A Review of The Entertainment Economy (Michael Wolf, Times Books 1999)
There is a widely accepted notion that entertainment and business exist in two separate realms. Entertainment is done during leisure time, business during work time. However, there is growing evidence that the two realms are becoming increasingly mixed. In his new book The Entertainment Economy, Michael Wolf takes the point a step further by arguing that entertainment dominates the modern, global economy. He has the credentials to back up his talk. As the founder and senior partner of the Media and Entertainment Group at management consultants Booz-Allen & Hamilton, he has consulted with many legendary media moguls. In the process Booz-Allen & Hamilton has established a reputation as one of the leading management consulting firms in the entertainment industry. The book provides much evidence that entertainment and media have moved beyond culture to become the driving wheel of the global economy. For example, children no longer go to McDonalds for food, but rather for entertainment value defined by its toys and play structures. Similarly, shopping malls have become theme parks, retail stores entertainment venues as much as shopping outlets.
The list goes on wandering far away from traditional entertainment products such as films, television and the internet. As Wolf notes, "Across a whole set of industries including many that have traditionally had nothing to do with entertainment an infusion of entertainment content, what I call the E-Factor, is increasingly playing a fundamental role in determining which stores we shop at, what airlines we fly, the restaurants where we eat, what clothes we wear, which pots we cook with, which computers we use." (P. 50) Some of the major E-Factor companies and their products are well-known to almost everyone. Here are some E-Factor companies mentioned by Wolf.
Hotels Delano (Miami), Mondarin (Hollywood), Royalton (New York)
Restaurants Hard Rock Café, Planet Hollywood, House of Blues
Cruise Ships Disney Magic
Airlines Virgin Atlantic, Singapore Airlines
Grocery Stores Stew Leonard's, Somerfield (a UK chain)
Retailers REI, Nike Town
Fashion Tommy Hilfiger
Books Borders, Barnes & Noble
Autos Oldsmobile's Silhouette Premiere
Wal-Mart Broadcast of a live Garth Brooks concert in 2,400 stores
Banks Citibank with its Elton John ad campaign and Sony credit card
Finance Bloomberg television, radio and monitors
One of the key themes that emerges from The Entertainment Economy is the increasing difficulty of standing out in a media and product saturated world. In this new environment, Wolf notes consumers today face an "avalanche" of choices. Brands crowd the commercial scenery placing customer time and attention in high demand. In addition to a media clutter best exemplified by the proliferation of cable television channels, there has also been a concurrent product proliferation. Wolf provides a few interesting statistics of this rise in product clutter.
Books 10,000 more books published in 1998 than in 1993.
Music 30,000 albums released in 1998 (only 2% sold more than 50,000)
Magazines 900 new magazines launched in 1998
Films Feature films released by majors increased by 80% in ten years
In this increasing flood of media and products, as well as the increasing number of companies practicing the E-Factor, just getting noticed (let alone making the sale) is becoming more and more problematic. Wolf observes, "Given the pervasive impact of entertainment in our economy today, companies must exceed the efforts of their competitors to amuse, arouse, and inform customers. In other words, companies need to provide entertainment experiences that engage consumers." (P. 54) Large, mainstream businesses, though, seldom possess this entertainment expertise "in house" and therefore the quickest route to an E-Factor company for them is hiring top management from the entertainment industry. This has caused an influx of entertainment executives into traditionally non-entertainment companies. A few examples: Disney executive Richard Nanula leaves to run the Starwood hotel chain; Viacom executive Ed goes to Citigroup; NBC's Warren Jensen goes to Delta airlines.
