MBUS 3000: Exam 1
25 Cards in this Set
| Front | Back |
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64%
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music industry is down ___ from peak in 1999
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45%
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music industry is down ___ from level at 1973
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3x
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10 years ago the average American spent ___ as much on recorded music products as today
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liabilities
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unearned revenues are
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june 1999 - july 2001
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Napster
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9-Jan-01
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iTunes
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late 2001
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iPod
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2003
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iTunes store
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normal distribution / randomness
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gaussian randomness
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long volatility
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lets you capture all of the "wild" profits
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Long Tail
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Extremely large selection of content or products.
Phenomenon whereby firms can make money by offering a near-limitless selection.
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1878
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Warner Music Group
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-smoothes out incoming revenues
-you never know when something in the tail will move to the head
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reasons for long-tail strategy
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1889
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Columbia Phonograph Company
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Rock Scene
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- a town or neighborhood that is a net exporter of concert tickets and/or music
- i.e. more concert tickets sold by the bands who are in the city than are sold total in the city
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1. cheap housing
2. place to rehearse
- access to electricity
3. neighborhood with indifference to noise
4. access to employment
5. accessibility to gigs (within 60-90 minutes of band, arguably 2.5-3 hours now with modern transportation)
6. depend on transitional neighborhoods t…
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necessary components of rock scene
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Hunter S Thompson
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"the music business is a cruel and shallow money trench, where thieves and pimps run free, where good men die like dogs. And then there is a negative side"
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- many small bets that rarely pay off
- upside is unlimited and of "wild" variety; wild payouts more than make up for all of the small losses
- low overhead; each "bet" is relatively inexpensive
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3 Traits of Long Tail/Long Volatility Strategy
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gershing
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no matter how small input was, credit is still taken; subtly move away from a project once championed if it fails, often passing to a subordinate
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narrative fallacy
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go back and make a logical story about success; net seemingly random events into a narrative
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Survivorship Bias
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Upward bias in average performance due to the failure to account for failures over the sample period.
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1. MP3's/piracy
2. the single
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What killed the recorded music industry
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long volatility
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you profit when things change beyond expectations
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short volatility
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you profit when things stay within the range of expectations
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"other assets"
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intangible assets,
goodwill
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MBUS 3000: EXAM 2