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20th March – 23rd March 2012

Suitable for Business

Case Competition

2012

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Pumpehuset Studiestræde 52 | 1554 København K 1

Introduction:

The Re-Birth of Pumpehuset

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umpehuset (the pump house) was originally one of the first waterworks in Copenhagen and contained three large steam-powered pumps, which created pressure in water pipes so the water could reach the upper floors of Copenhagen houses. Pumpehuset was officially taken into use on 1st July 1859. In September 1987 Pumpehuset opened as a concert venue in the middle of Copenhagen. It replaced a former punk concert venue called Saltlageret (the Salt Stock). It was run as a concert venue until the summer of 2010 when Pumpehuset went bankrupt and closed down. But in January 2011 it was announced that Pumpehuset would reopen as a concert venue with a new profile which would focus on urban subculture. At the end of September 2011, Pumpehuset once again opened the doors to the Copenhagen concert audience. When Pumpehuset went bankrupt it was put on a public procurement sale by the City of Copenhagen. The only requirement for potential buyers was that Pumpehuset should continue to be a meeting point for music and culture. Around 25 different bids were submitted, and the municipal committee picked 5 bids to look into further. The municipal committee decided that the best proposal came from the creative team Facilitator for Urban Storbykultur (Facilitator of Urban Metropolitan Culture, FUS), which had hooked up with a big player within the entertainment business, the cinema company Nordisk Film Biografer (NFB) during the process of the procurement. FUS consists of Ronnie Hansen, an independent concert organiser who has previously been part of the management at the concert venue and club Vega, and Kristoffer Bramsen, a DJ who is behind the electronic festival RAW, which has been elected as the “Best Event” at the Danish Deejay Awards. He is also cofounder of the ‘dubstep event-makers’ OHOI. NFB has been in the cinema industry for many years and is part of the big film company Nordisk Film (NF), which in turn is part of the big media concern Egmont (cf. part 8.a. and 8.b). According to the cooperative agreement, FUS would take care of the daily running of Pumpehuset and make sure that the house and the calendar were full, while NFB would take care of the financial stability and operational understanding. Simon Strange, social democrat from the Cultural Council of the City of Copenhagen, was a part of the municipal committee. In his opinion, the cooperation between FUS and NFB combines a strong creative profile with economic stability. As he told the music magazine Gaffa: “Above all we wanted to get full power on Pumpehuset, which has a brilliant location just next to the city hall square.” He believes that there needs to be more money in the urban metropolitan culture. For NFB this was a possibility to do something different. It already has the majority of the ci-

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nema marked in Denmark but the cinema industry has been facing a hard time. In addition, NFB has mostly focused on the mainstream market, so by cooperating with FUS, NFB got a chance to explore a new marked in a double sense: Firstly, by venturing into concerts, and secondly, by tapping into the subcultural segments. Indeed, Pumpehuset’s business is in many ways related to the cinema industry that NFB has been part of for many years as they are both within the general cultural entertainment industry. In spite of the crisis, the amount of money that people spend on entertainment has increased, and the percentage of people’s disposable income spent on entertainment has gone up. FUS and NFB each started out with separate bids in the public procurement contest. The original idea from NFB was to use the concert venue to film big names in intimate concerts, and broadcast these to its cinemas all over Denmark, as well as potentially selling these video streams abroad. The original bid from FUS was focused on giving a house to subcultures big enough to fill a house, but not big enough to own a house. The following consolidated bid from the cooperation between FUS and NFB had additionally aimed to provide Copenhagen with:

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Stable and long term culture with a focus on artistic development A focus on genres of music and forms of arts that characterises a metropolis A high level of activities and events that would ensure artistic activities all week all year around In the bid they wrote: “Pumpehuset shouldn’t be a music venue, but a culture venue, that holds a broad spectrum of cultural events carried by the music. There should be urban concerts with an edge, theatre and stage art, events for kids in both wintertime and in the holiday time, cultural hostel in the summertime, and a possibility for the festivals of the city to use the facilities.”

