The Oxford Handbook of Creative Industries 2015933886, 9780199603510

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t h e ox f o r d h a n d b o o k o f

C R E AT I V E I N DU ST R I E S

the oxford handbook of

CREATIVE INDUSTRIES Edited By

CANDACE JONES, MARK LORENZEN and

JONATHAN SAPSED

1

3 Great Clarendon Street, Oxford, ox2  6dp, United Kingdom Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford is a registered trade mark  of Oxford University Press in the UK and in certain other countries

© Oxford University Press  2015 The moral rights of the authors have been asserted First edition published 2015 Impression:  1 All rights reserved. No part of this publication may be reproduced, stored  in a retrieval system, or transmitted, in any form or by any means, without  the prior permission in writing of Oxford University Press, or as expressly permitted by law, by licence or under terms agreed with the appropriate reprographics rights organization. Enquiries concerning reproduction outside the scope  of  the above should be sent to the Rights Department, Oxford University Press,  at  the address  above You must not circulate this work in any other  form and you must impose this same condition on any acquirer Published in the United States of America by Oxford University  Press 198 Madison Avenue, New  York, NY 10016, United States of America British Library Cataloguing in Publication  Data Data available Library of Congress Control Number: 2015933886 ISBN 978–0–19–960351–0 Printed and bound  by CPI Group (UK) Ltd, Croydon, cr0  4yy Links to third party websites are provided by Oxford in good faith  and for information only. Oxford disclaims any responsibility for the materials contained in any third party website referenced in this  work.

Acknowledgements

The editors wish to acknowledge support and intellectual insight from ESRC’s AIM Research programme, the AHRC’s ‘Brighton Fuse’ projects, and the European Commission through the FP7 project CRE8TV.EU. We would also like to thank David Musson, Preethi Sundar, Clare Kennedy and the other editorial staff at Oxford University Press for their dedicated work and patience.

Contents

List of Figures  List of Tables  List of Contributors 

xi xiii xv

PA RT  1   I N T RODU C T ION 1. Creative Industries: A Typology of Change  Candace Jones, Mark Lorenzen, and Jonathan Sapsed

3

PA RT  2  C R E AT I V I T Y 2. The Creative Mind  James C. Kaufman and Robert J. Sternberg

33

3. Creativity in Teams: Processes and Outcomes in Creative Industries  Lucy L. Gilson

50

4. Creativity in Social Networks: A Core-Periphery Perspective Gino Cattani, Simone Ferriani, and Mariachiara Colucci

75

5. Creativity in the City  Richard Florida, Charlotta Mellander, and Patrick Adler

96

PA RT  3  VA LU I N G C R E AT I V I T Y A N D  C R E AT I N G  VA LU E 6. ‘The Market for Symbolic Goods’: Translating Economic and Symbolic Capitals in Creative Industries  Barbara Townley and Elizabeth Gulledge 7. Trading Places: Auctions and the Rise of the Chinese Art Market  Anna M. Dempster

119 136

viii  Contents

8. The Market for Creative Labour: Talent and Inequalities  Pierre-Michel Menger

148

9. Stars and Stardom in the Creative Industries  Elizabeth Currid-Halkett

171

10. Creative Entrepreneurs: The Business Models of Haute Cuisine Chefs  Silviya Svejenova, Barbara Slavich, and Sondos G. AbdelGawad 11. Entrepreneurship in Creative Industries and Cultural Change: Art, Fashion, and Modernity in India  Mukti Khaire 12. Performance in the Creative Industries  Allègre L. Hadida

184

200 219

PA RT  4   ORG A N I Z I N G C R E AT I V E I N D U ST R I E S 13. Projects and Project Ecologies in Creative Industries  Tara Vinodrai and Sean Keddy

251

14. Managing Project-Based Organization in Creative Industries  Robert DeFillippi

268

15. Organizing Events for Configuring and Maintaining Creative Fields  Elke Schüßler and Jörg Sydow 16. User Innovation in Creative Industries  Eleonora Di Maria, Vladi Finotto, and Francesco Rullani 17. User Innovation in the Music Software Industry: The Case of Sibelius  Stephen Flowers and Georgina Voss 18. Niches, Genres, and Classifications in the Creative Industries  N. Anand and Grégoire Croidieu

284 301

320 327

Contents  ix

PA RT  5  I N D U ST R IA L ORG A N I Z AT ION A N D  C R E AT I V E E C ON OM Y 19. Sunk Costs and the Dynamics of Creative Industries  Gerben Bakker

351

20. Creative Industries and the Wider Economy Stuart Cunningham and Jason Potts

387

21. Brokerage, Mediation, and Social Networks in the Creative Industries  Pacey C. Foster and Richard E. Ocejo

405

22. Digitizing Fads and Fashions: Disintermediation and Glocalized Markets in Creative Industries  Paul M. Hirsch and Daniel A. Gruber

421

PA RT  6  P OL IC Y A N D DE V E L OP M E N T 23. Copyright, the Creative Industries, and the Public Domain  Fiona Macmillan

439

24. Copyright and its Discontents  Martin Kretschmer

456

25. Public Policy for the Creative Industries  Hasan Bakhshi, Stuart Cunningham, and Juan Mateos-Garcia

465

26. Global Production Networks in the Creative Industries  Neil M. Coe

486

27. Creative Industries and Development: Culture in Development, or the Cultures of Development?  Andy C. Pratt

502

Author Index  Subject Index

515 535

List of Figures

1.1 A typology of change in the creative industries 

10

1.2 Examples of change in advertising, architecture, and videogames 

11

1.3 Examples of change in fashion and textiles, museums, and performance arts 

11

7.1

Chinese auction sales (all categories) 2000–10 

140

11.1 Timeline of evolution of the market for modern Indian art 

203

11.2 Timeline of evolution of the fashion industry in India 

206

12.1 Performance in the creative industries: dimensions and relationships 

233

16.1 Box: Open source software and user communities in the software sector 

306

18.1 Typology of niches 

332

19.1 Hypothetical production possibility frontier for entertainment and all other products and services

354

19.2 Stylized relation between sunk costs and variety of entertainment products 359 19.3 Hypothetical evolution of exogenous sunk costs needed for the production of an entertainment prototype, pre-industrial times to the present

362

19.4 Informal comparative ranking of sunk costs and product differentiation across various entertainment products and services

363

19.5 Ticket price versus cumulative ticket-selling capacity for entertainment venues in Boston in 1909 ($ and number of tickets) 

365

19.6 Stylized hypothetical Hotelling ranking of selected forms of spectator entertainment, 1890s to the present

366

19.7 A stylized example of sunk costs, revenues, and average costs without and with price discrimination

367

19.8 Price versus cumulative number of viewings for a typical Hollywood film, 1990s ($ and number of viewings) 

368

19.9 Producer’s share of ticket price and average costs versus cumulative number of viewings for a typical Hollywood film with a $40m production budget, 1990s 

369

xii   List of Figures 19.10 Total annual production outlays for various US film producers, 1913–1927, in constant 1913 dollars: semi-logarithmic scale 

372

19.11 Market size and concentration in the US film industry, 1893–1927, constant 1913 dollars and four-firm concentration ratio: semi-logarithmic scale 

373

19.12 Average real recorded music sales per music copyright registered, new copyrights and all copyrights ever registered, United States, 1921–1970  375 19.13 Hypothetical representation of the boundaries of the project-based segments of the creative industries and various other industries

379

19.14 Stylized representation of the interlinked intra- and inter-industry webs of project-based entertainment industries

380

20.1 Figurative view of the creative trident 

394

21.1 Brokerage Roles (Gould and Fernandez, 1989) 

407

List of Tables

1.1 Appendix: The most common definitions of creative industries 

29

11.1 Comparison between the two cases of modern Indian art and Indian fashion 

210

18.1 Main economic trends (1950–2010) 

329

19.1 Qualitative analysis of successive shifts in the production possibility frontier for various forms of entertainment during the nineteenth century

355

19.2 Contributions to output growth in spectator entertainment, 1900–1938, per cent per annum

356

19.3 Revealed comparative advantage (RCA) rankings of the tradable entertainment sector for selected countries, 1899–1950 

357

19.4 Stylized comparison of household versus market production of entertainment

360

19.5 Product differentiation within and between product categories

363

19.6 Worldwide prices, audience, sales potential, and consumer surplus for a typical Hollywood motion picture, 1990s 

370

19.7 Stylized comparison of revenues and profits of a high vs. a low capacity film for a hypothetical cinema 

374

19.8 Economic tendencies in the development of the entertainment industry

381

20.1 Tabular view of the creative trident 

355

20.2 The UK creative employment trident for 2001 based on CCI analysis of ONS census data 

360

22.1 Cultural industries: a historical overview 

363

List of Contributors

Sondos G. AbdelGawad Assistant Professor, Entrepreneurship Department, IE Business School Patrick Adler Doctoral Candidate, Urban Planning, Luskin School of Public Affairs, UCLA N. Anand  Shell Professor of Global Leadership, IMD Business School Hasan Bakhshi  Director, Creative Economy Policy and Research, Nesta, and Adjunct Professor, Queensland University of Technology Gerben Bakker  Associate Professor, Department of Economic History, London School of Economics and Political Science Gino Cattani  Associate Professor of Management and Organizations, Leonard N. Stern School of Business, New York University Neil M. Coe  Professor of Economic Geography, Department of Geography, National University of Singapore Mariachiara Colucci Associate Professor, Department of Management, University of Bologna Grégoire Croidieu  Assistant Professor, Grenoble Ecole de Management Stuart Cunningham  Distinguished Professor and Director, ARC Centre of Excellence for Creative Industries and Innovation, Queensland University of Technology Elizabeth Currid-Halkett  Associate Professor of Urban Planning, Sol Price School of Public Policy, University of Southern California Robert DeFillippi  Professor, Sawyer Business School, Suffolk University Anna M. Dempster  Senior Lecturer, Sotheby’s Institute of Art Eleonora Di Maria Associate Professor, Department of Economics and Business, University of Padova Simone Ferriani Professor of Entrepreneurship, Department of Management, University of Bologna and Cass Business School, City University London

xvi   List of Contributors Vladi Finotto Assistant Professor of Business Strategy and Entrepreneurship, Department of Management, Ca’ Foscari University of Venice Richard Florida  Director, Martin Prosperity Institute, Rotman School of Management, University of Toronto Stephen Flowers  Principal Lecturer, CENTRIM, University of Brighton Pacey C.  Foster Associate Professor, College of Management, University of Massachusetts, Boston Lucy L. Gilson  Professor, University of Connecticut Daniel A. Gruber  Assistant Professor, Medill School of Journalism, Media, Integrated Marketing Communications, Northwestern University Elizabeth Gulledge  Research Fellow, School of Management, University of St Andrews Allègre L.  Hadida  University Senior Lecturer in Strategy, University of Cambridge Judge Business School, and Fellow of Magdalene College Paul M. Hirsch  James L. Allen Professor of Strategy & Organization, Kellogg School of Management, Northwestern University Candace Jones  Associate Professor, Carroll School of Management, Boston College James C. Kaufman  Professor of Educational Psychology, Neag School of Psychology, University of Connecticut Sean Keddy  Research Assistant, School of Planning, University of Waterloo Mukti Khaire  Associate Professor of Business Administration, Harvard Business School Martin Kretschmer  Professor of Intellectual Property Law, School of Law, University of Glasgow, and Director of CREATe Mark Lorenzen  Professor, Copenhagen Business School Fiona Macmillan  Corporation of London Professor of Law, School of Law, Birkbeck, University of London Juan Mateos-Garcia  Research Fellow in Economics, Creative Economy Policy and Research, Nesta Charlotta Mellander Professor in Economics, Jönköping International Business School, Jönköping University, and Martin Prosperity Institute, University of Toronto Pierre-Michel Menger  Professor, College de France and Directeur d'études, Ecole des Hautes Etudes en Sciences Sociales, Paris Richard E. Ocejo  Assistant Professor, Department of Sociology, John Jay College of Criminal Justice, City University of New York (CUNY)

List of Contributors   xvii Jason Potts  Professor, School of Economics, Finance and Marketing, RMIT University Andy C. Pratt  Professor of Cultural Economy, Department of Culture and Creative Industries, City University London Francesco Rullani Assistant Professor in Entrepreneurship and Management of Innovation, LUISS Guido Carli, Department of Business and Management and Visiting Associate Professor, Department of Innovation and Organizational Economics, Copenhagen Business School Jonathan Sapsed  Principal Research Fellow, CENTRIM, University of Brighton Elke Schüßler Assistant Professor of Organization Theory, School of Business & Economics, Freie Universität Berlin Barbara Slavich  Associate Professor, IÉSEG School of Management (LEM-CNRS) Robert J.  Sternberg  Professor of Human Development, College of Human Ecology, Cornell University Silviya Svejenova  Professor with Special Responsibilities, Department of Organization, Copenhagen Business School Jörg Sydow Professor of Management, School of Business and Economics, Freie Universität Berlin Barbara Townley  Professor of Management, School of Management, University of St Andrews and Director, Institute for Capitalising on Creativity (ICC) Tara Vinodrai Associate Professor, Department of Geography and Environmental Management and School of Environment, Enterprise and Development, University of Waterloo Georgina Voss  Visiting Fellow, University of Brighton and University of Sussex

Pa rt  1

I N T RODU C T ION

Chapter 1

Creative Indu st ri e s A Typology of Change Candace Jones, Mark Lorenzen, and Jonathan Sapsed

Introduction Even if there are elements of creativity in most human endeavour, not all industries are organized principally to take advantage of and capture the market value of human creativity. Creativity is a process of generating something new by combining elements that already exist (Boden, 1990; Romer, 1990; Runco and Pritzker, 1999; Sternberg, 1999) and hinges upon individuals’ and organizations’ capability and willingness to engage in non-routine, experimental, and often uncertain activities. Creativity is enacted in the individual (Kaufman and Sternberg, 2015), within teams (Gilson, 2015), and within networks (Cattani, Ferriani, and Colucci, 2015). Such individuals, teams, and networks, as well as the business firms that profit from them, are typically attracted to those geographic locations that offer the best milieus for them to coexist and interact, and as a result, particular cities tend to be more characterized by human creativity than others (Lorenzen and Andersen, 2009; Florida, Mellander, and Adler, 2015). Thus, creative industries engage not only individuals, firms, and cities, but also national and inter­ national governmental policies to support and protect national cultures and economic sectors (Bakhshi, Cunningham, and Mateos-Garcia, 2015). To craft and capture value, creative entrepreneurs and organizations may generate new business models (Svejenova, Slavich, and AbdelGawad, 2015) and also translate various forms of capitals such as symbolic and economic (Townley and Gulledge, 2015). They also organize creative products, performances, and services around projects, and develop roles and routines that enable them to successfully complete their products and enhance learning (DeFillippi, 2015), particularly since creative industries are permeated by paradoxes and managerial challenges that can undermine value creation and value capture (DeFillippi, Grabher, and Jones, 2007). The desire to capture value

4   Candace Jones, Mark Lorenzen, and Jonathan Sapsed from creative individuals and products generates dynamics of stardom for individuals (Currid-Halkett, 2015), labour market inequalities for most talent (Menger, 2015), sunk costs for firms (Bakker, 2015), and laws and international agreements such as those surrounding copyright (Kretschmer, 2015; Macmillan, 2015). There is a significant effort expended on defining and measuring performance in creative industries, including artistic, commercial, managerial, and social (Hadida, 2015). The creation and pursuit of value alters cultural landscapes and generates economic development. Creative industries transform cultural landscapes when creatives play with semiotic codes—the structure and relations among symbolic elements—to infuse new ideas and meanings into creative products (Barthes, 1977, 1990). For example, bebop jazz in the 1940s, miniskirts in the 1960s, or the waves of Modernist architecture throughout the twentieth century not only changed how creative artefacts were produced and consumed but also, importantly, cultural meaning. Jazz was no longer only music to dance to, but was to be listened to and taken seriously, miniskirts symbolized the new freedoms of the sixties, while Modernist buildings celebrated technical scale and challenged implicitly the primacy of the Church. These symbolic values were recognized and converted to economic values. As engines of economic development, creative industries have remarkable growth in terms of product offerings and turnover, and new business models (see, e.g., DCMS, 2007, 2014; European Commission, 2001; HM Treasury, 2005; OECD, 2006; UNESCO, 2006), which vary dramatically depending on national context (Christopherson, 2004, 2008; Hesmondhalgh and Pratt, 2005; Ye, 2008; Economist, 2013a). Although definitions differ, it is clear that the economics of creative industries generate spillover effects across the wider economy (Cunningham and Potts, 2015). The combination of changes in semiotic code and material usage reflect and drive cultural change and economic value, encompassing both the tangible and the intangible. Thus, creative industries are cultures of development, playing a significant role in how both the social and economic life of nation states develop and change (Pratt, 2015). It is evident that while some degree of change is inherent to all creative industries, they change at different paces, ranging from minor ripples to a ‘gale of creative destruction’ (Schumpeter, 1942). Understanding the nature of change of creative industries is central to understanding (and propagating) their potential for development and transformation. In the following, we provide a framework for such understanding. In order to do so, we first define creative industries by focusing on creative products (Hirsch, 2000). By ‘products’ we mean the artefacts and offerings of creative industries including physical items, perform­ ances, services, and deliverables to clients (we use the term ‘product’ to denote all these). We identify two key dimensions of creative products that may undergo change: semiotic codes and the material base. Next, we identify four primary drivers of change: demand, public policy, technology, and globalization. Finally, we identify four primary types of change in the creative industries—Preserve, Ideate, Transform, and Recreate—as particular combinations of change in semiotic codes and the material base. Throughout the chapter, we provide examples of how particular creative products and industries are characterized by these different change types, and how this has differential effects on business models, industry organization, and ultimately cultural transformation and economic growth.

Creative Industries   5

Defining Creative Industries and Focusing on Creative Products There are numerous studies that attempt to define which industries should be seen as principally creative, varying in whether they include fine arts, cultural heritage, and information technology as part of creative industries. There has been significant debate about the shift in language from cultural to creative industries (e.g., Garnham, 2005; Galloway and Dunlop, 2007). We suggest that research on the arts (Frey, 2000; Ginsburgh and Throsby, 2006) and the cultural industries (Horkheimer and Adorno, 1944; Hirsch, 2000; Throsby, 2001; Hesmondhalgh, 2013) can be seen as subsets of creative industries because they depend on creativity and derive value from this creativity. The best-known lists are UNESCO (1986), DCMS (2001, updated 2013, 2014), WIPO (2003), Americans for the Arts (2005), KEA European Affairs (2007), and UNCTAD (2008). From these lists, it is not easy to identify the underlying dimensions for what is included or not as a creative industry. We provide an overview of these in Appendix 1.1. Our goal is to provide simple yet comprehensive dimensions for identifying and classifying creative products and industries. This enables scholars and policy-makers to make much-needed differentiation. Measuring the exact size of the creative industries has proven to be a point of contention (for discussions, see Howkins, 2001 and Throsby, 2001). Most scholars focus on creative products, which enable scholars and policy-makers to trace creative processes (Hirsch, 1972). It is the product by which artists generate new meanings and experiences and are judged as creative; it is the product that peers, critics, and consumers experience. In short, products link artists to audiences. Thus, we focus on creative products in our discussion on creative industries.

Creative Products: Semiotic Codes and the Material Base We highlight two key dimensions of creative products—semiotic codes and the mater­ ial base—that underpin art worlds and define institutions (Becker, 1982; Friedland and Alford, 1991); the symbolic and material shape our aesthetic experiences, enable us to categorize creative products, and generate market niches. Importantly, these two dimensions can accommodate and capture diverse creative products. The first dimension, semiotic codes, highlights the primacy of a creative product’s symbolic nature and by such codes artists give meaning to their work and shape how audiences interpret it (Barthes, 1977, 1990; Caves, 2000; Granham, 2005; Hirsch, 1972, 2000; Lampel, Lant, and Shamsie, 2000). The pattern among symbolic elements comprises a semiotic code that is called a style in the visual arts or genre in music

6   Candace Jones, Mark Lorenzen, and Jonathan Sapsed and literary art worlds; these patterns are the basis for classifying creative products (DiMaggio, 1987; Lena and Peterson, 2008). Semiotic codes vary in their stability and change: in some creative products there are established conventions that are refined, such as classical music, whereas in other creative products semiotic codes experience dynamic change, such as in fashion. When semiotic codes change, this creates high uncertainty about which products will be selected and their success (Caves, 2000). Artists mitigate this uncertainty by working within a genre or style: categories for which there is an established community, audience, or market niche (Hsu, Hannan, and Koçak, 2009). When artists or firms marry or move across many genres, they may attract multiple audiences but they also risk confusing these audiences and lowering the perceived integrity of their creative product (Hsu, 2006). By working within a genre, the artist or producer is selecting tried and tested concepts and constraints from the infinite variety available. Semiotic codes and the degree of change in their symbols and structural patterns are at the heart of how we classify creative products. The second dimension, the material base, includes not only materials that give form to creative products, but also technologies and socio-technical systems that enable the production and consumption of creative products (Douglas and Isherwood, 1979; Bijker, Hughes, and Pinch, 1984; Pinch, 2008; Miller, 2010). The material base in creative products is quite diverse, ranging from the body in dance and music, to mediums such as molten glass and paint, to tools such as musical instruments or paint brushes, to technologies such as computers, synthesizers, cameras, and sound systems, and increasingly important: the digital format. The material base of creative products entails distinct ecosystems of knowledge that are reflected in patent categories, as well as types of suppliers, artists, and consumers. The degree of change in the material base of creative products varies dramatically from refining existing materials with an emphasis on quality, such as in museums and classical music, to disruptive innovation that substitutes materials, such as the shift from analogue materials and printed paper hardcopy to digital softcopy in film, music, and publishing that has dramatically changed products, business models, and industry structures. When radical innovation in the material base of creative industries occurs, it engenders disruption because former suppliers and distributors based on those mater­ ial systems are rendered obsolete and new firms, organizational forms, and industry structures arise to replace them (Schumpeter, 1942). The material base of creative products is central to cost structures, knowledge reflected in patent rights, competitive dynamics such as substitution (Anderson and Tushman, 1990; Barney, 1991), and organizational structures such as vertical integration versus networks (Jones, Hesterly, and Borgatti, 1997; Djelic and Ainamo, 1999). Thus, the material base and changes in the material base shape the dynamics of creative industries. The combination of semiotic code and the material base elicits aesthetic responses from audiences (e.g., peers, gatekeepers, and consumers) that drive choices about what creative products to purchase or showcase and how much to value them (Charters, 2006; Hagtvedt and Patrick, 2008; Hoyer and Stokburger-Sauer, 2012). These judgements can be quite contested and fraught with competing demands such as to screen for ‘excellence’ or facilitate access (Garnham, 2005). Semiotic codes and the material base

Creative Industries   7 are used to classify creative products that populate creative industries, creating distinct niches, which vary on their conformity to conventions and their degree of protection from market forces (Anand and Croidieu, 2015). By understanding semiotic codes and the material base, we can better categorize creative products and better discern appropriate business models, supplier networks and industry structures. By understanding the changes in semiotic codes and the material base, we can understand the different types of change in the creative industries. But before we can do that, we need to consider the different drivers of such change.

Four Drivers of Change in Creative Products and Creative Industries Inherent to creative products and industries, change is often initiated by one or several of four primary drivers: demand, technology, policy, and globalization. Demand exerts an exogenous pull for change when consumers have purchasing power and organizations’ markets expand, ramping up production and consumption (de Vany, 2004; Lampel, Lant, and Shamsie, 2000). Exogenous demand, or audience expectations, either constrains or propels change in semiotic codes. Demand constrains change when audiences and critics reward established genres such as in film (Hsu, 2006; Hsu, Hannan, and Kocak, 2009). In music, creative products ‘usually have their distinguished genres purposely obscured or muted in the interest of gaining wider appeal’ (Lena and Peterson, 2008, p. 699). In contrast, audiences for haute couture and haute cuisine expect novelty in creative products (Aspers and Godart, 2013; Svejenova, Mazza, and Planellas, 2007), which drives fads and fashions (Simmel, 1957). Endogenous demand occurs when artists seek novel forms of expression; they are ‘mavericks’ that reside at the periphery of the creative industry (Becker, 1982), such as in music (Lena and Peterson, 2008) and painting (Crane, 1987). Their changes in semiotic codes depend on network structures of brokers connected to the periphery and core who translate new expressions into the mainstream (Cattani, Ferriani, and Colucci, 2015; Sapsed, Grantham, and DeFillippi, 2007). Endogenous demand is the basis for long-term predictable change (Martindale, 1990). Fads and fashions in clothing and fabrics may appear spontaneous, but are planned typically two seasons in advance. When exogenous and endogenous demand combine, it alters industry structures such as the rise of art dealers in impressionism to connect new consumers who desired new kinds of paintings with painters who sought to alter existing semiotic codes of representation and form (White and White, 1965/1997). This meeting of consumer and producer interest is critical in many industries that depend on continuous feedback and design and is increasingly seen in creative industries accelerated by developments in technology (Di Maria, Finotto, and Rullani, 2015; Flowers and Voss, 2015). Technology transforms the material base of creative products, altering processes of production and consumption. Technological change may be driven by the internal

8   Candace Jones, Mark Lorenzen, and Jonathan Sapsed dynamics of creative industries or trends in the wider economy. Internal change is seen in architecture with the rise of skyscrapers, whose development required new materials (e.g., steel, reinforced concrete) and knowledge (e.g., statics), altering our experience of cities and living patterns across the globe (Jones, Maoret, Massa, and Svejenova, 2012). Internal technological change may arise from user innovations that drive advances in music production by lowering costs and creating value through enhanced technological products; users are both distributed and focused around particular communities where firms coordinate input to create new products (Di Maria, Finotto, and Rullani, 2015; Flowers and Voss, 2015). Technological change may be driven by change in adjacent domains such as semiconductors and computer science, which enabled creative content to be stored on chips and transferred via electronic signals on the worldwide web, bypassing brokers who controlled the industry. Creative industries involve extensive production networks (Coe, 2015); thus, the substitution or alteration of a node of the network may disrupt production relations and the network. When technological changes prompt substitution such as digital softcopy for analogue hardcopy, then we see industry disruption and the rise of alternative organizations and ecosystems to support the new material base (Schumpeter, 1942). These changes in the material base vastly expanded who has access to music and film products, connecting producers and consumers in new ways and altering industry economics and structures (Hirsch and Gruber, 2015). For example, films are increasingly distributed and produced by Netflix rather than movie studios and music is distributed through Apple’s iTunes rather than record labels. Technological changes have disrupted industry business models and industry structures by altering cost structures, accessibility, reproducibility, and scalability. In contrast, when the material base and knowledge that underpins an industry are not easily substitutable, it creates a form of uniqueness that protects these products from market forces, creating competitive advantage (Barney, 1991). Under these conditions, technology more likely supports and extends current practices, companies, and strategies (Christensen, 1997). Public policy, such as copyright law and public subsidy, shifts over time and drives change. The international copyright system, designed to value creative products, influences the different creative industries in dissimilar ways, as it allows for collection of revenues but also potentially marginalizes individual creativity (Macmillan, 2015) and influences the pattern of creative production, such as the role of sampling in hip hop music following case law that found sampled recordings to be infringements (Kretschmer, 2015). Digitization in creative production and consumption has diffused so widely that the enforcement of the extant copyright system seems infeasible, yet industry and government interests have been intimately linked in supporting it (Blanc and Huault, 2014; Dobusch and Schuessler, 2014; Mangematin, Sapsed, and Schuessler, 2014). Public policy affects the rate of change in creative products such as classical music, ballet, and opera, which rely on established conventions that convey membership and status; as such, there is great focus on processes that preserve and refine semiotic codes. Many Western economies have a tradition for providing public support for creative industries with low scale markets, and many depend on such subsidies for survival. The rationale for such government support includes market failure and the idea of cultural

Creative Industries   9 and creative products as ‘merit goods’. Objectives of policy have shifted from traditional goals like exports and job growth to knowledge exchange and the spillovers from creative industries to the wider economy (Bakhshi, Cunningham, and Mateos-Garcia, 2015; Cunningham and Potts, 2015). The impact of institutional reform to this system is likely to be differentiated across the creative industries, but there has been a general agenda to promote collaboration and networking among institutions. Globalization is the liberalization of trade and investment that moves money, people, products, technologies, and ideas across regions (IMF, 2000), creating new market opportunities, but also intensifying competition, for the creative industries. For example, the last three decades’ migration from India to Western countries has created export markets for Indian culture, while changes in Indian trade policies during the same period has enabled hybridization of semiotic codes—a blending of modern Western and traditional Indian themes. This has paved the way for an international discourse and demand for Modern Indian Art (Khaire and Wadhwani, 2010) as well as a Bollywood export boom (Lorenzen and Mudambi, 2013). The combination of global exposure and export revenues from the Indian creative industries stimulates the creation of new institutional infrastructures and ecosystems at home, such as fashion and film schools, fashion shows and film festivals, critics and review systems, and retail outlets and multiplex cinemas. At the same time, falling trade barriers and the opportunity for cross-border investments have also resulted in the reorganization of Indian creative industries, for example the displacement of traditional Indian clothes tailors by modern fashion companies (Khaire, 2013) and the corporatization of Bollywood production and distribution companies (Lorenzen and Taübe, 2008). Next, we use the relations between changes in semiotic codes and the material base to develop a typology of change in the creative products and industries.

A Typology of Change in the Creative Industries We argue that the two dimensions of creative products—semiotic codes and the material base—are subject to different paces of and processes for change, ranging from slow-paced change, dominated by artists and firms seeking to preserve semiotic codes and the material base, to fast-paced change, where artists and firms ideate semiotic codes and/or transform the material base. Figure 1.1 illustrates four different stylized types of change in the creative industries, which, for the sake of simplicity, we will refer to as Preserve (slow change in semiotic codes and the material base), Ideate (fast change in semiotic codes but slow change in the material base), Transform (fast change in the material base but slow change in semiotic codes), and Recreate (fast change in semiotic codes and the material base). As paces of change are, of course, continua rather than discrete clusters, in between our types are a mix of continuity and change in either

10   Candace Jones, Mark Lorenzen, and Jonathan Sapsed

Semiotic codes

Fast change

Ideate

Recreate

Preserve

Transform

Slow change

Slow change

Fast change Material Base

Fig. 1.1  A typology of change in the creative industries

semiotic codes or the material base. Figures 1.2 and 1.3 provide some examples of how our change typology may be applied to prototypical creative products and industries. These are illustrative examples, showing how different types of change occur even within the same industry, for instance between mainstream and niche products, or at varying historical points. We observe that a few drivers of change tend to be associated with a type of change: State policy with Preserve, demand and globalization with Ideate, technology with Transform, and a combination of globalization and technology with Recreate. We discuss different drivers and types of change in the next four sections, seeking to provide a more detailed account of such variations.

Preserve: Slow Change in Semiotic Codes and the Material Base The lower left quadrant in Figures 1.1, 1.2, and 1.3 depicts the most conservative and stable type. It combines a semiotic code based on aesthetic conventions and traditional material base. Prototypical organizations that seek to preserve semiotic codes and the material base tend to rely more heavily on State policy, including performing arts such as classical music, ballet, opera, and those that collect, conserve, and/or house creative products such as museums, galleries, antique arts dealers, auction houses, collectors, and heritage parks, Indeed, heritage appears on four of the six definitions of creative

Semiotic Codes

Ideate

Low change

Advertising for TV, radio, print

Brutalism, e.g. Le Corbusier

Recreate

Deconstructivism e.g. Gehry

Casual/Social games for iOS

New Classical architecture

High change

Blockbuster shooter games for consoles

Games Workshop

Online search advertising

Preserve

Transform

Material Base

Fig. 1.2  Examples of change in advertising, architecture, and videogames Semiotic Codes Ideate

Recreate Haute Couture

Low Change

Museums and galleries

Smart Fabrics

High Change Online streamed performances

Classical Music

Textiles for athletics and sports clothing

Preserve Ballet

Online Access

Transform

Material Base

Fig. 1.3  Examples of change in fashion and textiles, museums, and performance arts

12   Candace Jones, Mark Lorenzen, and Jonathan Sapsed industries (e.g., UNESCO, Americans for the Arts, KEA, and UNCTAD). An increasingly important creative industry is that of art and antiquities markets, which have globalized, expanding to the Middle East and to China, generating new consumers, institutions, and practices (Dempster, 2015). Organizations and creative products characterized by this type of change are valued for the extensiveness and quality of their performances and collections; museums are heralded for the number of items by an iconic painter or within an art movement; the programme of a concert hall or opera house includes a heavy dose of iconic composers, even if it mixes popular tunes into its repertoire. The number and nature of this mix becomes a source of contestation with accusations of focusing on money not art (Glynn and Lounsbury, 2005). Although the prototypical organizations that represent this change type are listed above (e.g., ballet, symphony, museums), other creative industries can form niche specialties in processes that preserve creative products and techniques. These specialty organizations desire not only to focus on and preserve aesthetic conventions, but also deepen the quality of extant material base, and the knowledge to maintain that material base. For example, artisans and craftspeople specifically work within semiotic and material traditions and some artists, such as medieval musical troupes, or architects who specialize in historical styles, focus on learning and retaining traditional techniques. For instance, Cram and Goodhue in 1914 built St Thomas church with traditional stone and construction methods, even when modern materials and methods were available, which delayed construction time and increased costs (Jones and Massa, 2013). Perhaps because of this, in contrast to other creative industries, digital technologies have complemented rather than disrupted or supplanted the industries, and changes in the material base have been modest. For example, digital banners enable operas to be understood more widely, but alter neither the aesthetic conventions nor traditional materials (e.g., props, costumes, staging) of performances. To explore the change type depicted in this quadrant of the figure, let us consider museums, as exemplified in Figure 1.3. The purpose of museums has been and continues to be debated, whether primarily they are to educate, provide access, or preserve cultural treasures and evidence of ideas; these distinct purposes have been present since their founding (DiMaggio, 1982). Today many museums are thriving with average attendance numbers across museums doubling from two decades ago—from 23 000 to 55 000 visitors globally. Clear ‘blockbuster’ museums focus on contemporary art such as Tate Modern in London, Pompidou Centre in Paris, and Museum of Modern Art in New York (Economist, 21 December, 2013b, pp. 3, 7). There are various reasons for this resurgence. First, museums are primarily located in cities which are in a state of dramatic re-population and economic growth (McKinsey Reports, 2011, 2012b (April), and 2012a (June)). Cities are the geographic centres for creative workers and organizations, fuelling innovation-based economic growth (Florida, 2002; Florida, Mellander, and Adler, 2015). Cities are also home to educated and affluent residents, providing a necessary clientele for museums. Second, by constructing iconic new museums, a city or state seeks to generate tourism and spark urban renewal, a phenomenon which is called the ‘Bilbao effect’ after Frank Gehry’s design for the Guggenheim museum in

Creative Industries   13 Bilbao, Spain. Third, museums in Western countries have expanded their services and accessibility, with the British Museum, for example, hosting sleep-overs for children and working with digital experts to amplify participation in and engagement with exhibits. Fourth, museums are a means by which governments in both developed and emerging economies desire to showcase their culture; iconic new buildings are powerful material and symbols to do so. In fact, in 2009, China upgraded culture to a strategic industry, and is currently building museums rapidly to enact this strategy, often with a lack of appropriate artefacts to populate museums and with unclear purposes (Economist, 21 December, 2013b). The business models and revenue capacity of heritage-focused creative industry organizations depend heavily on state support, patrons, and paying visitors. Given the recent economic challenges of many states, nations, and cities, museums had to increase their visitors to attract revenues. For example, even though museums focus on trad­ itions in semiotic codes and maintaining the material base of creative performances and products, the most successful museums have embraced some degree of innovation in their business models such as crowdsourcing ideas for exhibits, using information technology to engage visitors in displays as well as offering 3-D models of popular artefacts on the web so that they can be experienced remotely, thus extending the access of the museum beyond its physical walls (which is a material change and extends into the next type of change). Museums are proliferating their brands, for example the Louvre has opened satellite museums in Lens and Abu Dhabi with the plan to rotate the collection among the sites. Critics argue that such an aggressive corporate strategy is inappropriate for a protector of cultural heritage (New York Times, 9 January 2007); yet, it illustrates how Preserving is not a static activity even if semiotic codes and the material base are largely untouched. Preserving is still a source of industrial change. Hence, the ability to attract visitors to museums or heritage sites is a key indication of their health and revenue, and the ability to generate identification with patrons. As developing nations grow wealthy, a museum that enhances accessibility and engages visitor interest, through using technology to support unique experiences and providing special exhibits by partnering with other museums, will be critical to creating a thriving city and culture.

