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The blurred lines of Livestrong - the spin bike sham

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The blurred lines of Livestrong - the spin bike sham

21 Dec 2010 13:27

This caught my eye this morning along with the first comment on the Wired website. Now excuse my maths but I think the basic principle of my argument still applies....


http://www.wired.com/gadgetlab/2010/12/livestrong-stationary-bike-wins-tour-de-bedroom/

Great review of the new @livestrongfit spin bike in @wired !! http://tinyurl.com/34p6v2x - Lance Armstrong Twitter feed.
_

The article reads:

The Livestrong Limited Edition Indoor Cycle differs from all other stationary bikes in just one way: It looks totally bad-***.

The bike, which comes in the trademark yellow-and-black colorway, will cost $1,700, $1,000 of which goes to Livestrong, Lance Armstrong’s cancer charity. Just 500 will be made, and there are several Lance and cancer-themed design flourishes: the number 28 on the fork represents the “28 million people living with cancer,” and the “seven stars on the seat post represent Armstrong’s record-breaking seven Tour de France wins.”

- What interested me most was that $1000 of the $1700 price tag goes to Livestrong.

The first comment below the article says:

-“Stepping back - its a cool product. It's a cooler gesture to be donating more than half the cost to cancer research. It's even a fair price for such a good looking piece of equipment. - I'll lobby my health club to consider a few of these and do the right thing”

On the surface $1000 out of $1700 does seem very good. To the casual observer that’s $1000 straight from the purchase for “cancer research”. If I was going to buy a spin bike I might as well buy this one because well over “half” is going to charity and its a good cause. The fact that it has the “28” logo down the side of the bike means it’s a representation of “cancer suffers” - again reasserting the theme its for "cancer research".

But this is where the Livestrong lines become very blurred. The $1000 is going to Livestrong.com or Livestorng.org? How can anyone really tell if the $1000 if for the "for profit" or for the "non-profit" entity? I would assume the .org enity?

Now if true then of that $1000 we know that a rounded 80% goes into "Programs" with the remaining 19% into “Admin/Fundraising”. So now we're down to $800 of the $1000. If we look that total revenue or donations/grants for “Programs” in 2009 was $31,000,000 (rounded). Travel was $2,000,000 and salaries were $6,000,000 and legal bills were a staggering $9,000,000. So if I subtract those figures away from the $37,000,000 I’m left with $14million or 37% of the “Program Fees”.

Therefore for the $1000 Livestrong donation became $800 for Programs only and 37% of this is for “awareness” program which results in $296. The $296 could go anywhere.... We’ll never know if that goes to salaries or bonus awards or to awareness programs but not cancer reseach as the first poster lamely suggests. (Although I think the marketing idea was to create the that very impression)

Now it’s a smart way of marketing a $1700 bike. You think it’s being rolled into the charity but in reality the it’s just funding more of Livestrong expenses. My assumption would be the $700 component goes to Livestrong.com for the manufacturing and distribution of the bike. Having Lance send a twitter about it adds to the feel that’s its “all for cancer”.

Cheap and nasty marketing if you ask me.

And for the life of me when they say $1000 goes to Livestrong I do hope at least this is the "non profit" entity. A simple Google search means you can only buy it from the "http://www.livestrongfitness.com/product/ls28ic/" - Livestrong Fitness.com site which is obviously for profit with the byline: "Join the fight
With each purchase, $1,000 will be donated to LIVESTRONG® to improve the lives of people affected by cancer
" - its the (R) which worries me the most.
User avatar thehog
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21 Dec 2010 13:35

i prefer this one for msrp $1395 US

Image

all kidding aside, it is certainly murky but i'm not sure we need a brand new thread on this.
"In great attempts it is even glorious to fail" -V Lombardi
User avatar lean,mean,&green
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21 Dec 2010 14:54

I was *this* close to setting up exactly such a deal, just a different bike-related product, and offer Lance a deal he'd be crazy not to sign. Unless he loved cancer.
Where I would have gone wrong : trusting the money would actually go to the fight against cancer. Also, to not make a profit on the deal, and treat it only as charity and getting "free" publicity.
The product itself is now still unreleased, yet many stages of development further. It would have been a stunning product even without the LS colors and hype, but will be way better still. Not my design though, I just help out behind the scenes.
Did I (and my associates) ever get off lucky there...what a way to taint your image to start up that way. Sure we'd have made money on the tail of the deal, but still, dealing with Lance... I got great insights on this forum, thanks to all for that.
Cloxxki
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21 Dec 2010 15:05

The LAF may not be spending the money they recieve in the best manner... but I think the idea that the money would go to the ".com" instead of the ".org" is a bit conspiracy theory-ish.

