How does economics explain the Gangnam Style phenomenon?
If you get online regularly, you must have come across Internet phenomenon of one kind or
another. One of them could well have been Psy's "Gangnam Style", which was uploaded to
YouTube on 15 July, 2012. Since then, millions of views have racked up every day. On 21
December, 2012, “Gangnam Style" reached the unprecedented milestone of one billion
YouTube views. By 15 July 2013, the music video had been viewed over 1.745 billion times on
YouTube. It is the site's most watched video ever. As the video continues to quickly gain
popularity and ubiquity, its signature ‘invisible horse dance’ was imitated around the world by
many notable political leaders on various occasions, such as British Prime Minister David
Cameron, U.S. President Barack Obama, and United Nations Secretary-General Ban Ki-moon,
hailing it as a "force for world peace".
Psy is an unlikely figure for music stardom. No one could have expected “Gangnam Style”,
originally geared for local audiences, to be a global sensation. It is an understatement to say
that the "Gangnam Style" phenomenon has reached a scale that is totally unprecedented. The
viral spread is perpetuated almost solely by people passing on and transmitting information
about the video through the online world, which I will elaborate further. It is my position that
this phenomenal influence generated by the “Gangnam Style” is a form of economic
abnormality, and the reason is that the masses are not always rational, oftentimes acting under
herd instincts that resemble ‘stock market behavior’. In my essay, I will attempt to explain this
phenomenon first through the meme theory, then the behavioral economics theory, and
wrapping up with the network economics theory.
Let me first start with the meme cultural evolution theory. The concept of memes was first
introduced by Richard Dawkins, the evolutionary biologist, in his highly acclaimed book “The
Selfish Gene”, first published in 1976. The theory attempts to explain how certain ideas,
catchphrases, trends, and other pieces of cultural information can replicate through the
population through human communications, and in today's cyber world, by means of online
forums, blogs, emails, social networks, etc.
That brings in the concept of Internet meme. An internet meme refers to the phenomenon of
contents or concepts that spread rapidly among Internet users. Simply by talking to a friend
about the video, you have taken part in the evolution of an Internet meme and propagated its
existence a little bit longer. The cultural evolution theory of memes, adapted to the online
world, provides a framework to explore the development and widespread popularity of an
Internet phenomenon.
Let us look at how the meme theory can explain the viral spread phenomenon. According to
The Wall Street Journal, rap artist T-Pain was among the first to have tweeted about the video
on Twitter. The momentum of the ‘replication’ process was then picked up by Neetzan
Zimmerman from the social blog Gawker, who asked: "Did this underground Hip Hop artist from
South Korea just release the Best Music Video of the Year?" This was soon followed up by even
more celebrities who either commented about or shared the video with their fans via Twitter,
or other social networks. The subsequent proliferation of spoofs and parodies propelled the
meteoric ascent of the video to international fame, turning it into a phenomenon that goes
beyond cultural boundaries. Psy has succeeded where most other entertainers from the East
have failed so many times: he has made it to the Western world. While most Westerners do
not comprehend the lyrics of the song, it did not stop the making of thousands of parody clips,
from members of the British Army, Thai Navy and Minecraft gamers, among others. The
“Gangnam Style” video sufficiently satisfies Dawkins’ three basic characteristics of a meme:
replication through a ‘vehicle’ (a carrier of the meme, in this case the Internet), variation of the
original meme (there are differences in the parody videos made from different parts of the
world, due to cultural differences); and longevity (the phenomenon lasts for more than a year,
which is eternity in today's cyber world).
Although the meme theory has come into existence for a couple of decades, studies about the
dynamics of meme growth is still more qualitative than quantitative. However, mathematical
models can help show the temporal dynamics of Internet memes and the evolution of their
popularity. Fig. 1 is a graph based on time series data collected from Google Trends. It shows
Fig. 1
the aggregate sum of the number of global searches for the words "Gangnam Style" relative to
the total number of Google searches within a time period of 12 months. The data is normalized
such that the peak search activity for a query is scaled to a value of 100. Memes tend to grow
rapidly in the initial stage when a popular trend is being formed, with the “participation” of
many celebrities helping with the "advertising". Note the first part which starts from July 2012
to October 2012, a period of exponential growth. The second peak occurred in December 2012.
On New Year's Eve, more than one million people witnessed a live "Gangnam Style"
performance in Times Square, New York City, as well as in front of the Brandenburg Gate in
Berlin. These well publicized performances caused dramatic increases on the searches of
“Gangnam Style” on the search engine, leading to a second peak.
It is revealing to look at the differences of the time series data amongst regions. Fig. 2 shows
the data from South Korea where the video originated. It is not surprising to see a positive
intercept of the graph in July 2012 when it was first uploaded onto YouTube. The following
steep gradient in Fig. 2 demonstrates the ‘meme effect’ of the propagation of the video when
Western countries began to catch fire and catch up. The rise in popularity and hence views in
one country or community leads to the rise in other countries and communities. This is further
demonstrated in the period around Oct 2012 when all three countries, South Korea (Fig. 2), UK
(Fig. 3) and the USA (Fig. 4) see a peak in the time series chart.
Fig. 2 South Korea
Fig. 3 UK
Fig. 4 USA
The search volume began to taper off around February 2013, when another new Internet
meme “Harlem Shake” moved into the radar. This coincided with the beginning of drop in
popularity of “Gangnam Style”, as shown in Fig. 5. The “Harlem Shake” video was replicated by
many people, rapidly leading to a peak in early February 2013, with thousands of "Harlem
Shake" videos made and uploaded to YouTube every day at the height of its popularity.
