The Creativity Edition

Summary

Slate Money – The Creativity Edition

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

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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.

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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]

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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]

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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.

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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.

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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.

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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.

Transcript

[A]

The following podcast contains explicit language. Hello, and welcome to a special creativity edition of Slate Money with a man called Derek.

[B]

He does have a last name.

[A]

There is a man called Derek here. I'll get you. This is also Kathy Oneills last ever show of Slate Money. Sad. So it's a little bit sad, but it's also happy because we have a man called Derek. Kathy, welcome.

[B]

Well, oh, oh, thanks.

[A]

And. And I'm Felix Hammond, Infusion and Jordan Weissman. And Slate is here.

[C]

Hello.

[A]

And we also have a man called Derek.

[D]

Hello, I'm a man called Derek.

[A]

Tell us.

[D]

Surnamed Thompson. But you do the Madonna thing if you want.

[A]

Yeah, Slate Money with Derek. Derek Thompson.

[B]

Derek looks a lot like Madonna.

[D]

Oh, my God.

[A]

That's like. This is the great thing about podcasting is nobody knows. Nobody knows. But it's true. Derek Thompson walked into the studio and was like, oh, my God, Madonna's just.

[D]

Walked into the studio.

[B]

I asked her for her autograph.

[A]

We are going to be talking about Madonna, actually on this show. We're going to talk about the economics of, well, all bits of the creative world. We're going to talk about the movie industry, the book industry, the art world, because I'm on the show and I can't really talk about creativity without wonking out about the art world. But Derek, why are you the person that we're talking to about this?

[D]

That's a good question. Well, I wrote a book called Hitmakers, the Science of Popularity in an Age of Distraction. I got the idea to write a book, to write this book, because I was writing about the economics of entertainment. Specifically, I was writing about the economics of the television industry. I thought it was pretty interesting. Just the single insight that kind of helped to inspire the book was this idea that the economic business models of cable versus broadcast helped to explain why some shows run cable and why some shows run broadcast. That, for example, the fact that HBO was subscription only, no advertising, meant that it could take these enormous risks and not have to optimize for sort of per unit attention. 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. So HBO could take a lot of the risks. For example, same with Showtime or Netflix, Fox and NBC and CBS had to maximize for audience. And as a result, all of the Emmy shows, all the status shows, all the shows that we praise for their quality were going toward the first business model. And the shows that were actually succeeding in getting a lot of people to watch them say big Bang Theory Two and a Half Men. Are we going to broadcast? So that was just this little thing that I was writing about, and it got me onto this book about the psychology and economics of cultural markets.

[A]

So. Okay, so let's start here. I mean, we may as well start with this whole television thing. One of the things which you have in the book is an explanation which I never really thought about before, but kind of like the minute that you wrote it down, I was like, oh, oh, right, shit. Of why CNN only seems to be capable of broadcasting one news story per day.

[D]

Yeah. So this, this, this, this. Actually, this story goes back to one of the first columns I wrote for the Atlantic, actually, was about the business model of espn. How did ESPN build a entertainment sports monopoly? And I was lucky enough to talk to its president, John Skipper, and he said, you know, we had a really big problem with SportsCenter in the early 2000s. We were covering bass fishing, and we were covering poker and all sorts of these sports. We were essentially like a. Like a Greek diner. We were serving a thousand different kinds of food. And I. This is Skipper realizing, Sorry, I'll do Skipper voice. I realized that what we should be is more like a steakhouse. We should tell one or three stories all the time. So that when the marginal viewer is thinking about tuning in, he or she will expect, oh, I'll see LeBron James when I tune in. I'll see Kobe Bryant. I'll see Tiger Woods. If I go to espn, I know what I'm getting that would make them more likely to tune in. And so they concentrated all of their television around a handful of essentially hero franchises. They turn these sports stars into heroes. That's what CNN did with Donald Trump in 2015, 2016. Zucker went in explicitly saying, we are going to copy the Sports center model. We are going stop. We're gonna stop doing 1000 different programs on a thousand different topics. We're gonna concentrate on the biggest stories of the day to get that marginal CNN viewer thinking, I'm interested in Donald Trump or I'm interested in the Supreme Court, I'm gonna.

[A]

And the big insight here is that Even though CNN, 24 hours a day, your typical CNN viewer is only gonna be watching it for 10 minutes. And so Zucker just really wants those 10 minutes to be about the one story that viewer cares about, which is invariably gonna be Trump.

[B]

Yeah, that's like I listen to the radio in the morning, and if I listen to it long enough, I hear exactly the same thing a second time.

[D]

This is news radio.

[B]

Yes.

[D]

Or top 40. Exact same thing on top 40.

[B]

Yeah. So I guess. Is that it? I mean, so you talked about this model of like, the hero, creating the hero, but is it also possible just like modeling the viewer and the viewer, they want to make sure the viewer, whenever they turn it on, sees the most important thing, Right?

