A system dynamics analysis of the superclub phenomenon in popular - - PowerPoint PPT Presentation

A system dynamics analysis of the ‘superclub’ phenomenon in popular youth culture: 1990 - 2004

James Rhys Kearney 2006

Presentation structure:

• History UK ‘rave’ and nightclub scene
• Factors contributing to the boom and bust

‘superclub’ reference mode of behaviour 1990 - 2004

• Influence diagram
• System dynamics model
• Model output
• Questions

Timeline

• 1977 – 1980 ‘Disco’ Era
• 1980s ‘Acid House’ surfaces in the UK
• 1988 ‘Second Summer of Love’
• 1990 ‘Acid House Bill’
• 1994 Criminal Justice & Public Order Act

Superclubs

In March 1995, journalist Andy Pemberton coined the term ‘superclubs’ in a small piece in Mixmag (a dance music magazine) noting how

• rganisations such as Cream, The Ministry of

Sound, Back to Basics and Hard Times were more than just clubs. They ran DJ agencies, record labels and tours. Their distinctive logos appeared on clothing, merchandise and mix

• CDs. They were emerging youth brands

(Garratt, 1999)

Ministry of Sound

£20 million turnover in 1999

• £3.5 million from club
• £12.5 million from record label
• £4 million from tours, merchandising and

media sponsorship

Ministry of Sound

“The super DJ and the superclub game is over”

Mark Rodol Chief Executive Ministry of Sound 2003

Timeline continued…

• 1992 Nightclub market

– £2.5 billion* (2003 prices)

• 1996 Eradication of ‘need’ concept
• 2002 ‘Rennaisance’, Midlands, closes
• 2002 ‘Gatecrasher’, Sheffield, reduces nights
• 2003 ‘Cream’, Liverpool, closes
• 2003 Nightclub Market

– £1.6 billion*

*Mintel Market Research

Visiting Rate Per Club Average Club Door Price Spin-Off Merchandising (Brand Awareness) Superclub Going Population New Bar Openings New Club Openings Profits DJ Fees

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4. 1. 7. 2. 6. 5.

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Population Going to Superclubs New Additions

• Av. Growth

Factor Merchandising Advertising Effect as Function of Sales Loss of Appeal Multiplier Word of Mouth Growth Factor Concept Desirability Product Lifespan Reduction due to Increased Alternatives % of On-Licensed Premises with SHCs <Time> Eradication of 'Need' Concept (1996) No.On Licensed Premises <Population Going to Superclubs> Growth Factor Population Going to Other Clubs & Bars Superclubs' Loss of Allegiance Fractional Loss Rate due to Average Entrance Fee Fractional Loss Rate due to Falling Attendance <Av. Number of Merchandise Units Sold Annually per Club> <No.of Superclubs> Persuasion Time Positive Growth Indicator <Visiting Ratio> <Average Entrance Fee>

• Av. Entrance Fee

Effect <Av. Entrance Fee Effect> Trend Period Population Going to Superclub Trend Inital Trend Value Initial Smoothed Value Time to Full Affect

• Av. Club

Capacity

• Av. No.of Visits per

Year per Clubber Nights Open a Year <Population Going to Superclubs> <No.of Superclubs> Attempted Visits per Superclub Annual No.Visits Possible per Superclub Average Cash Balance per Club Total Income Costs and Overheads Annual Income From Club Annual Club Overhead Overhead Costs per Person per Visit (at full capacity) <Annual No.Visits Possible per Superclub> Actual Visits per Club Income From Merchandising

• Av. Number of

Merchandise Units Sold Annually per Club Average £ Profit per Unit Sold % Potential Market Purchasing Merchandise Given Investment Merchandise R&D/Advertising Costs % Cash Balance Invested in Merchandise % Current Market Purchasing Club Merchandise <Merchandise R&D/Advertising Costs> Merchandise to Market Delay Time Merchandise Customer Base No. Competition Effect <No.of Superclubs> Annual DJ Fee (given full capacity) Baseline DJ Fee per Clubber Max Fee per Clubber Maximum No.Clubs Affecting Competition <Average Entrance Fee> Units Sold per Person

