“too high for the club to be able to dictate its future”: “A Different Perspective: More Than a Club, but Also More Than a Business,” Pictet Report, Winter 2012.
“We won’t always win, so our challenge: “Faus: ‘We’ve Reduced the Debt, but the Situation Is Delicate,’” www.fcbarcelona.com, September 14, 2011.
Long the undisputed leader in building its business globally: “The World’s Most Valuable Soccer Teams,” Forbes, April 18, 2012; “The World’s 50 Most Valuable Sports Teams,” Forbes, July 16, 2012.
Real Madrid’s executives have explicitly said that they modeled their approach: See: John A. Quelch, José Luis Nueno, and Carin-Isabel Knoop, “Real Madrid Club de Fútbol in 2007: Beyond the Galácticos,” Harvard Business School Case 508-060.
But much of the credit for the club’s achievements goes to one man: This section is based on: Anita Elberse and Tom Dye, “Sir Alex Ferguson: Managing Manchester United,” Harvard Business School Case 513-051. Ferguson is Europe’s most decorated manager.
In the past decade, one in which Manchester United has won: Based on an analysis with data I pulled from www.transferleague.co.uk that covers the ten seasons from 2001–2002 through 2010–2011. On this metric, Manchester United even outperforms Arsenal, which is known for investing in young talent.
he outperformed the typical short life cycle of a coach: In England, 30 percent of coaches survive less than a year in the job, and more than half less than two years, while records in most other European countries are even worse.
Chapter Four: How Superstars Use Their Powers
In November 2006, movie star Tom Cruise: This section is based on: Anita Elberse and Peter Stone, “Metro-Goldwyn-Mayer (MGM) and Tom Cruise,” Harvard Business School Case 508-057.
“Tom Cruise, in 10 months, for Paramount Pictures, generated: “Mission Improbable: Tom Cruise as Mogul,” New York Times, March 4, 2007.
“It’s nothing to do with his acting ability, he’s a terrific actor”: “Sumner Redstone Gives Tom Cruise His Walking Papers,” Wall Street Journal, August 23, 2006.
These contracts typically lasted seven years: Edward Jay Epstein, The Big Picture: The New Logic of Money and Power in Hollywood (New York: Random House, 2005).
The studio system was brought to a standstill by legal challenges: Ibid.
My own research, most notably a study that examined: Anita Elberse, “The Power of Stars: Do Star Actors Drive the Success of Motion Pictures?,” Journal of Marketing 71, no. 4 (October 2007): 102–20. Of course no academic researcher can convince a studio head to produce two versions of a $100 million movie, one with a certain star and one without, just to understand the difference. So researchers hoping to understand the power of stars have to be creative. In my study, I examined how casting decisions impacted traders on an online artificial market in which the goal was to predict movies’ box-office results as well as traders of “real” stocks of movie studios listed on the New York Stock Exchange. It may sound far-fetched, but such “event studies” are a common research tool; it turns out that, collectively, traders are pretty good at assessing the financial impact of any kind of announcement. (See, for instance: James Surowiecki, The Wisdom of Crowds [New York: Anchor Books, 2005]. In his book, Surowiecki discusses some of my earlier work involving prediction markets.)
My study is just one in a large stream of research: For example, in an earlier study on the relationship between star involvement and film profitability, S. Abraham Ravid concludes that “stars capture their economic rent,” meaning that they capture the value they add: S. Abraham Ravid, “Information, Blockbusters, and Stars: A Study of the Film Industry,” Journal of Business 72 (October 1999): 463–92. If stars indeed fully capture their “rent”—the excess of expected revenue over what the film would earn with an ordinary talent in the role—ordinary talent and stars are equally valuable for a studio that aims to maximize shareholder value rather than revenues. For more information, see: Richard E. Caves, “Contracts Between Art and Commerce,” Journal of Economic Perspectives 17 (Spring 2003): 73–83. I have borrowed the term the curse of the superstar from another study in this area: Arthur De Vany and W. David Walls, “Motion Picture Profit, the Stable Paretian Hypothesis, and the Curse of the Superstar,” Journal of Economic Dynamics and Control 28 (March 2004): 1035–57.
Tellingly, not one of the top movies released by MGM: I performed this analysis using data from imdb.com and boxofficemojo.com. For more information, see Anita Elberse and Peter Stone, “Metro-Goldwyn-Mayer (MGM) and Tom Cruise,” Harvard Business School Case 508–057.
Sloan’s experiment was essentially an attempt to, as he put it: “Mission: Rescue Operation,” New York Times, November 3, 2006; “Mission Improbable: Tom Cruise as Mogul,” New York Times, March 4, 2007.
