The Tick-Tock of my BBC News Channel Interview on Live International TV

I got up and went to Starbucks like I do almost every morning. That’s where I go to get some coffee, catch up on the news (specifically, that means reading Twitter), and plan my day. I like having a routine, especially in the morning, because it reduces the number of decisions I have to make when I’m sleepy and my brain isn’t fully functional.

8:00 AM Eastern Time

So I got my coffee, found a table by the window, and popped into Tweetbot to see what was happening. I saw the little dot that said I had a new mention, so I checked it.

That’s what I saw. The BBC? Interesting! I replied right away and we did the “follow each other so we can DM” dance.

8:05 AM Eastern Time

I wrapped up coffee time and headed in to my office, which is about 2 minutes from Starbucks. It would take a few minutes for Tammi to follow me back and DM me, so I figured I might as well move to my office so I could set up for my interview.

At this moment, I wasn’t even sure what kind of interview we were talking about. Most of the time when I get this sort of request, it’s for either an email interview or a phone interview, and those usually end up published online.

So I was thinking this might be a phone interview that might be aired on TV or transcribed for quotes for online, TV, or radio use.

To be clear: I had no idea I was going on national TV soon.

8:17 AM Eastern Time

Tammi DMs me her email address and lets me know that they’re on air in 45 minutes, and would I be free then?

Now I know this is a live interview. I’m still not sure if it’s audio-only or video. I’m assuming audio-only.

8:21 AM Eastern Time

Tammi emails me with a summary of what they’re talking about and asks some questions to give me a sense of what sorts of thing I might be asked on the air.

She also mentions that it would be great if we could do a live interview for TV, and asks if I have Skype.

“…LIVE FOR TV.” ?

I confirm that will work and answer the questions she asked to show that I know what I’m talking about.

As an aside, I’ve found that any time I’m asked questions about my subject, giving very thorough answers is almost always the best way to go. It demonstrates my expertise and gives the asker as much information as they need so that can pare it down to whatever they were looking for. Over-delivering in this particular area has gotten me a ton of good opportunities to contribute to large outlets.

We also exchange a few more emails about logistics like my geographic location.

Meanwhile, I start setting up my office for a Live TV interview. I cleared my whiteboard, raised my laptop on a pile of books so the webcam was eye level, set up two super-cheap desk lamps I keep handy for key and fill lighting, and began testing everything to make sure it looked and sounded ok.

8:34 AM Eastern Time

Tammi asks for my phone number so a producer can reach out to me to start getting ready to go on air.

I continue monkeying with my setup so it looks as professional as possible on such short notice.

8:42 AM Eastern Time

A producer from the BBC News Channel calls me to confirm some details and tell me what’s going to happen.

This call lasts one minute.

I continue fiddling with technical stuff and testing things to make sure everything works. I mess with my bookshelf so it’s not totally barren. I drink water to make sure my throat isn’t dry. I fire up my lights so they can warm up in time. I talk to myself out loud a lot so my voice warms up as well (I’ve been awake for about an hour at this point, so I’m still feeling and sounding sleepy).

I log into Skype and hang out waiting for the BBC to call.

8:58 AM Eastern Time

The BBC calls me on Skype. A different producer this time.

He does some basic checks to make sure everything is ok. I’m on camera now and planted in front of my laptop. I won’t move a muscle for the next 12 minutes.

I don’t see anyone on the other side, but I can hear Shaun Ley interviewing a guest and talking. There’s a commercial playing.

9:06 AM Eastern Time

Shaun Ley is talking about me. Now he’s talking to me, but I can’t see him. All I see is a green dot on my MacBook, and some stars from the bright lights in my face.

Shaun asks me some questions and I answer them while I continue staring at the green dot.

9:09 AM Eastern Time

Shaun and I are finished talking and a producer thanks me for my time. We disconnect on Skype and my 15 minutes is over.

In only an hour and nine minutes, I had spoken with three BBC producers over four different mediums, plus talked with Shaun Ley on Live TV.

But my time with the BBC wasn’t quite over.

1:06 PM Eastern Time

Here we go again!

This one was a slower burn, but the tick-tock is still interesting.

I exchanged DMs with Sophie and sent my phone number so we could chat about the interview.

1:34 PM Eastern Time

Sophie says she’s calling soon.

1:45 PM Eastern Time

Sophie calls for an exploratory chat where she asked several questions about different aspects of salary negotiation and the gender pay disparity.

The interview would be quite a bit later in the day, so I think she was trying to get as much information as possible to enable them to ask questions that dovetailed with their programming while complementing other discussions they would have over the next several hours.

We wrap up after 16 minutes and I’m told the interview should be at 6:05 PM Eastern Time, and that they’ll call me a few minutes before that.

6:01 Eastern Time

A BBC 5 Live producer calls to make sure everything is set up. We do some technical tests to make sure they can hear me and then I am in the queue.

I can hear Stephen Nolan talking with a Sky reporter and the conversation is a little… contentious? BBC News and Sky are competitors, so this is to be expected.

I confess I was a little nervous that I might be walking into a tricky situation, so my guard was up a bit.

The interview with the Sky reporter went a little longer than I expected, but then I could hear Stephen transitioning to our interview.

About 6:15 PM Eastern Time

I’m on! This was a much less difficult interview logistically, but the questions were more challenging. We didn’t have as much time as I expected, but it was a good interview overall.

6:23 PM Eastern Time

The interview was over, the producer thanked me for coming on, and that was it.

Here’s my BBC 5 Live radio interview:

What’s the deal with the SEC! chant?

Now that college football season is over, and FSU won the final BCS Championship, there’s a bit of a college football vacuum to fill. I might as well take a few minutes and explain something that seems to really confuse people outside the SEC: What’s the deal with the “S-E-C! S-E-C!” chant?

The short version

The SEC! chant was a marketing gimmick to get SEC teams more votes and more favorable rankings in the polls, meaning higher BCS rankings and more shots for SEC teams to win the BCS Championship.

The longer version

The BCS era was a transitional regime between simply voting for the national champion and deciding the championship “on the field” with a playoff. It was essentially a two-team playoff whose participants were determined by a computer algorithm that accounted for poll rankings, strength of schedule and some other stuff. The actual algorithm changed often throughout the BCS era as components were dropped, certain polls got more weight, the strength of schedule formula changed, and they made other tweaks here and there. But at its core, the BCS relied very heavily on polls, getting votes, and beating other BCS-ranked teams.

The SEC! chant reminds voters that the SEC is pretty good, so they’ll give SEC teams more votes, leading to higher poll rankings for SEC teams. This has an explicit benefit of nudging SEC teams ahead of non-SEC teams in the polls, and subsequently improving BCS rankings for SEC teams. For the last half of the BCS era, if it came down to a tight race between an SEC team and a non-SEC team in the polls, the SEC team would generally get preference. Sometimes, the preferred team would be a non-UF SEC team, but sometimes it would be UF, and we’d get a shot at a title. So that’s one way it helps UF when UF fans root for the SEC.

There was a nice indirect benefit, too: The BCS formula also included a bump for “quality wins”, so beating a Top 15 BCS team meant a better BCS score, which often meant a better BCS ranking. Most of a football team’s season is played against conference opponents, so if your conference had a lot of BCS-ranked teams, then that was good for your team because there were more “quality win” opportunities available. But if your team was the only BCS-ranked team in its conference, that meant there were no in-conference quality wins available. In this sense, rooting for the SEC was also rooting for UF.

To put a finer point on it, the SEC! chant gave SEC teams a small mathematical edge over non-SEC teams in the BCS formula; since UF is an SEC team, UF got a small piece of that edge. So, at least in the SEC, we could have our cake and eat it too—we could root for our team by rooting for our conference.

Coda

The trick with this whole gimmick is the SEC had to show up and actually win games so that the SEC! chant would continue to carry weight. If the SEC had gone to a couple BCS Championship games and lost, the chant would’ve been almost worthless. Of course, the SEC dominated the BCS era with the most appearances of any conference, winning three more BCS Championships than all other conferences combined. So it seems the SEC! chant served its purpose.

Slowing recovery by maintaining the status quo

The monthly jobs report dropped last Friday, and shows a sluggish, but steady recovery. I think this chart is pretty interesting:

EmployRecAlignJune2013

HT @justinwolfers for sharing that pic on Twitter, and obviously Calculated RISK Blog for posting the original.

Note how slow this recovery is, but also note that recoveries have been slowing over time – the U-shaped curves are getting more and more pronounced (less V-like) over time. This is true for the past four slumps (1981, 1990, 2001, 2007). It seems the most unique thing about the current recession isn’t just the time-to-recover, but the depth of the recession. This (admittedly very speculative) post is about the duration (and the trend to lengthening the duration in successive recessions), not the depth.

