Understanding the Business You're In
July 17, 2023 6:16 AM Subscribe
From Steve Shives, "Why Are Studio Executives Like This?" (SLYT)
Modern Capitalism is about seeking economic profit for capital, and hence executives. This is profit above and beyond what is "fair" from investing.
Labour based profit runs into the problem that Labour demands a share. If you can convert skilled human effort into money, capital doesn't own the humans nor the skilled effort, so it can only harness "economically fair" return on investment.
To generate economic profit, you need to generate ownership of something that lets you get "economically unfair" profits. Social networks do this via network effects, creating a moat against competition, at which point then can (in theory) harvest profits off of their users. Brands do so off of trademark law, using the familiarity (and fond feelings) of the population towards their brand to sell their product at a price well above production.
In both cases, if the workers picked up and moved to another company and did the exact same thing, the asset - the install base, or the trademark brand - wouldn't go with them. This reduces labour's ability to claim a share of profits, and also prevents "look-alike" competition from sliding in when there are "excess profits".
From this lens, having high quality writing and acting producing high quality entertainment is not worth doing.
You can invest in writers and acting, but so could your competition. And if the workers picked up and did it somewhere else, they would produce the same profits.
Only the brands permit harnessing "unfair" economic profits. The MCU, for example, with its many-movie deals for stars (so the star-power they produce is captured internally), deep lore bank of comics to mine (which they own), and dozen-plus sequels all add up to a moat against someone else competing for their profits.
Owning a bank of AI background actors? A huge repository of AI writing fuel? Rights to famous actors they who can't renegotiate after they become more famous? Those demands all look like attempts to generating a moat to generate non-labour based wealth. Which can be economic profit.
posted by NotAYakk at 6:53 AM on July 17, 2023 [20 favorites]
Labour based profit runs into the problem that Labour demands a share. If you can convert skilled human effort into money, capital doesn't own the humans nor the skilled effort, so it can only harness "economically fair" return on investment.
To generate economic profit, you need to generate ownership of something that lets you get "economically unfair" profits. Social networks do this via network effects, creating a moat against competition, at which point then can (in theory) harvest profits off of their users. Brands do so off of trademark law, using the familiarity (and fond feelings) of the population towards their brand to sell their product at a price well above production.
In both cases, if the workers picked up and moved to another company and did the exact same thing, the asset - the install base, or the trademark brand - wouldn't go with them. This reduces labour's ability to claim a share of profits, and also prevents "look-alike" competition from sliding in when there are "excess profits".
From this lens, having high quality writing and acting producing high quality entertainment is not worth doing.
You can invest in writers and acting, but so could your competition. And if the workers picked up and did it somewhere else, they would produce the same profits.
Only the brands permit harnessing "unfair" economic profits. The MCU, for example, with its many-movie deals for stars (so the star-power they produce is captured internally), deep lore bank of comics to mine (which they own), and dozen-plus sequels all add up to a moat against someone else competing for their profits.
Owning a bank of AI background actors? A huge repository of AI writing fuel? Rights to famous actors they who can't renegotiate after they become more famous? Those demands all look like attempts to generating a moat to generate non-labour based wealth. Which can be economic profit.
posted by NotAYakk at 6:53 AM on July 17, 2023 [20 favorites]
All of which presupposes that actor's have no intrinsic rights to their own likeness. I get why we have to understand the ownership class' perspective on things...that's one of the reasons I posted the video. But I don't why we have to concede to them the notion that they can just do anything they like without regard for the interests of the people who actually make the product or deliver the service.
posted by Ipsifendus at 7:01 AM on July 17, 2023 [2 favorites]
posted by Ipsifendus at 7:01 AM on July 17, 2023 [2 favorites]
See also... Tech & Gaming executives who were not promoted upwards through the ranks and instead were educated at 'x prestigious' business school - and probably landed their role via their network of other direct 'business' trained executives that graduated from the same/similar schools...