Ideate: Fast Change in Semiotic Codes and Slow Change in the Material Base The upper left quadrant in Figures 1.1, 1.2, and 1.3 represents a type with fast-paced changes in semiotic codes (Barthes, 1977, 1990) while maintaining the material form expressing creative products. Examples of creative products that represent this change type are haute couture/fashion, haute cuisine, wine, theatre, advertising, and fine art. Processes of hybridizing semiotic codes are at the core of Ideate and driven by the demand for novelty that underpins creativity: new combinations and recombinations

14   Candace Jones, Mark Lorenzen, and Jonathan Sapsed of existing semiotic elements. While combination is present across the framework and is thought to be the core process of creativity in science (Simonton, 2004), technology (Arthur, 2009), the arts (Sapsed and Tschang, 2014), and innovation (Schumpeter, 1942), it is here recombination is most intensive. These recombinations are signalled by semiotic shifts that may trigger disputes over the appropriateness of labels given the stability of the material product such as in wine (Anand and Croidieu, 2015). The material base, while stable, is enacted in unique ways—whether through novel ingredients and menus, a new fashion season or ad campaign, or a new blend of grapes and labelling of wine. Given this dynamism in the semiotic codes, order depends on established materials for expressing creative products, such as the texture, colour, and fall line of cloth in fashion or the ingredients and their combinations to create tastes and menus in haute cuisine, which remain relatively stable over time, even if the knowledge needed to perform that role has been dynamic. With hybridizing and the rapid change in semiotic codes, a challenge is being perceived as authentic rather than imitative in one’s aesthetic expression (Jones, Anand, and Alvarez, 2005; Peterson, 1997). Ideate is exemplified by music and haute couture, which produce hybrid semiotic codes to meet the desire for novelty and opportunities offered by globalization. Electronic music artists have exploited sampling and synthesized sound technology to produce ever more variations of digital genres, combining established rhythms with new forms. Dubstep, for example, combined UK Garage music with elements of Jamaican reggae and Jungle to create an underground South London style that was ultimately adopted by mainstream artists like Britney Spears, Rihanna, and Snoop Dogg, a typical sequence for new music genres (Lena and Peterson, 2008). In fashion, styles may be recycled but also given new names to highlight their novelty (Godart and Galunic, 2014). Fashion seasons offer systematic opportunities and a stable order to combine and recombine semiotic elements (e.g., new design motifs, as well as combinations of pants, vests, skirts, blouses, Barthes, 1990). Indeed, the modularization of semiotic elements enabled their recombination and was central to fashion becoming a creative industry rather than only a craft of tailors (Djelic and Ainamo, 1999). Fashion shows also organize the industry through providing collective events that draw together designers, critics, and firms from around the world to make sense of new trends and opportunities (Schüßler and Sydow, 2015). Globalization also drives change in semiotic codes within fashion. For example, in India, globalization has fostered cultural change—expressions of individual identity and taste married with traditional motifs and materials—as well as changes in roles, where the primary role of the tailor for customized clothes has been substantially reduced by the rise of designers in fashion houses in certain market segments (Khaire, 2013, 2015). Fashion, which has long resisted digital technologies, now has a digital fashion week, uses Facebook, Twitter, and blogging sites to position and supplement brand images, and is analysing tweets and re-tweets to spot fashion trends (Sedghi, 2013). Although the critic, as an intermediary, still plays a role in assessing the industry and quality of creative products, fashion is trending toward more instantan­ eous and democratic feedback via twitter feeds. These trends are imitated by other fashion houses and also diffused to the firm’s ready to wear operations, prompting the search

Creative Industries   15 for new semiotic combinations for the elite class and creating cycles of fads and fashions (Crane, 1990; Godart and Galunic, 2014; Simmel, 1957). Changes to business models in these creative industries are centred typically on entrepreneurs. The entrepreneur’s identity and passion drives product creation and their names are often attached to their products, such as the early Coco Chanel, Liz Claibourne, and Ferran Adrià. Entrepreneurial producers rely on a small set of clients and patrons to support new creative products. The products tend to be small batch or limited season, and since they are aimed at a relatively small set of elite customers, they are expensive. These businesses enact distinct but complementary business models: restricted access and diversification. With restricted access, producers tend to engage in creative exploration. For example, in haute cuisine, Adrià limited the time available to eat at El Bulli to six months and used the other six months to experiment and create new dishes (Svejenova, Mazza, and Planellas, 2007). In fashion, industry conventions such as Spring and Fall seasons limit product life, but also offer complementary products such as skirts, jackets, and blouses (Siggelkow, 2001, 2002). Through diversification, creatives build their brand such as TV cooking shows and cookbooks for chefs (Svejenova, Slavich, and AbdelGawad, 2015) or perfume, accessories, and cosmetics for fashion houses. Although there are commonalities for business models, these are enacted in distinct ways depending on the historical and institutional legacies in which these companies were founded. For example, haute couture is organized as the “umbrella holding” company in France, the “flexible embedded network” in Italy, and the “virtual organization” in the United States (Djelic and Ainamo, 1999, p. 622).

Transform: Slow Change in Semiotic Codes and Fast Change in the Material Base The lower right quadrant of Figures 1.1, 1.2, and 1.3 highlights a change type with fast-changing forms of the material base of creative products. Technological innovation often disrupts existing industries (Anderson and Tushman, 1990; Christensen, 1997) and once a new technology is established, older technologies become obsolete and tend to disappear whereas with semiotic codes, old codes can be reimported and re-used as classic designs. For example, the shift in the material base from analogue to digital technology has dramatically altered the landscape previously occupied by film, music, and publishing. The digital format not only allows for easy replication and distribution over telecommunication lines, but also privileges technology and communications companies, who hold expertise in manipulating digital systems and information; they have become the new intermediaries between artists and consumers. For example, download services like Apple’s iTunes now dominate music CD sales. Google provides access to music (google play), video (youtube), and publishing (google books). Spotify shares music. Netflix not

16   Candace Jones, Mark Lorenzen, and Jonathan Sapsed only distributes but produces content-first episodes, and now movies, that can be rented, streamed, and even watched all at once (rather than weekly) (Taylor, 2013). Integrated entertainment companies—publishing, movie, and music conglomerates— exemplify this change type and provide insight into how and why mass markets tend to have slow changes in semiotic codes, but experience dramatic changes in the material base. First, audience expectations constrain work within accepted genres (Hsu, 2006; Hsu, Hannan, and Ocak, 2009). Thus, entertainment firms reproduce their past products and offset their risks of lowered revenues by sticking with already-successful properties within established genres, such as blockbusters franchises (Christopherson, 2008), which entail enormous sunk costs (Bakker, 2015). New genres or novel combinations, such as Country and Western music, were ignored until a change in reporting or tracking revealed its existence as a viable revenue stream (Anand and Watson, 2004). Second, entertainment companies focus on smaller budget, lower-quality product to fill media pipeline and pressure more peripheral members of the industry to work faster and more cheaply to contain costs (Christopherson, 2008). Ironically, their actions lower the quality and diversity of product offered to consumers, prompting consumers to look for alternative sources of entertainment. Their actions also exacerbate stratification and inequality, where a few artists are stars, gaining most of the work and monetary rewards (Currid-Halkett, 2015; Menger, 2015). Third, the hybridizing benefits of globalization are quite challenging in mass markets and semiotic codes do not travel well between various countries. For example, the United States, China, and India are the largest film markets, and their film industries have built such distinctive semiotic codes that foreign films find it notoriously difficult to penetrate these markets (Lorenzen, 2009). Further, semiotic codes are culturally based, which means that ‘[t]‌oo many films are both too foreign and too familiar for audiences abroad’ (Economist, 21 December 2013, p. 107). Fourth, government policy differences impede effective market development. China imposes censorship, bureaucratic hurdles restrict access to which and how many foreign films can enter, and, importantly, there is less creative licence because China wants to use films to ‘inculcate Chinese values and culture’ (Economist, 21 December 2013, p. 107). In an attempt to work out these globalization challenges, Hollywood filmmakers are co-financing or co-producing Chinese films to gain a foothold in the burgeoning market, but cultural and policy differences still constitute substantial challenges for international co-productions, both for Chinese filmmakers and Western filmmakers. Bollywood, on the other hand, addresses similar challenges by ‘springboarding’ its way into the US market by acquiring production and distribution companies there (Lorenzen and Mudambi, 2013), similar to the method adopted by the United States in Europe during the 1940s and 1950s (Balio, 1985). In addition to technology and information companies as new competitors to film, music, and publishing, they also offer ‘digitally native’ creative products such as videogames, developing content based on accepted genres from film such as action, sci-fi, war, and fantasy. For some 30 years these genres have been serving the traditional ‘hardcore’ games market for videogames: young to middle-aged males. These gamers value innovations that are tightly linked to the material base in the processing power of consoles and their speed and ability to run video and graphics animation (Sapsed,

Creative Industries   17 Grantham, and DeFillippi, 2007). Each new console generation requires ever more complex and large-scale games to be produced, which means ever greater projects and sunk costs for the developers (Bakker, 2015), leading to concentration in this segment of the industry. Similar dynamics can be seen in the film animation industry, which was crafted by teams of cartoonists in small workshops and now requires hundreds of artists and developers, each working on a tiny slice of Computer Generated Imagery (CGI) on blockbusters like Avatar or The Avengers. The work process to achieve the desired effects is described as a ‘digital bricolage’ coordinating digital assets, tools, resources, and geographically dispersed creative workers (Rüling and Duymedjian, 2014). The change in the material base from traditional animation drawing to digital tools and format has had profound implications for organization in the industry. Similar to the entertainment industries of film, publishing, and music, new media and technology companies tend to locate in or near large cities, such as New York City, Los Angeles, and San Francisco in the United States, and London in the United Kingdom. These large cities have strong higher educational institutions, amenities, and lifestyles that attract workers in the creative industries (Florida et al., 2015) and ecologies of specialized suppliers and freelancers that support the project-based product development processes of these industries (DeFillippi, 2015; Lorenzen and Frederiksen, 2005; Vinodrai and Keddy, 2015). Traditional business models for film, music, and publishing are no longer working. First, traditional revenue sources no longer produce the levels of revenue they did in the past. Audiences pirate and share content or access it from technology companies. Recent reports by industry experts reveal that few movies are profitable, with only 7% of British movies making a profit (Economist, 21 December 2013, p. 105) and the record industry has seen revenues decline, some estimates say by $10 billion (Spotify, 2013). Media companies threaten lawsuits for piracy and sharing (e.g., Napster) and these practices dampen individual creativity and cultural diversity because current law commodifies and instrumentalizes cultural outputs (Macmillan, 2015). Second, with the digital revolution, artists can, in principle, produce and directly distribute their music to consumers, bypassing mega media companies’ traditional brokerage role and increasing the diversity of music available (Foster and Ocejo, 2015; Hirsch and Gruber, 2015). They still require marketing and promotion but there is no shortage of digital intermediaries appearing to replace those of the old business models. Third, new media industries’ business models have shifted from companies selling products to consumers to ad revenues and membership fees. Netflix and Spotify gain revenue from membership fees rather than purchase or rental of creative products. The average person spends $55 on music in a year whereas Spotify’s premium members spend an average of $120 per year (Spotify, 2013). However, the systematic data gathering by these technology-focused new media companies is increasingly raising concerns about privacy. Nevertheless the massive data generated by online activity has given rise to the high growth online segment of the advertising industry, which is displacing the familiar media of TV, radio, and print. Advertising no longer depends on clever combinations that drive Ideation, but is now fused with data analytics and Search Engine Optimization (Sapsed et al., 2013).

18   Candace Jones, Mark Lorenzen, and Jonathan Sapsed

Recreate: Fast Change in Semiotic Codes and the Material Base The upper right quadrant of Figures 1.1, 1.2, and 1.3 represents fast-paced change in both semiotic codes and in the material base. These creative industries are extremely dynamic and their artistic and material properties are tightly coupled such that expressing new semiotic codes drives new material innovations and vice versa, resulting in a total recreation of products and industries. Industries that represent this change type include parts of architecture where new materials enable the expression of new building styles such as skyscrapers, or textile design combined with electronics to produce ‘Smart fabrics’. These are a step beyond fashion’s use of new materials, from rayon through to lycra, but used in largely established categories of clothing such as sporting and athletic wear. Within design and consumer goods, the introduction of plastics altered the type of chair forms available and launched new furniture styles. The semiotic code changes associated with this material base change have been varied; on the one hand plastic furniture was first designed for high end consumers by renowned practitioners such as the Bauhaus school, yet other classic designs—like the ‘stacking’ chair—were adopted by public sector institutions like schools for their affordability. This duality of cultural meaning persists today. However in many cases, Recreate—changes in both semiotic codes and the material base—may occur more easily because many of the innovations depend on a limited set of people to experiment. For example, in architecture, this set includes persuading the client and collaborating with engineers to assuage building regulators rather than satisfying a mass market. Thus, audience expectations, such as those in film, music, and publishing, which dilute innovations to appeal widely, are not so present in this context given the different client base and revenue models. Indeed the final ‘audiences’ for buildings, their actual occupants, often disagree with the aesthetics and symbolism of their procurers. This type of conservatism can lead to revivalist styles, such as New Classical and Mock Tudor, which hide contemporary structures behind traditional façades (and belong more closely to the Preserve change type). Architecture exemplifies this Recreate process in creative products due to the intim­ ate relation between semiotic codes and the material base. For instance, in order for Frank Gehry to design and create a new genre of ‘deconstructivism’ in buildings of bent steel and metal shells, he had to find a new design tool which he imported from plane design, generating ‘wakes of innovation’ through the supply chain as others innovated when they adopted and adapted to the new digital technology and new material constructions (Boland, Lyytinen, and Yoo, 2007). With new materials, new semiotic codes were created that contravened extant semiotic codes such as Frank Lloyd Wright’s Unity Temple: a church made from reinforced concrete, which had a flat topped roof with no window openings and no spire (Jones and Massa, 2013) and Le Corbusier’s placing of large buildings on pilotis (stilts) to rise above the ground rather than sitting on it (Jones, Maoret, Massa, and Svejenova, 2012). Clearly, reinforced concrete, a new material, was

Creative Industries   19 needed to sustain the weight of tall buildings. Architects’ innovations in materials and styles challenged government policy, creating new regulations. For instance, Wright’s Johnson Wax building had nine-inch diameter, reinforced concrete pillars to carry its 12 ton roof which ‘flagrantly violated’ the 30-inch diameter requirement (Anonymous, 1937). Wright poured the column, used wire mesh instead of the prevalent steel rods, and tested it with 60 tons of weight; the column stood and building officials issued his permit. Johnson Wax became an icon and exemplar of new building style and material construction. Although changes in semiotic codes and the material base may take decades to fully assimilate and to alter the built landscape—such as Modernist architecture, which took close to 70 years—these efforts engage existing institutional infrastructures such as collaborations with engineers, professional associations, schools, and journals (Jones, Maoret, Massa, and Svejenova, 2012). The revenue models of architecture and other forms of design are based on client relations and diversification of client sectors, particularly given the volatility of construction and related areas. For example, architecture firms routinely use networks, creating partnerships with complementary areas of expertise, and target some stable areas of the construction industry that have continued growth such as public schools, corporate offices, ageing facilities or healthcare. Thus, one client sector can compensate for another whereas boutique firms that specialize are more likely to wither in a poor economic climate (Blau, 1984). Architectural and design firms use network forms of governance that engender both collaborative stability and flexibility to adapt to uncertain environments rather than internalizing skillsets such as engineering or landscapes (Jones, Hesterly, and Borgatti, 1997; Jones and Lichtenstein, 2008); project-based organizing and project ecologies facilitate this adaptability and flexibility (DeFillippi, 2015; Vinodrai and Keddy, 2015).

Discussion Primarily addressing manufacturing industries, the Schumpeterian tradition of understanding change (exemplified by innovation studies and the research field of industrial dynamics) focuses primarily on the material base dimension of products and industries. By contrast, as we also include the dimension of semiotic codes, our framework is better suited to understand changes in the creative industries. In these industries, disruptions of business models and industry organization arise not just from technological change, but also from changes in semiotic codes. To distinguish it from Schumpeterian ‘creative destruction’, we have dubbed change that encompasses both semiotic codes and the material base ‘Recreate’. We offer two important caveats on our framework. The first caveat is that we have not traced historical shifts and dynamics such as the relation between peripheral and core actors that hybridize to create new semiotic codes. For example, avant-garde movements often percolate in the periphery of a creative industry, which may later be hybridized or

20   Candace Jones, Mark Lorenzen, and Jonathan Sapsed integrated into established semiotic codes, generating new genres or styles and reinvigorating the industry such as painting (Crane, 1987; Sgourev, 2013) or music (Lena and Peterson, 2008). The second caveat is that because the change drivers, namely policy, demand, technology, and globalization, are dynamic, creative products and industries often move between change types over time. We have shown this with the examples in Figures 1.2 and 1.3. For instance, the film industry was characterized by Ideate, seen in the development of semiotic codes (e.g., narrative forms and genres), when it shifted from a focus on technology to content (Jones, 2001). Then, from 1920 until 1948, it was characterized by Recreate with the introduction of sound and colour as new technologies and the development of new genres that capitalized on sound (e.g., Hollywood musicals) or grainy films shot in black and white (e.g., film noir). This period included industrial reorganization from small production studios to a handful of vertically integrated firms that controlled production, distribution, and exhibition (Balio, 1985). When exogenous demand dropped, and government policy arose (e.g., anti-trust regulations in 1948) and globalization, particularly protectionism, occurred from the 1950s onwards, these factors re-organized the industry into production and distribution networks. Currently, film is experiencing Transform due to technological innovations that shift materials from analogue, hardcopy to digital softcopy and are upending business models and industry organization. During the last decades, the growth and economic promise of the creative industries has spurred a range of public policies across Western economies, Asia, and more recently South America, with different flavours but all aimed at promoting this category of industries for economic development (Bakhshi, Cunningham, and Mateos-Garcia, 2015). Creativity gives rise to cultural as well as economic value, as well as socio-economic development potential. Depending on how they are categorized and measured creative industries constitute a high-growth sector that faces the future and in some countries and regions form a substantial proportion of value-added in the economy (e.g., DCMS, 2014). There is of course a lock-in effect in many of these established centres that bestows advantages on them. The most obvious example of this is Hollywood as the centre of the film industry (Scott, 2005), and yet Bollywood has emerged as a contender in the scale of its activity (Lorenzen and Mudambi, 2013). Local film production clusters are also appearing elsewhere across the globe (Lorenzen, 2009; Coe, 2015). Because of the creative advantages of the periphery (Cattani, Ferriani, and Colucci, 2015), developing countries and emerging economies may have advantages as the centre of creative industry networks become saturated and in need of fresh ideas. Compared to other celebrated high-value-added industries, such as biotech and large-scale information and communications technologies (ICTs), some creative industries have relatively low entry barriers. Those creative industries with low finance and capital requirements offer a cheap and alluring path for new individuals, firms, and economies to enter into the global marketplace.

Creative Industries   21 Caution, however, is warranted in the creative industries discourse. We should remember that many creative industries have the capacity for cultural transformation, but not necessarily for being economic engines. Given the high levels of creativity in production and the nature of their demand, creative products that typify Preserve, such as symphonies and museums, are likely not to be scalable; thus, they cannot guarantee mass audiences in spite of some notable successes, and the majority will continue to depend on public subsidies to be viable. Many creative industries are also mature and are vulnerable to fluctuations in the world economy―some are even in decline and disarray in the search for new business models that properly reward creative work and its complementary business activities. Furthermore, significant entry barriers persist in many creative industries, in the guise of extant ownership structures, marketing muscle, and distribution infrastructures. The digital revolution is double-edged in how it affects creative industries; whereas some traditional content providers struggle to make old rules work, those industries and firms that embrace the connectivity, marketing, and combinative power of the Internet appear to be prospering. There is growing evidence that creative and information technology (IT) industries are fundamentally linked in the industrial dynamics (DCMS, 2013; Sapsed et al., 2013). We have suggested that the key to stimulating this potential through public policy is by understanding how changes differ across industries. Creative industries are diverse and span a range of products. Not all countries and regions can be manufacture exporters, and similarly not all countries and regional governments can make generic creative industry policies work; however, by understanding nuance and the local cultural advantages, there are surely profound opportunities for prosperity that maintains cultural dignity.

Conclusion Prior discussions and classifications have yielded confusion and competing lists of what is or is not a creative industry. In this chapter, we have, as an alternative, offered a framework highlighting two key dimensions of creative products—semiotic codes and the material base—and used these to classify creative products and develop a typology of change in the creative industries. This framework warns against making generalizations across all creative industries because the differences in their semiotic codes and the material base generate distinct change dynamics. For instance, film, music, and publishing are quite similar: they focus on mass markets, make money from their blockbuster products, enlist brokers to spot and filter talent, and their synergies have often made it attractive to integrate them in entertainment conglomerates. Hence the rise of digitization changes their material base, and in a similar way. In contrast, fashion, haute cuisine, and architecture have distinctly different dynamics and a different material base. Our framework captures and compares these differences, along with identifying the primary

22   Candace Jones, Mark Lorenzen, and Jonathan Sapsed drivers for each type of change. By juxtaposing these four change types, we hope to demonstrate, on the one hand, the value of analysing both the semiotic and material dimensions of change, and, on the other, that creativity does not always involve similar paces and types of change. We need to understand when and how it does, in order to profit from such change.

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Appendix 1.1  The most common definitions of creative industries UNESCO (1986)

WIPO (2003)

Americans for the Arts (2005) KEA (2007)

UNCTAD (2008) DCMS (2013)

Socio-cultural activities Environment and nature Sports and games Cultural heritage

Museums and collections

Heritage

Printed matter Press and and literature literature

Publishing

Books and press Publishing and printing media

Music and performing arts

Heritage Publishing

Music, theatrical Performing arts Performing arts Performing arts Performing productions, arts and operas entertainment Music

Visual arts Visual and (including arts graphic arts and crafts)

Visual arts/ photography

Visual arts

Photography

Photography

Cinema

Motion picture and video

Film

Film and video

Radio and television

Radio and television

Radio and television

Television and radio

Visual arts

Photography

Advertising services

Advertising

Design

Design Architecture

Software and databases

Sound recording and music publishing

Videogames

Audiovisual media

Motion pictures, video and television programmes Programming and broadcasting

Functional creations: Design, new media such as software, digital content and games, creative services such as architecture and advertising, digital services and recreational services

Advertising PR and communication Translation and interpretation Specialised design Architecture Software publishing Computer programming Computer consultancy (continued )

Appendix 1.1  Continued UNESCO (1986)

WIPO (2003) Copyright collective management societies

Americans for the Arts (2005) KEA (2007) Art schools and services

UNCTAD (2008) DCMS (2013) Cultural education

Note: The terminologies are the original used in the various sources. Based on copyrights, WIPO’s (2003) definition is the most narrow, excluding a range of event-, education-, and heritage-based industries. By contrast, UNESCO (1986) is very broad and includes cultural heritage, environment/nature, and socio-cultural activities (such as association and community work). However, neither this definition nor the one proposed by Americans for the Arts (2005) incorporates recent boom industries such as IT, software, and specialized design services, which have been included in the definitions by DCMS (2013) and UNCTAD (2008). The latter definition also includes heritage and traditional arts and crafts (but is more operational than UNESCO (1986) in that it focuses on industrial activities, omitting socio-cultural activities).

Pa rt  2

C R E AT I V I T Y

Chapter 2

T he Creativ e  Mi nd James C. Kaufman AND Robert J. Sternberg

Much of this book will address the wide variety of creative products and services that can be offered in industry. The array of possible creative industries is endless—from social networking sites to novelty tee-shirts, to Renaissance fairs, to toys that come with fast food meals, to blueprints to expand a master bedroom, to the next huge music festival. Yet  all of these creative industries start in the same place:  inside a creative person’s mind. Legendary thinkers throughout time, from Aristotle to Einstein, have pondered what it means to be creative. There are still debates, after more than six decades of intensive research, on how to measure, utilize, and improve creativity. Indeed, creativity has become its own research field, drawing scholars from psychology, education, neuroscience, history, sociology, economics, engineering, and other disciplines. This chapter explores current research and different perspectives on how people are creative. We first discuss the creative process itself. What cognitive processes occur while someone is being creative? Next, we analyse the research on what types of people are creative. We first discuss the copious research on creativity and personality, addressing the larger question of which types of people are more likely to be creative. We then cover studies that explore how knowledge, intelligence, and expertise all play a role in how people express their creativity. Next we discuss the kinds of creative contributions creative individuals can make. Finally, we draw conclusions.

Defining Creativity The first step to understanding creativity is to define it. Most definitions of creative ideas comprise three components (J. Kaufman and Sternberg, 2007). First, creative ideas must represent something different, new, or innovative. Second, creative ideas must be of high quality. Third, creative ideas also must be appropriate to the task at hand or to some redefinition of that task. Thus, a creative response is novel, good, and relevant.

34   James C. Kaufman and Robert J. Sternberg Although there is a relative consensus on the definition of creativity, there are numerous theories and beliefs about the creative process.

The Creative Process One of the early theories of the creative process was proposed by Wallas (1926), who proposed a model of the cognitive creative process. According to his five-stage model, you first use preparation to begin work on a problem. Next comes incubation, in which you may work on other things while your mind thinks about the problem. In intimation (a phase sometimes dropped from the model), you realize you are about to have a breakthrough. Then you actually have the insight in the illumination phase. Finally, with verification, you actually test, develop, and use your ideas. A more recent model of the creative process is the Geneplore model (Finke, Ward, and Smith, 1992). Finke et  al. propose two phases—generation and exploration. Generation, the ‘novel’ part, involves generating many different ideas. During this phase, one constructs a preinventive structure, or a mental representation of a possible solution. For example, Elias Howe was working on his invention of the modern sewing machine. He couldn’t quite get the needle correctly designed. Howe had an odd dream in which he was chased by savages who threw spears at him. The spears had a circle loop at the end—and Howe realized that adding the circle (or an ‘eye’) to the end of the needle was the solution he needed (Hartman, 2000). The image of a spear with a circle at the end—the image that preceded Howe’s insight—would be an example of one of these preinventive structures. They don’t need to be as dramatic or sudden as Howe’s story. Indeed, the generation of preinventive structures is only one part of the creative process, according to the Geneplore model. The thinker must then explore these different preinventive structures within the constraints of the final goal. There may be several cycles before a creative work is produced. Exploration, the second phase, refers to evaluating the possible options and choosing the best one (or ones). It is what all of us do when we choose between a creationist view of the origins of the world and an evolutionary view. We consider the evidence in favour of each, and make our selection. The Geneplore model focuses on the creative process, yet most tests of the model have actually measured the creative product. In an experiment using the model, people were shown parts of objects (such as a circle or a cube). They were then asked to combine these parts to produce a practical object or device. The creativity (and practicality) of the items is then assessed (e.g. Finke, 1990; Finke and Slayton, 1988). Interestingly, people produced more creative objects when they were told which parts had to be combined than when they could pick the parts themselves. Other theories have also focused on cognitive-oriented components of the creative process. Michael Mumford and his colleagues (Blair and Mumford, 2007; Mumford, Mobley, Uhlman, Reiter-Palmon, and Doares, 1991; Mumford, Longergan, and Scott, 2002)

The Creative Mind   35 have argued for an eight-part model, focusing on problem construction, information encoding, category selection, category combination and reorganization, idea generation, idea evaluation, implementation planning, and solution monitoring. Basadur, Runco, and Vega (2000) have offered a simplified model centred on finding good problems, solving these problems, and then implementing solutions. Mednick (1962) proposed the idea that creativity occurs when different elements are associated together to form new combinations. Creative individuals are assumed to be able to make meaningful, useful associations between disparate concepts and ideas to a greater extent than relatively uncreative individuals. The Remote Associates Test was developed, based on this idea (Mednick, 1968). In the last two decades, many studies of the creative process have used computer simulations in which investigators attempted to program a computer to ‘think’ in a manner similar to the ways people think. These computer models generally use many of the same principles as those behind artificial intelligence (Boden, 1999). Can we actually study artificial creativity? At first glance, computer models can be quite accomplished. BACON, one of the first such programs, used a series of rules and heuristics to re-discover Kepler’s third law of planetary motion (Langley, Simon, Bradshaw, and Zytgow, 1987). Other programs have written a character-driven fictional story (Turner, 1994), and improvised musical jazz pieces (Johnson-Laird, 1988, 1991). Many of these programs differ from human creative functioning, however, in that the problems are given to the computer in structured form. In real life, however, much of creativity can be in figuring out the nature of the problem in the first place (see Runco, 1994).

The Creative Person Theories Many theories of creativity centre on the creative person. For example, the investment theory of creativity (Sternberg and Lubart, 1995a, 1995b) argues that creative thinkers are like good investors: they buy low and sell high. Whereas investors do so in the world of finance, creative people do so in the world of ideas. Creative people generate ideas that are like undervalued stocks (stocks with a low price-to-earnings ratio), and both the stocks and the ideas are generally rejected by the public. When creative ideas are proposed, they often are viewed as bizarre, useless, and even foolish, and are summarily rejected. The person proposing them often is regarded with suspicion, and perhaps even with disdain and derision. Eventually, the creative person persuades others, and then ‘sells high’, moving on to the next unpopular idea. Creative ideas are both novel and valuable. But they are often rejected because the creative innovator stands up to vested interests and defies the crowd. The crowd does not maliciously or wilfully reject creative notions. Rather, it does not realize, and often

36   James C. Kaufman and Robert J. Sternberg does not want to realize, that the proposed idea represents a valid and advanced way of thinking. Society generally perceives opposition to the status quo as annoying and offensive, and as reason enough to ignore innovative ideas. Evidence abounds that creative ideas often are rejected (Sternberg and Lubart, 1995a), at least initially. Early reviews of classic works of art are often negative. Alfred Hitchcock’s Vertigo, Verdi’s Rigoletto, and Herman Melville’s Moby Dick, for example, all received bad reviews when initially critiqued. Some of the greatest scientific papers have been rejected, not just by one, but by several journals before being published. For example, John Garcia, a distinguished biopsychologist, was immediately denounced when he first proposed that a form of learning called classical conditioning could be produced in a single trial of learning (Garcia and Koelling, 1966). From the investment view, then, the creative person buys low by presenting a unique idea and then attempting to convince other people of its value. After convincing others that the idea is valuable, which increases the perceived value of the investment, the creative person sells high by leaving the idea to others and moving on to another idea. People typically want others to love their ideas, but immediate universal applause for an idea may indicate that it is not particularly creative. Sternberg and Lubart (1995a, 1995b) highlight six variables as being essential to creativity: intelligence, knowledge, personality, environment, motivation, and thinking styles. Another person-centered theory of creativity is Amabile’s (1982, 1996) componential model. She argued that three variables are needed for creativity to occur: domain-relevant skills, creativity-relevant skills, and task motivation. Domain-relevant skills include knowledge, technical skills, and specialized talent. To be a creative astrophysicist, for example, you need to know about electromagnetism and thermodynamics. Creativity-relevant skills are personal factors (indeed, they are comparable to personality) that are associated with creativity. These can include tolerance for ambiguity, sensible risk-taking, and being open to new experiences. The final piece is motivation towards the task at hand. A person could have many domain-relevant and creativity-relevant skills and yet, with inadequate motivation, never begin to display creativity in the first place!

Personality Both the investment theory and the componential theory include personality as a key factor in thinking about creativity. Unsurprisingly, hundreds of studies have been devoted to the relationship between personality and creativity. Whereas some findings are straightforward and consistent, there remain some places where questions persist. Many different theories of personality have been studied in relation to creativity, such as Eysenck’s (1993) P-E-N theory (psychoticism, neuroticism, extraversion). Eysenck suggested that psychoticism is linked to creativity. Barron (1969) and others at the Institute for Personality Assessment and Research also studied relations between creativity and personality, noting, for example, the relation of creativity to risk-taking.

The Creative Mind   37 More recently, the five-factor personality model (Goldberg, 1992; McCrae and Costa, 1997) has been the focus of most empirical investigations. The five factors proposed by this theory are neuroticism, extraversion, openness to experience (sometimes just called openness), conscientiousness, and agreeableness (McCrae and Costa, 1997). The names of these factors convey their meaning. Neuroticism measures an individual’s emotional stability (or lack thereof). Extraversion indicates how outgoing and sociable someone is, whereas openness to experience conveys someone’s intellectual and experiential curiosity. Conscientiousness taps into one’s discipline, rule-orientation, and integrity; and agreeableness refers to being compliant, trusting, and altruistic (Kyllonen, Walters, and Kaufman, 2005; Lowe, Edmundson, and Widiger, 2009). There is a near-universal finding that openness to experience is associated with creativity, whether measured by divergent thinking tests (King, McKee-Walker, and Broyles, 1996; McCrae, 1987), the Consensual Assessment Technique (Woldfradt and Pretz, 2001), or self-report measures (Griffin and McDermott, 1998; Soldz and Vaillant, 1999). This general finding of the power of openness to experience seems to extend across domains. Feist’s (1998) extensive meta-analysis of personality and creativity found that creative scientists were more open to experience than less creative scientists, and artists were more open to experience than non-artists. This relationship has been so consistently demonstrated that creative personality tests based heavily on openness to experience (e.g. Goldberg et al., 2006) have been used as proxy measures of creativity (Baer and Oldham, 2006; Powers and Kaufman, 2004). The relationship of the other four factors to creativity, however, is murkier and, apparently, domain dependent. The extent to which creativity is domain-specific has been much debated. The role of domains in creativity has fuelled numerous debates in the literature, although the two contrasting sides are converging in the middle (Baer and Kaufman, 2005; Plucker and Beghetto, 2004). In essence, the question is whether there is a creativity factor c, analogous to intelligence’s g, which transcends domains and enhances a person’s creativity across many different areas. A comparable view in personality research is provided by the cognitive–social approach to personality coherence (Shoda, Mischel, and Wright, 1994; Smith, Shoda, Cumming, and Smoll, 2009). According to this approach, a person’s behaviour changes according to the situation. These behavioral changes are typically consistent across the same type of situation. For example, a student might be consistently conscientious across multiple classroom situations and consistently non-conscientious across multiple basketball-playing situations. If creativity and personality both seem to be domain-specific, then personality will presumably be related to creativity differently across different domains. Indeed, when examining creativity and personality beyond the openness-toexperience factor, this type of discrepant pattern often emerges. Creative artists are unlikely to be conscientious. This finding was consistent across rated creativity (Woldfradt and Pretz, 2001) and biographical data (Walker, Koestner, and Hum, 1995). Students who scored higher on an arts-based creativity measure were also less con­ scientious (Furnham, Zhang, and Chamorro-Premuzic, 2006). Feist (1998) found that,

38   James C. Kaufman and Robert J. Sternberg although scientists were much more conscientious than non-scientists, creative scientists were not necessarily more conscientious than less creative scientists. Extraversion is sometimes related to domain-general measures of creativity (Batey, Chamorro-Premuzic, and Furnham, 2009; Furnham, Crump, Batey, and ChamorroPremuzic, 2009; Schuldberg, 2005) and sometimes it is not (Matthews, 1986; McCrae, 1987). Domain-specific investigations of artists and writers have found some evidence for an introversion–creativity connection (Mohan and Tiwana, 1987; Roy, 1996). Feist’s (1998) meta-analysis shows that scientists are much more introverted than non-scientists—but creative scientists were more extraverted than less creative scientists. Feist (1998) also found that more creative scientists were less agreeable than less creative scientists, and artists were less agreeable than non-artists (a result also obtained by Burch, Pavelis, Hemsley, and Corr, 2006). Even openness to experience may have some domain dependence. Perrine and Brodersen (2005) examined openness to experience and its sub-components, interests, and artistic vs scientific creativity through a battery of survey measures. Five of the six sub-components—all but the sub-component of values—were related to artistic creativity, and the strongest relationship was found in aesthetics. Ideas and values were the only sub-components related to scientific creativity. George and Zhou (2001) investigated the potentially interactive relationships between openness to experience, conscientiousness, and creative behaviour. They found that a supervisor’s feedback and the structure of the task were essential in relating the two personality factors to creative behaviour on the job. In situations where people received positive feedback from supervisors and had an open-ended task, those who were high on openness to experience produced more creative results. Conversely, when a person’s work was closely monitored, or they received inaccurate feedback, people who were high on conscientiousness produced notably less creative results. Conscientiousness is typically associated with positive work outcomes (i.e. with people showing up for work on time, or getting projects completed by deadline), so this type of negative finding is fairly unusual. Of the five factors, agreeableness has perhaps the least powerful relationship to creativity. Feist’s (1998) analysis found that creative scientists were less agreeable than less creative scientists, and artists were less agreeable than non-artists (the same was also found by Burch et al., 2006). Agreeableness also has been negatively correlated with creative accomplishments (King et al., 1996) and scores on divergent-thinking tests (Batey et al., 2009). Silvia, Kaufman, Reiter-Palmon, and Wigert (2011) explored Ashton and Lee’s (2007, 2008) assertion that agreeableness can be split into two factors. One factor retains the name ‘agreeableness’, but constitutes, specifically, the facets of forgiveness, gentleness, flexibility, and patience. The second factor, honesty-humility, has facets of sincerity, fairness, greed-avoidance, and modesty. Silvia et al. (2011) found that creativity (as measured by self-reports and behaviour checklists) was significantly negatively correlated with honesty-humility. No significant relationship with agreeableness (as defined by Aston and Lee, 2007) was found. The relationship between emotional stability and creativity veers into the frequent debate on the relationship between creativity and mental illness, with vociferous debaters arguing either in favour of or against such a link (see essays in J. Kaufman, 2014).