Sloan’s choice of the dormant United Artists as the vehicle: “UA Started with Artists in Lead Role,” Hollywood Reporter, November 3, 2006.
In July 2004, at the tender age of seventeen, Maria Sharapova: This section is based on: Anita Elberse and Margarita Golod, “Maria Sharapova: Marketing a Champion (A),” Harvard Business School Case 507-065; Anita Elberse and Margarita Golod, “Maria Sharapova: Marketing a Champion (B),” Harvard Business School Supplement 507-066.
the highest-paid female athlete in the world: “The International 20,” Sports Illustrated, July 27, 2006.
she was also the tenth-highest-paid overall: Ibid.
Estimates put her income from endorsing such brands: As estimated by Forbes. Max Eisenbud has stated about these estimates: “I have no idea how they estimate these numbers. They are always a few million dollars short and keep quoting the same numbers year in year out.”
The chart on the left shows the ages of all players starting: Using a Web crawler, I pulled these data from ESPN’s English Premier League Web site, “ESPN FC” (soccernet.espn.go.com). Player ages are rounded to the nearest whole year. The “player starts” figure shows the distribution of the ages of players starting each match; the “goals scored” figure shows the distribution of the ages of players scoring each goal in each match, but excluding own goals.
The chart on the left shows the ages of all finalists in the four men’s: I collected information on Grand Slam finalists from various sources, including the tournaments’ own web sites, and information on player ages from the ATP (Association of Tennis professionals) and WTA (Women’s Tennis Association) web sites. Ages are calculated as of the day of each final and rounded to the nearest whole year.
Based on a sample of the 675 movie actors and actresses listed: I pulled these data from boxofficemojo.com. Ages are rounded to the nearest whole year.
what economists call “path dependencies” or “positive feedback effects”: Robert H. Frank and Philip J. Cook, The Winner-Take-All Society (New York: Free Press, 1995).
And Cruise has starred in more movies that collected at least: For an overview, see Anita Elberse and Peter Stone, “Metro-Goldwyn-Mayer (MGM) and Tom Cruise,” Harvard Business School Case 508–057.
This theory, first described in the context of the creative industries: Richard E. Caves, Creative Industries: Contracts Between Art and Commerce (Cambridge, Mass.: Harvard University Press, 2000).
The actor Will Smith, for one, is known to be especially shrewd: See for instance: Rebecca Winters Keegan, “The Legend of Will Smith,” Time, November 29, 2007.
agencies like IMG are thought to receive an average of: Also see: Bharat N. Anand and Kate Attea, “International Management Group (IMG),” Harvard Business School Case 702-409.
My own study of hundreds of endorsements by athletes: Anita Elberse and Jeroen
Verleun, “The Economic Value of Celebrity Endorsements,” Journal of Advertising Research 52, no. 2 (June 2012): 149–65.
“You are waving their dream in their face: Peter Bogdanovich, “SNL’s Killer Contract,” New York Observer, August 16, 1999.
The adult cast members of ABC’s Modern Family did just that in 2012: Matthew Belloni,
“‘Modern Family’ Cast Sues 20th TV as Contract Renegotiation Turns Ugly (Exclusive),” Hollywood Reporter, July 24, 2012.
Worth more than $90 million before he even graduated from high school: This section is based on: Anita Elberse and Jeffrey McCall Jr., “LeBron James,” Harvard Business School Case 509-050.
He had coached James’s summer league team and was working for Nike: “LeBron Inc.: The Building of a Billion-Dollar Athlete,” Fortune, November 28, 2007.
Taking basketball legend Michael Jordan’s billion-dollar brand: Ibid.
quarterback Tim Tebow, for instance, jumped on the bandwagon: J. Goodman, “Team Tebow Marketing Arm, XV Enterprises, a Long Time in the Making,” Gator Clause, Miami Herald blog, September 8, 2010.
“We interviewed the top 15 marketing agencies in the world: Ibid.
Robert Downey Jr. reportedly received $50 million: Matthew Belloni, “Marvel Moolah: Robert Downey Jr. ‘Avengers’ Pay Set to Hit $50 Million,” Hollywood Reporter, May 15, 2012.
50 Cent’s endorsement deal with vitaminwater is: Zack O’Malley Greenburg, “50 Cent’s Next Move: Get Rich, or Feed the Poor Trying,” Forbes, September 20, 2011.
an eight-year, $70 million agreement with longtime sponsor Nike: Danielle Rossingh, “Sharapova Said to Renew Nike Contract for 8 Years, $70 Million,” Bloomberg, January 11, 2010.
