CHAPTER1 a Look at Wants and Needs

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CHAPTER1 A Look at Wants and Needs

Reading Skills: Going Into Business

DIRECTIONS: The article below describes events relating to the first year in the business life of a recording studio. Read the article, then answer the questions that follow. Bill Tyrell spent a decade touring the world as a keyboard player in various bands, covering musical styles as diverse as techno, R&B, country, and jazz. When he grew tired of the road, he decided to use his eclectic musical experience and his skill with recording technology to open up a recording studio in his hometown of Austin, Tex.

There were already several studios in town, but all of them used older, outdated equipment to record. Tyrell’s idea was to build the first completely digital studio in Austin. The start-up costs of the new technology would be more, but the maintenance would be less expensive. If he got enough business, he could afford to charge 20 percent less than the other studios and still make a profit.

Tyrell found a centrally located building, with good wiring that could handle his power needs. He took out a loan to pay for the equipment he needed: a state-of-the-art computer, a mixing board, a DAT (digital audiotape machine), 20 different microphones, miles of cable, a comfortable sofa, and an industrial-sized coffee machine. When he finally opened the studio, a well-known local rapper, MC Overdrive, booked the place for two weeks to cut a demo.

Business trickled in for the next eight months. It turned out that many local bands were either loyal to the other studios or just unsure about keeping up with the technology. Tyrell found out that it was a challenge to stay out of debt. Small, hidden costs were growing and threatening his enterprise. Then he got a call from MC Overdrive, who recently signed a major-label deal, due in part to the quality of the demo that Tyrell recorded for him. MC wanted to return to the studio to record his debut album. The record company liked the idea, and Tyrell was offered five times his usual fee for the use of his facilities for two months. Needless to say, he accepted the offer.

1. Does Tyrell’s studio provide a good or a service?

2. What did Tyrell’s studio have that his competition didn’t?

3. If Tyrell’s normal fee is $200 per day, what do the other studios charge?

4. What are five resources that Tyrell used in creating his studio?

5. If Tyrell’s normal fee is $200 per day and his operating costs are $100 per day, how much profit will he make per day by recording MC Overdrive’s debut album?