The Creative Mind   39 Studies focusing on clinical levels of manic depression or schizophrenia are obviously addressed to syndromes more severe than neuroticism (or lack of emotional stability). The literature on hypomania and anxiety, however, seems to be quite relevant. Hypomania, as Furnham, Batey, Anand, and Manfield (2008) and Lloyd-Evans, Batey, and Furnham (2006) argue, is a disorder related to bipolar depression (in which there are periods of elevated mood, which are less intense and shorter than periods of depression); yet it does not necessarily lead to a diagnosis of ‘mental illness’. People with minor hypomania may be more creative, whereas people with extreme bipolar disorder may be less creative (see also Richards and Kinney, 1990). Another line of research focuses on the relationship between anxiety and creativity. Rubinstein (2008) found that anxious and depressed patients were more creative than schizophrenics, and shyness researchers have found links between diminished social anxiety and higher creativity (Cheek and Stahl, 1986; Kemple, David, and Wang, 1996). However, Silvia and Kimbrel (2010) found weak and inconsistent connections between anxiety and depression, on the one hand, and creativity, on the other. The literature on personality and creativity is a mix of strong connections (openness to experience), conflicting results (extraversion), and domain-based differences (conscientiousness). Although the relationship between expertise and knowledge and creativity also has conflicting results, the general tenure of the research is more consistent.

Expertise, knowledge, and intelligence Attaining greatness (or simply a high level of professional accomplishment) in any given field requires a substantial amount of knowledge and practice. On average, this process of acquiring expertise in an area requires approximately ten years from entering a field to making any kind of substantial contribution (Bloom, 1985; Ericsson, Roring, and Nandagopal, 2007; Hayes, 1989). These ten years are spent learning the mechanics of the field, discovering all of the practical issues that cannot be taught in a book, and obsessively plying one’s trade. These ten years do not represent a basic apprenticeship, as in being taught how to mend clothing. Rather, these are years of active experimentation and generation of new ideas (Gardner, 1993). Just as in personality, there are some aspects of expertise acquisition that are consistent across creative domains and other aspects that are distinct. There are, of course, some differences. In domains where creative excellence may entail very similar work—especially performance areas such as chess, sports, or playing music—ten years may be just right. Fields more dependent on ever-changing standards of creativity and less focused on technically perfect performance may take much longer than ten years (Simonton, 2001). The ten-year rule is also roughly consistent regardless of when someone first enters a field. Mozart, for example, began composing at age 5, in 1761—and his first major composition, ‘Exsultate, Jubilate’, debuted in 1773. To rise from being merely creative to being eminent has its own sets of requirements. Subotnik (2000, 2004) sees expertise as a continuum, in which even once you reach a certain level of expertise, there still lies the peak of elite talent. It is here, in what

40   James C. Kaufman and Robert J. Sternberg Subotnik calls ‘elite talent’, that genius-level work is done. For example, once Mozart achieved renown and success with his early works, he kept progressing. Most of his classic symphonies and operas were not written in his teens. Gardner (1993) proposed that a creator may take a second ten years to create his or her second great piece of art. Could there be a similar ten-year rule that advances the creator from mere goodness to greatness? S. B. Kaufman and Kaufman (2007) present evidence for such a rule. They studied 215 contemporary fiction writers. Writers took an average of 10.6 years between their first publication and their best publication. Just as there is evidence that creators take ten years from the time they put pen to paper, there may also be evidence that another ten years pass before a truly elite work is produced. How does advanced expertise evolve? Subotnik and Jarvin (2005) interviewed over 80 top music students at different stages of their careers. To go from being competent to expert required strong emphasis on technical proficiency. Going from expert to elite talent brought in new components, such as creativity, charisma, and practical intelligence. Some scholars have argued that having too much knowledge may actually hinder creativity because it can lead to inflexibility (Frensch and Sternberg, 1989; Schooler and Melcher, 1995). In the problem-solving literature, this effect is sometimes called the Einstellung Effect. It occurs when a person does not find a new (and possibly better) solution because a pre-existing solution is already known, thus creating rigidity. Bilalić, McLeod, and Gobet (2008) questioned the Einstellung Effect in their study of chess grandmasters. They found that although some expert chess players were inflexible, they were more likely to be flexible if they had a greater level of expertise. The extent to which Bilalić et al.’s (2008) work can be applied to other domains and to different levels of expertise is still unknown. Knowledge of a topic or category (if not expertise) may decrease originality. Ward (1994) asked students to imagine animal life on other planets, and found that nearly everyone used Earth-based animal characteristics (such as eyes and legs) as a basis for their alien creature. These results held even when students were asked to describe alien animals that were extremely different from Earth beings (Ward and Sifonis, 1997), and similar patterns emerged for a variety of different concepts (such as food or tools). Ward and his colleagues (Ward, 1995; Ward, Dodds, Saunders, and Sifonis, 2000) argued for a path-of-least-resistance model, in which people tend to rely on standard examples of a given domain to generate new ideas in that same domain. It is possible to break out of this least-resistance trap, particularly if you are given instructions that encourage you to think more abstractly about the task (Ward, Patterson, and Sifonis, 2004). The relationship between intelligence and creativity, unlike that between know­ ledge and creativity, does not focus on the direction of the relationship. Most researchers agree that basic levels of intelligence help creativity, even if only a little bit, and vice versa. However, most intelligence theorists relegate creativity to also-ran status. The CHC model, a combination of the Cattell-Horn theory of fluid and crystallized intelligence (Horn and Cattell, 1966; Horn and Noll, 1997) and Carroll’s Three-Stratum Theory (1993), relegates creativity to being one of several factors comprising Glr (long-term storage and retrieval) (J. Kaufman, Kaufman, and Lichtenberger, 2011; McGrew, 2009).

The Creative Mind   41 Luria’s (1966, 1973) neuropsychological model, like the CHC theory often a basis for IQ tests, includes creativity as one of many abilities involved in Planning (Naglieri and Kaufman, 2001). One notable exception is Sternberg’s (1985, 1997, 1999b, Sternberg et al., 2008) theory of successful intelligence, which includes creative abilities as one of three essential components (along with analytical and practical abilities). Sternberg (1997) further argues that over-rewarding students for analytical abilities (or related skills, such as rote memory) can actually result in their creative intelligence being underdeveloped. Within creativity theories, however, intelligence typically plays a key role (Kozbelt, Beghetto, and Runco, 2010). The central debate is with regard to the extent and intensity of the relationship. As Plucker and Renzulli (1999) concluded, it is a matter of uncovering not whether, but how, the two constructs are related. Most studies have found that creativity is significantly associated with psychometric measures of intelligence (especially verbally oriented measures). This relationship is, typically, not a particularly strong one (Barron and Harrington, 1981; Kim, 2005; Wallach and Kogan, 1965), although Silvia (2008a, 2008b) argues that the relationship is underestimated because we are limited by looking at observable scores (i.e. by performance on an intelligence test). Creativity’s correlation with IQ is maintained up to a certain level of performance on a traditional individual intelligence test. Traditional research has argued for a ‘threshold theory’, in which creativity and intelligence are positively correlated up to an IQ of approximately 120; in people with higher IQs, the two constructs show little relationship (e.g. Barron, 1963; Fuchs-Beauchamp, Karnes, and Johnson, 1993; Getzels and Jackson, 1962; Richards, 1976). More recently, however, the threshold theory has come under fire. Runco and Albert (1986) found that the nature of the relationship was dependent on the measures used and on the populations tested. Preckel, Holling, and Wiese (2006) looked at measures of fluid intelligence and creativity (as measured through divergent thinking tests), and found modest correlations across all levels of intellectual abilities. Wai, Lubinski, and Benbow (2005), in a longitudinal study of gifted (top 1%) 13-year-olds, found that differences in SAT scores—even within such an elite group—predicted creative accomplishments 20 years later. Kim (2005), in a meta-analysis of 21 studies, found virtually no support for the threshold theory, with small positive correlations found between measures of ability and measures of creativity and divergent thinking.

Types of individual creative contributions What kinds of creative contributions do creative minds make? A propulsion model suggests that there are eight different types of creative contributions that can be made to a field of endeavour at a given time (Sternberg, 1999a; Sternberg and Kaufman, 2012; Sternberg, Kaufman, and Pretz, 2002). The contributions ‘propel’ a field forward. Although the eight types of contributions may differ in the extent of creative contribution they make, the scale of eight types presented here is intended as closer to a nom­ inal one than to an ordinal one. There is no fixed a priori way of evaluating amount of creativity on the basis of the type of creativity. Certain types of creative contributions

42   James C. Kaufman and Robert J. Sternberg probably tend, on average, to be greater in amounts of novelty than are others. But creativity also involves quality of work, and the type of creativity does not make any predictions regarding quality of work. The types of creativity differ in terms of how they relate to existing paradigms.

Types of creativity that accept current paradigms and attempt to extend them 1. Replication. The contribution is an attempt to show that the field is in the right place. The propulsion keeps the field where it is rather than moving it. This type of creativity is represented by stationary motion, as of a wheel that is moving but staying in place. 2. Redefinition. The contribution is an attempt to redefine where the field is. The current status of the field thus is seen from different points of view. The propulsion leads to circular motion, such that the creative work leads back to where the field is, but as viewed in a different way. 3. Forward Incrementation. The contribution is an attempt to move the field forward in the direction it already is going. The propulsion leads to forward motion. 4. Advance Forward Incrementation. The contribution is an attempt to move the field forward in the direction it is already going, but by moving beyond where others are ready for it to go. The propulsion leads to forward motion that is accelerated beyond the expected rate of forward progression.

Types of creativity that reject current paradigms and attempt to replace them 5. Redirection. The contribution is an attempt to redirect the field from where it is towards a different direction. The propulsion thus leads to motion in a direction that diverges from the way the field is currently moving. 6. Reconstruction/Redirection. The contribution is an attempt to move the field back to where it once was (a reconstruction of the past) so that it may move onward from that point, but in a direction different from the one it took from that point onward. The propulsion thus leads to motion that is backward and then redirective. 7. Reinitiation. The contribution is an attempt to move the field to a different, as yet unreached starting point and then to move from that point. The propulsion is thus from a new starting point in a direction that is different from that the field previously has pursued.

Types of creativity that synthesize current paradigms 8. Synthesis. The contribution is an attempt to integrate different creative contributions.

The Creative Mind   43 The eight types of creativity described above are viewed as qualitatively distinct. However, within each type, there can be quantitative differences. For example, a forward incrementation can represent a fairly small step forward, or a substantial leap. A reinitiation can restart a subfield (e.g. the work of Leon Festinger on cognitive dissonance) or an entire field (e.g. the work of Einstein on relativity theory). Thus, the theory distinguishes contributions both qualitatively and quantitatively.

Conclusion In this chapter, we have considered what creativity is, what it is that makes people creative, and the types of creative contributions that people make. We have reviewed several different theories of creativity and also have examined empirical data pertaining to these theories and some empirical generalizations in the field of creativity. The field of creativity is somewhat more challenging than other fields. First, creativity can only be defined in relative terms: thinking that is novel in one context may be mundane in another. Second, creativity is hard to measure. Whereas there are many widely accepted tests of intelligence, there are no tests of creativity whose results are widely accepted as authoritative indices of creativity. Third, the field, perhaps because of its elusiveness, has never been a particularly popular one. Creativity involves defying the crowd, and so does studying creativity. Nevertheless, the field of creativity has advanced notably since the middle of the twentieth century, when J. P. Guilford (1950) gave his presidential address urging psych­ ologists to study creativity. Contemporary psychologists do not pay as much attention to Guilford’s model as they once did, perhaps, but they have paid attention to his plea to study creativity.

Note 1. Please address all correspondence to James C. Kaufman, Neag School of Education, University of Connecticut, 2131 Hillside Road, Storrs, CT 06269-3007. Electronic mail: [email protected]. The authors would like to thank Raul Salcedo for his assistance in the preparation of this manuscript.

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46   James C. Kaufman and Robert J. Sternberg Kaufman, J. C., Kaufman, S. B., and Lichtenberger, E. O. (2011). Finding creativity on intelligence tests via divergent production. Canadian Journal of School Psychology, 26: 83–106. Kaufman, J. C. and Sternberg, R. J. (2007). Resource review: creativity. Change, 39: 55–58. Kaufman, S. B. and Kaufman, J. C. (2007). Ten years to expertise, many more to greatness: An investigation of modern writers. Journal of Creative Behavior, 41: 114–124. Kemple, K. M., David, G. M., and Wang, Y. (1996). Preschoolers’ creativity, shyness, and self-esteem. Creativity Research Journal, 9: 317–326. Kim, K. (2005). Can only intelligent people be creative? A meta-analysis. Journal of Secondary Gifted Education, 16: 57–66. King, L. A., McKee Walker, L., and Broyles, S. J. (1996). Creativity and the five-factor model. Journal of Research in Personality, 30: 189–203. Kozbelt, A., Beghetto, R. A., and Runco, M. A. (2010). Theories of Creativity. In J. C. Kaufman and R. J. Sternberg (eds.), Cambridge Handbook of Creativity. Cambridge: Cambridge University Press, 20–47. Kyllonen, P. C., Walters, A. M., and Kaufman, J. C. (2005). Noncognitive Constructs and Their Assessment in Graduate Education: A Review. Educational Assessment, 10: 153–184. Langley, P., Simon, H. A., Bradshaw, G. L., and Zytkow, J. M. (1987). Scientific Discovery: Computational Explorations of the Creative Processes. Cambridge, MA: The MIT Press. Lloyd-Evans, R., Batey, M., and Furnham, A. (2006). Bipolar Disorder and Creativity: Investigating a Possible Link. In A. Columbus and A. Columbus (eds.), Advances in Psychology Research, Vol. 40. Hauppauge, NY: Nova Science Publishers, 111–141. Lowe, J. R., Edmundson, M., and Widiger, T. A. (2009). Assessment of dependency, agreeableness, and their relationship. Psychological Assessment, 21: 543–553. Luria, A. R. (1966). Human Brain and Psychological Processes. New York: Harper & Row. Luria, A. R. (1973). The Working Brain: An Introduction to Neuropsychology. London: Penguin. McCrae, R. R. (1987). Creativity, divergent thinking, and openness to experience. Journal of Personality and Social Psychology, 52: 509–516. McCrae, R. R. and Costa, P. R. (1997). Personality trait structure as a human universal. American Psychologist, 52: 509–516. McGrew, K. S. (2009). CHC Theory and the human cognitive abilities project: standing on the shoulders of the giants of psychometric intelligence research. Intelligence, 37: 1–10. Matthews, G. (1986). The interactive effects of extraversion and arousal on performance: Are creativity tests anomalous? Personality and Individual Differences, 7: 751–761. Mednick, S. (1962). The associative basis of the creative process. Psychological Review, 69: 220–232. Mednick, S. (1968). The Remote Associates Test. Journal of Creative Behavior, 2: 213–214. Mohan, J. and Tiwana, M. (1987). Personality and alienation of creative writers: a brief report. Personality and Individual Differences, 8: 449. Mumford, M. D., Lonergan, D. C., and Scott, G. (2002). Evaluating creative ideas: processes, standards, and context. Inquiry: Critical Thinking Across the Disciplines, 22: 21–30. Mumford, M. D., Mobley, M. I., Uhlman, C. E., and Reiter-Palmon, R. (1991). Process analytic models of creative capacities. Creativity Research Journal, 4: 91–122. Naglieri, J. A. and Kaufman, J. C. (2001). Understanding intelligence, giftedness and creativity using PASS theory. Roeper Review, 23: 151–156. Perrine, N. E. and Brodersen, R. (2005). Artistic and scientific creative behavior: openness and the mediating role of interests. Journal of Creative Behavior, 39: 217–236.

The Creative Mind   47 Plucker, J. A. and Beghetto, R. A. (2004). Why Creativity is Domain General, Why it Looks Domain Specific, and Why the Distinction Does Not Matter. In R. J. Sternberg, E. L. Grigorenko, and J. L. Singer (eds.), Creativity: From Potential to Realization. Washington, DC: American Psychological Association, 153–167. Plucker, J. A. and Renzulli, J. S. (1999). Psychometric Approaches to the Study of Human Creativity. In R. J. Sternberg (ed.), Handbook of Creativity. New York: Cambridge University Press, 35–61. Powers, D. E. and Kaufman, J. C. (2004). Do standardized tests penalize deep-thinking, creative, or conscientious students? some personality correlates of Graduate Record Examinations Test Scores. Intelligence, 32: 145–153. Preckel, F., Holling, H., and Wiese, M. (2006). Relationship of intelligence and creativity in gifted and non-gifted students: an investigation of threshold Theory. Personality and Individual Differences, 40: 159–170. Richards, R. L. (1976). A comparison of selected Guilford and Wallach-Kogan Creative Thinking Tests in conjunction with measures of intelligence. Journal of Creative Behavior, 10: 151–164. Richards, R. L. and Kinney, D. K. (1990). Mood swings and creativity. Creativity Research Journal, 3: 202–217. Roy, D. (1996). Personality model of fine artists. Creativity Research Journal, 9: 391–394. Rubinstein, G. (2008). Are schizophrenic patients necessarily creative? A comparative study between three groups of psychiatric inpatients. Personality and Individual Differences, 45: 806–810. Runco, M. (ed.) (1994). Problem Finding, Problem Solving, and Creativity. Westport, CT: Ablex Publishing. Runco, M. and Albert, R. S. (1986). The Threshold Theory Regarding Creativity and Intelligence: An empirical test with gifted and nongifted children. Creative Child & Adult Quarterly, 11: 212–218. Schuldberg, D. (2005). Eysenck Personality Questionnaire Scales and Paper-and-Pencil Tests related to creativity. Psychological Reports, 97: 180–182. Schooler, J. W. and Melcher, J. (1995). The Ineffability of Insight. In S. M. Smith, T. B. Ward, and R. A. Finke (eds.), The Creative Cognition Approach. Cambridge, MA: The MIT Press, 97–133. Shoda, Y., Mischel, W., and Wright, J. C. (1994). Intraindividual stability in the organization and patterning of behavior: incorporating psychological situations into the idiographic analysis of personality. Journal of Personality and Social Psychology, 67: 674–687. Silvia, P. J. (2008a). Creativity and Intelligence Revisited: A Latent Variable Analysis of Wallach and Kogan (1965). Creativity Research Journal, 20: 34–39. Silvia, P. J. (2008b). Another look at creativity and intelligence: exploring higher-order models and probable confounds. Personality and Individual Differences, 44: 1012–1021. Silvia, P. J., Kaufman, J. C., Reiter-Palmon, R., and Wigert, B. (2011). Cantankerous creativity:  honesty-humility, agreeableness, and the HEXACO structure of creative achievement. Manuscript submitted for publication. Silvia, P. J. and Kimbrel, N. A. (2010). A dimensional analysis of creativity and mental illness: do anxiety and depression symptoms predict creative cognition, creative accomplishments, and creative self-concepts? Psychology of Aesthetics, Creativity, and the Arts, 4: 2–10. Simonton, D. (2001). Talent development as a multidimensional, multiplicative, and dynamic process. Current Directions in Psychological Science, 10: 39–43.

48   James C. Kaufman and Robert J. Sternberg Smith, R. E., Shoda, Y., Cumming, S. P., and Smoll, F. L. (2009). Behavioral signatures at the ballpark: Intraindividual consistency of adults’ situation-behavior patterns and their interpersonal consequences. Journal of Research in Personality, 43(2): 187–195. Soldz, S. and Vaillant, G. E. (1999). The big five personality traits and the life course: A 45-year longitudinal study. Journal of Research in Personality, 33: 208–232. Sternberg, R. J. (1985). Beyond IQ: A Triarchic Theory of Human Intelligence. New York: Cambridge University Press. Sternberg, R. J. (1997). Successful Intelligence. New York: Plume. Sternberg, R. J. (1999a). A propulsion model of types of creative contributions. Review of General Psychology, 3: 83–100. Sternberg, R. J. (1999b). The theory of successful intelligence. Review of General Psychology, 3: 292–316. Sternberg, R. J., Kaufman, J. C., and Grigorenko, E. L. (2008). Applied Intelligence. New York: Cambridge University Press. Sternberg, R. J. and Kaufman, J. C. (2012). When your race is almost run, but you feel you’re not yet done: Application of the Propulsion Theory of Creative Contributions to late-career challenges. Journal of Creative Behavior, 46: 66–76. Sternberg, R. J., Kaufman, J. C., and Pretz, J. E. (2002). The Creativity Conundrum: A Propulsion Model of Kinds of Creative Contributions. New York: Psychology Press. Sternberg, R. J. and Lubart, T. I. (1995a). Defying the Crowd: Cultivating Creativity in a Culture of Conformity. New York: Free Press. Sternberg, R. J. and Lubart, T. I. (1995b). An Investment Perspective on Creative Insight. In R. J. Sternberg and J. E. Davidson (eds.), The Nature of Insight. Cambridge, MA: The MIT Press, 535–558. Subotnik, R. F. (2000). The Juilliard Model for Developing Young Adolescent Performers: An Educational Prototype. In C. M. van Lieshout, P. G. Heymans, C. M. van Lieshout, and P. G. Heymans (eds.), Developing Talent Across the Life Span. New York: Psychology Press, 249–276. Subotnik, R. F. (2004). Transforming Elite Musicians into Professional Artists: A View of the Talent Development Process at the Juilliard School. In L. V. Shavinina and M. Ferrari (eds.), Beyond Knowledge: Extracognitive Aspects of Developing High Ability. Mahwah, NJ: Lawrence Erlbaum Associates Publishers, 137–166. Subotnik, R. F. and Jarvin, L. (2005). Beyond Expertise: Conceptions of Giftedness as Great Performance. In R. J. Sternberg, J. E. Davidson, R. J. Sternberg, J. E. Davidson (eds.), Conceptions of Giftedness (2nd ed.). New York: Cambridge University Press, 343–357. Turner, S. R. (1994). The Creative Process: A Computer Model of Storytelling and Creativity. Hillsdale, NJ: Lawrence Erlbaum Associates, Inc. Wai, J., Lubinski, D., and Benbow, C. P. (2005). Creativity and Occupational Accomplishments Among Intellectually Precocious Youths: An Age 13 to Age 33 Longitudinal Study. Journal of Educational Psychology, 97: 484–492. Walker, A., Koestner, R., and Hum, A. (1995). Personality correlates of depressive style in autobiographies of creative achievers. Journal of Creative Behavior, 29: 75–94. Wallach, M. A. and Kogan, N. N. (1965). A proof to distinguish between creativity and intelligence. Megamot, 13: 289–294. Wallas, G. (1926). The Art of Thought. New York: Harcourt, Brace, & World. Ward, T. B. (1994). Structured imagination: the role of conceptual structure in exemplar gener­ ation. Cognitive Psychology, 27: 1–40.

The Creative Mind   49 Ward, T. B. (1995). What’s Old About New Ideas? In S. M. Smith, T. B. Ward, and R. A. Finke (eds.), The Creative Cognition Approach. Cambridge, MA: MIT Press, 157–178. Ward, T. B., Dodds, R. A., Saunders, K. N., and Sifonis, C. M. (2000). Attribute centrality and imaginative thought. Memory & Cognition, 28: 1387–1397. Ward, T. B., Patterson, M. J., and Sifonis, C. M. (2004). The role of specificity and abstraction in creative idea generation. Creativity Research Journal, 16: 1–9. Ward, T. B. and Sifonis, C. M. (1997). Task demands and generative thinking: what changes and what remains the same? Journal of Creative Behavior, 31: 245–259. Woldfradt, U. and Pretz, J. E. (2001). Individual differences in creativity: personality, story writing, and hobbies. European Journal of Personality, 15: 297–310.

Chapter 3

Creativit y i n T e a ms Processes and Outcomes in Creative Industries Lucy L. Gilson

Introduction Organizations around the world, large and small, and across all types of industries are increasingly becoming team based (Cohen and Bailey, 1997; Ilgen, 1999; Mathieu, Maynard, Rapp, and Gilson, 2008; McGrath, 1997). It is generally believed that teams or groups of individuals working together will be better able to generate novel ideas quickly, appropriately adapt to changing customer and market conditions, and generate multidisciplinary ideas or solutions (Uhl-Bien and Graen, 1998) to solve complex problems (Tesluk, Farr, and Klein, 1997; Tagger, 2002). Further, working in a team has been argued to be advantageous over working individually on creative tasks (Paulus, Larey, and Ortega, 1995). Research here suggests that teams have access to multiple different contacts and outside resources, as well as member past experiences and different perspectives, that all serve to increase their ability to draw upon diverse information that helps in defining and solving problems, as well as making decisions and reaching creative solutions (Hargadon, 2002; Perry-Smith, 2006). Consequently, over the last 20 years a great deal of work has explored different team configurations, processes, and emergent states as well as outcomes (Mathieu and Gilson, 2012). However, much less is known about team creativity (George, 2007), and even less about team creativity in ‘natural settings’ (Kurtzberg and Amabile, 2001, p. 292; for reviews see Gilson, Lim, Litchfield, and Gilson, 2015; Reiter-Palmon, Wigert, and Vreede, 2012). As described by George (2007), ‘creativity is . . . recognized as a critical means by which organizations and their members can create meaningful, lasting value for their multiple stakeholders in today’s dynamically changing environment’ (p. 439). The value of team creativity is realized when creative ideas or processes are converted into new procedures or products that benefit or are valued by individuals, groups, organizations, or the wider

Creativity in Teams   51 society (West and Farr, 1990; Yuan and Woodman, 2010). When teams exhibit creativity at work, they develop novel and potentially useful ideas and suggestions which they make available for further development and possible implementation—innovation (Amabile, 1996). Teams that develop creative ideas and the organizations that subsequently implement them should be better positioned to adjust to shifting market conditions, respond to opportunities, and ultimately adapt, grow, and compete. A great deal of historical and current creativity research has been built upon the premise that creative work is dependent upon an individual (for more detail see ‘The Creative Mind’ by Kaufman and Sternberg). Consequently, an extensive body of work has sought to identify traits or attributes that make some individuals ‘gifted’ with regard to creativity (Sternberg, 1999). For example, the label of creative genius has been applied to the artist who comes up with a new style of painting, the composer who writes a new score, or the game designer who develops a new interface allowing players to enter a new world. Because of the value placed on the individual, researchers have tried to better understand how ‘creatives’ differ from others with regard to a number of characteristics such as personality (Gough, 1979) and cognitive style (Jabri, 1991; Kirton, 1976, 1991). Here, conflicting and often inconclusive findings have resulted in the addition of context (Woodman, Sawyer, and Griffin, 1993), social networks (Ferrani, Cattani, and Colucci; Perry-Smith and Shalley, 2003), communities (Rullani, de Maria, and Finotto), and even the labour market (Menger) into the creativity equation. Similarly, work by Csikszentmihalyi (1999) has argued that creativity is not ‘the product of single individuals, but social systems making judgments about individuals’ products’ (p. 314). These perspectives along with work by Becker (1982) on temporary organizations in the production of movies, DeFillippi et al. (2007) on creativity in the cultural economy, and Simonton (2004) on creative clusters in the feature film industry all suggest that creativity is not purely an individualist construct. Indeed, this body of work suggests that creativity can be collective in nature and may well require the diverse contributions of a number of individuals working together as a team. In this chapter I will discuss team creativity and how characteristics of the group can serve to either enhance or constrain engagement in creative processes, the development of creative outcomes, and ultimately implementation or innovation. Specifically, I will review work that has considered how the team environment (Edmondson, 1999), relationships with supervisors and coworkers (Oldham and Cummings, 1996; Tierney and Farmer, 2002), and the work context (Scott and Bruce, 1994; Shalley, Gilson, and Blum, 2009; Zhou and George, 2001) all affect creativity. However, while the majority of this work has not been conducted in the creative industries, the applications are for the most part clear and analogies and examples will be offered throughout. Before moving forward, it is important to note that yes, there are probably some individuals who are more creative than others (Kaufman and Sternberg), and many of them work in the creative industries. Therefore, even in the most creative of contexts—the creative industries—‘creatives’ must work with others and frequently as a part of a team. And while there may be some sectors within the creative industries where individual work

52  Lucy L. Gilson is the norm (i.e., painter, composer), when we think of film, spectator sports, software, biotech, advertising, and even haute couture or cuisine to name but a few, much of the work is conducted by teams. There are a range of industries that are labelled as creative, and the work conducted in them varies greatly with regard to the creativity of the products developed and the processes employed. In addition, creative industries is a broad term that refers to a number of different industries that are not homogeneous with regard to their size, structure, skill levels of employees, task interdependence, complexity, or the nature or type of work produced. This chapter will work off the premise that in all of these industries or organizations there are teams or groups of individuals employed in at least one stage of the creative process (Amabile, 1988). According to Amabile’s componential theory of creativity, as well as work by Reiter-Palmon and colleagues (2008), creative work can be delineated into idea generation and problem solving. At each of these stages, teams are frequently used to tap into employee demographic diversity (Baer, Oldham, Jacobsohn, and Hollingshead, 2008), cognitive styles and personality (Tagger, 2002), divergent network ties (Perry-Smith and Shalley, 2003), as well as functional heterogeneity (Woodman et al., 1993). To better understand the role and importance of teams in the creative industries this chapter is structured as follows; first, team creativity and the creativity continuum will be defined. Following this, the differences between team creativity and innovation will be discussed. This is an important distinction because the two constructs are often used interchangeably, but have different relationships with many team inputs and processes. Next, the distinction between team creative processes and outcomes will be reviewed and finally, the remainder of the chapter will examine the stages in the creative process and integrate research findings from both the team and creativity literatures. Throughout this chapter, implications for practice and future research directions will be addressed.

Team Creativity Creativity is defined as the generation of products, processes, and services that are both novel and useful (Amabile, 1988). To be considered creative, ideas need to be new and unique relative to others, and to what is currently available within the team or organ­ ization. In addition, creative ideas have to be of value or in some way useful to the team or organization. This focus on the mix of novelty and usefulness ensures that the definition of creativity is never static, but rather bounded within a social, cultural, or historical precedent (Perry-Smith and Shalley, 2003). In the creative industries, where originality or the generation of something new is usually considered the currency of the realm (Boden, 1990; Florida, 2002; Sternberg, 1999), there is continued pressure to look for ways to combine what already exists into something different or unique

Creativity in Teams   53 (Hargadon and Bechky, 2006), to experiment with new, different, and existing ideas, as well as to completely break from the known and venture into uncharted territories. Team creativity has been described as a collective phenomenon where members behaviorally, cognitively, and emotionally attempt new things, take novel approaches to their work, or generate products, processes, or procedures that are both novel and useful (Gilson and Shalley, 2004). Team creativity can originate with the idea or suggestion of a single individual that is then developed, worked on, and elaborated upon by the team. In many teams or organizations there is a lead creator (i.e., a painter, composer, auteur, film director) whose ideas are the seed for the projects that the team will subsequently develop. For example, many Apple products were based upon ideas generated by individuals such as Stephen Wozniak, Burrell Smith, or Jony Ive, but these ideas were further developed and worked upon by teams of individuals (Isaacson, 2011). Conversely, creativity can also emerge from the collective. Here an idea emanates from the unit (i.e., string quartets, jazz trios) and the unit as a team or as a collective works to refine and develop its idea(s). Ideas also can be developed by subgroups, and then moved to the larger group who will further develop the idea and take the process forward. Here the work done at Pixar can be considered as an exemplar in that small groups of individuals are encouraged to generate and refine ideas as well as give feedback and communicate with others inside and outside of the team (Catmull, 2008). Furthermore, the nature of the contract (Caves, 2000) or the role of the lead creator (Morley and Silver, 1977) also influences team creativity. For example, in string quartets the role of the second violinist can be critical to how creative ideas are brought forward and selected, how conflict is handled, paradoxes addressed, and the ultimate success of the quartet (Murnigham and Conlon, 1991) What the above suggests is that team creativity is a messy construct and there is no single definition that can be applied across scenarios. However, this messiness is also interesting from a research perspective as many questions arise; for instance, with regard to the outcome, does it make a difference if an idea is generated by an individual or a collective? What about working to refine the idea, seeking suggestions and feedback, are these processes better undertaken by individuals or groups? Meaning that, will individuals alone seek out more possible solutions or will they do better as a team? The brainstorming literature finds that individuals generate more ideas and better quality ideas, but are more satisfied with the process when it takes place in a group (Mullen, Johnson, and Salas, 1991; Paulus and Brown, 2003). Does this hold true for other stages in the team creative process? This somewhat ‘fuzzy’ definition has probably contributed to team creativity being an under-researched area however, given the prevalence of teams in organizations, the increased means through which teams can now meet, communicate, and work, and the importance of creativity; team creativity if anything is a concept that researchers and practitioners need to better understand and embrace. To answer some of the questions posed above, the notion of what type of creativity is desired needs to first be considered. In the section below the creativity continuum will be discussed in more detail.

54  Lucy L. Gilson

The Creativity Continuum While it has been established that some form of creativity is required in most jobs (Shalley, Gilson, and Blum, 2000), what is considered creative can range from minor (incremental) adaptations or changes in how work is performed to radical breakthroughs and the introduction of completely new processes or products (Gilson and Madjar, 2011; Mumford and Gustafson, 1988). For example, the work of the artist Norman Rockwell is often considered more ‘incremental’ with regard to creativity in that he worked predominantly in the same medium and his work followed and extended upon many similar themes (i.e., different aspects of American life). In contrast, Pablo Picasso’s body of work is considered more ‘radical’ with regard to creativity in that it ranged from the large black and white mural war scene Guernica, to portraits (i.e., Igor Stavisky or Gertrud Stein), and large sculptures. Work by Sternberg has argued that the ‘essence of creativity cannot be captured in a single variable’ (Sternberg, 1999, p. 84) and Unsworth (2001) further proposed that different work processes and antecedents may promote or hinder more radical ideas while others may substantially influence only incremental improvements and adaptations. However, what is considered incremental versus radical creativity can vary greatly based upon the organization or industry in question. Another delineation of the creativity continuum suggests that what is deemed to be creative can range from small-c creativity (Simonton, 2000) that focuses on solving problems as they relate to ‘everyday’ activities such as rearranging how utensils are organized in a kitchen or looking for novel ways to handle a scheduling problem (Craft, 2001) to big-C creativity focusing on the production of solutions or the development of products that will impact the society or culture at large. Big-C creativity is also more closely aligned with eminent creativity and the notion of greatness through high levels of creative thought (Simonton, 1994). At the more macro or organizational level, this distinction has been conceptualized along an exploit–explore continuum. Here it has been positioned that when a firm’s strategy is focused on incremental change, process management, efficiency, and meeting current customer needs, exploitation will ensue. Conversely, an exploration strategy is one that focuses on new opportunities that depart from existing skills and customers, and is directed toward more fundamental change (Benner and Tushman, 2003). However, it is important to note that both incremental and radical creativity, little- and big-c, as well as exploration and exploitation can all be key drivers of performance, and can be equally important to organizational success (Benner and Tushman, 2003; Gilson, 2008; Uotila, Maula, Keil, and Zahra, 2009). One of the interesting aspects of the conversation above is that the terms radical and incremental along with explore and exploit can be used interchangeably to describe aspects of both creativity and innovation. What this suggests is that while creativity and innovation may be distinct, there are many similarities. Therefore, it is particularly baffling that these two fairly well established theoretical and empirical bodies of work have

Creativity in Teams   55 developed separately of one another and limited work has sought to either conceptually or empirically link them together (see Somech and Drach-Zahavy, 2013 for an exception). Before delving further into the construct of team creativity, it is important, from a team perspective, to first differentiate creativity from innovation.

