ECO Chapter 2 Video Case: Nederlander
Question # 00029281
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Updated on: 10/25/2014 11:59 PM Due on: 10/26/2014
Chapter Two
Economics: The Framework for Business
Video Case: Nederlander
Nederlander is one of the oldest and most respected concert management companies in the
United States. Founded in 1912 and strategically headquartered in Los Angeles, the West Coast
concert promoter owns and operates such award-winning venues as the Greek Theatre, Santa
Barbara Bowl, and the San Jose Civic. With fewer than six thousand seats, Nederlander venues
are much smaller than today’s popular stadium-rock settings, yet they attract some of the biggest
names in show business—Bruce Springsteen, Pearl Jam, and Jimmy Buffett are just a few of the
world-class performers to rock Nederlander stages.
While popular touring artists grab the spotlight on Nederlander stages, behind-the-scenes
planning for concert events is the work of 60 full-time employees who staff the company’s
marketing, talent buying, finance, and development departments. Added to that number are the
hundreds 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, CEO
of Nederlander. “Yet we also have a client in the artist, management, and representation. If
they’re not happy with their experience, and if they don’t see a relatively full house, and if they
don’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, Nederlander
focuses its efforts locally. “Our business model is not to become nationwide or international
overnight; 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 are
uniquely 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. “Los
Angeles is a very important market for us, not only because of the consumer and the media, but
also because every major talent agency has at least one of its top two headquarters in New York
or L.A.,” adds the CEO. There is another good reason Friedman maintains a domestic focus: as a
company founded and operated in the United States, Nederlander benefits from a legal and
economic environment characterized by limited regulation, individual property rights, and
healthy competition.
Although Nederlander dominates the West Coast concert circuit, delivering sellout crowds night
after night depends on the company’s ongoing ability to match the right band with the right
target audience. Jamie Loeb, the marketing manager responsible for publicizing Nederlander
shows, zeros-in on each band’s unique audience. “The number one reason why people don’t go
to a show is they don’t know about it,” Loeb says. To get the word out, the Nederlander
executive targets specific consumer segments: “It comes back to who is the artist and who is
their audience. Then the scope becomes narrower, because you don’t necessarily have to know
where 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 money
based on precise economic calculations. For example, the demand for musical artists like Dave
Matthews and 30 Seconds to Mars is very high, but the supply of tickets for Nederlander venues
is low. This market reality, notes Friedman, is the basis for Nederlander’s pricing: “Our
economic model is more viable—we sell less seats at an aggregate higher ticket price because
the 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 top
talent 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 highly
competitive, and final negotiations always come down to cash. “We have to put a dollar equation
to it and make an offer,” says Alex Hodges, Nederlander’s chief operating officer. And while
negotiations may get sticky at times, Hodges says that artists, agents, and promoters have
something 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 the
night. Not surprisingly, Nederlander’s ability to deliver great performances and keep all parties
satisfied is what makes the concert promoter one of the most sought-after partners in the
entertainment world.
Economics: The Framework for Business
Video Case: Nederlander
Nederlander is one of the oldest and most respected concert management companies in the
United States. Founded in 1912 and strategically headquartered in Los Angeles, the West Coast
concert promoter owns and operates such award-winning venues as the Greek Theatre, Santa
Barbara Bowl, and the San Jose Civic. With fewer than six thousand seats, Nederlander venues
are much smaller than today’s popular stadium-rock settings, yet they attract some of the biggest
names in show business—Bruce Springsteen, Pearl Jam, and Jimmy Buffett are just a few of the
world-class performers to rock Nederlander stages.
While popular touring artists grab the spotlight on Nederlander stages, behind-the-scenes
planning for concert events is the work of 60 full-time employees who staff the company’s
marketing, talent buying, finance, and development departments. Added to that number are the
hundreds 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, CEO
of Nederlander. “Yet we also have a client in the artist, management, and representation. If
they’re not happy with their experience, and if they don’t see a relatively full house, and if they
don’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, Nederlander
focuses its efforts locally. “Our business model is not to become nationwide or international
overnight; 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 are
uniquely 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. “Los
Angeles is a very important market for us, not only because of the consumer and the media, but
also because every major talent agency has at least one of its top two headquarters in New York
or L.A.,” adds the CEO. There is another good reason Friedman maintains a domestic focus: as a
company founded and operated in the United States, Nederlander benefits from a legal and
economic environment characterized by limited regulation, individual property rights, and
healthy competition.
Although Nederlander dominates the West Coast concert circuit, delivering sellout crowds night
after night depends on the company’s ongoing ability to match the right band with the right
target audience. Jamie Loeb, the marketing manager responsible for publicizing Nederlander
shows, zeros-in on each band’s unique audience. “The number one reason why people don’t go
to a show is they don’t know about it,” Loeb says. To get the word out, the Nederlander
executive targets specific consumer segments: “It comes back to who is the artist and who is
their audience. Then the scope becomes narrower, because you don’t necessarily have to know
where 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 money
based on precise economic calculations. For example, the demand for musical artists like Dave
Matthews and 30 Seconds to Mars is very high, but the supply of tickets for Nederlander venues
is low. This market reality, notes Friedman, is the basis for Nederlander’s pricing: “Our
economic model is more viable—we sell less seats at an aggregate higher ticket price because
the 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 top
talent 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 highly
competitive, and final negotiations always come down to cash. “We have to put a dollar equation
to it and make an offer,” says Alex Hodges, Nederlander’s chief operating officer. And while
negotiations may get sticky at times, Hodges says that artists, agents, and promoters have
something 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 the
night. Not surprisingly, Nederlander’s ability to deliver great performances and keep all parties
satisfied is what makes the concert promoter one of the most sought-after partners in the
entertainment world.
Video Case Study Questions
1.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?
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?
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Rating:
/5
Solution: ECO Chapter 2 Video Case - Nederlander