My purely qualitative theory is this: Government and industry are both mostly interested in maintaining the status quo. So, when something happens (an economic jolt, disruption, globalization) that threatens the status quo, we often must choose between letting the change happen, and trying to protect the status quo. The issue is that we often protect the status quo at the expense of economic efficiency, and this happens aggressively during recessions.

Too Big To Fail (TBTF) was a great example of this. I don’t think anyone thought, “It’s long-run economically efficient to bail these banks and creditors out.” Instead, the rhetoric was, “If we let these banks fail, our economy will crumble and who knows how long it will take to recover.” We knowingly made inefficient decisions to protect the current status quo – we weren’t willing to accept the pain of an economic correction that severe.

On his EconTalk podcast (an excellent, excellent podcast that I highly recommend), Russ Roberts frequently refers to the “Bootleggers and Baptists Theory“. Basically, bad stuff can happen when apparently-opposed interests pursue a common interest that benefits them both at the expense of society. In this case, the bootleggers were the banks, and the baptists were the politicians who (ostensibly) believed America couldn’t handle the economic fallout of allowing the banks to fail. The result was TBTF, and hundreds of billions in bailouts to banks who had already demonstrated that they were not acting in an economically efficient manner. It seems obvious to me that the banks should have failed if we’re interested in economic efficiency. They obviously didn’t operate efficiently, and the market tried to destroy them when the housing bubble popped. But rather than allow them to fail, we propped them up with tax payer dollars.

In general, we see this with rhetoric about how so and so industry is crucial to American interests, and we must protect it. The results are subsidies, favorable regulations, licensing regimes and the like. These are all essentially government and industry working together to maintain economic inefficiency for the benefit of the few, at the expense of the masses. Basically, we allocate capital (human or fiscal) to maintain the status quo rather than allowing the economy to adjust on the fly and reallocate capital efficiently. This is “sustainable” when everything is rosy – there’s all kinds of money available to maintain the inefficiency when the economy is booming. But as soon as we experience a bust, the money dries up and we can’t maintain the inefficiency because there simply isn’t enough capital.

My theory is that the more we support inefficiency is good times, the longer it will take the economy to adjust in bad times because it’s so difficult to unwind the inefficiency. The beneficiaries of the inefficiency are loathe to release the control they gain, and that control must be slowly pried away from them by economic forces over time. The more control they have, the harder it is to pry away from them. TBTF demonstrates this well: It was actually a last-ditch effort to maintain the status quo after the housing bubble burst. The “so and so industry” of the 90s and aughts was the housing industry. We put all our eggs in that basket, promoted it, lobbied for it, subsidized it, did everything we could to bolster it, ultimately misallocating a substantial amount of capital to that particular industry. When the market couldn’t bear the weight of the inefficiency, it collapsed, and the government stepped in with TBTF (a collaboration of government and industry) to try to maintain the status quo. 1 2

This all reminds me of one of my favorite E.A. Poe short stories – The Facts in the Case of M. Valdemar. WARNING: SPOILERS LIE AHEAD!

The story is basically about a sick man (M. Valdemar) who is hypnotized and put into a sort of suspended state to prevent him from dying. He’s very ill and would soon die otherwise, but a “specialist” thinks he can prevent M. Valdemar from dying by putting him in a sort of hypnotic state. It works, and M. Valdemar is held there in suspended animation for a long time (like seven months). Eventually, he starts mumbling and moaning, and his caretakers/experimenters are worried something isn’t right. They decide to ask him what’s wrong. That’s where I’m picking up with the story:

“M. Valdemar, can you explain to us what are your feelings or wishes now?”


There was an instant return of the hectic circles on the cheeks; the tongue quivered, or rather rolled violently in the mouth (although the jaws and lips remained rigid as before;) and at length the same hideous voice which I have already described, broke forth:


“For God’s sake! — quick! — quick! — put me to sleep — or, quick! — waken me! — quick! — I say to you that I am dead! “


I was thoroughly unnerved, and for an instant remained undecided what to do. At first I made an endeavor to re-compose the patient; but, failing in this through total abeyance of the will, I retraced my steps and as earnestly struggled to awaken him. In this attempt I soon saw that I should be successful — or at least I soon fancied that my success would be complete — and I am sure that all in the room were prepared to see the patient awaken.


For what really occurred, however, it is quite impossible that any human being could have been prepared.


As I rapidly made the mesmeric passes, amid ejaculations of “dead! dead!” absolutely bursting from the tongue and not from the lips of the sufferer, his whole frame at once — within the space of a single minute, or even less, shrunk — crumbled — absolutely rotted away beneath my hands. Upon the bed, before that whole company, there lay a nearly liquid mass of loathsome — of detestable putrescence.


Although they found a way to maintain the status quo, suspending his death – an inefficient decision since they weren’t doing anything to actually address the causes of his illness – his body was primed to deteriorate just as it would’ve without the intervention. They managed to delay the inevitable for seven months, but once they woke him, efficiency was restored and he turned to a “nearly liquid mass of loathsome — of detestable putrescence.” At least M. Valdemar’s body was eventually allowed to correct itself very quickly. This doesn’t quite match my analogy to U.S. industry — we would’ve brought specialists, lobbyist, regulators, politicians bedside to try to slow the decay as much as possible, even after he awoke. We would’ve moved him into a freezer, or given him medicine, or whatever might work to preserve the status quo as long as possible.

So many of our economic interventions – supported by industry and politicians alike – are just like this hypnosis. They postpone the inevitable, but are ultimately bad for the economy as a whole. We hold on to economically inefficient regimes to maintain the status quo, but we’re only postponing the inevitable and misallocating resources in the interim.

FOOTNOTES:

Economics and Politics: Ignorance is bliss

First, a little back story. I began studying Economics during the 2008 election season. I regularly found myself debating some economic idea or another, and wanted to understand the subject better so I could evaluate my intuition and form more-educated opinions. I began reading books and blogs, following economists on Twitter, and studying for my MBA.

Rather than becoming more comfortable with the subject, I’ve become frustrated and regret taking the red pill.

I could probably write thousands of words on this 1, but here’s a quicker way for me to express this frustration:

The surprising part isn’t that the policy ended up being bad, but that President Obama ever believed it could possibly be good. Politicians promote bad policies all the time. But this one is such an obviously-bad policy that it gives me pause – it’s literally an Econ 101 mistake whose awfulness is self-evident. I usually suspect politicians understand that the policies they push aren’t optimal for everyone, but they support those policies anyway because they benefit their constituents; they don’t really think the policy will be good for everyone, but maybe it won’t be bad for everyone, and their constituents will benefit, so it’s ok.

But in this case – the Chinese-tire tariff – I think it’s obvious that President Obama thought this policy would be great for America. He bragged about it in a recent speech. So the problem doesn’t seem to have been his intentions, but his understanding of very basic economics. The problem wasn’t with his spin of the policy, but that the policy was simply an awful policy with a bad economic outcome for Americans.

If the President’s intuition is this bad on basic economics, how much worse is he at predicting the economic effects of routing federal dollars to specific areas research? Fiscal policy? Labor policy?

Nancy Pelosi, when promoting Obamacare, said overhauling healthcare would provide “lower cost, improved quality” healthcare“, and it might… or it might not. The issue for me is that I don’t believe the President understands basic economics well enough to do a real analysis of the possible effects of such complicated policies. If he couldn’t predict that a tariff on Chinese tires would cause prices to rise for Americans – a prediction most first-year, Econ 101 undergrads would’ve made – then how could he possibly predict the economic impact of capping profit margins for health insurance companies (only a few of the 2,000 pages in the ACA) on healthcare costs?

Footnotes

A Suggestion for Planet Money: Investigate why the healthcare market isn’t competitive

Planet Money podcast: Please consider a second part for “Episode 439: The Mysterious Power Of A Hospital Bill”

I’ve regularly listened to Planet Money for a few years now. I’ve occasionally had qualms with an episode, but it’s a great podcast, and I’ve learned a lot from it. This Tuesday’s episode was about healthcare costs, and it focused on Steven Brill’s ideas (Brill just wrote a whopper of a cover story for Time: “Bitter Pill: Why Medical Bills are Killing Us“).

You should listen to the podcast to get the full flavor of the conversation. But the gist is that costs are high because insurers lack bargaining power. The silver lining is that Medicare actually pushes costs down because the program has so much bargaining power. Brill suggests we lower the age for Medicare so that costs will come down.

Near the end of the podcast, they acknowledge that there may be an alternate way to push costs down: competitive markets. But they quickly brush this aside after about a minute with, “Obviously we’re not gonna’ settle this debate right here.” Then they close the show. While I understand the time constraints of the podcast, I’m concerned that what they really mean is they aren’t going to try to settle the debate at all. I hope they revisit the idea that competitive markets could help bring costs down, if only healthcare were a competitive market.

