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Economics of Culture

Blake stopped by my office today and mentioned that he liked my Spotting Opportunity post. He thought that a lot of the reason that Hollywood has suffered creatively is because the high risk/ reward component of the industry these days. Big hits are great, but big flops are intolerable. As a result, movies skew towards the proven, formula for success - and anything that deviates (i.e. is creative) is not acted upon. I don't know enough about the movie industry to say whether or not that is correct, but the logic seems right.

Perhaps TV is more immune from this dynamic because of its economic model. TV survives on advertising revenue, not box office admission tickets, so the flop/ hit dynamic is not as prevalent. TV can do things like sell bundled advertising packages and segment an audience for advertisers - so they'll pay inventory for even weak performing shows, provided that the overall audience numbers are maintained (a subject for a different blogpost). The only thing that TV can't do is create such a distasteful product that an advertiser being associated with it would suffer some brand degradation. Given the FCC rules, that is difficult to do.

So we live in a world today where TV, despite having government imposed content restrictions (i.e. language/ nudity rules), is more creative than the mostly self-regulated, movie industry because, at least in part, of the economic model? In my economics classes they always used to tell us that economics was a human behavioral study. This seems to go to that. Economics directly effecting our popular culture.

Now, this doesn't explain why in the 70's and 80's the opposite dynamic existed - where films like The Godfather, the French Connection, ChinaTown, etc. were made while TV was putting out Growing Pain, Who's the Boss and Three's Company. Hmmm.....have to think about that one for a bit.


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Comments (1)

Brilliant insight by that Blake character... I like the cut of his jib.

Incidentally, there is a great list on Wikipedia of the most expensive movies ever made -- with costs adjusted for 2005.


Note that of the top 30 films, only *3* were made before 1995. So one could deduce that it was much less risky in terms of relative dollars to produce a Godfather back in the days of Three's Company.

Plus, I don't think Don Knotts came cheap :-)

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