Posts tagged ‘economic sociology’

Peak screens

| Gabriel |

Apparently Creature , a god-awful exploitation monster film, opened on 1,500 screens with no marketing and made no money whatsoever (h/t Jonathan Last). My initial reaction was (and I apologize if you can’t follow the abstruse technical jargon) what the fuck?

1,500 screens is no Spiderman 2, but it’s still a reasonably wide opening. When Jaws (which as coincidence would have it was also produced by Sid Sheinberg) opened on 409 screens in 1975 that was considered “opening wide” on an unprecedented scale for a highly anticipated major studio film which was based on a novel that had been on the NYT bestseller list for almost a year. And yet here we are with an obscure turd of a film opening on over three times the scale of one of the biggest films in Hollywood history.

This seems like the kind of thing that simply can not happen, but I checked Variety, and yup:

Monster movie “Creature” also bellyflopped. The film, self-distributed by Sid and Jon Sheinberg’s Bubble Releasing, had an unusually aggressive rollout for an indie title but a paltry per-screen average of just $220 from 1,507 locations. Total was an estimated $331,000.

At least I can take some comfort in the collective sanity of Hollywood in knowing that neither the majors nor LionsGate were involved in this fiasco but there’s still the puzzle of what the exhibitors were thinking.

Most likely they were thinking in terms of vacancy chain / opportunity cost issue. September is something of a dumping release date. For instance, Fox notoriously buried the brilliant satire Idiocracy in September of 2006. We can see this more formally in Figure 1 from Sorenson and Waguespack ASQ 2006 (emphasis added).

Big movies tend to open on big weekends. This wasn’t a big weekend and so it’s not surprising that weren’t a lot of big movies opening this weekend. To a first approximation, we can say that exhibitors probably played Creature because it was that or keep dark. (Though at $220 per screen they probably would have been better off staying dark).

Another interesting thing is that opening wide isn’t cheap (which is why until the blockbuster era studios preferred to make just a few prints). It costs about $2,000 to make a print of a film, which (if we assume prints rather than digital) implies about $3 million for prints for Creature , which is about the same amount as the production budget. The rule of thumb is that prints and promotion cost about half again the production budget, but Creature seems to have economized on this through the simple expedient of not having any marketing. This doesn’t really make sense though since marketing and prints are complements, which is why they are usually budgeted together. If I had a crappy movie and only $3 million to self-distribute it, I’d probably spend less than a million on prints and the rest on promotion. So we’ve got to figure out what was going on with the (self) distributor. Here are a few non-mutually exclusive speculations as to what was going on with the distributors:

  1. They’re idiots (more specifically, they drank the “social media” Kool-Aid)
  2. They planned on marketing the film but ran out of money
  3. They relied on digital projection
  4. They offered exhibitors better points on box office than the industry standard

Note that any of these stories are bad news for exhibitors. #1 implies that exhibitors didn’t think to check if the distributor understood the film industry. #2 implies that the distributor booked the exhibitors with an explicit or implicit expectation of a certain level of marketing then didn’t follow through and the exhibitors didn’t notice this. #3 is one of many issues in the film industry where distributors have a conflict of interests against exhibitors. Digital projection implies large fixed costs for theaters but allows distributors to radically lower their marginal costs, which (Coase theorem notwithstanding) is not a good recipe for a happy outcome. The conflict is especially acute when you realize that digital projection makes it easier to open wide which means most of the box is in opening weekend when the theaters get very little of the ticket sales and basically only make money on popcorn. (On the other hand, digital does open up some pretty cool possibilities for using theaters for things other than movies.) That leads us to possibility #4, which is that the distributors might have gotten creative and offered the exhibitors an unusually good deal, like an 80/20 split on opening weekend box or something like that, so as to treat the theatrical release as a publicity-generating loss leader for ancillary revenue streams (DVD, tv, streaming, etc.). If we also assume digital distribution this largesse wouldn’t have even cost the distributor much up-front. This would have been a good precedent for the exhibitors if it worked, but it didn’t and so they’re stuck with back-loaded revenue sharing models that were worked out back when there were fewer screens and movies stayed in theaters for more than two weekends.

Long story short, I’m putting this in my “theatrical exhibitors are fucked” file, along with 3D fatigue and the Comcast/Universal merger.

