, audiences do more than listen; they participate in the performance. On one occasion, tens of thousands of viewers, on cue from Rieu, took out a plastic cup from their concert party bags, removed the cover and gargled the water to create sounds to accompany the orchestra in its performance of Verdi’s opera Aida, their laughter filling the air of the venue. In Maastricht, the audience across the entire city square hailed in unison the opening rendition of the famous song “Granada” by Mexican composer Agustin Lara, to the satisfaction of André Rieu who had jokingly demanded “Spanish Spanish, not Maastricht Spanish” from them. At almost every concert, Rieu and his orchestra stir the audience to dance in the aisles as enthusiastically as at any pop concert. As one media report commented, “André Rieu took the seriousness away from classical music.”21 Rieu has confirmed this, saying he wants to bring back humour into classical concerts. More importantly, he brings genuine joy to people. Often, as the “Blue Danube” is being played and the audience sway, sing and dance in total self-indulgence, they appear to be the happiest people in the world.

On top of the fun family atmosphere, Rieu’s concerts also offer a feast for the senses, with special effects such as smoke, explosions, balloon or dove launches that are alien to any traditional classical concert. At a Maastricht concert, the soprano, dressed as Mary Poppins, singing live, flew into the stadium suspended on an invisible wire and descended to the stage to join Rieu and the other performers, to the awe and amazement of the audience. During his world stadium tour “A Romantic Night in Vienna”, Rieu combined artistic expressions from ballet, opera and figure skating to create a dream-like experience for his fans.

The average price of an André Rieu concert ticket is comparable to that of a top orchestra performance with guest soloist appearance. But the sheer size of the audience means that an André Rieu concert earns multiple times the revenue of a traditional concert. Depending on the seating position, Rieu’s ticket prices range from around $60 to over $1,000, allowing fans with different needs and means to either simply attend the event, have VIP seats, or even meet André Rieu backstage.

The ages of André Rieu concertgoers are said to “range from 6 to 100”. Indeed, the family-friendly and festive atmosphere draws people of different ages to Rieu’s concerts, some even with babies in their arms. Most importantly, André Rieu appeals to a vast demographic that is overlooked by both the pop and classical music industries. Pop music acts have always focused on teenagers and adults below the age of 30, whereas orchestras, in view of their aging and shrinking customer base, have tried desperately to arouse interest among the

21 “Getting the World to Waltz,” Billboard, May 15, 2010, p46.

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younger generation by giving discounted or free educational concerts at the expense of their current profitability. Yet the great majority of the relatively mature demographic do not feel they fit into the pop culture of younger people. On the other hand, they are either intimidated or frustrated by the stuffiness of classical concerts so that they have seldom or never been to such a concert. As music lovers they sometimes watch old concert recordings on TV but have never considered the possibility of enjoying the music with a crowd in a public place, as their children or grandchildren do at pop concerts. These people now come to André Rieu’s concerts, some even flying from other countries or continents, dancing, swaying and celebrating together with tens of thousands of André Rieu fans. There were also people who first came to an André Rieu concert to accompany parents or friends, and were anticipating a “schmaltz musical show”, only to find that they fell in love with the ambiance and “abandoned themselves to the joy of listening to the best bits.”

As executives working for Rieu acknowledge, people who like André Rieu are more affluent than the average teenage kid… they want to pay money to get something they like. They don’t expect music to come to them for free.22 These people form the solid fan base of André Rieu and his orchestra. Over the years, Rieu has played for more than 15 million people worldwide, giving from 70 to 112 concerts per year. Since 2008, he has stayed consistently on Billboard’s top 25 touring concerts list, grossing from $40 million to $96 million annually.

The Waltz King’s Expanding Business Empire

The huge success of André Rieu goes beyond live concerts. Rieu’s fans love his musical programs so much that he is able to leverage his brand across multiple streams of revenues from the merchandising of posters and calendars to perfumes and recordings. In addition to albums, his performances, which have a strong visual appeal, have also been made into DVDs and distributed around the world. So far he has sold over 40 million albums and DVDs and notched up 30 No.1 chart positions worldwide. Again, Rieu’s fans who were very much ignored or forgotten by the music industry form a strong customer base for these products. According to Pierre Rieu, André Rieu’s son and manager of his production company, unlike teenage music lovers, these customers “want to have the real thing: the disc in their hand, to see the booklet, put the DVD in the player and watch the show.”23 All this allows André Rieu to be less impacted by problems such as illegal downloading in the digital age.