The LAF owns all rights to the livestrong name. They recieved payment from demand media to let them use the 'livestrong.com' website... but demand does NOT own the livestrong name. They can only use "livestrong.com".

They charity may not be well run... but 1000 dollars is going to the charity.
kurtinsc
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21 Dec 2010 15:23

Someone please clear this up... I did a whois lookup and see that the owner of livestrong.com is kept private. Who owns it, Armstrong or the LAF?

Another question: Is "Livestrong" a registered for-profit corporation? Anything to back that notion up? Please forgive me for not being informed on this. It's been a busy week.

-----------

Domain name: livestrong.com

Registrant Contact:
Whois Privacy Protection Service, Inc.
Whois Agent ()

Fax:
PMB 368, 14150 NE 20th St - F1
C/O livestrong.com
Bellevue, WA 98007
US

Administrative Contact:
Whois Privacy Protection Service, Inc.
Whois Agent (kspqmcqw@whoisprivacyprotect.com)
+1.4252740657
Fax: +1.4259744730
PMB 368, 14150 NE 20th St - F1
C/O livestrong.com
Bellevue, WA 98007
US

Technical Contact:
Whois Privacy Protection Service, Inc.
Whois Agent (kspqmcqw@whoisprivacyprotect.com)
+1.4252740657
Fax: +1.4259744730
PMB 368, 14150 NE 20th St - F1
C/O livestrong.com
Bellevue, WA 98007
US

Status: Locked

Name Servers:
aus1.akam.net
eur2.akam.net
eur4.akam.net
ns1-242.akam.net
ns1-35.akam.net
use4.akam.net
usw1.akam.net
usw5.akam.net

Creation date: 12 Jul 2002 17:00:40
Expiration date: 12 Jul 2013 17:00:00
User avatar BotanyBay
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21 Dec 2010 15:27

thehog wrote:The first comment below the article says:

-“Stepping back - its a cool product. It's a cooler gesture to be donating more than half the cost to cancer research. It's even a fair price for such a good looking piece of equipment. - I'll lobby my health club to consider a few of these and do the right thing”


And what a brilliant first comment it is! Almost as if written by the PR firm that succeeded in getting Wired to write the blurb in the first place. And notice the suggestive selling that was cleverly woven into the item.
User avatar BotanyBay
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Not good bikes...

21 Dec 2010 15:30

I've been a Spin instructor for almost 11 years. I've also been the bike maintenance guy at one of the clubs where I work, so I've seen first hand how the bike are built and engineered, what bikes last, how well they work, what the service issues are and how well they can be adjusted to match a rider's real-bike position.

For the money the Lemond is tough to beat. On the other hand the Lance bike are, to use the technical term, CRAP! :(

I suspect that the Uniballer only got into this market to spite Greg Lemond and that the Lance bikes are simply an existing bike rebranded in cancer-killing-yellow. :mad:
[color="DarkGreen"]"There are going to be some days where the rider got lazy and did not bother to contaminate their penis in time."

Dave Stoller: [I]"Everybody cheats. I just didn't know."
[/color][/I]

[color="DarkGreen"]“If you repeat a lie often enough, it becomes the truth. ” ― Joseph Goebbels[/color]
User avatar Fausto's Schnauzer
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21 Dec 2010 17:07

BotanyBay wrote:Someone please clear this up... I did a whois lookup and see that the owner of livestrong.com is kept private. Who owns it, Armstrong or the LAF?

Another question: Is "Livestrong" a registered for-profit corporation? Anything to back that notion up? Please forgive me for not being informed on this. It's been a busy week.


Livestrong.com is owned by demand media. They own a bunch of other websites like ehow.com and cracked.com.

In the deal to buy the rights to use the livestrong.com name, Demand gave the LAF and Lance each "significant" ownership stakes... Lance for providing content and advertising and the LAF to use the name (which they own the rights to). Nobody knows what "significant" is exactly or even if Lance's "significant" stake and the LAF's "significant" stake are equal.

Livestrong is a brand owned by the LAF. While Demand owns the domain livestrong.com and the right to reference that domain, they do not have the ability to use the brand on any products... at least not without putting the ".com" on the end of it.
kurtinsc
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21 Dec 2010 17:17

kurtinsc wrote:Livestrong.com is owned by demand media. They own a bunch of other websites like ehow.com and cracked.com.

In the deal to buy the rights to use the livestrong.com name, Demand gave the LAF and Lance each "significant" ownership stakes... Lance for providing content and advertising and the LAF to use the name (which they own the rights to). Nobody knows what "significant" is exactly or even if Lance's "significant" stake and the LAF's "significant" stake are equal.