An overview of Pumpehuset’s Business: “Connecting the Dots” 2

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umpehuset is probably best known as a concert venue, hosting a very diverse line-up of acts: Heavy metal on one night, Indie Folk on another. It cannot be said to be limited to a certain music genre. If there is a red thread, it is probably a general avoidance of things mainstream (cf. part 4). The public awareness as a concert venue, however, easily leads to two common misunderstandings of Pumpehuset’s core business activities. First, Pumpehuset’s activities are far from being limited to music. In fact, Pumpehuset is open to projects and events across cultural sectors, as long as they are innovative, novel, and have what CEO Ronnie Hansen calls the experimental vibe. Secondly, from the company’s perspective, music is not the core product. As Ronnie Hansen states:

“Our product is not in concerts – those are being set up by external promoters and booking agencies. Our product lies in connecting the dots when it comes to partners, both booking and commercial partners.” The core activities are therefore not the selection of artists, nor would the company consider expertise on musical acts a core competence. Instead, networking and collaboration with external partners in these matters is crucial for Pumpehuset. The approach towards sponsorship and promotional activities is characterised by the same stress on collaboration with business partners. Instead of concert development, the company therefore prefers to describe this part of its business broadly as concept development with and for partners. In addition to the conceptual work, facility management would be the second pillar of Pumpehuset’s business. This category comprises, for example, the management of the technical equipment for light and sound or the organisation of the bar. See figure 1 for an illustration of this. In some respects, Pumpehuset’s business can be compared to that of hotels or airlines, sharing the same challenge to deal with strong cyclicality of demand, since the summer is generally the festival season in Denmark. One of the ways in which Pumpehuset is

Big enough to fill a house, but not big enough to own a house

Concept development

Mission/Vision

Facility Management

Pillars of Business

Tangible and intangible ressources e.g Facilities, Networks, HR and Goodwill Figur 1: Overview of the business of Pumpehuset

Ressources

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planning on counteracting the low season, is by searching for a suitable hostel business partner to open basic facilities on its grounds. The aim is to rent these out during the summer to create a kind of artistic community, comprising people interested in Pumpehuset’s concerts, as well as young artists. Furthermore, facilities remain mostly unused during the daytime except for the setting-up and preparation of events. To fill capacities and gain more flexibility, Pumpehuset therefore sometimes opens its door to private events. For example, space has been rented out for corporate Christmas lunches or birthday parties. Since these are not promoted or listed on the website, they do not have to fit with the criteria of public acts described above.

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Background:

The cultural industry 4

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lthough it is generally difficult to draw a sharp line around the cultural industry in Denmark, it is normally considered to be composed of at least the following components: Literature, film, performing arts, visual arts, design and crafts, architecture and music. Culture can be considered a key industry in Denmark due to a high amount of public funding as well as household spending. Per capita expenditures for recreation and culture1 in Denmark 2 amount to around 11.000 DKK, a number almost 60% higher than the European median. Cultural workers make up 2,3% of total employment, and cultural exports have consistently outnumbered imports2.

3.a. Industry Trends and Development

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he cultural industry in Denmark has seen a major trend towards the fragmentation of styles and movements. Historically, there had been a strong polarisation of only a few music styles dominating the market, such as the era of Punk versus Popper in the 1980s. This gave organisations operating in the music business a stable environment in which demand could be relatively easily forecasted. Recent times, however, have seen the proliferation of hundreds of different subcultures. The spread and fragmentation of customers across music genres poses a big challenge to music businesses, since it has become more difficult to attract a stable audience of a large size. This trend is not limited to the music segment, but

1 Percentage based on real expenditure per capita on GDP at average OECD PPP prices. http://www.culturalpolicies.net/web/statistics-markets.php?aid=201&cid=76&lid=en. 2 Data until 2008. http://www.culturalpolicies.net/web/statistics-markets.php?aid=112&cid=76&lid=en

extends to other parts of the cultural industries as well. To deal with this fragmented demand, cinemas and concert venues have become more conservative in their offerings and often look out for sure blockbusters and mainstream artists instead of experimenting with styles. After all, the mainstream has not disappeared, and a concert by Bruce Springsteen or Coldplay will still appeal to mass audiences. However, the mainstream has become less clearly defined and is rapidly changing. This tendency of short-lived and unpredictable “hypes” in the demand of the mass market can turn the feverish search for tomorrow’s stars into a dangerous gamble of future revenues. On the other hand, industry experts see a great profit potential hidden in the more sharply-defined subcultures that lie off the mainstream. It is therefore up to companies like Pumpehuset to prove that there is a market beyond the mainstream – by demonstrating how to exploit these types of niche markets in a profitable way. The fragmentation of demand is closely interlinked with other industry trends. In this respect, the transition towards the “digital age” is particularly worth mentioning. On the one hand, the possibilities of the internet open up many new choices and easy access for customers worldwide. On the other hand, they have shaken the entire foundation of the industry. The seemingly unlimited access to music due to platforms such as YouTube and MySpace challenge the traditional profit models. The new media, however, also offer huge opportunities for new channels and greater interaction with the customers. A good example at hand is the Tak Rock campaign as mentioned in part 5.b.


