The Economics of Entertainment (w/ Pablo Gastón Sanchez) - #NL10

Entertainment has been on the rise in our generation. Its impact cuts across different aspects of life. Micheal Wolff has called the ability for entertainment to transcend industries as the E-Factor (Entertainment Factor). Disney’s ability to understand the impact of `The Little Mermaid′ to increase their sales through toys is one of such examples. This has largely led to coopetition between different businesses, actors and artists. The whole economy of the entertainment world is an interesting one as it really puts to question whether the “medium” is really the “message” in our time.

In the conversation with Pablo Gaston, a Fashion Designer and student of Parsons in Paris, Adrian Arroyo and I went deep into how both the economy and the entertainment world connect.

Talent is the underlying factor of the entertainment world. Without talent, there is little to appreciate and therefore little to really entertain oneself of. Even more interesting is the reality that even talents require their own coaches, and so there is a need for talent to manage talent itself. Figures like George Martin, who managed the Beatles, and Joseph Volpe, Opera Manager, are good examples. In this dialectic between the demand for talent (fans wanting stars) and the supply (the talent expressed - entertainment) is where the economics happen. The economics of entertainment finds its rooting when talent (stars) meets the market (fans). Depending on what kind of entertainment is being offered itself, the relationship between fans and stars tends to be very strange. In 2007 Radiohead, a British rock band, released their album called `In Rainbows′. ?This album was released for downloads as pay-as-you-want. Basically, fans paid what they thought was the value of the album. The sales went beyond expectation.

In entertainment, prices become very interesting. From longtails, dynamic prices and the many other prices mingling the business of entertainment, the relationship of fans with their stars has a big say. Let’s think back to when Luis Figo (a football/soccer player) decided to move from FC Barcelona to Real Madrid in 2000. It was for the Barcelona fans equal to traitorship. When he came back to play against his former team, the match had to be suspended because objects (even a pig's head) were thrown at him. Luis Figo moved because the economics made sense. FC Barcelona lost him because his €62 million release clause was paid. As we realized with Luis Figo, in (sports) entertainment, it cannot just be purely business - there are so many things involved (fans).?

Brands like Tommy Hilfiger realized this and used maximally when they started using celebrities (e.g. Snoop Dogg, Dr. Dre, Little Vicious) to promote their products. African-Americans were Hilfiger’s first target and it worked. What Hilfiger realized has now become commonplace with fashion brands using influencers to sell their products, as against model agencies in the past. The economics and business strategy here is clear. Get those that can entertain to wear the products so that their fans, whose relationship is beyond quantitative reasoning, will want your own products.?

A place to see all of this relationship happening in a transformed place or space is the modern (global/cosmopolitan) city. The city is a wonderful place to understand and realize the vastness of this synergy. Cities themselves have noticed this and have increasingly become branded to ensure they attract their own fans (tourists). This distinction can be seen since Paris’ World Fair in 1889 with the building of the Eiffel Tower. This has led many residents to become “tourists in their own city”, as Llyod says. Two former Mayors of Chicago, though father and son: Richard J. Daley (1955 - 1976) & Richard M. Daley (1989 - 2011), shows us exactly how this E-factor has come to stay in our times. J. Daley was your traditional “let’s make jobs and build industries” kind of guy, while his son was interested in rebranding Chicago to attract more people. Even kingship cannot stop the relationship between the economy and entertainment. Gentrification has also played its own huge role in the whole interrelation as the need to make your city more attractive causes a need to modernize the buildings (though this comes with its own social backlash).?

So what is the point? That the whole idea of the Entertainment Factor is just unavoidable. There is a need for a bit of tiktok for that increase in sales. Will this stop? Who knows? Is it beneficial? Both answers, yes and no, can be argued by PhD students. Why should you care? So that you don’t forget that in the E-Factor, everyone is both producer and product.?

Listen to the full discussion in the podcast.

References

Cabral, L. (2009). What Is Special About the Economics of Entertainment Industries? See https://luiscabral.net/economics/books/entertainment/

Lloyd, R., & Clark, T. N. (2001). The city as an entertainment machine.?Critical perspectives on urban redevelopment,?6(3), 357-378.

Fraim, J. (2000). Book Review: The Entertainment Economy.