I've been in and around the music industry for a few decades. (As someone who actually likes music, Omega help me.) Whatever it runs on, it's not rationality and only occasionally seems to be business. There's lots of ape politics and towering mountains of BS.
We're talking about something where the product for sale is a subjective feeling in the mind of the listener, so being a skilled enough rhetorician to convince someone else that enough customers will feel the right subjective feeling is enough to get you a very long way, even with a terrible track record (because there's always an excuse, and 10 years' failure is 10 years' experience on your resume).
Rational business practice in the entertainment industry seems in short supply. I have only just-so surmises on why precisely it comes out this way, but it does seem to be the case, suggesting the possibility of an underlying more generally applicable reason or theory.
We're talking about something where the product for sale is a subjective feeling in the mind of the listener
I suspect the problem is that being good at that, i.e., having artistic talent and/or having a feel for artistic talent, tends to be inversely correlated with rationality.
By "the industry" in this post, I refer to that part of the entertainment industry which:
1. Produces movies, TV and video games (as opposed to books, comics etc.)
2. Is motivated by profit (as opposed to fun, politics etc.)
3. Consists of companies (as opposed to lone developers, student teams etc.)
It seems to me that the industry has two characteristics:
Formulaic
Most products follow some formula which is known to be workable.
Under what circumstances is this rational? (I'm not commenting on whether it's artistically good or bad; again, I'm only discussing entertainment as a commercial enterprise motivated by profit.) It seems to me following a proven formula is rational if your priority is to not lose, to go for the sure thing, i.e. the chance of a big hit is not worth the risk of a complete flop.
Hit driven
It's the accepted wisdom that entertainment is a hit driven industry: almost all the profits are generated by a handful of the most successful products, with the rest losing money or barely covering costs.
Now my question: isn't there a contradiction here? If you're selling insurance, following a proven formula may well be the rational thing to do. If you're the owner of one of the handful of franchises that is pulling in big profits, of course you shouldn't mess with a winner. But if you're one of the many also-rans, how is it rational to stick with an almost sure loser? In a hit driven industry, wouldn't it be more rational to concentrate on maximizing your chance of winning big, instead of trying to minimize the risk of a flop?
But I've never worked in the entertainment industry; perhaps my layman's impression of it is inaccurate. Is there something I'm missing, or is a substantial amount of expected profit really being left on the table?