Entertainment economy and its market impacts

Entertainment Economy

Michael J. Wolf's book, The Entertainment Economy: How Mega-Media Forces are Transforming Our Lives, was published six years ago but nevertheless offers timely insights into how the forces of American corporate entertainment are shaping our culture.

Main Points

The author points to the end of huge military spending at the conclusion of the Cold War, but those military-related industries were replaced by entertainment revenue for those cities. The author also mentions instances where the economy had fallen flat in a given area, and some form of entertainment was introduced which not only bolstered the sagging economy, but provided jobs and spread the power of corporate-created entertainment throughout the land.

Chapter Two: while American's watch their personal savings dip into the red ink zone (2.1% of earnings), they are spending (or were, in 1999 when the book was published) 8.4% on entertainment. Wolf writes that Americans are all about going out to eat, gambling, buying video games and computers; and the new "shared community" is a chat room on AOL or going to a movie with friends.

Chapter Three: Show business has spread its influence into the mainstream American economy, as airlines, restaurants, and malls are more and more combining entertainment (gambling, etc.) with their standard goods and services.

Chapter Four: The mass marketing of the Internet, cable TV, video games, magazines, radio programming and sports has hugely expanded the opportunities for revenue. New and lucrative markets have opened up because of the digital technology revolution.

Chapter Five: Moguls rule the entertainment world; moguls like Rupert Murdoch and Ted Turner created new networks; Bill Gates launched Windows 95 with an extravagantly huge entertainment campaign; Steve Case build AOL with "vision, tenacity, and high-stakes gambling." (p. 129). And yet all four of these wealthy power brokers in entertainment couldn't have succeeded without bringing in talented executives to carry out key missions.

Chapter Six: Moguls strive to create "hits" -- which provide more than money, including "the cultural context in which people see themselves" (p. 157). Taking a hit to its ultimate impact creates a "phenomenon" (158-159) which "transforms the landscape," and fills a "niche." Examples of phenomena: Viagra, the Web, Star Wars, PalmPilot and cell phone technologies.

Chapter Seven: The power of the Internet -- and the "migration of content" (194) to the Web -- has brought many previously non-entertainment-based corporations into the entertainment field. But, how can a company build reliable revenue from a Web-based presence? This chapter looks at all the ways, including subscriptions to Web sites, advertising, catalogue sales.

Chapter Eight: The advent of adroit, high profile branding has helped ESPN, MTV, Martha Stewart, Mattel (Barbie doll), Starbucks, the NBA and other companies to push the envelope way past previous growth / success stories, and gain a huge market share for their portion of the entertainment pie.

Chapter Nine: How advertisers get the strongest message out to the precise targeted audience has become a fine art. Competition is so keen, that advertisers are more inclined to use creative marketing campaigns than just spend big bucks.

Chapter Ten: Author Wolf offers his crystal ball into the future of Internet and other entertainment forms. He believes global entertainment competition will go as far at the human imagination will take it, which, he implies, will be limitless.

Key Examples

Chapter One: When the little strip malls (circa 1950s) became outdated and boring, new malls -- like the Mall of America in Minnesota (page 10) -- were built, featuring entertainment instead of just shopping opportunities. The Mall of American featured an aquarium, movies, an amusement park; many other malls followed suit, using entertainment as the magnet to draw people away from their boring TV programs and dull lives.

Chapter Two: Halloween used to be about families carving a Jack-O-Lantern out of a pumpkin, and distributing candy to trick-or-treaters; today (p. 41) Halloween is an excuse for parties and balls, involving adults; estimated revenues from costumes, parties, greeting cards, etc., total $5 billion in retail sales.

Chapter Three: A cable news / business channel, CNBC, has created a format with " ... attention-grabbing stories" instead of "boring data about prices, volumes ... " (p. 50).

Chapter Four: Radio revenues (p. 112) -- thanks to the likes of Howard Stern and marketing strategies that target specific audiences -- have skyrocketed to around $15 billion annually, from around $9.5 in 1993.

Chapter Five: Moguls succeed because they take the necessary risks / leaps into new business related to entertainment. French mogul Jean-Marie Messier (pp. 140-141) went from owning the "largest water company in the world" to building a media company by "adding a digital pipe" to the "metal and concrete" pipe he already had into millions of French homes, in his existing water delivery company.

Chapter Six: Not all phenomena are hugely expensive, they just need to be refreshingly new and whet public thirst for entertainment that creates sparks. "The Full Monty" film cost only $3.5 million to produce, but brought in $246 million worldwide; what's more, it set off "a rush to smallness" (p. 166).

Chapter Seven: Many paths to profitability on the Web came from "outside the mainstream ... " (p. 219). This proves you don't need huge sums of cash to start a Web business: Myst, the hot video game, was invented in a garage; Yahoo! was created in a trailer on the Stanford campus; eBay "grew out of a girlfriend's desire to trade Pez dispensers on the Web."

Chapter Eight: Starbucks has used its successful brand-development to expand its retail offerings to "frozen drinks, juices, premium ice cream" (p. 252), and subsequent to the publication of this book, to music CDs and wireless Internet access for its customers.

Chapter Nine: Audi loaned its finest car (A8) (p. 269-70) model to "business leaders, local celebrities," chefs, and a couple media stars (Martha Stewart and Wolfgang Puck). That visibility paid off for Audi.

Chapter Ten: "There is no spreadsheet that can fully predict" the public reaction to the launch of a given product or service (p. 294), but successful companies will have to create "talent-friendly environments."

Critical Thinking Question: Does Rupert Murdoch's powerful News Corporation have an agenda beyond a basic profit motive? Critical Thinking Answer: It appears that Murdoch has a bullish wish to gain power in sports (he bought the Los Angeles Dodgers for $300 million and has Fox Sports producing regional games nationwide) (Wolf 104-108) and politics. Indeed, Murdoch clearly has a conservative political agenda, based on the right-leaning point-of-view consistently taken by Fox News channel reporters and commentators. Meanwhile, by 2000, he had dumped $2 billion into Star TV (Wolf 16), and "had not seen one nickel of return" for his effort to either "control" or "at least breach" the Chinese and Indian markets. He's willing to gamble, and it is clear he is pushy -- he gets his way " ... By sheer force of personality" and money (Wolf 122) -- in order to obtain new markets for his messages. He has indeed invested "billions to lock up satellite delivery in Britain, China, India, and Latin America" (Wolf 94).