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Lady Gaga Case Study

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by

Manoj Sharma

on 18 July 2013

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Transcript of Lady Gaga Case Study

Problem
Lady Gaga is a new artist who’s co-headlining with Kayne West. At the VMAs, hip-hop artist Kanye West—with whom Gaga had planned to co-headline a high- profile arena tour—had crashed the stage just as the first award of the night, for Best Female Video, was presented to Taylor Swift. The ensuing media storm prompted West to take a break from the music industry—and withdraw from the tour that had taken months to plan
The Issue:
• Gaga was relatively inexperienced:
she had only emerged on the
scene in October
2008, as a supporting act for
New Kids On The Block—
a former boy band beyond
their glory years
•Lady Gaga had only headlined a tour
of small clubs with a capacity of a few
thousand people at most, a far cry from
the 20,000-seat arenas planned for the
tour with Mr. West
•Kanye West would bear the production costs.
•Developing artists typically
did not take on arenas, and a
failure to draw fans could
seriously hurt Gaga’s brand.
Objective:
We’ve been drawn into a $4,000,000
hole with the Kayne set back and in
order to get out of that hole. The plan
is to break even and from there, and
turn a profit.
Alternative Solutions and Approaches:
We chose Option 2, because four million dollars has been invested into the tour. Scaling production down would require another two million dollars in start up costs. This is efficient because every theater production throughout the tour would cost $400,000 dollars to produce, so making the money back towards the start up seems more achievable.
•The staging plans were extremely ambitious:
the design called for the stage to extend the entire length of the arena. Production was in
full swing.


•Scale down the production of Lady
Gaga’s area staging plans in order to fit,
a theater or book outdoor theater
venues.
Evaluate Each Alternative:
•Cheaper ticket prices ($60-$100)
• More controlled setting
• More intimate relationship with the crowd
• Build a bigger fan base overall.
• Sell more merchandise to specific crowds.
Recommendation:
• Rather than canceling her tour
altogether, postpone the tour for two
months, in order to revise her budgeting
plans to fit her production needs.
•From January 2007- September 2009
(No Big Hit Singles at the time).
•Headlined 19 Events
•All Tickets sold 99%
•Average capacity of 2,100.

•As a new/niche artist in 2007, the average club, a venue with a capacity of anywhere from 100 to 1,500 people.

•Mid level artists seat an upwards of 1,500
people to amphitheaters seating as many as 6,000 to 8,000 people, which is where Lady Gaga stands as an artists.

Our recommendation is for Lady Gaga
is to perform at a smaller venue, which
would boost demand and generate
profit at a 99% rate, according to her
previous venue sales.

Outcomes And Obstacles
•Outcomes from our Alternative:
•After revamping Lady Gaga’s tour plans, roughly $6 million in start-up costs will be spent.



•Each concert venue will cost around
$400,000 from that point.


•We suggest doing 5 concert venues to gather
appropriate results in order to estimate if all 25 concerts in the tour will sell properly.


•The goal is to break even initially...
Obstacles:
•Making $6 million from the initial investment plus profit.
•Each ticket will cost between $60-$100 and each venue will host as many as 6,000-8,000 people.
•At $100 per ticket, that means the audience provides around $700,000, not counting merchandise sales.
•At the end of the day, Lady Gaga profits 85% of the $300,000 made.
•Times that by 25 concerts, the math tells you
the tour will profit $7.5 million in revenue.
Review of Work as a Whole:
After Kanye separated from Lady Gaga’s tour, we have come to the conclusion that her best option is to pursue the tour on a theatre level that she has past success in. From our results, we predict that she will profit $1.5 million after breaking even. The brand for Lady Gaga will also boost dramatically and the demand will rise to an extreme level. This will allow her to be a headliner from that point on, booking bigger venues.
Thank you. This
presentation was
brought to you by:
Manoj Sharma, Trae Fuller,
David Roden, and His Royal
Majesty, High Counselor to the Duke of York, Protector of The Sovereign Nation of Los Angeles, his excellency, King Shane Edward Miller, The First.

Three Rules:
1. Silence or Turn off your cellular device please.

2. Please close your Laptops
3. PAY ATTENTION! Greatness is
hard to find...
Where We Got Our Info:
CHRISTENSEN, M. & ELBERSE, A. (OCTOBER 15, 2011). LADY GAGA STATISTICS STUDY. RETRIEVED FROM DROPBOX.
ARTLOVERRR. (OCTOBER 2, 2009). CNN KANYE WEST LADY GAGA FAME KILLS TOUR CANCELED. RETRIEVED http//www.youtube.com/watch?v=Yldgzz-w8Uw
Full transcript