André Rieu’s performances have also been broadcast on TV and screened in cinemas in many parts of the world. TV broadcasts of live concerts and event appearances have boosted album sales and concert ticket sales as their emotional and visual impacts are so strong that people are enticed to go and experience such an event themselves.

André Rieu’s concerts have come to the cinema and set box-office records. During the Christmas week of 2016, André Rieu: Christmas with André 2016 took around £1.2 million in UK cinemas despite only being released for a single day – overtaking the Marvel box-office hit “Doctor Strange” which took £941,628 in that week. Rieu was the first artist to take over £1 million at the box office in one night in the UK, surpassing similar successes by One Direction and Take That. His Maastricht concerts have been screened in cinemas around the

22 Ibid., p 46. 23 Ibid., p.46.

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world since 2011. Of all releases of live performances and other special live events at cinemas worldwide, the screening of Rieu’s hometown concert was the highest grossing cinema event in 2015 and 2016. The 2016 Maastricht concert took more than £1.5 million at the UK box office – the highest grossing music concert of all time in the territory. In Denmark, the concert became the highest grossing cinema release of a live event of all time, and it also topped the event cinema box office in Australia and the Netherlands. The concert was screened in over 30 countries worldwide including the US, Brazil, Canada and South Africa to an estimated cinema audience of 200,000.24 For one live concert, therefore, André Rieu’s company earns both the revenue from ticket sales and a share of the box-office income from cinema screening of the same event.

The Johann Strauss Orchestra turns a substantial profit every year without receiving a penny in subsidy. The orchestra, which had only 12 members at its inception in 1987, has since hovered around 50 to 60 members, whereas a full-scale symphony orchestra normally has from 90 to over 110 musicians. While a big orchestra typically has 200-300 part-time musicians and other artistic support people, Rieu is able to keep the size of his orchestra lean thanks, in part, to the reduced music complexity of the repertoire, which requires fewer instruments to perform. Moreover, the use of amplification allows his orchestra to achieve great sound from a smaller group of musicians.

While a regular orchestra often has several conductors on the payroll, André Rieu is the sole conductor of his orchestra. With the immense popularity of his performance based on the intrinsic appeal of the music and dramatic visual and sound effects, he has never had to use ultra-famous and expensive external soloists to boost ticket sales. Instead his guest performers include child prodigies like the 3-year-old violinist Akim Camara and the 10-year-old soprano Amira Willighagen. Their incredible talent and authentic style appeal strongly to audiences, often moving them to tears. These young people are given a boost to their reputations by performing with André Rieu, while he benefits from their outstanding performances without bearing the regular high costs of star performers. Rieu also spots talented, well-trained professional musicians and brings them on board under long-term engagements. Since 2005, for example, he has brought three accomplished soloists who formed “the Platin Tenors” in 2000 – into his world stadium tours and made them a permanent part of his concerts. For these musicians, working with André Rieu guarantees their exposure to big audiences and makes them famous worldwide. On the other hand, by offering them a unique platform for professional growth, André Rieu has been able to secure their high-standard performances at a reasonable rate for the long term, avoiding the often prohibitive and escalating costs of ultra-famous soloists that traditional orchestras bear.

Despite relative low staffing costs, Rieu and his orchestra deliver high-quality and much- appreciated performances. While critics may be unkind to André Rieu and talk down his choice of repertoire and the sentimental, dramatic way of presentation, few deny that he is a gifted and brilliant violinist and his musicians are craftsmen and craftswomen par excellence.

By performing in public stadiums and vast city squares, Rieu not only provides more seating and wider aisles for his fans to waltz to the music, but also dramatically lowers the venue cost per attendee. In fact, his concerts boost the local economy of his hometown Maastricht so

24 “André in Cinema,” André Rieu official website (https://press.andrerieu.com/andre-in-cinemas/, accessed

May 23, 2017).

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much that each time he plays a concert there he receives tons of flowers from restaurants around the city square, which benefit from the huge flow of customers coming to town and dining before the event.

The “Fairytale Castle Crisis” of 2008: A Hard Lesson Learned

André Rieu’s business success in the past two decades has been premised upon two equally important factors – the extreme popularity of his performances and a lean cost structure. Rieu has always attached importance to details such as the lighting, the set, staging and costumes, and considered them an integral part of his music offering. He is known to have always personally designed and guided these details to ensure they are exquisite and magical. But one time he went too far.