3. b. Competitive landscape

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efore Pumpehuset’s bankruptcy in 2010, the major competitors with a comparable line-up were the concert venues VEGA music house as well as Amager Bio. Big, international artists (e.g. The Red Hot Chili Peppers or Metallica) have also been hosted in the Forum Copenhagen or the national stadium Parken. Other venues such as the amusement park Tivoli would not consider concerts their core

business, but nevertheless frequently host comparable concerts. Since Pumpehuset’s relaunch and new positioning in the niche markets, however, it has ceased to directly compete with these venues. This competitive differentiation is most illustrated by Pumpehuset’s novel artistic strategy (cf. part 4).

3.c. The role of public funding in the cultural industry

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ublic funds play a fundamental role in the cultural industries. Total spending by the Danish government on the cultural industries equalled roughly 20 billion DKK in 2011, with around 6% of this money going to the music industry. According to the Ministry of Culture, independence is a key principle in the heavy subsidisation: By providing public funds, art and cultural initiatives are supposed to be promoted to flourish freely without having to defer to commercial interests3. In this respect, the system is supposed to encourage artistic freedom and pluralism. However, there are also critical voices that claim that the current system produces the opposite effect: By giving too much power to a““”” small amount of actors controlling the allocation of public funds, homogeneity rather than diversity is being promoted. Accordingly, a key role in the public subsidisation process is played by the Danish Art Council as well as the organisations such as Dansk Live (Danish Live), Dansk Musiker Forbund (The Union of Danish Musicians), ROSA (Dansk Rock Samråd/Danish Rock Council) or MXD (Music Export Denmark). Pumpehuset, being privately funded to a large degree, knows that it constitutes rather an exception in the music industry. However, there is a strong belief that its private funding provides the company with rather more than less independence. From the company’s perspective, private money and art are not opposites: “The mission for Pumpehuset is that good business and good culture can go hand in hand. This is fundamentally different from common music venues”. (Frederik Juul, Board member at Pumpehuset.)

The Artistic Strategy of Pumpehuset: Breaking with Traditions 4

4.a. The traditional approach

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igure 2 shows the traditional set-up of the value chain as well as the flow of the money for a concert. The box on top represents the artist or band that has signed a contract with the booking agency. The booking agency represents the artist and sets up the concerts for the international tours. (In the case of a national artist, there would be one intermediary less, since there would only be a national booking agency.) Examples of big, international booking agencies include Live Nation or Coda Agency. Figure 2: Exemplary Value Chain for the set-up of a Concert

Artist

Value Chain

7 Contract

Flow of Money

Booking Agency (International)

Booking Agency (National)

Booking fee

Promoter

““””

Ticket Sales

Rent

Concert Venue

Public Funds

Bar sales etc

Consumer

3 For an overview of the historical development of Denmark’s cultural policy until today, see also the compendium of the Council of Europe found under http://www.culturalpolicies.net/web/denmark.php.


This set-up can in practice of course vary considerably. In particular, the role of the promoter might be taken over by either the respective booking agency or the concert venue itself, cutting out one intermediary of the process. In very rare cases, there might be no booking agency involved in the process. However, this is usually only the case for unsigned, young bands or for non-profit concerts, such as fundraising events. It becomes clear that the concert venues itself do not play a key role in the line-up of their concerts. Historically, concert venues had their own bookers, whose job it was to spot international talents and engage them with the use of contracts. Today, the role of the booker within a concert venue is mostly reduced to bidding for deals with promoters and booking agencies, negotiating the terms of the engagements and filling up the capacity. Since concert venues use the same international booking agencies as their competitors, they usually have no possibility for strategic differentiation through their line-up. The decision whether a concert is set up in one location over another rather depends on operational considerations such as free capacity.

4.b. Pumpehuset’s Booking Strategy

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umpehuset’s artistic strategy diversifies from the traditional value chain described above. The big, international booking agencies are complemented by extensive networks of dedicated experts in different subcultures. For example, Pumpehuset seeks out the small and independent writers of online blogs as a valuable source of expert knowledge in their respective (subcultural) field. Building on this knowledge, Pumpehuset is then able to identify potential acts and can get into direct contact with the concert promoters. The key to success is therefore sustaining a wide network of experts - in other words: “Knowing how to set up contacts” (Ronnie Hansen). The motives for sharing knowledge are just as varied as the experts are dissimilar to one another. On a very professional level, monetary compensation or profit-sharing agreements may be put in place. In other instances, they might benefit from a reciprocal exchange of knowledge (e.g. insights about the working of the music industry), or benefit from being invited to concerts and events. However, many of the individuals Pumpehuset is in contact with are very dedicated to their respective subculture and see their work more as a passion than a way to make an economic profit.

