Joe: In 2011, Netflix paid one hundred million dollars for a TV show without seeing a single frame of a pilot. The TV executives at HBO and AMC thought they were insane. But Netflix knew something they didn't, and it would change entertainment forever. Lewis: Hold on, a hundred million dollars, sight unseen? That's not a business decision; that's a Vegas bet placed by someone who's had way too many free drinks. How could they possibly be that confident? Joe: That is the central question in Streaming, Sharing, Stealing: Big Data and the Future of Entertainment by Michael D. Smith and Rahul Telang. And what's fascinating is that these guys aren't journalists chasing a scoop; they're respected academics. Their book came out through MIT Press, so it’s grounded in serious data analysis. They argue this wasn't a gamble at all. It was a calculated execution. Lewis: Okay, so the nerds had a spreadsheet that said, "This will work." But a spreadsheet can't predict a cultural hit. There's an art to it, a gut feeling. That's what Hollywood has been built on for a century. Joe: Exactly. And this book is the story of how that century-old model, built on the gut feelings of powerful gatekeepers, was systematically dismantled. Not by a rival studio, but by an algorithm. Lewis: I'm hooked. How did they know? What was in that spreadsheet?

Joe: They knew because they had the data. At the time, networks like HBO, Showtime, and AMC had a very specific, very expensive process. They’d commission a pilot episode. It’s a test run. They spend millions, show it to a focus group, and then executives in a boardroom decide if it has "the magic." Lewis: Right, it's a high-stakes audition. And most shows fail the audition. Joe: Most do. It's incredibly inefficient. But Netflix had something the networks didn't: a direct, real-time feed into the brains of millions of viewers. When the producers of House of Cards pitched their show, they went to HBO, who hesitated. But when they went to Netflix, the Chief Content Officer, Ted Sarandos, didn't need a pilot. He just needed to run a query. Lewis: What kind of query? What were they looking for? Joe: They looked at their own user data and found a powerful, three-way overlap. First, a huge number of their users had watched and loved the films of director David Fincher, like The Social Network. Second, an overlapping group of those same users also loved movies starring Kevin Spacey. Lewis: Okay, that makes sense. People who like the director and the star might like their new project. That's not exactly rocket science. Joe: But here's the third, crucial layer. A significant number of those same people had also rented the original 1990s British House of Cards series on DVD from Netflix, back when they were still mailing discs. They didn't just have a vague idea of the audience; they had a statistically validated profile of the perfect viewer, and they knew there were millions of them. Lewis: Wow. So it's less like a crystal ball and more like a ridiculously detailed weather forecast. They couldn't predict the hurricane, but they could see all the atmospheric conditions were perfect for one. Joe: A perfect storm, exactly. The book uses that metaphor. So Netflix walked into the bidding war and offered $100 million for two full seasons—26 episodes—upfront. No pilot. No notes from nervous executives. They just said, "Here's the money, go make the show." The industry was stunned. Lewis: I can imagine. But this brings up a huge question for me. If decisions are purely data-driven, does that kill creativity? Are we just doomed to get endless rehashes of things an algorithm has already approved? "You liked a superhero movie and a sci-fi movie, so here's a superhero sci-fi movie." Joe: That's the common critique, and it's a valid concern. But the book argues that, in this case, it actually did the opposite. It liberated the creators. Kevin Spacey said they wanted to create a "sophisticated, stratified story" with complex characters that unfold over time. Lewis: And you can't really do that on traditional TV, can you? You have to hook people before the first commercial break and deliver a mini-cliffhanger every week to make sure they come back. Joe: Precisely. Because Netflix's business model is based on a monthly subscription, not on ad revenue per episode, they didn't care if you watched it all in one night or over a month. They gave the writers, like Beau Willimon, total freedom. He even said the brutal opening scene where Frank Underwood strangles a dog was a test. He said, "If you couldn't survive the dog strangling scene, this probably wasn't the show for you." Lewis: You would never, ever get that scene past a traditional network executive. They’d be terrified of scaring away advertisers. Joe: Never. So the data didn't just predict an audience; it created a protected space for a different kind of storytelling to exist. And by releasing all episodes at once, they invented the binge-watching model, which fundamentally changed our relationship with television. It was a masterclass in using data not just to find a market, but to reshape it entirely.