In 2008, after playing in front of the Schönbrunn Palace in Vienna with ballet, horses and debutants on the scene, Rieu was so much satisfied and excited that he decided to replicate this visual experience in other parts of the world. He pursued this grandeur by having the palace recreated room-by-room and sending it to Australia on a world stadium tour. In so doing, he lost sight of his long-standing focus on delivering a spectacular performance while keeping costs down, and instead dramatically raised production costs. The entire project was so expensive that by the time he had paid for the set and hotel rooms, he was €34m in debt and on the verge of bankruptcy. With the grace and support of his bank manager, who trusted that he would get the money back with continued performances, and a reinstated focus on keeping a lean cost structure, Rieu was able to turn around his business within a couple of years.

Eventually, the extravagant show with the castle replica gained him the needed publicity that boosted sales of his next tour, for which he eventually reaped €22m. However, this one-off expensive approach was out of step with Rieu’s overall smart business model. And he realized that. “It was stupid,” Rieu told reporters, “I promised Marjorie (Rieu’s wife) I will never do it again. We were in Australia to build this castle with 500 people, including the artists. Now when we come, we travel with 110.”25 Rieu never repeated this mistake in the years that followed. And as of today his business is healthy and continues to prosper.

A Maestro without Borders

For nearly two decades, Rieu has stayed on the Billboard Top 25 Tours list, with the size and revenue of his tours rivalled only by the biggest pop and rock acts. He has been one of the biggest touring artists and the only classical artist to enter Pollstar’s TOP 10. His concerts are placed on the same level as those from pop icons like Elton John, Barbara Streisand and Justin Bieber.

Between 2008 and 2015, Rieu performed an average of 85 shows per year, with average revenue of $58.8 million per annum, which was more than the combined revenues of New

25 Lynda Dugdale, “How Did André Rieu Make Classical Music a Multimillion Dollar Business,” Intheblack,

October, 2016. https://www.intheblack.com/articles/2016/10/10/how-André-rieu-made-classical-music-multimillion-dollar-business, accessed May 23, 2017.

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York Philharmonic and London Symphony Orchestra in 2014. While major labels such as Sony, BMG and Warner Music were forced to close down their unprofitable classical music branches in Europe, Rieu’s albums have gone platinum 485 times, and gold 270 times around the world. While selling 10,000 copies of an album would be considered remarkable for a classical musician, Rieu’s CDs and DVDs have sold more than 40 million. Instead of relying on public grants and charitable contributions to stay afloat like traditional orchestras, Rieu’s company has generated a tidy and steady profit over the years solely based on orchestra activities.

Despite his indisputable success, André Rieu is loathed as much as he is adored. Critics from hard-core classical music circles call him “the Schmaltz King” and “the Liberace of the violin.” They shudder at his repertoire and the way he intersperses classical pieces with popular themes.

But André Rieu is not bothered by this. He has deliberately stepped outside the box, breaking down the boundaries other people put up, and is proud of entertaining people with his music. As one Rieu supporter observes: “He makes people happy… When you watch an André Rieu performance you get wonderful music but you also see people being genuinely happy. People who go to his shows are not classical music fans. Indeed, the classical music fraternity doesn’t like him. But he has added colour and vitality to classical music.”

Whether the industry, the elites or the critics like him or not is not important to Rieu, as the mass of people do. They embrace his music with great enthusiasm. That’s exactly what Rieu intends to achieve – to give back classical music to the people, where it belongs.

Questions to Consider

• Is the classical music industry attractive? If you were head of an orchestra set on beating the competition, what strategic options could you have? What would be the likely results?

• How do you feel about attending a classical music concert based on what you have seen in the first video and/or your personal experiences versus how do you think the average person feels? What are the pain points of such concert-going experiences? Who are the noncustomers of traditional classical concerts?

• Some critics and hard-core classical music lovers don’t see André Rieu’s music as authentic classical music. In your opinion, what genre of music does his fit into? In what way did he change and reconstruct the classical music industry?

• What is the key logic underlying Rieu’s business success?

• Despite his impressive achievements over the years, André Rieu suffered a financial downfall at one point in his career, as described in the case. Seen from a blue ocean strategy perspective, what did he do wrong there?

For the exclusive use of S. Wang, 2023.

This document is authorized for use only by Si Yu Wang in BUS 690-Winter 2023 taught by Manely Sharifian, San Francisco State University from Dec 2022 to Jun 2023.