4.c. Artistic differentiation The promoter of the concert is at the centre of the process: He is the one who bears the entire risk but also collects the revenues of the ticket sales. He pays a booking fee to the booking agency, rents a concert venue, and deals with the marketing and ticket sales activities. The concert venue itself generates its income from three sources: First and foremost, the bar sales. Secondly, most concert venues in Denmark receive public funds from the local government and art council. Thirdly, the promoter might pay rent for the provision of the venue.

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reater independence towards intermediaries in the booking process may entail some cost advantages for the company. A more important advantage of having alternative booking channels, however, is the implication for artistic differentiation: The line-up of Pumpehuset becomes unique on a national level. Pumpehuset can capitalise on acts that are widely successful in the international setting, but would never have come to Denmark through

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the standard processes of the big booking agencies. One example is the Neo-Folkband Death in June, a concert which was sold out in a single day. The philosophy for selecting artists is highly influenced by the lessons drawn from the fragmentation of the music industry (cf. part 3.a.): Leaving aside the sure bestsellers of the mainstream and focusing on different market niches requires that the products are rather sharply defined. More specifically, Pumpehuset is very sceptical towards hype, and never promotes an act simply because it is the “up-and-coming” star of next year. “Never say ‘This is gonna be massive’. Say ‘we like this, and this or this guy really likes this’”, could be the philosophy summed up in the words of Ronnie Hansen. Although the might not be known outside of their domain of dedicated fans, a lot of artists that Pumpehuset hosts have been around for years. This does of course not entail that newcomers are not given a chance – but the rationale for hosting them is never a bet on their breakthrough with a broader audience. Board member Frederik Juul emphasises that Pumpehuset prefers an audience of hundred people that are truly dedicated to four hundred people that lack this loyalty. Since devoted fans like these even travel internationally to see their favourite acts, they offer a very lucrative market segment to target. On these grounds, Pumpehuset believes that it can offer high-quality music while securing a profitable economic return.

amount of money. Since both partners have an equal share of the fund, both have to agree 50-50 on projects that will be financed by it. The benefits are obvious: The amount of money from the sponsor is doubled, and both partners take on an active role in making sure that the money in the fund will be spent on something which generates value for both of them. The beverage producer has thus boosted the venue’s sponsorship money but gets more valuable promotional concepts in return. Value Chain

Figure 3: The traditional sponsorship model

Flow of Money

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Sponsor

Pumpehuset

Traditional promotion 11

Spending on e.g. operational costs

Cooperation with Business partners: A novel approach 5

Figure 4: An alternative sponsorship model

5.a. Sponsorship philosophy

Value Chain

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raditionally a sponsorship consist of one company providing the concert venue with a Flow of Money certain amount of money in return for some classic marketing benefits such as having the company logo printed on promotional material. Another typical sponsorship example would be the provision of a certain amount of money per litre of beer sold by the brewery company. The money paid is usually a lump-sum that the concert venue can spend freely on its different operational costs, such as the payment of employee salaries. This is exemplified in figure 3. However, the benefits for the sponsor of this approach are rather limited: Since people today are overexposed by logos everywhere, these marketing strategies rarely make a big impact. To offer more value to the sponsoring partners, Pumpehuset developed a different approach that rather resembles a mutual partnership. Figure 4 is an example of this different type of sponsorship. The venue receives a certain amount of money from e.g. a beverage producer as a sponsorship. Instead of just adding the money to its operational budget, however, the venue transfers it to a mutual fund. The beverage producer pays the same amount in the mutual fund, and hereby actually doubles the

Sponsor

Pumpehuset

Mutual Fund New Concepts & inspirations

Equal decision-making power: Spending only in mutal agreement Aimed a novel & creative promotion (e.g. social media) Creative Collaboration

New Concepts & inspirations


To ensure credibility and impact, Royal Beer looked to recruit successful Danish bands for the cooperation. In 2010, Royal Beer cooperated with the rock band Kashmir and in 2011 with the Danish punk band Sort Sol. The key challenge for the cooperation of the different partners within Tak Rock is to fuse their individual and specific needs together for a common cause. As it can be seen in Figure 5, Tak Rock was successful in putting complementary interests together. First, for the bands Kashmir and Sort Sol, the Tak Rock campaign was an opportunity to support the growth of the Danish rock scene in general. In a sense, they could ‘give something back’ to rock music through their participation, including guiding and coaching the selected bands. Additionally, 4 http://royalbeer.tv/tak-rock/