Team Creativity and Innovation Although it has been argued that creativity and innovation are distinct (Mumford and Gustafson, 1988; Sawyer, 2006), the terms are frequently used interchangeably (e.g., Eisenbeiss, van Knippenberg, and Boerner, 2008). The most commonly used definition of creativity (Amabile 1988) actually states that ‘creativity is the most crucial element of organizational innovation, but it is not, by itself, sufficient’ (p. 125). In other words, innovation extends beyond creativity to consider ‘intentional introduction and application’ (West and Farr, 1990, p. 9). In most definitions of innovation, creativity is either subsumed into the construct, positioned as the first stage, or as a sub-process (Anderson, De Dreu, and Nijstad, 2004; Hulsheger, Anderson, and Salgado, 2009; West and Farr, 1990). Work by Axtell and colleagues (2000), while labelling their construct innovation, delineates it into two distinct phases, ‘ “awareness” of the innovation, or suggestion, phase; and the second is an implementation phase’ (p. 266). For teams, particularly those working in the creative industries, differentiating between creativity and innovation is particularly salient as some of the inputs and process that either stifle or facilitate the preparation for, and generation of novel and useful ideas or suggestions may not be the same as those that help or hinder their implementation. In effect, when the focus is on creativity too much of an emphasis on implementation might stifle novelty. For example, when the goal is creativity, it may be desirable to compose teams of individuals who are best able to generate lots of ideas (Campbell, 1960), play with ideas (Csikszentmihalyi, 1997), free-wheel (Osborn, 1957), and take risks. In contrast, when a team is focused on implementation or innovation, team members may need to have an ‘efficiency oriented perspective’ (Yuan and Woodman, 2010, p. 324), be more inclined toward rational decision-making and able to gauge appropriateness and practicality relative to novelty so as to minimize foolishness (Litchfield, 2008) and costly investments in projects that will not yield the desired results with regard to profitability, practicality, and perceived need for change (Damanpour, 1991; Van de Ven, Angle, and Poole, 1989). Work by Nemiro (2002) found that the already fine line between creativity and innovation is further blurred when teams work virtually. These findings suggest that because communication is often more task focused in technology mediated teams, idea generation can become interwoven with development, evaluation, refinement, and implementation. Therefore, while it was originally thought that working virtually should aid team creativity because members would have less evaluation apprehension, the focus on implementation may actually hinder the earlier stages of the creative process and working virtually may be better for innovation.

56  Lucy L. Gilson A good example of how the drivers of creativity and innovation are different at the team level can be illustrated by looking at their relationships with psychological safety. Psychological safety has been described as an emergent state (Marks, Mathieu, and Zacarro, 2001) whereby members perceive their team as interpersonally non-threatening and one where they are comfortable taking risks, openly exchanging information, and trying new things (Edmondson, 1999). It has been proposed that with high levels of psychological safety there is tolerance and encouragement for trying new approaches to work—engagement in creative processes (Edmondson, 1999; West, 1990). Team level research has found that psychological safety is positively associated with team creativity (Gilson and Shalley, 2004) and innovative behaviours (Scott and Bruce, 1994), but it is not related to innovation (Axtell et al., 2000; Hulsheger et al., 2009). A possible explanation for these findings may be that engaging in creative behaviours involves a conscious choice regarding whether or not to share or withhold ideas that might be perceived by others as controversial or contentious. Further, because creatives are often labelled as ‘deviant’ (Moscovici, 1976) team members may refrain from expressing creative ideas in an environment that is not perceived to be safe for fear of retribution or negative attributions (Diehl and Stroebe, 1987). However, when team members are more comfortable with one another, they should be willing to discuss unconventional ideas or approaches to work and throw out suggestions that might be unrealistic or ‘crazy’ just to get the conversation started or to move out of deadlock. On the other hand, by the time it comes to innovation, the implementation and adoption stage, many ideas will have already been dropped, retooled, and in effect vetted and screened for appropriateness and therefore the value of an environment that is psychologically safe and where risks can be taken may be less consequential. In fact, having team members bring up completely new or radically different suggestions at this stage in the process might actually be counter intuitive and set the implementation schedule back. This is NOT to say that team members should not feel free to make suggestions and stop a process or product that is flawed, but rather the time to play with ideas, challenge the status quo, and discuss ‘ideas’ that might be unrealistic has now passed. For teams working in the creative industries, the above findings should be particularly salient. Creative individuals and artists are often labelled as eccentric, sensitive, self-confident, introverted, and intuitive (Gough, 1979; Guilford, 1959; MacKinnon, 1962, 1975), characteristics that are not normally associated with ‘good’ team members. Work by Baer and colleagues (Baer, Oldham, Jacobsohn, and Hollingshead, 2008) has started to examine the personality composition necessary for group creativity along with the moderating effects of team creative confidence. Firms in the creative industries need to continually balance their need to tap into the creative potential of both individuals and the team as a unit and therefore it becomes critically important that the environment be one where opinions and divergent thinking are encouraged (i.e., Pixar) and self-confidence and at times aggression is regarded as passion rather than deviance. However, while it behoves management to ensure a psychologically safe environment for creativity (i.e., idea generation and problem selection) it may be less necessary for

Creativity in Teams   57 teams who are tasked with working on the implementation of a project—innovation. In fact, for implementation teams may want to keep the more ‘creative’ individuals away because their continual input may hinder rather than help the process. Similarly, the team composition most desirable for creativity may not be the same as that which is best suited for implementation. For instance, Baer and colleagues (2008) found that team demographic diversity was negatively related to creativity on an initial task, but not later in the task. Could this be because at the later stages the task takes on an implementation rather than creativity focus? This line of thinking is in keeping with the work by Lewis (Lewis, 2000; Lewis, Welsh, Dehler, and Green, 2002) that has examined a number of paradoxes or trade-offs between conflicting demands and opposing perspectives. In string quartets for instance, inherent conflict exists between following the leadership of the first violinist, usually the best known of the group, and making decisions in a democratic manner where influence is shared since, in theory, all musicians are equal members (Murnigham and Conlon, 1991). Many of these trade-offs appear to hinge on the creativity-innovation distinction in that they involve the inherent contradictions that exist between newness and efficiency. These tensions surround the external and internal forces competing for time, resources, people, and budgets which Caves (2000) refers to as the art-commerce distinction. Taken together, the discussion above suggests that there are contradictions between what facilitates creativity versus what facilitates innovation. Future research should, in more detail, continue to examine the paradoxical pull between creativity and innovation and how at the team level these distinct but related constructs can best work together. In addition, linking the previous sections into the discussion would also be advantageous, for instance, is there less distinction between creativity and innovation when ideas are more incremental? What happens when an idea generated by an individual rather than a group is moved to the implantation phase? Is it easier for a team or an individual to handle the conflict between art and commerce? Finally, while I stated previously that there has been limited research conducted on creativity at the team level, it is worth noting that there is a substantial body of work linking team composition, processes, and other factors such as TMT membership to innovation (Somech and Drach-Zahavy, 2013). While somewhat outside of the scope of this chapter, there are some notable results worth mentioning. First, it has been found that team processes involving cooperative goals and reflexivity have a positive impact on team innovation (Tjosvold, Tang, and West, 2004). Similarly, in a study of hospital patient care, Edmondson (1996) found significant differences in innovation between teams whose members openly discussed their errors and identified new ways to avoid them versus those where members kept this information to themselves. Furthermore, research into team innovation has consistently found that team composition and size (Jackson, 1996; West and Anderson, 1996), certain processes (West and Anderson, 1996), and facets of climate (Scott and Bruce, 1994) all can have an effect on innovation. In a study of hospital TMTs, West and Anderson (1996) found that larger groups instituted more radical innovations, but group size did not affect overall levels of innovation. In addition, whereas participation predicted the number of innovations introduced, task orientation was related to the quality of innovations.

58  Lucy L. Gilson Moving forward, research is needed to better understand how the above findings related to both creativity and innovation. Examining the predictors of team creativity and innovation is an important area in need of further careful consideration. While it appears that trade-offs and paradoxes are apparent in all industries, research also needs to consider whether they differ along the creativity in products versus creativity in processes dimensions. Thus far the discussion has centred on the creativity continuum and the distinction between creativity and innovation. The remainder of this chapter will delineate team creative outcomes from team creative processes then move on to explore the various stages within the creative process and, more specifically, how teams in the creative industries can best work together to enhance rather than hinder the development of creativity at each step of the way.

Creativity as an Outcome Creativity can be conceptualized as both a processes and an outcome. Interestingly however, regardless of whether creativity is studied at the individual or group level, conceptualized as a process or an outcome, it has predominantly been considered as the dependent variable (Gilson, 2008). Meaning that we have a fairly good understanding of what predicts creativity (more so at the individual than team level), yet know very little about the effects of engaging in creative processes or how creative outcomes are related to other outcomes of interest (e.g. performance, effectiveness, satisfaction). It has been noted by both George (2007) and Gilson (2008) that this is particularly perplexing since it is almost universally assumed that creativity will result in improved performance and in particular innovation. Interestingly, however, there is a body of work alluding to the dark side of creativity. Here it has been found that individuals who are more creative have a greater tendency to cheat and justify their dishonest behaviours (Gino and Ariely, 2011). Similarly, engaging in creative behaviours has been theorized to increase group tension and conflict, reduce satisfaction, and result in ineffectiveness, which can be detrimental for both innovation and performance (Janssen, Van de Vlirt, and West, 2004). As an outcome, creativity is often considered to be the number of ideas generated (Goncalo and Staw, 2006), the breadth of ideas generated, or the creative rating of a single idea or a sample of ideas (see review by Shalley, Zhou, and Oldham, 2004). A key determinant of creativity as an outcome is that someone evaluates or judges something to be creative based on expertise or a favourable structural position in a network (Burt, 2004; Perry-Smith and Shalley, 2003). The majority of the creativity literature at the individual level has framed creativity as an outcome and something that is best rated by subject matter experts (Amabile, 1996), supervisors, or through objective measures such as research reports (e.g., Tierney, Farmer, and Graen, 1999). However, it also has been argued that self-reports are as, if not more accurate because creative outcomes are risky, break with norms, go against the status quo, and

Creativity in Teams   59 as such may not always be made visible to supervisors and coworkers (Janssen, 2000; Shalley, Gilson, and Blum, 2009). Somewhat surprisingly, Axtell and colleagues (2000) found that supervisor and self-reports correlated quite highly with one another and several studies have found self-reported creativity to be associated with ‘real-life’ measures (e.g., Furnham, 1999; Furnham, Batey, Anand, and Manfield, 2008; Furnham, Zhang, and Chamorro-Premuzic, 2006; Park, Lee, and Hahn, 2002). Additionally, Silvia, Wigert, Reiter-Palmon, and Kaufman (2011) recently assessed the validity of self-reported creativity and suggested that this type of reporting is actually much better than researchers have previously believed. In a study designed to examine individualistic versus collective values and team creativity as an outcome, Goncalo and Staw (2006) measured the number of ideas generated (fluency), whether the ideas were qualitatively different from one another (flexibility—Guilford, 1956; Larey and Paulus, 1999), overall creativity of ideas generated, and creativity of the idea selected by the team as either the most creative or practical (depending on the manipulation). Their results consistently demonstrate that teams with individualistic rather than collectivist values, and who were instructed to be creative, generated more creative ideas, more unique ideas, a greater range of ideas (flexibility), and of the ideas they generated, were better able to choose a single most creative idea. Similarly, research has found that teams who have a pro-self versus a pro-social orientation generate more original ideas when working on creative tasks (Beersma and De Dreu, 2005). The rationale here is that pro-self individuals compare their outcomes to those of others in their group and are motivated to come up with more ideas regardless of the consequences this might have on others. For teams in the creative industries, these findings send a clear signal that contrary to the often exposed ideal that cooperation is what is really needed for team success, being individualistic can actually, under certain conditions, be beneficial for creativity. However, the caveat here is that in these studies, creativity (or practicality) was specifically requested of the teams, suggesting that teams might need to be primed as to their specific goals. At the individual level it has long been found that individuals who are assigned a creativity goal are less constrained by other pressures and deadlines and are better able to focus their attention on the given task (Shalley, 1991, 1995). For teams it also appears that a goal to be creative is beneficial, however an interesting question for team creativity researches is who should set the team goal. Specifically, is it better for the team as a unit to determine their own creativity goal(s) or is the effect of the goal stronger (or weaker) when it is externally set? Within the creative industries, there is almost always a creativity goal, but does team involvement differ with regard to the outcome when the desired creativity is incremental vs. radical? A popular way of using goals to foster creative outcomes in many organizations is to have the individuals and teams tasked with being creative work outside of the focal organization at ‘skunk works’ (Christensen, 1997). Research centres or incubators can be treated as semi-autonomous units with their own budgets, staff, employees,

60  Lucy L. Gilson and goals. In these instances, what is fundamentally different are the goals driving the work processes used as well as outcomes produced. For instance, at a headquarters the goal is usually one that relates to profitability or shareholder return and thus might be more closely tied to innovation and the implementation of new products or services that help meet organizational goals with regard to the financial performance, customer satisfaction, and efficient delivery. With regard to the creativity continuum discussed earlier, headquarters are more likely to have a strategy that is focused on exploitation and incremental creativity that will help meet the organizationally espoused goals. In contrast, at the satellite, incubator, or skunk works the goals are usually more closely tied to radical creativity and exploration—playing with ideas is encouraged, taking risks, trying things that may or may not work. A goal is to have employees who feel free to engage in creative processes (to be discussed in more detail below) because they are not driven by budgets, production schedules, or the bottom line. In the creative industries, these distinctions also happen all the time. For example, fashion houses are continually looking to develop and test new looks and styles (i.e., radically creative outcome) for the catwalk through their haute couture lines while at the same time maintaining a ready-to-wear line (i.e., incrementally creative outcome) that has more ‘mass appeal’ and can be sold on the high street to make a profit which in turn funds the more cutting edge creations (Chevalier and Mazzalovo, 2008). The tension and paradoxes discussed earlier exist here too as designers seek to create outfits that will make headlines rather than fill cash registers. Teamwork here is paramount and it has been argued whether Georgio Armani and Yves Saint Laurent would not have been a success had Sergio Galcotti and Pierre Berge not joined their respective teams (Chevalier and Mazzalovo, 2008). Research and development labs in the high tech and videogame industries are frequently housed at sites that are physically distant from head offices for fear that once word starts to leak out regarding new product developments, plot twists, or characters being worked upon, the current lines will no longer sell as buyers will hold out for the new. Similarly, startup industries can often be found in places like Silicon Valley (USA) or Brighton (UK) where creatives work together in clusters to develop new products and processes. Here, the hope is often that a product or the company as a whole will be assimilated or acquired by an established firm. However, many entrepreneurs and innovators quickly find that when the focus is on creativity the goals are distinctly different from those that emerge once a product or company is assimilated. In fact, many creators find themselves having to focus on different goals and thus frequently leave and reconstitute a team of others who will once again seek to develop the next new thing. In other words, engage in creative processes to produce a creative outcome. When considering creativity as an outcome it is frequently argued that composition is an important antecedent (Egan, 2005; Jackson, 1996). Team diversity reviews suggest, however, that it may be a ‘double-edged sword’—‘diversity is more likely to have a

Creativity in Teams   61 negative than a positive effect on group performance. Simply having more diversity in a group is no guarantee that the group will make better decisions or function effectively . . . diversity is a mixed blessing and requires careful and sustained attention to be a positive force’ (Williams and O’Reilly, 1998, p. 120). When it comes to generating creative outcomes, diverse groups often do not perform as well as expected, in part, because members tend to focus on their common knowledge (Stasser, 1999) and frequently encounter information sharing problems (Ancona and Caldwell, 1992). In addition, divergent thinking and diverse perspectives rather than stimulating creativity can result in both task and affective conflict which in turn hinder a team’s ability to make good decisions (Jehn, 1995). Conflict, whether real or suggested, can result in narrow and rigid thinking (Carnevale and Probst, 1998). Previous research has shown that relationship conflict reduces group member satisfaction and liking (Jehn, 1995) and has a negative influence on perceptions of team creative synergy (Kurtzberg and Mueller, 2005). Relationship conflict also has been found to increase tension and feelings of dissatisfaction among team members that can result in less information sharing as well as more critical evaluation of others’ ideas (Jehn, 1995) thereby reducing cognitive flexibility and ultimately stifling creative outcomes (De Dreu and Weingart, 2003).

Team Creativity as a Process As a process, team creativity involves the sharing of ideas that stimulate associations and results in identifying problems, constructively dialoguing possible solutions to problems, and engaging in the act of trying novel approaches to a task (De Dreu and West, 2001; Gilson and Shalley, 2004; Taggar, 2002; Torrance, 1988). With regard to creative processes, it can be argued that based on information and decision making theories, working in teams should be beneficial due to the diversity of perspectives and backgrounds. For instance, diversity should be beneficial because individuals are exposed to more approaches to problem solving along with a range of different ideas (Hoffman and Maier, 1961; Jackson, May, and Whitney, 1995; Nemeth, 1986; West and Anderson, 1996). Working in diverse teams should stimulate the consideration of non-obvious alternatives (Cox, Lobel, and McLead, 1991; McLeod and Lobel, 1992). Work by Jackson (1996) suggests that for creative decision making, teams need to be diverse on both demographic and work related characteristics. The argument here is that diversity will stimulate divergent thinking that is critical for creative processes in that it allows team members to approach idea generation and solutions searches from multiple different perspectives (Mumford and Gustafson, 1988). All this being said, diversity also can be detrimental to creative processes when team members are not willing to attend to the ideas, suggestions, and perspectives of those who are different from themselves (Byrne, 1971;Tajfel and Turner, 1986) and consequently, consideration is only given to the views

62  Lucy L. Gilson of similar others or those that might lead to consensus (Janis, 1982). Hence the need for psychological safety discussed earlier or group norms that encourage speaking out, voicing divergent opinions, and engaging in the creative process. What this discussion seems to suggest is that it is not diversity per se that drives creative processes, but rather the ability of team members to communicate with one another, share information, handle conflict, and collectively work together. Not surprisingly, however, in this area of inquiry the results have been mixed; for instance, Hoffman and colleagues found that diverse groups (with regard to member sex) had higher levels of creative problem solving that was attributed to increased conflict over ideas which in turn stimulated groups to search for different answers (Hoffman, 1959; Hoffman, Harburg, and Maier, 1962; Hoffman and Maier, 1961). However, in a study on heterogeneity of attitudes and abilities, Triandis, Hall, and Ewen (1965) found diversity resulted in lower levels of interpersonal attraction and decreased creativity. The inability to integrate divergent information has been labelled ‘representational gaps’ by Cronin and Weingart (2007). Here it is argued that while diverse teams may have the necessary raw materials to be creative, members are sometimes unable to communicate and integrate divergent information that eventually limits their creativity. However, in a study of MBA students in a multidisciplinary product development course it was found that representational gaps actually increased team creativity because the gaps stimulated debate and critical thinking rather than miscommunication and frustration (Weingart, Todorova, and Cronin, 2010). Taking a more fine-grained approach, creative processes can be conceptualized as idea generation and problem solving (Amabile, 1996; Reiter-Palmon et al., 2008). At the individual level it has been argued that different cognitive processes are needed for the various stages. From a team perspective it also makes sense that the inputs, processes, and emergent states necessary for idea generation may differ from those that will best facilitate problem solving and idea selection.

Idea generation Teams are frequently used for idea generation and in fact, most of the work on team creativity is based on an extensive body of brainstorming research (Osborne, 1957; see Paulus, 2008 for a review). Almost counter intuitively, this research has found that groups are best able to engage in idea generation when they are tightly constrained and member interaction is limited (Jackson and Poole, 2003; Paulus and Yang, 2000). The brainstorming literature has consistently found that in order for groups to produce a greater quantity of creative ideas on a broad range of topics (flexibility), it is necessary for team members to work both dependently and independently (Paulus and Yang, 2000). These findings make good sense when teams are working in an experimental setting and the goal is to generate either lots of ideas or a broad range of ideas, but in organizational settings, and in particular in the creative industries, it may be desirable

Creativity in Teams   63 for groups to either go off on a tangent or spend a great deal of time exploring a single idea or a set of tightly coupled ideas. Teams frequently struggle with the process of idea generation because the presence of others can be interpreted as pressure to conform. Early work positioned conformity as a barrier to creativity (Campbell, 1965) whereas more recent work has found that in some instances pressure to conform is beneficial to team creativity. In a series of experiments with undergraduate students that measured both the number of and creativity of ideas generated, Goncalo and Duguid (2011) found that when conformity pressure was low, highly creative people generated more creative ideas. However, when conformity pressure was high, the groups with less creative people generated more creative ideas. Taken together these results suggest that for some groups, pressure to conform can actually be beneficial for creativity, but for highly creative individuals, the norms that reinforce conformity can in fact be negative. However, an important caveat here appears to be that when the ‘most’ creative individuals are not available, all is not lost, and social influence and norms may in fact help bridge the deficit. Another group feature that can affect creative processes and in particular idea generation is that that membership is not always constant. Here, research conducted by Choi and Thompson (2005) has found that groups who experienced a membership change generated more ideas and were more flexible in their thinking. Work by Hirst (2009) finds that membership change interacts with team member tenure, suggesting that membership change can be beneficial for newer teams as it promotes open discussion, but not for those who have worked together for a longer period of time. To help ensure that teams are able to generate new ideas even after working together for a period of time and when members change, it appears that teams need to have established norms and goals that emphasize collaboration and cooperation (Mitchell, Boyle, and Nicholas, 2009). Finally, recent work has started to consider the use of technology in idea generation. Here, the hope has been that much of the blocking and domination by a few that can hinder creative idea generation in face-to-face teams would be eliminated. In effect, technology can be used to allow members to all talk simultaneously and in doing so, introduce multiple ideas all at the same time (Dennis and Williams, 2003; Gallupe, Dennis, Cooper, Valacich, Bastianutti, and Nunamaker, 1992). Results suggest that technology is beneficial for larger teams (DeRosa, Smith, and Hantula, 2007) and those working on tasks that require divergent thinking (Kerr and Murthy, 2004). However, a great deal more work is still needed in this area to really understand if technology can be used to harness the benefits of multiple perspectives and diversity while dampening the process losses that can happen when individuals work as groups to generate ideas (Paulus and Brown, 2003). Further, how does technology affect idea generation when teams are new to working together? Are the benefits of using technology for idea generation mitigated over time? Lastly, what about groups with one highly creative individual: does technology help or hinder the integration of that person’s ideas?

64  Lucy L. Gilson

Problem solving Problem solving is the process through which teams identify an idea to develop and in doing so gather, share, and evaluate information such that a solution can be moved forward. Research suggests that employees often seek help from teammates during creative problem solving (Hargadon and Bechky, 2006), and that help seeking facilitates an employee’s own ability to produce novel, useful, and creative ideas (Mueller and Kamdar, 2011). Therefore, the presence of others at this stage in the creative process may be desirable, but not for the reasons originally thought. Work by Hargadon and Bechky (2006) details how this process works by connecting the past with the current situation through help seeking, help giving, and reflective reframing. Here it appears that teams need to have a good working knowledge regarding who knows what (transactive memory), as well shared mental models concerning how the task and team interactions will take place. The concepts of transactive memory and shared mental models have started to receive a great deal of attention in the team literature, but as yet have not fully been integrated into team creativity research. For creative problem solving leadership also plays a critical role. Leaders are necessary at this stage in the creative process to help ensure that adequate information is gathered and that the team is communicating both internally and externally (Catmull, 2008; Tierney, 2008). At Pixar for instance, team leaders sit in on idea evaluation meetings and also request idea development presentations to ensure teams are not ‘stuck’ and that ideas are moving forward appropriately. Leadership plays a key boundary spanning role in that leaders provide team members with bridges to other networks (Perry-Smith, 2006) and sources of information that should be helpful in problem-solving. However, the role of leadership can be a tricky one because, while critical, autonomy is also positively associated with creativity (Oldham and Cummings, 1996). For example, in the film industry it has been found that when the ‘working relationship breaks down between the editor and other members of this group, the film often suffers as a result’ (Simonton, 2004; p.1507). The evaluation apprehension that can result in groups generating fewer ideas seems to be less prevalent when it comes to this stage in the creative process, and research has found that groups can be very creative when it comes to building upon and improving the ideas of others (Osborne, 1957). Furthermore, groups can increase the likelihood of good choices (Larey and Paulus, 1999) and this interdependent evaluation may also result in the selection of ideas that are more appropriate and thus more likely to be implemented (Laughlin and Hollinshead, 1995). An important constraint here is having enough time. Teams research has long asserted that decision making in groups takes longer (Mathieu et al., 2008) and creative decisions are no different. Actually, one would almost expect them to take longer as having second thoughts or wanting to revisit a prior idea or solution should be encouraged as engagement in the creative process.

Creativity in Teams   65

Team creative processes and outcomes When we look at creative processes and outcomes together as team creativity, it appears that most research to date has been conducted in settings that would not be considered highly creative. In a 2004 study Gilson and Shalley found that teams who were more engaged in creative processes also perceived their work as requiring higher levels of creativity, had members who were more likely to participate in decision making, share common goals, had moderate levels of organizational tenure, worked interdependently, and socialized with one another both inside and outside of work. However, these teams were not operating in a creative industry. In a study of service technician teams, Gilson and colleagues (2005) found that while objective performance was positively related to team creativity, there was a significant interaction with standardized work processes such that standardization attenuated the influence of creative processes. In other words, teams that were overly constrained by work standards were unable to reap the benefits of creativity. However, teams that operated in a less standardized manner and encouraged and supported creativity exhibited the highest levels of performance. In addition, the highest levels of customer satisfaction were reported when the teams described their processes and climate as creative and at the same time highly standardized. Specifically, teams that were both high on creativity and used high levels of work standardization (i.e., routinized problem-solving procedures, documented work processes) had the highest customer satisfaction ratings. While these findings illustrate the importance of engagement in creative processes, more work is needed to understand how these phenomena work when teams are engaged in more radical exploratory, or big-C, creativity. In addition, the industries studied above were not highly creative by nature. Therefore, research is needed to understand the interplay between team creative processes, standardization, performance, and customer satisfaction in the creative industries. When thinking of teams engaged in more creative work, is there a point in time when the inflection of the curve shifts such that being creative for too long can actually hinder performance? One would expect in the creative industries where the focus is often on creative processes this might be the case; however, this is of course an empirical question. Finally, James and colleagues (1999) developed a theoretical model describing how creative processes can result in theft, sabotage, and the undermining of group and organizational goals. Here they argued that many of the group norms that should facilitate engagement in creative processes (i.e., collective thinking and cooperation) can result in groups that become too cohesive and end up using creative processes to undermine the good of the organization and its customers. Moving forward, research needs to continue to examine how different antecedents to creative processes can result in negative outcomes.

66  Lucy L. Gilson

Conclusions Given the prevalence of teams in organizations, a great deal of research attention has focused on team composition—the characteristics of individual members as well as their collective properties (Mathieu et al., 2008; Stewart, 2006). At the same time, while theoretical work has touted the benefits of teams for creativity (Paulus, 2000, 2008), limited empirical work with mixed and often inconclusive results has examined how team composition and processes influence creativity (Mathieu et al., 2008). Finally, it has been argued that creativity is a multi-level construct (Drazin, Glynn, and Kazanjian, 1999) that is both isomorphic (Chen, Mathieu, and Bliese, 2004) and homologous (Chen, Bliese, and Mathieu, 2005) and as such retains its meaning and associations with predictors and outcomes across levels of analysis (Gilson, 2008). In order to move our understanding of team creativity forward, and in particular in the context of the creative industries, it is important that we first unpack the constructs to better understand a number of terms that are often used interchangeably and in concert with one another. Accordingly, the aim of this chapter has been to delineate the creativity continuum, differentiate between creativity and innovation, and finally creative outcomes and creative processes. In doing this it is hoped that the conversation regarding what can be done to help and facilitate team creativity, both from an applied and a research perspective, can be moved forward.

Note 1. This research was partly supported by a grant from the Connecticut Center for Entrepreneurship and Innovation (CCEI). Thank you to Robert Litchfield and Hyoun Sook Lim for their helpful comments on earlier drafts.

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Chapter 4

Creativit y i n S o c ia l Net work s A Core-Periphery Perspective Gino Cattani, Simone Ferriani, And Mariachiara Colucci

Background Creativity has received a considerable interest from academic researchers, but recently has become a hotly debated topic in the popular media and business press. Organizational benefits of individual creativity include new products, effective decision making, superior leadership, innovative solutions to organizational problems, and higher performance. Under these circumstances, even a single creative idea may be highly consequential (Elsbach and Kramer, 2003). Given the importance of innovation in today’s knowledge-based economy, sparking, nourishing, and maintaining creativity is a critical condition for any organization that seeks to achieve and sustain a competitive advantage. Creativity research has long been polarized between the ‘romantic’ view that major creative achievements are sparked by imaginative and uniquely gifted individ­ uals at the margin of an intellectual field, and the competing view which emphasizes the influence of the social context in which individuals are embedded in determining the range of information and opportunities available to them during the creative process. Without downplaying the crucial role played by individual dispositions and talents, a social perspective on creativity emphasizes how those dispositions and talents often are mobilized and directed within a context of intersecting relationships through which conventions are learned, ideas are recombined, and capabilities are nurtured. Collins (1998), for example, shows that several prominent intellectuals in art and science were often embedded in strongly connected networks of other scientists, researchers, and artists who not only shared ideas, but also competed and collaborated; by contrast, those who were embedded in weakly connected networks languished despite

76   Gino Cattani, Simone Ferriani, and Mariachiara Colucci their talent. In the wake of Collins’ ideas, over the past ten years much organizational work has been devoted to the understanding of the network bases of creativity. The key idea of this perspective is that: ‘A successful social psychology of creativity demands that the creative individual be placed within a network of interpersonal relationships’ (Simonton, 1984, p. 1273). As social networks provide the fabric through which individuals may tap novel information for creative problem solving, some authors have gone so far as to advance the argument that creativity ‘is all in your social network’ (Brass, 1995, p. 94). Several scholarly contributions have followed this tradition (Burt, 2004; Uzzi and Spiro, 2005; Perry-Smith, 2006; Ferriani and Cattani, 2008) leading to a relatively new, yet vibrant, body of work that has enhanced our understanding of the network mechanisms that underlie the genesis of new ideas. However, this research has left almost untouched the process by which the new and unaccepted ideas become valid and attain legitimacy. We believe this is a significant shortcoming as artists, inventors, or scientists are rarely recognized as creative until their social systems in general, and other creative people in their field in particular, recognize and endorse their work (Adarves-Yorno, Postmes, and Haslam, 2007). Consider, as an example, the reputation of Raphael as a painter, which has waxed and waned several times since his heyday at the court of Pope Julius II (Csikszentmihalyi, 1996). Johann Sebastian Bach was eclipsed for more than one hundred years and rediscovered by Felix Mendelssohn during the nineteenth century. As a more recent illustration, also consider Barbara McClintock who won the Nobel Prize in Physiology 1983 for her pioneering research on mobile genetic elements. Her studies deviated from accepted standards and norms in biology and hence were initially rejected by top biology journals (Williams and Yang, 1999). It was only later, once the logic underlying genetic investigations became evident, that her research fell within the boundaries of acceptability, and was consequently re-evaluated as a highly innovative advance. These short vignettes underscore the importance of jointly accounting for the processes that underpin the generation of novelty and regulate its legitimation within communities that may or may not embrace it. As Simonton noted (1999, p. 5), ‘unrecognized genius becomes an oxymoron’. Our goal in this article is to illustrate how the adoption of a social structural perspective on individual creativity may offer a bridge between the understanding of creativity in terms of novelty generation and its recognition within the larger social context in which creators and their audiences are embedded. We combine research on the network side of creativity with sociological research concerned with how and why individual actors’ structural position in the social field shapes not only their ability to generate creative work, but also whether this work conforms to or departs from a field’s established norms and standards—thus affecting its reception by relevant social audiences. Building on Cattani and Ferriani’s (2008) stylized characterization of individuals’ social network position along a core-periphery continuum, we suggest that actors pos­ itioned at the fringes of the social system are more likely to generate divergent ideas than core players, as they are less constrained by the field’s normative criteria. However, we

Creativity in Social Networks   77 also contend that, due to their peripheral position, the same actors have only limited ability to mobilize constituencies and solicit recognition for the novelty of their efforts. Conversely, as individual actors progress towards the core and therefore become more embedded within the field’s social structure, deviant ideas are foreclosed and adherence to the field’s institutionalized norms and standards is increasingly stimulated and even rewarded. As Jones and colleagues (1997, p. 929) pointed out: ‘The more structurally embedded (e.g., the more connected and frequently interacting) the industry participants, the more deeply they share their values, assumptions and role understandings’. Strong structural embeddedness makes deviance from existing norms and standards harder to hide and, therefore, more likely to be punished (Granovetter, 1985); by contrast, proximity to the core also implies greater ability to enter the attention space of relevant audiences. This characterization thus highlights the existence of a trade-off between producing more conventional (incremental) work, for which it is easier to gain legitimacy, and producing less conventional (divergent) work, for which receiving legitimacy might prove problematic. Drawing from McLaughlin’s (1998, 2000, 2001) notion of optimal marginality, we delineate possible strategies to resolve this tension. We catalogue these strategies under the label optimal network structuration strategy to indicate a distinctive social position that combines the level of embeddedness in the institutions that shape a given field (Collins, 1998) with some distance from intellectual entrenchment. By pursuing an optimal network structuration strategy actors can carve out a social space removed from the field’s normative pressures, while also maintaining exposure to fresh stimuli—so increasing the likelihood of generating novelty but without undermining their ability to make it manifest and visible to the field. We outline the key features of this strategy while leaving its further development as an opportunity for future research. We conclude the article with a brief discussion of the implications of our proposal for organizational design and literature on creativity and the social structure of markets.

Networks, Creativity, and Legitimacy In the last few years, sociologists and organizational scholars interested in the social side of creativity have paid increasing attention to the conditions that facilitate the generation of creative work. Building on seminal ideas from Coleman (1988) and Granovetter (1973), a growing body of research—both theoretical (Perry-Smith and Shalley, 2003; Schilling, 2005) and empirical (Burt, 2004; Uzzi and Spiro, 2005; Perry-Smith, 2006; Cattani and Ferriani, 2008)—has begun to focus on structural and relational explanations of creativity in an effort to explore which configuration of actors’ social networks is likely to foster the emergence of novel outcomes. On the premise that generative creativity requires a recombinant effort (i.e., recombining ideas, information, knowledge, or perspectives) and most exposure occurs through social interaction with other creative people, the extent to which individuals are at risk of generating creative outcomes is

78   Gino Cattani, Simone Ferriani, and Mariachiara Colucci inferred by examining the pattern and properties of their networks. Accordingly, recent work has looked at the relationship between creativity and network features such as centrality (Perry-Smith, 2006), brokerage (Burt, 2004), cohesion (Obstfeld, 2005), strength of ties (Perry-Smith and Shalley, 2003; Baer, 1997), or degree of ‘small worldness’ (Uzzi and Spiro, 2005). While the role of networks in shaping novel recombination and exposure to non-redundant information is now well established, accepted definitions of creativity suggest that creativity is not just about intrinsic properties of novelty and usefulness. To appreciate this point it is worth recalling one of the earliest and still most widely used definitions of creativity, the one offered by Stein (1953, p. 131) according to which creativity describes ‘a process which results in a novel work that is accepted as tenable, useful or satisfying by a group at some point in time’. Implicit in this definition is the idea that creativity embodies two crucial dimensions: (1) the production of novelty—what we refer to as the generative dimension; and (2) the recognition (or acceptance) of this novelty—what we refer to as the legitimation dimension. Distinguishing between these two dimensions allows for a more precise theoretical characterization of creativity as a social process and avoids the ex-ante selection bias of focusing only on successful ideas and how they are generated (Fleming, Santiago, and Chen, 2007). Contrary to popular wisdom, whether someone is recognized as creative is less contingent on their actual achievements than on social consensus about their unique contribution (Kasof, 1995). An illustration of this duality can be found in Martindale’s (1990) research on stylistic change in arts, and especially in poetic literature. Martindale argued that in the field of poetry it is fellow writers and a few select critics who constitute the most important audience and play the critical role in evaluating whether an author’s poetry qualifies as creative. His view is that this evaluation is based on two considerations. First, the poetry must be novel, rather than merely rehashing what has already been said in the past. Second, it must conform to the stylistic standards that define what is acceptable form and content for that particular domain of creativity at that particular time. A systematic study of creativity, therefore, should consider the conditions favouring the generation of novelty and the processes through which audiences recognize this novelty and come to value it.

