It seems acutely aware to many of us today that our entertainment world is in a bit of a freefall. Social media is flailing, with Twitter on the verge of collapse, Reddit driving people off its site and Meta (Facebook) looking stronger than ever. SAG-AFTRA and the WGA are both on strike, bringing Hollywood to a halt. Streaming services are becoming more expensive. Why? Today, I want to dive into a theory I've been working on for some time on why all these things are happening now. It will not be perfect, but I want to try to bring some clarity as to why I think things are the way they are.

Please note that as I am a layman and am not an economist, everything that follows could be completely wrong. FYI!

To start, our journey begins far before movies or social media existed. We must first examine the basic structure of our economy and how it works.

Naturally, for thousands of years our economies have been 'goods-based'. It's exactly what it sounds like-the economy revolves around the production and transferrance of physical goods. For example: Bob grows and harvests wheat and then he then sells them to his neighbor Bill for a set amount of gold coins. A transferrance of tangible items, and realistically that wheat and gold will likely never run out until something drastically changes (for example, if there is a drought or if Bill runs out of money). On a larger scale, these risks become smaller and smaller (as more people would harvest more wheat and sell to more people for more gold). Simply put, there are so many people in the world that might need wheat that there will always be demand. Thus, the economy is stable, and (mostly) everyone is happy. This was how the American economy worked for many years-people required tangible goods, and they could get them. This is all vastly oversimplified of course, but by-and-large this was the way it was run.

Somewhere between then and now, however, something changed. We pivoted from a goods-based economy to something else. Naturally, this wasn't completely the case. We all still need food, water, shelter, and other basic necessities. Yet they aren't the bedrock of our economy anymore. "So, what is?" I hear you asking.

Our modern-day economy is based upon something else completely-services, not goods. Nowadays, much more moolah is made on delivering services to people (such as entertainment, hospitality, and leisure) than goods could. Oftentimes, these services are tied to the goods themselves (think: streaming services or subscriptions!). This shift from goods to services is a relatively recent one. In 1900, according to the Bureau of Labor Statistics, nearly 70% of the American workforce was working either in agriculture or goods-producing jobs, while only around 30% were working in service-based ones. By 1982, those numbers had reversed, with 70% of jobs being in the service sector while barely 30% were in agriculture or goods. And that was still 40 years ago! Those numbers have probably skewed even further now. There are many reasons for why this happened (and I will not discuss them here), but all you need to know is that the American economy has shifted from the production and consumption of tangible goods to the delivery of services to American consumers.

So, what does this have to do with actors striking and the behavior of social media companies? Well, I'd like to submit for your consideration a concept I'd like to call 'the iron roof.'

Here's a simple question: what happens when a company gets too big? In a goods-based economy, this was simple. Since there would likely always be demand for certain products, companies would never run out of profit from said product. There were, of course, exceptions to this rule (see the Roaring Twenties and ensuing stock market crash), but companies could reasonably bank on this principle. I like to use John D. Rockefeller's Standard Oil as an example. In the early 1900s, everyone needed oil! Therefore, Standard Oil could keep selling oil (as they had a monopoly on it) and would never have to worry about demand going away. Thus, they could rest easy and not worry about people waking up one day and not needing oil. Of course, there would be some impact on the consumer - as a company could feasibly make their product worse. However, this did not happen often. Take AT&T, for example, who had a monopoly on the telephone market well into the 1980s. How could they possibly make their service worse to make more money? More importantly, did they need to?

In a services-based economy, however, things are different. Now, it is much easier for demand to dry up! There can only be so many people that need a service performed for them. It may be ten times or a hundred, but people can't always have this service performed. This wasn't a big deal for many years because there were always more people. But suddenly...

...there weren't anymore! The rise of the tech industry over the past 20 years led to an impossibly large footprint by a handful of companies - literally holding billions of people under their sway. This posed a problem: what now?

Added to this pressure are the millions of dollars invested in the stock market. There are multiple interests that a company has to keep its stock price going up. For one, more executives than ever have stock included as part of their pay. According to a Harvard Business Review article, stock options made up 20% of CEO pay by 2020, for example. Add the decline of pension funds and the rise of the 401k (where employees contribute income, often taking the form of company stock), and we can reasonably conclude that companies have a vested interest in keeping their stock price going up. If their stock price goes down, everyone hurts because much of their pay is being directly affected.

We still haven't touched on an important question, however: what drives a stock up? The answer? Growth and profits. That's it. Good things drive demand, and since the supply of stock is consistent, its price will go up. So if companies keep reporting 'more' good things - whether that be more profit, revenue, users, or anything other than losses, investors will invest more money and a company's value will go up.

I believe that the root of the problem for tech and entertainment companies is that they've run out of good things to report. They have hit that 'iron roof' of users. The pandemic accelerated user growth because no one had anything else to do! They were stuck inside, so all they could do was watch TV or browse the Internet (tech and entertainment!!!). No wonder tech and entertainment stocks went up! Here's some highlights - from January 1, 2020 to January 1, 2022, the following companies had the following increases in their stock prices:

• Netflix - +64.43%
• Disney - +9.13%
• Amazon - +72.64%
• Facebook/Meta - +52.16%
• Google - +91.65%
• S&P 500 (avarage market) - +43.30%

Now, the opposite is happening. People are going back to their normal lives.