Cultural Industries
September- October 2020
BLACK = what has been said in the knowledge clips
GREY = what I added from the book
Week 1 – knowledge clip 1
The concept of the cultural industries is rooted in why a product is valued by consumers, not really
in the process. Understanding the cultural industries requires the understanding of the dynamics of
consumption (rather than the dynamics of production).
Example:
Calvin Klein white t-shirt → the product is consumed as culturally interpretable
Lidl white t-shirt → materially similar (the value lies in their practical usefulness rather than having
a cultural meaning).
Cultural industries compete in the symbolic realm rather than only having material and practical
characteristics. → it is the practice of consumption, not production that is important to define the
boundaries of the cultural industry.
Article 1: Modelling the cultural industries - Throsby
Defines what a cultural industry is and which organizations are included in that definition (so far
very difficult and confusing).
Is it possible to find a common group of industries on which all of the models agree? (definition,
boundaries conditions and economic analysis)
Cultural vs. creative goods and services
Consider type of value that the good generates → cultural value? Monetary value?
Cultural goods and services: valued by both who make them and by those who consume them for
cultural and social reasons. They are likely to compliment or transcend a purely economic
evaluation.
Creative goods or services: require some significant level of creativity in their manufacture not
necessarily satisfying other criteria that would enable them to be called “cultural”
An industry can be defined according to several different criteria. For present purposes the most
relevant is a definition based on a ‘product group’, i.e. goods or services with some common
characteristics that make them complements or substitutes in consumption.
UNESCO’s definition of cultural industries:
Those industries that combine the creation, production and commercialization of contents which
are intangible or cultural in nature.
→ cultural goods and services, such as artworks, music performances, literature, films, tv programs
and videogames, tourism, sport and leisure share the following characteristics:
- they require some input of human creativity in their production
,- they are vehicles for symbolic messages to those who consume them → they are more than simply
utilitarian because they serve an additional communicative purpose
- contain at least some intellectual properties which is attributable to some individual or group that
produce the good or service
Cultural goods and services are valued, both by those who make them and by those who consume
them, for social and cultural reasons that are likely to complement or transcend a purely economic
evaluation. These reasons might include spiritual concerns, aesthetic considerations, or the
contribution of the goods and services to community understanding of cultural identity
DCMS’s definition of creative industries:
Those industries which have their origin in individual creativity, skill and talent and which have a
potential for wealth and job creation through the generation and exploitation of intellectual
property.
Creative industries like advertisements and web design share the following characteristics:
- require some input of human creativity in their production
- they take the form of goods and services
- they are predominantly promotional products
6 economic approaches to analyze the cultural industries:
1. Industrial organisation theory
→ focusses on standard economic variables such as value of production, value added, levels
of employment and business concentration.
This approach looks at the organizational characteristics of markets with particular emphasis
on the degree of seller and buyer concentration, the nature of product differentiation and the
conditions of entry/exit of firms. But also, on the way in which the firms behave in the
industry (setting prices, marketing products, competing with one another).
– structure refers to the organisational characteristics of markets, with particular emphasis on
the degree of seller and buyer concentration, the nature of product differentiation and the
conditions for entry and exit of firms
– conduct refers to the ways in which firms in the industry behave in setting prices and output
levels, marketing their products and competing with one another
– performance refers to how efficiently firms adjust to effective demands for their output in
terms of costs, prices, and product quality.
This economic approach is relevant primarily to those models oriented towards the
commercial production of cultural goods and services
(nevertheless, many of the methods of industrial organisation theory are also applicable to
areas such as the not-for-profit arts, where economic concepts such as product
differentiation, monopoly rents, price discrimination, non-price competition and so on all
have considerable relevance)
2. Value chain analysis
Looks at the creative ideas and how they are combined with other inputs to produce the
creative good or service → it then passes through other value-adding stages until it enters
the market and the distribution channels (and eventually the final consumer)
, Value chain analysis is dynamic or multi-stage, and its relevance to the other models
discussed above may seem somewhat remote, since they involve essentially a static snapshot
of the cultural production sector at a given point in time
This economic approach is used to analyze performance in different stages of the production
cycle
3. Inter-industry analysis
Focuses on the way in which output is produced and distributed in the economy. It offers a
better understanding of the direct and indirect effects on an industry, consumers and on
governments.