The Social Structure of Creativity One of the most influential advocates for considering the interaction between producers of novelty and their audiences is the social-psychologist Csikszentmihalyi. Building on the notion of creativity as a subjective assessment of the product of individual action, Csikszentmihalyi (1988, 1990, 1996, 1999) developed a systems view of creativity in which the genesis of a creative act can be fully understood only by looking at the inter-relationship between three subsystems: the individual—i.e., the person

Creativity in Social Networks   79 who serves as the source of variation to the field; the field—i.e., the audience members who are entitled to make decisions as to what should or should not be included in the domain (e.g., peers, critics, or users); and the domain—i.e., the norms and rules of a recognized area of action (e.g., physics, biology, economics, sociology, painting). While the individual is critical in triggering change, the gatekeepers who populate the field and personify the audience select creative acts that subsequently elaborate the domain (Ford, 1996). Indeed, ‘[. . .] what we call creativity is a phenomenon that is constructed through an interaction between the producer and audience . . . creativity is not the product of single individuals but of social systems making judgments about individuals’ products’ (Csikszentmihalyi, 1998, p. 41; emphasis added). The thrust of the theory is that creativity stems from the interplay between the individual act and the enabling social context that decides whether or not the creative act should be endorsed and legitimated. Thus, a social conceptualization of creativity presupposes the existence of social judgements to which attributions of creativity must refer (Csikszentmihalyi, 1994). This view of creativity echoes current formulations of sociologists who consider legitimation as a collective process that implies the presence of both social objects (e.g., creative work) and social audiences that evaluate them (e.g., Hirsch, 1972; Crane, 1976; Becker, 1982; Zuckerman, 1999; Zelditch, 2001). As explained by Johnson and colleagues (2006, p. 57), legitimacy depends on ‘the implied presence of a social audience, those assumed to accept the encompassing framework of beliefs, norms, and values, and, therefore, the construal of the object as legitimate’. The process by which new social objects become widely accepted in any intellectual field has been a long-standing theme in sociology. Not only is legitimacy ‘one of the oldest problems in social thought’ (Zelditch, 2001, p. 4), but research on legitimacy has developed in various directions across social scientific disciplines. As a collective construction of social reality, legitimacy has both a cognitive dimension that constitutes the object as valid in light of existing standards of evaluation within the field, and a normative or prescriptive dimension that represents the social object as right (Johnson et al., 2006). This prescriptive dimension bears important implications for the acceptance of work that challenges accepted beliefs, norms, and values. Any attempt at departing from them is likely to be framed as ‘wrong’ and hence trigger some punishment in the form of legitimacy discount or denial. The relationship between creativity and standards of evaluation, therefore, is not straightforward. On the one hand, in order to be more readily appreciated creative work needs to remain within normative boundaries. For instance, Renaissance artists’ creativity was largely a function of their resolution to live up to ancient Roman norms of aesthetics. On the other hand, the search for novelty often involves striving for contrast rather than the safety of the ‘sameness’—which typically fosters assimilation. For example, Newton’s classical ideas on mechanics proved groundbreaking because they marked a significant departure from contemporary scientific assumptions (Adarves-Yorno et al., 2007). These observations suggest that focusing on the ‘degree of novelty’ as a critical component of creativity may only capture one side of a continuum. Generative

80   Gino Cattani, Simone Ferriani, and Mariachiara Colucci efforts in fact can range from radically divergent to obediently incremental: not all creative ideas need to depart significantly from an existing standard (Houtz et al., 2003).1 As Audia and Goncalo (2007, p. 1) noted: ‘An idea may be both novel, useful, and therefore creative, even if it reflects continuity with existing solutions’. This view is consistent with the idea that creativity is a continuous concept, whereby ‘observers can say with an acceptable level of agreement that some products are more creative or less creative than others’ (Amabile, 1996, p. 34). The question of when and how actors’ creations will be incremental or deviate from prevailing norms is strongly influenced by actors’ embeddedness in the social structure of the field. The importance of social structure in shaping actors’ adherence to or departure from the field’s norms and standards is one of the oldest themes in social psychology (see classic work by Festinger, Schachter, and Back, 1948; Homans, 1958; see also Merton, 1959) and rests on the realization that greater embeddedness makes ideas about proper behaviour more likely to be discussed repeatedly and thus become institutionalized (Granovetter, 1985). We refer in particular to the degree of socio-structural embeddedness because individuals who are deeply embedded in their social system are more likely to conform to the norms and standards that characterize their area of expertise, and thus reproduce ideas or styles currently deemed acceptable. In line with this perspective, Moody and White’s (2003) analysis of political behaviour showed that individuals behave more similarly despite having the freedom to be different as a cluster’s cohesion increases. Indeed, greater levels of connectivity tend to homogenize the pool of knowledge and promote common information exchanges, decreasing individuals’ incentive and desire to go beyond conventional ideas (Lazer and Friedman, 2007). Strong structural embeddedness also makes deviance from existing norms and standards harder to hide and, therefore, more likely to be sanctioned (Granovetter, 1985). In contrast, actors who are less deeply embedded and not subject to such strong assimilative pressures are freer to pursue divergent ideas (White, 1993).

Creativity in a Core-Periphery Social Structure Cattani and Ferriani (2008) articulated this trade-off in terms of an actor’s position along the core-periphery continuum of the field’s social structure. A core-periphery social structure is characterized by a cohesive subgroup of core actors and a set of peripheral actors loosely connected to the core (Borgatti and Everett, 1999). This characterization of a social field structure is intuitive and has been shown to be salient in a variety of areas ranging from the structure of society (Shils, 1975), to cults (Lofland and Stark, 1965), to trade among nations (Smith and White, 1992), to collaborations in

Creativity in Social Networks   81 Hollywood filmmaking (Cattani and Ferriani, 2008). Core actors are typically deeply embedded in the social system and hence tend to share ideas and habits more closely. They are usually key members of the community and have developed dense connections among themselves, with many of them acting as network coordinators. By contrast, peripheral players reside closer to the boundaries of the network, and hence are not as visible or socially engaged as those in the core. The upshot of this position is an increased level of exposure to fresh ideas and original sources of inspiration or stimuli that may facilitate divergent thinking—a tendency that has been noted in different fields of human activity. As Collins (1998, p. 532) noted, ‘[. . .] some of the greatest philosophers are connected to multiple circles but are members of none. We see in such network positions Spinoza, Leibniz, Locke, Bayle, along with the great freelancing scientists Newton and Heygens’.2 Standing at the fringe of their social field, peripheral actors can elude the hom­ ogenizing influences typical of an established institutional framework, and consider unconventional ideas without the anxiety of clashing with the field’s accepted norms. In contrast, individuals who stand at the core of their social field may find it difficult to recharge the freshness of their ideas and escape the pressures to conform to these norms. Entrenched in the prevailing conventions, they can become increasingly reluctant to abandon existing ideas and knowledge to explore new areas (Schilling, 2005), and are likely to experience a decline in intrinsic motivation due to their continued adherence to a ‘winning style’ (Faulkner and Anderson, 1987). As core actors become increasingly immersed in the field’s network structure, it becomes ‘unmanageable or extremely difficult to break free of the web of ties and to see beyond them to new ideas’ (Perry-Smith and Shalley, 2003, p. 100). Several vivid examples of this trade-off can be found in art and science. For instance, Michael Polanyi’s (1963, p. 1013) description of the genesis of one of his contributions to physics is indicative of this tension: ‘I would never have conceived my theory, let alone have made a great effort to verify it, if I had been more familiar with the major developments in physics that were taking place. Moreover, my initial ignorance of the powerful, false objections that were raised against my ideas protected those ideas from being nipped in the bud.’ Polanyi’s words echo those of the famous abstract Italian painter Giorgio Morandi: ‘When most Italian artists of my generation were afraid to be too “modern” or “international” and not “national” or “imperial” enough, I was left in peace, perhaps because I demanded so little recognition. In the eyes of the Grand Inquisitors of Italian art, I remained but a provincial professor of etching at the Fine Arts Academy of Bologna.’3 Unlike core actors, however, peripheral actors typically have limited ability to gather attention and support for their generative efforts. It is easier to mobilize people and secure support within the more cohesive structure of the network core (Knoke, Pappi, Broadbent, and Tsujinala, 1996) than at its fringes. Core actors are favoured in this respect, and their work is likely to gain faster acceptance in a dense and clustered network where it can be readily recognized and legitimated, whereas peripheral players lack the kind of visibility and endorsement necessary to boost their work’s legitimation.

82   Gino Cattani, Simone Ferriani, and Mariachiara Colucci In this sense, a peripheral position ‘condemns one to coming too late into the sophisticated center of the action’ (Collins, p. 2004: 436). Therefore, while peripheral players are more likely to depart from traditional ways of thinking, explore untapped areas, and so pursue more divergent outcomes and ideas, they also have limited ability to generate attention and foster consensus around their creative efforts. Core players, on the contrary, may be constrained in their ability to break with conventional ideas or styles that worked in the past—and can even develop a vested interest in resisting the introduction of divergent ideas that may threaten their status as core members—but enjoy easier access to the symbolic and material resources they need to continue their work (Crane, 1976).4 As long as the social field rewards those actors conforming to the dominant logic and penalizes those deviating from it, core actors have clearly little incentive to pursue work that diverges from existing norms and standards, and therefore challenges their current position in terms both of status and control over symbolic and material resources. But permanence in the core is unlikely to pay off in the long run as the institutional logic may change, leading to a revision of the criteria by which actors’ creativity is judged. Such changes can stem from organized efforts by actors within the social field to exploit the existing logic’s internal contradictions or its incompatibility with logic in cognate fields (Clemens and Cook, 1999). A case in point is the appearance of nouvelle cuisine in France, which moved from the fringe to the mainstream of French gastronomy in the early seventies after an initiator movement highlighted the mutability of classical cuisine’s conventions ‘and surfaced tensions between the logic of classical cuisine and the new logics that were being established in cognate fields such as literature, drama, and film’ (Rao, Monin, and Durand, 2003, p. 9). By questioning classical cuisine’s conventions and exhorting chefs to engage in culinary inventions, the proponents of nouvelle cuisine redefined the norms and standards of gastronomic creativity. Change in institutional logics may also result from external shocks that create opportunities for activists to critique the existing orthodoxy and proffer new standards. Collins (1987, p. 49), for example, illustrates how the political events that led to the French revolution were crucial in creating the intellectual opportunities necessary to foster the creativity that spawned German Idealist philosophy: ‘[. . .] these political and military upheavals, by threatening . . . authoritarian government in northern Germany, cracked the imposed religious orthodoxy, and allowed a variety of new philosophical statements on religious topics’. Another reason why persistence in the field core may become counterproductive is that core actors risk becoming so embedded within the field that they can experience a creative drought (Perry-Smith and Shalley, 2003). Lower exposure to new and diverse ideas and perspectives, coupled with the constraint of becoming too embedded within the dominant logic, is likely to result in more incremental, rather than divergent, work over time. As Collins (1998, p. 380) noted, ‘when external conditions enforce a single orthodoxy [. . .] creativity dries up’. This idea also echoes well-established findings in the organizational embeddedness literature illustrating the performance and innovation threats associated to overembeddedness (e.g., Uzzi, 1996).

Creativity in Social Networks   83

Navigating the Core-Periphery Creativity Trade-Off We have so far delineated the conceptual components of a sociologically grounded understanding of creativity by recognizing that the generation of novelty and its legitimation are two sides of the same coin. Specifically, we have described the tension between the production and the legitimation of divergent creative work as a journey along the core-periphery continuum of a field’s social network structure. In this section, we suggest that individuals can navigate this trade-off by forming ties that allow them to span both extremes (the core and the periphery) but without becoming embedded in either of them. Such a strategy, which we term optimal network structuration, is intended to ensure exposure to fresh stimuli and insights, which typically spill over from the periphery, while at the same time preserving the legitimacy indispensable for sustaining and leveraging novel solutions. This conceptualization builds on earlier work by social scientists as well as anecdotal evidence. Although neither the illustrations we use nor the specific theoretical points we make are entirely original, they have not been used to address the challenge of navigating the trade-off under examination. Applying such a conceptualization to the area of organizational design generates several important managerial insights which, along with more general theoretical implications, we probe in greater depth in the conclusions.

The optimal network structuration strategy In its basic form, the optimal network structuration strategy embodies the sociological notion of optimal marginality developed by McLaughlin (1998, 2000, 2001). Optimal marginality describes a distinctive social position that fosters creativity by combining embeddedness within an intellectual field ‘with a sociologically created distance from intellectual orthodoxies’ (McLaughlin, 2001, p. 272). We offer two examples to illustrate this point, one in science the other in the arts. The first example is Eric Fromm. McLaughlin (2001) explains how Eric Fromm reached an optimally marginal social space through an in-depth analysis of the sociological origins of his revolutionary contributions to psychoanalysis. At the beginning of his career, Fromm was a ‘core’ actor of the Frankfurt School of critical theory and, during his exile in the United States in the early 1930s, he became central also within the American revisionist psychoanalysis movement—where he enjoyed the institutional and theoretical life of the White Institute. After playing an important role in this institute, Fromm decided to move to Mexico in 1950. In Mexico, he found space and resources—both material and cultural—to develop his ideas, while also keeping some periodical academic and clinical appointments in the United States. Fromm’s major contribution to the modern revision of psychoanalysis consisted in the critique of Freud’s ‘libido theory’ which represented

84   Gino Cattani, Simone Ferriani, and Mariachiara Colucci the orthodoxy within the psychoanalytic field. He challenged central aspects of the mainstream because, as McLaughlin suggests, his decision to move to Mexico allowed him to ‘gain some distance from the hostility from the American psychoanalytic establishment’ (McLaughlin, 2001, p. 276), while still maintaining ties to several powerful institutes. By simultaneously staying on the margins of the field of psychoanalysis and remaining connected to its core, Fromm was able to introduce ideas and innovations to the field that would otherwise have been quickly dismissed by the Freudian orthodoxy. This optimally marginal social position ‘allowed him to bring new ideas into the Freudian fold [. . .] while keeping him relatively isolated from the institutional pressures of mainstream Freudian institutes’ (McLaughlin, 2000, p. 246) at a time when only ‘optimally marginal thinkers like Fromm would try to bring these ideas into psychoanalysis, since to do so was practically reputational suicide inside the Freudian networks’ (McLaughlin, 2000, p. 245). Our second illustration of this strategy is iconic film director Stanley Kubrick’s decision to reject the production logics of the Hollywood system (which he referred to as ‘film by fiat, film by frenzy’) and move to England in 1962, despite the success of his latest Hollywood productions Spartacus (1960) and Lolita (1962). Although the movie Spartacus proved a major commercial success, it represented an exception in Kubrick’s working style as he had to conform to the conventions inherent in the commercial logic that pervaded Hollywood. He indeed felt he worked on Spartacus as just a ‘hired hand’ (Phillips, 2001, p. 81), all final decisions being made by Executive Producer Kirk Douglas, subject to the veto of Universal Studios. Frustrated by the lack of creative freedom in Hollywood, Kubrick established his own independent production company in the UK, but retained a critical linkage with Warner Bros Pictures, the powerful Hollywood Major that continued to distribute his movies. As Ciment (2003, p. 36) noted: ‘[. . .] it was Kubrick himself who produced his subsequent films, Dr Strangelove (1964), 2001: A Space Odyssey (1968), A Clockwork Orange (1972), Barry Lyndon (1975), and The Shining (1980), five unique works, all of them bearing the stamp of a single man who had mapped out a private, artificial space for himself in which to pursue his pre­ occupations. In the sixties and seventies, Kubrick enjoyed absolute security, the product of a hard-won independence.’ Film historians and critics (e.g., Ciment, 2003; Phillips, 2001) now concur that Kubrick’s cinematic creativity benefited from his decision, yet the maintenance of a distribution agreement with Hollywood’s Warner Bros meant that his vision could reach out to worldwide audiences. In essence, the optimal network structuration strategy builds on the power of ties that cut across the boundaries of both social worlds allowing core actors to reach out to the fringe and so benefit from a peripheral partner’s fresh perspective; and allowing peripheral actors, who lack the legitimacy and status necessary to gather attention around their own work, to build on the core partner’s social clout to gain legitimacy. Thus, there are mutually reinforcing incentives on both sides to work together: core actors can reignite their ability to pursue divergent creative outcomes; peripheral actors can benefit from the relational endorsement involved. The rationale behind this strategy is that

Creativity in Social Networks   85 actors who occupy extreme positions along the core-periphery continuum can complement each other’s structural features by providing a context where the two extremes (core and periphery) meet each other by coming together.

Discussion Contribution to the literature In recent years, sociological and socio-psychological research has contributed greatly to the development of more socially-oriented perspectives on creativity (Kasof, 1995; Simonton, 1999), paving the way for a significant stream of organizational work interested in the contextual drivers of creativity (Amabile, 1982, 1996; Woodman, Sawyer, and Griffin, 1993; Perry-Smith and Shalley, 2003; Perry-Smith, 2006). Our conceptualization frames the pursuit of novelty and legitimacy as an ongoing tension between the core and the periphery of the social system. Actors positioned at the fringes of the social system are free to experiment with unusual ideas and solutions since they are less constrained by normative pressures from the field. However, they have only limited (or no) ability to mobilize attention and harness the symbolic and material resources needed to legitimate their work. In contrast, core players are more effective at leveraging networks to build consensus around their work, but they exhibit greater propensity towards more incremental generative efforts due to their higher levels of assimilation into the conventions of the field. In order to address this tension, we outlined the basic features of a network strategy that allows core members to nurture their creativity and counter the pressures towards conformity that invariably follow attainment of status and legitimacy. The perspective described in this chapter sheds new light on the polarized debate between Romantic notions of the marginal creative individual, mainly rooted in psychological research on creativity (Barron and Harrington, 1981; Martindale, 1989), and competing sociological and organizational accounts stressing the benefits of social networks in the production of knowledge (Collins, 1987, 1998). We offer the notion of an optimal network structuration strategy as an attempt to solve this debate. An optimal network structuration strategy combines embeddedness in the networks that impart influence and visibility with insulation from the field core, ‘where intellectual stagnation can ossify rather than produce creativity’ (McLaughlin, 2001, p. 272). Relational patterns are an important means of positioning an individual for optimal structuration, and stand out in stark contrast to more dichotomous isolation/centrality mechanisms. The role of the third parties that attribute social rewards is critical, underscoring the importance of strategic social positioning for an individual seeking external legitimation. Remaining in touch with the core, but without disengaging from the periphery, provides a way to acquire new knowledge while avoiding the ties that typically bind such knowledge to particular worlds (Hargadon, 2005).

86   Gino Cattani, Simone Ferriani, and Mariachiara Colucci The optimal network structuration strategy, and its inherent tension (i.e., novelty vs. legitimacy), is reminiscent of Obstfeld’s action problem (2005). Obstfeld emphasizes the existence of a trade-off between a network rich in structural holes, which creates the opportunity for generating new ideas but that poses an action problem, and a denser network, which is suitable for a coordinated action to implement innovation but creates obstacles to the generation of new ideas. Whereas Obstfeld addresses this tension by introducing the role of a third party who acts as a broker (i.e., tertius iungens strategic orientation), our approach suggests the possibility of navigating the trade-off by creating selective ties that span the two ends of the core-periphery continuum. The core-periphery perspective, which underlies the optimal network structuration strategy, also shares in Burt’s (2004) brokerage strategy. In particular it encapsulates Burt’s key intuition that creativity is more likely to emerge at the interstice of social worlds. Yet it also adds to Burt’s view by underscoring the role of the social structure in shaping legitimacy beside and beyond providing idea-conducive conditions. As explained by Cattani and Ferriani (2008, p. 839), a core-periphery ‘approach is better suited to capture the duality of this process as compared to an approach that is focused exclusively on egocentric properties like in the case of structural holes’. In a similar vein, Rogers (1983) introduces the concept of ‘optimal degree of heterophily’ to highlight the importance of having complementarities at cultural, structural, and personal levels in order to facilitate knowledge transmissions and innovation diffusion among individuals. Likewise, collaborative relationships between core and peripheral actors constitute a fertile arena for stimulating productive thought and for how individual outcomes are perceived externally and hence supported and diffused. Indeed, sociologists and network theorists have long asserted that relationships implicitly transfer legitimacy between the parties involved in an association (Faulkner, 1983), so making perceptions of merit dependent on patterns of affiliations (Blau, 1964; Merton, 1973). Latour (1987), for instance, noted that professional assessments of scientific work are influenced by the prominence of the scientist’s affiliates, particularly in uncertain research areas where there is disagreement over what constitutes a significant contribution. At the organizational level, Powell’s (1996, 1998) extensive studies of the biotech industry illustrate how this kind of network structuration strategy can often lead large innovative pharmaceutical companies strongly embedded in the field to provide support and resources to small peripheral companies in return for access to the latest scientific developments. Similarly, on the premise that individual status spills over from partner status, Podolny (1993) has described status-enhancing affiliation strategies where lower-status actors gain legitimacy by collaborating with higher-status actors. The logic underlying the optimal structuration strategy, however, is distinctive because focal actors are not low-status, so struggling to gain visibility and legitimacy through their connections to legitimate players. Instead, they are core actors who seek to preserve or reignite their ability to produce creative work by reducing their exposure to the conformity pressures stemming from being embedded in a particular field.

Creativity in Social Networks   87 The joint consideration of social structural influences on the generation and legitimation of creative work also allows for a deeper appreciation of the role that established norms and standards play in providing direction to individuals’ creative efforts—thereby contributing to the small but growing literature on incremental versus divergent creativity (Kirton, 1976; Audia and Goncalo, 2007). Unlike received views of creativity that overemphasize the role of an individual’s unique personality traits or mental processes in shaping continuity or change in creative work (Houtz et al., 2003), our framework suggests that the distinction between divergent and incremental creativity may be more situationally and socially determined (Kirton, 1987). As norms and standards are learned and gain strength in networks of personal contacts (Becker, 1982), actors’ embeddedness in the field affects the extent to which such norms and standards imbue their creative work—thus making it more or less divergent. A social structural approach sheds light on the conditions under which significant changes, particularly in an existing field, are more or less likely to occur. Actors who are routinely peripheral to the field, and therefore not deeply (if at all) assimilated into existing conventions, struggle to achieve support and recognition for their creative efforts. In the art world, for instance, this is the case with mavericks. Unlike core individuals, who typically follow more conventional perspectives in their work, mavericks are not as tied to the conventions of their field and hence retain some loose connection with it but without participating in its activities; in particular, they tend to ‘propose innovations the art world refuses to accept as within the limits of what it ordinarily produces’ (Becker, 1982, p. 233). In order for them to succeed, especially when they attempt to introduce a major change (e.g., a new style or school of thought is advanced), they must obtain consensus from the very same field they intend to transform or find a way to ‘force’ the field to recognize their achievements.5 Adopting an optimal structuration strategy will allow core actors to maintain close connections with the field core and participate in its activities, and avoid the fate of mavericks, who risk being marginalized and being unable to further develop their ideas.

Implications for management At a broad level, the notion that creativity is determined as much by the receptiveness of the field as by the intrinsic novelty and usefulness of individual outputs should make organizations more sensitive to the selection systems responsible for recognizing and evaluating individuals’ work. For example, many companies involved in innovation invest considerable resources in scouting for talented engineers or training them in order to empower their ‘out-of-the-box’ thinking ability. But this remains only a partial strategy unless the gatekeepers (in this case the management) are prepared and able to recognize when new ideas are good and deserve endorsement. In this respect, our model suggests important insights to aid those involved in organizational design. First, the managerial implications of our study are reasonably clear for creative professionals wishing to nurture their creativity without losing the ability to make it manifest

88   Gino Cattani, Simone Ferriani, and Mariachiara Colucci and visible. The optimal network structuration strategy illustrates the benefits of aiming for an intermediate position which offers links with both the core and the periphery of an intellectual field’s social structure—which permits professionals interested in navigating their organizational environment to maintain exposure to original ideas but without losing touch with the sources of legitimation indispensable for making their efforts recognizable and hence actionable. Second, and related to the previous, managers should design organizations that facilitate and encourage integration of peripheral players into the core of the action. The fringe is where divergent ideas thrive, yet it also is the place where they risk remaining invisible, and their exploration unexploited, because, no matter how original the insight, the label of ‘creative’ depends on gatekeepers who can support and legitimate it (Hargadon, 2005). And since organizations often regard divergent ideas as inherently threatening to the status quo, identifying the right gatekeepers is especially important when companies need to promote experimentation and variety in order to respond to rapid change (Kanter, 1988). In such cases, organizations would be better off designing diverse committees that are more open to experimentation and less likely to have vested interests to protect. This idea is consistent with research on accountability that has shown that individuals held accountable to external evaluators, whose views are unknown, are more likely to explore a problem from different perspectives in seeking a high-quality solution (Tetlock, 1992; Lerner and Tetlock, 1999).

Directions for future research Our core-periphery perspective on creativity provides a first glimpse into the ongoing tension between the need for assimilation into the field and the need to depart from what already exists. Future research is needed that articulates the boundary conditions for this tension to play out. For instance, different versions of the optimal network structuration strategy can be envisioned depending on how far from the field’s core the actor is willing to migrate. A ‘radical’ version of this strategy might see a core actor deciding to break away from the field’s normative constraints by moving out into the periphery and retaining only a few selected ties with the core. A more ‘conservative’ version of the optimal structuration strategy, on the contrary, could be to maintain a position close to the core while working to establish and nurture selected collaborations with peripheral players. Although both strategies aim to achieve the same goal, they are quite different in the kinds of social penalties they may engender. When core actors opt for a radical structuration strategy they risk suffering a stronger legitimacy discount than in the conservative case. Exploring this type of distinction will likely reveal additional factors that shape the extent to which patterns of affiliation effectively structure the manifestation of creativity. While relying on the core-periphery metaphor, our framework does not consider the possibility that the same actor might be embedded in multiple networks and

Creativity in Social Networks   89 that the same actor might be peripheral to one social world and core to another. Such an actor could in fact benefit from symbolic and material resources coming from one world to support his/her creative efforts in the other. This is clearly outlined in the case of Fromm’s contribution to change within Freudian thought, as he ‘was a threat to orthodox psychoanalysis because he was not a marginalized intellectual but had access to sufficient alternative sources of resources to sustain himself and his ideas’ (McLaughlin, 2001, p. 281). When Fromm moved to Mexico he became a central player in the Latin American intellectual elite, gaining access to new material and symbolic resources which helped him introduce innovations in the North American field of psychoanalysis, where he was no longer a central actor. These kinds of situations suggest the value of future research. Another interesting avenue for future theorization would imply a more dynamic rethinking of the institutional context in which creators and their ideas strive for legitimacy. One might realistically consider the context as evolving over its lifecycle, so that in the early stages of its evolution it might be possible to expect more variance in creative outcomes as norms and standards are not fully shared nor precisely defined yet. Over time, as norms and standards become established, rewards will accrue to core members whose work is more likely to conform to such norms and standards. But, as conformant (usually incremental) creative work is increasingly legitimated, core members face the risk of experiencing a creative draught. In the end, one might expect the very boundaries between the core and the periphery to vary with the evolutionary stage at which a given institutional context is. Another potential way to add more dynamism to the framework would be to consider variations at the level of audience members. For example, creators and their ideas might be exposed to different audiences and hence to a multifaceted legitimation process. An interesting avenue for future research would then be to delve into the mechanisms through which multiple audiences recognize, validate, and legitimate ideas and the extent to which these evaluations are shaped by the social structure in which candidates are embedded (Cattani, Ferriani, and Lanza, 2010). This would contribute to research on the determinants of social stratification, which typically focuses on actors vying for recognition rather than the constituents responsible for conferring it (Zuckerman, 1999). This more ‘political’ aspect of the creative process also calls for a deeper investigation of the influence of power and status. Scholars have long recognized that creativity derives its content and meaning from the surrounding social field. Although the production of creative work involves the recombination of existing ideas, materials, and practices in new ways, in the end it is the social field that decides which work should be judged as creative. These judgements are far from being objective: on the one hand, they reflect the extent to which relevant audiences within the social field converge around individuals’ creative efforts; on the other, the position of these individuals in the field might affect these evaluations (Cattani and Ferriani, in press). For instance, high-status individuals (e.g., individuals who occupy a very central position in the field’s social network or have achieved great prominence in it due to their past accomplishments) can leverage their influence to shape the evaluations of relevant field

90   Gino Cattani, Simone Ferriani, and Mariachiara Colucci gatekeepers and gain support (both material and symbolic) for their work. Indeed, individuals’ status can bias audiences’ evaluations of their work as higher status affiliations help to increase returns to a given quality of output (Allison and Long, 1990; Merton, 1968). While status does not guarantee acceptance, it does increase the probability that an individual’s work will be heard and taken seriously from the outset. The conditions that attend the generation of creative work, therefore, may interact in complex ways with those that influence its recognition. What is the role of individuals’ social structures in eliciting audiences’ appeal for their work? How does individ­ uals’ status affect audience evaluations? Are high-status individuals more likely to get their work recognized as creative? Under which conditions do low-status individuals obtain the same result? We believe that these and related questions are worth exploring in greater depth.

Concluding Remarks Creativity does not occur in a vacuum, nor does it spring into the minds of individ­ uals ex nihilo. Any moment in the production of creative work involves the reassembling and rearranging of pre-existing materials, practices, and influences. However, in the end it is society that decides whether a piece of work should be regarded as creative. Understanding creativity requires more than studying those individuals typically associated with a novel product, new movement, or groundbreaking idea. While, for instance, Picasso and Einstein stand out among their fellow peers, their unique contributions were made in concert with the intellectual and social networks that stimulated their thinking, as well as the social mechanisms that first recognized and then helped spread their work. As Csikszentmihalyi (1996, p. 7) pointed out: ‘To say that the theory of relativity was created by Einstein is like saying that it is the spark that is responsible for the fire. The spark is necessary, but without air and tinder there would be no flame.’ Even in those cases in which the creative process seems to originate from the workings of lone individuals, at a closer inspection creative efforts very often occur in a network of relationships and social support (Collins, 1998). In line with these ideas, in this chapter we propose a theoretical framework where the tension between conformity to legitimating norms and deviation from them is recast under a different light. Our key claim is that a core-periphery perspective on creativity adds considerable value to the literature because it explicitly models the generation of novelty and its legitimation as embedded in social structures of interaction that shape both the creators and their acceptance. We believe that this perspective might enrich the theoretical foundations of creativity research and open up original opportunities for scholars interested in the intersection between creativity, legitimacy, and social structures.

Creativity in Social Networks   91

Notes 1. Sternberg (2006), for instance, classifies eight types of creative contributions in three major categories along the incremental–divergent continuum. These are: types of creativity that accept current paradigms and attempt to extend them; types of creativity that synthesize current paradigms; types of creativity that reject current paradigms and attempt to replace them. Similarly, Unsworth (2001) identifies four types of creativity: responsive, expected, contributory, proactive. 2. Similarly, Schilling pointed out (2005, p. 133) that ‘[. . .] it has often been argued that marginal intellectuals (those who may participate in multiple intellectual domains but are central to none) are more likely to introduce creative breakthroughs than well-established experts in a domain’. 3. Reported in the article ‘Art View; Giorgio Morandi: A Quality of Private Mediation’ by Hilton Kramer, The New York Times, December 6, 1981. 4. Similar patterns can be observed in various fields. For instance, even a ‘casual survey of the history of art reveals periods when the established view of art has been challenged by relatively marginal artists whose ideas in turn sometimes came to dominate. One thinks of the French Impressionists who rejected the tenets of nineteenth-century representational painting in France, the abstract expressionists who challenged the modern art “establishment” of the 1950s, and the “pop art” movement more recently’ (Crane, 1972, p. 134). 5. Referring to change in the art world, Becker (1982, p. 309) noted: ‘Innovations begin as, and continue to incorporate, changes in an artistic vision or idea. But their success depends on the degree to which their proponents can mobilize the support of others. Ideas and visions are important, but their success and permanence rest on organization, not on their intrinsic worth.’ This insight, of course, is not restricted to the art world but extends to intellectual fields in general.

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Chapter 5

Creativit y i n t h e  C i t y Richard Florida, Charlotta Mellander, and Patrick Adler

Imagine, if you would, a time traveller from H. G. Wells’ era who piloted his device to the midpoint of the twentieth century. On the one hand—Commercial airplane travel! Television! Penicillin!—everything would be completely different. On the other (gays in the closet, women in the kitchen, Jim Crow, the suffocating bureaucracy and enforced conformity of the high Organization Age) not that much would have changed. A time traveller from the 1950s to our own era would have a very different experience. Creativity and self-expression, the traveller would quickly realize, are signal values for everyone, not just students, bohemians, and beatniks. Diversity, as witnessed by the US’s mixed race president with the Muslim name, is real. Entrepreneurs like Steve Jobs and Facebook’s Mark Zuckerberg are culture heros. And this new breed of capitalist doesn’t preside over empires of smokestacks but of ideas. The cities that are truly booming—not just the global colossuses like London and New York, Milan and Shanghai, but smaller knowledge industry redoubts like Austin, Texas, San Jose, California, and Boulder, Colorado—are the ones that have the most creative citizens. Creativity isn’t just an attribute or an aspiration—it is an important, indeed the most important, economic commodity. A decade or so ago, before the terms ‘creative industries’, ‘creative economy’, and the ‘Creative Class’ had become such familiar buzzwords, the notion that creativity, or more particularly creative people, (as opposed to industry or high technology) could spur economic growth and development was seen as wrong-headed, if not ludicrous or heretical. It’s amazing how quickly this once controversial idea became a truism. Everything that seemed so new a decade ago—female CEOs, openly gay celebrities, unashamedly nerdy billionaires, the rise of intellectual properties (as opposed to manufactured goods) as our most valuable products, and even more-so, the smart, talented people who create them—has become so firmly ensconced that we hardly even notice how new it all is. A handful of scholars and thinkers anticipated the rise of Creativity and the ensuing tectonic shifts it entailed relatively early on. A set of studies in the early 2000s

Creativity in the City   97 documented the rise of ‘creative industries’ spanning digital media, creative content, and the artistic and cultural sectors. John Howkins (2002) identified the broader ‘creative economy’, showing how much these industries were already contributing to national and global economies. And in 2002, one of us identified the ‘Creative Class’, a set of occupations spanning science and technology; management, business, and the professions; and arts, culture, media, and entertainment that made up roughly a third of the workforce and accounted for approximately half of all wages and salaries, even more in large cities and metros (see Florida, 2002). Creativity is different from most other economic resources, which are finite. Creativity is limitless in quantity and inexhaustible in potency. Virtually every human being is creative in some way, and the products of human creativity—ideas and forms—do not wear out; in fact, they become ever more valuable as they are adapted and refined (consider the concept of the wheel). While certain industries and certain occupations might use more or less creativity in the here and now, our future economic growth turns on our ability to harness every human being’s full complement of creative talents. Creativity is also a great leveller. It cannot be handed down, and it cannot be owned in the traditional sense. We have no way of knowing who the next creative geniuses will be or where they will come from. And creativity has always been intimately related to cities. The Epic of Gilgamesh—perhaps the oldest known work of literature—closes with an awed description of the walls of the city of Uruk. Plato’s Republic was a product of the cultural and intellectual flowering of the earthly city of Athens; Dante, Petrarch, Boccaccio, Brunelleschi, da Vinci, and Michelangelo all were born in or near the city of Florence. Great thinkers, artists, and entrepreneurs cluster and thrive in places where the conversation and culture are the most stimulating; they attract and feed off of each other, creating new ideas and new businesses that drive growth and prosperity. The congregation of populations into progressively larger, denser, and less isolated groups may have been what enabled humanity’s rise. Archaeologists and anthropologists have long noted evidence of a flowering of artistic and material creativity that occurred roughly 40 000 years ago in Europe, reflected in everything from cave paintings, figurines, and jewellery to the complex tools that allowed our ancestors to begin actively transforming nature. Some scientists attribute this leap to evolutionary advances in cognition and memory. But more recent research puts communities—not genes—at the centre of this evolutionary watershed. The denser and larger the communities, the more intense the ferment of ideas. The remainder of this article proceeds as follows. We first go back and discuss earlier studies that predate the more recent surge in interest in the creative industries, creative cities, and the creative class. The next section turns to the discussion of the creative city, followed by considerations of factors like innovation and human capital, which underpin the creative city. The next sections discuss the creative class approach and the 3Ts of economic development—technology, talent, and tolerance. We then turn to recent debates over the creative class and the creative city, focusing in particular on the question of socio-economic and spatial inequality. The final section sums up the key issues

98   Richard Florida, Charlotta Mellander, and Patrick Adler and constructs that have emerged from research on the creative city and the creative class.