Yet possessing internal entertainment expertise is seldom enough by itself. There still exists a need to look outside the company and exploit synergies its products have with various media. Crossover tie-ins between retail, film, television, food, music, publishing and the internet become increasingly important in creating brand empires and breakout products. The lesson learned by McDonald's is instructive here. As Wolf notes, "When McDonald's realized that Burger King was cleaning its clock with its Lion King and Pocahontas promotions, it stepped up to the plate and completed an exclusive ten-year, multibillion-dollar marketing and promotional partnership with Disney. Their logic: Disney film equals major family entertainment phenomenon equals major boost in families eating at McDonald's to get 101 Dalmatians snow domes, Hercules figurine sets, and Mulan action figures." (p. 55) The result was that the Disney/McDonald's alliance resulted in a 23 percent increase in production of Happy Meals in the United States. This made McDonald's by volume, the world's largest distributor of toys. The Disney alliance officially began in 1997. In that year McDonald's saw a 7 percent increase in sales, resulting mainly from its movie tie-ins. Apart from the increasing synergy needed in the brave new world of the entertainment economy, businesses need to be aware of new business cycles created in an entertainment environment. Wolf warns that "by incorporating entertainment content, businesses will more become subject to the compressed, hit-driven business cycle of the entertainment business. Things will be cool, and then they won't be. To expect businesses to abandon this dynamic and try to escape the new exigencies of doing business in the entertainment marketplace is like hoping that banks will go back to barter." (P. 73) In this new environment, Wolf foresees that businesses will grow and die more quickly. Planet Hollywood offers a good example of this new quick rise and demise scenario. The entertainment strategy of the chain was built around the "nostalgification" of culture where people went to see entertainment memorabilia as much as they went for the food. "When sales plummeted as the public finally figured out that the display jackets that were worn by the cast of Grease probably tasted better than the chicken fried in Cap'n Crunch batter, marketers were put on notice that entertainment, though necessary, is no substitute for quality in the core product." (P. 74) On the other hand, Disney has an excellent understanding of this business cycle. As Wolf notes, "Disney knows that about every seven years the sixth-grade class that graduates from grammar school is replaced by a whole new generation entering kindergarten, and it will re-release The Little Mermaid or The Jungle Book videos to coincide with that cycle." (P. 93)
The new business cycle brought about by the entertainment economy, though, extends far beyond theme restaurants like Planet Hollywood or even the monolithic Disney Company. Wolf suggests major economic structures like the stock feel its repercussions. "So rather than a more orderly market we are just as likely to see one in which stocks rise and fall more like hit movies which, come to think of it, has been exactly the way a lot of the hot technology stocks have hit the market: they open big, purely on the basis of buzz, and, if they connect, with an audience, they can continue to generate the excitement of a blockbuster." (P. 79)
Yet, within all the glitz and glitter of entertainment, the cycles and synergy, it is often difficult to remember that making money is still the goal of the entertainment economy. Here Wolf reminds us that there are still only a handful of ways building revenue in the entertainment and media industry:
- Selling admission
- Selling admission to a venue
- Selling subscriptions
- Selling audience access
- Selling products directly
The first, based around admission, is exemplified by amusement parks as well as "pay-per-view" cable television and adult web sites. The second based around building subscriptions is used by HBO and The Wall Street Journal Interactive Edition. The third method of selling audience access is the advertising side of the media business exemplified by internet portals such as Yahoo. Last, we should not forget that money is also made in media by selling products directly like Amazon Com.
Tommy Hilfiger - Ultimate 90's E-Factor Company
One of the 90's most successful companies in using the E-Factor to build revenue has been Tommy Hilfiger. As Wolf notes, of all the fashion moguls who have sought the power of entertainment and celebrity, none has done it more effectively than Tommy Hilfiger. Today the brand has revenues of nearly $850 million yet it hardly existed ten years ago. The key marketing strategy behind the Hilfiger phenomenon has been the use of celebrities to promote its products. The celebrities Hilfiger focused on were the idols of African-American city kids. Wolf notes that "Americans and after them the rest of the world have drawn generation after generation of styles from this culture. Cool, rebellious, young, hip ... it has all the things the rest of the world's youth wants to be. When the sports and music stars who are the aspirational images for this culture started sporting Tommy Hilfiger clothes, the brand got their seal of approval ... Capture these key taste generators, and you capture the young. Capture the young, and you have set the trend for the rest of society." (P. 65, 66)
The first celebrity targets for Hilfiger were rap stars like Snoop Doggy Dogg, Mobb Deep, Dr. Dre and Little Vicious. The Hilfiger label began to appear in rap videos on MTV and the Hilfiger name was even appropriated into lyrics. Hilfiger next courted Sheryl Crow and created a wardrobe for her tours. He did the same thing with the Rolling Stones and their "Bridges to Babylon" tour, designing over a hundred pieces of clothing for them. And, when Rebecca Romijn took over from Cindy Crawford as host of MTV's House of Style, Hilfiger bought her in as the female image for his ads.
After creating the Hilfiger brand image in fashion, Hilfiger worked to leverage the brand name into other areas outside clothing like any good E-Factor company. There are now Hilfiger shoes, pajamas, underwear, wallets, eyeglasses, golf wear and men's fragrances. In fact, Tommy Cologne accounts for 10% of the global market of men's fragrances. The result is that by mid-1998, the Tommy Hilfiger brand was ranked in the five "coolest" brands category among the twelve to nineteen year old consumer group.
It's All About Stories
Ultimately, Wolf's book is more enticement than explanation. We come away believing what he says, but with little idea what to do. Wolf dangles the proverbial carrot in front of us. The fact that he does not deliver the "how-to" should not surprise us: he makes his living consulting, not writing books. Therefore, we shouldn't expect him to give his product away. His purpose is to provoke rather than to answer questions.