HoReCa

Need of venues

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Need of finding new talents

Rock Talents Need of  being seen

Need of a helping hand

Need of  a good cause

Royal Beer

Challenge and stimulate Danish rock and create a breeding ground for new talent Find and fertilise the best Danish rock talents in Denmark Improve the framework for rock talents, so they would get easier access to venues and thereby crowds Donate a quarter million DKK to the talents

Music industry

The aim of Tak Rock was to:

Figure 5: The identification of needs of the parties involved

Need to learn the terms of success

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This sponsorship idea was formed for Royal Unibrew by the Danish advertising agency DDB Danmark (DBB). The idea behind this sponsorship was to build a new promotional approach that involves ‘story telling’ rather than the traditional advertising tools which are increasingly being rejected by consumers. The connection between drinking beer and listening to music has often been used in advertising campaigns. However, according to Morten Sune Jonas, Group Account Director at DDB, both the music and the beverage industries are increasingly experiencing inertia. Therefore they were both in need of a good campaign to boost their industries. DDB identified the traditional customer of Royal Beer as a middle-aged man, typically living in the province. The goal was to expand this target audience and appeal to a new, younger and more urban target group. Looking for a completely novel and creative campaign, the idea of Tak Rock was born: It would be Royal Unibrew’s chance to get deeply involved in the music business, by searching for new rock talents and giving them the chance for a breakthrough of their career.

Need of events to the customer

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n 2010 Royal Unibrew started its initiative Tak Rock (Thank you Rock), giving upcoming bands a chance to become the warm-up gig for concerts of big, successful bands4 within rock music. The competition is carried out through the Royal Unibrew website, where upcoming bands publicly upload their music. Using the cooperation with the music promoter LiveNation, Tak Rock can offer young bands the unique chance to play at different music venues in all of Denmark. According to Royal Unibrew, the purpose of Tak Rock is to support and give something back to rock music.

they could use the campaign to benefit the marketing of their own music. Secondly, since musicians’ earnings from music sales have been decreasing drastically in the last decade, the industry generally needs to think in alternative models of collaboration to create new growth. In addition, the music industry needs to identify new talents and here Tak Rock was an efficient way to find these new talents. Thirdly, young bands are frequently lacking platforms where they can showcase their talent. Here the HoReCa (Hotel/Restaurant/Cafe) customers of Royal Beers enter the picture: HoReCa can provide these platforms by letting new talents play at their venues. Since they need to create a new customer flow during the recession, they are interested in the innovative campaign. Lastly, Royal Unibrew needed a good cause, which could give the label some edge and attract a slightly younger, more modern and urban crowd. According to Michael Schiedel, Marketing director at Royal Unibrew, Royal Unibrew wants its product Royal Beer to equal rock music in the consumer’s mind.

Need to give back to rock music

5.b. Royal Unibrew’s ‘Tak Rock’ Campaign

Kashmir

In addition to this, the creative platform had to make sense for the consumers. Here it was important that the sales dimension faded into the background and that the cause came into focus. This way the consumer could participate in the campaign through what might be called ‘story building’. In this sense, the customer is not only the passive consumer, but actually becomes an active co-creator of the campaign. The campaign has proved to be a major success. In 2011 several bands from the Tak Rock


band base have played as warm-up for as big names such as Eric Clapton, Erasure, The Cult, Raveonettes, The Eagles and Pretty Maids. In March 2012, a total of 815 bands had signed up and uploaded 512 videos and 2336 songs, and 144 concerts were coming up. Furthermore, the campaign is boosting cooperation between music venues and festivals. This is done by e.g. letting the upcoming bands play at a venue and afterwards letting the best band play at a festival. DDB Danmark won the Advertising Effectiveness Award in 2011 for its Tak Rock campaign. This award focuses on the cost effectiveness for the customers. The overall idea of the way Tak Rock is set up, is that it becomes more of a partnership for the parties involved than a traditional advertisement. So instead of just exploiting the sponsored properties, where the main benefit for the sponsored subject was money, this kind of sponsorship involves a partnership that gives value to all the parties involved. In some way it can be seen as being on the borderline to a Cooperate Social Responsibility initiative. But Morten Sune Jonas underlines that not all sponsorships can be set up like this, since it has to make sense for the specific interests of all partners involved.

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Besides Pumpehuset as a venue, Royal Unibrew works together with many other venues and festivals including ‘Fredags rock i Tivoli’ (Friday Rock in Tivoli)5, Copenhell (a two day metal music festival in Copenhagen), Northside festival (a music festival in Aarhus) and the second largest music festival in Denmark, Skanderborg Festivallen. See the appendix 10.a to get more information about how well the Tak Rock campaign worked.