“Healthcare is fundamentally different”

Here’s their reasoning for why this just wouldn’t work: Around 16:00 into the 18:00 podcast, they say “…healthcare is fundamentally different. If you have chest pains, you’re not gonna’ like get on the Internet and start Googling ‘what hospital in my neighborhood has the best price for heart attack treatment’, right?. You’re gonna’ call 911, and the ambulance is gonna’ come and get you and it’s going to take you wherever it takes you. So [Steven Brill] argues that the model is not really a sensible model to use for healthcare.”

This just seems like such a weak argument to me. I’m not going to settle the debate either, but I’d like to at least throw out some ideas, and point out how shallow this example is.

How much healthcare spending is on traumatic life-and-death care?

First of all, I’d be curious how much of our healthcare spending goes to this type of suddenly-traumatic and life-threatening situation. My guess is that the vast majority of “healthcare spending” happens in a planned, calculated way. People find out they’re sick, they get a first, second, third opinion. They decide on their course of treatment, and they sign up to receive that treatment at a hospital. There’s a lot of room for regular old competitive markets here. Nobody’s being whisked anywhere in an ambulance. The real question is why healthcare markets aren’t competitive in these planned-care situations.

But let’s look at this heart attack example since it seems to be the most extreme. Someone suddenly finds himself very ill, nearing death, and must seek treatment immediately. He calls an ambulance, and is simply taken to the nearest hospital. Cost is not a factor in any of this because he just doesn’t have time to think about cost. If he stops to negotiate price, he could be dead before he gets the care he needs.

There are just so many things ignored here. I’ll start with an analogy and then circle back to some of the finer points.

What if my car had a heart attack?

About 15 months ago, I took my car to a car wash, left the car with an attendant and waited around front for my car. After they finished washing and drying my car, I got in and could immediately tell something was wrong. The engine was pretty loud, and I noticed the temperature gauge was pointing to “really hot”. I put it in drive, just hoping I could move it to a parking spot or something so I could regroup. It didn’t make it to a parking spot (about 40 feet), so I just let it roll to a stop under a tree, out of the way. My car was dead – it wasn’t drivable and appeared to be in “limp mode”. I had no choice but to have it towed to see what was wrong.

Obviously, I wasn’t in danger of dying, but my car certainly was. What’s more, I was stuck – I couldn’t shop around for a good deal on the repairs because I need my car (I was going home for Thanksgiving in a few days, then off to Atlanta not long after that) and because it’s not drivable. Also, I was pretty sure the car wash wouldn’t be ok with me just leaving my car parked under their tree for very long. If my car were a person having a heart attack in Planet Money’s world, I’d call an ambulance and they’d whisk it away to whichever hospital could save it. I wouldn’t be able to negotiate the cost of repairs, and I’d end up paying a lot of money for some healthcare.

My car is saved, and I get a great price despite a desperate situation

What happened instead is that I called AAA, who sent a tow truck out in about 30 minutes. When the tow truck driver got there, I told him to take my car to Bush Gator Transmission & Auto Repair on Main Street. About 20 minutes later, it was up on the rack and they told me one of my cooling fans had died. I asked what it would cost, they told me, and I had them go ahead and do the repair. A couple hours later I drove home, plopped down on my couch, and finished planning my trip to Jacksonville.

“But you didn’t negotiate price either!”, you might be thinking. And you’re right… and wrong. The reason I didn’t negotiate price is that I knew I was going to get the best price. How? I’d been to Bush Gator many, many times in the previous five years. They’ve been my mechanic since I moved back to Gainesville in 2006. I initially went there because a friend told me about a really great experience he had there, so I decided to check them out. 1 When I first went to them, I did call around to shop prices, but I eventually just stopped doing that because Bush Gator was always far cheaper than anywhere else I called. 2

So, no, I didn’t negotiate the price of this particular repair. But I didn’t need to because I already knew they had the best prices and best service in town. I managed to get my dead-in-the-water car repaired in a pinch and I managed to get a really good price. Why isn’t this possible for healthcare? For heart attack victims, even?

Is healthcare innately different, or do we just treat it differently?

The common answer is some flavor of “healthcare is different” or “but this is life and death” 3, but this is very myopic. It assumes that Yelp! and Consumer Reports can’t exist for healthcare. It assumes that word of mouth isn’t important. It assumes that anyone who ever has a health emergency is totally ignorant of his options for care. It assumes people are incapable of making phone calls to find the lowest price for anything related to health or medicine. 4

But if I’m right, then there’s a big question we need to answer: Why isn’t healthcare a competitive industry? I don’t know, but I think Planet Money has the right resources to find out, and a great platform to tell us.

EDIT: This piece from Uwe E. Reinhardt is a good start: “Shocked, Shocked Over Hospital Bills

FOOTNOTES:

Movie Mind Games: Does manipulating our expectations make movies better?

Illustration by Sean Nyffeler of Popcorn Noises fame

[This was originally a three-part series: Part 1; Part 2; Part 3.]

We spend a lot of time gobbling up media. We want to do fun stuff, and we want to do stuff on the cheap. Such is life in a stagnant economy. One of my go-to, quick and dirty ways to choose one option over the others is to figure out the cost per hour for each of my options, and then choose the one with the lowest cost per hour. 1

Here’s a quick summary of the cost to consume different types of media, shown in ascending worst-case dollars per hour 2 3:

  • Podcast – free – As long as I have iTunes and an internet connection, I can get just about any podcast free of charge.
  • News online – free – Yeah, the NYT has a pay wall now, but they don’t have any news I can’t get for free somewhere else.
  • Video games – $.03 to $1.25 – Angry Birds, Madden, NCAA: they all take so long they end up being really cheap by the time we’re through with them.
  • Books – $.25 to $2 – This one obviously depends how fast you read, but a good old paperback can go a long way on short change.
  • MP3 albums – $.3 to $4 – The trick with MP3s is to find them on sale. The Amazon MP3 store runs sales all the time.
  • Movies – $.50 to $5 – Movies tend to run the gamut because there are so many ways to get them. Prices vary pretty widely from Redbox to IMAX.

Almost any way I slice it, movies are one of the most expensive pieces of the entertainment pie. Looking back at my personal habits over time 4, it’s pretty obvious that I’ve been moving to cheaper and cheaper options over time. This wasn’t a conscious decision, but I have been purposely reducing my spending over the past few years, and I’ve obviously accomplished that by buying cheaper media.

Consuming media isn’t just about being entertained as cheaply as possible 5; I want quality entertainment. It’s not as simple as just consuming some type of media–I also have to figure out which examples of a given type of media to choose. If I’m listening to podcasts, how do I decide which ones? How do I find good books to read? How do I decide which movies to see in the theatre and which ones to rent? How do I know which ones to avoid altogether? The easy answer is recommendations. The trickier answer is expectations.

Recommendations

Over the past decade, recommendations 6 have gone from an informal give and take to a very sophisticated marketing tool, employed by giant companies to boost sales. Amazon, Netflix, Apple’s App Store and many other companies rely on recommendations to keep customers coming back for more. “Recommendation Engines” have become a closely guarded secret and a competitive advantage designed keep customers from switching to a competitor. I’ve bought hundreds of items on Amazon, and I like the recommendations it provides based on my previous purchases. If I start shopping at another online vendor, I’ll have to start over from scratch. That would be a lot of work, so I’m likely to stay with Amazon for quite a while unless a competitor offers something significantly better or Amazon totally drops the ball.

Many of my social interactions revolve around either sharing recommendations or comparing opinions on different media. For as long as I can remember, I’ve frequently asked friends what they’re into: “Seen any good movies lately?” or “Have you heard the new Girl Talk? How is it?” For almost any kind of media, I have at least one friend who’s practically on speed dial in case I need new recommendations.

I also make a lot of recommendations. I love it when a friend tweets, “Looking for some good books to read this summer. Any suggestions?” It takes me a few questions to figure out what kind of stuff they like, but once I zero in on their preferences I can usually recommend several titles that I can almost guarantee they’ll like. The same goes for music, movies, podcasts and TV shows. Part of being a maven 7 is that I’ve always got a solid cache of information ready to share if someone’s careless enough to open the door for me.

Expectations

The flip-side to recommendations is the expectations they create. If a friend of mine, let’s call him Morris, has successfully recommended 10 documentaries to me without any stinkers, then I expect his next doc recommendation to be a good one. If another friend, let’s call him Les, has recommended five documentaries for me, and all of them have been terrible, then I expect his next recommendation to be terrible and I’ll eventually just stop listening to his recommendations altogether. If Morris and Les both make recommendations to me at the same time, I can safely choose Morris’ recommendations because I expect them to be better. With each recommendation Morris and Les make, I can reevaluate their recommendations as a whole to determine how much weight I’ll give to either recommender in the future.