[D]

It's definitely a little bit of both. First of all, one of the big ideas in the book is the sneaky power of familiarity. That as much as we want to think that we're creatures of novelty, 90% of the time we listen to music, we're listening to a song we've already heard. What are the biggest movies in America? They're all sequels, adaptations, and reboots. I think this is even true for our reading habits. We love reading new stories about topics in which we already have a bit of expertise or we have a prior bias or opinion.

[A]

Is this why there are so many books coming out about Hygge right now that we just like, you know, I need to start collecting books. I've actually done this myself. I just moved into a brutalist apartment building, and I now have eight different brutalism books on my bookshelf. Because if I've got one, I want another.

[C]

Hygge is like the Danish science of, like, comfort. It's like Scandinavian surrounding themselves with like, candles and furry blankets and stuff. And like.

[A]

And once you come across the hookah thing, you see it everywhere and it's just like. And. And it's there. It's like five year olds playing soccer, you know, like, no one thinks about this stuff. And then one person doesn't. Everyone just floats.

[B]

It's like, but people actually do want new things, right? Like, that's exciting when they come up with new things.

[D]

Yes, exactly. And that, that is like the central tension that I'm getting. It's certainly the first half of the book is that people are torn between what I call neophilia, a love of new things, and neophobia. We are all deeply conservative in our tastes. And so the trick for hitmakers, the trick for people creating podcasts or journalism or movies or music, is constantly, how do we create new things to create a new product line, to create a new franchise? While understanding that people's tastes are incredibly conservative, all they want is to be sort of introduced to something that's sneakily familiar. And so I think that that tension very much, I think, lives at the heart of.

[A]

I remember when we put out a little bit question to our listeners about a few months ago, saying, so what do you Think about mixing up the Slate Money feed and putting some, like, new things in there. And we got this overwhelming response saying, no, don't touch it. Keep the formula. Including the formula.

[D]

Totally. And this is. I mean, you see this all the time with. With redesigns for webpages, right? Which is the. Your favorite web page is. Your favorite website is redesigned. You absolutely hate it. It's terrible. You don't know where anything is. And then six months later, you get used to it. And maybe you get a peek and somehow of the old design, and you're like, God, that's absolute crap. How in the world did I go to that site every day?

[C]

Like, one of the themes you have kind of running through the books is that Hitmaker's big secret is kind of take something familiar and just like, one cool twist that's like, take familiar and just add a twist to it. Which, if you want to go back to Donald Trump. I think, like, the best example is probably like, make Mexico pay for the wall. Like, that was like, you already knew they wanted to build a wall, but Make Mexico Pay for it was like, his quirky. And there were like. Some people have tried to, like, codify this. Like, there's this thing, Maya, that you talk about. Like, do you want to like that. That this acronym that kind of captures.

[A]

Was this yours? Was this someone else's?

[D]

This was someone else's. And I'm about to give him. Give him credit. Raymond Lowy was the father of industrial design. He's a French orphan who comes over to the US in the late 1910s.

[A]

You don't need to storify this.

[D]

I don't need to storify. Oh, no. Let me. Okay. Raymond Loewy is the father of industrial design. He designed, like, the 1950s. Basically, he's the Steve Jobs of his era. Like the cars, the trains, everything. And basically, he had a theory of why people like what they like, called Maya M A Y a most advanced yet acceptable. And it gets this very idea that people are torn between neophilia and neophobia. And they do, like, familiar things, but they get tired of realizing that they're doing the same thing over and over again. So they need a new product that sort of reintroduces that.

[A]

So can you explain how to understand the current epidemic of superhero movies within the context of this Maya framework? Because as far as I'm concerned, you know, Iron Man 14, there's nothing advanced about it.

[D]

Well, so what's really interesting to me about Deadpool.

[C]

Deadpool is actually the best example. Right, right.

[D]

Right, exactly. So there's two things that are happening here. First, the movie industry has realized that the number of tickets that people buy per year has fallen from, you know, about 30 in the 1950s to about 4 per year today. So the same way that people are only tuning into CNN For 10 minutes a day, people are only tuning in, so to speak, to the movie industry for, like, four weekends a year. As a result, there's a really, really high bar to getting their attention. And how do you get someone's attention? You have to introduce something that's a little bit familiar. So a lot of people, I think, are just waiting on their favorite storylines to reappear year after year. I'm only gonna. I'm gonna wait until the next Star wars movie comes out. I'm gonna wait till Iron man comes out.

[A]

I think what they're doing is they're binge watching the. You know, the Avengers in much the same way that we'll binge watch Game of Thrones or something like that. You just have to, like, wait between episodes.

[D]

Wait between binges. Actually, what's funny about that is I brought up with a movie executive. I was like, does it piss you off when people are like, all the good stories have moved to television, and the movies are just a franchise sequel and, like, you know, hat business. And he was like, what pisses me off, actually, is that, you know, what is television? Television is an hour of entertainment plus 100 sequels. Like, that's what a television show is. It's just sequels. So when we see it, sequels on television, we call episodes, we praise them for their genius. And sequels and movies, we call franchises. And we say that they're stupid. But in fact, at the same time as the. Just as television has become more like the movies in terms of its cinematic sort of panache, the movies have become more like television. They've understood that all people want is just to see new episodes of their favorite characters. And just like you said, they're essentially just waiting for their favorite characters, favorite characters to reappear.