Toward the Creative City Creativity has always been a feature of cities. Jane Jacobs noted it in her writings (The Death and Life of Great American Cities, 1961; The Economy of Cities, 1969). But it was the Swedish geographer Ake Andersson who put the construct of ‘creative milieux’ squarely on the table in 1985—by which he meant cities that had developed an optimal capacity for the production of original art, technology, and science. The urban planner Peter Hall’s magisterial Cities in Civilization, which looked at the ways that cities have driven innovation throughout the whole span of human history, was published in 1998. 2000 saw the publication of Charles Landry’s The Creative City: A Toolkit for Urban Innovators. In August of that same year BusinessWeek brought out a special double issue on the challenges and opportunities of the emerging Creative Economy, an economy, they wrote, that is ‘based on ideas rather than physical capital’ (Coy, 2000). John Howkins’ bestselling book The Creative Economy followed in 2001. As the new millennium got underway, a new paradigm—the Creative City as the heart of the Creative Economy—was beginning to coalesce. The Rise of the Creative Class (2002) emerged from a different set of preoccupations than the ones that most urbanists were absorbed by in those years. Florida’s academic studies of the evolution of capitalism were deeply influenced by the writings of Marx and Schumpeter. Peter Drucker and Daniel Bell’s theories of the post-industrial economy, and Michel Aglietta, Robert Boyer, Bob Jessop, and other European Marxists who worked on the so-called regulation theory of capitalism all had a distinct influence on his thinking as well. His studies of Silicon Valley and other high tech districts in the 1980s and 1990s convinced him that capitalism was entering a new epoch, one in which the old vertically-integrated industrial firms that Alfred Chandler and Oliver Williamson and others had described were being eclipsed. Jacobs’ The Economy of Cities provided the key idea that places were supplanting firms as the key organizing units of the economy. Robert Sternberg’s work on the psychology of creativity, Teresa Amabile’s studies of intrinsic motivations in the workplace, and historian Dean Keith Simonton’s examination of the mutually reinforcing relationships between artistic, technological, and entrepreneurial creativity led Florida to the notion that creativity wasn’t merely a human attribute but a basic drive and potentially a fundamental, irreducible economic principle, just as labour and the working class were for Marx. The Creative Class theory proposed that: 1) Creativity, not simply technological innovation which it subsumes, was increasingly the principal driver of economic life; and 2) That the city (in many ways a product of human creativity) was both a magnet for creative people and a magnetron in which creativity is intensified and actuated.

Creativity in the City   99

Clustering and Agglomeration Much of the recent work on the Creative City and the Creative Class reflects earlier work on clustering and agglomeration. The geographic clustering of firms that do not formally cooperate, and that may even aggressively compete with one another, has long been recognized as an important contributor to regional growth. Alfred Marshall (1890) was the first to describe the phenomenon, and his work has found contemporary resonance in the writings of Michael Porter (1994) and Gabi Dei Ottati (1994). Clusters realize at least four economies by co-locating. The first economy (1) is access to a larger and specialized pool of sub-contractors. The second (2) is more efficient communication, as closer proximity provides more opportunities for ideas to be transmitted and absorbed. The third is access to a shared labour market with a specialized set of skills. The fourth is less concrete, relating to the un-transacted and un-measurable ‘atmosphere of trust’ (Dei Ottati, 1994) that develops when humans share the same place for a long time. According to numerous studies in the 1980s and 1990s, these spillovers, particularly the last one, were especially evident in the regions of Emilia Romagna, Italy and Baden-Württemberg, Germany (Piore and Sabel, 1984; Bellandi, 1989; Goodman, 1989; Cooke and Morgan, 1990; Sforzi, 1989). Silicon Valley and Los Angeles were cited as North American archetypes of industrial clusters. Each of these districts was dominated by a large number of small producers with fairly even power relations. But the forces of agglomeration do not apply solely to small firms. More hierarchical clusters dominated by large firms and the state have also been observed (Markusen, 1996), further reinforcing the importance of industrial clustering. A strong tradition of work that’s generally gathered under the rubric of the New Urban Economics (NUE) explains agglomeration economies and locational choices as a function of transportation costs (Alonso, 1960, 1964; Fujita, 1985, 1988; Krugman, 1992). Based on the tradition of J. H. von Thünen (1966/1826), Walter Christaller (1933) and August Lösch (1940), the NUE provides a micro-fundamental basis for urban spatial structure studies (Alonso, 1960, 1964; Muth, 1961, 1969; Mills, 1967). Building on von Thünen-like models, regional structure is envisioned as a flat plain with a single, well-defined central business district and equal transport costs in all directions. The structure of the city is determined by incomes, tastes, housing, commuting conditions, and the relative use and pricing of urban/nonurban land. From this, an optimal level of population or housing density can be derived as a function of the distance from the central business district. The approach is highly abstract in that it implies that all regions have an optimal size, and that they are monocentric, with just one city core. The Creative City thrust, in contrast, better reflects the transformation from Fordism to post-Fordism. The process of deindustrialization and the migration of capital away from the large factories of the Midwestern ‘rust belt’ prompted scholars to seek out a new economic and regulatory system of accumulation. Industrial clusters were said to possess features of a new type of capitalism: industrial organization (Piore and Sabel, 1984;

100   Richard Florida, Charlotta Mellander, and Patrick Adler Storper, 1994). The products produced by these districts were less standardized and the machinery that was used to manufacture them was less specialized. Technological plasticity enabled workers to have expertise in a wider range of products (Storper, 1994), and led to more continuous firm learning.

Innovation and Growth Going back to the writings of Marx and Schumpeter, technology has long been recognized as a key driver of economic growth. Solow’s classic residual model (1956) formalized thinking about the role of technology in economic growth. Technological change, he wrote, had been an important component of productivity growth in the post-war period, and was an area in which increasing economic returns could still be realized. Regional economists were interested in how this process was initiated at the local level. The view that universities were engines of innovation was widely subscribed to. According to the ‘linear model of innovation’, innovations flowed from university science to commercial technology (Smith, 1990) through regional channels. Adam Jaffe (1989) concluded that university research made corporate research more efficient. Anselin, Vargas, and Acs (1997) found that university research tends to attract corporate research labs. Still, this research was as focused on firms as the industrial districts literature had been. The impact of the university was measured through variables like new firm formation and commercial patent licensing; researchers carefully compiled data on the co-location of industries and institutions while largely eliding broader regional factors such as occupational mix, amenities, or built form, which would have gone a long way towards explaining why some strong universities spawn significant regional growth (Stanford, MIT, Harvard) while others (Carnegie Mellon, Rochester Institute of Technology) do not. While many studies examined the firm characteristics that contributed to commercialization (see Anselin et al., 1997; Cohen and Levanthal, 1990) the host of other factors that also contribute to the economic qualities of a place (everything from good weather and cultural assets, to a diverse, interesting community—the kinds of features that attract and retain the creative people that make creative industries successful) were generally ignored.

Human Capital Human capital has also long been identified as a major factor in economic growth and development. Adam Smith famously dubbed it a special factor of production. Economists like Robert Barro (1991) have documented the role of education or human

Creativity in the City   101 capital in economic growth, and urban economists like Edward Glaeser have identified its role in city and metro growth. Gary Becker (1964) and Jacob Mincer (1974) established that wage levels vary with the level of human capital. Romer (1986, 1987, 1990) suggests that the rate of invention is a local feature, determined by the presence of a knowledgeable workforce and a pre-existing stock of knowledge. Lucas (1988) shows that knowledge not only improves an individual’s productivity, it also improves the productivity of his or her coworkers. This last insight—that clustered knowledge workers create positive externalities for local economies—added formal support to Jane Jacobs’ long-held contention that cities are able to essentially create not just new innovations but ‘new work’ (Jacobs, 1969). Research into regional economics began to link educational attainment to regional economic performance. Building on the work of Barro (1991), who linked national economic performance with educational attainment, Glaeser and colleagues (1994, 1998; Glaeser et al., 1995, 2001; Berry and Glaeser, 2005) chronicled a positive relationship between rising levels of education and upticks in local incomes. Glaeser’s work on the growth of sunbelt cities and high-amenity urban centres helped to demonstrate that the locational preferences of human capital were distinct from those of firms. Vijay Mathur as well (1999) brought a new focus on human capital into the regional development literature. Explanations for why human capital concentrates in certain places and not in others focused on the presence of local amenities. Jennifer Roback (1982) explained wage differentials in American cities via a battery of amenities such as weather, housing quality, and crime. Other studies highlighted the relationships between the presence of cultural amenities (cafes, artistic institutions) and growth (Glaeser et al., 2001; Lloyd, 2002; Lloyd and Clark, 2001).

The Creative Class Approach It was with all this in mind that the Creative Class approach was first proposed and refined, emerging as a fusion of the ‘firm (or technology)-centred’ and ‘people (or human capital)-centred’ growth literatures, with place as its central organizing principle. Like the earlier work on human capital, Creative Class theory emphasizes the role of knowledge location for regional economic growth while suspending the assumption that workers will simply ‘go where the jobs are’. Like some of the most useful firm-centred growth literature, Creative Class theory focuses on the fundamental mechanisms of economic growth, eliding such factors as individual taste and generational tendencies that amenity-based theories of economic growth (for instance Glaeser et al., 2001; Clark et al., 2002) tend to treat as paramount. The Rise of the Creative Class broadened the emphasis on talent by shifting attention away from education as the key determinant of human capital. Spurred by Marx’s insistence that it is the work that people do that really matters, Florida focused on the ways

102   Richard Florida, Charlotta Mellander, and Patrick Adler that the worker’s shifting role in production re-shapes societies and influences regional development in its turn. Occupation provides a better and more nuanced measure of skill than diplomas and degrees along two dimensions: first, it allows those who engage in knowledge-based or creative work but do not have college degrees (which is the case with many leading entrepreneurs, perhaps most famously Steve Jobs and Bill Gates) to be counted. Second, it allows for more granular and precise analysis, as the occupations that figure in a regional economy can easily be counted. In the extant literature, labour had been viewed as an important input in the process of firm location but not as an independent factor that might contribute to urban growth. Skilled workers were, alternatively, the source of agglomeration economies, an input increasing in value under post-industrialism, and the connective tissue between universities and firms. The Creative Class approach put workers first. As noted earlier, the Creative Class is made up of workers spanning industries such as science and technology, arts, culture and entertainment, and the knowledge-based professions. It has grown from roughly 5 to 10% of the workforce at the turn of the twentieth century to roughly a third or more of the workforce in the advanced economies by the early twenty-first century. Studies of Silicon Valley and Route 128 (such as Saxenian, 1996) had highlighted the dynamics through which technology spurred the development of those two highly productive regions. The Creative Class approach paid especial attention to the role of occupation as opposed to industry as the key to understanding economic change and regional development, drawing on work by Robert Solow (1956), Robert Lucas (1988), and Paul Romer (1986, 1987, 1990), who explored the relationship between technological innovation and economic growth, emphasizing in particular the role of high tech workers. Robert Barro (1991), Edward Glaeser (1994, 1998) and others also emphasize skilled labour in their explanations of urban and national growth.

‘The 3Ts of Economic Development’ The Rise of the Creative Class presented a stylized model for urban growth called ‘The 3Ts of Economic Development’, which proposes that in the post-industrial era, successful regional economies need to cultivate an ecosystem that incorporates high levels of talent, high technology industry concentration, low barriers to entry, and high degrees of social heterogeneity (or tolerance). While some Creative Class theorists (see Storper and Scott, 2009) have criticized the human capital approach for its over-simplicity, the first of Creative Class theory’s 3T’s, talent, incorporates its presiding presumption—that in the post-industrial era, education will have a discernible impact on growth. The Creative Class model of economic development views place rather than the firm as the most significant economic unit. Growth does not simply occur in the places that lower firm costs in an aim to be as ‘business-friendly’ as possible. Instead, it occurs in

Creativity in the City   103 places that allow individuals to ‘maximize their utility and not just their income’ (Clark et al., 2002, p. 496). The 3Ts theory extends the work of national-level theories (Inglehart, 1977, 2003, 2005; Dei Ottati, 1994) that posit a relationship between social openness and growth while bringing it down to the level of regions and cities. 3T theory assumes that firms that rely on skilled labour will have to trade inefficiencies in other areas for access to human capital. For instance, they might locate in places that have higher taxes if those places also provide access to a highly-skilled labour force. As economic units that rely on income, skilled labour must likewise consider the availability of jobs when they make their location decisions. The 3T model is constructed according to a series of variables; each ‘T’ a necessary but insufficient condition of place. Economic growth only occurs in regions that have substantial levels of all three. While place is the most significant economic unit in the 3Ts model, talented workers are its most significant actors. Talent is a direct measure of the share of high-skill workers in a region at a given time. Skill is measured in two ways in the 3Ts model: on an educational basis and on an occupational one. Occupational skill is measured as the percentage of people engaged in ‘non-routine occupations that require creative problem solving and/or the generation of new forms’. Occupations in this Creative Class includes occupations related to: computers and programming, architecture, engineering, social science, education and library, arts and entertainment, sports, media, managers, finance, law, health related, and high-end sales. In keeping with previous work on human capital, educational skill is measured by the attainment of a bachelor’s degree or higher. Like other models of human capital growth, the 3Ts model assumes that highskill workers are more productive and command higher wages and incomes than workers at large, and thus help to improve income and wage accumulation across the region in which they live. The second set of variables is related to technological activity. The technology T is measured by a Technology Index, which is composed of two technology and industry-related location quotients. The first captures the percentage of regional output contributed by high tech as a percentage of a nation’s high tech output. The second measures the share of regional output contributed by high tech. The third ‘T’ is tolerance. This trine might be the most important contribution of the Creative Class approach, as economists have long neglected socio-cultural and non-market factors of growth, as often as not viewing both talent and technology as stocks that are accumulated in places. But it is clear from the empirical literature that both are highly mobile factors that are more aptly characterized as flows. The Tolerance T emphasizes the key factor in realizing these flows—openness to human capital or, to put it more broadly, openness to people. Skilled labour is mobile. Where it locates is dependent on a multiplicity of factors, most of which have not yet been accounted for. But places with high barriers of entry to outsider groups will necessarily repel skilled outsiders; skilled insiders will be less inclined to move to such places as well. Openness requires tolerance, which is measured not through opinion surveys or attitudes but observed locational preferences. The 3T model measures tolerance according to three variables, each focusing on a population

104   Richard Florida, Charlotta Mellander, and Patrick Adler that has traditionally faced considerable discrimination and segregation. The Mosaic Index measures the percentage of a region’s residents born in another country. The Bohemian Index measures its share of artists—a population that historically has challenged convention perhaps more than any other. The Gay Index measures the fraction of the population made up of same-sex partners who reside in the same household. One important caveat: places with high shares of visible minorities and immigrants but also a high degree of segregation can’t expect to accrue the same benefits from heterogeneity that regions with more integrated communities do. More fine-grained measurements are needed.

The Central Role of Place By situating place at the very centre of regional development, Creative Class theory unifies ‘firm-focused’ and ‘people-focused’ theories of urban growth. In the Creative Class model, place has come to take on the role once played by industrial corporations. If industrial corporations were the social and economic organizing units of the Fordist Age, connecting people to jobs and delimiting and structuring the core of economic life, place has not come to be the social and economic organizing unit of the Creative Age. Simply put, in the Creative Economy, jobs require cities. Human capital has ceased to be merely an input into the production process, a resource to be tapped by a firm, or shared by similar firms in the same industrial cluster. Skill-intensive firms must locate where they can access skilled labour, not just where costs are lowest or agglomeration economies exist. Instead of treating skilled labour as a permanent stock, firms must treat it as a flow, the amplitude of which varies with the qualities of a place. It is only since the advent of the post-industrial economy that firms have had to take the locational preferences of skilled labour into account. Under early industrial­ ization, the fixed nature of transport networks (canals, seas, rivers) and power generation (canals, rivers), kept production and producers close to these sources. With the advent of electricity, transport, power, and communication became less fixed to specific places, but the sunk costs of advanced industrialization were still high. Once large factories were established in a place, they were hard to move and much less mobile compared with labour. Large factory towns such as Hershey, Pennsylvania, epitomized this firm-led system. Here, the consumption preferences of workers were not only subservient to the microeconomic demands of the firm, but the firm even controlled the workers’ housing and consumption. The development of industrial suburbs at the periphery of cities during the late nineteenth century (Walker and Lewis, 2001) provides another example of the primacy of the industrial firm over the industrial worker. Today’s highly-skilled post-industrial workers enjoy more autonomy over where they live because post-industrial production is relatively footloose. Offices, studios, and laboratories can be relocated with greater ease than assembly plants. Communications

Creativity in the City   105 technology allows firms to maintain multiple sites of production with much greater ease than before, and to separate command and control functions that might once have been centralized in one location. Since skilled labour is a source of competitive advantage and firm differentiation, firms bid for skilled labour in order to gain competitive advantage. They do this in part by locating in places that appeal to the lifestyle preferences of high-human-capital individuals and reflect their values. The theories of technology generation identified earlier see place as a passive container in which economic innovation occurs. The 3Ts perspective, in contrast, sees innovation as dependent itself on a series of place-related forces. The talent level of the whole region—not just its local university or firm—is seen as an important determinant of new firm formation and knowledge formation. The region’s openness to this talent becomes an equally important characteristic, alongside the technological production and innov­ ation of the region’s industries. This place-based perspective on innovation is useful in explaining why otherwise similar universities have different effects on regional technological growth. As noted earlier, Pittsburgh, Rochester, and Boston all have strong university bases, but they have different rates of commercialization and different average regional incomes. The 3T measurements offer an explanation: Boston’s higher scores on each metric suggest that its regional environment plays as critical a role in absorbing and commercializing its new knowledge creation as the mere presence of a university. Here it’s worth noting that not all cities are creative cities. Creative cities are virtual petri dishes in which the serendipitous combinations and recombinations that generate innovations occur; the mere presence of high human capital individuals is not sufficient to boost regional growth; other conditions must be present as well. Particular cities and places (as opposed to generic cities and places) may play a crucial role in activating creative industries. Firm geography plays a more significant role in the Creative Class model than in other human capital models. Both 3T technology variables are based on industrial data, suggesting that places without concentrations of high tech activity will not achieve significant levels of growth, regardless of their other measures. The 3Ts model is also distinguished by its focus on tolerance, a fundamental and deeply-rooted characteristic of place that goes well beyond Human Capital Theory’s focus on lifestyle, tastes, and amenities. Data on the observed locational preferences of artistic and cultural creatives, foreign-born people, and gay and lesbian people is far more systematic and unbiased than data associated merely with amenities and lifestyle. The experiential amenities identified by Terry Nichols Clark and his collaborators are united by a specific aesthetic sensibility (Clark et al., 2002; Florida, 2002a) which is not uniformly shared across all skilled workers (Markusen and Schrock, 2006) and which might change with time. Likewise, the climactic, educational, and safety amenities identified by Glaeser (1994, 1998) are specific to skilled labour with a particular set of lifestyle demands, and largely neglect cohorts such as the young, the single, and childless. The 3Ts approach departs the most from human capital theory in its definition of human capital. Since Becker (1964), Mincer (1974), and Romer (1986), educational

106   Richard Florida, Charlotta Mellander, and Patrick Adler attainment has been the proxy for human capital. In contrast, the 3Ts approach holds that knowledge is not the only cognitive resource that improves productivity. Creativity, intelligence and intuition have also been found to be separate and important sources of productivity growth (Smith et al., 1984), and are encountered separately from formal education. So do a wide range of high-level social skills. Creative Class theory defines human capital in occupational terms (as well as educational ones) because occupation captures skills that are directly put to use by the economy. A large supply of skilled people can, likewise, only be expected to account for growth if the resource is absorbed and utilized by the local economy. The occupational measure also captures segments of the labour force that did not acquire their skills in school. In some lines of work, skills are acquired informally on the job and not recognized by a formal, measurable credential. The revolutionary and disruptive nature of entrepreneurial work often makes it incompatible with the proven lessons and established thinking that characterize university curriculums. This is not a trivial distinction. Recent research for Sweden estimates that while 90% of its degree holders have a creative job, only 25% of its Creative Class has a degree (Mellander, 2009).

The Great Creative Class Debate It is an understatement to say that Florida’s The Rise of the Creative Class instigated a robust debate. Science—as Thomas Kuhn (1962) noted long ago—advances through challenge and debate. And the debate over Rise has helped propel the field forward in important ways. Acting on the assumption that a measurement of the absorptive capacity for talent captured by occupation would better account for economic growth, 3Ts theory challenged the traditional definition of human capital. The education and training definition had been preeminent for economists going back to Becker (1964) and Mincer (1974). Defenders of this tradition such as Glaeser (2005) and Stephen Rausch and Cynthia Negrey (2006) insist that the educational measure better correlates with regional population growth than a region’s share of the super-creative core or bohemian occupations. In their analysis of German regions, Ron Boschma and Michael Fritsch (2009) found support for both measures, but concluded that educational attainment is more important. Yet other studies have pointed in other directions. Gerard Marlet and Clemens Van Woerkens (2004) concluded that their refined formulation of the Creative Class outperformed educational attainment in accounting for job growth in the Netherlands. A study that Charlotta Mellander and Richard Florida conducted in Sweden (2009) found that occupationally-based Creative Class measures did a better job of accounting for wage levels than traditional human capital measures.

Creativity in the City   107 So which better accounts for regional growth, human capital theory or Creative Class theory? This is not an academic question: each answer entails a very different approach to economic development. If human capital is more associated with growth, then policy-makers should focus on expanding universities and improving linkages between universities and the local labour market. If Creative Class share is more associated with growth, then maybe less targeted and more lifestyle-based initiatives are more prudent. The most recent empirical evidence suggests that the answer depends on how you define regional growth. A study by Florida, Mellander, and Stolarick conducted in 2008 found that traditional human capital measures are more strongly associated with wages, while Creative Class measures are better correlated with income. This suggests that education and Creative Class share act in different ways to affect economic outcomes. Wage level is said to reflect a region’s overall productivity, while income level is said to reflect its overall wealth. Since increased productivity, wages, and wealth are all important policy goals, clearly both measures have a long-term place in the analysis of regional economic growth. Some have criticized the Creative Class concept as too broad to develop policy around. Ann Markusen (2006) argues that Creative Class theory brackets together people with drastically different lifestyles, mobility tendencies, political views, and amenity preferences—that it would be impossible to court the ‘Creative Class’ writ large with the same set of policies. Artists, for instance, (Markusen and Schrock, 2006) appear to be relatively more mobile, socially liberal, and sensitive to price levels compared to other members of the Creative Class. Asheim and Hansen (2009) claim that the location preferences of creative types are affected by the predominant knowledge bases required by local industry. They find that workers who require a synthetic knowledge base tend to favour a better climate for business and industry, while workers with analytical and symbolic knowledge bases tend to worry more about a place’s ‘people climate’. On the basis of data from O*NET, a US Department of Labor database that assigns various skill ratings to each occupation, David McGranahan and Timothy Wojan (2007) removed occupations related to education and health from the Creative Class. This is an important, empirically grounded advance. It should be noted, however, that the new O*NET-based definition of the Creative Class is closely correlated with the original one; the updated definition has not altered the key findings of the original research. Gabe and colleagues (2007) find that wage returns to the Creative Class are only significant in metropolitan counties while the returns to mathematical and technical skills are significant in both metro and non-metro areas. Still another debate is concerned with the conditions that affect the distribution of human capital and hence economic growth. Whether human capital is defined according to an attainment or an occupational measure, it is assumed to flow to places that are most suited to it. Prior to Rise, there was little theoretical consensus on which conditions most favour human capital agglomeration. Although numerous studies had hinted that human capital co-located with consumer amenities, industrial clusters, and universities, it was unclear how the full complement of these factors worked to channel human capital.

108   Richard Florida, Charlotta Mellander, and Patrick Adler The introduction of ‘tolerance’ as a new condition has added to the list of variables that can be analysed and empirically tested. The significance of the tolerance variable on growth appears to vary depending on the specific independent and dependent variables that are employed to measure it. Rausch and Negry (2006) found that tolerance (more specifically, the Melting Pot Index) is more strongly related to gross municipal product than the Creative Class share. Clark (2003) found that the significance of tolerance only holds for large metro regions. Glaeser (2005) found that the Gay Index is negatively related to US metropolitan growth and that the Bohemian Index is not significantly related. Employing a path analysis technique, Florida et al. (2008) discerned a broader relationship between tolerance, the concentration of human capital, and regional outcomes (income and wages). Tolerance not only acts though human capital to promote regional growth, but also on its own, in more than one way. First, a tolerant region is riper for interaction and positive spillovers. Bohemian workers are highly mobile across industries and employers, which makes them effective transmitters of knowledge and best practices (Markusen and Schrock, 2006; Gertler and Vinodrai, 2004; Currid, 2007). Second, tolerant regions value openness and self-expression, the same values that have been linked to economic growth in studies at the national level (Berggren and Elinder, 2010; Inglehart, 2003, 2005). Alessandra Faggian and PhilipMcCann (2009) have found that the presence of a university does not explain growth once the presence of human capital has been controlled for. This suggests that the university’s primary economic role is in attracting human capital to a region, and not necessarily in spinning off or generating technological activity directly.

Economic Spikiness and Inequality Another important issue—and a topic of intense debate—is the relationship of the rising Creative Class to inequality. The 3Ts framework has been most influential as an alternative method of accounting for regional economic growth. But by introducing a new variable for socio-economic differences, it has also opened up research that seeks to grapple with increased social polarization in advanced capitalist societies. The Rise of the Creative Class pointed to the increasing danger of socio-economic inequality identifying class as a fundamental social and economic unit of modern life, and later works like Flight of the Creative Class (2005) made the focus on inequality explicit. Flight of the Creative Class developed an index of metro level wage inequality, documenting the high levels of inequality that exist not only between metros but within them. Metros with high levels of the Creative Class also had high levels of inequality. Subsequent research and writings pointed to the increasing geographic inequality across the global urban system. ‘The World is Spiky’ (2005) took on Freidman’s construction of benign globalization, ‘the world is flat’ (2005), by using satellite images to portray the spatial concentration of economic assets and activity across the globe. Who’s

Creativity in the City   109 Your City? (Florida, 2009) outlined the rise of mega-regions as a spatial unit of analysis and the increased inequality between mega-regions and other geographic units. Donegan et al. (2008) studied the relationship between a region’s Creative Class share and its wage polarization. Although they concluded that ‘traditional’ institutional factors such as unionization and the minimum wage are important mechanisms for easing inequality, the presence of the Creative Class outperforms all other variables in their analysis. The wide gulf in income between the creativity-oriented and routine-oriented classes hints that the content of jobs might be a leading mechanism of social polarization. This is somewhat in line with the economists’ construction of ‘skill-biased technical change’, which argues that growing inequality is the result of differential returns to skill, knowledge, and human capital. But recent research suggests that while skill accounts for a large portion of the variation in wage inequality, it accounts for at most a very limited explanation for broader income inequality. Florida and Mellander (2012) find that wage inequality explains but 15% of overall income inequality, and that class and human capital play only a limited role. Income inequality is more closely related to factors like declining unionization, race, and poverty than to skills, human capital, or class. Subsequent research shed additional light on this hypothesis by analysing wage and income returns to skills (Florida and Martin, 2009; Scott, 2009; Feser, 2003). A recent skills-based analysis of North American occupations finds that earnings increase dramatically as the level of analytical and social skills required by an occupation increase (Florida et al., 2012). Earnings were found to increase by between $24000 and $32000 as the level of analytical and social intelligence skills required by a job increased from the 25th to the 75th percentile. Earnings decreased as the physical skills required for a job went up. Members of different occupations are not only rewarded differently, but the value of their skills also varies. The growing disparity in regional incomes is another dimension of social polarization, and recent work (Feser, 2003; Scott, 2009) has linked regional income to the concentration of cognitive skills in metropolitan areas. Commentary on the Creative Class thesis has also linked the consumption practices of high-income workers to the high levels of income inequality that prevail where creative workers are found. By some accounts, creative workers are highly dependent on an underclass of service workers who earn low wages to do tasks that creative workers do not have time to perform for themselves (McCann, 2007; Peck, 2005; Scott, 2006). The livelihoods of these service workers, it is said, are further complicated by gentrification and displacement processes which, by necessity, accompany the influx of wealth and capital to a city (Atkinson and Easthope, 2009; Scott, 2006; Peck, 2005). A number of studies in the creative class tradition suggest that the key to alleviating the problems of inequality and the bifurcation of the labour market is to increase the content of routine service work (Florida, 2009; Florida and Martin, 2009; Florida, 2005). The Service Class is the single largest class, comprising more than 60 million workers in the United States and roughly 45% of the workforce there and in other advanced nations. Recent research suggests that adding both cognitive and social intelligence skills—the skills typically associated with creative class work—to service class as well as to working class jobs adds substantially to wages. Case studies suggest that best-practice service

110   Richard Florida, Charlotta Mellander, and Patrick Adler companies have been developing ways to increase the productive output of traditionally low-paid service jobs by integrating the creative capabilities of front-line workers into their business models (Ton, 2014). Florida has argued that as service workers contribute more value to their firms, their compensation should rise as well (2010; also Florida and Martin, 2009). Future research will no doubt examine if such efforts can moderate the social ‘bifurcations’ of the post-industrial economy (Scott, 2006).

Conclusions At the heart of Creative Class theory is the broad idea that economic growth is driven, first and foremost, by people as opposed to firms. The corollary conclusion is that cities can better invest their resources in amenities, built and otherwise, that will attract and retain creative people in general than in the kinds of tax subsidies and variances that are targeted to attract specific firms. Cities need creative people; somewhat paradoxically, they also (assuming that the right preconditions are present) provide the means of actuating, intensifying, and monetizing that quintessentially human creativity. The debate about the Creative Class and Creative Cities has been extremely fruitful and valuable. Our critics are our best teachers; they spur us to think harder about our assumptions, our constructs, and our work. Our task—like the impetus of creativity itself—is to move our understanding forward. Most of the time, this happens slowly, in small increments. Much less frequently—as happened in our society itself, with the explosion of information technology, and in our field, with the explosion of new ideas about creativity and place in economic models—it happens in sudden lurches. Constructing a theoretical framework that is capacious and elastic enough to accommodate all of these new factors will be the work of generations. In the meantime, it’s important to remember that the issues in contention are truly momentous—that they speak not just to critical issues in economic and urban development, but to the heart of the human condition. Today, for perhaps the first time in history, we have the opportunity to align economic and human development. This is embedded in and driven by the very underlying logic of the Creative Economy, the further development of which turns on its ability to utilize ever more talent and creative capacity.

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Pa rt  3

VA LU I N G C R E AT I V I T Y A N D C R E AT I N G  VA LU E

Chapter 6

‘ The M ark et for Sym b olic G o od s ’ Translating Economic and Symbolic Capitals in Creative Industries Barbara Townley and Elizabeth Gulledge

All goods have symbolic value, however the creative industries are noted for the production of goods that ‘generally serve an aesthetic or expressive rather than a clearly utilitarian purpose’ (Hirsch, 1972, p. 641–2). As sentimental attachment to a music track or addiction to a computer game may testify, their value is primarily ‘governed by the search for a “good” or the “right” ’, and thus raises the contested question of how to ‘value the unique’ (Karpik, 2010, p. 3). Two principles of legitimacy, centring on the symbolic and the economic, structure the reception of creative industry products. To be appreciated, they must satisfy the symbolic; to be viable, they must address the economic. Symbolic goods thus balance these twin poles and encompass both. However, the relationship between the materialization of creative production and its realization within an economic exchange is divisive: symbolic culture’s relationship to value, and more especially the market, is a contentious area (Throsby, 2001). The term ‘creative industries’ itself stimulates disquiet, evoking concerns that marketization and the imperatives of the commodity form fundamentally change cultural products, cultural producers, and cultural labour, challenging culture’s perceived role as a public good and as a creative civilizing force (Hesmondhalgh and Pratt, 2005; Jeffcutt et al., 2000). Debate pits the aesthetic against the efficient; the creative against the commercial; and ‘art for art’s sake’ competes with the exigencies of commercial appropriation (Townley et al., 2009). But what is the relationship between these two forms of value: the aesthetic and monetary, the symbolic and the economic? This article examines some of the relationships between them as they play out within creative fields. It does so by arguing that Bourdieu’s work on capital provides a useful entrée into this discussion, illustrating how the two spheres are intimately and inseparably related.

120   Barbara Townley and Elizabeth Gulledge

Bourdieu and the Symbolic Realm Bourdieu (1987, p. 201) poses the seemingly simple question: ‘what enables one to distinguish between works of art and simple, ordinary things?’ What makes a work of art a work of art and not a mundane thing or a simple utensil? What makes an artist an artist and not a craftsman or a Sunday painter? What makes a urinal or a wine rack that is exhibited in a museum a work of art? . . . Where does the ultimate principle, which produces the sacred by introducing difference, division and separation, reside? (Bourdieu 1987, p. 204)

For some, the answer lies in the intrinsic value of the object, an individual’s pleasure and enjoyment in response to the artefact. To others, the answer lies in the role of the institution: ‘the art object . . . is an artefact whose foundation can only be found in an artworld, that is, in a social universe that confers upon it the status of a candidate for aesthetic appreciation’ (Bourdieu, 1987, p. 201; Becker, 1982). An artistic institution, ‘the product of historical invention’(Bourdieu, 1987, p. 202), consecrates goods as aesthetic goods, the enjoyment of which depends on the possession of ‘the necessary schemes of appreciation and understanding’ (Brubaker, 1985, p. 41). ‘Cultural or symbolic goods differ from material goods in that one can “consume” them only by apprehending their meaning . . . The work of art considered as a symbolic good . . . only exists as such for a person who has the means to appropriate it, or in other words, to decipher it’(Bourdieu, 1984, p. 7). Dependent on the nature of the particular artwork, this is brought about by (long) exposure to, and a familiarization with, the artistic language and practice which indicates the development of an autonomous artistic field: ‘one could say that it is the aesthete’s eye which constitutes the work of art as a work of art’ (Bourdieu, 1987, p. 203). Appreciating the symbolic or the aesthetic is not therefore a disinterested act. Social conditions heavily influence aesthetic experience, ‘the work of art is given only to those who have received the means to acquire the means to appropriate it’ (Bourdieu, 1984, p. 23). Nor does aesthetic value reside in objects per se, appearance to the contrary notwithstanding, but in (elite) networks that sanctify such attribution. This process is eminently social, ‘although made to appear a game of truly objective qualities’ (Foster, 1986, p. 107). In his critique of economic theory Bourdieu (1997, p. 46) writes, ‘by reducing the universe of exchanges to mercantile exchange, which is objectively and subjectively oriented to the maximization of profit, i.e., economically self-interested, it has implicitly defined the other forms of exchange as noneconomic and therefore disinterested’: the ‘art-for-art’s sake’ that characterizes ‘cultural’ appreciation. For Bourdieu, this denies the social conditions in which productive practice and the consecration of creative work takes place, intimately linked to the ‘economic’, i.e. the configuration of social relations that make the production and consumption of cultural goods possible. Claiming the art world as an autonomous field of cultural activity is the attempt to develop ‘an upside

‘The Market for Symbolic Goods’   121 down economic world’ (Bourdieu, 1993). It is the attempt to deny the significance of the broader economic field. In addressing these deficiencies, Bourdieu (1997, p. 242) argues that it is ‘impossible to account for the structure and functioning of the social world unless one introduces capital in all its forms and not solely on the one form recognized by economic theory’ (Bourdieu, 1997, p. 47). Bourdieu identifies different capitals (assets, benefit, or investment) that an individual uses to augment their position in a scientific, political, academic, or artistic field. Capital is present in three guises: economic, cultural, and social (Bourdieu, 1997). The more familiar economic capital refers to monetary income, financial resources, and assets. Immediately and directly convertible into money, economic capital may be institutionalized in the form of property rights. Cultural capital exists as an embodied state of long-lasting ‘dispositions’ acquired through socialization of family and peers, and ‘work on oneself ’ in acquiring ‘cultivated’ habits and tastes; an objectified state of valued, cultural material objects, ‘educative . . . by their mere existence’ (Bourdieu, 1997, p. 56); and an institutionalized state, as acquired education (qualifications) and knowledge (Bourdieu, 1997, p. 47). ‘Cultural competence’, the ability ‘to decode that which is encoded . . . situat[ing] . . . art in the universe of artistic possibilities of which it is a part’ (Bourdieu, 1993, p. 22), depends on one’s cultural capital. Social capital is the actual and potential resources in ‘durable network[s]‌of more or less institutionalized relationships of mutual acquaintance or recognition’ (Bourdieu, 1997, p. 49). The volume of social capital possessed by a given agent reflects ‘the size of the network of connections he can effectively mobilise and the volume of capital (economic, cultural or symbolic) possessed . . . by each of those to whom he is connected’ (Bourdieu, 1997, p. 49). For Bourdieu (1997, p. 46), cultural and social capital, both in objectified and embodied forms, are capital because their basis lies in a universal equivalent of labour-time: capital is accumulated labour. The product of investment strategies, both take time to accumulate, and are ‘individual or collective, consciously or unconsciously’ aimed at establishing forms of being, behaviour, or knowledge, or ‘reproducing social relationships that are directly usable in the short or long term’ that have a potential capacity to produce profits, reproduce themselves in identical or expanded form, and a tendency to persist (Bourdieu, 1997, p. 52). They function, in other words, similarly to economic capital. Other forms of capital constitute ‘transformed, disguised forms of economic capital, never entirely reducible to that definition’ and which ‘produce their most specific effects only to the extent that they conceal (not least from their possessors) the fact that economic capital is at their root . . . at the root of their effects’ (Bourdieu, 1997, p. 47). Capitals are structurally homologous, that is, interests and investments in different forms of capital are analogous to an economic logic, but are not reducible to this. Although access to one form of capital makes access to others easier, one form does not automatically entail another. Cultural capital and social capital are convertible into economic capital under certain conditions but they remain distinct and separate forms. Drawing on an analogy between power and energy, forms of capital or power are potentially inter-convertible forms of power, but mutually irreducible.

