EMCI Lectures
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Week 1 Lecture 1
Business models are for competing, like books are for reading
2 sept
Creative industries:
- Product life cycles are longer or shorter
- Flat or extremely hierarchical organizations
- Big hits or big flops
- So, all kind of organizations
Article 1 Peltoniemi, M. (2015)
This is a review paper, so hard to read. Cultural industries are those that produce experience
goods (so there is some kind of opinions about the goods) with considerable creative
elements (so the goods have creative aspects, Dopper for example) 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),
symbolic, social meaning and a social display value.
Cultural industries can be seen as:
Cultural industries as industry systems (Hirsch, 1972/2000): is not just a value chain, it is a
part of a whole existing value chain. And you are part of it. Which also means as value
systems allowing particular business models at particular stages.
Cultural industries as communities (Peltoniemi, 2015). For example in the music industry,
you like the type of music and become part of a particular community. A community of
producers but also of the consumers. Other example, Apple, people want to be part of this
community, this way you can even sell them products. Creative industries are excellent in
grouping people. Which does not only mean communities of producers, but also include
consumers.
Creative industries 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?
1. Sources of revenues (complicated in this industry)
- Selling the creative good.
- Advertising goods of other producers. If they like your product, most of the time this
says more about other products they will also like. People that like to read also like
coffee, this information is worth a lot of money.
- Subsidies or no subsidies.
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, - Other types of support for what we are because we are that (grants from
foundations, Mycenae, corporate sponsorships, 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.). For example a gift shop in museums or zoo’s.
Article 4 Frey & Steiner (2010)
This article is about museum prices: pay as you go.
How/why to price
- To help to fulfill its basic museum responsibilities, namely showing its collection
responsibly.
o Too many visitors put the collection at risk and diminish the quality of the
visit.
- To achieve economic goals.
o Revenue, most of the museums are non-profit. And even earn money by
subsidies. They can make some profit, but if it will be too big, they have an
issue. Because if that is the case, al the subsidies will be cut out. They will not
give all this money if, apparently, you won’t need it. In this case, we find a
way to spend all this profit, to again end in the non-profit environment.
o Differentiation. You want your major stakeholders, to be happy about your
company. This is why museums want to get a diverse public. When they have
different kind of customers, they are more likely to receive a bigger subsidy.
- To achieve other social/political goals
o Getting the support of broader groups of stakeholder, 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). A
lot of political parties, will say to the poor people: your subsidy money will go
to pricy museums, even you cannot effort.
Options of tickets differ a lot:
- Group discounts
- Students discounts
- Child discounts
- Fast or slow track
Pricing schemes:
- Fixed prices, just a ticket price
- Free entry, most of the time you can voluntary give money
- Museum club membership
- Voluntary donation (at exit or entry)
- Exit price
o Fixed
o Completely voluntary & open
o Obligatory but variable
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,Pricing at exit according to time spent inside. Not a voluntary contribution on the basis of
subjective perception of how good the experience was. But a price that varies with an
‘objectified’ experience.
Is it difficult/costly to make consumers pay?
Does the consumer feel a link with/responsibility towards the producer?
Does the consumer feel group/peer pressure to pay?
Does the voluntary contribution function as a quality signal to other customers?
Doe even non-paying consumers spend enough on other things with the producer to make it
worthwhile?
Article 5 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. Example: the artist and the
shop (art gallery) that buys the music or paintings and sells it to the public.
Humdrum inputs: for example shampoo
Artistic inputs: paintings, music, musicals etc.
Interorganizational structures in cultural industries
- Artist-Facilitator deals:
o Painter / Gallery
o Writer / Publisher
o Musician / Agent / Recording Company
- Motley crew deals:
o Moviemaking
o TV-series
o Theatre etc.
Unequal contracts
- The nobody knows principle: Most of the time the art gallery has much more power
than the artist. Same story in music, publishing. The facilitator has a much more
powerful situation. They exploit the artists. The buyer does not have the information
about the amount of money that goes to the artist. (Asymmetric information).
Example of the classic case: selling a secondhand car. Example in this case: the art
gallery and the artist. Here it actually is the other way around. You have asymmetric
information in a different direction. The painter wants to sell his painting to the
gallery (as a gatekeeper) to reach a broader public. The painter knows more about his
painting, but the gallery will know much more about how this painting will be
received in the bigger public. So this means, the gatekeeper has more information
than the artist. The basic problem in de CI: nobody can really predict the success of a
particular good. You will never know how many people will actually like the painting.
“Nobody knows” give facilitators power to tell the artist he better sign or they can
find 100 others who would. It is different than selling a non-creative good such as
water. You will know people will need it to survive.
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, - Art for art’s sake means psychological income, which leads artists to be satisfied with
less other types of income. So they accept that they receive less money, because
they like this. Just because they are more eager to do so, you can pay them less.
Example exam question: in what way is shampoo close to the creative industries, but way
different?
You have shampoos for children, people with blond/flat/etc hair, ecofriendly people. Still
98% of your shampoo is the same, but it is this ‘story’ around the shampoo that makes it
creative. Every year, Unilever comes with new brands of shampoo. The risk of the nobody
knows is stronger in the outputs, because you cannot predict the results of . Because 98% is
the same. If this brand flops, they just stop promoting the product and use the 98% for
another product.
Musical example. You make a musical, and all the imput is just used for that specific
musical. It has flopped. The risks are way higher, if the musical flops, all the people involved
in it have problems. You cannot use the script again for 98% of it.
Bugshot strategy: als je heel veel schoten maakt, zal er altijd wel eentje raak zijn. Als je heel
veel scripts voor een nieuwe film eruit gooit, zal er altijd wel een idee opgepakt worden door
een regisseur. Bijna alle kleine/korte films, maken geen omzet. Je werkt dan eigenlijk gratis,
behalve als de film wordt opgepakt.
Article Hirsch 1972 & 2000
Fads and fashions, the cultural industries
He first wrote it, and then updated it. He wants to talk about commercial cultural products:
“non-material goods, directed as a mass public of consumers, for whom they serve an
esthetic, rather than a clearly utilitarian purpose.”
Cultural production taking place in ‘industry systems’.
He comes with 3 commercial cultural industries:
- Book publishing
- Phonograph records
- Motion pictures
What are the basic parameters?
- Oversupply: a lot of input & a lot of output
- Uncertainty (nobody knows)
- Fads & Fashion, being innovative is much more important in the CI than in other
industries.
3 overlapping adaptive strategies in the 70’s
- Contact men to cross organizational boundaries.
- Overproduction and differential promotion
- Coöperation of institutional regulators/gatekeepers.
The relation between the producers
The way in which you can access this market
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