[C]

I'm gonna.

[B]

I have a totally different theory about this.

[D]

Okay.

[B]

I mean, which I would like you to tear apart. But, like, my theory is that what's. What's really happening is that these movie. The people who decide which movies to produce, right, the producers, I guess they're called, they are, like, conservative, and they don't want to take big chances. And they. So they. What they do is they opt locally, optimize. They're like, oh, well, people aren't going to movies, so we're gonna. We're gonna give them something that probably will bring a few more people to a movie than a risky thing that we would do. But in the meantime, people like me would, like, love to go to the movie every Friday night. But the movies suck because they're all sequels, you know? In other words, you have to literally break out of this mold, stop locally optimizing and really start making great movies. That's not gonna happen.

[D]

Everything that you said is true. And I think almost every single movie executive off the record would agree that what you're saying is true. The problem is the feedback loop. And the feedback loop is you make a super original movie and nobody sees it. And that creates an enormous chilling effect on equally original movies in that genre.

[B]

It is riskier, but it's probably. The payoff is bigger on expectation, I'm guessing. I wish that were true.

[A]

The biggest payoff is on Star Wars. You can never get a bigger payoff when you get on Star Wars.

[B]

Star wars is the thing. I see when it comes to that.

[A]

Here's the question, and just one last question in the segment, which is what has changed since 1999? I have this idea in my head that 1999 was like the golden year for movies. There were so many amazing movies came out. They are super original movies. I mean, I know like Being John Malkovich or something, like awesome stuff which like just came out of left field and really delighted people. What is true today that was not true then?

[D]

A couple of things. First of all, the domestic market for movies has absolutely flatlined. So the entire growth sector for Hollywood is overseas. And what translates overseas, Is it Spike Jonze movies? Nope, it's explosions. It's incredibly familiar heroes. It's storylines that have already been translated into Mandarin so they don't have to re educate people in like the irony of Woody Allen and Spike Jon's dialogue and screenplays. So that's an enormously important thing. The other thing that's happened is that everybody has learned Disney's playbook and realized that the business of Hollywood is in merchandising. And it's just so much easier. I mean, imagine trying to merchandise Bing John Malkovich. It's almost funny to imagine. What the hell would that.

[A]

Look, I've got a little toy New Jersey Turnpike.

[D]

Yeah, being John Malkovich, like a Mution park ride would be like going to like the floor that's only three feet tall. This is fun. I'm on a really crappy floor. And so the way to, you know, you make how much Money from Disney World, like $150 per person. You make how much money from the movies in the opening weekend, maybe five nets to the studio. The future of this business model is in merchandising these films, not the artwork itself.

[A]

But Derek, you have written. I mean, this is one of the more sort of self aware books out there. There's a lot of kind of weird sort of breaking of the fourth wall and going, yeah, I'm trying to write a hit book here going on in your book. So why not just take that sort of head on? Let's talk a little bit about the economics of the book publishing industry because this really fascinates me. And as someone who's had a book agent for a decade but has never written a book, I can tell you that what my book agent tells me is that if you earn out your advance, you've got a crap agent. Basically the idea is that all, all publishers just, they publish a whole bunch of books and most of them will basically fail. And that's how it works. And then once in the blue moon, you'll get this mega hit which pays for everything else.

[D]

Right? That's exactly. So it's, it's the portfolio model for venture capitalists too, Right? You bet on a hundred companies and 98 of them are absolutely terrible. And then two of them are, you know, Facebook and Airbnb, and then you're Peter Thiel. So one thing to, I think, to spell out for, for listeners is probably, you know, you said sell out your advance. So, like, what does that mean? The way that being a book writer works with having. I'll. Well, I'll tell, I'll tell my story very briefly and hope that it's instructive.

[A]

Yeah. Because I want to know how much of an advance you got.

[D]

That's not going to happen. Really good, really good effort. So I had a couple ideas for books that were terrible. I got an agent who said maybe you should write a book about sort of the economics and psychology of cultural markets. I wrote a proposal that was 20,000 words long. It's basically a business plan for a book, essentially, that says, I promise to do this, I promise to do that. It's sent out to the publishers, to the imprints, and imprint is the official name for the tiny little character you see at the bottom of a spine on the book. Each of the publishing houses, like Penguin or Random House, have an imprint. And the imprints will either say, this proposal is terrible, or I like this proposal. We'll, we'll talk about it. We'll do a bid. They bid on it, and they finally offer an advance. With the advance, a certain amount of money, let's say it's $10,000 just to make it a round number. With $10,000, it's paid out in four bits. First upon signing, second quarter upon turning the manuscript, third quarter for getting the hardcover published, fourth quarter for getting the paperback. You have to, if the book doesn't sell as much as the publisher thinks it's going to sell, essentially sell out its advance, then there are no royalties for the author. As you said, it's only if the book is super successful that you get to see those royalties. And for the vast majority of authors, you know, you don't get the royalty and it's argu that, you know, you hopefully shouldn't, that you're, that you got paid more than you're worth. Isn't that the dream of every, you know, worker?