Visiting Ratio <Attempted Visits per Superclub> <Annual No.Visits Possible per Superclub> Club Profitability Index <Annual Income From Club> <Annual Club Overhead> Entrance Fee Adjustment Factor Average Entrance Fee Adjustment to Av. Entrance Fee Fee Increment Stoppage Point Required Profitability Index Required Fee Adjustment to Maintain Profitability Time to Fee Adjustment Baseline Entrance Fee No.of Superclubs New Superclubs <Population Going to Superclubs> Superclub Requirement <Av. No.of Visits per Year per Clubber>

• Av. Club

Creation Time Established Venue Additions Superclub Shortfall <Annual No.Visits Possible per Superclub> Club Closures Fractional Closure Rate Due to Loss of Profitability <Club Profitability Index>

Population going to Superclubs Average entrance fee Number of Superclubs in existence Cash balance per club

Rates and Level Sketch

Population Going to Superclubs New Additions Population Going to Other Clubs & Bars Superclubs' Loss of Allegiance No.of Superclubs New Superclubs Average Cash Balance per Club Total Income Costs and Overheads Average Entrance Fee Adjustment to Av. Entrance Fee Club Closures

Superclub population rate of new additions

Population Going to Superclubs New Additions

• Av. Growth

Factor Merchandising Advertising Effect as Function of Sales Loss of Appeal Multiplier Word of Mouth Growth Factor Concept Desirability Product Lifespan Reduction due to Increased Alternatives % of On-Licensed Premises with SHCs <Time> Eradication of 'Need' Concept (1996) No.On Licensed Premises <Population Going to Superclubs> Growth Factor <Av. Number of Merchandise Units Sold Annually per Club> <No.of Superclubs> Persuasion Time Positive Growth Indicator <Average Entrance Fee>

• Av. Entrance Fee

Effect Trend Period Population Going to Superclub Trend Inital Trend Value Initial Smoothed Value Time to Full Affect

Superclub average entrance fee model sketch

Visiting Ratio <Attempted Visits per Superclub> <Annual No.Visits Possible per Superclub> Club Profitability Index <Annual Income From Club> <Annual Club Overhead> Entrance Fee Adjustment Factor Average Entrance Fee Adjustment to Av. Entrance Fee Fee Increment Stoppage Point Required Profitability Index Required Fee Adjustment to Maintain Profitability Time to Fee Adjustment Baseline Entrance Fee

Superclub Population with Gains & Losses in Attendance

1 M people 600,000 people/yr 500,000 people 300,000 people/yr 0 people 0 people/yr 1990 1992 1994 1996 1998 2000 2002 2004 Time (Year) Population Going to Superclubs : Run 1 people New Additions : Run 1 people/yr Superclubs' Loss of Allegiance : Run 1 people/yr

DJ Fee and Income Factors

4 M £/(yr*club) 60 £/visit 40 clubs 6 M £/club 0 £/(yr*club) 0 £/visit 0 clubs

• 6 M £/club

1990 1992 1994 1996 1998 2000 2002 2004 Time (Year)

"Annual DJ Fee (given full capacity)" : Run 1 £/(yr*club) Average Entrance Fee : Run 1 £/visit "No.of Superclubs" : Run 1 clubs Average Cash Balance per Club : Run 1 £/club

DJ Fee Policy Experimentation

Population Going to Superclubs

4 M 3 M 2 M 1 M 1990 1992 1994 1996 1998 2000 2002 2004 Time (Year)

Population Going to Superclubs : Run 4 people Population Going to Superclubs : Run 3 people Population Going to Superclubs : Run 2 people Population Going to Superclubs : Run 1 people

Further Model Development

• Decline in Superclub venues not isolated

within whole nightclub industry

– Increased competition due to changing licensing laws

• Introduction 24 hour licensing laws
• Resurgence of ‘raves’ in recent times

– Macro-media influence

• Subculture development with strong

fashion affect

Conclusion

• Legislation against ‘rave’ movement led to

sizeable potential market for Superclubs contributing towards ‘boom and bust’ reference mode of behaviour

• Changes in licensing laws led to highly

competitive night-time economy

• Carrying capacity of system eroded by an elite

group of DJs whom exploited there position as the ‘must have’ commodity (example of a ‘tragedy of the commons’)