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ECO Chapter 2 Video Case: Nederlander




Question;Chapter TwoEconomics: The Framework for BusinessVideo Case: NederlanderNederlander is one of the oldest and most respected concert management companies in theUnited States. Founded in 1912 and strategically headquartered in Los Angeles, the West Coastconcert promoter owns and operates such award-winning venues as the Greek Theatre, SantaBarbara Bowl, and the San Jose Civic. With fewer than six thousand seats, Nederlander venuesare much smaller than today?s popular stadium-rock settings, yet they attract some of the biggestnames in show business?Bruce Springsteen, Pearl Jam, and Jimmy Buffett are just a few of theworld-class performers to rock Nederlander stages.While popular touring artists grab the spotlight on Nederlander stages, behind-the-scenesplanning for concert events is the work of 60 full-time employees who staff the company?smarketing, talent buying, finance, and development departments. Added to that number are thehundreds of seasonal workers who provide daily support for ticket buyers and bands alike.?Many people think that the only client we have is the ticket buyer,? says Adam Friedman, CEOof Nederlander. ?Yet we also have a client in the artist, management, and representation. Ifthey?re not happy with their experience, and if they don?t see a relatively full house, and if theydon?t experience a stage that is put together and produced correctly, they won?t come back.?Unlike many corporations that view international expansion as the key to growth, Nederlanderfocuses its efforts locally. ?Our business model is not to become nationwide or internationalovernight, it is to be successful in what we do,? Friedman explains. ?We are expert in the smallto-mid-sized space, we are expert at promoting and acquiring top headline talent, and we areuniquely qualified to bring some of the biggest artists into some of the smallest venues.?Nederlander?s local approach is driven in part by the firm?s highly favorable location. ?LosAngeles is a very important market for us, not only because of the consumer and the media, butalso because every major talent agency has at least one of its top two headquarters in New Yorkor L.A.,? adds the CEO. There is another good reason Friedman maintains a domestic focus: as acompany founded and operated in the United States, Nederlander benefits from a legal andeconomic environment characterized by limited regulation, individual property rights, andhealthy competition.Although Nederlander dominates the West Coast concert circuit, delivering sellout crowds nightafter night depends on the company?s ongoing ability to match the right band with the righttarget audience. Jamie Loeb, the marketing manager responsible for publicizing Nederlandershows, zeros-in on each band?s unique audience. ?The number one reason why people don?t goto a show is they don?t know about it,? Loeb says. To get the word out, the Nederlanderexecutive targets specific consumer segments: ?It comes back to who is the artist and who istheir audience. Then the scope becomes narrower, because you don?t necessarily have to knowwhere everybody else is, you just have to worry where those people are and how you find them.?As a family-owned company with a regional focus, Nederlander has learned to make moneybased on precise economic calculations. For example, the demand for musical artists like DaveMatthews and 30 Seconds to Mars is very high, but the supply of tickets for Nederlander venuesis low. This market reality, notes Friedman, is the basis for Nederlander?s pricing: ?Oureconomic model is more viable?we sell less seats at an aggregate higher ticket price becausethe artist can command it and because the fan is willing to pay it.?While gauging market demand is a hallmark of the Nederlander Organization, procuring toptalent is the firm?s core competence. Managers and agents call on Nederlander?s talent buyers,and Nederlander?s talent buyers in turn call on managers and agents. The process is highlycompetitive, and final negotiations always come down to cash. ?We have to put a dollar equationto it and make an offer,? says Alex Hodges, Nederlander?s chief operating officer. And whilenegotiations may get sticky at times, Hodges says that artists, agents, and promoters havesomething in common: they all want to put on a great show?they want fans to have a great time,they want the show to attain financial goals, and they want everyone to get paid at the end of thenight. Not surprisingly, Nederlander?s ability to deliver great performances and keep all partiessatisfied is what makes the concert promoter one of the most sought-after partners in theentertainment world.Video Case Study Questions1.Explain the role of capitalism in the 100-year growth of Nederlander Concerts. How does Nederlander benefit from each of the fundamental rights of capitalism?2.Why is Nederlander able to charge higher prices for small theatre performances when audiences could pay less at stadium concerts? Would you expect the current slump in the U.S. economy to affect Nederlander's ticket sales? Why or why not?


Paper#56251 | Written in 18-Jul-2015

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