[A]

But the economics of the royalties, I mean, this kind of implies that the publishers are stupid if the authors don't earn out their advance. And there are two reasons why they're not. One reason is that they actually make money even if you don't earn out your advance because of the economics of the book publishing industry. But the other reason is that when they are giving an advance, what they're not doing is anticipating how many books are going to sell and then giving you an advance equal to the number of books they think they're going to sell divided by the amount they pay you per book. They're actually perfectly happy giving you more than that because there's this very fat right tail being the upside risk. And one of the fascinating things about this entire discussion is that when you talk about risk in the context of books or in music or any other creative field, the risk is almost all to the upside. The downside risk is very finite. You can sell zero, but the upside risk is infinite. There's like literally no end to how much you can sell.

[D]

There's a. There's a quote from Jeff Bezos in the book that gets exact to this point. He says people talk about hitting home runs in business, but they should stop doing that because home runs have a truncated outcome distribution. You can only score four runs with a home run in business. You can score a thousand runs, a million runs. I mean, the iPhone scored a billion runs, like. And so that's the upside of taking enormous risks in some of these markets, is that, as you said, there's a floor but no ceiling.

[B]

Yeah, I mean, I just want to. I Just wrote a book. So I just want to correct one thing you said, which is they don't give you the second part of your advance when you turn in your manuscript. They give you the second part of your advance when they accept your manuscript. Which is a lot. There's a lot of difference in this space between those two things. I also want to say, like having gone through this entire thing, it's awful. It is really, really awful. It's an awful experience for the writer and it's something I would never recommend to anyone. Even though my book was extremely successful, it still hasn't covered my advance. And there's, you know, that's what it means I have a good agent. That's true. But it also is pressure for the writer from the publishing house. They want me to do all sorts of things in order to meet that target because they care about that. And if you want to write a second book and you want a good advance for the second book, you better have paid back for that first book. So there's this whole economics of not just the first book.

[A]

The trick is to sign your second book contract one day before your first book comes out.

[D]

I think that's right exactly.

[C]

About why they overpay though. Also I think part of this is because it's an auction system, right. Like there's, there's a well known phenomenon, it's the winner's curse in auctions that like when you have lots of people bidding on something and if you have an even a decent book proposal, you're going to have multiple bidders. It's whoever most overestimates the value of that product is going to win. And so by definition whoever is most likely to lose money on it is most likely to actually get it. So that's, I think, you know, it's kind of built into the whole model of the industry.

[B]

Best case scenario, look, a lot of people just never get paid for their. And they self publish on Amazon or something and.

[A]

Right.

[D]

And then it's all royalties. It's all just making money off the books that you sell.

[B]

Yeah, but then you probably don't get very much royalties when I mean like, let's face it, like one of the great things about getting. Because you put got published with Penguin. Right. I was with Crown Random House and they have an enormous machine, a marketing machine. Right. If they're going to pay for a big advance, they're also going to put your, their marketing machine behind you. And that's a huge push.

[A]

But, but let's just, you know, since this is. We love our edge cases and our outliers. On this show. There is that amazing story of the self publishing, you know, phenomenon known as 50 shades of grey, Right?

[C]

Yes.

[A]

Which was just like, you know, once you have a huge hit which is self published, then at that point you can like, you know, you can. It will eventually get picked up by a publisher, but boy, are they gonna pay through the nose for it.

[D]

Yeah, yeah. And 50 shades of gray is so interesting. And I talk about it at length in toward the end of my book. I talked to the author, I talked to EL James, I talked to the publisher and a couple people in this story. And you know, one of the theories that I have about 50 shades, which I think is understood sometimes about sort of cultural blockbusters, is that my theory is that it didn't actually, you know, go viral the way that most people think it went viral. She was a superstar on fanfiction.net, which is this website that practically nobody has heard of, but might be the most popular erotic website for women in the world.

[B]

Say it again. What exactly?

[D]

Fanfiction.

[A]

So this started as Twilight fanfiction, right?

[D]

Exactly. It started as Twilight fan fiction. She has millions, by one estimate, maybe 5 or 6 million readers, tens of thousands of commenters reading this work in.

[A]

Historical present here or just like present present. Did she have millions of followers before she published this?

[D]

Yes. That's what's so unknown. That's the story that that hasn't been as widely reported is that she was already this blockbuster phenomenon.

[B]

She's a marketing machine.

[D]

Right. I call her in the book. I say it's like a dark broadcaster. It's someone who essentially has broadcast power, but we can't measure it effectively. We as like the media, the publishing world or Hollywood, can't measure it effectively. So she had this massive broadcast power that couldn't be measured by the publishers. Cause he wasn't selling, she wasn't selling books yet. And so when she finally did go to this small little Australian publishing company to sort of translate this very popular work into an ebook, a lot of these people followed her. And then when Random House finally gave her all of this money in order to actually publish with an American official publishing house, then that's when it really exploded and she got in the COVID of, you know, Time magazine and Good Morning America and everything else.