This is also true for recommendation engines like those at Amazon and Netflix. If Amazon starts recommending stuff that I hate, I’ll take that into account in the future and begin lowering my expectations for the stuff they recommend. Eventually I’ll just stop buying stuff they recommend, and that may remove the exit barrier I described earlier so that I’m comfortable going to another company and starting over from scratch.

There’s a feedback loop of recommendations and expectations. With each new good recommendation I get from a friend, the higher my future expectations will be that the stuff he recommends is worth my time and money. With each bad recommendation I get from a friend, the lower my future expectations will be that the stuff he recommends is worth my time and money. Eventually, I will learn to anticipate exactly how accurate my friends’ recommendations will be.

Recommendations and expectations are part of an adaptive framework wherein each future recommendation carries the weight of all previous recommendations. This feedback loop is only useful if I compare my actual experience to my actual expectations. 8

Utility-Hours Per Dollar

Before I can compare outcomes to expectations, I need a way to objectively measure my general satisfaction with any particular piece of media. Dollars per hour is a good metric to figure out the cost of consuming media, especially if my biggest concern is keeping a budget. It helps me measure efficiency. I might say, “Well, I’ve got three bucks left in my entertainment budget this month. I might as well stretch it as far as I can. What’re my options that are three bucks or cheaper and provide the most entertainment time?” But I’m not just looking for any old media–I want the good stuff. I need a way to account for both efficiency and the relative enjoyment offered by something. Enter this new thing I’m creating called “Utility-Hours per Dollar” (UHD) 9. The UHD allows me to normalize things so that I can compare apples to apples. Yes, going to see a movie in the theatre is really expensive ($5 per hour), but what if it’s the most fun thing I could possibly do with five bucks? That has to count for something, right? Sure it does.

I calculate UHD like this:

  1. Find the absolute cost (in dollars) of the media I’m looking to buy.
  2. Estimate how long (in hours) it will take to consume. 10
  3. Subjectively determine its utility 11on a 10-point scale (1 is for awful stuff, 10 is for incredible stuff).
  4. Multiply the utility number by the number of hours.
  5. Divide that number by the cost, rounded to the next highest dollar. For free stuff, use $1 (not $0). 12 13

For those who like a tidy formula, here it is:

  • UHD = (Utility * Hours) / Dollars

That’s it. Here are a couple examples 14:

  • A really bad movie at the theatre would be $10, last 2 hours and provide a utility of 2:
  • 2 utils * 2 hours = 4 util-hours
  • 4 util-hours / $10 = .4 UHD

  • A pretty good album that I buy on Amazon for $8 might give me 20 solid hours of listening at 6 utils:
  • 6 utils * 20 hours = 120 util-hours
  • 120 util-hours / $8 = 15 UHD

A UHD near zero sucks. A UHD that ends up in the double digits is pretty good. Stuff with a UHD in the mid-to-high double digits is pretty great. Using this metric, I can figure out my most cost effective, enjoyable option for entertainment.

Our trusty UHD chart–we’ll see this again later

UHD isn’t as esoteric as it seems

I realize that, at first, UHD just seems like a wonky way to describe something that’s already obvious and intuitive. But it actually has real-world applications, especially when it comes to understanding our intuitive-but-not-easily-explained preferences for stuff.

For example, UHD helps me understand why it took me a little while to move from CDs to downloading MP3s 15. Initially, the cost of an MP3 album (on iTunes, for example) was pretty close to the CD and Apple was using DRM 16. My concern was that I wouldn’t “own” the music if I paid for the MP3s. The result was that the utility of the MP3s was less than that of the CD, even though it was the same music at the same cost. Since the cost was similar, and the hours of entertainment would be the same, the difference in utility made the UHD for CDs higher than MP3s. Eventually, Amazon started offering DRM-free downloads and cheaper prices, shifting the UHD for MP3 downloads ahead of CDs. That’s when I made the switch to MP3 downloads 17. Of course, I didn’t actually do a conscious UHD calculation one day and say, “Ah ha! The UHD for MP3s is finally greater than it is for CDs! Time to make the switch!” But that’s basically what happened. The same process is happening for me with eBooks right now. 18

A brief, anecdotal history of cinema

The shift from CDs to MP3s, or from physical books to eBooks is interesting to me. But what’s really interesting to me is the persistence of movie theaters despite cheaper, very similar movie-watching options. Fifty years ago, the only real option for seeing a movie was to go to the movie theatre. This was great for movie companies because they could charge high prices since they were basically the only game in town. The UHD calculation wasn’t really useful for deciding how to watch a movie because it wasn’t so much a matter of comparing different movie-viewing options as just deciding whether it was worth it to spend the money on a movie or not. If it wasn’t, you just had to find something else to do.

Then technology started changing, opening the door for the home theatre experience. First, VHS started enabling people to watch movies at home en masse. Hi-fi began morphing into fancier surround sound setups whose cost was dropping so that more and more people could buy them. LaserDisc 19 came and went. Then DVD took hold and made the home-viewing experience even better.

A sidebar into UHD for movies at the turn of the century

Ten years ago, we really had two options for watching a movie (without owning it). We could either go to the theatre or rent it at Blockbuster. Let’s run through the UHD calculations real quick, just to get an idea of the difference in UHD for these two options at that time:

  • A good movie as a “New Release” rental was about $4 (-ish), lasted 2 hours and provided a utility of 6:
  • 6 utils * 2 hours = 12 util-hours
  • 12 util-hours / $4 = 3 UHD

  • The same good movie in the theatre would have been about $5, lasted 2 hours and provided a utility of about 7 (slightly higher since it was in the theatre):
  • 7 utils * 2 hours = 14 util-hours
  • 14 util-hours / $5 = 2.8 UHD

So the UHD for renting versus going to the theatre was really close even as recently as 2000. They were close enough that there was a real decision to be made: Spend $5 and go to the theatre or spend $4 and stay home? We would often decide what to do based on the number of people in a group (if there were four of us, we could just split the rental for a buck a piece; if there were two of us, then why not just pay for the movie in the theatre?) and our willingness to sneak snacks into the theatre. 20

Our trusty UHD chart from earlier

Snap back to reality

A lot has happened over the past 10 years or so. Netflix popped up, HD-DVD lost the war to Blu-Ray, streaming video became better and better, Blockbuster got crushed, and DVD rentals have gotten cheaper and cheaper. There are options now, options that just weren’t available when movie theaters first became a big deal. Not only are there options, but there are cheap options that rival the actual movie-going experience. And yet, movie ticket prices have been steadily increasing over time. 21

Let’s look at one more sample UHD calculation:

  • A really bad movie that I waited to watch on Redbox DVD would be $1, last 2 hours and provide a utility of 2 22:
  • 2 utils * 2 hours = 4 util-hours
  • 4 util-hours / $1 = 4 UHD

As we saw earlier, watching the bad movie in the theatre gives .4 (that’s point-four) UHD. Watching the same bad movie on DVD gives 4 UHD. Watching the bad movie on DVD is 10 times “better” than watching it in the theatre, and all of this difference is accounted for by the difference in cost. “But wait!”, you say, “What if I enjoy watching movies more in the theatre?! I really like going to the theatre!” Ok, fine. How much better would the movie have to be in the theatre to make up for the difference in UHD?

Some people will want to go to the most extreme case first, so let’s just go straight there. Let’s say that the bad movie moves from 4 utils to 10 utils just because I enjoy going to the theatre so much. It only jumps to 2 UHD (still half of the 4 UHD if I wait to watch the bad movie on Redbox DVD). “That doesn’t make any sense!” My counter would be, “So you’re saying there’s no way any movie can be better than the bad movie in the theatre? What if you go see a good movie in the theater?” Since the 1-10 scale is a subjective scale, I have to leave room above the bad movie for less-bad movies. Either that or I have to slide my Redbox DVD experience down to a 1 or something. If I move the theatre experience up to a 10 and move the Redbox DVD experience down to a 1, then I get the same result for both options: 2 UHD.

The present, seemingly uncrossable gulf between UHD for going to the movies and watching them at home is due to super high, sticky movie prices and much, much cheaper alternatives for watching movies at home. This has created such a big gap in cost that watching movies in the theatre is just that much more expensive, ruining their UHD relative to the very-similar experience of watching movies at home now.