Livestrong is a brand owned by the LAF. While Demand owns the domain livestrong.com and the right to reference that domain, they do not have the ability to use the brand on any products... at least not without putting the ".com" on the end of it.


Thanks. Sounds much like what Triad Digital Marketing does with Walmart.com (and many other big-traffic sites). They build and maintain the site, force vendors such as P&G and Johnson Wax to pay huge premiums to "be" on the site, and then hand-over huge checks to WalMart each month. They keep a little bit for themselves, which is actually a HUGE figure considering how much traffic Walmart.com gets. And most people assume there must be some web team sitting in Bentonville AR tooling around with the site each day. Nope. Walmart just tells them what they need done. The advertisers that sell product at Walmart not only pay for Triad and the site itself, but Walmart gets a huge revenue check each month.
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21 Dec 2010 17:30

Fausto's Schnauzer wrote:I've been a Spin instructor for almost 11 years. I've also been the bike maintenance guy at one of the clubs where I work, so I've seen first hand how the bike are built and engineered, what bikes last, how well they work, what the service issues are and how well they can be adjusted to match a rider's real-bike position.

For the money the Lemond is tough to beat. On the other hand the Lance bike are, to use the technical term, CRAP! :(

I suspect that the Uniballer only got into this market to spite Greg Lemond and that the Lance bikes are simply an existing bike rebranded in cancer-killing-yellow. :mad:


Correct on both counts, the line is just re-branded crap that was rushed out to spite Lemond. No wonder they have had to recall some of the line

http://www.newsomelaw.com/blog/2010/01/26/lance-armstrong-livestrong-fitness-equipment-launches-safety-recall
User avatar Race Radio
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21 Dec 2010 17:43

Write the author at wired@mistercharlie.co.uk
User avatar BotanyBay
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21 Dec 2010 17:51

lean,mean,&green wrote:i prefer this one for msrp $1395 US

Image

all kidding aside, it is certainly murky but i'm not sure we need a brand new thread on this.



Even after the donation to the LAF, I still think Lance will make more money off his trainers than Greg makes off his. Disappointment Greg:(

Greg had to sue RevMaster for crap bikes BTW:

"Life Fitness parent Brunswick Corp. struck first, recently filing a civil suit in Illinois seeking damages of more than $3.9 million from LeMond Fitness. The damages would be compensation for complaints it says it has received over alleged RevMaster Pro indoor cycles that aren’t functioning properly. These quality issues, according to Life Fitness, forced the company to terminate its distribution agreement early with LeMond Fitness.

Instead of sitting idly by waiting for this lawsuit to play out, LeMond Fitness went on the offensive, strongly denying these allegations with a lawsuit in Federal Court, seeking more than $1 million from Life Fitness as a result of the early termination."

http://www.bicycleretailer.com/news/newsDetail/2821.html
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21 Dec 2010 18:05

Polish wrote:Even after the donation to the LAF...


Since the article states that the proceeds go to "Livestrong" (not the LAF), you know as well as I that Mr Armstrong is under no legal obligation to pass those proceeds along to the LAF. He just might choose to line his own pockets.

Livestrong is an (admittedly) brilliant case of using brand confusion to leverage the supposedly altruistic behavior of one organization to benefit another, for-profit venture.
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21 Dec 2010 18:07

kurtinsc wrote:Livestrong.com is owned by demand media. They own a bunch of other websites like ehow.com and cracked.com.

In the deal to buy the rights to use the livestrong.com name, Demand gave the LAF and Lance each "significant" ownership stakes... Lance for providing content and advertising and the LAF to use the name (which they own the rights to). [color="Blue"]Nobody knows what "significant" is exactly or even if Lance's "significant" stake and the LAF's "significant" stake are equal.[/color]
Livestrong is a brand owned by the LAF. While Demand owns the domain livestrong.com and the right to reference that domain, they do not have the ability to use the brand on any products... at least not without putting the ".com" on the end of it.


Hold on ...... If as you say Demand own Livestrong.com why would they need to "buy the rights"?

To the Blue - yes we do, it was part of S-1 sent to the SEC - here it is.
There was a warrant of 2,500,00 common stock issued in the deal at $6.
The LAF gets 50% of 1,250,000 common stock.
Armstrong gets 42.5% of 1,062,500 common stock.
LA's management company C.S.E. gets 7.5% of 187,500.
User avatar Dr. Maserati
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21 Dec 2010 18:10

Dr. Maserati wrote:Hold on ...... If as you say Demand own Livestrong.com why would they need to "buy the rights"?