[A]

So the publishing industry is a bit like the music industry. You have these intermediary publishers. You have the fans, the listeners, the readers who pay money for the product. You have the creators, the writers, the artists, who create the product, and then in between, you have the record labels or the publishing houses. What we have seen in the music industry, and we can talk about this in the next segment, is though, those intermediaries getting squeezed and the economics really kind of getting pushed back out towards the creators, which is a good thing. Is there any evidence that the publishing houses are getting squeezed? Because it seems to me that they're not. That the authors are getting squeezed, if anything, more than the publishing houses are.

[D]

So an interesting statistic is that the recorded music industry right now used to be $20 billion, used to be huge, now it's $6 billion. The US book market is $15 billion. So there's going to be hits in there. That's. It's an enormous tale, but there are some hits inside of there. You know why these public publishing houses are successful is because it's a little bit oligopolistic. There's only like five really big ones, and it's a $15 billion pot. So there's just a lot of consumer interest that's just there.

[A]

So. Yeah, so, but in terms of the advances, like if I'm Barack Obama and I get a $20 million advance for my book, which is what the rumor is that he might get if he writes his White House memoir, realistically, the publisher is gonna lose money on that, right?

[D]

I think they probably will. That's an enormous number of books sold. I mean, I don't know how much. What was it My Life was that Bill Clinton's memoir sold? But it wasn't like one of these books that was number one for half a year, which is essentially what you would need to make back 20 million. One other really interesting thing about the book industry that I think, where I think it should be more like the movie industry, is that you know what happens if you write a successful book in the business technology sort of space. You can give talks about it, you can give speeches about it. And how much of that speaking revenue does the publisher get? Absolutely zero. They get none of it. So in a way, you could say that they're not capturing the long tail risk of the success of certain business titles that the authors monetize on the speaking circuit. And I was actually giving like a talk at Penguin about this book where they said, all right, well, you just wrote this book about cultural markets. Tell us what to do, how to be a better business. And I was like, well, this isn't gonna be very good for me. And I apologize to all the future writers that I might be screwing over. But you know, when Disney makes a hit movie, then it owns the theme park and it owns the shirts and it owns the, you know, Star wars bedding. But when one of your writers has a hit business book, you get none of the speaking revenues. You get none of the merchandization of the original product.

[B]

You're a traitor and you should.

[D]

And no, but this is why it's good for authors, or how I at least justified it to myself as being good for authors, is that I said you should overpay to capture a little bit of this long tail risk. Which means that business writers of the future might get paid even a little bit more. But just the, but just the publishing house would get a certain segment of their future speaking.

[B]

Well, that brings me up with the question I have about, you know, your book hitmakers. If I'm an aspiring writer, am I gonna find like how to make my book a hit from your book?

[D]

I try to avoid what I considered like explicit formulas. There's 100% some how to self help guidelines in here. Even though predominantly I wanted this to be a story driven book and an analysis driven book.

[B]

I mean, in particular, the story about like 50 shades of gray seems like impossible to replicate.

[D]

And I think it's my job as an honest journalist to not give people the false hope as to say, read my book and there's a formula for becoming the next 50 shades of gray. Reasonably speaking, there is no next 50 shades of gray. It's a comet, it's an asteroid, it's the Donald Trump of publishing. It happens once every century and there's no formula. And so what I've taken to saying now is formulas are for garage door openers, like punch in 2796 pound and you open the garage door. But culture isn't a garage door.

[A]

What did you do in my formula?

[D]

I just randomly picked that out from stalking Felix for the last six months. But like, culture's not a garage door and people aren't a garage door. There's no formula to success here. Even though there are, I think good academic research, good general principles, and good rules.

[B]

Did you hear about the people that claim to have figured out the attributes for a bestselling book?

[D]

Yeah. And how did that book do? No offense, but like, if you knew the formula, why in the world wouldn't you it use. Use it? I get this question so often that I just have had to develop a memorized answer to it, which is if I wanted to write a book called the Formula that was about the formula for being successful, then I would have been selling snake oil three years ago if I was willing to lie to people about this kind of stuff. I wouldn't start with a book. I'd start with running for president.

[A]

But let's talk a little bit about the music industry because I think everyone's fascinated by the music industry and it's changed a lot. As you said, the dollar size of the music industry, certainly in terms of people just paying for music, has shrunk a lot. The live music industry has been expanding enormously. Artists are finding non record label related ways of funding themselves in multitudinous different ways. And in the age of Spotify, you can you have access to just this insane range of music which no one really had access to before. And yet this is the paradox which I struggle with. In a world where more people are listening to a much broader range of music than ever before. That world also seems to be much more hit driven. And with many fewer like hit recording artists. How can you reconcile those two things?

[D]

This is an awesome question, and here's my best guess. What I think you're asking is why is it the case that you can listen to an ever more diverse array of music and yet some of the hit songs seem to be more dominant?

[A]

Well, it's not just that. It's just that the number of hit songs seems to be going down, right?

