now used by some 425 million people: “Survival of the Biggest,” Economist, December 1, 2012.
now responsible for nearly 30 percent of total book sales: For the estimates of Amazon’s overall share and the relative size of the e-book market, see: Jim Milliot, “E-books Market Share at 22%, Amazon Has 27%,” Publishers Weekly, November 5, 2012. For the estimate of Amazon’s share of the e-book market, see: David Streitfeld, “Little Sign of a Predicted E-Book Price War,” New York Times, December 23, 2012.
The company’s vast range of products generated $48 billion in revenues: According to Amazon.com Inc.’s income statement for the year 2011.
How many brand partners does it take to launch one hit album?: This section is based on: Anita Elberse and Michael Christensen, “Lady Gaga (A),” Harvard Business School Case 512-016; Anita Elberse and Michael Christensen, “Lady Gaga (B),” Harvard Business School Case 512-017.
“undeniably unique” and likely to “attract fashionistas far”: Jasmine France, “Heartbeats by Lady Gaga Headphones from Monster—Editor’s Review,” CNET.com, December 18, 2009.
“Lifestyle, music, art, fashion! I am so excited to extend myself: “Lady Gaga Named Creative Director for Specialty Line of Polaroid Imaging Products,” Polaroid press release, January 5, 2010.
“Jay-Z doesn’t do straightforward endorsement deals”: I am unsure whether Jay-Z’s partnership with Duracell is a deviation from this path. In 2012, Jay-Z appeared in television commercials for the brand that are suggestive of a more standard endorsement deal.
Procter & Gamble started funding programs as early as: Procter & Gamble, “Procter & Gamble Entertainment: History,” www.proctergambleproductions.com.
Lexus paying a share of the production costs for a special episode: “Lexus Bankrolls Extra Episode of Food Network’s ‘Restaurant Impossible,’” Advertising Age, December 7, 2012.
In late 2012, when she released her album Red, Swift did so: Glenn Peoples, “Why Taylor Swift’s ‘Red’ Is Absent from Subscription Services,” Billboard, October 23, 2012.
“We’re always looking at, ‘How can we create more doors?: Andrew Hampp and Phil Gallo, “How Taylor Swift’s ‘Red’ Is Getting a Boost from Branding Mega-Deals,” Billboard, October 22, 2012.
Red debuted at the top of the Billboard album chart: Ibid.
more than four hundred thousand units were sold at Target: Brian Mansfield, “Taylor Swift Goes No. 1 with Million-Plus ‘Red’ Sales,” USA Today, October 31, 2012.
In late 2012, she closed a $50 million brand partnership with Pepsi: Pepsi, “Pepsi and Beyoncé Partnership Fact Sheet,” PepsiCo, December 10, 2012.
Google still dominated the market with a 66 percent share: Microsoft internal documents.
Microsoft saw Bing reach a 12 percent share during the Decoded campaign: Ibid.
AdWeek selected Droga5 as its Agency of the Year: Gabriel Beltrone, “Agency of the Year: Droga5’s Delicious World,” AdWeek, December 10, 2012.
FarmVille attracted forty-six million players every month: Miguel Helft, “Zynga Does a Deal with Lady Gaga,” New York Times, May 10, 2011.
Epilogue: No Business Like Show Business?
Sometimes, it seems, the best way to put your latest blockbuster bet: This section is partly based on: Anita Elberse, Ryan Barlow, and Sheldon Wong, “Marquee: The Business of Nightlife,” Harvard Business School Case 509-019.
most clubs were over within a mere eighteen months: Although solid numbers are hard to come by, the typical life span of the 129 legally operating nightclubs in Manhattan is thought to be about eighteen months. And of the ten American nightclubs in the “Hot Clubs Around the World” list published in a 2006 Forbes report on the “Business of Nightlife,” three (Amika in Miami, Crobar in New York City, and Ice in Las Vegas) had closed their doors by 2008. For more information, see: “Flaming Out Never Felt So Good,” Forbes, August 22, 2006; “The Science of a Sizzling Club,” Forbes, August 22, 2006.
