Note: I’m posting this assignment on my blog @ http://zons-education-edutainment.blogspot.com/. Since, I’m quoting you two if you want me to remove the post please email me at ZDP2011@fullsail.edu or IzEFunni@Gmail.com. And since I read and loved your responses please read my posts as well.
Response to 1.
Was it a good decision for LiveNation to sign Madonna, Jay-Z and other megastars?
I agree with Alexandra Rotenstein and Kadina Sangster that Live Nation made a good choice to Sign these major stars based on their earning potential.
Will they earn a profit?
I think Alexandra Rotenstein is right in saying “LiveNation realized that the economy here in the U.S. has taken a toll on concert sales, but they shouldn’t look to international fans, they should compensate here.” However, I’m not sure that Live Nation at the time was really considering what that compesntion might be. For example…
Mr. Rapino: If we get to $7 gas, the natural [thing] is to assume that because it's a luxury item or a consumer item that it's affected. But we have found that most consumers only go to two shows a year. And even if you look at the data for the last 15 or 20 years in the concert business, there's no correlation between recession down times and declining ticket sales. No matter where the price of gas is, the consumer's still got to get out. They've still got to save their money to go see Tim McGraw. (Smith, 2008)
Re: Kadina
The 2008 assumption by Rapino is that the recession really won’t effect ticket sales for major stars. This isn’t a bad assumption since entertainment sales for establishes brands and franchises seems to be a staple of the US economy. However, is this prediction realistic is the question?
I did a quick Google search and found that yes in 2009 the ticket sales were up, but they had to discount heavy. In regards to Alex, it seems the company did focus on adjusting prices for the US consumer market; however, the company still was at a loss….
“LOS ANGELES – Live Nation Entertainment Inc. says its third-quarter net income fell after a dismal summer concert season.
The concert promoter that merged with Ticketmaster this year said Thursday that net income fell to $51.4 million, or 30 cents per share, from $69.2 million, or 78 cents per share, a year earlier.”
From: http://news.yahoo.com/s/ap/20101104/ap_en_mu/us_earns_live_nation
What are some other factors to consider regarding the recording?
Re: Alex_
“I guess the only question is how the contracts are created and who really controls the agreement, the artist or LiveNation. A downfall to this contract is coverage. The artist might have to give up certain aspects to their concerts that they usually have full control over and vice versa for LiveNation.”
True, but as seen in the Madonna deal it seems that Live Nation got the short end of the deal because Live Nation really had to pay Madonna in the deal to advertise her products (Kafka, 2007). In other words it seems She's exploiting them. LOL, Madonna is an amazing and scary businesswoman to deal with. Also, I don't think it would be the best inrest for Live Nation to attempt to control the artists the signed, becuase that might change the out put of the music made and cause fans to move on to other artists.
Re: Kadina
“Something very important to consider is the quality of music that these artist are producing and their overall image as artists. This industry is based on, first overall appearance (image) and then their sound. If Jay-Z went from rapping to singing or from rapping to singing and dancing and changed his sexual preference, his fanbase would probably decrease dramatically, because that is not how his audience perceives him. If there is a decrease in his fanbase, then this will cause LiveNation to lose lots of money on their investment. Also, another factor to consider would be if the artist of interest fanbase is continuously expanding year after year, then LiveNation success would increase rapidly because now not only do that artist have their audience that has been went them for some time, but they now have gained a new audience that will continue to follow their career, and therefore ticket sales will increase every year.”
I like the fact you took in the consideration of the artist evolving and making creative decisions that effect their fan base and sales. True, if new fans happen then ticket sales could increase; however, Live Nation's deal was not on the potential fans, but the established fans. I don’t think Live Nation was banking on new fans and would probably disapprove of drastic artistic changes that could effect demographics and sales. This is why Madonna is so important because she has changed herself for two decades, and her fan base is large and very diverse already because of it. I beleive if Madonna became a hard core getto rapper, she would still sell tickets.
Other References
Kafka, P. (2007) Live Nation's $120 Million Bet:Breaking Down Madonna Deal From: Businessinsider.com
Smith, Ethan. "LiveNation Sings a New Tune." The Wallstreet Journal. The Wallstreet Journal, 11 July
2008. Web. 12 Jan. 2011.
Masnick, Mike. "Live Nation's Plans To Annoy More People?" Techdirt. Techdirt, 31 Aug. 2010. Web. 12
Jan. 2011.
Break-even analysis
3. What are the basic steps that you must take to determine if you are able to make a profit?
Ideally determine you fixed costs, then determine your variable prices per unit. Then, subtract variable costs from the selling price. The ratio could look like this…
Breakeven Point = Fixed Costs/(Unit Selling Price - Variable Costs)
From: http://entrepreneurs.about.com/od/businessplan/a/breakeven.htm
Note the Entrepreneurial Finance bookalso states it does have to be the price per unit. For the Madonna deal, it might be better to group all different types of products such as “Vitamine Water into one dollar amount.
(Entrepreneurial Finance, 5th Edition. Pearson Learning Solutions p. 127).
@ Monique
Note: I’m posting this assignment on my blog @ http://zons-education-edutainment.blogspot.com/. Since, I’m quoting you you want me to remove the post please email me at ZDP2011@fullsail.edu or IzEFunni@Gmail.com. And since I read and loved your responses please read my posts as well.
From: Monique
"So many people don't realize that this persona that they've created is a job and it is work to keep them going. I'm sure Lady Gaga has to have time to be Stefani Germanotta and not everyone is going to like that person so she has to work to keep her real life and her show persona separate and distinct so as not to turn off any fans. Justin Bieber and Selena Gomez are going thru this at this very moment since he is getting older and starting to date. None of his young female fans want to see him with this young lady so consequently, they're feeling heartbroken over this boy they do not know and some fans are making death threats at Selena. These kinds of situations affect public personas and eventually impact sales. You can say the same about Miley Cyrus who is trying to find a way to grow up but not offend parents of the world who saw her as the ultimate role model for their daughters. Usher, who broke women's hearts by marrying Tameka Foster and ended up losing some of his fan base; the list goes on and on."
LOL, it’s happened to me before many times as well, but what you added are examples I didn’t considered.
I think there is a sad old formula being drawn about pop stars… “Don’t date.” On the other hand, I still listen to Usher. I think that if fans love the performer, relationships that happen aren’t heartbreaks for fans, but can generate the same feeling of hearing a friend find someone that makes them happy (i.e. the power couple formula).
Interestingly, Lady Gaga on interviews such as Larry King has shown more of her personal slef, and has been more public about personal issues such as Gay Rights even tough she herself reportedly is not. Scott Kurtz and the Half Pixel crew had a great discussion about fans and sales. They said on their pod cast “Webcomics Weekly” that a persona should train their fans by rewarding positive behavior and ignoring negative behavior.
Of course, what’s positive or negative to an artist is arbitrary. For example, my pro gay rights message was posted on Lady Gaga’s twitter page, but I guess the negative twits were removed because I did not see any. Another example, The lead Singer of “Garbage” I heard one day had to tell her fans not to trash the theater they were performing once, which caused the loss of a lot of fans but not all.
In turn, music stars should prep fans for changes that may effect their art. Can't sing about how much society is taken advantage of you, when you making millions, right Dr. Dre? Can't sing about heart break when you are in love?
Know of any cases?
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