“Harlem Shake” took only half the time “Gangnam Style” took to hit 1 billion hits, as shown in
Fig. 5. The “Harlem Shake” as an Internet meme transmits even more rapidly because it is even
easier to reproduce -- it consists of a single locked camera shot and one jump cut and a short
time span of 30 seconds in most cases. Nonetheless, the bar charts show that “Gangnam Style”
has a higher average of relative Google searches than “Harlem Shake” over the same 12-month
period. Clearly, the “Gangnam Style” meme effect was much more prolonged and prominent in
the global world than “Harlem Shake”. This goes back to the three characteristics of memes as
mentioned earlier. While both videos rely on the Internet as its carrier, the “Gangnam Style”
has more variations which contributed to the relative longevity of its popularity.
Fig. 5
Let me now bring in my second observation as to how the “Gangnam Style” phenomenon can
be explained in the light of behavioral economics. The volatile movements of the time series
data illustrates the herd instinct, or 'copycat’ behavior of the general public, which is not unlike
the volatile movements we see in stock market charts. Fig. 6 is a very typical stock market chart
around the period of the 2008 subprime mortgage financial crisis. From 2004 till the crisis broke
out in 2008, we can see a steady rise of the Dow Jones index as investors, ignoring or ignorant
of the flaws of the subprime mortgage products, continuously poured money into the stock
market. During this period, the commercial banks continuously extended bad loans such as
NINJAs to borrowers with no proper due diligence and requiring no down payments, while
investment banks happily issued all sorts of mortgage securities products such as CDOs, taking
these loans away from the commercial banks' balance sheets, allowing these banks to extend
even more bad loans. They did so simply to gain market share, to outperform their competitors,
and ultimately to earn outsized bonus for senior management. This is exacerbated by the rising
demand for housing ownership, while the banks were under pressure from shareholders to
chalk up profits and to ignore the risks inherent in these products. This is a phenomenon where
all the commercial banks, investment banks, and the general public all feel that if they do not
copy each other, they would potentially miss out on opportunities to bring in seemingly easy
profits.
Fig. 6
Keynes' use of the phrase “animal spirits” to describe the psychological forces that partly
explain why the economy seldom behaves in the manner predicted by classical economics can
be used to describe both the stock market rise preceding the financial crisis, as well as the
miraculous rise of the “Gangnam Style” to international stardom. While economic actors do not
behave as unemotional rational beings in stock investments, neither is the general public
behaving entirely rationally when they happily transmit memes through the Internet. We are
seeing the same sort of “animal spirits” in the stock market as in the “Gangnam Style”
phenomenon.
Lastly, let me bring in the concept of network economics, where products are produced or
services delivered with minimal cost, while tremendous value is created and added through
social networks operating on immense scale. In the case of the “Gangnam Style” phenomenon,
the value of the video is determined by the size of “user base”. After the initial stage, and after
a critical mass of people have watched and passed on the video, new waves of audiences begin
to watch and pass on the video, leading to the value of the video eventually far exceeding its
production cost. This follows the principles of a network economy of first creating contents (the
authenticity and buzz-worthiness of “Gangnam Style”), then building up a “user base”, enabled
by the YouTube platform which is virtually free, thus allowing the video to propagate rapidly
and broadly. Eventually, its commercial value is ready to be exploited, and outsized revenue is
generated, commensurate with the ultimate size of the base.
So, why was “Gangnam Style” the “chosen gene” to be so widely propagated? As we can see,
the vehicle propagating the meme is not a conventional carrier. The “Gangnam Style” and
internet memes are no more than subcultural fads supported by a society inhabited by
emotional and sometimes irrational human beings with a stampede mentality. The key factor
that led to “Gangnam Style” receiving worldwide media attention is the participation of famous
celebrities, with their fans, often in awe of their celebrity idols, flocking to embrace the same
things their idols like. Psy's success is a testament to the universal appeal of catchy music and
unconventional dance moves, with a strong vein of humor running through the video that is
borderless, independent of language and culture.
To summarize, I have attempted to explain the “Gangnam Style” phenomenon using the meme
theory illustrated by the time series charts, the behavioral economics theory as seen through
the stock market charts during the financial crisis, and finally the network economics of how an
entertainment product can spread widely and virally, creating commercial value of colossal
scale.
Word count: 1954
References & Bibliography:
Susan Blackmore
- The Meme Machine (1991) (Chapter 1 Strange Creatures)
FDFRS
- Richard Dawkins’s take on an Internet meme:
http://www.richarddawkins.net/news_articles/2013/6/20/richard-dawkins-on-theinternet-s-hijacking-of-the-word-meme#
Neetzan Zimmerman
- Column on Gawker: http://gawker.com/5930283/did-this-underground-hip-hop-artistfrom-south-korea-just-release-the-best-music-video-of-the-year
The Economist
- http://www.economist.com/blogs/graphicdetail/2012/10/data-behind-gangnam-style
John Cassidy
- How Markets Fail: The Logic of Economic Calamities (2009) (Chapter 1 Warnings Ignored
and the Conventional Wisdom)
George Akerlof and Robert Shiller
- Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for
Global Capitalism (2009) (Preface)