Is Justin Timberlake a Product of Cumulative Advantage?
J Thoendell stashed this in Music
As anyone who follows the business of culture is aware, the profits of cultural industries depend disproportionately on the occasional outsize success — a blockbuster movie, a best-selling book or a superstar artist — to offset the many investments that fail dismally. What may be less clear to casual observers is why professional editors, studio executives and talent managers, many of whom have a lifetime of experience in their businesses, are so bad at predicting which of their many potential projects will make it big. How could it be that industry executives rejected, passed over or even disparaged smash hits like “Star Wars,” “Harry Potter” and the Beatles, even as many of their most confident bets turned out to be flops? It may be true, in other words, that “nobody knows anything,” as the screenwriter William Goldman once said about Hollywood. But why? Of course, the experts may simply not be as smart as they would like us to believe. Recent research, however, suggests that reliable hit prediction is impossible no matter how much you know — a result that has implications not only for our understanding of best-seller lists but for business and politics as well.
Old but great!
Agreed, wonderful article, worth a re-read of how hard success is to predict.
I'm coming back to this again and again:
Luck creates the initial momentum.
But then feedback loops keep it going.
We (heart) feedback loops.
And yet, feedback loops mean the most popular is not necessarily the best.
Sometimes popularity is just random.
This is the foundation of "Winner Takes All":
The reason is that when people tend to like what other people like, differences in popularity are subject to what is called “cumulative advantage,” or the “rich get richer” effect. This means that if one object happens to be slightly more popular than another at just the right point, it will tend to become more popular still. As a result, even tiny, random fluctuations can blow up, generating potentially enormous long-run differences among even indistinguishable competitors — a phenomenon that is similar in some ways to the famous “butterfly effect” from chaos theory. Thus, if history were to be somehow rerun many times, seemingly identical universes with the same set of competitors and the same overall market tastes would quickly generate different winners: Madonna would have been popular in this world, but in some other version of history, she would be a nobody, and someone we have never heard of would be in her place.
"Winner take all" is enabled by network effects:
This lesson is not limited to cultural products either. Economists like Brian Arthur and Paul David have long argued that similar mechanisms affect the competition between technologies (like operating systems or fax machines) that display what are called “network effects,” meaning that the attractiveness of a technology increases with the number of people using it. But even in markets that don’t exhibit obvious network effects (like markets for low-carb or organically produced food, fuel-efficient vehicles or alternative energy technologies), sudden shifts in consumer demand can still arise, persist and then shift again. These shifts often come as surprises but are soon explained away as mere reflections of changing public sentiments. Yet while in some sense these markets do reflect what people want, that is true only of what they want right now. If markets not only reveal our preferences but also modify them, then the relation between what we want now and what we wanted before — or what we will want in the future — becomes deeply ambiguous.
Our desire to believe in an orderly universe leads us to interpret the uncertainty we feel about the future as nothing but a consequence of our current state of ignorance, to be dispelled by greater knowledge or better analysis. But even a modest amount of randomness can play havoc with our intuitions. Because it is always possible, after the fact, to come up with a story about why things worked out the way they did — that the first “Harry Potter” really was a brilliant book, even if the eight publishers who rejected it didn’t know that at the time — our belief in determinism is rarely shaken, no matter how often we are surprised. But just because we now know that something happened doesn’t imply that we could have known it was going to happen at the time, even in principle, because at the time, it wasn’t necessarily going to happen at all.
That doesn’t mean we should stop trying to anticipate the future, any more than we should stop trying to make sense of the past. But it does mean that we should treat both the predictions and the explanations we are served — whether about the next hit single, the next great company or even the next war — with the skepticism they deserve.