September 13, 2011 at 6:52 am 5 comments

Misc Links

| Gabriel |

  • Anything But Justin Bieber: Symbolic Exclusion and NPR Story Selection Dislikes
  • Glee breaks Elvis Presley’s record. Note that this is more than a little misleading since Glee singles have brief but intense bursts of popularity whereas Elvis (or the Beatles for that matter) had much more sustained popularity.
  • WalMart is pushing CSR on its supply chain. WalMart says that their customers are demanding these practices but I call bullshit on that as CSR is a superior good and WalMart’s niche is down market (though it’s possible that they think CSR is a way to draw in wealthier customers). Rather I think it likely that WalMart knows it has saturated the exurbs and small cities and can only expand by going into big cities, but this ambition is thwarted by a left-wing political coalition. WalMart is never going to get the unions to drop their opposition (here in LA the grocers’ unions have led the fight against WalMart) but several of their recent actions suggest a strategy of peeling off enough of the “food desert” and “sustainability” greens to squeeze through the zoning process. In other words, it’s coercive isomorphism all the way down.

March 7, 2011 at 1:23 pm

Breaking Bad Edges

| Gabriel |

First let me say that I love Breaking Bad for exactly the same reasons as Ross Douthat. If you haven’t watched it, go to Amazon and buy the first and second seasons — it will be the best $29.98 plus shipping you ever spend.

It struck me that the season 3 finale is entirely about exchange theory. [really serious spoilers follow].

(more…)

June 18, 2010 at 1:16 pm 1 comment

Doing well by doing good

| Gabriel |

In the course of a recent post describing Haitian resentment of relief workers (who they view as stealing their jobs), Bryan Caplan links to a much older post he wrote (as inspired by a Cowen talk) about the “cargo” practice in rural Mexico. In this system anyone with wealth is expected to take on public office during which he funds public expenses from his private wealth. Caplan and Cowen describe this as providing an extreme incentive to either avoid wealth accumulation or to become an evangelico, which is a voluntary form of social death.

At first I found this pretty convincing (in part because I’ve heard an almost identical analysis from Alex Portes). However I was thinking about it some more and I realized that it’s a little more complicated than that. First of all, this dynamic is not unique to modern rural Latin America. An almost identical practice of euergetism was common in the ancient world, which didn’t exactly have the state capacity to collect a Value-Added Tax. Instead they relied on a combination of direct levies (conscription from the middle classes and euergetism from the big shots) and the relatively minor state treasuries came from the highly inefficient practice of tax farming the provinces. For instance, although Pericles financed most of his Athenian public works out of tribute from the other members of the Delian League, he offered to pay for them out of pocket on several occasions. Although euergetism was important in classical Greece and the Hellenistic world, I’m going to focus on Republican Rome as an example.

The main way euregetism worked in Republican Rome was through the aedileship (municipal officer), which was the second step in the cursus honorum. Every year four ambitious young men were made aediles and during their tenure they provided many municipal services, especially the ludi (games) which provided the young man an opportunity to show off his wealth and connections by bringing in exotic animals, gladiators, performers, etc. An arms race developed for largesse and spectacle and many aediles went heavily into debt.

So far this is all consistent with the picture drawn by Caplan, Cowen, and Portes, of the expectation of magnificent philanthropy being an indirect form of high marginal tax rates, with all that implies. Note though that their model implies that:
a) people would tend to avoid public service either directly or by forgoing wealth accumulation in the first place
b) the poor bastards who get stuck with public service would be bled dry

However neither of these are entirely true in the Roman Republic. The simplest way to demonstrate this is that there is a power-law distribution for how often families held the consulship. This implies cumulative advantage and thus holding high political office must have been, on net, profitable. How could this be given the massive expenses necessary to achieve and exercise high political office?

Consider the case of Gaius Julius Caesar. He was driven heavily into debt by his aedileship and praetorship (a judicial office that followed the aedileship). However then he was made propraetor (military governor) of outer Spain during which he won a lot of wealth by conquest and acquired the patronage of Crassus. Caesar then became consul (albeit in an especially ugly fashion) and went back North of the Alps to acquire enormous wealth in Gaul. So basically, the early stages of political office were expensive, but they provided the opportunity for later provincial administration where one could squeeze the provincials. Put more broadly, philanthropy is the price of purchase for political rent-seeking which could be extremely valuable. Likewise, my understanding is that in Latin America there are many opportunities for rent-seeking that are opened by embedding oneself in a patronage system. This may actually be the most invidious aspect of the system — it may not so much discourage wealth accumulation per se so much as redirect efforts away from positive sum wealth creation and to negative sum rent-seeking.

