Their Logic

In the preface to The Hollywood Economist, Edward Jay Epstein tells the story of why newspapers still report box office numbers. The journalists who put them together are well aware that ticket receipts make up just a small fraction of the average movie’s revenue. They know, for example, that the numbers are highly relative—different movies have different splits with different theater chains and distributors and even then, studios rarely take home anything over 40% of the money earned theatrically. Not to mention that domestic and international gross, which although conveniently rolled into one, don’t go into the same coffers. They know that the results are juiced by p&a spend, but still get compared head to head with movies that didn’t have any.

Yet newspapers continue to report what are little more than bragging rights. Why?

The answer is that newspapers can only report on what is happening right now. By the time the other revenue streams trickle in—ones that studios are reluctant to disclose—nobody cares how much money a movie made. Not only that, but movies contribute millions of dollars in newspapers advertising and an immediate scorecard is nice fodder for next week’s ad copy. #1 Movie in America, etc.

So what seems like cluelessness is actually very logical. Newspapers are responding perfectly to the incentives that the inclinations of their readers and the industry converge to create. And for the most part, any effort to ‘fix’ this anachronism would fail unless it changes the root cause of the issue – which in this case is an innate feature of the human attention span.

Many things are like this. What seems like an easily resolved inefficiency is actually a deeply rooted, consistent response to the conditions of the market. You just have to be humble and open minded enough to spot these native operative paradigms. To understand why people behave this way, the assumptions need to be traced back to their founding sources. Not only for the sake of sympathizing with the culture, but to figure out what can be changed and what can’t.

Unfortunately, this is why bloggers analysis fails so spectacularly. As outsiders, they’re cut off from the peculiarities of the terrain – and they are too foolish and self-absorbed to to bother finding it out for themselves.

It’s easy to learn enough about an industry to know that, say, the box office numbers don’t tell you much. Pointing it out isn’t helpful. What’s difficult is to develop a wide and empathetic understanding of the sources that created these conditions. This is the position that makes change or action possible. Because the solution will not be obvious. It will not be an “aha!” moment. And if you feel like you have one, you’re probably still in the easy phase.

Written by Ryan Holiday
Ryan Holiday is the bestselling author of Trust Me, I’m Lying, The Obstacle Is The Way, Ego Is The Enemy, and other books about marketing, culture, and the human condition. His work has been translated into thirty languages and has appeared everywhere from the Columbia Journalism Review to Fast Company. His company, Brass Check, has advised companies such as Google, TASER, and Complex, as well as Grammy Award winning musicians and some of the biggest authors in the world. He lives in Austin, Texas.