The result is that The Entertainment Economy leaves us with interesting food for thought. At the end of the book, Wolf waxes philosophical with the observation " ... [u]ltimately, it's really not about corporate behemoths, mergers, or finances, or the box on top of the TV set. It's about stories that move us, characters we can root for, ideas that transform the cultural landscape, special effects that take us to a world we've never seen before, situations and lines that make us laugh, and ideas that are universal, they forever change the way we live." (P. 295) While it takes a certain amount of imagination to discover hidden synergies between products and media, for Wolf the major purpose of imagination is in creation of stories rather than discovery of business synergies. Entertainment is really about stories. As he notes in the final words of the book, "Humanity makes it impossible not to take notice of great stories, whether they are told around a Neolithic campfire or in the cathode-ray-glow of the digital hearth. It all starts with a well-told 'Once upon a time...'." (P. 296)
Wolf ends his book (as all good movies do) by setting up the possibility for an interesting sequel. By claiming the major business of our economy is about creating stories, there is the interesting yet inescapable inference that the most successful businesses today are the ones that create the best stories. Just how businesses create stories is a worthy topic for a forthcoming book from Wolf. We shouldn't hold our breath though. After all, Wolf's firm has a vested interest in keeping this information "in house." This is understandable for a management consulting firm where books by partners are a type of "bait" to bring in clients. Still, he raises some very interesting questions. And we don't need to wait for Wolf's sequel to explore them.
The Key Stories Of Our Times
With the growth of mega-media forces such as the Disney Company and Time Warner, there is a temptation to believe these entertainment conglomerates create the key stories of our time. But do they create the stories or are they simply better at tuning into the prevailing "zeitgeist" and then exploiting it better across multi-media platforms? In this sense, a company like MTV is really better at predicting this entertainment "zeitgeist" than in filling it with stories. Understanding the dynamics of entertainment structure becomes more important (at least for MTV) than creating the content to fill this structure. Predicting what the story is (or will be) might be a powerful new business tool by itself.
One of the dominant themes in modern marketing is differentiation. The argument goes that success is based on standing out from the rest in an increasingly crowded marketplace of consumer products. But it is possible that success might come more from alignment to a story "zeitgeist" of the times than from differentiation from competitors. How can we discover the present and predict the future story "zeitgeist?" Certainly there are thousands of different stories at any given time, but only four key dramatic story modes tragedy, comedy, satire and romance. Today's popular film and literary genres ultimately revolve around these dramatic modes. Stories are always subject to classification within these key genres. There might be a cyclical nature to prevailing genres. For instance, the famous literary critic Northrup Frye suggested in his Anatomy of Criticism that genres are symbolically related to the seasons. Might there exist a set cyclic sequence of leading story genres? Are the most successful businesses and products the ones that are in the best alignment with these cycles? These are questions Wolf hints at but doesn't answer.
Business Leaders As Storytellers
A number of scholars have argued that great business leaders are often great storytellers they create compelling stories for their organizations. Renowned education theorist Howard Gardner of Harvard has done a major study focusing on outstanding leaders. In Strategy & Business, Gardner notes the basic finding of the survey was that "leadership involves the creation of powerful narratives, narratives that are much more than mission statements or messages. They are actually stories where there are goals and obstacles, where good and bad things can happen along the way and where the people involved feel part of the enterprise that's trying to end up in a better place." (First Quarter 1999, P. 91)
Like the heroes in stories, corporate leaders create a sense of drama, conflict and eventual catharsis in building a corporate mythology. In effect corporate visionaries understand the key elements of building a strong story, whether this is understood consciously or unconsciously. The elements could be picked up from a book on drama or screen writing. They include subjective aspects centered around setting (time, place, space, color, elements) and objective aspects based around action (hero, action, objects). Pervading all is the drama of conflict, or the age old battle between the "good guy" and "bad guy." Perhaps one of the key qualities of the great business leader is that he/she can articulate the story and drama of their company so all employees can gain a sense of the heroic themselves.
Business As Film Production
As business in the digital age moves more towards "outsourcing" via the increasing use of part-time employees, many companies in effect become similar to film production companies bringing large numbers of people together temporarily for projects. Many traditional business people might laugh at the crazy way films get made in Hollywood. But in the end, Hollywood might have the last laugh.
The cast and crew of a film is a great metaphor for consultants and project teams brought temporarily together inside traditional businesses. From all indications, these temporal groupings are becoming the dominant method of modern business. So, there might be something traditional businesses can learn from Hollywood after all.In this model of organization, human resource people and venture capitalists play an increasingly important role. They are comparable to Hollywood agents and production companies, matching the right people with the right projects at the right time. Little wonder that relational database programming has taken off on the internet.
