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Subject: RTP-area local music and culture

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  • From: grady <grady AT ibiblio.org>
  • To: RTP-area local music and culture <ch-scene AT lists.ibiblio.org>
  • Subject: Re: Eh, Whatever!
  • Date: Tue, 17 Mar 2009 15:15:55 -0400

I find it kind of amusing that I'm arguing business economics with an MBA, but c'mon, Glenn, there's fundamentally *no difference* between the overhead component called "the guarantee" and the other types of overhead that other businesses have.

Rent must be paid monthly, regardless of how many patrons come through the door. Ditto salaries.

In the case of, say, a restaurant, if you want to plan for patrons, you have to stock up on a certain amount of raw ingredients, many of which are subject to spoilage after a short period of storage. *And* if you're preparing food that requires advance prep work, you have to prep a certain amount, which in many cases means you're throwing it out at the end of the *day*.

In the case of, say, the software-development business, you might spend a YEAR developing a piece of software before you even get it to the point where it's consumable. If one of your competitors makes it to market before you do, or if the market shifts in that time . . . you lose that year, with all the overhead it involves.

In the case of movie production, by the time you get the product to a testable state, you've sunk anywhere from 3 to 130 million bucks into it, and with the exception of a few key players who accepted points in lieu of salary, you've had to pay everybody for their work regardless of whether the damn thing even gets released or not.

Most retail businesses have to buy and stock inventory. *some* retailers have the option of returning unbought inventory to the distributor, but many do not.

So yes, when you open the club on a night when the band has a guarantee, your overhead for that night is higher than it is on a night when there's no guarantee. But it's still just overhead, and the math is the same.

Ross

On Tue, Mar 17, 2009 at 2:48 PM, <local506 AT gmail.com> wrote:

But the
point I was trying to make is that music venues, unlike other
businesses, don't just 'not make money' when people don't show up, but
can also lose money that goes to pay the bands (on top of the other
overhead that ever business has.)




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