Going to see movies in the theatre is expensive. I realize some people will say, “But your formula is just wrong. It weights the cost too much.” Using the UHD calculation as-is, it’s hard to see many situations where it would be better to go to the theatre than to watch the flick at home. It’s possible that I’m weighting cost too heavily, but I think the real problem is that movie theaters are just way too expensive now because we have more, better options. There really is that much of a difference in cost between movie theaters and rentals.

Movie Expectations – A bizarre special case?

And yet, new releases continue to set box office records as people go to the theatre in droves. At the same time, the movie theaters are much more expensive than the alternatives, and the quality of the movies released has been consistent (or at least not improving enough to justify the growing gap between theatre prices and the alternatives). What gives? If I’m right that waiting for the movie on DVD is almost always better than going to the theatre, then why do so many people continue going to see movies in the theatre? Why did I go see three movies in the theatre this summer?

I’ve overheard this sentiment several times recently: “That movie wasn’t that bad. I just went into it with no expectations and it turned out ok. I’ve decided I just won’t have expectations for movies because I end up over-hyping them and when they don’t meet my expectations I feel ripped off.” So the idea is that movies are often bad because we expect them to be good, or at least because we expect them to be better than they actually are. To solve this problem, we play mind games with ourselves, intentionally under-hyping a movie so that when we go see it and it’s just an ok movie, it exceeds our deflated expectations.

At first, I saw the wisdom in this tactic. If we get really good at lowering our expectations, almost any movie will be a success, at least inasmuch as it will exceed our expectations. That way, we can pretty much guarantee that when we pony up $10 for a ticket and another $10 for concessions, we won’t be let down.

The more I think about this, the more ridiculous the idea seems. We don’t lower our expectations for music, books or TV shows, do we? So why do we do that with movies? Of all our options, movies are one of the most expensive options we have. Why would we trick ourselves into doing something super expensive that we don’t really enjoy that much?

But this one goes to 11.

What we’re doing when we go see movies with deflated expectations is trying to trick ourselves into accepting the lower utility of the movie and ignoring the greater cost. Let’s say we go see the same bad movie we’ve talked about already, but we have “no expectations”, meaning we essentially expect the movie to be about 1 util of entertainment. That way, when we go to the movie and it’s 4 utils, we exceeded expectations! We practically created three utils out of thin air! Um, ok. But the problem is that the movie itself is still only 4 utils. It has to be because we have to put every other movie we’ve ever seen on the same scale. We can’t artificially inflate the number of utils to, say, 5 because what happens to those other movies that really were a 5? 23 This also reduces the perceived value of a 10 because we’re watering all of our other movie experiences down. So if we inflate the utility from a 4 to a 5, what we’re really doing is inflating the whole scale. Now it goes to 11. We have created UHD inflation.

A Delightful Food-Poisoning Analogy

It’s as though we have a friend who likes to cook. He says, “Hey everyone! Come over to my place and bring $5. I’ll cook something for all of us to eat. It’ll be delicious!” So we all go over there and bring five bucks. We eat the meal and it’s really freaking terrible. Half of us are disappointed and the other half are left with Oregon Trail flashbacks. A few weeks later, the same friend makes the same offer. We all decide to give it one more shot–maybe he just had a bad night, right?–and we head back over there with our five bucks. Same thing happens. Half of us are disappointed and the other half end up battling the dysentery. A couple weeks later, the same friend makes the same offer again. Would I go? Of course not. But what if I said, “You know what? I’m going back! I’ve learned that I just have to lower my expectations so I can really enjoy the food poisoning! I’m going to just assume it will kill me this time, or at least that it’ll ruin my digestive system for the next few days. It’s going to be terrible! I can’t wait!” I’m tricking myself into paying $5 for the privilege of being food-poisoned by my friend.

Ridiculous, right? How’s that any different than saying, “The trick to movies is that I just lower my expectations as much as possible. If I go in without expectations, I can’t be disappointed!” Well, kind of. But you’ll trick yourself out of $10 and you’ll waste time that you could’ve spent doing something cheaper and better.

What’s going on here?

So why do we trick ourselves into going to see bad movies in the theatre at 10 times the cost of the Redbox DVD? What’s really strange is we don’t do this with other stuff. If anything we tend to inflate our expectations, especially when it comes to music. I’ve heard friends totally pan a new album just because it didn’t live up to their expectations, which were far higher than they should’ve been. This happened with She & Him’s “Volume 2”. Many of my friends said they didn’t like it, and it was just more of the same from She & Him. Well, duh. They’re still She & Him and their first album was awesome. I’d say “Volume 1” was like 8 utils to me. I expected “Volume 2” to be about 8 utils. I think some of my friends expected it to somehow magically be 10 utils. Why? I have no idea. Turns out it was right about 8 utils (maybe slightly less, but it was really close). I ended up enjoying it a lot (and still listen to it regularly), whereas they ended up all disappointed and annoyed. Of course, they just did that to themselves.

So, with music, a lot of my friends do the opposite of this movie theatre trick–they inflate their expectations so they’re artificially disappointed when they hear a new album. 24 This is silly, but at least it makes some kind of sense: If we’re going to mess with expectations, we should manipulate the numbers so we tend to be less satisfied. That way, we’re basically tricking our future selves into spending less money. But this leaves us in an awkward place: we trick our future selves into spending more money on expensive stuff (movies at the theatre), and less money on cheap stuff (music). If we’re going to trick ourselves, we should be tricking ourselves so that we’re less satisfied with expensive stuff and more satisfied with cheaper stuff. At least that way we end up tricking our future selves avoiding the more expensive purchases on stuff we don’t like anyway. The UHD for music is almost always higher than it is for movies so, if anything, we should tend to “trick” ourselves into consuming more music and fewer movies in order to use our time and money more efficiently by consuming better stuff.

Why do we have it backwards? There could be a few explanations for this. Rather than trying to make sure we spend our money as efficiently as possible, we’re more focused on justifying expensive movies because they’re a cultural staple:

“Did you see the new X-Men movie?”
“No, I’m waiting for it on DVD.”
“Lame-o! Hey everybody! This guy’s super lame!”

It’s not cool to wait to watch movies on DVD. If I show up at the water cooler on Monday morning after a big release 25, nobody wants to hear anything I say if it starts with, “Well, I’m waiting for that one to be available on Netflix streaming.”

Sometimes there are benefits to seeing a movie in the theatre, especially action flicks. But we can account for that by bumping the utils for the movie just a little bit. Maybe X-Men on DVD is 6 utils, but X-Men in the theatre is 8. Ok, but does that justify the 10-times-higher price tag? The UHD sure doesn’t think so.

Conspiracy Theory!

There’s also some clever marketing going on by the movie studios. Most of the movies made are crap. We tend to remember good things more than bad, but most movies are really, really bad. This is easily confirmed by just browsing Netflix for movies 26. Some friends and I recently spent about two hours scrolling and scanning through Netflix to find a movie to watch. We ended up just re-watching Arrested Development Season 1. The issue wasn’t a lack of options, it was a lack of good options. There just weren’t any. We looked at hundreds of movies and all of them were terrible. If we used movie studios’ previous product as an indicator of future quality, we’d almost always opt not to go see movies in the theatre because there’s just too much risk that the movie will be crap and we’ll waste $10. Waiting for the DVD gives us more time to get recommendations from other people who have seen it so we can decide whether it’s even worth seeing on DVD.

But movie studios have cleverly convinced us that we should set our expectations aside so we can enjoy the movie-going experience itself. 27 Of course, as discussed earlier, the movie theatre experience isn’t really much different than just watching the movie at home (there are a few exceptions). If we all had the appropriate level of expectations for movies, we would rarely go to the theatre because we would mostly be disappointed. But instead of just saving that cash and doing something with higher UHD, we buy into this idea that we should essentially forget all the crap they’ve fed us previously so that we can enjoy this current experience more.

Positive Reinforcement of Terrible Moviemaking

But it’s actually worse than that. By tricking ourselves into “liking” (and paying for) bad movies, we’re encouraging movie studios to make more bad movies. If I trick myself into paying $10 to see Zookeeper, then I just gave the movie studios $10 and a green light to start production on Zookeeper 2: Flying Poo. Now I have to trick myself into going to see that dud, too?

Not only am I tricking myself into spending a lot of money on a bad movie, but I’m feeding the movie making machine so that it continues to churn out garbage that I have to trick myself into overpaying for in the theatre next time. I’m essentially a recommendation engine whose recommendations are made in dollars. I’m saying, “Movie studios. I recommend that you make Zookeeper 2: Flying Poo! Here’s ten bucks to get you started!” When does it end?

It is ending

In many ways, this phenomenon is ending, if only subtly. There are myriad modern sources of recommendations that are almost forcibly removing our self-imposed myopia. For example, Rotten Tomatoes is a crowd-sourced recommendation engine that is almost impossible to ignore once you know it’s out there.

