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 organisations 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

Spin-Off Merchandising 3. + (Brand Awareness) + + 4. Profits - + + Superclub Going Visiting Rate Population 1. Per Club + - 5. - - 7. + + DJ Fees New Bar + Openings 2. + New Club Average Club Openings Door Price + 6.

<No.of Superclubs> <Av. Entrance Fee <Av. Number of Effect> Av. Growth Fractional Loss Rate due Merchandise Units Sold Factor to Average Entrance Fee Annually per Club> Merchandising Baseline Time to Fee Population Entrance Fee Population Advertising Effect as <Annual Income <Annual Club Adjustment Going to Going to Other Function of Sales From Club> Overhead> Superclubs Clubs & Bars New Additions Superclubs' Loss of Average Growth Factor Allegiance Entrance Fee Club Profitability Adjustment to Av. Word of Mouth Fractional Loss Rate due Index Entrance Fee Growth Factor <Population Going to Positive Growth Av. Entrance Fee to Falling Attendance Entrance Fee Fee Increment Superclubs> Indicator Effect Loss of Appeal Adjustment Factor Stoppage Point Multiplier Required Fee Adjustment Persuasion Time <Average to Maintain Profitability Initial Smoothed Concept Population Going to Entrance Fee> Value <Visiting Ratio> Required Desirability Superclub Trend Profitability Index <Attempted Visits Average per Superclub> Eradication of Visiting Ratio 'Need' Concept Inital Trend Value Reduction due <Annual No.Visits (1996) Trend Period Product Lifespan to Increased Possible per Superclub> Alternatives Time to Full Affect entrance fee % of On-Licensed Premises with SHCs Population going No.On Licensed <Time> Premises to Superclubs Cash balance per club <Population Going to Superclubs> Overhead Costs per Person <No.of Superclubs> per Visit (at full capacity) Number of <Average Attempted Visits per Entrance Fee> <Annual No.Visits Superclub Possible per Superclub> Av. No.of Visits per Superclubs in Annual Club Year per Clubber Annual Income Actual Visits per Overhead Baseline DJ Fee From Club Club per Clubber existence Av. Club Average Cash Annual DJ Fee (given Annual No.Visits Capacity Balance per Club full capacity) Possible per Superclub Costs and Total Income Overheads Nights Open a Year Max Fee per Competition Effect Clubber <Annual No.Visits Income From <Av. No.of Visits per Av. Club Possible per Superclub> Merchandising Merchandise Year per Clubber> Creation Time R&D/Advertising Maximum No.Clubs Average £ Profit per Costs % Potential Market <Merchandise Affecting Competition Unit Sold <Population Going to Purchasing Merchandise <No.of R&D/Advertising Superclub Shortfall Given Investment Superclubs> Av. Number of Superclubs> Costs> Established Venue Superclub Merchandise Units Sold Additions Requirement Annually per Club % Cash Balance Invested in Merchandise to Units Sold per Merchandise Market Delay Time % Current Market Person No.of Purchasing Club Superclubs <Club Profitability New Superclubs Club Closures Merchandise Merchandise Index> Customer Base No. Fractional Closure Rate Due to Loss of Profitability

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

Superclub population rate of new additions <No.of Superclubs> <Av. Number of Av. Growth Merchandise Units Sold Factor Annually per Club> Merchandising Population Advertising Effect as Going to Function of Sales Superclubs New Additions Growth Factor Word of Mouth <Population Going to Av. Entrance Fee Growth Factor Superclubs> Positive Growth Effect Indicator Loss of Appeal Multiplier Persuasion Time <Average Initial Smoothed Entrance Fee> Concept Population Going to Value Superclub Trend Desirability Eradication of Reduction due 'Need' Concept Inital Trend Value to Increased (1996) Alternatives Trend Period Product Lifespan Time to Full Affect % of On-Licensed Premises with SHCs No.On Licensed Premises <Time>

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

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 0 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’)