5.c. New Partnerships

B

oth Pumpehuset and Royal Unibrew therefore share their interest in a new type of partnership for sponsorship and promotion. A big part of the business of Pumpehuset is based on being a more conceptual provider and not just a passive music venue. Furthermore, Pumpehuset is interested in working with other partners outside the beverage industry as well. For example, the company has already cooperated with Skanderborg Festival, Spot Festival and Northside Festival. For new partnerships, Pumpehuset focuses on three parameters in the organisations: Professionalism, creativity, and innovation.

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Marketing & Promotion

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s seen in part 5, Pumpehuset strives to play a very active role in the promotion of its concerts. Marketing or concept development is therefore considered a key activity within the company, claiming most of the organisational resources. With the favourable consumer spending on culture, the company philosophy is that for any act, however big or small, it should always be possible to sell at least 500 tickets. However, this goal is not always reached, and Pumpehuset realises that there is still a big potential for pushing its marketing activities. Social media such as Facebook and different kinds of music blogs are key channels for Pumpehuset due to the low cost and possibilities for creative approaches as well as customer interaction. In some cases, Pumpehuset is able to capitalise on its relationship with NFB and use their cinemas for advertisement. This is possible if audiences of specific concerts and movies overlap, usually with productions off the mainstream. Instead of simply pushing its marketing through its own channels, however, Pumpehuset takes a more customer-driven approach: First, striving to identify the crucial channels for reaching its target audiences, and then developing strategies to use them. For example, if there is a heavy metal concert coming up, Pumpehuset would identify relevant online blogs and try to get coverage by them. If an act lacks awareness and a loyal customer base, Pumpehuset tries to attract an audience by developing a “story” around the artist. This requires some creativity, but has proven a huge success in the past. To illustrate, consider the case of Justin Townes Earle, a US artist with a unique music style influenced by Blues, Rock, Country and other, traditional American music styles. While award-winning in the US, he was lacking general awareness in Denmark. Justin Townes Early started using drugs when he was 12, and it took him about thirteen rehabs to overcome his addictions. Pumpehuset, however, managed to turn this history of drug abuses into a new image by promoting him as the “New Jonny Cash”. This got the attention of the media; The newspaper Politiken became interested in the story and ran articles on his upcoming gig. The concert eventually became a big success and was completely sold out due to the storytelling that Pumpehuset managed to create around Justin Townes Earle. Looking back, Ronnie Hansen says with a certain pride that this campaign was “the best example of fulfilling our job”. The approach towards promotion is rather individualised and could be compared to a “white label” product strategy. This means that the individual concert is promoted instead of Pumpehuset itself. For example, Pumpehuset has refrained from printing the typical large-scale posters that show the upcoming concert line-up for a particular venue. Furthermore, it is a company norm of employees to personalise online posts by signing with names instead of using only the “Pumpehuset” signature. Consequently, there is consistency in the “expert recommendations” despite a variety of music styles and opinions. “It is the events that defines us, therefore we don’t go out and promote Pumpehuset”, explains board member Frederik Juul.

5 The music on fridays in the Copenhagen amusement park Tivoli is limited to the summertime.

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7

International engagement

P

umpehuset often hosts many acts from other Scandinavian countries, such as the Norwegian band Big Bang. The customers, however, are almost exclusively from Denmark. Networks to the greater Scandinavian area are slowly being built up, but there is still a great deal of unrealised potential. In this respect, Malmö has become the key target market for several reasons: First, the geographic proximity and the good public transportation offer great mobility to quickly travel between the two cities. Secondly, Malmö is generally too small to host bigger musical acts itself. Thirdly, Pumpehuset can build on Copenhagen’s established reputation for cheaper (and better) night life. So far, some promotional initiatives have been developed that have specifically targeted Swedish customers from Malmö, such as the offer to exchange the train ticket for a free drink at Pumpehuset. However, the company believes that a lot more could be done in this direction.

Company Organisation and Resources 8

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8.a Organizational Structure

F

rom a legal perspective, Pumpehuset consists of two separate organisations: First, the company Pumpehuset A/S itself, and secondly, a public fund set up by the City of Copenhagen. The fund is governed by a board consisting of five members, all with different relations to the cultural industry. The aim of the fund is to provide financing for Pumpehuset’s artistic engagement. On the other hand, the joint-stock company Pumpehuset A/S is owned in equal shares by NF and FUS (cf. part 1). NF is represented by the CEO of Nordisk film Live, Frederik Juul and the marketing director at Nordisk Film Biografer Jacob Elkjær-Hansen. FUS consists of Ronnie Hansen and Kristoffer Bramsen. As the CEO of Pumpehuset, Ronnie Hansen takes care of the daily running of the business, while Kristoffer Bramsen is in charge of the artistic programme. The representatives from NF have mostly an advisory role within their business area and are involved in decisions concerning the overarching vision for Pumpehuset.