122   Barbara Townley and Elizabeth Gulledge The different species of capital have different relative values depending on the nature of the field in which they are used: capitals are effective ‘in relation to a particular field’ (Bourdieu, 1995, p. 73). Action within a particular field is dependent on the participants’ understanding of the social, economic, and cultural parameters of that field. To perform effectively in the field one must have accumulated the appropriate capital and mastered the ability to use this capital effectively (mastered the field’s habitus). Fields, however, are in a constant process of change, and with this, the configurations of capital within them. One form of capital that has not been mentioned thus far is symbolic capital (Bourdieu, 1979). Essentially, symbolic capital is field-specific capital, a form of legitimacy or respect granted according to that which is valued within the field; the prestige that reflects knowledge of, and recognition within, the field. It ‘is the form the different types of capital take once they are perceived and recognized as legitimate’ (Bourdieu, 1987, p. 4). All capital is potentially symbolic. Within artistic fields, symbolic capital is closely allied to cultural capital. Symbolic cultural capital is thus the capacity to define and legitimize cultural and artistic values, standards, and styles (Anheier et al., 1995). It determines ‘what counts’ or what ‘is at stake’ within a particular field. From this perspective, symbolic capital and economic capital are distinct though (under certain conditions and at certain rates) mutually convertible forms of power, obeying distinct logics of accumulation and exercise (Brubaker, 1985, p. 39). Symbolic capital is judged internally, influenced by the interests of participants in the field. Economic capital introduces a heteronomous principle, that is, its criteria are determined external to the field. Through his analysis, Bourdieu demonstrates that ‘goods traditionally excluded from economic analysis . . . can be appropriated and constituted as capital’ (Liénard, Servais, and Bailey, 1979, p. 216). At issue, however, is how these different capitals operate in practice within a field, and in particular how the different forms of capital may be converted or translated from one form to another (see also ‘Performance in the Creative Industries’ by Allègre Hadida).

Translating Capitals Bourdieu’s intention, in what he refers to as the general economy of practices, is to ‘grasp capital and profit in all their forms’ in order to understand ‘how different forms of capital (or power, which amounts to the same thing) change into one another’ (Bourdieu, 1997, p. 47). In particular, his interest lays in the ‘transformational’ laws which ‘govern the transmutation of the different forms of capital into symbolic capital’ (Di Maggio, 1979, p. 82), and transubstantiation, whereby material, economic capital presents itself as immaterial cultural or social capital, or vice versa (Bourdieu, 1997, p. 46, emphasis added). ‘Translation’ is used here rather than Bourdieu’s term ‘convertibility’, because, as his use of the term transmutation implies, translation denotes editing and change according to the parameters of the field; rather than convertibility connoting equivalence.

‘The Market for Symbolic Goods’   123 Within the creative industries, the valorization of economic capital and cultural capital are inextricably, and complexly, intertwined. As Bourdieu notes, the relationship between economic and symbolic capital is often an inverse relationship, whereby economic value does not necessarily imply cultural value, often the reverse, and cultural significance does not necessarily ensure economic return. Economic success may consciously work against symbolic success. Distinguishing between financial return from creative endeavour and the commodification process in the mass production of creative goods, for some ‘profit-seeking’ from cultural production is an anathema. The demands of industrial production directed at large-scale audiences is held to devalue not only the creative process but also the cultural demands placed on the consuming audience (Horkheimer and Adorno, 1997). These relationships are heavily contingent, however. At issue is the intricate relationship between value and transactions. In a monetary economy, value is enhanced through circulation and transaction. In certain cultural forms, increased circulation of an object might devalue symbolic value to the extent that the monetary value of the object is also damaged. The relationship between economic and symbolic capital is thus ambivalent and often highly contingent socio-economically, historically, and geographically, dependent on the specific creative industry that is being examined. Within niche markets, symbolic capital may be used as a means of ensuring economic capital. For example, Peterson (2005) illustrates how ‘authenticity’ functions as symbolic capital for those involved in the production of country music, as actors manipulate it as a means of enhancing country music’s appeal. The inter-relationship between commercial and cultural goods is examined in Ryan’s (2007) study of Prada’s collaboration with avant-garde artists and architects. The latter’s cultural capital is used by Prada to produce symbolic capital for its brand. The interplay of the different capitals is complex, however, with leading architects countering charges of compromising artistic integrity (symbolic capital) by ‘selling out’, arguing that architecture should engage with the market economy and give architecture relevance through contributing to the built environment. The salience of geographical location is an important element in the accumulation of cultural and social capital, and its impact and inter-relationship with economic capital can be seen in the analysis of creative industry ecologies. Specialized schools and training establishments, apprentice and internship programmes sustain geographical locations and complex social networks within and between organizations. The relevance of social capital is evidenced in Grenfell and Hardy’s (2003) study of Young British Artists, as they illustrate Damien Hirst’s links to leading institutions in the field, as for example, Goldsmith’s (the leading art college in London), the Saatchi gallery which did so much to present his art, and the Tate, and through these, links with other art fairs and gallerists and fund raisers. Levine (1972) illustrates the relative standing of the Chicago and New York art markets with their differential access to critics, museums, and collectors and the impact of these on the art markets they sustain. Bystryn’s (1978) study of Abstract Impressionism in 1940s and 1950s New York illustrates the role of art galleries in mediating processes of innovation. She illustrates how galleries function in two roles: the first stimulating artistic invention within the

124   Barbara Townley and Elizabeth Gulledge artistic community by providing feedback on aesthetics and work in progress; the second concentrating on promoting artists’ work to potential exhibitors and collectors. ‘The first type tends to provide symbolic rewards to its artists while the latter type allocates very distinct monetary rewards . . . one can make a distinction among galleries between those which conceive of themselves as primarily cultural institutions and those which conceive of themselves primarily as businesses’ (Bystryn, 1978, p. 393). Both, however, function within an intricate social milieu exercising an implicit division of labour whereby the former provides a filtering role to the latter. The symbiotic relationship between them is reflected in the differential rewards, in terms of enhanced symbolic and economic capital accrued to each of their roles. Both sustain the art market. The means through which the artistic and the economic are mediated varies according to the industry in question. Sometimes the two are represented by different personnel within the same organization, ‘creatives’ and account managers in advertising, artistic directors and executive directors in opera and ballet, for example, or through different organizations, the artist being represented by the gallery. Demarcation may be specified spatially, through the separation between front room and back room of art galleries (Velthuis, 2005). Within the fashion industry the two arenas are visibly represented through the erection of two tents at ‘fashion weeks’: the exhibition hall which functions as a trade show and the catwalk theatre. As Entwistle and Rocamora (2006, p. 739) illustrate, ‘the distinction between art and commerce is translated into the planning of space’ with the separation between the two bridged by the physical movement of buyers and journalists. This movement, however, is mediated by one’s social and cultural capital, as only certain individuals access tickets to shows or after-show parties. We have been talking of ‘economic’ and ‘symbolic’ capital as though these are easily identifiable categories. This is not necessarily the case. Symbolic capital is an ambiguous property as Christopherson’s (1974) study of photography, and its attempts to differentiate itself as an ‘art’ form, while lacking the economic power of restricting supply of production or distribution, illustrates. Similarly, Baumann’s (2001) study of film criticism also illustrates how the gradual evolution of certain strands of cinema became an art form. Through the development of TV, increased secondary education, director-based production, film schools and their ties to universities, the perception of film shifted from being a form of entertainment to becoming a form of art, leading to the role for critics and the development of a film critics’ discourse. These studies also highlight the important function of cultural intermediaries whose role it is to ‘translate’ the significance of cultural goods. The ‘art market’, for example, exists through the cultural complex of critics, art historians, museum directors, professors, collectors, dealers, auctioneers, and experts (Karpik, 2010, p. 134). The role of the critic in mediating artistic appreciation influences the assessment of cultural production (Bielby et al., 2005); the pre-selection of goods for potential consumption is effected by, and through, the filtering of a number of ‘boundary spanners’ (A&R in music, literary agents, galleries, fashion buyers, influential magazine editors etc.), drawing on detailed, though rarely articulated, knowledge of

‘The Market for Symbolic Goods’   125 a field (Hirsch, 1972), as buyers and agents act as intermediaries between production and consumption (for an examination of these roles see ‘Brokerage, Mediation, and Social Networks in the Creative Industries’ by Foster and Ocejo). Equally, the foundation of economic capital is not necessarily readily identifiable. The UK government’s definition of the creative industries as the collective noun for ‘those activities 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’(DCMS, 2001), recognized in the US as ‘copyright industries’, indicates that though they may share many similarities with other information goods, it is only when ‘intellectual capital’ or creative content is converted to a form of intellectual property, protected by intellectual property rights, does creativity take the form of economic capital. Securing copyright and intellectual property right protection (IPR) is a vital element of business models: intellectual capital rendered into a form of property can then be protected and traded. Copyright thus acts as monopoly rent. In an era of easy free access, however, it is difficult to secure respect for, and recognition of, IPR. (There is, of course, the need to distinguish between authors’ and owners’ rights.) Complexities of distribution make copyright collecting services difficult, as is identifying the agency held responsible for infringement. Persuading consumers to finance creativity generates a variety of responses, from voluntary solutions to legislation ensuring copyright enforcement. Others see the model of physical property as private and excludable as outdated for essentially a network-based creation and production system, and emphasize access-based services or secondary markets (Anderson, 2006). Experiments with apps and the impact of mobile access, however, indicate the possibility of developing monetized IPR strategies. What is identified in all these examples is the ‘specialised milieu of symbolic production’ (Peterson, 1979). The creative industries are part of two different social worlds simultaneously, the commercial and the cultural, ‘each having its own conventions or routines of what is appropriate, legitimate or normal behaviour’ (Velthuis, 2005, p. 24). Within creative industries, the ‘convertibility’ and exchange of economic and symbolic capital, although not necessarily accepted and often hotly debated, become part of the ongoing, taken for granted, understanding of how these industries operate, as the parameters of the proper identity of the ‘artwork’, and the relative balance between commodity versus cultural good, is permanently under dispute (Velthuis, 2005, p. 79). Difficulties arise, however, when ‘value’ is addressed from outside the field, and takes place within a broader, economically dominated discourse with demands made for the creative industries, either individually or collectively, to demonstrate their ‘value’ (Throsby, 2001). Some of the claims made for the creative industries, and one of the reasons of their appeal to a political agenda, are their ability to satisfy a number of demands. Of personal and social benefit through education and cultural development, they are also identified as important in shaping cultural and community identity and with this, have a potential role in social inclusion projects. Their role in the generation of tourism and economic regeneration equally stresses their role in the creation of employment and contribution

126   Barbara Townley and Elizabeth Gulledge to economic value (Throsby, 2001). Towse (2003) estimates that the share of GDP in most developed countries is 5%, with some sectors, e.g. film in US, music in UK etc., being higher than average exporters. The economic ‘value’ of the creative industries, however, is fraught with difficulties. Measures of employment encounter the classification difficulties of standard industrial coding, including ‘humdrum’ activities in the creative industries while simultaneously downplaying the number of creative employees, especially designers, in other sectors of the economy. Questions arise as to whether measures should be restricted to the production of creative content or include production and distribution. Contribution to GDP, market size, value-added, turnover all present methodological problems. International comparative analysis is made more difficult due to differences in classifications. The 2008 OECD report on the Creative Economy specifically addresses means of measuring ‘creative industry activity’, identifying employment, time use, trade and value-added, copyright, and IPR as possible measures. Employment is often undercounted, excluding micro-enterprises or self-employed with a small turnover. Length of time worked causes problems in project enterprises. Time use surveys designed to capture non-economic activity, usually used to identify attendance at events, miss informal events, and generally focus on box office takings rather than attendance numbers. Measuring trade is problematic, as the ‘dematerialization’ of trade makes the measurement and monitoring of trade in IPRs through digitization problematic. As the report notes, ‘trade in the creative economy is relatively invisible’ (2008, p. 86). Measures of public investment suffer from a lack of standardized reporting conventions for public and non-public bodies. The OECD measure finally chosen is the nationally reported value of traded goods and services in the creative industries involving arts, heritage, media, and functional creations of design, architecture, and creative business services of advertising, PR (OECD, 2008). Measures of value are especially exacerbated where cultural goods are not necessarily produced by and for market activities. Their valuation necessarily depends on mechanisms of translation, i.e. how the ‘value’ of culture and creative products are rendered calculable through metrics and language. As Callon et al. (2007) note, it is the plethora of material and discursive assemblages that aid the construction of markets. There have been many attempts at accounting for measures of the value of culture: including use value (actual use, option value, for self, for others, bequest value), non-use value (existence value), outcome-based values, contingent valuation, choice modelling, hedonic pricing, travel cost, subjective well-being, quality adjusted life years, non-economic forms of valuation, and multi-criteria analysis (O’Brien, 2010). Measures of value include economic impact, measured in terms of consumption value of users (ticket sales etc.). Non-user consumption value is recorded in willingness to pay estimates; bequest value (willingness to preserve for heirs); hedonic value (increases in property values in areas with cultural amenities); and output, income, and jobs associated with cultural assets (Seaman, 2003). Economic impact models (EIM) calculate short run spending generated, usually computing net direct and ancillary (indirect) spending at sites and their region, adjusted through multipliers; contingent valuation survey methods

‘The Market for Symbolic Goods’   127 (CVM) assess non-market consumption benefits linked to option, existence, prestige, and bequests benefits (Seaman, 2003; Frey, 2000). Algorithms compute the total impact of cultural assets assessing consumption impact, long run growth impact and short run spending impacts. Contention or disquiet arises because attempts to construct a universal matrix bring the unique to the market (Karpik, 2010). As the market compels measurement in terms of prices (Klamer, 2003), the implicit understanding is that the symbolic value of products is simultaneously devalued. Through this ‘the market grows unremittingly, driven by the conversion of incommensurables into generalised equivalence’ prompting an ‘extension of calculativeness’. It is this that stimulates dissent.

Economic and Symbolic Capital in the Field of Publishing The intricacies of the relationship between economic and symbolic value are perhaps best illustrated through examples. Book publishing nurtures two kinds of enterprises: the cultural and the commercial (Coser et al., 1985; Thornton, 2004). Commercially a book must generate economic capital for a publisher directly through sales, indirectly through secondary rights, foreign sales, film rights, accompanying merchandise spin-offs in the form of games, toys etc. Books, however, also function as cultural capital. Produced in publishing houses not factories or plants they have a value beyond the price of the paper and printing. ‘Books are different’.1 These twin understandings of the book lead to the dualistic tensions that pervade publishing, as an editorial logic balances market interests. Their relative weight sees publishing as a profession or a business; emphasizes the importance of back catalogue and reputation or sales and market position; developing author/editor networks and establishing imprints or developing market and distribution channels (Coser et al., 1985; Thornton, 2002). And, as is often found in the creative industries, the domains of commerce and culture are represented by two distinct personnel, the rights manager and the editor. Although not using the term, nor using a Bourdieusian framework, Thornton’s (2002) analysis of historical changes in higher education publishing in the US, changes that are identifiable to greater or lesser degrees elsewhere, identifies the relative balance of economic and cultural capital over a 30-year period. She illustrates some of the tensions between the capitals as she distinguishes between what she terms an editorial and a market logic, seen as informing all dimensions of publishing organizations including organizational identity, sources of legitimacy and authority structures, the identification of missions, the development of organizational strategy, governance structures, and investment. An editorial logic emphasizes the importance of cultural capital and is identified with privately owned, smaller publishing houses, for whom publishing represents a profession; an emphasis on the prestige of backlists and the ability of editors to build

128   Barbara Townley and Elizabeth Gulledge reputations through developing imprints and developing new authors; and the status of published books to build reputations in the field. The subsequent shift from ‘publishing as a profession’ to ‘publishing as a business’ sees an emphasis on market position and increased profit margins, the building of new market channels and corporate acquisitions to build growth that has increasingly characterized the field. While Thornton offers an historical overview, Weber’s (2000) comparative analysis between the US and French editors and publishers illustrates how the relative weight of symbolic vis-à-vis economic capital is geographically situated and influenced by wider cultural values. In both countries, ‘symbolic boundaries’ are constructed around the twin poles of economic and cultural capital and used by publishers to distinguish ‘worthy’ and ‘less worthy’ books, characterize professional peers and the perceived reading public, and their own self-identity and worth. Publishers are distinguished according to whether they are ‘literary’ or ‘scholarly’ or more ‘commercial’. While commercial publishers may place an emphasis on a broader audience, current front list, best-sellers, subsidiary rights, competitive bids, marketing specialists, and sales forecasts, more literary publishers focus on more intellectual works, a narrower audience, the importance of the backlist, book reviews in established, recognized outlets, and their roles as cultural gatekeepers (Weber, 2000, p. 130). There are, however, important cross-cultural differences. American publishers, for example, classify books according to utilitarian criteria: being in line with market objectives, fitting categories that have previously proved successful for bookselling. Audiences and booksellers are recognized as being influential in the construction and adoption of new genres and classifications. In France, however, and reflecting its policy of ‘patrimoine culturel’, protecting indigenous cultural and creative content be this in films, music, or books where a ‘prix unique’ with a lower sales tax distinguishes them from other goods, appeal is more to a literary and intellectual heritage. Whereas in the US there is a greater congruity between sales results and the designation of a ‘good book’, acceptance of a marketing strategy, and the role of sales personnel, in France book publishing is driven by the literary cannon. Authors and genres are hierarchically ordered according to literary prestige: ‘popular means tasteless’ rather than having its own traditions and qualities (Weber, 2000, p. 133). Weber (2000, p. 128) concludes, unlike France, ‘the appeal to the market is a salient and taken-for-granted element in the American definition of cultural value . . . It is more recognized that the market ‘establishes the symbolic order of worth and value’. Weber (2000) notes, however, that in France commercial houses are beginning to hire ‘intellectual’ editors as a means of boosting symbolic capital, while literary houses are hiring those with commercial skills to boost sales. The relative balance and weight of capitals influences not only broad organizational structural, strategy, and design issues within publishing houses, but also the daily practices that inform job roles and decisions. One of the problems encountered by publishers, both exacerbating and ameliorating the tensions between capitals, is the ‘nobody knows’ principle, taken to be one of the defining characteristics of the creative industries (Caves, 2000). As one publisher explains, ‘I just cannot predict with any accuracy

‘The Market for Symbolic Goods’   129 which books will become the standard reading of the next decade, let alone those that will become the classics of the next half century, and so I understand that in some way I am a gambler of sorts, betting on books that will last’ (Gulledge, 2010, p. 55). In devising a front and back list, publishers put out books that they know will make money to allow them to publish more financially ‘risky’ ventures. However even here, economic imperatives are never entirely ignored. The emphasis is on publishing books considered ‘worthwhile’ while being able to gauge quantity. As one publisher explains, ‘most people think a good book is one that sells. A good book is one that sells the number you have printed’ (Gulledge, 2010, p. 57). Decision-makers evaluate, classify, choose, and justify their actions according to collective conventions that define what is legitimate and feasible reflecting the relative balance of the economic and cultural. While the role of capital may allow for fine detail at the level of decisions by individual publishers and the relative roles within publishing houses, capital also has a purchase at a broader, industry level, and it is here we can see the relevance of the role of symbolic capital. Contemporary publishing may be understood as a global industry, brought about by the international buying and selling of rights, conglomeration, and the search for larger markets. The focus on global does not mean, however, that the national level is no longer important. As a vehicle of cultural production, publishing plays an important role in transmitting cultural identity. As Coser et al. (1985, p. 7) note, the dual nature of book publishing ‘is . . . perilously poised between the requirements and restraints of commerce and the responsibilities and obligations that it must bear as a prime guardian of the symbolic culture of the nation’. An indigenous publishing industry potentially plays an important role in protecting and promoting a cultural and national identity in the choice of works it chooses to publish and distribute. Given some of the pressures imposed by the wide economic field, this role may become more constrained. For nationally based publishers, publications focusing on issues of cultural and national identity provide an important source of symbolic capital, a source of ‘distinction’ within the broader field of publishing which may then be used as a resource in the struggle for identity and position. Attempts to protect ‘Scottish publishing’ provide an interesting example of the interplay of capitals. ‘Scottish publishing’ is a term that draws upon an eminent and illustrious history and is used by some publishers to position their understandings of their purpose and position in the market. Although great Scottish Enlightenment writers such as David Hume, Adam Smith, and James Boswell were published in London, by the beginning of the nineteenth century, and encouraged by the publication of the Encyclopedia Britannica, Edinburgh challenged London in publishing eminence. Using financial capital accumulated through reprints and educational publishing to invest in new authors, Scottish publishers effectively turned themselves into enduring imprints. Archibald Constable, a leading Scottish publisher, broke industry norms to run large print runs of novels by Sir Walter Scott, a huge risk at the time. Nelson’s capitalized on overseas markets as the earliest British publisher to open a United States office; Chambers led the British popular literary market; Murray’s published Darwin’s Origin

130   Barbara Townley and Elizabeth Gulledge of the Species; while Blackwood’s, a Glasgow-based publishing house, published leading writers, including George Eliot, Joseph Conrad, and E. M Forester (Finkelstein and McCleery, 2007). By contrast, at the end of the twentieth century, prominent independent Scottish family-run publishing houses had been replaced by international conglomerates. All Scottish publishers had been taken over, sold, or ceased to exist. Not only was there a change in the ownership of publishing houses, the decline of independent book retailers and the rise of centralized book purchasing by the retail trade caused one publisher to lament ‘It’s a process of cultural ethnic cleansing’ (Gulledge, 2010, p. 83). Debates on Scottish devolution saw a resurgence of interest in Scottish culture and with this a revival in publishing companies based in Scotland (as opposed to Scottish firms based in London), with the founding of independent houses, publishing fiction and non-fiction aimed at a general market ‘but with a distinctly Scottish flavour to the lists of author and subjects’ (Scottish Publishers Association, 2004). These presses have played a significant role in nurturing new Scottish writing, publishing works by Ian Rankin, Alexander McCall Smith, Louise Walsh, and Irvine Welsh, many of whom were presenting a representation of Scottish working class life and introducing new stylistic devices marked by dialects and accents, writing that, in the words on one publisher, the ‘distinguished London publishers won’t dare touch’ (Gulledge, 2010, p. 80). As a result of literary reviews and prizes, ‘Scottish writing’ became a ‘category of writing’ carrying symbolic capital within the broader field of publishing. With increased interest in ‘Scottish writing’ and the role that indigenous, independent publishers played in this, an association of publishers, the Scottish Publishers Association (SPA), was formed with a view to promoting the output of its members. Scottish Arts Council (SAC) awards in the form of publishers’ grants to support ‘Scottish publishing’ were also established. While ‘Scottish writing’ may be identified as being ‘any book by an author or authors of Scottish descent or living in Scotland, or for any book which deals with the life of a Scot or with a Scottish question, event or situation’ (Saltire Society Scottish Literary Awards), Scottish publishing, however, is a different question. What are its parameters? Books from Scotland, about Scotland, any book published by a publisher based in Scotland, any book published by a publisher based in England but having Scottish content? Scottish publishing continually confronts the issues of publication location, authors’ place of birth, content and subject matter, attempts of the Scottish Publishers Association and Scottish Arts Council awards to support ‘Scottish publishing’ notwithstanding (Gulledge, 2010). While smaller, ‘one man presses’, being less engaged with the wider field of publishing, are willing to position themselves as niche publishers of Scottish writing or Scottish interest books, medium to large sized publishers in Scotland are less likely to do so, either because they are part of a larger conglomerate or because they are aiming at a wider international market. Although being affiliated with ‘Scottish publishing’ is used by some publishers to help avoid the ‘contamination’ of being considered too commercial, there is strong resistance to this being the sole focus of a publishing press. A focus on ‘Scottish publishing’ is seen as centring on the creation of product while taking insufficient account of marketing and sales. Focusing solely on Scottish product results in

‘The Market for Symbolic Goods’   131 them being sidelined in London, pigeonholed as ‘Scottish’, a ‘curiosity’ or a ‘vanity publisher’ of the ‘old guard’. As with other forms of capital, symbolic capital is intimately linked to power. Symbolic power is ‘the performative power of naming’ (Bourdieu, 1997, p. 14), the power of consecration, to ‘make something exist in the objectified, public, formal state which only previously existed in an implicit state’ (1997, p. 14). The power to consecrate, however, is not unconditional. It has to be based on the possession of symbolic capital, while its efficacy depends on the degree to which the vision proposed is founded in reality. ‘Symbolic power is the power to make things with words. It is only if this is true, that is, adequate to things, that description makes things . . . symbolic power is a power of consecration or revelation, the power to consecrate or to reveal things that are already there’ (Bourdieu, 1997, p. 22–23). Although ‘Scottish publishing’ is of important symbolic value, there is an ambiguity in what it constitutes, and thus exactly what form this symbolic capital takes. As organizations, the SPA and SAC have insufficient symbolic capital to act as influential players within the broader field of publishing, while the symbolic power of ‘Scottish publishing’, although having resonance, is insufficient to challenge or counterweigh economic capital in being able to ensure markets. In other words, the symbolic capital of ‘Scottish publishing’ is, in itself, insufficient to guarantee economic success. The broader political issue of the role of indigenous publishing reflecting elements of national and cultural identity is still significant, however. As one publisher comments, ‘The issue, the question, is how do you protect a distinct identity of a small country in an age of rampant globalization?’ (Gulledge, 2010, p. 99). As has been seen, ‘the structure of the publishing field is shaped above all by the differential distribution of economic and symbolic capital’ (Thompson, 2010, p. 9). Their relative balance is likely to be heavily challenged by digitization and its impact on the publishing value chain, operating systems, content management and workflow, sales and marketing, and content delivery. For Amazon, e-book sales have overtaken book sales with the introduction of digital reading platforms, most especially Kindle, prompting some to confuse product with process and proclaim the ‘death of the book’, downplaying its aesthetic, material form and its role as a social object. Digitization has an impact on reader engagement methods, digital sampling, ease of access, updat­ ability, portability, and multimedia engagement with content. In line with changes in other creative industries, of great concern to publishers are the problems of copyright protection and piracy, and the role of large distributors in prompting price deflation and the increased commoditization of content by non-content players, as e-books are sold at large discounted rates in relation to their material counterparts. As in the music industry, if books become established in consumers’ minds as being ‘worth’ a low discounted price, as a music track is established at 99 cents through Apple’s distribution strategy, it is perhaps this that has the greatest significance for the balance between the two capitals. While digitization may allow access to ‘the long tail’ (Anderson, 2006) of books that might not otherwise gain a readership, ‘a major devaluing of intellectual property is unlikely to lead to an overall increase in the quality of content over time’ (Thompson, 2010, p. 368).

132   Barbara Townley and Elizabeth Gulledge

Conclusions The issue is how creative and cultural goods come to be affirmed, evaluated, and valorized, by whom and for what (Klamer, 2003). The opposition between money and culture reproduced in the publishing industry reflects the tensions between the symbolically valid and the economically viable in all creative fields. While there may be clearly identified positions at each end of the spectrum, most agents occupy the ‘grey area’ in between, as they try to balance both imperatives of cultural and economic capital that define these fields. Certain characteristics make the marketability of creative goods difficult and distinct: an inherent unknowability (market response is knowable only after consumption or the commitment of significant sunk costs), and an infinite variety (as a multidimensional product, its qualities are indivisible, and thus difficult to duplicate or replicate) (Caves, 2000). Decisions are thus made on judgements, with judgements informed by domains or logics of action. Karpik (2010) identifies a range of devices that function to organize the operation of a market: networks (personal, trade, and practitioner networks, professionals dedicated to the circulation of knowledge) (social capital); appellations (names associated with products, e.g. brands, certificates), critics, guides, and rankings (cultural capital); and confluences (acting to channel buyers to products) (social capital). All these devices operate to orient knowledge, moderating both product and client, with their functioning structuring acceptable modes of operation within domains of logics of action. What is at issue in these examples, as Karpik (2010) notes, is not the opposition between ‘culture’ and ‘economics’, but between ‘singularities’ and ‘commodities’. For Karpik (2010, p. 6) the creative industries epitomize a ‘longstanding struggle between commoditization and singularization’. As generalized equivalences (one family saloon being like another), commodities circulate in markets; as incommensurable goods (Mozart is not substitutable by Beethoven) the circulation of singularities, although not excluded from the sphere of exchange, follow their own specific logic (Karpik, 2010, p. 4). It is not a separation between ‘inside’ and ‘outside’ the market, rather the goods of the creative industries function within ‘the market of singular goods’ (Karpik, 2010). Most markets are cultural constellations, involving ‘a wide variety of symbols that transfer rich meanings between people who exchange goods with each other’ (Velthuis, 2005, p. 3). Economic exchange is always socially and culturally situated and meanings of exchange emerge from the transaction of situational circumstances, specific social relationships, and frames which economic actors actively construct. For Velthuis (2005) it therefore makes more sense to talk in terms of circuits of commerce. His study of art markets concludes ‘the radical separation between quality or artistic value on the one hand, and price on the other, is in the end untenable’. This separation is based on a misconceived, ‘under-socialized’ conception of economic and cultural value ‘. . . the relationship between price and value is more intricate than the dominant strands within humanities, or neoclassical economics have allowed for’ (Velthuis, 2005, p. 178). It is

‘The Market for Symbolic Goods’   133 the recognition that all markets are embedded within regimes or domains of action and these regimes of economic coordination with their combination of aesthetic value, social value, and economic value, or capitals, all intertwine in the market for singularities. This is why a full understanding of the market for symbolic goods in the creative industries will have to rely on detailed examinations of industry and organization negotiations of value to trace the various modalities of translation that are adopted within each province.

Note 1. The reference comes from the 1962 Restrictive Trade Practices Court investigation of the Net Book Agreement, an agreement between publishers of a minimum retail book price below which it cannot be sold. Challenged that this was a publishers’ collective agreement or cartel, the book trade offered a since oft repeated phrase that ‘books are different’, and publishing is a special activity. The court accepted that the NBA functioned in the public interest in that books have educational and cultural value (Allan and Curwen, 1991).

References Allan, W. and Curwen, P. (1991). Competition and Choice in the Publishing Industry. London: The Institute of Economic Affairs. Anderson, C. (2006). The Long Tail. New York: Hyperion. Anheier, H., Gerhards, J., and Romo, F. (1995). Forms of capital and social structure in cultural fields. American Journal of Sociology, 100: 859–903. Baumann, S. (2001). Intellectualization and art world development: film in the United States. American Sociological Review, 66: 404–426. Becker, H. (1982). Art Worlds. Berkeley, CA: University of California Press. Bielby, D., Moloney, M., and Ngo, B. (2005). Aesthetics of television criticism. Research in the Sociology of Organizations, 23: 1–44. Bourdieu, P. (1979). Symbolic Power. Critique of Anthropology, 4: 77–85. Bourdieu, P. (1984). Distinction:  A  Social Critique of the Judgment of Taste. Cambridge, MA: Harvard University Press. Bourdieu, P. (1987). What makes a social class? On the theoretical and practical existence of groups. Berkeley Journal of Sociology, 32: 1–18. Bourdieu, P. and Wacquant, L. (1992). An Invitation to Reflexive Sociology. Oxford: Polity Press. Bourdieu, P. (1993). The Field of Cultural Production: Essays on Art and Literature. New York: Columbia University Press. Bourdieu, P. (1995). Sociology in Question. London: Sage. Bourdieu, P. (1997). The forms of capital. In A. H. Halsey, H. Lauder, P. Brown, and A. S. Wells (eds.), Education: Culture, Economy, Society. Oxford: Oxford University Press, 46–58. Brubaker, R. (1985). Rethinking classical theory: the sociological vision of Pierre Bourdieu. Theory and Society 14(6): 745–775. Bystryn, M. (1978). Art galleries as gatekeepers: The case of the abstract expressionists. Social Research, 45(2): 392–408.

134   Barbara Townley and Elizabeth Gulledge Callon, M., Millo, Y., and Muniesa, F. (2007). Market Devices. Malden, MA: Blackwell. Caves, R. (2000). Creative Industries. Cambridge, MA: Harvard University Press. Christopherson, R. W. (1974). From folk art to fine art: A transformation in the meaning of photographic work. Urban Life and Culture, 3(2): 123–157. Coser, L., Kadushin, C., and Powell, W. (1985). Books: The Culture and Commerce of Publishing. Chicago, IL: Basic Books, Inc. Department for Culture, Media and Sport (DCMS) (1998, 2001). Creative Industries Mapping Document. London: DCMS. Di Maggio, P. (1979). On Pierre Bourdieu. American Journal of Sociology, 84(6): 1460–1474. Entwistle, J. and Rocamora, A. (2006). A field of fashion materialized: A study of London fashion week. Sociology, 40: 735. Finkelstein, D. and McCleery, A. (eds.) (2007). Edinburgh History of the Book in Scotland, vol. 4: 1880–2000. Edinburgh: Edinburgh University Press. Foster, S. (1986). Reading Pierre Bourdieu. Cultural Anthropology, 1(1): 103–110. Frey, B. S. (2000). Arts & Economics. New York: Springer. Grenfell, M. and Hardy, C. (2003). Field manoeuvres: Bourdieu and the Young British Artists. Space and Culture, 6: 19–34. Gulledge, E. (2010). Understanding the publishing field: the contributions of Bourdieu. Ph.D., University of St Andrews. Hesmondhalgh, D. and Pratt, A. C. (2005). Cultural industries and cultural policy. International Journal of Cultural Policy, 11: 1–13. Hirsch, P. (1972). Processing fads and fashions: An organization set analysis of cultural industry systems. American Journal of Sociology, 77: 639–659. Horkheimer, M. and Adorno, T. W. (1997). Dialectic of Enlightenment. London: Verso. Jeffcutt, P., Pick, J., and Protherough, R. (2000). Culture and industry. Organizations and Society, 6: 129–143. Karpik, L. (2010). Valuing the Unique. Princeton: Princeton University Press. Klamer, A. (2003). Value of culture. In R. Towse (ed.), Handbook of Cultural Economics. Cheltenham: Edward Elgar, 465–469. Levine, E. (1972). Chicago’s art world: The influence of status interests on its social and distribution systems. Urban Life and Culture, 1(3): 293–322. Lienard, G., Servais, E., and Bailey, A. (1979). Practical sense. Critique of Anthropology, 4: 209–219. O’Brien, D. (2010). Measuring the Value of Culture. London: DCMS. Organisation for Economic Co-operation and Development (2008). Creative Economy Report. Geneva: OECD. Peterson, R. A. (1979). Revitalising the culture concept. Annual Review of Sociology, 5: 137–166. Peterson, R. A. (2005). In search of authenticity. Journal of Management Studies, 42(5): 1083–1098. Ryan, N. (2007). Prada and the art of patronage. Fashion Theory, 11(1): 7–24. Seaman, B. (2003). Economic impact of the arts. In R. Towse (ed.), A Handbook of Cultural Economics. Cheltenham: Edward Elgar, 224–231. Scottish Publishers Association (2004). Thirtieth Anniversary of the Scottish Publishers Association: A celebration. Edinburgh: SPA. Thompson, J. B. (2010). Merchants of Culture. Cambridge: Polity Press. Thornton, P. (2002). The rise of the corporation in a craft industry: Conflict and conformity in institutional logics. Academy of Management Journal, 45(1): 81–101.

‘The Market for Symbolic Goods’   135 Thornton, P. (2004) Markets from Culture: Institutional Logics and Organizational Decisions in Higher Education Publishing. Stanford, CA: Stanford University Press. Throsby, C. D. (2001). Economics and Culture. Cambridge: Cambridge University Press. Townley, B., Beech, N., and McKinlay, A. (2009) Managing in the creative industries: managing the motley crew. Human Relations, 62: 939–962. Towse, R. (2003). Creative industries. In Ruth Towse (ed.), A Handbook of Cultural Economics. Cheltenham: Edward Elgar, pp. 125–131. Velthuis, O. (2005). Talking Price. Princeton: Princeton University Press. Weber, D. (2000). Culture or commerce? In M. Lamont and L. Thevenot (eds.), Rethinking comparative cultural sociology. Cambridge: Cambridge University Press, 127–147.