May 20, 2010 at 3:00 pm 2 comments

Misc links (niche partitioning and categories edition)

| Gabriel |

  • Attention niche partitioning people in search of a research topic! For awhile there was a fairly clean divide between ethnic shops and general shops in the advertising industry. Now the general shops are increasingly creating multicultural divisions and taking market share from the specialists. For some good background reading on ethnic partitioning of the ad market see Davila and Turow.
  • Intel is creating a more powerful dual-core version of the Atom chip that is found in most netbooks. This of course blurs the boundary between netbooks and laptops since the whole point of a netbook was it was weak but only cost $250, so if it’s powerful and $500 doesn’t that make it a laptop? (h/t Mark Kennedy.) On the other hand, this could actually heighten the contrast between netbooks and laptops. Suppose that in its quest to climb back up the value chain, Intel effectively prices itself out of the netbook market. If there is still a demand at or below the $250 price point, it will be met by computers based on ARM chips (the same thing that’s in the iPad and most cell phones) which are even cheaper and weaker than the Atom. The hitch is that ARM chips can’t run software compiled for an x86 which in practice means they can only run Linux. (Windows CE runs on ARM but there’s very little application software available for it whereas it’s pretty easy to recompile open source software for ARM and cloud services don’t care what chips or OS you’re using). In this scenario the current netbook niche would fragment into two, with some climbing the value chain to be low-end laptops running Windows and others being dirt cheap and running Chrome OS or Ubuntu Netbook Edition.
  • Everything I needed to know about economic sociology I learned from watching this old Disney cartoon. The main focus is on categorical uncertainty but it’s also got legal-rational authority/ bureaucracy, the railroads as the archetypal organizations of the second industrial revolution, reliance on expertise, social construction of price, exponential growth processes, etc.
  • Finally, it’s worth remembering that niche partitioning specifically and the organizational ecology paradigm more broadly is based on regular old biology and so even more than your average liberally educated person, econ soc folks should know something about biology. Fortunately, Stephen Stearns has podcast his intro to EEB. EEB is short for “evolution, ecology, and behavior” which us laymen can think of as the kind of biology that’s interesting, in contrast to MCB (molecular cell bio) which is the kind of biology that’s boring but will get you a job at Pfizer. As usual, Yale did a great technical job of capturing a talented lecturer. FWIW, Stearns’ voice sounds a little like that of President Obama so I keep expecting to say things like “if you like your genome, you can keep your genome.”

May 5, 2010 at 4:38 am 2 comments

Ratings game

| Gabriel |

David Waguespack and Olav Sorenson have an interesting new paper on Hollywood (their earlier Hollywood paper is here) that contributes to the literature on categorization, rankings, and sensemaking that increasingly seems to be the dominant theme in econ soc. The new paper is about MPAA ratings (G, PG, PG13, R, NC17) and finds that, controlling for the salacious of the content, the big studios get more lenient ratings than small studios. The exact mechanism through which this occurs is hard to nail down but it occurs even on the initial submission so it’s not just that studios continuously edit down and resubmit the movie until they get a PG13 (which is what I would have expected). Thus the finding is similar to some of the extant literature on how private or quasi-private ranking systems can have similar effects to government mandates but adds the theoretical twist that rankings can function as a barrier to entry. This kind of thing has been suspected by the industry itself, and in fact I heard the findings discussed on “The Business” in the car and was planning to google the paper only to find that Olav had emailed me a copy while I was in transit.

Aside from the theoretical/substantive interest, there are two methods points worth noting. First, their raw data on salaciousness is a set of three Likert scales: sex, violence, and cussing. The natural thing to do would have been to just treat these as three continuous variables or even sum them to a single index. Of course this would be making the assumption that effects are additive, linear, and the intervals on the scale are consistent. They avoided this problem by creating a massive dummy set of all combinations of the three scores. Perhaps overkill, but pretty hard to second guess (unless you’re worried about over-fitting, but they present the parametric models too and everything is consistent). Second, to allow for replication, Olav’s website has a zip with their code and data (the unique salaciousness data, not the IMDB data that is available elsewhere). This is important because as several studies have shown, “available on request” is usually a myth.