Lewis: It's fascinating how they built this entertainment empire on a foundation of convenience. Which makes me think about the flip side—the ultimate inconvenience for studios: piracy. The book's title has 'Stealing' right in it. What's the book's take on that? Is it just a simple case of good guys versus bad guys? Joe: Not at all. The book's perspective, which was pretty refreshing when it came out, is that the endless "copyright wars" were asking the wrong question. The question wasn't just "How do we stop people from stealing?" but "Why are they stealing in the first place?" Lewis: Well, because it's free. Isn't that the obvious answer? Joe: It's part of it, but the book argues that it's often more about friction and availability. Think about the early 2000s. If you wanted to watch a specific movie, you had to hope it was at your local Blockbuster. If you wanted a specific song, you had to buy the whole album. Piracy, for all its flaws, offered infinite selection and on-demand access. Lewis: It was a better product, just an illegal one. Joe: Exactly. And the entertainment industry's first response was to sue. They went after Napster, they went after individual users. The book quotes one observer who called it "the world's largest Whac-a-Mole game." You shut one site down, and ten more pop up. It was a losing battle. Lewis: So what was the winning strategy? Joe: To compete with free. Steve Jobs famously said that. You can't stop piracy, so you have to offer something better. The book presents this incredible piece of data. In 2011, at its peak, the file-sharing protocol BitTorrent accounted for over 21% of all internet traffic in North America during peak hours. It was a behemoth. Lewis: That's a staggering number. Basically, one-fifth of the internet was being used for piracy. Joe: Yes. But in that same year, Netflix's streaming service accounted for 22% of traffic. They were neck and neck. Fast forward just four years to 2015. Netflix's share had exploded to nearly 37%. And BitTorrent's? It had plummeted to just over 6%. Lewis: Whoa. So Netflix didn't just grow; it actively ate piracy's lunch. Joe: It devoured it. Because it offered a superior experience. For a reasonable monthly fee, you got a massive library, instant access, no viruses, no sketchy pop-ups, and it worked seamlessly on your TV, laptop, and phone. They didn't beat 'free' with laws; they beat it with convenience. Lewis: That makes so much sense. It's the path of least resistance. You could spend twenty minutes searching for a grainy, unreliable bootleg stream, or you could click a button and be watching in high definition in three seconds. My time is worth more than the hassle. Joe: And the book shows this pattern over and over. They analyzed what happened when the government shut down the massive piracy site Megaupload. Digital movie sales in the following weeks jumped by about 8%. They studied France's anti-piracy law, HADOPI, which sent warning letters to illegal downloaders. Music sales on iTunes went up 25%. Lewis: So making piracy less convenient also works. It's a two-pronged attack. Make the legal option easier and the illegal option harder. Joe: That's the formula. It's not about eliminating piracy, which is impossible. It's about shifting the balance of convenience so dramatically that for most people, paying becomes the more attractive option. Piracy, in a weird way, was the market research that taught the industry what consumers actually wanted: everything, right now.

Joe: And that control over convenience and the user experience leads directly to the final, and maybe most important, power shift the book talks about. The platforms that mastered data didn't just become convenient; they became powerful. Lewis: What do you mean by that? Powerful in what way? Joe: Powerful over the original creators. For a century, the Hollywood studios, the record labels, the big publishing houses—they were the gatekeepers. They controlled production, marketing, and distribution. But in the new world, the power lies with the platforms that control the customer relationship and, therefore, the data. Lewis: The ones who know what I watch, what I listen to, what I read. Amazon, Apple, Netflix. Joe: Exactly. And the book tells this chilling story about Amazon's early days that perfectly illustrates this power dynamic. It was a strategy internally known as 'Project Gazelle.' Lewis: That does not sound friendly. Joe: It wasn't. The idea was allegedly laid out by Jeff Bezos himself. He said Amazon should approach small publishers the way a cheetah pursues a sickly gazelle. They would identify the weakest ones and squeeze them for better terms. Lewis: Come on. That's brutal. How would they even do that? Joe: The book recounts the story of Dennis Johnson, the co-owner of a small independent publisher called Melville House. In 2004, Amazon started demanding that publishers pay a "co-op fee" of 2-5% of their revenue just to have their books show up properly in search results and be easily purchasable. Johnson refused, calling it a shakedown. Lewis: Good for him. What happened? Joe: Amazon simply removed the "Buy" button from all of Melville House's books on the site. Overnight, their primary sales channel was crippled. They were invisible. After a standoff, the publisher had no choice but to give in. Lewis: Oh man. That's a nightmare. So the same data that helps them recommend a book to me is also used as leverage against the people who make the books? That's a huge concentration of power. Joe: It's a seismic shift. The book lays out the market share numbers, and they're staggering. In the physical world, the top two booksellers might have 20-25% of the market combined. In the ebook world, Amazon has over 60%. In digital music, iTunes has had over 80%. These aren't just stores; they are monopolies or near-monopolies. Lewis: And the traditional studios and labels are now the "sickly gazelles." They have the content, but the tech companies have the customers. And they're not sharing the data. Joe: That's the key. The book has a table showing what data the platforms share with content owners. The answer is: almost nothing. Netflix, Amazon, Google—they keep the customer data for themselves. So a movie studio might know how many people bought their movie on iTunes, but they have no idea who those people are, what else they like, or how to reach them again. But Apple knows everything. Lewis: It's the ultimate revenge of the nerds. The tech guys who started out just building a digital storefront now have more power than the moguls who have run Hollywood for generations.

Joe: And that really is the thread that connects everything in this book. You see the pattern. First, data disrupts content creation with the House of Cards gambit, proving analytics can outperform gut instinct. Lewis: Then, it disrupts the consumption model. It doesn't just fight piracy; it makes it irrelevant by offering a more convenient product. Joe: And finally, that control over data consolidates into immense market power, turning the distributors into the new kings and the traditional creators into tenants on their platform. It’s a complete inversion of the old world order. Lewis: It leaves you wondering, what's the future of art in a world run by data? Is it a utopia of perfectly tailored content, where we always get exactly what we want? Or is it a dystopia where human creativity is just another variable to be optimized in an algorithm? Joe: That is the billion-dollar question, isn't it? The book doesn't give a definitive answer, but it makes it clear that the people who can harness data to understand and serve the audience are the ones who will write the next chapter of entertainment history. Lewis: It’s a powerful and slightly terrifying thought. It makes you look at your Netflix recommendations a little differently. Joe: It really does. And that’s a great place to leave it for our listeners to ponder. We'd love to hear what you think. Drop us a comment on our socials. Does data-driven entertainment excite you, or does it worry you? Lewis: Let us know. We're genuinely curious to see where everyone lands on this. Joe: This is Aibrary, signing off.