“Only the fashionable, famous, or financially secure need apply: “Club Stays Hot at Ripe Old Age of 2,” New York Times, November 3, 2005.
described as a “one-stop party shop”: “The Short, Drunken Life of Club Row,” New York Magazine, February 11, 2007.
with an estimated $80 million in revenues: According to estimates by Nightclub & Bar, “Nightclub & Bar Top 100 2012,” www.nightclub.com.
being “among the vanguard of electronic musicians: According to rankings by DJ Mag, “DJ Top 100: The Full 2012 Results,” www.djmag.com/top-100-djs.
Top spinners like Avicii, Deadmau5, David Guetta, and Tiësto: Ben Sisario, “Electronic Dance Concerts Turn Up Volume, Tempting Investors,” New York Times, April 4, 2012.
the world’s ten highest-paid DJs collectively earned $125 million: Zack O’Malley Greenburg, “The World’s Highest-Paid DJs, 2012,” Forbes, August 2, 2012.
are visible throughout the hospitality industry: In fact, seemingly taking a cue from entertainment businesses, restaurants such as Grant Achatz’s Next (based in Chicago) are experimenting with ticketing models.
Apple makes only a few bets each year: In his biography of Steve Jobs, Walter
Isaacson recalls how, upon his return to Apple in the mid-1990s, Jobs introduced this much more narrow product focus. “Deciding what not to do is as important as deciding what to do,” Jobs is quoted as saying. At the time, Apple had a dozen versions of the Macintosh; Jobs cut 70 percent of them, and urged the Apple employees to focus on just one consumer and one professional product in both the desktop and portable market. Source: Walter Isaacson, Steve Jobs (New York: Simon & Schuster, 2011).
Broadcast in more than 180 countries, the $12 million show: Marisa Guthrie, “How ‘Victoria’s Secret Fashion Show’ Turns $12 Million into $5 Billion in One Hour,” Hollywood Reporter, November 28, 2011.
CBS licenses the show for more than $1 million: Yvonne Villarreal, “Victoria’s Secret Helps Lead CBS to Victory,” Los Angeles Times, December 5, 2012.
reportedly up to $5 million a year: Marisa Guthrie, “How ‘Victoria’s Secret Fashion Show’ Turns $12 Million Into $5 Billion in One Hour,” Hollywood Reporter, November 28, 2011.
the brand’s “Red Bull gives you wings” slogan: John Jurgensen, “The New Producers,” Wall Street Journal, December 21, 2012.
famous for its blockbuster product, the trench coat: In early 2013, Ahrendts wrote in a Harvard Business Review article: “Today 60% of our business is apparel, and outerwear makes up more than half of that.” A focus on the core product was and continues to be a critical element of her strategy to improve the retailer’s fortunes, she wrote: “Now every major new initiative has the trench coat front and center.” Source: Angela Ahrendts, “Burberry’s CEO on Turning an Aging British Icon into a Global Luxury Brand,” Harvard Business Review, January–February 2013.
she described her firm not as a clothing company: All quotes by Angela Ahrendts in this paragraph originate from: Angela Ahrendts, Q&A at the Harvard Business School, November 28, 2012.
Burberry Acoustic, which falls under Burberry.com: Nancy Hass, “Earning Her Stripes,” Wall Street Journal, September 9, 2010.
ACKNOWLEDGMENTS
It’s amazing how surprising life can be. I knew I was in for an adventure when I joined the Harvard Business School as a newly minted PhD in 2003, but I didn’t quite expect it to be this thrilling. If you had told me back then that ten years later I would have been named a chaired professor, would have had the opportunity to study some of the entertainment business’s biggest stars and most successful executives, and would have been given a chance to describe my ideas in a book released by a major publishing house, I would have responded that you’d make for an excellent screenwriter in Hollywood—but only if you were to add a healthy dose of realism to your stories.
Yet, here we are. Blockbusters is the culmination of a decade-long exploration of my passion, the worlds of entertainment, media, and sports. When I first toyed with the idea of focusing on these s
ectors in my bid to earn a tenured position at Harvard, I knew it was the road less traveled. Several colleagues told me I was crazy to focus on what seemed such frivolous sectors of the economy, and they were probably right. It certainly appeared very risky to try to launch a Harvard MBA course that revolved entirely around the entertainment business, let alone to dedicate the lion’s share of my time to developing case studies for that course even though I was trained as an empirical researcher who tackled large-scale data sets. You could say I made a blockbuster bet on my research program: if the research had not caught on with students, fellow academics, and executives, my career likely would have stopped dead in its tracks.
