Simon & Schuster, April 2021
This book is positioned by its publishers as a “how-to” business book – and by the author on the book’s website as a broad book about business and economics with a fresh take (“This book asks only that you apply some common sense”). A worthy attempt to widen its audience, but one that falls flat: it’s first and foremost an analysis of the entertainment industry today, drawing heavily on the author’s time as chief economist at Spotify. As a fan of Page’s thinking, this was where my interest lay in picking up the book, so speaking personally, it didn’t disappoint.
The premise of Tarzan Economics is that businesses should avoid complacency by swinging from “vine to vine” rather than clinging on to one “vine”. A valid point albeit not entirely new, though having finished the book, I struggle to list the eight principles referenced in the subtitle.
Instead, for me the book itself is pivotal in highlighting (i) the attention economy and (ii) network effects, two meta-trends in the entertainment industry (and more broadly anything termed “digital”) which are little understood by many regulators, policymakers and commentators.
A key tenet of Page’s argument is that we need to understand how people consume – not just what they consume. In digital entertainment, consumers buy access rather than ownership (cf physical CDs, books and DVDs, for which the right exhausts with the sale and the purchaser can make a capital gain on the second-hand market). Entertainment companies are not so much trying to sell us stuff as compete for our attention, which is finite. So book publishers compete with gaming companies, podcast platforms and streaming services – not just other book publishers. Media companies should view their market accordingly. Famously, Reed Hastings once said that Netflix’s biggest competitor was sleep.
Arthur C Nielsen, founder of the eponymous media sales analysis company, once said that “if you can put a number on it, then you can know something”, but analysing sales or viewing figures only compares like with like. It assumes that if the consumer wasn’t reading your book or watching your show, they were reading another book or watching another show – not, for example, playing a video game or listening to a podcast. And how do you know that they weren’t doing something else entirely, with the show on in the background? This is particularly important in the case of printed books, TV and gaming, which are zero sum games; audio books and music have more leeway as it’s possible to do something else whilst consuming them.
More helpful metrics are to be found in indicators such as “like” buttons, which indicate not just what people consumed, but how they felt about it. Applause was one of the earliest measures of consumer sentiment and, as a metric, can be considered more important than ticket sales. For all its faults, the ill-fated short-form video platform Quibi got something right: its business model was led by how audiences consume its offering (on mobile, on the go, and in “filler” moments) rather than by the content itself. Similarly (and more successfully), Spotify’s original premise was that it made paying for music more efficient than stealing it. It was primarily the service that its early users signed up to, not the content.
Page sums this up in what he calls the “quantification bias” – measuring things by numbers risks spurious correlations. We need qualification as well, which has traditionally been notoriously difficult to measure. Page calls this “thick data” rather than “big data” which for me was one of the most important take-aways of the book. Thick data requires an understanding of psychology and behaviour which doesn’t fit with traditional methods of measurement. Human judgement and collaboration (“free information goods”) will become more, not less, valuable in an automated world (Page points out that AI is only as good as the data which is fed to it, which could be biased or incomplete) and it’s vital that we have a robust way of measuring this value.
My second key take-away from the book was the importance of network effects. As Page puts it, “Tarzan Economics promotes thinking less about individuals and more about how social networks connect people into a community.” Page builds on Chris Anderson’s famous theory of the Long Tail (the notion of selling specialist items to a dedicated group for a long period) by concluding that you can’t make money in the tail, but that you can make money off the tail. He calls this “veganomics”: a restaurant won’t make a profit off a vegan dish, but the needs of the few are critical in allowing crowds to gather, so diversifying its menu will pay off overall.
Translated into what we now call the digital world (though soon to be simply the world), Page makes the important point that the definition of a monopoly is when the consumer loses out. This is not the case with so-called tech monopolies. Amazon is primarily focused on providing both low price points and a smooth purchase experience for its customers; Apple is happy to promote Google Maps to make its devices easier to use. Network effects mean everyone gains. This isn’t to say that multinational “tech” companies don’t present issues, but regulators, policymakers and commentators too often apply the twentieth century concept of “monopoly” to them, when we’re looking at something entirely new.
I would add to this that accusations of tech companies “stealing” our data falls into the same category mistake: unlike physical objects, which can only be in one party’s possession at any given time, data can’t be “taken” from you, as you still own it.
A reader seeking a practical business book might be disappointed, but for any follower of the content industry and those concerned with the wider digital economy, this book is definitive. It’s a must-read for team behind the new Digital Markets Unit whose raison d’etre has been rightly scrutinised in this excellent report by the Entrepreneurs’ Network.
Too many commentators have fallen into the trap of measuring twenty-first century industry by the standards of the twentieth century – inevitably, and unfortunately, concluding that technology and innovation is a threat rather than an opportunity. It’s refreshing to read an account which recognises that the entire ecosystem has changed, and that we need to change our approach accordingly.