One of the most long-standing techniques for studying inter-industry relations is input-
output analysis. Its capacity to depict the ways in which output is produced and distributed
in the economy, and to capture the direct, indirect and induced effects on industries,
consumers and government of a range of external stimuli are well known. there are 2
“problems” with input-output analysis → placed a serious constraint on the extent to which
input-output analysis can be used for studying economic impacts in the cultural industries
This economic approach is used to evaluate the economic impact of the cultural policy.
4. Locational analysis
Firms and certain industries form clusters in urban and regional settings.
For example:
On the demand side, for example, tourists may be concentrated in particular areas that will
attract firms selling cultural wares to locate close together.
On the supply side, network externalities in cultural production lead to clustering of firms
that benefit from being located close to other firms of the same or similar industry (example:
Hollywood)
This economic approach is used by governments to attract firms and develop (cultural)
industries clusters
5. Contract theory and property rights
Complex creative industries, such as film and television production, hand on the existence
of contractual arrangements at all stages of the value chain. This economic approach is
grounded in the economic theory of contracts and puts emphasis on identifying economy
rights as a basis of making deals at every point along the cultural value chain.
Creative activities are characterized by several fundamental properties such as:
• “nobody knows” no stage in the production sequence for any type of cultural product
can be predicted with any degree of assurance
• “art for art’s sake” creative workers care about the quality of their product in a passional
way and therefore often behave in ways that are contrary to the predictions of rational
labor worker theory
• “infinite variety” (of creative goods) look at the diversity of the goods and the fact that
are mostly vertically differentiated
• “durability” ability to yield monetary compensation over long periods of time
, The WIPO model, with its orientation towards the copyright-producing industries is clearly the
most relevant here. This model has been used to estimate the size of the cultural industries in a
number of countries and is also applicable to an analysis of international trade in cultural products,
since an important component of cultural trade is international flows in royalty and license
payments for products such as music, film, television programs and other audiovisual material.
This economic approach is used when firms want to develop “optimal” contracts with (value chain)
partners.
6. Trade and development
The cultural industries have a particular relevance in the international trade. Traditionally,
economic analysis has looked to the theory of comparative advantage to explain specialization
of production in different countries and has advocated the elimination of trade distorting
measures (such as import tariffs and quotas on the grounds that free trade maximizes world
welfare). In this context the cultural industries have presented a particular challenge, since the
cultural goods they produce are argued to be more than just commercial merchandise. In
response, suggestions have been put forward for an emphasis on linking local economic and
cultural development through the expansion of small-scale cultural production.
Cultural industries have presented a particular challenge since the cultural goods they produce
are argued to be more than just commercial merchandized. These goods are rather used as
transmission of sorts of cultural value.
This economic approach is used when you want to explain specialization of countries and to
eliminate trade barriers.
Lecture 1 – knowledge clip 2
A business model is a useful tool or device that reveals a firm’s logic for creating and capturing
value and also its approach to constant renewal.
Examples of business models: (this is in none of the articles but useful to know)
Fractionalization business model: when an organization or entrepreneur can sell an entire product
or cut into several pieces and sell each piece as a product separately (example: a pizzeria can sell a
whole pizza or just a slice).
Razor and blades business model: is when a product is sold at a low price in order to increase the
sales of a complementary good (example: videogame console, it is only useful if it has accessories
and software).
Subscription model: the firm asks for a regular payment to access the product or service for a set
period of time (example: Netflix).
Article 2: An individual business model in the making: a chef’s quest for creative freedom -
Svejenova
The study contributes to the study of business models in three distinct ways:
1. A business model has significance and usefulness when extended to the level of the
individual