“Want to go see the new Zookeeper movie?”
“What’d it get on Rotten Tomatoes?”
“Eleven percent.”
“And how did the first one do on Rotten Tomatoes?”
Fourteen percent.”
“This one is worse than the first one? That’s pretty bad. I’ll pass.”

That’s what saving $10 and two hours sounds like. I have conversations like this one a couple times a month. On the flip-side, I often decide to go see a new movie specifically because Rotten Tomatoes rates it highly. For example, when I was in Vancouver last year, my friends and I went to see Drive because I saw it got something like 90% on Rotten Tomatoes. They had never heard of the movie, and I had only heard a little about it, but the Rotten Tomatoes score pushed me to recommend it to them. We also went to see The Help and Moneyball because of high scores on Rotten Tomatoes. All three movies ended up getting Oscar nominations 28 There were a few other movies that we skipped because the Rotten Tomatoes score was so low.

Recommendations Engines are enabling us to make better decisions and making it more difficult to declare that we’re lowering our expectations to justify a trip to the theatre. It’s a lot easier to lower expectations when there’s some chance that the movie will be good despite the trailer or word-of-mouth buzz it’s been getting. But when thousands of people have already said it’s a bad movie and we know that, then it’s much harder to pretend it might be good.

The trick is that we, as consumers, have to listen to what so many other people are telling us through all the recommendations vehicles that are out there. When we start listening to others’ recommendations, we can set our expectations appropriately to maximize two of our scarcest resources: time and money.

SPECIAL THANKS

I put a lot of work into this piece, but I also got a lot of help from other people. Jason Killingsworth offered his editorial insight and sage advice to help make it better and more readable. Jason was also one of the first bloggers I read, so there’s a nice historical symmetry here. Danny Anderson did the final review before I published, and helped me figure out how to wrap it all up. Sean Nyffeler illustrated the piece (twice, actually: he did a draft, took some notes and re-did the illustration for the published version). Several other people were sounding boards who helped me refine the basic ideas over the past several months. Thanks to everyone who helped make this a better piece.

Movie Mind Games: Does manipulating our expectations make movies better? (3 of 3)

Illustration by Sean Nyffeler of Popcorn Noises fame

PREVIOUSLY, in Part 2: How we all use UHD to decide what to buy, and how we sometimes ignore UHD altogether. [Click here to view the entire piece as a single page.]

But this one goes to 11.

What we’re doing when we go see movies with deflated expectations is trying to trick ourselves into accepting the lower utility of the movie and ignoring the greater cost. Let’s say we go see the same bad movie we’ve talked about already, but we have “no expectations”, meaning we essentially expect the movie to be about 1 util of entertainment. That way, when we go to the movie and it’s 4 utils, we exceeded expectations! We practically created three utils out of thin air! Um, ok. But the problem is that the movie itself is still only 4 utils. It has to be because we have to put every other movie we’ve ever seen on the same scale. We can’t artificially inflate the number of utils to, say, 5 because what happens to those other movies that really were a 5? 1 This also reduces the perceived value of a 10 because we’re watering all of our other movie experiences down. So if we inflate the utility from a 4 to a 5, what we’re really doing is inflating the whole scale. Now it goes to 11. We have created UHD inflation.

A Delightful Food-Poisoning Analogy

It’s as though we have a friend who likes to cook. He says, “Hey everyone! Come over to my place and bring $5. I’ll cook something for all of us to eat. It’ll be delicious!” So we all go over there and bring five bucks. We eat the meal and it’s really freaking terrible. Half of us are disappointed and the other half are left with Oregon Trail flashbacks. A few weeks later, the same friend makes the same offer. We all decide to give it one more shot–maybe he just had a bad night, right?–and we head back over there with our five bucks. Same thing happens. Half of us are disappointed and the other half end up battling the dysentery. A couple weeks later, the same friend makes the same offer again. Would I go? Of course not. But what if I said, “You know what? I’m going back! I’ve learned that I just have to lower my expectations so I can really enjoy the food poisoning! I’m going to just assume it will kill me this time, or at least that it’ll ruin my digestive system for the next few days. It’s going to be terrible! I can’t wait!” I’m tricking myself into paying $5 for the privilege of being food-poisoned by my friend.

Ridiculous, right? How’s that any different than saying, “The trick to movies is that I just lower my expectations as much as possible. If I go in without expectations, I can’t be disappointed!” Well, kind of. But you’ll trick yourself out of $10 and you’ll waste time that you could’ve spent doing something cheaper and better.

What’s going on here?

So why do we trick ourselves into going to see bad movies in the theatre at 10 times the cost of the Redbox DVD? What’s really strange is we don’t do this with other stuff. If anything we tend to inflate our expectations, especially when it comes to music. I’ve heard friends totally pan a new album just because it didn’t live up to their expectations, which were far higher than they should’ve been. This happened with She & Him’s “Volume 2”. Many of my friends said they didn’t like it, and it was just more of the same from She & Him. Well, duh. They’re still She & Him and their first album was awesome. I’d say “Volume 1” was like 8 utils to me. I expected “Volume 2” to be about 8 utils. I think some of my friends expected it to somehow magically be 10 utils. Why? I have no idea. Turns out it was right about 8 utils (maybe slightly less, but it was really close). I ended up enjoying it a lot (and still listen to it regularly), whereas they ended up all disappointed and annoyed. Of course, they just did that to themselves.

So, with music, a lot of my friends do the opposite of this movie theatre trick–they inflate their expectations so they’re artificially disappointed when they hear a new album. 2 This is silly, but at least it makes some kind of sense: If we’re going to mess with expectations, we should manipulate the numbers so we tend to be less satisfied. That way, we’re basically tricking our future selves into spending less money. But this leaves us in an awkward place: we trick our future selves into spending more money on expensive stuff (movies at the theatre), and less money on cheap stuff (music). If we’re going to trick ourselves, we should be tricking ourselves so that we’re less satisfied with expensive stuff and more satisfied with cheaper stuff. At least that way we end up tricking our future selves avoiding the more expensive purchases on stuff we don’t like anyway. The UHD for music is almost always higher than it is for movies so, if anything, we should tend to “trick” ourselves into consuming more music and fewer movies in order to use our time and money more efficiently by consuming better stuff.

Why do we have it backwards? There could be a few explanations for this. Rather than trying to make sure we spend our money as efficiently as possible, we’re more focused on justifying expensive movies because they’re a cultural staple:

“Did you see the new X-Men movie?”
“No, I’m waiting for it on DVD.”
“Lame-o! Hey everybody! This guy’s super lame!”

It’s not cool to wait to watch movies on DVD. If I show up at the water cooler on Monday morning after a big release 3, nobody wants to hear anything I say if it starts with, “Well, I’m waiting for that one to be available on Netflix streaming.”

Sometimes there are benefits to seeing a movie in the theatre, especially action flicks. But we can account for that by bumping the utils for the movie just a little bit. Maybe X-Men on DVD is 6 utils, but X-Men in the theatre is 8. Ok, but does that justify the 10-times-higher price tag? The UHD sure doesn’t think so.

Conspiracy Theory!

There’s also some clever marketing going on by the movie studios. Most of the movies made are crap. We tend to remember good things more than bad, but most movies are really, really bad. This is easily confirmed by just browsing Netflix for movies 4. Some friends and I recently spent about two hours scrolling and scanning through Netflix to find a movie to watch. We ended up just re-watching Arrested Development Season 1. The issue wasn’t a lack of options, it was a lack of good options. There just weren’t any. We looked at hundreds of movies and all of them were terrible. If we used movie studios’ previous product as an indicator of future quality, we’d almost always opt not to go see movies in the theatre because there’s just too much risk that the movie will be crap and we’ll waste $10. Waiting for the DVD gives us more time to get recommendations from other people who have seen it so we can decide whether it’s even worth seeing on DVD.

But movie studios have cleverly convinced us that we should set our expectations aside so we can enjoy the movie-going experience itself. 5 Of course, as discussed earlier, the movie theatre experience isn’t really much different than just watching the movie at home (there are a few exceptions). If we all had the appropriate level of expectations for movies, we would rarely go to the theatre because we would mostly be disappointed. But instead of just saving that cash and doing something with higher UHD, we buy into this idea that we should essentially forget all the crap they’ve fed us previously so that we can enjoy this current experience more.

Positive Reinforcement of Terrible Moviemaking

But it’s actually worse than that. By tricking ourselves into “liking” (and paying for) bad movies, we’re encouraging movie studios to make more bad movies. If I trick myself into paying $10 to see Zookeeper, then I just gave the movie studios $10 and a green light to start production on Zookeeper 2: Flying Poo. Now I have to trick myself into going to see that dud, too?