Corporate Strategy As Screenplay
Wolf argues that marketing plans are becoming passé. They lock the firm into static structure during periods of dynamic change when relationships move from vertical to horizontal and simultaneous events possess more importance than linear, causal events. In our new dynamic world, an appropriate metaphor is found in the screenplay. In this scenario, the product is the hero, the product/brand manager the director, the product team members the cast and crew. The competition becomes the antagonist or the "bad" guy. Motivation involves how well the conflict between the "good" guys in one corporation can be articulated against the "bad" guys in the other corporation. This amounts to discovering drama of the situation, creating the best story for the situation and finally telling the story most effectively to the corporate cast and crew. The drama of stories is a universal and it is apparent in an entertainment economy that this drama happens outside movie houses.
Entertainment As Business Paradigm?
The above ideas lurk beneath the surface of Michael Wolf's fascinating new book like the subtext of a movie, the subliminal aspects of an ad. Final answers are not provided in The Entertainment Economy but all businesses should know they at least exist. The greatest brands and E-Factor businesses utilize them, many without a conscious awareness or understanding of what they are doing. For now it seems important to consider the possibility that entertainment is not something that takes place solely in Los Angeles through deals between stars and studios but rather something that happens every day in a wide range of businesses from Main Street America. We're all in the entertainment business.
The "service economy" business commentators have defined America as moving towards for a number of years might better be defined as an "entertainment service economy." In fact, despite the digital industry's on-going PR campaign to label this the "information age," the consideration of things from the perspective of an "entertainment economy" might prove to be a far more fruitful paradigm in advancing the state of modern business and marketing theory. As we move closer to a global economy the real American market "niche" might ultimately be in providing entertainment type of information for the rest of the world.
In The Entertainment Economy, Wolf makes some large claims for the importance of entertainment in the modern world. Are we witnessing the creation of a new paradigm for organizing marketing and business thought? He argues that Marshall McLuhan's dictum "medium is the message" no longer applies to digital entertainment content where messages are now independent of their medium. In this change, Wolf gives entertainment a lofty status next to such grand world-changing events as the digital revolution, telecommunications, the steam engine and merchant banking. Is it truly the beginning of a new revolution or a short-lived side-track off a larger mainline trend? Will the "entertainment economy" become little more than the latest business buzzword with a rise and fall similar to the fate of other buzzwords like excellence, re-engineering, differentiation and brand equity. Yes, a fate similar in many ways to the rise and fall of hit films.
While Wolf might ultimately be found "guilty" of overstating the importance of entertainment in modern America, there is also the possibility that the entertainment industry is itself the culprit in attempting to expand its markets outside traditional entertainment areas. This thought moves beyond mere speculation when one considers that the growth curve for the entertainment industry has leveled off. Wolf notes "In the United States traditional entertainment is a relatively mature business. Consumer spending is flattening. Price increases are wringing out as much additional revenue as they can." (P.89) In this scenario, Wolf sees growth limited to coming from one of three key areas: 1) a major hit 2) through global expansion into less mature markets or 3) through diversification into other industries. (P. 89) Are we witnessing an attempt by a mature industry to pursue the last option by diversifying into other areas?
And in all of this, what place will the marketing profession play? Wolf argues that a new position of "chief entertainment officer" is paralleling the existence of the better known chief information officer. Will entertainment and the creation of the best stories become the key concern of marketers? As we suggest, Wolf purposefully does not answer these questions.
His book is not an academic book yet there is a sense he is not showing us his "full hand" and that there are a lot of methods and "how to" techniques he is holding close to his chest. However, he has opened a door which may lead to a new way of looking at marketing and business. The marketing profession needs to give his ideas and arguments some thoughtful consideration and then make its own evaluation. Do his ideas lead towards a new paradigm in marketing or to just another trendy popular buzzword in business, here today and gone tomorrow? Will the idea of the entertainment economy be the next big "blockbuster" idea or will it fade quickly at the "box office" of business opinion? And ultimately, might it's rise to prominence as a business concept be largely related to its entertainment value and the interesting story it tells about our modern business world?
© 1999 - John Fraim
John Fraim is President of GreatHouse Company a research, consulting and publishing firm centered around the symbolism of popular culture. His articles have been published in a number of leading publications. His book Spirit Catcher won the 1997 Small Press Award for best biography. His email is This email address is being protected from spambots. You need JavaScript enabled to view it.. Visit the CyberBeacon Café at http://sites.netscape.net/fraimjohn/homepage