8.b. Nordisk Film and Egmont While this is a good way to deal with the cultural diversity of its line-up, the flip-side of the coin is the lack of the established brand Pumpehuset as a trusted venue. From an international perspective, there is a striking absence of customer loyalty to a specific venue within Copenhagen compared to other cultural hubs of Europe, such as Berlin or London. A future goal is therefore to establish a brand identity for Pumpehuset and build up a loyal audience of customers sharing a certain curiosity about novel acts.

N

ordisk Film (NF) was founded in 1905 by Ole Olsen and is the oldest film company in the world. NF holds the Nordic distribution rights to Sony PlayStation and owns cinemas in Denmark and Norway. NF also supplies production and post-production facilities to a number of NF companies. In 2010, NF generated a total revenue of DKK 2,9 billion. The company employs 1,625 full-time employees in Denmark, Sweden, Norway, and Finland.

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NF is part of the Egmont group, one of Scandinavia’s leading media companies. Its business is the development, production, and distribution of creative content in movies and games. It is active in many industries within entertainment as well as education, such as comics, school books, magazines, films, theatres and TV, as well as games and gaming consoles. NF operates mostly independently, but the board of Egmont has a say in important business decisions such as larger investments.

Nordisk Film Biografer (NFB) and Nordisk Film Live (NF Live) are both subsidiaries of NF. NFB is the largest cinema chain in Denmark with six million guests every year. NFB’s largest cinema is Imperial, located in the centre of Copenhagen. With 1,102 seats and state-of-the-art technology, Imperial is the largest and best equipped cinema in Scandinavia. All NFB cinemas have recently been renovated to ensure not only a high viewing quality, but also to provide the flexibility for hosting alternative experiences such as sporting events, concerts, and operas. Figure 6: An overviewof the connection between Egmont and Pumpehuset

Egmont

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Nordisk Film

8.c Functional organization & Human Resources

Nordisk Film

Nordisk Film

Live

Biografer

Owns 50 % of the company Pumpehuset A/S

CEO

Frederik Juul

-Board Member at Pumpehuset

finance big-scale theatre setups, such as large commercial theatre concerts and other live entertainment. Throughout its existence, NF has been known for providing entertainment with a broad appeal. The same is true for the new business NF Live. Pumpehuset board member Frederik Juul, who is also CEO of NF Live, explains that the goal is to reach an audience that does not necessarily attend the theatre. Since this is a new business concept, it is impossible to assess whether it will work out as planned. Industry experts such as Stig Jarl, associate professor in the Department of Art and Cultural Studies at the University of Copenhagen, believe that the audience will appreciate a broader offering within the theatre industry. He points out the opportunities for cross-selling, such as selling cinema and theatre experiences jointly together. This could be an opportunity to attract new audiences that traditionally have only been interest in either theatre or cinema. At the same time, there is a certain risk of an oversupply of entertaining performing arts in Copenhagen. Adding 100.000 or 200.000 additional tickets per season will certainly stir up the competitive landscape, since it is uncertain whether the demand will grow accordingly. Being backed up by the parent company NF, which not only produces television and film but also owns a large cinema chain, could turn out to be a great asset for the competitive situation of NF Live. As Stig Jarl points out, the discussion surrounding the prospects of this new business model is in many ways comparable to the debate on the new production of opera films around twenty years ago. At that time, there was a fear by many theatres that it would result in a decline of people attending the opera. In fact, however, the effect was the opposite: By having it made more accessible, even more people became interested in the opera and went to see their favourite opera movies live on stage.

Pumpehuset benefits from its relationship with NF by capitalising on its organisational resources for many administrative and operational tasks. This gives Pumpehuset the opportunity to function well with only a small team of employees. Furthermore, the operational costs of Pumpehuset are kept quite low. The individuals employed at Pumpehuset are the following:

Marketing director Jabok ElkjĂŚr-Hansen -Board Member at Pumpehuset

Pumpehuset A/S In February, NF announced the launch of its new business NF Live. NF Live business concentrates on producing live entertainment for a broad audience. The first project of NF Live is the theatre concert with music from the Beatles called Hey Jude. NF Live will both produce and

Chief Executive Officer (full-time) Head of the creative area (full-time) Communication employee (full-time) Production manager (part-time) Facility manager (full-time) Light manager (Trainee) Event coordinator (Trainee) Part-time assistant to the CEO (part-time)

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8.d Facilities

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umphuset consist of a two-floor building. The main floor ‘Crane Hall’ has a capacity of 600 people standing. The ground floor ‘Black Hall’ has a capacity of 350 people standing. If chairs are set up, the capacities would approximately be reduced to a third, or around 200 and 120 seats. In the Crane Hall it is possible to set up chairs in ‘theatre style’. The total capacity of the house is 600 people. For details, please refer to appendix 10.b.