Not only am I tricking myself into spending a lot of money on a bad movie, but I’m feeding the movie making machine so that it continues to churn out garbage that I have to trick myself into overpaying for in the theatre next time. I’m essentially a recommendation engine whose recommendations are made in dollars. I’m saying, “Movie studios. I recommend that you make Zookeeper 2: Flying Poo! Here’s ten bucks to get you started!” When does it end?

It is ending

In many ways, this phenomenon is ending, if only subtly. There are myriad modern sources of recommendations that are almost forcibly removing our self-imposed myopia. For example, Rotten Tomatoes is a crowd-sourced recommendation engine that is almost impossible to ignore once you know it’s out there.

“Want to go see the new Zookeeper movie?”
“What’d it get on Rotten Tomatoes?”
“Eleven percent.”
“And how did the first one do on Rotten Tomatoes?”
Fourteen percent.”
“This one is worse than the first one? That’s pretty bad. I’ll pass.”

That’s what saving $10 and two hours sounds like. I have conversations like this one a couple times a month. On the flip-side, I often decide to go see a new movie specifically because Rotten Tomatoes rates it highly. For example, when I was in Vancouver last year, my friends and I went to see Drive because I saw it got something like 90% on Rotten Tomatoes. They had never heard of the movie, and I had only heard a little about it, but the Rotten Tomatoes score pushed me to recommend it to them. We also went to see The Help and Moneyball because of high scores on Rotten Tomatoes. All three movies ended up getting Oscar nominations 6 There were a few other movies that we skipped because the Rotten Tomatoes score was so low.

Recommendations Engines are enabling us to make better decisions and making it more difficult to declare that we’re lowering our expectations to justify a trip to the theatre. It’s a lot easier to lower expectations when there’s some chance that the movie will be good despite the trailer or word-of-mouth buzz it’s been getting. But when thousands of people have already said it’s a bad movie and we know that, then it’s much harder to pretend it might be good.

The trick is that we, as consumers, have to listen to what so many other people are telling us through all the recommendations vehicles that are out there. When we start listening to others’ recommendations, we can set our expectations appropriately to maximize two of our scarcest resources: time and money.

SPECIAL THANKS

I put a lot of work into this piece, but I also got a lot of help from other people. Jason Killingsworth offered his editorial insight and sage advice to help make it better and more readable. Jason was also one of the first bloggers I read, so there’s a nice historical symmetry here. Danny Anderson did the final review before I published, and helped me figure out how to wrap it all up. Sean Nyffeler illustrated the piece (twice, actually: he did a draft, took some notes and re-did the illustration for the published version). Several other people were sounding boards who helped me refine the basic ideas over the past several months. Thanks to everyone who helped make this a better piece.

Movie Mind Games: Does manipulating our expectations make movies better? (2 of 3)

Illustration by Sean Nyffeler of Popcorn Noises fame

PREVIOUSLY, in Part 1: Some background on recommendations and expectations, and UHD defined. [Click here to view the entire piece as a single page.]

UHD isn’t as esoteric as it seems

I realize that, at first, UHD just seems like a wonky way to describe something that’s already obvious and intuitive. But it actually has real-world applications, especially when it comes to understanding our intuitive-but-not-easily-explained preferences for stuff.

For example, UHD helps me understand why it took me a little while to move from CDs to downloading MP3s 1. Initially, the cost of an MP3 album (on iTunes, for example) was pretty close to the CD and Apple was using DRM 2. My concern was that I wouldn’t “own” the music if I paid for the MP3s. The result was that the utility of the MP3s was less than that of the CD, even though it was the same music at the same cost. Since the cost was similar, and the hours of entertainment would be the same, the difference in utility made the UHD for CDs higher than MP3s. Eventually, Amazon started offering DRM-free downloads and cheaper prices, shifting the UHD for MP3 downloads ahead of CDs. That’s when I made the switch to MP3 downloads 3. Of course, I didn’t actually do a conscious UHD calculation one day and say, “Ah ha! The UHD for MP3s is finally greater than it is for CDs! Time to make the switch!” But that’s basically what happened. The same process is happening for me with eBooks right now. 4

A brief, anecdotal history of cinema

The shift from CDs to MP3s, or from physical books to eBooks is interesting to me. But what’s really interesting to me is the persistence of movie theaters despite cheaper, very similar movie-watching options. Fifty years ago, the only real option for seeing a movie was to go to the movie theatre. This was great for movie companies because they could charge high prices since they were basically the only game in town. The UHD calculation wasn’t really useful for deciding how to watch a movie because it wasn’t so much a matter of comparing different movie-viewing options as just deciding whether it was worth it to spend the money on a movie or not. If it wasn’t, you just had to find something else to do.

Then technology started changing, opening the door for the home theatre experience. First, VHS started enabling people to watch movies at home en masse. Hi-fi began morphing into fancier surround sound setups whose cost was dropping so that more and more people could buy them. LaserDisc 5 came and went. Then DVD took hold and made the home-viewing experience even better.

A sidebar into UHD for movies at the turn of the century

Ten years ago, we really had two options for watching a movie (without owning it). We could either go to the theatre or rent it at Blockbuster. Let’s run through the UHD calculations real quick, just to get an idea of the difference in UHD for these two options at that time:

  • A good movie as a “New Release” rental was about $4 (-ish), lasted 2 hours and provided a utility of 6:
  • 6 utils * 2 hours = 12 util-hours
  • 12 util-hours / $4 = 3 UHD

  • The same good movie in the theatre would have been about $5, lasted 2 hours and provided a utility of about 7 (slightly higher since it was in the theatre):
  • 7 utils * 2 hours = 14 util-hours
  • 14 util-hours / $5 = 2.8 UHD

So the UHD for renting versus going to the theatre was really close even as recently as 2000. They were close enough that there was a real decision to be made: Spend $5 and go to the theatre or spend $4 and stay home? We would often decide what to do based on the number of people in a group (if there were four of us, we could just split the rental for a buck a piece; if there were two of us, then why not just pay for the movie in the theatre?) and our willingness to sneak snacks into the theatre. 6

Our trusty UHD chart from Part 1

Snap back to reality

A lot has happened over the past 10 years or so. Netflix popped up, HD-DVD lost the war to Blu-Ray, streaming video became better and better, Blockbuster got crushed, and DVD rentals have gotten cheaper and cheaper. There are options now, options that just weren’t available when movie theaters first became a big deal. Not only are there options, but there are cheap options that rival the actual movie-going experience. And yet, movie ticket prices have been steadily increasing over time. 7

Let’s look at one more sample UHD calculation:

  • A really bad movie that I waited to watch on Redbox DVD would be $1, last 2 hours and provide a utility of 2 8:
  • 2 utils * 2 hours = 4 util-hours
  • 4 util-hours / $1 = 4 UHD

As we saw earlier (in Part 1), watching the bad movie in the theatre gives .4 (that’s point-four) UHD. Watching the same bad movie on DVD gives 4 UHD. Watching the bad movie on DVD is 10 times “better” than watching it in the theatre, and all of this difference is accounted for by the difference in cost. “But wait!”, you say, “What if I enjoy watching movies more in the theatre?! I really like going to the theatre!” Ok, fine. How much better would the movie have to be in the theatre to make up for the difference in UHD?

Some people will want to go to the most extreme case first, so let’s just go straight there. Let’s say that the bad movie moves from 4 utils to 10 utils just because I enjoy going to the theatre so much. It only jumps to 2 UHD (still half of the 4 UHD if I wait to watch the bad movie on Redbox DVD). “That doesn’t make any sense!” My counter would be, “So you’re saying there’s no way any movie can be better than the bad movie in the theatre? What if you go see a good movie in the theater?” Since the 1-10 scale is a subjective scale, I have to leave room above the bad movie for less-bad movies. Either that or I have to slide my Redbox DVD experience down to a 1 or something. If I move the theatre experience up to a 10 and move the Redbox DVD experience down to a 1, then I get the same result for both options: 2 UHD.

The present, seemingly uncrossable gulf between UHD for going to the movies and watching them at home is due to super high, sticky movie prices and much, much cheaper alternatives for watching movies at home. This has created such a big gap in cost that watching movies in the theatre is just that much more expensive, ruining their UHD relative to the very-similar experience of watching movies at home now.

Going to see movies in the theatre is expensive. I realize some people will say, “But your formula is just wrong. It weights the cost too much.” Using the UHD calculation as-is, it’s hard to see many situations where it would be better to go to the theatre than to watch the flick at home. It’s possible that I’m weighting cost too heavily, but I think the real problem is that movie theaters are just way too expensive now because we have more, better options. There really is that much of a difference in cost between movie theaters and rentals.

Movie Expectations – A bizarre special case?