Chapter Five: Will Digital Technology End the Dominance of Blockbusters?
How do you change the fortunes of a company: This section is partly based on: Anita Elberse and Sunil Gupta, “YouTube: Time to Charge Users?,” Harvard Business School Case 510-053. The statements can be found in: “Best Inventions 2006,” Time, December 2006; “The 10 Biggest Tech Failures of Last Decade,” Time, May 14, 2009. The section also draws heavily on John Seabrook, “Streaming Dreams: You Tube Turns Pro,” New Yorker, January 16, 2012.
Co-founders Steve Chen, Chad Hurley, and Jawed Karim: Ellen Lee, “YouTube Video’s Boom ‘a Social Phenomenon,’” San Francisco Chronicle, October 10, 2006.
The video quickly went viral, ultimately collecting five million views: Anita Elberse and Sunil Gupta, “Hulu: An Evil Plot to Destroy the World?,” Harvard Business School Case 510-005.
“We’re in the middle of a shift in digital media entertainment: Ellen Lee, “YouTube Video’s Boom ‘a Social Phenomenon,’” San Francisco Chronicle, October 10, 2006.
Advertisers remained wary of the vast amount of user-generated content: A New York Times article, “YouTube Videos Pull in Real Money,” December 11, 2008, estimated that only 3 percent of the videos were ad-supported, while a report by Bernstein Research, “Web Video: Friend or Foe … and to Whom?” October 2009, suggested about 10 percent of videos were monetized.
the average YouTuber only spent a paltry fifteen minutes: The fifteen-minutes estimate is stated in John Seabrook, “Streaming Dreams: YouTube Turns Pro,” New Yorker, January 16, 2012. Other estimates put this statistic between six and twenty-four minutes. See for instance: “Web Video: Friend or Foe … and to Whom?,” Bernstein Research, October 2009.
Industry insiders expressed strong doubts about YouTube’s: “Web Video: Friend or Foe … and to Whom?,” Bernstein Research, page 43; “Google Inc.: Potential Ways to Monetize YouTube,” Piper Jaffray Company Note, July 16, 2009.
YouTube’s “Partners Program,” splitting advertising revenues with the site: “Google in-Depth Part 2: YouTube—the Super Bowl of Online,” Piper Jaffray Company Note, June 2, 2008.
“What we do is commission channels,” declared Kyncl: John Seabrook, “Streaming Dreams: YouTube Turns Pro,” New Yorker, January 16, 2012.
“People went from broad to narrow … and we think they will continue: Ibid.
“For example, there’s no horseback-riding channel: Ibid.
Every manager in the entertainment industry should be acutely aware: For a more comprehensive treatment, see: Anita Elberse, “Should You Invest in the Long Tail?,” Harvard Business Review 86, nos. 7–8 (July–August 2008): 88–96.
in 2012, YouTube claimed it had eight hundred million users: YouTube, “Press Statistics,” accessed December 18, 2012.
the central tenet of a best-selling book, The Long Tail: Chris Anderson, The Long Tail: Why the Future of Business Is Selling Less of More (New York: Hyperion, 2006).
Anderson’s beliefs “influence Google’s strategic thinking in a profound way: Ibid.
Anderson goes on to predict that “fickle customers” will “scatter: Ibid.
According to Nielsen: Copyrighted information ©2011, 2012, of The Nielsen Company, licensed for use herein. Nielsen SoundScan is the leading source for recorded-music sales data in North America. The data cover major and independent labels, and even unsigned artists, as long as they are properly registered and set up with identifiers like UPC barcodes.
For instance, nearly 6 million titles—74 percent of all unique titles: Source: Nielsen SoundScan®, 2011.
For instance, 513,000 titles—58 percent of all unique titles: Source: Nielsen SoundScan®, 2011.
But the large majority of products in the tail were not: In line with this view, the extreme concentration of sales is present in both “current” and “catalog” sales, with the latter representing titles eighteen months or older.
now that online consumers can cherry-pick the most popular: My research on unbundling in the music industry shows that independent artists with weaker track records are especially hard hit by the unbundling of albums. They are overrepresented in the tail. For more information, see: Anita Elberse, “Bye-Bye Bundles: The Unbundling of Music in Digital Channels,” Journal of Marketing 74, no. 3 (May 2010): 107–23.