[D]

Well, actually it seems to be the case that the power of hit songs is greater than it was before. So there's fewer, longer lasting. The superstars are more super than they used to be.

[A]

And there are fewer superstars than they used to be.

[D]

Yes. So here's my theory about this. There's a psychological principle called social influence, which is basically a fancy way of saying peer pressure. It says that in a world with transparent taste, simply knowing what's popular is going to make you gravitate to those popular things. Knowing what the best selling mop is means you bound your search for mops on Amazon by just going to buy the most popular mop. I think the same thing is happening for cultural products. Tastes are transparent now, which means it's very easy to see what the best selling or most listened to hidden hip hop song is or movie or book. And as a result, I think people are clustering. They are a little bit scared of the sheer abundance of options that they have. They feel a little bit of the pinch of the paradox of choice. And as a result they're beginning their search by saying, all right, well what's already popular? I'll begin there. And that because of the transparency of cultural markets right now, plus this element of social influence, you're seeing consumers cluster around the same products, and you're also.

[A]

Seeing fewer intermediary tastemakers. Like, it used to be that radio stations could basically create hits, and now because it has become that, that job has become outsourced to everyone who's sharing what they're listening to on Facebook. You know, because the only way, I don't know if this is still true, but it used to be that the only way you could even log into Spotify was if you had a space Facebook account. You are kind of forced to chain to. Forced to share what you were listening to. And because of that, it's almost impossible for someone to come along and say, you should listen to this, you should listen to that.

[C]

I think you actually kind of make a little bit. The opposite point in your book is that you still have these broadcast channels like radio and Spotify playlists that actually do have an enormous impact. That you do have these, and this is a theme for every industry in your book, is that you have these broadcasters, and as long as they control some sort of large platforms, they really are still influential.

[B]

I'm going to jump in here because. Because along those same lines, I'm wondering to what extent the recommendation algorithms on whatever Pandora or what have you are actually influencing this too, because I'm imagining building one of these recommending algorithms and there are all these songs that no one hates, and they're the popular songs. Or another way of saying that is it gets popular, people get big and popular because they make music that is not very hateable, and they get sort of jammed into those.

[A]

Right. So what you want to do is you want to create. The secret to success in the music industry is to create a song which gets recommended in as many different algorithms as possible.

[D]

That's a great way to think of it. Yeah, right, exactly. Hack the algorithms. Yeah. I would say two things. First, to Jordan's point, which I think is totally well taken, I think definitely a theme of the book is that broadcast power has been democratized. That it used to just be FM radio stations, television stations, movies maybe that had the ability to launch a hit song. But now we see songs launching from, quote, the bottom, from a Sean Parker playlist, from a Mannequin Challenge viral meme, from a, you know, Ashton Kutcher's Twitter feed. This is how some top 10 songs are launched now from individuals that now have stolen broadcast power from the institution. So that's. That's definitely happening. The second Thing that's really fascinating about about the power of hit songs today is that a lot of this has to the demise of the old collusion networks of the labels. So that for example, for the vast majority of the Billboard Hot 100's existence, the labels could pay the radio stations to play certain songs and pay the DJs to tell Billboard, hey, this song's really popular. Or because music was scarce, when a record store owner ran out of say Bruce Springsteen, he or she would tell Billboard, well, I'm out of Bruce Springsteen. So the most popular music that I have is basically AC DC. So scarcity and collusion would drive the Billboard Hot 100. But after 1991 and into the 2000s, Billboard A started measuring point of sales data and B started measuring more accurately radio airplay. And since then, the 20 songs that have been on the Billboard Hot 100, the longest have all come out since 2000. So it turned out that as Billboard held a more perfect mirrored audience tastes, it turned out that we really do just want to hear the same songs over and over, over and over and over again.

[A]

And in fact, this is one of the, you know, big unsung facts about the book industry is that the number one best selling book every year for the history of the book industry has been the Bible. Yes, it's always the same book and it doesn't even appear on the bestseller list because that would be the world's most boring bestseller list. But people actually do like the stuff that they are familiar with and they listen to those songs and they buy those books over and over.

[B]

I'm just gonna jump in here and object a little bit to the idea that just because we listen to it the most, it's the thing we like the most. I don't think any one person might not like it the most, but they're willing to listen to it. Just like the Bible's obviously bought a lot. But as I mean, and there's actually plenty of people that'll say that the Bible is their favorite book, especially Republican politicians. I'm just saying, like it's a proxy for not for being willing to listen to it. It's not a proxy for this is my favorite song.

[D]

I think that's totally fair. And I think that one of the things that I'm really fascinated about and is a theme from your book as well is measurements of popularity can determine culture, that even the billboard changes in 1991 that more accurately measured point of sales data rather than just allow the record store owners to lie to Billboard. One thing that happened almost immediately is that hair bands collapsed, their sales collapsed and hip hop and country soared up the charts. Because it turned out that when you actually measured what people were listening to, many more people who, the music fans actually preferred hip hop and country. But it was the labels whose taste was conservative who wanted to promote rock and roll and hair bands. So again, yes, hair bands are conservative. Apparently they're tasteful conservative compared to NWA.

