Entertainment and Media: Markets and Economics. Professor William Greene. Professor William Greene Department of Economics KMC, Rm. 7-90 212.998.0876 people.stern.nyu.edu/wgreene firstname.lastname@example.org people.stern.nyu.edu/wgreene/entertainmentandmedia/course.htm Find link on Sternclasses.
Professor William Greene
Department of Economics
KMC, Rm. 7-90
Find link on Sternclasses
Broad microeconomics based understanding of the economic forces that shape the entertainment and media industries
1: The Demand for Experience Goods
2: Supply. Production, Costs, Markets, Vertical Integration
3: Contracts, Boundaries of the Firms, Conglomerates,Digital Entertainment Business Models
4: Intellectual Property: Laws, Movies, Books, Music
5: Markets: Sports, Art, Gambling, Theater, Publishing, etc.
6: TV, Radio, Print Media, Others
Long Run Trends: Who We Are
Hours worked stops falling; hours spent on recreation (not working) stops rising.
Economic fluctuations have much greater impact on manufacturing than on services.
Recent trend in hours worked (weekly, average), 1965-2009
Per capita, real spending on recreation
and recreation services.
Recreation as a % of Disposable Income
Service Component of Recreation Expenditures
Service = Movies, Sports, … (passive) 1959-2009
(2014 looks like 2010.
Not much change in broad allocation.)
Food $ 6373
Clothing $ 1725
Transportation $ 7658
Health Care $ 3126
Entertainment $ 2693
Insurance $ 5471
Everything Else $ 5127
Category Avg Top
Income $ 51G $127G
Food 6.1% 7.1%
Health care 4.2% 2.8%
Entertain. 4.0% 3.6%
Clothing 3.3% 2.6%
Education 1.5% 1.7%
Housing About 31%
Transportation “ 16%
Other “ 35%
The figures suggest consumers reallocate spending as incomes change.
Careful! This shows a difference between consumers, not the change in behavior of a particular consumer. It is only suggestive.
(Books, magazines, newspapers,…)
Why did it fail the market test?
Did it fail because it looked like a toaster?
Also cool. Why did it pass the market test?
What differentiates this cool appliance from the coolest computer ever made?
New York Times, April 2, 2012, page B1.
Different from a book? How so – from the consumers viewpoint?
Same as a book? How so – from the economist’s viewpoint?
[T]he art film has been ghettoized as audiences have fragmented into niche markets. The very notion of what a movie audience is has changed: how do you arouse a public when many are no longer watching movies publicly, but sitting at home in front of their entertainment centers? It's a powerful feeling to share an audience's collective gasp, such as the one elicited by a startling suicide in Michael Haneke's Cache’.That can't be duplicated in solitude. But increasingly rare is the breakthrough movie, such as a Blue Velvet or a Brokeback Mountain, that reaches a mass audience. These days we get our culture jolts in daily, bite-size portions on YouTube or Facebook, a kind of viral fast-food diet of scandal, easily digested and quickly forgotten. [David Ansen, Newsweek, 10/26/09, p. 48]
Not quite a theater experience.
Definitely in great demand.
Trump pushed to make the new shuttle a luxury service… The Shuttle’s core passengers chose it for its convenience, not its costly luxury features. Trump Shuttle never turned a profit.
What differentiates the demand for experience goods from the demand for humdrum goods?