Slate Money – The Creativity Edition

Host: Felix Salmon (and Slate Money team)
Guest: Derek Thompson
Date: February 11, 2017

Episode Overview

This special "Creativity Edition" of Slate Money dives deep into the intersection of creativity and economics across TV, movies, books, art, and music. Featuring Derek Thompson—author of Hit Makers: The Science of Popularity in an Age of Distraction—the episode uncovers how business models influence creative output, why people crave both novelty and familiarity, and how industries shape what becomes a hit. The show also marks co-host Cathy O’Neil’s final appearance.

Key Discussion Points & Insights

1. How Business Models Shape Creative Content (TV & News)

• Cable (e.g., HBO, Showtime) vs. Broadcast:
  – Cable, funded by subscriptions, can take creative risks and isn't bound to maximize for mass appeal.
  – Broadcast, funded by advertising, must aim for the largest mainstream audience.
  Quote: "HBO could take a lot of the risks... whereas the broadcasting model really was monetized through advertising, which means it had to maximize the number of people who are watching in each hour." – Derek Thompson [01:30]
• The 'Hero Franchise' Model:
  – TV networks like ESPN and CNN increasingly focus on a small number of big stories or personalities to ensure viewers always find something familiar and attractive, even if they tune in for just a few minutes. Quote: "We should tell one or three stories all the time... They concentrated all of their television around a handful of essentially hero franchises." – Derek Thompson [03:22]

2. Familiarity vs. Novelty – The Central Paradox

• MAYA Principle—"Most Advanced Yet Acceptable":
  – People crave something new, but it must also feel familiar.
  – This applies from books to blockbuster movies and even to viral marketing. Quote: "People are torn between what I call neophilia, a love of new things, and neophobia... people's tastes are incredibly conservative." – Derek Thompson [06:50] Quote: "'MAYA'—most advanced yet acceptable... people do like familiar things, but they get tired of realizing that they're doing the same thing over and over again." – Derek Thompson [08:44]

• Sequels, Franchises, and Binge Culture:
  – Moviegoers see fewer movies each year; thus, studios double down on proven franchises—translating familiarity into box office success. Quote: "TV is just sequels; we call them episodes and praise their genius. Movies are sequels, we call them franchises and say they're stupid... People just want to see new episodes of their favorite characters." – Derek Thompson [10:30]

3. The Economics of Book Publishing

• Portfolio Model:
  – Publishers bet on many books, expecting most to 'fail.' Rare mega-hits subsidize the rest, similar to how venture capital works. Quote: "It's the portfolio model for venture capitalists... You bet on a hundred companies and 98 of them are absolutely terrible. And then two of them are Facebook and Airbnb." – Derek Thompson [15:15]

• Advances, Royalties, and Risk:
  – Advances are often more about betting on potential blockbusters than precise sales forecasts. – The upside potential (a huge hit) is infinite; the downside (a flop) is limited. Quote: "The risk is almost all to the upside. The downside risk is very finite... but the upside risk is infinite. There's literally no end to how much you can sell." – Felix Salmon [18:30]

• Self-publishing & Viral Hits:
  – Example: Fifty Shades of Grey started as Twilight fanfiction and built a huge unseen fanbase before mainstream publishing. Quote: "She was already this blockbuster phenomenon [online] that couldn't be measured by publishers." – Derek Thompson [22:20] – Game-changing, but nearly impossible to replicate—“culture isn’t a garage door, there’s no formula” for hits. [27:00]

4. The Music Industry in the Streaming Age

• Why Are There Fewer, Bigger Hits?
  – Streaming and visible popularity (charts, playlists) lead to more peer influence and clustering around the same songs. Quote: "There's a psychological principle called social influence... simply knowing what's popular is going to make you gravitate to those popular things." – Derek Thompson [30:00]
• Democratization of Broadcast Power:
  – Now anyone can launch a viral hit (via a shared playlist, meme, etc.), but major platforms and recommendation algorithms still dominate. Quote: "Broadcast power has been democratized... but large platforms are still hugely influential." – Derek Thompson [32:39]
• Music Industry Money Flows:
  – Labels have regained power through streaming deals, often at the expense of artists, who make most on touring and merchandising. Quote: "Spotify's revenue goes 60% to the labels, 7% to the artists." – Derek Thompson [38:00]

5. Art World Economics

• Value of Fungibility:
  – Artists whose works are consistent and interchangeable (like Cy Twombly) become more collectible and command higher prices. Quote: "If you can create a body of work where any one piece is worth pretty much the same as a very similar piece, then you will be very successful in the art [market]." – Felix Salmon [42:42]

Notable Quotes & Memorable Moments (with Timestamps)

• On the tension between newness and comfort:
  "Hitmaker's big secret: take something familiar and just add a twist to it." – Jordan Weissmann [08:03]
• On the futility of formulas for creative success:
  "Formulas are for garage door openers... But culture isn't a garage door." – Derek Thompson [27:05]
• On viral hits:
  "Fifty Shades was like an asteroid, it happens once every century and there’s no formula." – Derek Thompson [27:00]
• On the quirks of the bestseller list:
  "The number one best selling book every year for the history of the book industry has been the Bible... But people actually do like the stuff that they are familiar with." – Felix Salmon [34:30]

Important Segment Timestamps

• [01:30] – Derek Thompson introduces Hitmakers and discusses how TV business models shape programming.
• [03:22] – The “hero franchise” model in cable news and sports media.
• [06:45] – The principle of familiarity vs. novelty and the MAYA model.
• [10:30] – Movie industry strategies: franchises versus originality.
• [15:15] – The economics of book advances and how publishers make money.
• [21:08] – Fifty Shades of Grey as a self-publishing phenomenon.
• [24:00] – Are publishing houses being squeezed like record labels?
• [29:30] – Why does streaming lead to fewer, longer-lasting music "superhits"?
• [32:39] – Broadcast power in music: democratization and algorithmic influence.
• [38:00] – How streaming shifts money back to labels, not artists.
• [42:04] – Cy Twombly’s estate and financial success in fine art.
• [44:49] – Statistic about Liberty University and student loans.
• [45:49] – Cathy O’Neil’s tongue-in-cheek "statistic" as her final number.
• [46:24] – Send-off and farewells to Cathy O’Neil.

Tone and Style

• Conversational, witty, and slightly irreverent—the hosts and guest don’t shy away from poking fun at each other, the industries, or themselves. They blend playful asides with deep insights.

Conclusion

This creativity-themed episode skillfully weaves together economics, psychology, and industry trends, revealing how familiar patterns underpin much of what becomes popular in music, movies, books, and art. The episode balances data-driven analysis with humor and personal reflection—especially as the team says a heartfelt goodbye to co-host Cathy O’Neil.

For those interested in cultural economics, the psychology of hits, or simply want to understand why so much of what we consume looks and sounds so familiar, this episode offers a trove of insights—plus plenty of laughs and a few thoughtful goodbyes.