Why blockbusters are taking over the arts Harvard’s Anita Elberse on why the ‘long tail’ is not where the money is By Craig Fehrman Globe Correspondent,October 13, 2013, 12:33 a.m. The next few weeks seemed to bear out his prediction, as “The Lone Ranger” (reported cost: $215 million), “R.I.P.D.” ($130 million), and other big titles flopped. But then a funny thing happened. When summer came to an end, Hollywood had brought in more money than ever: a domestic box office of $4.76 billion. For every “Lone Ranger” there had been an “Iron Man 3” and a “Fast & Furious 6.” Hollywood wasn’t collapsing under the weight of its blockbusters. It was enjoying its best summer ever. That might have surprised Spielberg, but it’s exactly what Anita Elberse expected. Elberse, a professor at Harvard Business School, has spent a decade studying the entertainment industry and how it’s changing in the online economy. Many observers had predicted the Web would revolutionize our culture and wildly expand our choices—and in some ways, it has. But in her new book “Blockbusters,” Elberse argues that for entertainment companies at least, the digital shift has only amplified the star system already in place. Movie studios now succeed by sinking extra resources into a handful of super-hits, and the public responds by flocking to them. “Blockbusters” shows that this strategy has also worked for book publishers, music labels, TV networks, and video game companies. Elberse analyzes the realm of culture with a rigorous, numbers-driven approach. One of her central findings has been that Chris Anderson’s influential “long tail” theory, which imagined a digital future in which we would happily browse a niche-filled utopia, hasn’t quite worked out as promised. In the pages of the Harvard Business Review, and now in her new book, Elberse has mounted a forceful argument against it, showing that instead of producing a “long tail” of modest successes, consumers respond to an overwhelming mass of products by drifting back to the biggest brands. “Blockbusters,” she writes, “will become more—not less—relevant in the future.” The notion that blockbusters are doing better than ever has been a big relief for entertainment companies worried that digital content would gut their business. For the wider culture, however, it might not sound so encouraging. Who wants to live in a world where there’s “Fast & Furious 12” and little else? It’s easy to blame movie studios and publishers for crassly chasing the easy money. But Elberse’s book shows the reasons lie with us, as well. We may think we’ll use the Internet as a gateway to marvelous and obscure new music, books, movies, and so on—but to a significant extent, we’re really using it for a mass discussion of Miley Cyrus’s new number one hit. A blockbuster economy, it seems, is what happens when people get what they really want. *** ELBERSE’S OFFICE on the Harvard campus isn’t that of a typical business professor. “Most of my colleagues have res.

1. Why blockbusters are taking over the arts
Harvard’s Anita Elberse on why the ‘long tail’ is not where the
money is
By Craig Fehrman Globe Correspondent,October 13,
2013, 12:33 a.m.
The next few weeks seemed to bear out his prediction, as “The
Lone Ranger” (reported cost: $215 million), “R.I.P.D.” ($130
million), and other big titles flopped. But then a funny thing
happened. When summer came to an end, Hollywood had
brought in more money than ever: a
domestic box office of $4.76 billion. For every “Lone Ranger”
there had been an “Iron Man 3” and a “Fast & Furious 6.”
Hollywood wasn’t collapsing under the weight of its
blockbusters. It was enjoying its best summer ever.
That might have surprised Spielberg, but it’s exactly what Anita
Elberse expected. Elberse, a professor at Harvard Business
School, has spent a decade studying the entertainment industry
and how it’s changing in the online economy. Many observers
had predicted the Web would revolutionize our culture and
wildly expand our choices—and in some ways, it has. But in her
new book “Blockbusters,” Elberse argues that for entertainment
companies at least, the digital shift has only amplified the star
system already in place. Movie studios now succeed by sinking
extra resources into a handful of super-hits, and the public
responds by flocking to them. “Blockbusters” shows that this
strategy has also worked for book publishers, music labels, TV
networks, and video game companies.
Elberse analyzes the realm of culture with a rigorous, numbers-
driven approach. One of her central findings has been that Chris
Anderson’s influential “long tail” theory, which imagined a
digital future in which we would happily browse a niche-filled
utopia, hasn’t quite worked out as promised. In the pages of the
Harvard Business Review, and now in her new book, Elberse