And yet, new releases continue to set box office records as people go to the theatre in droves. At the same time, the movie theaters are much more expensive than the alternatives, and the quality of the movies released has been consistent (or at least not improving enough to justify the growing gap between theatre prices and the alternatives). What gives? If I’m right that waiting for the movie on DVD is almost always better than going to the theatre, then why do so many people continue going to see movies in the theatre? Why did I go see three movies in the theatre this summer?

I’ve overheard this sentiment several times recently: “That movie wasn’t that bad. I just went into it with no expectations and it turned out ok. I’ve decided I just won’t have expectations for movies because I end up over-hyping them and when they don’t meet my expectations I feel ripped off.” So the idea is that movies are often bad because we expect them to be good, or at least because we expect them to be better than they actually are. To solve this problem, we play mind games with ourselves, intentionally under-hyping a movie so that when we go see it and it’s just an ok movie, it exceeds our deflated expectations.

At first, I saw the wisdom in this tactic. If we get really good at lowering our expectations, almost any movie will be a success, at least inasmuch as it will exceed our expectations. That way, we can pretty much guarantee that when we pony up $10 for a ticket and another $10 for concessions, we won’t be let down.

The more I think about this, the more ridiculous the idea seems. We don’t lower our expectations for music, books or TV shows, do we? So why do we do that with movies? Of all our options, movies are one of the most expensive. Why would we trick ourselves into doing something super expensive that we don’t really enjoy that much?

UP NEXT, in Part 3: Why we game the UHD system, what it costs us, and how much all this matters. [Click here to view the entire piece as a single page.]

Movie Mind Games: Does manipulating our expectations make movies better? (1 of 3)

Illustration by Sean Nyffeler of Popcorn Noises fame

We spend a lot of time gobbling up media. We want to do fun stuff, and we want to do stuff on the cheap. Such is life in a stagnant economy. One of my go-to, quick and dirty ways to choose one option over the others is to figure out the cost per hour for each of my options, and then choose the one with the lowest cost per hour. 1

Here’s a quick summary of the cost to consume different types of media, shown in ascending worst-case dollars per hour 2 3:

  • Podcast – free – As long as I have iTunes and an internet connection, I can get just about any podcast free of charge.
  • News online – free – Yeah, the NYT has a pay wall now, but they don’t have any news I can’t get for free somewhere else.
  • Video games – $.03 to $1.25 – Angry Birds, Madden, NCAA: they all take so long they end up being really cheap by the time we’re through with them.
  • Books – $.25 to $2 – This one obviously depends how fast you read, but a good old paperback can go a long way on short change.
  • MP3 albums – $.3 to $4 – The trick with MP3s is to find them on sale. The Amazon MP3 store runs sales all the time.
  • Movies – $.50 to $5 – Movies tend to run the gamut because there are so many ways to get them. Prices vary pretty widely from Redbox to IMAX.

Almost any way I slice it, movies are one of the most expensive pieces of the entertainment pie. Looking back at my personal habits over time 4, it’s pretty obvious that I’ve been moving to cheaper and cheaper options over time. This wasn’t a conscious decision, but I have been purposely reducing my spending over the past few years, and I’ve obviously accomplished that by buying cheaper media.

Consuming media isn’t just about being entertained as cheaply as possible 5; I want quality entertainment. It’s not as simple as just consuming some type of media–I also have to figure out which examples of a given type of media to choose. If I’m listening to podcasts, how do I decide which ones? How do I find good books to read? How do I decide which movies to see in the theatre and which ones to rent? How do I know which ones to avoid altogether? The easy answer is recommendations. The trickier answer is expectations.

Recommendations

Over the past decade, recommendations 6 have gone from an informal give and take to a very sophisticated marketing tool, employed by giant companies to boost sales. Amazon, Netflix, Apple’s App Store and many other companies rely on recommendations to keep customers coming back for more. “Recommendation Engines” have become a closely guarded secret and a competitive advantage designed keep customers from switching to a competitor. I’ve bought hundreds of items on Amazon, and I like the recommendations it provides based on my previous purchases. If I start shopping at another online vendor, I’ll have to start over from scratch to get new recommendations. That would be a lot of work, so I’m likely to stay with Amazon for quite a while unless a competitor offers something significantly better or Amazon totally drops the ball.

Many of my social interactions revolve around either sharing recommendations or comparing opinions on different media. For as long as I can remember, I’ve frequently asked friends what they’re into: “Seen any good movies lately?” or “Have you heard the new Girl Talk? How is it?” For almost any kind of media, I have at least one friend who’s practically on speed dial in case I need new recommendations.

I also make a lot of recommendations. I love it when a friend tweets, “Looking for some good books to read this summer. Any suggestions?” It takes me a few questions to figure out what kind of stuff they like, but once I zero in on their preferences I can usually recommend several titles that I can almost guarantee they’ll like. The same goes for music, movies, podcasts and TV shows. Part of being a maven 7 is that I’ve always got a solid cache of information ready to share if someone’s careless enough to open the door for me.

Expectations

The flip-side to recommendations is the expectations they create. If a friend of mine, let’s call him Morris, has successfully recommended 10 documentaries to me without any stinkers, then I expect his next doc recommendation to be a good one. If another friend, let’s call him Les, has recommended five documentaries for me, and all of them have been terrible, then I expect his next recommendation to be terrible and I’ll eventually just stop listening to his recommendations altogether. If Morris and Les both make recommendations to me at the same time, I can safely choose Morris’ recommendations because I expect them to be better. With each recommendation Morris and Les make, I can reevaluate their recommendations as a whole to determine how much weight I’ll give to either recommender in the future.

This is also true for recommendation engines like those at Amazon and Netflix. If Amazon starts recommending stuff that I hate, I’ll take that into account in the future and begin lowering my expectations for the stuff they recommend. Eventually I’ll just stop buying stuff they recommend, and that may remove the exit barrier I described earlier so that I’m comfortable going to another company and starting over from scratch.

There’s a feedback loop of recommendations and expectations. With each new good recommendation I get from a friend, the higher my future expectations will be that the stuff he recommends is worth my time and money. With each bad recommendation I get from a friend, the lower my future expectations will be that the stuff he recommends is worth my time and money. Eventually, I will learn to anticipate exactly how accurate my friends’ recommendations will be.

Recommendations and expectations are part of an adaptive framework wherein each future recommendation carries the weight of all previous recommendations. This feedback loop is only useful if I compare my actual experience to my actual expectations. 8

Utility-Hours Per Dollar

Before I can compare outcomes to expectations, I need a way to objectively measure my general satisfaction with any particular piece of media. Dollars per hour is a good metric to figure out the cost of consuming media, especially if my biggest concern is keeping a budget. It helps me measure efficiency. I might say, “Well, I’ve got three bucks left in my entertainment budget this month. I might as well stretch it as far as I can. What’re my options that are three bucks or cheaper and provide the most entertainment time?” But I’m not just looking for any old media–I want the good stuff. I need a way to account for both efficiency and the relative enjoyment offered by something. Enter this new thing I’m creating called “Utility-Hours per Dollar” (UHD) 9. The UHD allows me to normalize things so that I can compare apples to apples. Yes, going to see a movie in the theatre is really expensive ($5 per hour), but what if it’s the most fun thing I could possibly do with five bucks? That has to count for something, right? Sure it does.

I calculate UHD like this:

  1. Find the absolute cost (in dollars) of the media I’m looking to buy.
  2. Estimate how long (in hours) it will take to consume. 10
  3. Subjectively determine its utility 11on a 10-point scale (1 is for awful stuff, 10 is for incredible stuff).
  4. Multiply the utility number by the number of hours.
  5. Divide that number by the cost, rounded to the next highest dollar. For free stuff, use $1 (not $0). 12 13

For those who like a tidy formula, here it is:

  • UHD = (Utility * Hours) / Dollars

That’s it. Here are a couple examples 14:

  • A really bad movie at the theatre would be $10, last 2 hours and provide a utility of 2:
  • 2 utils * 2 hours = 4 util-hours
  • 4 util-hours / $10 = .4 UHD

  • A pretty good album that I buy on Amazon for $8 might give me 20 solid hours of listening at 6 utils:
  • 6 utils * 20 hours = 120 util-hours
  • 120 util-hours / $8 = 15 UHD

A UHD near zero sucks. A UHD that ends up in the double digits is pretty good. Stuff with a UHD in the mid-to-high double digits is pretty great. Using this metric, I can figure out my most cost effective, enjoyable option for entertainment.

Our trusty UHD chart–we’ll see this again later

UP NEXT, in Part 2: How we all use UHD to decide what to buy, and how we sometimes ignore UHD altogether. [Click here to view the entire piece as a single page.]