Full Sail Discussion on Break Even Analysis

@ Alex and Kadina

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?

Reserach

My 2010 Understanding of Net Neutrality

My 2010 Understanding of Net Neutrality

As a guy trying to make money with the Internet and Access in various platforms such as home and phone, net neutrality really had me spooked. On webcomics.com, many creators were afraid of the FCC’s impact on the business model that has worked for thousands of creators in the last ten years based on Net Neutrality. Frustrated to the naïve ignorance of how important this is of many friends, family, and peers, I decided to blog about the information I’ve been finding. Moreover, the more I understand how the Internet is being protected and designated, the less emotional I feel. Nonetheless, if ignorance blinds many, our “Internet Rights” may one day disappear and most of the country wouldn’t even care until they had to pay for it, literally.



The F.C.C. under the Obama administration is trying to protect the Internet from falling under corporate control (Net Neutrality). Because what has made the internet successful for entrepreneurs and new technologies has been a uncontrolled platform where new services like “Youtube “could beat “Google Video” based on frame rate performance as cited by Senator Franken on many interviews such as the one seen below.



Franken draws an analogy to the Television industry. Within his analogy, he cited how many of the independent television producers disappeared after a 1980 FCC rule change that gave networks the ability to create their own show. In other words, the ruling gave corporate control over an independent market, which could ultimately lead to one conglomerated corporation. Moreover, if a company like Comcast gains control of how speeds run on the Internet, this could lead to accelerated mergers between communication companies such as “AT&T” and media companies such “Disney” to try secure their market shares and portability. Thus a trigger effect where the Internet goes the way of the radio, a once free innovated platform to a more controlled less innovated platform.

“Mr. Franken and other critics say the rules come with major caveats; for instance, they would allow for 'reasonable network management' by broadband providers. And they would discourage but not expressly forbid something called 'paid prioritization,' which would allow a media or technology company to pay the provider for faster transmission of data, potentially creating an uneven playing field.” _Stelter, 2010

For example, Level Three versus Comcast. Under Net Neutrality, Level 3 could offer a service without being charged by Comcast. Thus, “Net-Flix” users had lower costs; however, if Comcast could charge Level 3 then the costs would be on the consumer. The argument is that Comcast is only a portal to the Internet and not the owner of the Internet. The video below explores two related arguments.



“On Dec. 21, 2010, the F.C.C. approved a compromise that would broadly create two classes of Internet access, one for fixed-line providers and the other for the wireless Net. The vote was 3 to 2, with the Democratic commissioners supporting it and the Republican commissioners against.”_ Net Neutrality

The battle for now is fast lanes, but a new question has been proposed about new technology that Google and Verizon may be developing independently. Meaning, broadband connection as far as paid faster connection is not the concern but it the next generation of Internet could come prepackaged and controlled by a company such as Google. “…fast lanes are fairly easy to understand when it comes to wireless Internet access…”however, what are the other services that Google and Verizon want to control? (Net Neutrality).

My understanding is that the Internet is slowly replacing the cable box with platforms like HD TV where the TV is really a giant computer monitor. Comcast realizing what was happening tried to control where the cable market was heading to, an actual Internet TV Hybrid. In turn, imposing their concerns on companies such as Facebook. However, Comcast had no real market position in portable devices as Google and Verizon. Thus, the focus of content providers is no longer the home, but what devices will people carry on them wherever they go.

So this is where Net Neutrality is at the end of 2010. There’s plenty on the web to read about this issue, and I’ll continue to blog about it as it relates to my interests and concerns. However, how does it interest or concern you?

If you are interested, search for new technology and trends related to Net Neutrality.

Also, look into the cell phone effects of Net Neutrality.


Non-Video References
Stelter, B (2010, Dec 20 )F.C.C. Is Set to Regulate Net Access. The New York Times Retrieved From http://www.nytimes.com/2010/12/21/business/media/21fcc.html?sq=fcc&st=cse&scp=3&pagewanted=print

Net Neutrality (Updated Dec22,2010) Retrieved From
http://topics.nytimes.com/topics/reference/timestopics/subjects/n/net_neutrality/index.html