4/12/2006

Who Says A Name Is Just A Name?

A blog titled What's in a Good Name? on Daniel Gross's blog caught my interest. The entertainment company CKX has recently purchased, for $50 million, an 80 percent stake in Muhammad Ali's name. The company already rakes in millions for controlling the rights to such names as Elvis Presley, "American Idol" and David Beckham. In the five years prior to purchasing the rights to Elvis Presley, Elvis Presley Enterprises had brought in revenues of $40 million per year. So next time someone asks you what's really in a name, the answer could be millions.

2 comments:

Tom said...

Isn't it crazy how a name can become such a monopoly? It makes me think how someone's name can get to be worth so much. I think it is like a snowball effect, once someone thinks that it is worth something then everyone else tags along.

Dr. Tufte said...

What Tom is outlining is called a network externality, and he may very well be right.

I also think this neatly illustrates two points: 1) this is a discounted cash flow problem involving the tradeoff of cash now for cash flow later, 2) this shows that it is what is traded not what is produced that creates value.