Assignment
Nederlander Concerts is based in Los Angeles, one of the two biggest markets in the U.S. concert industry (New York is the other). The company, which is one of the few remaining family-owned businesses in the entertainment industry, specializes in booking and promoting musical artists like the Goo Goo Dolls, Maroon 5, and Cyndi Lauper for events in the western United States. It owns or operates some of the theaters, amphitheaters, and arenas- including the Greek Theatre in Los Angeles, the Santa Barbara Bowl, and the Grove in Anaheim-and it rents space for concerts and events in other cities along the West Coast. Nederlander Concerts also partners with some of California's major cities such as Santa Monica and San Jose to manage or operate their civic theaters and present events there. Since Nederlander Concerts deliberately focuses on small- to mid-sized events, it can offer a unique concert experience that brings audiences and performers closer together.
It can therefore sell a high-quality experience at a higher price than seats in a bigger theater yield. Because of this high-quality experience, it can also count on selling out the house, which helps the company and the artists to profit. According to the concert company's chief operating officer, "The key areas or departments of the company include talent-buying and marketing, operations, finance, and business development. . . . I have a talent-buying team, I have a marketing team, we have a general manager of the building, we have a substantial team of people who take care of the fans, take care of the artist, and look after the shows that we buy. We're in a competitive market, and it's pretty interesting what we do." Although it might seem odd that the concert business is a competitive one, in fact Nederlander Concerts competes with other promoters (like Live Nation) not just for audiences at its events but for bookings by popular artists.
Therefore, it must keep both music lovers and performers happy. Musicians are especially concerned with the financial deal they are getting. As Nederlander's chief operating officer explains, "It's not always easy to get the show; there is competition. . . . We have a great reputation with the artist. But also there's one other factor, and that's making the deal. That's making your best offer. That's trying to think about whether the agent is . . . telling you that your competition is paying more, willing to go more. You have to get your own ‘I won't go above' number and stop bidding (for the act), or you have to say, ‘Okay, I'll pay a little bit more and try to get the show.' So there's a real gamesmanship between agent and buyer. . . . The art of the deal is something we live with every day." Given the talent, how does Nederlander get music lovers to its events?
Says its vice president of marketing, "It's learning about the market, and picking up every newspaper you can find, listening to every radio station you can find, watching all of the TV, all the news programming. . . . It still comes back to, who is the artist, and who is their audience? And how do you find them? . . . The number one reason why people don't go to a show, so they say, is that they don't know about it. Which is infuriating. But we just try to make that percentage of people . . . smaller, and smaller, and smaller." When everything is going well, the company profits. "Where we like to do most of our business, and in fact is where we probably do 90 percent of our business, is in the venues that we own or operate, so that the risk profile of those shows goes down . . . we have more revenues coming in to ensure that we're able to cover the cost, including the cost of talent, and then walk away with a greater profit."19
Questions
1. Nederlander Concerts competes for music lovers with other concert arenas and promoters. Do you think it also competes with TV, movies, CDs, DVDs, streaming video, and sports events? If yes, what implications does this type of competition have for Nederlander's business?
2. How many different groups can you think of whose needs Nederlander Concerts must satisfy in order to be a successful business?
3. Give an example showing how Nederlander Concerts uses each of the four factors of production.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.