2. has mounted a forceful argument against it, showing that
instead of producing a “long tail” of modest successes,
consumers respond to an overwhelming mass of products by
drifting back to the biggest brands. “Blockbusters,” she writes,
“will become more—not less—relevant in the future.”
The notion that blockbusters are doing better than ever has been
a big relief for entertainment companies worried that digital
content would gut their business. For the wider culture,
however, it might not sound so encouraging. Who wants to live
in a world where there’s “Fast & Furious 12” and little else?
It’s easy to blame movie studios and publishers for crassly
chasing the easy money. But Elberse’s book shows the reasons
lie with us, as well. We may think we’ll use the Internet as a
gateway to marvelous and obscure new music, books, movies,
and so on—but to a significant extent, we’re really using it for a
mass discussion of Miley Cyrus’s new number one hit. A
blockbuster economy, it seems, is what happens when people
get what they really want.
***
ELBERSE’S OFFICE on the Harvard campus isn’t that of a
typical business professor. “Most of my colleagues have
research awards on the shelf,” she jokes. “I have party invites.”
In one corner sits a guitar autographed by the guys in Maroon 5;
on the wall hangs an invitation to LeBron James and Jay-Z’s
Two Kings’ Dinner.
Before she was an expert on the entertainment industry, the
Dutch-born Elberse was a fan. “I spend way too much time
watching television, going to sports games, going to movies,”
she says. But for all the cultural chatter about those events,
Elberse noticed that very few scholars were studying them
empirically. “It struck me that there’s an awful lot of data in the
public domain for these sectors,” she says. “The movie industry
publishes weekly sales numbers—not many industries do.”
While a graduate student at the London Business School,
Elberse decided to quantify the best entertainment business
strategies, building complex models that controlled for all kinds

3. of factors. Subrata Sen, a professor in Yale’s School of
Management, still remembers the novelty of Elberse’s 2002
dissertation on the film industry. “She doesn’t just wave her
hands and make some general statement,” Sen says. “She
actually works with the numbers. She does the math.” Once she
got to Harvard in 2003, Elberse began mixing in more
qualitative research as well, including interviews with book
publishers, music executives, and movie producers.
While doing this work, Elberse kept bumping up against a
popular new idea: the long tail. According to Chris Anderson,
who developed the theory in a 2004 Wired article, then in a
2006 book, the Internet makes it easier than ever to produce,
distribute, and buy products—and this freedom would transform
customer behavior. With evangelical fervor, he wrote of an end
to the era of bland, one-size-entertains-all popular culture. A
typical mass-market “demand curve” slopes from left to right,
graphing the fall-off in popularity from the megahits in the
“head” to the less trendy “tail,” which represents the many
products with a relatively small audience. The Web, Anderson
predicted,would empower us to reach beyond the high-volume
head of the curve to the long and ever-expanding tail, where
people would increasingly create and consume products better
suited to their personal tastes.
Anderson’s book itself became a blockbuster, and his theory
became a key framework for understanding the cultural
marketplace. But Elberse was skeptical from the start. “I
remember thinking, this just does not jibe with the underlying
data I’ve seen for the industry,” she says.
No one disputes that the Internet gives consumers many more
choices—just compare your local bookstore’s selection to
Amazon’s. But when it comes to what most of us actually buy
and read, Elberse argues, there’s little evidence that we’re
taking advantage of the immense variety out in that tail. Perhaps
the best example comes from digital music. From 2007 to 2011,
the number of unique songs that sold at least one copy, largely
through iTunes, exploded from 3.9 million to 8 million. But in

4. 2011 nearly a third of those songs sold only one copy—a
percentage that keeps increasing every year. And 94 percent of
the songs sold fewer than 100 copies.
The long tail, it turns out, is a pretty lonely place. Instead, more
and more fans are moving to the head, where the blockbusters
reside. In 2007, 36 songs sold at least a million copies. But by
2011, more than a hundred songs sold that many. Put another
way, a mere 0.001 percent of the available songs was
responsible for 15 percent of all sales. “Every time new data
come out,” Elberse says, “we see more demand shifting to the
head.”
In “Blockbusters,” Elberse shows how Warner Bros. has
capitalized on this trend. After a strategy shift in 1999, the
studio began committing an unprecedented chunk of resources
to a mere handful of movies. In 2010, for example, Warner
Bros. put a third of its production budget and nearly a quarter of
its marketing budget into just three of its 22 movies: “Harry
Potter and the Deathly Hallows, Part 1”; “Inception”; and
“Clash of the Titans.” It worked: Those three generated more
than 50 percent of the studio’s worldwide box-office.The
blockbuster strategy doesn’t always work—for Warner Bros.,
it’s led to disasters like “The Green Lantern” and “Speed
Racer”—but over time, Elberse demonstrates, the approach
consistently produces the highest returns. Last year, Warner
Bros. became the first studio in history to earn $1 billion or
more for 12 straight years, and Elberse has uncovered the same
pattern in other fields. When a music executive described one of
Lady Gaga’s albums, he invoked the Hollywood model. The
release, he said, had been orchestrated like “a movie
blockbuster in the summer months, like ‘Avatar.’”
***
FOR ENTERTAINMENT EXECUTIVES , the blockbuster
strategy makes a lot of sense. But what about for the rest of us?
Do big movies succeed because they’re what we want, or
because the studios invest lots of money in pushing them on us?
Elberse wrote her dissertation on that question, creating models