March 22, 2010 at 4:27 am

Age, Period, Flim Flam

| Gabriel |

A few months ago, The Chronicle had a very interesting article on generation gurus, who claim insight into the “millenials,” or as actual social scientists boringly call them, “the 1980s and 1990s birth cohorts.” Lots of organizations, including college admissions boards, are really interested in these gurus’ advice on how to understand the kids these days. (Which reminds me of the obnoxious creative team of Smitty and Kurt, who were brought on to Sterling Cooper to sell Martinson’s coffee to the Pepsi generation).

I remember way back when I was in high school reading a long-form magazine article (The Atlantic?) on Howe and Strauss and I thought it was a great theory, in part because some of the details seemed like they were (or ought to be) true and in part because the generational dialectic struck me as plausible. Basically they say that idealistic generations are followed by cynics who in turn are followed by pragmatic workhorses who are in turn followed by idealists, with the mechanism being that each generation reacts against its parents’ excesses. According to this schema, the reason I grew up listening to Nirvana was as a reaction to the “All you need is love” stuff of the boomers.

When I got all growed up and actually started dealing with, you know, systematic data, I was more than a little disappointed that while cohort change is not always linear, it is basically monotonic and it is definitely not cyclical or dialectical. I’m primarily an orgs guy rather than a people guy, but I’ve still done some moderately extensive age/period/cohort stuff with the GSS and SPPA and on everything I looked at (mostly social attitudes and cultural consumption), there’s absolutely no evidence whatsoever for the Howe and Strauss dialectic. So for instance, if you look at strong preference for opera and classical you first have to limit the data to BA or higher education (less educated people don’t like this music regardless of cohort) and then you see a clear trend that the music is popular with educated people born before 1950 and unpopular with educated people born after 1950. There is no distinction between “boomers” and “gen X” in the data, and in fact older boomers are still into high culture. The only issue that I’m aware of that even vaguely approximates the Howe and Strauss model is abortion attitudes, but a) the cohort effects on abortion attitudes are weak and b) the effects of cohort on other sex/reproduction opinions, like gay marriage, are monotonic.

So given that the empirical evidence for these ideas is so weak, why are college administrators, marketers, etc, so into it? I think the answer has to be that it was facially plausible and more importantly that it was pretty clear. A money quote from the article is:

Amid this complexity, the Millennials message was not only comforting but empowering. “It tickled our ears,” says Palmer H. Muntz, director of admissions and an enrollment-management consultant at Lincoln Christian University, in Illinois. “It packaged today’s youth in a way that we really wanted to see them. It gave us a formula for understanding them.”

This is reminiscent of the argument that John Campbell gave for explaining the popularity of supply side economics. His argument is basically that the idea gained popularity not because it had especially powerful theory or empirics behind it, but because it was comprehensible and gave a tractable guide to action. In theory, Lafferism is contingent on the important question of where the current tax regime lies relative to the curve’s maximum, but in practice this contingency was elided and people took it to mean “always cut taxes.” That is the appeal of the idea was not so much that we had good reasons to think it reflected reality (or more specifically, that it was applicable to current circumstances), but because it clearly prescribed action — and I think it’s worth adding, actions that were desirable in a free lunch kind of way. In the same way, if you read Howe and Strauss, they are relentlessly positive about the millennials, portraying them as a dialectically-generated reproduction of the go-getters who first stormed the beaches of Normandy and then nested into Levittown. Victory, affluence, swing music, what’s not to love about these kids?

You can see similar wishful thinking in the eagerness of municipal officials to throw consulting contracts at Richard Florida. Florida’s basic shtick is that if Methenburg, PA wants to develop they should just rezone old warehouses and put up a sign reading “Methenburg Arts District,” this will attract artists, who in turn will attract engineers, who in turn will turn Methenburg into the next Silicon Valley. I always imagine after Florida gives his powerpoint, the city councilmen or county selectmen are enthusiastically coming up with ideas about how to be “cool” like Murray Hewitt on Flight of the Conchords. It sounds like a perfect plan: Methenburg get to be “cool,” we get development, and it doesn’t require either making expenditures or forgoing revenues to any appreciable extent.

If only it were true.

January 19, 2010 at 5:14 am 2 comments

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