The problem is fundamentally the division between capital and labour. This late-stage capitalist system we are in, is inherently broken.
posted by rozcakj at 7:07 AM on July 17, 2023 [13 favorites]
The problem is fundamentally the division between capital and labour. This late-stage capitalist system we are in, is inherently broken.
posted by rozcakj at 7:07 AM on July 17, 2023 [13 favorites]
sure it's AI somewhat and corpo execs but Vanguard, Blackrock, State Street - investment firms own most of everything either in tandem or wholly on their own. the middle/upper-middle class's retirement savings are vested in these same accounts so we all hope to see 10%+ returns on our investment so that we may retire in relative, developed nation, resource extractive comfort
so we don't mind it when these firms and their largest shareholders, the billionaire types, demand even more intensive modes of labor exploitation and thus better dividends because it's a big self-eating, complicity cycle. the will of a single Bezos demanding quarterly dividends of x% or else his capital moves elsewhere produces more result than all the 'activist' investors demanding 3M (8.1% owned by Vanguard, 6.1% State Street, 5.1% BlackRock) and Chemours (12.3% Vanguard, 11.4% BlackRock, 6.6% Fidleity) stop dumping PFAS into our public water systems because that could be inconvenient for us in the future, nevermind workers' rights
we lose and lose while being provided with tokens of our 10% returns and it's only in these flare up moments exemplifying the extraction of surplus productive value - moments of writer/actor strikes that we go 'hmm yeah pretty wild how film crews are expected to work minimum 12 hour days regularly' that we're like 'oh hey capitalism sucks huh' when really we should be caring the whole time and doing all we can in our own small ways to gum up the works of any kind of organized capital extraction (ie corporations existing)
posted by paimapi at 7:56 AM on July 17, 2023 [8 favorites]
so we don't mind it when these firms and their largest shareholders, the billionaire types, demand even more intensive modes of labor exploitation and thus better dividends because it's a big self-eating, complicity cycle. the will of a single Bezos demanding quarterly dividends of x% or else his capital moves elsewhere produces more result than all the 'activist' investors demanding 3M (8.1% owned by Vanguard, 6.1% State Street, 5.1% BlackRock) and Chemours (12.3% Vanguard, 11.4% BlackRock, 6.6% Fidleity) stop dumping PFAS into our public water systems because that could be inconvenient for us in the future, nevermind workers' rights
we lose and lose while being provided with tokens of our 10% returns and it's only in these flare up moments exemplifying the extraction of surplus productive value - moments of writer/actor strikes that we go 'hmm yeah pretty wild how film crews are expected to work minimum 12 hour days regularly' that we're like 'oh hey capitalism sucks huh' when really we should be caring the whole time and doing all we can in our own small ways to gum up the works of any kind of organized capital extraction (ie corporations existing)
posted by paimapi at 7:56 AM on July 17, 2023 [8 favorites]
Caste boundaries are *meant* to be uncrossable. Best a laborer can hope for is to become an NCO of sorts. See also: trans people.
posted by tigrrrlily at 8:11 AM on July 17, 2023 [1 favorite]
posted by tigrrrlily at 8:11 AM on July 17, 2023 [1 favorite]
Brands do so off of trademark law, using the familiarity (and fond feelings) of the population towards their brand to sell their product at a price well above production.
Interestingly executives have pretty much killed this off as well. When was the last time you actually trusted a brand? They've diluted almost all brand with excess market and product segmentation to the point where I can't even figure out how to buy the Levis 501s I used to like. To do so I have to navigate about 40 different types of 501s with different fabrics, cuts and quality sold in about a dozen different storefronts. Are Levis quality jeans anymore? Maybe some but now I have to actually shop through all the options to find the good ones thus rendering the value of the brand as a heuristic shortcut meaningless to me. It indicates nothing other than same amount of work I'd have to do to sort through all of the available options from all the available brands. It's been at least a decade since I have had jeans I genuinely liked.
posted by srboisvert at 8:15 AM on July 17, 2023 [24 favorites]
Interestingly executives have pretty much killed this off as well. When was the last time you actually trusted a brand? They've diluted almost all brand with excess market and product segmentation to the point where I can't even figure out how to buy the Levis 501s I used to like. To do so I have to navigate about 40 different types of 501s with different fabrics, cuts and quality sold in about a dozen different storefronts. Are Levis quality jeans anymore? Maybe some but now I have to actually shop through all the options to find the good ones thus rendering the value of the brand as a heuristic shortcut meaningless to me. It indicates nothing other than same amount of work I'd have to do to sort through all of the available options from all the available brands. It's been at least a decade since I have had jeans I genuinely liked.
posted by srboisvert at 8:15 AM on July 17, 2023 [24 favorites]
When the executives make statements to the press, this is all I hear:
"This is an issue of expenses. What part of 'we get all the money' do these people not understand?"
posted by eye of newt at 10:11 AM on July 17, 2023 [10 favorites]
"This is an issue of expenses. What part of 'we get all the money' do these people not understand?"
posted by eye of newt at 10:11 AM on July 17, 2023 [10 favorites]
It's all posturing for the investors.