To the Blue - yes we do, it was part of S-1 sent to the SEC - here it is.
There was a warrant of 2,500,00 common stock issued in the deal at $6.
The LAF gets 50% of 1,250,000 common stock.
Armstrong gets 42.5% of 1,062,500 common stock.
LA's management company C.S.E. gets 7.5% of 187,500.


And Armstrong gets $1,000,000 per year.

This has been explained to Kurt multiple times but he still writes "We do not know"
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21 Dec 2010 18:15

BotanyBay wrote:Since the article states that the proceeds go to "Livestrong" (not the LAF), you know as well as I that Mr Armstrong is under no legal obligation to pass those proceeds along to the LAF. He just might choose to line his own pockets.

Livestrong is an (admittedly) brilliant case of using brand confusion to leverage the supposedly altruistic behavior of one organization to benefit another, for-profit venture.


Yes, Lance will line his pockets more than Greg.
Even after any real or imaginary or brilliant donations to charity.

Who is manufacturing Greg's current windtrainers btw?
Brave people. Hope they have good lawyers lol.
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21 Dec 2010 18:18

Dr. Maserati wrote:Hold on ...... If as you say Demand own Livestrong.com why would they need to "buy the rights"?

To the Blue - yes we do, it was part of S-1 sent to the SEC - here it is.
There was a warrant of 2,500,00 common stock issued in the deal at $6.
The LAF gets 50% of 1,250,000 common stock.
Armstrong gets 42.5% of 1,062,500 common stock.
LA's management company C.S.E. gets 7.5% of 187,500.


Owning the .com domain name is different than "Owning the name" (as in the trademark "Livestrong"). Lance and the LAF own the latter. They just give DemandMedia permission to register the domain name. Anyone call tell a domain registrar (such a Godaddy) that they "own" the name. It's not like they check.

Demand Media probably concocted the idea of doing the .com name and leveraging the brand equity and name recognition of the LAF (.org) and harvesting dollars out of the crop. There are several companies out there that identify opportunities such as this and then present fully-vetted, executional plans to people like Armstrong. All he has to do is say "do it" and he starts collecting checks. They do all the rest. They get a cut of the proceeds for having found the opportunity and doing the legwork. Find a few other opportunities like the Livestrong one, and you're making millions.
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21 Dec 2010 18:29

Fausto's Schnauzer wrote:I've been a Spin instructor for almost 11 years. I've also been the bike maintenance guy at one of the clubs where I work, so I've seen first hand how the bike are built and engineered, what bikes last, how well they work, what the service issues are and how well they can be adjusted to match a rider's real-bike position.

For the money the Lemond is tough to beat. On the other hand the Lance bike are, to use the technical term, CRAP! :(

I suspect that the Uniballer only got into this market to spite Greg Lemond and that the Lance bikes are simply an existing bike rebranded in cancer-killing-yellow. :mad:


2 ex racers I know have opened spin studios in CA and IL..they bought all the equipment together and opened with 5 weeks of one another. Neither uses Lemond or Armstrong brand anything. Also the tech rep from the company said that 90% of people in spin classes do not like the aggresive race bike position. A funny thing happened when the truck arrived in CA..The bikes and additional equipment was off loaded and was unpacked..part of the way..the brand of the bikes, and graphics and paint sceme were totally wrong. The rep appologized..he said it was no big deal to get the right bikes and that his company makes bikes for 5 major spin bike sellers. They look and ride like the examples shown here. Also a major hotel chain has all there equipment branded for them and it looks identical. I would love to see some of the crap you see fail on spin bikes often way under built.
fatandfast
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21 Dec 2010 18:35

fatandfast wrote:2 ex racers I know have opened spin studios in CA and IL..they bought all the equipment together and opened with 5 weeks of one another. Neither uses Lemond or Armstrong brand anything. Also the tech rep from the company said that 90% of people in spin classes do not like the aggresive race bike position. A funny thing happened when the truck arrived in CA..The bikes and additional equipment was off loaded and was unpacked..part of the way..the brand of the bikes, and graphics and paint sceme were totally wrong. The rep appologized..he said it was no big deal to get the right bikes and that his company makes bikes for 5 major spin bike sellers. They look and ride like the examples shown here. Also a major hotel chain has all there equipment branded for them and it looks identical. I would love to see some of the crap you see fail on spin bikes often way under built.


Wait'll people find out that almost any brand of shampoo they can think of is manufactured at a single facility in Los Angeles. Everything else is just "marketing" and spin (no pun intended).
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21 Dec 2010 18:46

BotanyBay wrote:Wait'll people find out that almost any brand of shampoo they can think of is manufactured at a single facility in Los Angeles. Everything else is just "marketing" and spin (no pun intended).


worse yet wait til they find out that the european formula was mixed by a guy named Juan who moved to LA from TJ.
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