But beautiful things happened once I decided to go for it anyway. I learned that what initially had seemed quite a gamble wasn’t nearly as risky as everyone thought. The moment I went all in, many joined in to help. Executives and celebrities gave me unprecedented access and shared their secrets to success and, truly admirably, explained their failures. Many colleagues collaborated on research projects. And students enrolled in the course even when they had no idea exactly what they signed up for. Before I knew it, one incredible opportunity after another opened up and, as they say, the rest is history. I hope that with my work I have done justice to those opportunities and to the efforts of everyone who helped along the way.
I have numerous people to thank. First, I am deeply grateful to the many entertainment industry insiders who agreed to participate in my case studies, who granted interviews specifically for this book, or who otherwise were very generous with their time and knowledge. The full list of those who feature prominently in Blockbusters is long, but I count myself among the luckiest people on this planet to have been able to work with such a remarkable group of accomplished individuals, so I would like to acknowledge them all here once more:
Alan Horn; Karen Kosztolnyik, Peter McGuigan, Vicki Myron, and Jamie Raab; Avi Arad, Peter Cuneo, and Isaac Perlmutter; Steve Berman, Bobby Campbell, Troy Carter, Arthur Fogel, Stefani “Lady Gaga” Germanotta, and Vincent Herbert; Ben Berkman, David Boxenbaum, and James Diener; Ramón Calderón and Florentino Pérez; Mauricio Macri; Sir Alex Ferguson; Tom Cruise, Harry Sloan, and Paula Wagner; Max Eisenbud and Maria Sharapova; Maverick Carter and LeBron James; Alex Carloss; JP Colaco, Andy Forssell, and Jason Kilar; Peter Gelb; Bob Bowman; Brian Rolapp and Hans Schroeder; David Droga, Andrew Essex, Shawn “Jay-Z” Carter, Julie Grau, Chris Jackson, John Meneilly, and Yusuf Mehdi; Holly Hinton, Anders Klemmer, and Alex Wheeler; Lou Abin, Ryan “Kaskade” Raddon, Pasquale Rotella, Jason Strauss, and Noah Tepperberg; and Angela Ahrendts, Garth Ancier, Scooter Braun, and Richard Plepler.
Thank you all—it was a joy to work with you and learn from you.
Countless other people who are not mentioned by name in this book were just as crucial to the end result. Special thanks go to Jason Ferguson, Andrew Goldberg, Lee Gomes, Michelle Horowitz, John Maatta, Martin O’Connor, Lex Suvanto, Judy Tepperberg, Page Thompson, and Blair Westlake.
By now, nearly a thousand students have signed up to take my Harvard Business School course Strategic Marketing in Creative Industries (sadly, for all my talk about not playing it safe in my career, when I launched the course I didn’t quite have the guts to opt for the infinitely cooler sounding Show Business). Those students were an invaluable source of insights and ideas. Thank you, my dear SMICIs. You have a special place in my heart—even if I gave you a “3”—and you are the primary reason why what I do is far too much fun to be called “work.” I’m so impressed by you, and I can’t wait to see how you’ll change the world for the better in the years to come.
Fifteen students had an even greater impact on the book by helping to write the case studies featured here: Thank you, Ryan Barlow, Jason Bergsman, Kelsey Calhoun, Michael Christensen, Tom Dye, Margarita Golod, Daven Johnson, Caren Kelleher, Brett Laffel, Jeffrey McCall, Kwame “DJ K.Kess” Owusu-Kesse, Crissy Perez, Peter Stone, Kimball Thomas, and Sheldon Wong, for all your prized contributions.
For all the deep insights that case studies can bring, I continue to analyze quantitative data to understand market trends, and some of those analyses found their way into the book, too. I am grateful to the many individuals and companies that over the years have given me proprietary data to work with. Here, I’d like to especially thank The Nielsen Company’s Hugh Anderson, Howard Appelbaum, and David Bakula as well as Rentrak’s Bill Livek. Hugh, Howard, David, and Bill, I appreciate your generosity and willingness to help.
I am forever indebted to my academic mentor and collaborator Jehoshua Eliashberg at The Wharton School, whose pioneering work inspired my PhD dissertation on the film industry, and who has been a trusted adviser ever since. Thank you, Josh, for always being there for me—Kalderon forever! Several other colleagues in academia were coauthors on research projects that found their way into Blockbusters: I am grateful to Bharat Anand, Gustavo Herrero, Sunil Gupta, Felix Oberholzer-Gee, Clarence Lee, Elie Ofek, John Quelch, David Schweidel, Jeroen Verleun, and Lingling Zhang for all their wisdom. And thank you, Julia Kirby, for teaching me so much about writing for practitioners.
