Question

In: Operations Management

Musicians are paid royalties for airplay of their songs. The amount can vary, but royalties are...

Musicians are paid royalties for airplay of their songs. The amount can vary, but royalties are paid on an annual basis. Assume the royalty per song is .001 cents.

Pick your favorite music artist. Your artist has a fixed management fee they must pay their agent per year. (Use a search engine to find out their annual income). Assume 15% of their total income is paid as a management fee. Create a simple goal seek analysis using Excel or Google Sheets (both have the functionality). Do an analysis for the following scenarios:

1. How many times must your artist have songs played to cover the management fee?

2. How many times must your artist have songs played to earn 5% of their annual income?

Submit your spreadsheet analysis in Microsoft Excel format to Canvas. Be sure to mention your artist and their annual income. Once you've completed this practice exercise, you may move on to the next item in the module.

The artist makes $10,000,000 per year

Solutions

Expert Solution

1.

Application of goal-seek function (Data --> What-if analysis --> Goal-seek)

Result:

Annual Income $10,000,000
Royalty per song $0.00001
No. of times played 150,000,000,000
Management fees (required) $1,500,000
Income to cover the management fees only $1,500,000

2.

Results:

Annual Income $10,000,000
Royalty per song $0.00001
No. of times played 50,000,000,000
5% of the income (required) $500,000
Income to cover this 5% $500,000

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