[A]

This is a scandal of LIBOR fixing proportions. Basically what you're talking about is the LIBOR fixing of the music industry. And I just wonder who is going to pay those multibillion dollar fines for fixing the Billboard 100.

[D]

Well, they've already fixed it, right? I mean, there's been enough payroll scandals that I think that they've made their, their, their LIBOR equivalent payments.

[C]

So I want to come back to this idea of that intermediaries are kind of gone, right? Or that they're breaking down. I feel like that's not really the case though. It's that they're still extremely, extremely important that just the intermediaries have kind of diversified and like. And I was hoping you could just talk a lot.

[A]

Well, I mean. Okay, so. And can you talk about it specifically with regard to my favorite recording artist, Taylor Swift?

[D]

Yes, of course. Well, something interesting about. You know, Taylor Swift has an. A label.

[A]

She owns her own label.

[D]

She owns her own label. So she doesn't. She has Universal.

[C]

No, she has, she has distribution, I think with Universal, but she's also got Big Machine and her father owns a few percentage points of equity in it, but she does not own the whole thing.

[D]

So there I was thinking about this. There are basically four big players in the music industry. The songwriters obviously write the songs. The publishers, so called because they used to sell the sheet music, but now they really handle royalties. The performers, literally, Taylor Swift and then the labels, let's say Universal Republic. And throughout in the last century of music history, the balance of power has shifted really dramatically between these four actors. In the late 19th century, when the music business was literally like a paper business, people, there was no recorded music. People just wanted the sheet music to play on their piano at home. That was great for the publishers. Then along comes FM radio. And FM radio is established to pay out a lot of its royalties to the songwriters. Okay? Now the songwriters are no longer impoverished. Then recorded music with vinyl and cassettes and CDs becomes this $20 billion business. Who gets the money from that? It's the labels. But then the recorded music industry collapses and performance art, performance Art Ha. Performances begin to grow. The performers get the most money from that. But now, as stream starts coming along, how did they begin to organize the streaming rights so that it benefits the labels much, much more than it benefits anybody else? Spotify's revenue goes 60% to the labels, 7% to the artists. So in a weird way, because of streaming, the labels have made a bit of a comeback in recorded music. But the big growth industry is performance.

[A]

And this is. I can highly recommend the David Byrne op ed about this in the New York Times from about a year ago where, where the deals between the labels and Spotify and Pandora are so opaque and confidential that I mean, Spotify can say we pay a lot of money to these record labels and then it's just up to the record labels to pass that money on through to the artists. And the record labels will never ever give an artist a proper accounting of how many streams they had and how that came then passes through to how much money they get. Even if you're David Byrne, they won't tell you. Yeah. Which is kind of astonishing.

[D]

Yeah, that is astonishing. And, and, and this is why you have, it's funny, you kicked off this segment by talking about, you know, merchandising and, and independent artists, I think, sort of going like performing in, in commercials and things like this. That used to be called selling out. When Michael Jackson did the Pepsi commercial, people were like, what the hell are you doing? You know, you have a Pepsi commercial. The biggest.

[A]

Can you imagine what Rihanna's career would be like if there was no selling out? It's one entire career selling out and it's glorious, right?

[D]

Yeah, I know. Selling out has itself sold out. Right? Like, it's just, this is how you make money. You have, you have to try to get your song on a commercial because you're not going to get any money from YouTube and Pandora and Spotify. The way to eat and get health insurance is to hope that Toyota pays you a bunch of money.

[A]

So I'm really psyched about this numbers round because this is somewhere where this is. The factoids in this entire area of life are just brilliant. Derek, did you bring a number?

[D]

My number is 51%. Immigrants founded 51% of America's unicorn companies. Billion dollar companies. I think this is a Rorschach stat. Someone like Steve Bannon might look at this and say immigrants are stealing our unicorns. They're stealing our billion dollar companies. Companies. Others I think clearly would look at it and say, well, you know, if native born Americans would have invented Google Anyway, they would have invented Google.

[A]

Although this is a slightly cunning stat because 51% of unicorn companies have at least one immigrant co founder. Most of these companies have three plus co founders. So like the more co founders you have per company, the easier it is to get that number quite high.

[D]

Yes, I am, I'm pretty pro collaboration and pro immigrant with this.

[A]

I actually have a creativity number this week just because the magnitude of these things is enormous. I was reading this week about the Cy Twombly estate. Cy Twombly being very good famous artist, but not necessarily a household name who sold most of his art over the course of his career to various people. And who knows, people are now quite rich because A you needed to be rich to buy sidewomblies, but B, the value of those sidewomanies has gone up and all of that is well and good. What's interesting is the leftovers that the paintings and drawings that he had left over when he died, he gave to this thing called the Cy Twombly Foundation. The Cy Twombly Foundation's assets are valued at $1.5 billion.

[B]

Holy crap.

[A]

So that's how much value just second tier visual artists can create.