More generally, I owe all my colleagues at the Harvard Business School a great deal of gratitude for their encouragement over the years, for creating a wonderful work environment, and for never giving up on the challenge to be relevant to management practice. Thank you, Dean Jay Light, for stimulating me to, in your words, “think big,” and thank you, Dean Nitin Nohria, for all your guidance and support.
Without my rock-star literary agent Chris Parris-Lamb, I probably would have never taken the step of packaging my research into what you are reading at the moment. “Do you think there’s a book there?,” he asked me in an out-of-the-blue e-mail now nearly five years ago. Chris, thank you for asking the question I could only answer in the affirmative—and for expertly shepherding our project ever since. You are awe-inspiringly brilliant.
Of course Blockbusters also never would have seen the light of day without the star-studded team at Henry Holt. John Sterling, my fabulous editor, was instrumental throughout the book-writing process. John, thank you for having faith in this project, and for having faith in me. I know I made your life difficult at times, but I have no doubt that your sublime efforts made the book much better than it otherwise would have been. You taught me many writing lessons that will stick with me, and I will never be able to thank you enough. Steve Rubin, thank you for making a (blockbuster!) bet on my book. I was honored by the extraordinary vote of confidence. Emi Ikkanda, thank you for tirelessly and patiently working behind the scenes to keep everything on track. Patricia Eisemann, Emily Kobel, Katie Kurtzman, Jason Liebman, and Maggie Richards, thank you for plotting a blockbuster-worthy promotional strategy. Gretchen Crary and Dee Dee De Bartlo, thank you for jumping on board so enthusiastically. Finally, Michael Bierut, thank you for designing such a stunning cover.
I can’t believe how many other friends and colleagues helped with the book in other ways. Chris Satti, thank you for making me a higher priority than the mayor of Boston. James Allworth, I am convinced you are Australia’s very own superhero. I owe you many, many dinners. Chris Allen and Marc Lubbers—thank you for your beautiful design work. And Anthony Accardo, Jyoti Agarwal, Shane Bills, Barbara Cleary, Nick Krasney, Minal Mehta, Jann Schwarz, Rena Wang, Calvin Willett, Carter Williams, and the dozens of others who have kindly offered to help shape or promote the book—you showed that the Harvard Business School community always steps up to a challenge. I promise to return the favor by throwing a spectacular launch party.
But most of all, I want to thank my family, my dog, Moseley, for having the wisdom to never contradict me, and my husband, Michael, for making Brad Pitt look decidedly mundane and for being the best friend and most supportive partner I could ever imagine.
—Anita Elberse
INDEX
The index that appeared in the print version of this title does not match the pages in your eBook. Please use the search function on your eR
eading device to search for terms of interest. For your reference, the terms that appear in the print index are listed below.
A-list stars. See superstars
A&M/Octone
ABC
Abin, Lou
Abramovich, Roman
Abrams, J. J.
AC Milan
Activision Blizzard
Adele
Adventures of Pluto Nash, The
advertising. See marketing
AdWeek
agents
Aguilera, Christina
Ahrendts, Angela
Ahrens, Rob
Aidem, Larry
Akon
All I Need (Radiohead)
all-rights deals
alternate reality games (ARGs)
Alves, Dani
Amazon
growth of
highlighting of similar products
Hocking and
Lady Gaga and
publishers and
Ambrosio, Alessandra
American Greetings
American Idol
Hulu and
Lady Gaga and
production costs of
scheduling of
The Voice and
Amityville Horror, The
Ancier, Garth
Anderson, Chris
Angels and Demons
Aniston, Jennifer
Ansari, Aziz
Apple
BAM and
blockbuster strategies of
e-book market and
influence on prices
iPhone apps and
iTunes Store
Arad, Avi
ARGs (alternate reality games)
Art of Fielding, The
Art of Racing in the Rain, The
Assassination of Jesse James, The
Associated Press
At Bat application
Atom Factory
Avengers, The
Avicii
back-end deals
Blockbusters: Hit-making, Risk-taking, and the Big Business of Entertainment Page 34