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Theories of EMCI Summary - Msc Business Administration
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Lecture 1 & 2– Theories of EMCI – 31/08/2020Theories of Entrepreneurship and Management in the Creative Industries:
The classes will be recorded and links to the recordings will be uploaded on Canvas, slides will be
posted on Canvas as well.
This course consists of:
1. Lectures about the obligatory literature on Mondays, which include regular periods of Q&A
2. Lectures/guest-lectures on a particular industry or theme on Wednesdays, which include regular
periods for Q&A and in which we will respond to ‘’questions and answers’’ you have posed by mail
on the Tuesday before that Wednesday
3. An assignment you have to write in a small group and hand in on canvas by the end of week 7
4. A closed book exam
‘’Get over COVID’’ assignment:
1. Write an idea to improve one of the three main aspects of a business model (revenues, costs,
protection against competition/imitation – see later in this lecture!)
2. In one of the creative industries discussed in this course (book publishing, restaurants, fashion,
film, tv, music)
3. That makes sense in the present circumstances created by the covid-crisis
The idea should be 250 words and there should be a 150 word comment by (and under the name of)
each member of the group. The comments should not overlap and it is the responsibility of the group
to ensure this is the case. Comments can have many forms, but they should always deepen or extend
understanding of the basic idea. To give some examples: 1) remarks that add a follow-up idea to the
basic idea; 2) remarks that explain further the boundaries of the applicability of the basic idea (for
instance, it is only useful for larger firms); 3) reasons why the basic idea might fail in particular
circumstances, etc. etc.
So you should have meetings to discuss not only the basic idea but also the comments you will add to
that idea. The grade will be the same for all, so it is not enough that there is something smart under
your name while the others make mediocre points!
Assignment group:
- you can join a group until the start of week 4, then group composition is definitive
- you must be in a group to do the assignment and you must do the group assignment to pass this
course
- the group assignment grade counts for 15% of the final grade
- There should be at least two explicit references to the literature of the course and where
literature from the course is relevant, you should use it sensibly
- Use a clear, critical and concise writing style
- Use proper referencing (APA/AMJ style)
- Add a title page with: the title, the team number, the names and student numbers of all the
team members
- Upload the team assignments on Canvas before the deadline.
Two classes per week and the exam:
- ‘’obligatory literature’’ is the literature for the 1st class, but parts of this literature will also be
discussed in the 2nd class
,- literature for the 2nd class is not obligatory in the sense that there will be no exam questions about
specific points in that literature.
This lecture: the economics & business of the creative industries:
- Creative industry business models
- Creative markets dynamics (which these business models should take into account)
Cultural/creative industries:
- Peltoniemi (2015): Cultural industries are those that produce experience goods with
considerable creative elements and aim these at the consumer market via mass distribution.
- Many cultural industries definitions begin from the nature of the value of cultural goods.
Such goods offer a low level of utilitarian value, and a high level of aesthetic (Hirsch 1972;
Power 2002), symbolic (DeFillippi et al. 2007; Throsby, 2001), social meaning (Markusen et al.
2008) and social display value (Bourdieu 1984; Scott 1999a).
- Creative industries: from ballet to computer games
What do people speak about when they speak about business models?
1. Where to find revenues
2. Where to find the stuff that will make revenues come to us at minimal cost
3. If we can do 1 and 2, how to make sure it stays that way and my competitors do not imitate me
and destroy my relative advantages
Sources of revenues in the creative industries (it’s complicated!):
- Selling the creative good
- Advertising goods of other producers
- Subsidies or no subsidies
- Other types of support for what we are because we are that (grants from foundations,
mecenae, corporate sponsorship, loyalty programmes etc)
- Revenues for the creative/cultural goods we offer or for other goods we offer on the side
(the shop, the restaurant etc)
How/why to price?
- To help to fulfill its basic museum responsibilities, namely showing its collection responsibly
• Too many visitors put the collection at risk and diminish the quality of the visit
- To achieve economic goals
• Revenue
• Differentiation
- To achieve other social/political goals
• Getting the support of broader groups of stakeholder, eg by involving schools etc (which
can lead to financial advantages if this contributes towards the museum’s standing in the
eyes of other stakeholders who provide revenue)
,Market solution?
Pricing schemes:
- Fixed price
- Free entry
- Museum club membership
- Exit price
- Voluntary donation
• At entry
• At exit
Frey & Steiners proposal:
Exit price could be:
• Fixed
• Completely voluntary & open
• Obligatory but variable
Pricing at exit according to time spent inside
Not a voluntary contribution on the basis of subjective perception of how good the experience was
(& sense of fairness), but a price that varies with an “objectified” experience
Voluntary contributions afterwards – cost/benefit considerations:
- Is it difficult/costly to make consumers pay? (eg because of weak intellectual property rights
regime or too open “access”)
- Does the consumer feel a link with/responsibility towards the producer? (see also
authenticity)
- Does the consumer feel group/peer pressure to pay? (see also group identity & social
networks)
- Does the voluntary contribution function as a quality signal to other consumers? (see also
social networks, virality etc.)
- Do even non-paying consumers spend enough on other things with the producer to make it
worthwhile (see many fremium schemes)
Caves (2003): contracts between art and commerce:
In cultural industries, suppliers of artistic inputs have to work together with suppliers of humdrum
goods. This leads to particular types of contracts in which the risks & rewards are distributed very
unevenly or to “motley-crew” type organizations.
, (Inter)organizational structures in cultural industries:
- Artist-Facilitator deals
• Painter – Gallery
• Writer- (Agent) – Publisher
• Musician – (Agent) – Recording Company
• Etc etc
- Motley crew deals
• Moviemaking
• TV series
• (Theatre, Games, etc etc)
Core characteristics of cultural production:
- “Nobody knows”
• But some less than others?
• But about some things less than others?
- “Art for art’s sake” vs “Show me the money”
Unequal contracts:
- Nobody knows (+ oversupply of artists) give facilitators power to tell the artist s/he better
sign or they can find 100 others who would;
- Art for art’s sake means psychologial income, which leads artists to be satisfied with less
other types of income
- Keeping the costs down?
Wijnberg & Gemser (2000):
Title: Adding Value to Innovation: Impressionism and the Transformation of the Selection System in
Visual Arts
The article in a nutshell: Competition can be understood as a selection system with particular (types
of ) selectors. Radical innovation, such as Impressionism, often means a change of the selection
system.
Competition, described in terminology of the selection system:
- The selected
- The selectors
- The selection system:
• Market: consumers are selectors
• Peer: other producers are selectors
• Expert: experts, who are consumers nor producers, are selectors (for example celebrities
telling in an interview they are using a certain products)
➔ The difference between the three is the ones who decide the value of the product. Their
judgement counts.
Why is a particular painting worth 50.000.000, it’s much more difficult to form an idea of how this
value is created. Evaluation of products is more difficult in the creative industries. Compared to for
example evaluating a car.
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