8.e Strategic and Financial Planning

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lanning the programme and the negotiations that follow requires substantial resources. Many concerns need to be taken into consideration: Which are the most profitable times? What are the capacities? Are there any competitive acts at the same time? Dates and acts are often being shifted back and forth but despite this imperative flexibility of approach, Pumpehuset tries to promote a very strategic and detailed planning. Forecasting is done for three months in advance and the annual budget is specified for each year. Pumpehuset receives economic support from the Art Council of the Danish State and from the City of Copenhagen. This economic support has been necessary for the start-up of Pumpehuset, but Pumpehuset’s goal is to achieve financial independence at a still unspecified point in the future. The detailed budget of Pumpehuset is listed in appendix 10.c. Pumpehuset has a very detailed calendar plan with an overview of potential acts and other activities for the house. The low season for concerts is from the 15th of May to the 15th of August, mainly because of the music festivals, and again from the 15th of December to the 1st of February. During these times, Pumpehuset is always open for ideas regarding new types of events to fill its idle capacity. Furthermore, Pumpehuset is mostly occupied in the evening and night hours, and still sees potential for new daytime initiatives that would not interfere with the established night time program. Appendix 10.d. shows an exemplary calendar of Pumehuset.

Building a vision for Pumpehuset 9

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or the owners of Pumpehuset, their vision is a company that resembles conceptually more a platform of new opportunities – their core competences being concept development and the ability to work with a broad range of cooperative partners across a variety of products. With a taste for the unusual and different, Pumpehuset is the house where urban artists and art-lovers come together in low and high season alike. In a future scenario, Pumpehuset imagines a business that would have expanded significantly. It would comprise not one, but several music venues and other cultural bars or venues spread throughout Copenhagen, other areas of Denmark, or even Scandinavia. A bigger audience of diverse people would have been attracted, sharing a curious attitude about art and being open to Pumpehuset’s “experimental vibe”. Additionally, Pumpehuset would have enlarged its business model to cover more parts of the value chain to be engaged in both booking as well as promotional activities. By keeping a sharp eye on the profitability, Pumpehuset would safeguard sustainability and independence of its business. Although the business is dynamically transformed over time, it remains firmly founded on the company values: Business acumen, Integrity, and Rock’n’Roll. In March 2012, the owners of Pumpehuset seized the opportunity for a completely new perspective on their business. They turned to a selected group of students from the humanities and social sciences to get fresh inspiration on how to achieve their vision, build new strategies and re-assess their business model. They were curious of whether the students would challenge their established assumptions and taken-for-granted perspectives altogether by thinking “out of the box”! Pumpehuset is looking for a suitable team that understands the complexities of a business where creative art and rational business logic meet, a team that is able to fuse the narrative of Pumpehuset’s past and future together into a coherent one, an identity that can be communicated internally and externally. Can they find a good way of expanding the business to attract other nationalities and find other areas in which to engage? Can they come up with ideas to fill up the house during the daytime and low season? And do they have ideas for new partnerships that Pumpehuset would gain from in various aspects?

At this point, it is up to you – will you accept the challenge?

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Appendix

10.a The DDB case movie about the Tak Rock campaign Go to YouTube: “Royal Rock – Case film” (4:03 min.) NB. the video is in Danish, but you can find an English text version in the electronic appendix at http://case.suitableforbusiness.dk

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10.c Budget -The budget can be found at: http://case.suitableforbusiness.dk

10.b Floor plans

10.d An example of the calendar

Additional floor plans can be found in the electronic appendix at: http://case.suitableforbusiness.dk

Floor plan – Crane Hall:

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Floor Plan – Black Hall:


An example of the calendar

Download the case, appendix, pictures, logos and extra information at: http://case.suitableforbusiness.dk

Suitable for Business case competition 2012 Case writers: Valentina Jill Alice Cullmann Cecilie Bisgaard-Nøhr

Thank you: Pumpehuset and especially Ronnie Hansen and Frederik Juul DDB Danmark and especially Morten Simon Jonas Royal Unibrew and especially Michael Schiedel The Suitable for Business Crew and especially Frederikke Lange for layout and Christine Ebert for proof reading

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Suitable for Business Case 2012 - Pumpehuset