These statistics for the recorded music industry are no fluke: Some research is discussed in more detail in: Anita Elberse, “Should You Invest in the Long Tail?,” Harvard Business Review 86, nos. 7–8 (July–August 2008): 88–96. For academic research on long-tail trends in video sales data, see: Anita Elberse and Felix Oberholzer-Gee,”Superstars and Underdogs: An Examination of the Long Tail Phenomenon in Video Sales,” Marketing Science Institute 4 (2007): 49–72. For a more recent study on video rentals, see: Anita Elberse and David Schweidel, “Popularity Profiles: How Customers’ Use of a Long-Tail Assortment Relates to Their Retention,” Working Paper, Harvard Business School, January 2011.
the sociologist William McPhee in the early 1960s: William N. McPhee, Formal Theories of Mass Behavior (New York: Free Press of Glencoe, 1963).
over 98 percent of iPhone users had at the time shown: According to data published by appsfire on its Appsfire Blog: Appsfire team, “100k Apps, Announced Today (Only) by Apple. Not a Word on the VERY Long Tail,” blog.appsfire.com, November 4, 2009.
“I would like to tell you that the Internet has created such: James Manyika, “Google’s View on the Future of Business: An Interview with CEO Eric Schmidt,” McKinsey Quarterly (September 2008).
“In fact, it’s probable that the Internet will lead to larger: Ibid.
In late 2012, YouTube doubled down on its investment: Peter Kafka, “Changing Channels: YouTube Will Pull the Plug on at Least 60 Percent of Its Programming Deals,” All Things Digital, November 11, 2012.
Meanwhile, among the ten most popular channels in early 2013: Advertising Age, “YouTube Original Channels Tracker,” adage.com/youtube/most-popular-channels. This statement is based on the rankings as of February 4, 2013.
$100 million on its own television series House of Cards: Nancy Hass, “And the Award for the Next HBO Goes to…,” GQ, February 2013.
“They’re huge budgets shows, they’re doing things: Andrew Wallenstein, “Netflix Series Spending Revealed,” Variety, March 8, 2013.
“the largest Internet video distribution network ever assembled: “NBC Universal and News Corp. Announce Deal with Internet Leaders AOL, MSN, MySpace, and Yahoo! to Create a Premium Online Video Site with Unprecedented Reach,” press release, March 22, 2009.
“started out of frustration that other people were using our video: �
�Free, Legal and Online: Why Hulu Is the New Way to Watch TV,” Wired, September 22, 2008; “NBC CEO Jeff Zucker: Hulu Will Start Breaking Even ‘Soon,’” All Things Digital, May 28, 2009.
“Old media guys don’t ‘get’ the Internet”: “Old Media Strikes Back,” Newsweek, March 2, 2009.
“Name this thing fast, before ‘Clown Co.’: Michael Arrington, “Dear ClownCo.: Name This Thing Fast Before It’s Too Late,” TechCrunch, March 23, 2007.
“the most promising new way for consumers to view television shows: “Hulu: Five Burning Questions,” Entertainment Weekly, March 21, 2008.
“Happy Birthday Hulu. I’m Glad You Guys: Michael Arrington, “Happy Birthday Hulu. I’m Glad You Guys Didn’t Suck,” TechCrunch, October 29, 2008.
True, some studies have shown that illegal downloading: See for instance: Sudip Bhattacharjee, Ram D. Gopal, Kaveepan Lertwachara, and James R. Marsden, “Stochastic Dynamics of Music Album Lifecycles: An Analysis of the New Market Landscape,” International Journal of Human-Computer Studies 65, no. 1 (2007): 85–93; Sudip Bhattacharjee, Ram D. Gopal, Kaveepan Lertwachara, James R. Marsden, and Rahul Telang, “The Effect of Digital Sharing Technologies on Music Markets: A Survival Analysis of Albums on Ranking Charts,” Management Science 53, no. 9 (2007): 1359–74.
Other researchers, however, have concluded that illegal file sharing: See for instance: Felix Oberholzer-Gee and Koleman S. Strumpf, “The Effect of File Sharing on Record Sales: An Empirical Analysis,” Journal of Political Economy 115, no. 1 (2007): 1–42.
Consider the perspective of free, over-the-air broadcast networks: They can make money in three main ways: through advertising sales on their own stations, through sales of national advertising spots placed on third-party “affiliate” stations, and, in a few cases, through license fees paid by cable operators or the affiliate stations.
Networks live and die by so-called CPM rates: In recent years, the lines between broadcast and cable networks have blurred. Major broadcast networks now also receive a monthly fee from cable operators, albeit not as high a payment as, say, ESPN.
Blockbusters: Hit-making, Risk-taking, and the Big Business of Entertainment Page 32