[D]

Can I just say, I love Sny Twombly. For those who don't know him, all of his art looks like scribbles. Looks like a very ingenious child on acid. And so what's interesting is that he created a bit of confusion because if his famous art looks like scribbles, then his non famous art is still gonna look like scribbles. And so his non famous and famous art probably look more alike than many other artists. And that's actually what is it.

[A]

We didn't really get into the economics of the fine art world. But it's absolutely true that the secret to success, to financial success in the art world is precisely that kind of fungibility. 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. You create a bunch of very unique pieces which aren't really fungible and there are maybe not so many of them, then you become less collectible and your financial success is much lower.

[D]

So don't have a blue period if you're a modern artist, or rather only have a blue period if you're going to go blue.

[A]

Right, you better stick with blue. Do you remember that wonderful line in Art School Confidential? Since we're talking about John Malkovich movies here, there's this wonderful movie called Article confidential where he goes, I invented triangle. Do you have any idea how long.

[D]

It took me to paint like this?

[A]

25 years. So what's your number, Jordan?

[C]

My number is 36%. 36, 36%. And it's gonna take a little while to get to it, but it's a really, it's a really depressing number. And it's about higher education, which is something I haven't talked about a while. On the show recently, Donald Trump announced that Jerry Falwell Jr. Head of Liberty University, was going to head a commission on higher education reform for the administration. So Kevin Carey from well known guy from New America foundation, writes the New York Times, started looking at Liberty University's results, how well it does in training students, how well they do when they leave, what do they make? And one of the standout statistics is that after three years, only 36% of Liberty students have paid down even $1 of principal on their student loans. Three years after they have left school, they've only 36 have managed to pay off any of what they have borrowed on their loans. This is a guy whose university essentially thrives off of federal funding and loading kids up with too much debt. And now he's going to be the one advising Trump on how to remake American education, apparently.

[D]

Did you see Kevin Roose's tweet from his year at Liberty University where he was tweeting images of textbooks that he had from the school? One of them was a page, an FAQ about the veracity of the Noah's Ark story. And one of the images has a picture of various figures walking up the plank into Noah's Ark. And the line under the picture says humans and dinosaurs shone at scale. Because if you are the sort of person who believes that the world is created in seven days and all everyone was created at the same time, you have to believe that humans exist at the same time as dinosaurs. So in the picture there's a little human and a slightly bigger brontosaurus gazing into each other's eyes in the stern of the show.

[A]

It's weird how these people don't make lots of money after they graduate.

[C]

Odd.

[B]

Yeah, I have a number.

[A]

What's your number, Kathy?

[B]

It's 88.4867%.

[A]

That's a lot of significant digits.

[B]

Well, fancy that you say that because I have two facts about this number. One is that that percent of statistics are more precise than they are accurate. And the second fact about that number is that that percent of statistics are made up on the spot to seem Smart.

[A]

That's awesome. And false.

[B]

But also, I just had to have a little math joke at the end of last week episode.

[A]

So Kathy, is, is that your last ever number?

[B]

That's my last. That's my last number.

[A]

On which note, yes, we are going to go out and cry.

[B]

Yeah, that's what I'm doing. I'm with beer. I'm gonna cry into my beer.

[C]

We will.

[B]

You guys are welcome to join me.

[A]

We're gonna go out and get some beer. I, I, I urge you all out there listening to Slate Money to drink beer. Just in general, but especially this week because it's Kathy's last week, we will somehow soldier on.

[B]

You guys are gonna be amazing. I have every, every faith in you.

[A]

Next week, actually, we do have another wonderful nonfiction author, the one and only Lee Gallagher. Fortune magazine is gonna come in and talk about one of those unicorns. Which one was it, Derek? You know what she's just written about?

[D]

No, Derek has no idea.

[A]

Derek is not really plugged into the nonfiction book publishing world of as he might make it.

[B]

It's a very onerous process when you come out with a book like your heads down.

[D]

There are other books.

[A]

So you're gonna have to, you're gonna have to tune in next week to find out.

[D]

I promise you, the only book February.

[A]

Endorsed my publisher and Cathy, on your final week. And in this creativity special edition, what should we play out with?

[B]

Well, one of my favorite songs is First Day of My Life by Connor Oberst.

[A]

We'll have to find out, like, how we manage to cope without Kathy. But we will do our very best with Lee and with the able help of Zach Dynastyn, the producer of the show. Many thanks to him to Steve Lichti and Andy Bowers, the executive producers of all of Panoply, which is iTunes.com Panoply. Do keep your emails coming to slatemoneylate.com we will take Kathy off that list at some point, but probably not for a little while just so that she gets to kibitz and, and join in on our, like, weekly discussions about what to talk about. She'll be like, I'm not on the show, but this is what I think.

[E]

Absolutely.

[A]

So, yeah, we will talk to you next week on Slate Money. Don't unsubscribe because Kathy's not here. It's still gonna be good.

[E]

I think I was blind before I met you, you and I don't know where I am I don't know where I've been But I know where I want to go and so I thought I'd let you know. Yeah, these things take forever. I especially am slow.