5. that accounted for a movie’s budget, its stars, the number of
theaters, the quality of the reviews, and more. She found that
both factors were at work. “Success is a combination of supply
and demand forces,” she says.
In other words, a big part of any blockbuster’s appeal is that we
simply like blockbusters. And here we’ve changed less than you
might think. In fact, Elberse says, the work that best explains
today’s consumers isn’t Anderson’s “Long Tail” but the far less
seductively titled “Formal Theories of Mass Behavior,” a 1963
book by sociologist William McPhee.
Elberse first learned about McPhee’s book when an emeritus
professor at Harvard mentioned it during one of her
presentations. When she checked the title out at the campus
library, she saw it hadn’t been borrowed since 1973. McPhee
constructed a series of experiments where people evaluated 12
different entertainment options. What he found was that most
fans of pop culture were fairly light consumers—they didn’t
consume many products, but when they did they preferred the
biggest hits. The heavier consumers (the film buffs, the music
junkies) were more likely to dip into what we now call the long
tail. But McPhee also found that they were less likely to enjoy
those obscure items. Even movie buffs liked blockbusters, he
observed—and most of the long tail just wasn’t that good.
When Elberse read McPhee’s findings, she recognized them
instantly. “I still remember the feeling of, ‘Oh my God, he
described it back then,’” she says. She’s replicated his model in
all sorts of modern settings—for example, in the user queues of
Quickflix, an Australian version of Netflix. But Elberse also
believes it makes intuitive sense. “It’s really not fun to have
seen a movie that you want to talk about and you can’t find
anyone else who’s seen it,” she points out. “It’s much better to
say, ‘Did you watch yesterday’s “Scandal” episode? Oh my
God, can you believe...’”
Elberse’s findings about the profitability of big hits has
reassured those inside the industry who had feared the long tail
would end their businesses. “Throughout the 2000s, there was a

6. lot of questioning and concern,” says James Diener, the
president of Maroon 5’s record label (and a subject for one of
Elberse’s early case studies). Elberse’s models “demystified,
even within the music industry, what was often mysterious to
us,” Diener says.
Elberse expects the strategy to keep working: “I don’t really see
a saturation point anytime soon,” she says. But to some that
sounds worrisome. At USC Spielberg didn’t just question the
durability of blockbuster strategy—he questioned its impact on
quality, too. “You’re at the point right now,” the director said,
“where a studio would rather invest $250 million in one film for
a real shot at the brass ring than make a whole bunch of really
interesting [projects].”
One hears echoes of Spielberg’s concern across the
entertainment industry. Sub-blockbuster commercial products—
what book publishers call the “midlist”—are where a lot of the
best popular art has traditionally emerged. That space has also
nurtured and supported artists before they started producing
hits. Jonathan Franzen, to take only one example, wrote two
slow-selling novels before his breakthrough “The Corrections.”
Yet with bigger profits coming from blockbusters, today’s
companies now have less incentive to invest in music that’s not
obviously Top 40, or in TV shows that try something new. As a
Warner Bros. executive told Elberse, “because technology is
shrinking the pie, at least in the foreseeable future, we’ll have
to make fewer smaller movies.”
Elberse can point to a few sound business reasons for making
smaller movies, even in a blockbuster age. Smaller movies help
movie studios preserve their relationships with movie theaters
and maintain a flexible schedule. They’re the best place to try
out new concepts or actors. “You don’t want to do your R&D in
a blockbuster,” Elberse says.
But she also notes that, in the end, the cultural products that
thrive are up to us. “In a way it’s our fault for not going to the
movies more often,” she says. “Would I prefer to see ‘Lincoln’
over ‘Iron Man 5’? Yes. But is that representative of the general

7. population? No. There’s clearly an enormous group of people
out there who find tremendous value in these blockbuster
movies.”
Research Assignment - Securing IoT Devices: What are the
Challenges?
Internet security, in general, is a challenge that we have been
dealing with for decades. It is a regular topic of discussion and
concern, but a relatively new segment of internet security is
getting most attention—internet of things (IoT). So why is
internet of things security so important?
The high growth rate of IoT should get the attention of
cybersecurity professionals. The rate at which new technology
goes to market is inversely proportional to the amount of
security that gets designed into the product. According to IHS
Markit, “The number of connected IoT devices worldwide will
jump 12 percent on average annually, from nearly 27 billion in
2017 to 125 billion in 2030.”
IoT devices are quite a bit different from other internet-
connected devices such as laptops and servers. They are
designed with a single purpose in mind, usually running
minimal software with minimal resources to serve that purpose.
Adding the capability to run and update security software is
often not taken into consideration.
Due to the lack of security integrated into IoT devices, they
present significant risks that must be addressed. IoT security is
the practice of understanding and mitigating these risks. Let’s
consider the challenges of IoT security and how we can address
them.
Some security practitioners suggest that key IoT security steps
include:
1. Make people aware that there is a threat to security;
2. Design a technical solution to reduce security vulnerabilities;
3. Align the legal and regulatory frameworks; and
4. Develop a workforce with the skills to handle IoT security.

8. Assignment - Project Plan (Deliverables):
1) Address each of the FOURIoT security steps listed above in
terms of IoT devices.
2) Explain in detail, in a step-by-step guide, how to make
people more aware of the problems associated with the use of
IoT devices.
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