Talent - and this very much includes studio executives - has always eaten first in Hollywood, with investors getting the scraps, if any.
The strikes are softening up the investors to be told that they will shoulder the bulk of the burden of declines in the scripted business - pre-COVID box office that isn't coming back; captive-eyeball linear TV advertising revenue that isn't coming back; share-of-screen lost to gaming, YouTube and TikTok; and streaming revenue not nearly making up for the foregoing.
posted by MattD at 10:43 AM on July 17, 2023 [1 favorite]
Talent - and this very much includes studio executives - has always eaten first in Hollywood, with investors getting the scraps, if any.
The strikes are softening up the investors to be told that they will shoulder the bulk of the burden of declines in the scripted business - pre-COVID box office that isn't coming back; captive-eyeball linear TV advertising revenue that isn't coming back; share-of-screen lost to gaming, YouTube and TikTok; and streaming revenue not nearly making up for the foregoing.
posted by MattD at 10:43 AM on July 17, 2023 [1 favorite]
I know this isn't the point but I'm cracking up about Leonard Goldberg's story about the "The Fugitive." The senior management can't understand why people would care how the show ends; after all it is not real. They're like Dr. Manhattan, they have transcended petty human emotions. Maybe all top executives in all industries have the same attitude: "People care about this shit? Jesus. Well keep making it I guess."
posted by officer_fred at 11:29 AM on July 17, 2023 [7 favorites]
posted by officer_fred at 11:29 AM on July 17, 2023 [7 favorites]
This piece really clarified my thinking about the next phase of the class war.
posted by Ickster at 11:45 AM on July 17, 2023 [8 favorites]
posted by Ickster at 11:45 AM on July 17, 2023 [8 favorites]
officer_fred, I’ve been in enough boardrooms to confidently say you are correct. Even (perhaps especially) at “mission-driven” firms.
posted by turbowombat at 4:19 PM on July 17, 2023 [2 favorites]
posted by turbowombat at 4:19 PM on July 17, 2023 [2 favorites]
Much as I like movies and TV, I think the idea that those works aren't "merely" products, unlike some other commercially sold products (like chicken sandwiches, as in the example in the video) isn't helpful. Drawing a line and saying things on one side of it are creative works that deserve protection and whose producers are entitled to dignity and fair compensation admits that there is such a line to be drawn anywhere, and once you've admitted that, you now have to determine where the line is to be drawn. This guy says TV, movies, and paintings are in, but chicken sandwiches are out. For others, TV is worthless garbage and belongs on the chicken sandwich side of the line. For others only "the fine arts" are worthy pursuits, and if you go far enough back in history, anyone involved in the theater was considered suspect. Why is anything worth producing not worth valuing?
Ideally, the owners (and the executives they designate to run their businesses) should be articulate defenders of exactly what's meaningful and valuable about whatever business they're in. Entertainment executives should understand the connection between their audiences and their work, just as a restaurant executive should be able to defend the unique worth and value of chicken sandwiches, not to mention the workers who produce them. Unfortunately, in the US at least, our legal and regulatory regime largely accepts that investors are the only stakeholders whose interests are structurally defensible, and so we end up with a system that allows them to dominate those other stakeholders. But the answer to that is not to hold some industries apart from others—it's to demand recognition for all of the stakeholders of all industries, including workers, customers, society at large, and the natural world.
posted by angrynerd at 5:10 PM on July 17, 2023 [6 favorites]
Ideally, the owners (and the executives they designate to run their businesses) should be articulate defenders of exactly what's meaningful and valuable about whatever business they're in. Entertainment executives should understand the connection between their audiences and their work, just as a restaurant executive should be able to defend the unique worth and value of chicken sandwiches, not to mention the workers who produce them. Unfortunately, in the US at least, our legal and regulatory regime largely accepts that investors are the only stakeholders whose interests are structurally defensible, and so we end up with a system that allows them to dominate those other stakeholders. But the answer to that is not to hold some industries apart from others—it's to demand recognition for all of the stakeholders of all industries, including workers, customers, society at large, and the natural world.
posted by angrynerd at 5:10 PM on July 17, 2023 [6 favorites]
I don't think he at all suggested that such a division exists. He specifically mentions a worker in the kitchen at Popeyes also being able to take pride in the care she gives to her work.
posted by Ipsifendus at 3:32 AM on July 18, 2023
posted by Ipsifendus at 3:32 AM on July 18, 2023
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