Chapter 7

Trading  Pl ac e s Auctions and the Rise of the Chinese Art Market Anna M. Dempster

On Thursday, 11 November 2010, shock waves went through the international art world as a Chinese vase was sold at Bainbridges auctioneers for a hammer price of £43 million. This was 40 times its estimate of between £800 000 and £1.2 million and the world record for any Chinese work of art sold at auction to date. If before 1978 it was impos­ sible to own art in China, by 2011 China had reportedly traded places with the established Western markets to become one of the largest art markets in the world. At the heart of this transition was an ancient place of trade, the auction house. The vase sold at Bainbridges reaches a delicate 16  inches and is decorated with a fish and flower motif on a vibrant yellow and blue background with a central body of perforated lattice work. The specially printed three page description of Lot 800 began ‘A Superb and Very Rare yang cai Reticulated Double-Walled Vase, six-character mark in underglaze blue of Qianlong and of the period’. In a BBC interview following the sale, Ivan Macquisten, editor of the leading industry publication Antiques Trade Gazette, confirmed that the vase ‘dates to between mid to late 18th Century and it would have been made for the Qianlong emperor . . . when China was at its zenith . . . this is one of the great works made for one of his palaces’ (BBC News, 12 November 2010). Michael Lee, Curator of the Museum of East Asian Art in Bath, commented on its technical merit and was quoted as saying ‘The double-walled construction is rare and difficult’ (Grice, 2010). The setting for this sale was unexpected: a modest auction house in West Ruislip, a suburb of London, founded 30 years ago by Peter and Jane Bainbridge specializing in probate work involving the valuation, disposal, sale, and delivery of items bequeathed by will. On its website, Bainbridges stated that ‘We value ALL ITEMS—from the humble to the important’.1 Approximately every five weeks, on Thursdays, Bainbridges hold an auction that covers all levels of goods and can last for up to nine hours. This is a world away from the glamorous auctions of the major London houses like Sotheby’s and

Trading Places  137 Christie’s, where a small number of star lots from globally branded artists are offered in high profile events seen by many as the highlight of the art world calendar. To put the sale in perspective, Bainbridges’ previous highest selling lot was £100 000, paid for a Ming enamel piece in 2008. Furthermore, ‘The top car auctions are happy if they get £26 million for an entire sale’ explained Peter Bainbridge, drawing on his experience of auctioning classic cars. ‘We just got £43 million for one lot. These are figures that no one in the world gets round easily’ he exclaimed at the time (Grice, 2010). According to the terms and conditions printed on the back of Bainbridges’ catalogue, the sale room receives a 20% buyer’s premium and 17.5% seller’s commission on every lot, which would mean that the auction house would stand to net an estimated £16 million from the sale, while the buyer paid a reported £51.6 million (Reyburn, 2011). The sale captivated the popular and trade press with the perfect ‘cash in the attic’ story. The vase was discovered in the northwest London suburb of Pinner, by Anthony Johnson and his mother, Gene Johnson, 86 at the time, when clearing out the home of her late sister, Patricia Newman, who died in 2010. The vase was consigned to Bainbridges along with some mahogany furniture after Mr Johnson had come across a leaflet for the local auction house. On the evening of 22 September, in amongst the household items and bric-a-brac common to the monthly sales, the vase caught the eye of Luan Grocholski, a consultant valuer working with Bainbridges at the time. In an interview, Grocholski decribed how the vase ‘distracted’ him with ‘a sort of light source’. Grocholski asked Bainbridge to remove it from the next sale so he could investigate it further (Knight, 2011). The provenance, or historical chronology of ownership, of an object is critical to establishing its authenticity as well as its cultural significance and has a direct impact on its value in the marketplace. In this case the provenance was vague. As was the fate of many such items, the assumption was that the vase originally left China in about 1860, possibly looted from the Summer Palace during the Second Opium War. It was reputedly acquired by the family during the 1930s but precisely how it made its way to the house in Pinner remained a mystery. A posting on the auctioneer’s blog at the time remarked: ‘It is a masterpiece. If only it could talk’ (BBC News, 12 November 2010). Establishing authenticity was critical given the prevalence of high-quality fakes and forgeries in the international art and antiques market. In particular, with China’s art market boom from the mid 2000s and the prices for Chinese porcelain at historic highs, the global trade in fakes has become increasingly sophisticated. This has not only threatened the market as a whole but increased the already significant risks of buying Chinese ceramics in particular (Pomfret, 2008). In authenticating the work, ‘The weight of responsibility was considerable’ Grocholski admitted in an interview (Knight, 2011). However, after weeks of extensive research at the London archives of the Victoria and Albert Museum and the British Museum he was confident that this was a genuine Qianlong piece from the period 1736–1795. Following confirmation that the vase was authentic, Peter Bainbridge made the bold decision to take out a full-page advertisement in the Antiques Trade Gazette, a leading industry publication which lists upcoming auctions across the country and

138  Anna M. Dempster internationally. On Monday 8 November, on the eve of London’s Asian Art Week, the vase went on display in a boardroom in Dover Street, Mayfair. For one afternoon only, from noon until 6pm, the most prominent experts of Chinese art, as well as dealers, agents, and buyers, came to see the vase in a murmuring chorus of approval. For the small auction house it was an enormous endorsement. The object, and its subsequent sale, depended almost entirely on its validation by the art world establishment, including its experts. So far, the vase had passed the test. By the end of the afternoon the estimate of £800 000 to £1.2 million seemed low. ‘It was like a taxi meter’, Grocholski remarked, ‘the figures were click click clicking upwards’ (Knight, 2011). What factors could explain this remarkable case? In order to better understand the dynamics that led to the sale, multiple levels of analysis are needed and the remainder of this article will discuss the socio-economic changes, including macro trends at the national and international levels and possible motivations at the micro and individual levels. An interplay of economic, social, and cultural explanations are provided for why an object such as this could have been sold to a buyer at a regional auction house for such a remarkable price. Of all the creative industries, perhaps some of the most spectacular growth of the past two decades, both in terms of value and volume of trade, has been seen in the area very broadly labelled as the ‘Art and Antiques’ market (DCMS, 1998). In fact, this market is far from homogeneous. It spans periods from the pre-historic to the present day and includes a wide range of styles and artistic movements, as well as many types of objects in different media and dimensions. Nonetheless, industry estimates suggest that the ‘Art and Antiques’ market has more than doubled in size from 1980 to 2011, growing over 575% from its lowest point in 1991 to a high in 2007. By 2011 it was valued at €46.1 billion globally (McAndrew, 2011). Many segments of the total market have also proved remarkably resilient in the face of major economic downturns. Although it took the art trade nearly a decade to recover from the recession of the 1990s, much of the market bounced back in only a few years from the contraction of 2009, even given the global economic recession starting that year which followed the financial crisis of 2008. Furthermore, as returns on traditional financial asset classes, such as bonds and equities, have receded, investors’ attention has turned to the art market’s comparatively positive performance and resilience. Given its return performance and relatively low correlation with other investment categories, art has been seen as an increasingly attractive way to diversify risk and increase returns in a broader portfolio of investments (Mei and Moses, 2002). One of the key explanations for the art market’s growth are global trends which suggest increases in income inequality, and a growing population of (ultra) high net worth individuals, many from the emerging economies. This has fuelled the consumption of luxury goods, including art and antiques. In a study of the art market over the last two centuries Goetzmann, Renneboog, and Spaenjers (2010) find a long-run correlation (cointegration) between top incomes and art prices as well as evidence that an increase in income inequality may lead to higher prices for art. According to the 2012 Hurun Report (China’s rich list), there were 189 US-dollar billionaires in China, around six

Trading Places  139 times the number in Britain. ‘China probably now has the largest number of billionaires anywhere in the world’, said Rupert Hoogewerf, founder and compiler of the Hurun list (The Independent, 30 January 2011). Unlike in Western traditions where the affiliation between art and money, culture and commerce is fraught with tensions (Caves, 2000; Dempster, 2009), in China the relationship between art and money is less at odds. The trade of art and antiques has become an increasingly global, and big, business. Traditionally dominated by the transatlantic markets of Europe and the US, in the twentyfirst century the duopoly of London and New York has been challenged by the rise of regional centres in emerging economies such as Russia, United Arab Emirates, India, Brazil, and China. Although there is evidence of government and private efforts to foster local creative and cultural initiatives, it is the new consumers from emerging econ­ omies who have dominated the news and the market, given their purchasing power and the record prices they are willing to pay for cultural objects. The Qianlong vase sold at Bainbridges was only one in a long line of record prices achieved at auction in recent years. The rise of the Chinese art market has been fuelled by the extraordinary economic growth seen in the country since the launch of its ‘reform and opening-up’ policy in 1978. In the last 30 years the economy has increased nearly 20-fold in US dollar terms and real GDP growth has averaged 10% annually, with the implication that GDP has doubled every seven to eight years. This economic development, and its significant social and cultural implications, has been compared to the socio-economic change experienced in Europe during the Industrial Revolution of the nineteenth century (Keane, 2009). In terms of art, mainland China began to open up from about 2000. Exports dominated imports through the 1980s and 1990s and it is only since 2005 that Chinese collectors have become prominent on the international art scene. The leading art world headline of 2011 was that China, with an estimated 30% share of the market, for the first time in contemporary history, overtook the US (with 29%) and UK (with 22%) to become the largest Art and Antiques market in the world (McAndrew, 2011). The contemporary auction market alone grew from an estimated $0.8 million in 2002 to $167.4 million in 2010 (ArtTactic, 2011) with Chinese auction sales estimated to rise 177% in 2010 and a further 64% in 2011 (see Figure 7.1). From 2004, total auction sales in Asia increased in value by over 1000% as both supply and demand exploded. China accounted for the highest value auction results with more than 700 paintings sold above $1 million in 2011, compared with 426 in the US and 377 in the UK (ArtPrice, 2012). By 2011, six of the top ten best selling artists were Chinese painters, including Zhang Daqian (1899–1983) and Qi Baishi (1864–1957) in first and second place followed by the more widely recognizable names of Andy Warhol (1928–1987) and Pablo Picasso (1881–1973) (ArtPrice, 2012). In a powerful sign of its perceived importance by industry players, by 2011 the Chinese art market moved into first place according to ArtTactic’s ‘Confidence Indicator’ methodology which polls leading experts to gauge market trends. As well as the emergence of specialist sales focusing on Chinese objects by long-standing players in established art market centres, there was a notable rise in the number of auctions held in Mainland China, as well as in Hong Kong, Macao, and Taiwan, designed to

140  Anna M. Dempster $1600 $1400 $1200

Millions

$1000 $800 $600 $400 $200 $0

2000

2001

2002

2003

2004

2005

Chinese contemporary art (20th century)

2006

2007

2008

2009

2010

Chinese classical modern paintings

Chinese ceramics and works of art

Fig.  7.1  Chinese auction sales (all categories) 2000–10. Source:  Art Tactic, Annual Art Investors’ Guide to the Chinese contemporary Art Market  2011.

satisfy local demand. These cities had become the global trading places of choice for new art market consumers. The widespread interest in collecting art and antiques exhibited by Chinese consumers is therefore a relatively recent phenomenon (also dating to the mid 1990s) when local auction houses began offering specialized sales in painting and sculpture. Although Christie’s and Sotheby’s strategic response to this trend was a rapid expansion in their regional operations, the long-standing duopoly was challenged by the establishment of home-grown auction houses China Guardian and Poly International, the latter of which became the third largest auction house by volume of sales in the world by 2011. In spite of fierce competition, Sotheby’s and Christie’s Hong Kong sales turnover increased dramatically by 300% between 2009 and 2010. Mainland Chinese auction houses experienced similar trends with sales volumes up from $397 million in 2009 to $2.2 billion in 2010 (ArtTactic, 2011). As the case of the Bainbridges Qianlong vase showed, Sotheby’s and Christie’s no longer held their usual duopoly either regionally or in terms of the most desirable lots. Microeconomic theory suggests that even given the idiosyncratic nature of creative and cultural goods, as demand increases with limited supply, prices will be driven up (Heilbrun and Gray, 2001). The extraordinary prices seen in the art market can in part be explained by increasing demand, from a new consumer class as well as a growing population of high net worth individuals coupled with a fixed, or decreasing supply of highquality works. Describing the emergence of new Chinese buyers, Giuseppe Eskenazi, one of the world’s most respected dealers in Chinese art, remarked that ‘Up to a point, we can’t find enough objects to satisfy a market like that’ (Knight, 2011). Indeed, the fact that demand so significantly outstripped supply in many artistic markets fuelled in

Trading Places  141 part the trade in fakes and forgeries, which in turn has increased the importance of the authentication and expert validation process. This has challenged established notions of trust on which much of the art world is built and introduced new demands for transparency in both practice and process (Dempster, 2013). Regional policies have also stimulated local and international markets as well as raising awareness, which has produced a cultural shift in attitudes towards art. Since about 2005 the Chinese government has been actively investing in a ‘cultural infrastructure’ to establish the nation as a leading global cultural hub and to stimulate creative sectors. By 2009 there were 3020 museums in China with an estimated 100 museums added each year, including 328 private museums. An openness to commercial interests coupled with the promotion of the public sector was seen by international art world players as providing the necessary cultural infrastructure to ensure sustainability and robustness of the Chinese market (ArtTactic, 2011). In early 2012, the Chinese government issued a wide-reaching ‘cultural system reform’,2 which outlined plans for the promotion of China’s creative industries more broadly. It articulated the ongoing relationship between economic growth and notions of ‘cultural prosperity’. On the supply side, the policy aimed to support medium and small cultural enterprises at both local and national levels, as well as major cultural institutions such as museums and galleries. On the demand side, it addressed the need to encourage creative consumption, increase access to cultural goods as well as protection of consumers from fakes and forgeries. Critically the plan proposed the use of ‘social capital’ by the authorities to help build creative and cultural industries3 in open recognition of the need to create synergies between an emerging national cultural identity and an internationally competitive creative industry. In an attempt to move away from an economy founded on manufacturing and inexpensive labour to one which is based on ideas, innovation, and intellectual capital, the policy reinforced the ambitious shift from ‘Made in China’ to ‘Created in China’ (Keane, 2009). It could thus be argued that the re-branding of China as a cultural, not only economic, powerhouse is being played out in the art world. Since approximately 2000, Chinese artists have not only fetched record prices at auction but their historic and creative merit is being increasingly discussed and re-evaluated by leading cultural experts and art historians throughout the world. Chinese born artists have increasingly contributed to philosophical and intellectual debates on topics including human rights, intellectual property and freedom of expression. In October 2011, ArtReview magazine named Chinese-born artist Ai Weiwei number one in their annual Power 100 List, recognizing not only his aesthetic contributions but his political activism and contribution to a category of politically and socially conscious art. Traditionally, the majority of trade in art and antiques was the preserve of expert collectors characterized by connoisseurship, focused interests, and motivated by ‘art for art’s sake’. They tended to buy and hold pieces for long periods of time and were reluctant to sell. The trade was mediated by established specialist dealers acting as gatekeepers and happened behind closed doors in a culture which resisted the commodification of objects, and shunned flagrant commercialization and attempts to put a spot price on the goods being traded (Velthuis, 2005). From the 1990s a new group of consumers

142  Anna M. Dempster emerged who were often less knowledgeable and experienced, younger, geographically and culturally diverse, and with considerable wealth and disposable incomes. These consumers were more sensitive to changing fashions and responsive to global brands and the cult of celebrity. From the 1730s onwards there is evidence for a new aesthetic of colour in Chinese ceramics including a brightness of colour and ostentation in design within some of the very fine pieces made for the court (Wen and Watt, 1996). It is precisely these decorative complications as well as the direct link with royalty which gave the vase sold at Bainbridges extra caché and why this Qianlong piece might have been particularly attractive to the new consumer group. Market intermediaries and in particular auction houses, both big and small, benefited from and contributed to this changing landscape as they offered consumers a relatively democratic, rapid, and transparent process for buying and selling. Traditionally, a dealer or gallery makes strategic decisions regarding who to buy from and sell to because part of their role is to increase the value of an object by placing it in a social and cultural context that validates it and enhances its cultural capital. Leading dealers often have extensive ‘waiting lists’ for their best pieces and try to place their works in important private collections or leading public collections such as museums. The auctioneer, on the other hand, does not (theoretically) distinguish between clients in terms of their social status, knowledge, or taste. In the context of the auction, the object simply goes to the highest bidder. There is no back-room discussion about who should (be allowed to) own which work and for what reasons and there is no distinction made between potential buyers. In this sense the auction is both democratic and provides an entry point for a segment of consumers who do not necessarily possess the cultural or social capital usually associated with collecting art. The art world of the past few decades has therefore been characterized in part by the emergence of a new consumer elite, buoyed by new found wealth and market power, trading places with the art collectors and connoisseurs of the past. In another critical shift for the industry, the new generation of consumers has not only been motivated by aesthetic considerations but also by investment opportunities that art and antiques have come to represent. At the micro-level, many sectors of the art market have shown low and negative correlation with financial investments, which has led to increased interest in art as an asset class for risk diversification (Mei and Moses, 2002; Deloitte and ArtTactic, 2011). Unexpected volatility and underperformance of traditional asset classes such as equities and bonds in global financial markets has made alternative investment, such as precious metals, fine wines, rare stamps, art and antiques, and other collectibles, increasingly attractive (Satchell, 2009; McAndrew, 2010). The Chinese in particular have embraced the concept of art as an investment ‘Chinese collectors have no shyness about the links between money and art and the art market is generally accepted as a place of commerce. They have leap-frogged the debate of art as an asset class that went on for 10 years in Western art markets’ (McAndrew, 2011, p. 121). Rather than work through dealers, auction houses offer relative liquidity and price transparency and the past 25 years have seen the rise of auction houses and an increasing acceptance of buying and selling important cultural works in this

Trading Places  143 setting. As such, auction houses have also traded places with dealers as the preferred setting for buying and selling cultural objects of all types and values. High value purchases by new consumers, often from emerging economies, have been disdainfully described as ‘trophy purchases’. In fact ‘Trophy Art’ is a nebulous and ill-defined concept. Martin Summers, a London dealer, describes trophy art simply as works with ‘the recognizability factor’ (Maneker, 2011). They tend to be associated with the acquisition of expensive cultural objects, usually in public settings such as auctions. This acquisition behaviour is associated with the desire for increased prestige and social status and has classically been described as ‘conspicuous consumption’. By the very fact that it is inherently wasteful, conspicuous consumption distinguishes individuals who possess discretionary income from those who do not (Veblen, 1994 [1899]). The purchase of such objects signals (economic and social) power and they are held up as symbols of status and success. Trophy art is therefore generally believed to be both purchased and put on display in order to impress others. This type of consumption behaviour acts as a signalling device, differentiating individuals and groups in society. However, the assumption that new consumers are motivated solely by the need for public displays of wealth hides a more complicated set of socio-economic dynamics which are also inextricably linked with political power, cultural aspirations, and identity. Given that one of the most notable developments of the art market boom has been that new consumers display a marked preference for objects from their home countries, there has been much speculation on why this might be the case. There is evidence that many new consumers are genuinely motivated by a desire for repatriation of cultural heritage following years of historical turbulence in which many items were either destroyed or lost to the foreign powers. This has been identified as an important driver of the large-scale purchasing of art and antiques by Chinese individuals and institutions. As such, art and heritage objects represent an important link with the past, which re-establishes and enriches cultural identities—both national and individual. In Europe and the US the restitution of cultural objects commonly follows a legal framework, but this is often lengthy, highly uncertain, and riddled with moral debate. Given the necessary economic resources, simply buying back objects openly available in the marketplace is a simpler, quicker, and more direct way to acquire cultural goods and has characterized the repatriation of cultural objects by both institutions and individuals from ‘emerging’ economies such as China in the past decade. The acquisition of objects of great value (and perceived cultural significance) can also be seen as an expression of national pride. As one art-world observer commented ‘The Chinese do not see why Impressionist paintings should be more valuable than their own Imperial works of art. Could the Pinner Vase be the continuation of the Opium Wars by other means?’ (Grice, 2010). Public displays of patriotism have been argued to have value in the cultural stock they hold with the people and political institutions who act as gatekeepers to other (economic and social) resources. Donations of high value objects purchased on the international art market to public sector institutions such as museums may seem benign but they can hide a deeper culture of gift giving in exchange for preferential treatment. Across a spectrum and a range of cases there is evidence that economic

144  Anna M. Dempster capital is employed in the purchase of art and used in support of social capital which in turn creates future (economic and other) opportunities for the benefactors. The acquisition of art and antiques has a further, more personal, function. In an interview, the dealer Giuseppe Eskenazi stressed that it is not just ‘a case of the simple repatriation of objects . . . People from China want to be surrounded by art they are familiar with from the past, that they have seen in museums and in books, or remember from their parents and grandparents homes—rather than English silver and French furniture’ (Millner, 2010). Pearl Lam, the daughter of Hong Kong billionaire and a leading gallerist of contemporary Chinese art, explained that ‘cultural enhancement’, the acquisition of knowledge through artefacts from China’s pre-communist past, is an important vocation for many of the country’s first-generation rich (Knight, 2011). Many Chinese collectors were denied ownership of art and cultural heritage through Mao’s policy which rejected the ‘four olds’: old ideas, old culture, old customs, and old habits. The vigorous acquisition and repatriation of many previously prohibited objects represents a fundamental shift in cultures of ownership, and is associated with personal expression and an opportunity for reinterpretation of individual and national identity as well as a search for cultural and symbolic enrichment. Cultural enhancement is an important consequence perceived to come with a closer connection and deeper understanding of artistic and cultural goods. In sum, the acquisition, ownership, and display of art and cultural objects constitutes a complex form of signalling, both at the national and individual level. Buying and selling art can be specifically understood as signalling power—both in terms of economic capital required to make the purchase but also more critically in terms of the social and cultural competence required to identify the artwork, which in turn represents the aspirations, aims, and achievements of a new group of consumers. By all accounts, Bainbridges was abuzz on the night of 11 November 2010 as the auction house was packed with a mix of locals and a contingent of dealers and agents who had come from London and around the world. An extra number of telephones were laid on to receive bids. Opening at £800 000, the bidding moved upwards rapidly in £200 000 increments. There were a reported seven bidders at £20 million. At £40 million, clapping and cheers filled the room with two bidders remaining, one of whom was a young Chinese man in the front row. As the price approached £43 million and one of the bidders dropped out, in final theatrical turn, Peter Bainbridge slowly and confidently concluded ‘ladies and gentlemen . . . this is a world record being made here tonight’ . . . followed by a slow count down to three until he brought the gavel down for the final time, breaking it with the force, and shouted ‘sold, sold’ as the room erupted in applause. The story of the sale was carried in every major national paper in the UK and was the talk of the art world for years to come. However, the story was far from over after the Bainbridge auction as the fate of the Qianlong vase proved to be even more dramatic than the auction itself might suggest. In spite of widespread validation by art world experts during its exhibition in London, a shadow was cast over its authenticity when the leading American dealer James Lally said in a CNBC interview that he was ‘very skeptical . . . there are a number of people who do not find that piece convincing’ (Moore, 2011). Given the prevalence of fakes and forgeries

Trading Places  145 in the international art market and uncertainty regarding how it was acquired and came into the United Kingdom even the slightest doubt as to its provenance and authenticity could dramatically affect its value. Furthermore, as the vase was bought by a representative foreign agent, the art world was rife with speculation regarding both the true identity and motivation of the buyer. Although never publicly confirmed by either the vendors or Peter Bainbridge, who cited a confidentiality clause and consistently refused to reveal the purchaser’s name, there was a consensus in the trade and general press that the buyer was an ultra-high-net-worth individual from mainland China. While emergent Chinese consumers were clearly driven in part by personal taste and new found economic opportunities, there was increasing evidence to suggest that the acquisition of historically significant objects was in part motivated by a desire for the repatriation of cultural heritage in line with government policy. Chinese buyers, often acting through agents, included both individuals and large-scale organizations. For example, China Poly Group Corporation, a state owned conglomerate which includes businesses in a range of creative industries as well as in antiques and heritage, has a key mission ‘to rescue and protect Chinese cultural relics lost abroad.’4 At the same time, individual buyers included wealthy collectors and business people who were known to bid aggressively for cultural objects which were subsequently donated to the Chinese state. When persistent reports began to circulate that the object remained unpaid for, weeks, months, and even years following the sale (Sawer and Duffin, 2012, amongst others), a great deal of uncertainty was introduced into the marketplace. This in turn affected market confidence across the art world, given that Chinese consumers had emerged as some of the most powerful players on the buy-side and that the market for Asian artefacts was seen internationally as the strongest area of growth. If new consumers refused to play by the rules of game—the classical English ascending auction at which they bid—trust in and the resilience of the whole system was undermined. As other cases of ‘false bidding’ and non-payment surfaced, auction houses responded by introducing stringent contractual arrangements regarding payment and large-scale deposits to protect themselves and their clients. A careful balance was needed between guaranteeing the terms and conditions of the auction process and not discouraging potential and new bidders (Reyburn, 2011). In spite of intermittent press reports that the vase remained in storage while negotiations between the buyers, sellers, and auction house continued, no details of a settlement were released by the parties for years following the auction. It was not until 15 January 2013 that the story broke that the now infamous Qianlong Vase had finally been sold not by Bainbridges but by the leading British auction house, Bonhams. An email from Julian Roup, Director of Press and Marketing stated simply that ‘Bonhams is pleased to confirm the sale of the vase for an undisclosed sum, in a private treaty deal’ (Reyburn, 2013). While details on the exact settlement remained vague, the vase had reportedly been sold to another Asian buyer ‘for an undisclosed price between 20 million pounds and 25 million pounds’ and had been exported (Reyburn, 2013). It was assumed that all parties would have benefited and

146  Anna M. Dempster been compensated to some extent, including the vendor who would receive the bulk of the settlement, but also Bainbridges auction house to which the vase was originally consigned and Bonhams auction house which negotiated the final private sale. Although the price quoted was less than half of what the original purchaser owed, in spite of much speculation the object did finally sell at what some dealers argued was the ‘right’ price. Even more importantly, the non-payment issue was resolved. The art world seemed to breathe a communal sigh of relief that the case was finally closed. While aspects of this particular case may never be known—including how a regional auction house ended up with such a high value item, what originally motivated the original buyer, why they did not pay their winning bid, and how the settlement was eventually reached—the case highlights a range of important and complex issues worthy of discussion and research. The remarkable case of the Bainbridge, Qianlong, or Pinner Vase acts as stark reminder of both the benefits and the pitfalls of the art world. With the rapid growth and globalization of the art and antiques market, this case illustrates the clash of cultures and potentially conflicting interpretations of the auction process. In a relatively short period of time, new consumers from markets like China have traded places with established collectors from Western Europe and North America. At the same time, auction houses have challenged the traditional domain of dealers and galleries as the locus of transactions for both public and private sales. As an art ‘world’ concerned with connoisseurship and expertise must increasingly coexist with a growing art ‘market’ focused on commerce, there is evidence to suggest that a highly localized ‘cottage’ activity is evolving into a global ‘industry’. Established norms and rules of behaviour have been challenged and transformed as organizations and institutions are forced to adapt. The case provides a fascinating insight into the emergence of a trade in Art and Antiques which is characterized by a complex and dynamic interplay of economic, social, and cultural drivers.

Notes 1. http://www.bainbridgesauctions.co.uk/ 2. http://english.cntv.cn/program/newshour/20120310/111757.shtml 3. http://news.xinhuanet.com/english/china/2012-02/15/c_122707449.htm 4. http://en.polypm.com.cn/english/bwge.php

References Art Tactic (2011). Annual Art Investors Guide to the Chinese Contemporary Art Market’ . ArtPrice (2012). Art Market Trends 2011, February, . ArtReview (2011). Ai Weiwei number one in ArtReview’s Power 100. 12 October 2011. BBC News (2010). Qianlong Chinese porcelain vase sold for £43m. 12 November 2010.

Trading Places  147 Caves, Richard E. (2000). Creative Industries: Contracts between Art and Commerce. Cambridge, MA: Harvard University Press. DCMS (1998). The creative industries mapping document. London: Department of Culture, Media and Sport. Deloitte and ArtTactic (2011). Art and Finance Report. December 2011. Dempster, A. M. (2009). An Operational Risk Framework for the Performing Arts and Creative Industries. Creative Industries Journal, 2(2): 151–170. Dempster, A. M. (2013). Trust, but Verify, as they say. The Art Newspaper, Number 248, July/ August 2013. Goetzmann, William N., Renneboog, L., and Spaenjers, C. (2010). Art and Money. Yale ICF Working Paper, No. 09–26. Grice, Elizabeth (2010). Chinese vase sold for record price. The Telegraph, 13 November 2010. Heilbrun, James and Charles M. Gray (2001). The Economics of Art and Culture, second edition. Cambridge: Cambridge University Press. Keane, Michael (2009). Created in China: The Great New Leap Forward: Media, Culture and Social Change in Asia. Routledge, London. Knight, Sam (2011). Lot 800: the Bainbridge vase. Prospect Magazine, Issue 182, 20 April 2011. Maneker, Marion (2011). Top 200 Collectors for 2011. Art Market Monitor, 29 June 2011. McAndrew, Clare (ed.) (2010). Fine Art and High Finance’. New York: Bloomberg Press. McAndrew, Clare (2011). The International Art Market in 2011. Helvoirt: TEFAF. Mei, J. and Moses, M. (2002). Art as an Investment and the Underperformance of Masterpieces. NYU Finance Working Paper, No. 01–012. Millner, Catherine (2010). Chinese vase: a foreign price tag in a foreign market: Something strange is going on in the art market. The Telegraph, 12 November 2010. Moore, Susan (2011). Doubts hang over record sale of Chinese vase. Financial Times, 25 February 2011. Pomfret, James (2008). Fake Chinese ceramics cast shadow over art boom. Reuters, 4 August 2008. Reyburn, Scott (2011). Auction clampdown as non-payers hurt $10 billion Asia market. Bloomberg, 12 April 2011. Reyburn, Scott (2013). Chinese vase resold for less than half $83 million record. Bloomberg, 15 January 2013. Satchell, Steve (2009). Collectible Investments for the High Net Worth Investor. London: Academic Press, United Kingdom. Sawer, Patrick and Claire Duffin (2012). Mystery over £51m sale of Chinese vase; The £51m sale of a Chinese vase discovered in Pinner sparked headlines around the world. But nearly 16 months on the seller has yet to receive a penny. The Telegraph Online, 14 February 2012. The Independent (2011). Chinese boost prices in world’s auction houses. AFP, 30 January 2011. Veblen, Thorstein (1994) [1899]. The Theory of the Leisure Class. Penguin Twentieth-century Classics. New York: Penguin Books. Velthuis, Olav (2005). Talking Prices: Symbolic Meanings of Prices on the Market for Contemporary Art. Princeton: Princeton University Press. Wen, Fong and Watt, James C. Y. (1996). Possessing the past: Treasures from the National Palace Museum, Taipei. New York: Metropolitan Museum of Art.

Chapter 8

The M ark et for Creative L a b ou r Talent and Inequalities Pierre-Michel Menger

The many approaches to creativity in labour markets and organizations are built on a similar ground: that of one common good, be it that of knowledge and creative learning-by-doing produced and shared through networks of firms, or that of positive identification with work inside the firm, or that of creativity as a shared ethos of work and life. Yet the presumption of self-actualization at work contained in the creativity principle runs against the highly unequal chances of achievement that are observed in very creative occupations. Indeed, as the functioning of core creative worlds such as the arts and sciences shows, one crucial issue is missing in the broadened picture of creativity at work: that of the several dimensions of inequality magnified by the work system which builds on highly individualized performance ratings and selective matchings. Ironically enough, although a majority of creative workers are prone to advocate a sustainable version of egalitarianism in society, the creative worlds have developed an insuperable engine to rank workers by quality level, reputation, and market value, to select and signal the best works out of an ocean of products through winner-take-all tournaments and endless competitive comparisons, to let the whirl of fads and fashions promote or eliminate aspiring superstars, to celebrate skyrocketing and ephemeral celebrity as well as to provide civilization with Pantheons and Academies of long-lasting values. Thus, on the one hand, creativity must been seen as a generic part of the inventiveness common to all economic activities, which constantly require knowledge, its unceasing renewal, and a technical approach to the production process to ensure innovation and competitiveness. On the other hand, creativity has the flavour of a scarce ability much sought after: people well endowed with it come to be rewarded with earnings and prestige disproportionately higher than what the presumable underlying distribution of skills and abilities would command among the workforce concerned. The main determinants of creativity are somewhat obscure. The most common notion in use is talent, which has become a

The Market for Creative Labour   149 buzzword everywhere value creation is at stake. Young managerial and professional workers are ranked according to their talent potential, as they get hired by a company, so that the best 10% or 20% be on a fast track, with a steeper learning curve, and more opportunities supplied to show inventiveness and creativity. But what does talent refer to? How is it conceivable to found huge earnings differentials on a reality that is hardly definable? My aim in this article is to explore how talent is understood in the realms where it is obsessively sought after, those of the arts and sciences, and to find out to what extent the talent factor can help explain differences in reputation and earnings that attain extreme levels. I’ll show that in creative undertakings initial education does explain far less of occupational achievement than elsewhere in the economy. When it comes to defining talent, the standard answer is cast in terms of gift and calling: talent is the expression of abilities that seem to originate in the genetic lottery, especially if they manifest themselves early in the artist’s life; this genetic capital enters into a nurturing family and social environment that fosters its development. With this posited, all that has to be done is inventory the unique traits of exceptional talent and see what reactions its products elicit, thereby determining whether the creative activity of the genius in question is supported, ignored, or thwarted in the world of his or her contemporaries or the most influential of them. A biographical account of this sort amounts to a narrative of the adventures and misadventures of expressions of pure talent in favourable or less-than-favourable environments. But if ‘talent’ is just another name for ability, as contrasted with skill, and as such represents the point of origin to which all other factors implicated in success should be tied, in accordance with a determinist schema of propulsive causality, then what remains to be explained? And on the demand side, how are talent and its products discovered and assessed by audiences? An essentialist understanding of talent or genius would postulate that gaps in degree of material and symbolic ‘consecration’ (fame, recognition) in the arts and sciences are due to proportionate differences in aptitude and that the peer community (in sciences) and the varied sets of audiences (for the arts), even if imperfectly informed or unequally cultured, will necessarily recognize, sooner or later, the value of this or that work of art by producing an aggregate value judgement, thereby providing a universal foundation for that judgement and perception of difference. But if things did in fact happen this way, the factorial breakdown of causes of inequality in artist earnings should be able to capture the influence of determinants as strong as abilities, with which individuals may be unequally endowed. As I will show, this is precisely what earnings equations fail to do. So we have to find another explanation for those inequalities. If abilities were readily definable or observable there would be no uncertainty about success. It is precisely such uncertainty that fuels creative work, and the competition and innovation within the various art worlds. The reason those worlds proceed by ceaseless comparisons is that the wellsprings of inventiveness and originality cannot possibly be fully determined. Comparisons and tournaments, as I shall show, not only rank ordin­ ally producers and products, but come to magnify interindividual differences that may have been tiny or large, but essentially impossible to calibrate from the outset.

150  Pierre-Michel Menger

Education and Earnings in Creative Work The usual analysis of earnings may be divided into two non-exclusive categories of argument. One deals with the investments that individuals make in initial education and in subsequent forms of acquisition of knowledge and of cognitive, physical, social, and psychological resources for use in their work. The more systematic development of this analysis is derived from the economic theory of human capital (Becker, 1975; Mincer, 1974; Rosen, 1986a, 1987). The other approach comes from the sociology of job stratification, to which I’ll turn in the next section. While links may be made between these two analytical frameworks, they nonetheless remain very different. According to the human capital model, the quantity and quality of investment in education largely determine the individual’s earnings prospects, and since the most desirable positions generally demand high-level skills. Yet that investment only accounts for a third of the variance in earnings, and offers no easy explanation for increasing intra-occupational inequalities, when individuals who are fairly similar in terms of human capital meet increasingly different fates. Even when factors such as sector of activity, regional location, or company size are introduced into the explanatory model, the unexplained portion of these inequalities remains high. Data from various surveys (Alper and Wassall, 2006; Menger, 2011) have shown that the number of artists has been increasing faster than that of the workforce taken as a whole, that they are younger than those workers they can be compared with in terms of education, that their educational level is above average, and their self-employment rates are high. Some surveys tell us that given their level of education and social status, artists’ earnings are below the average found for the occupational category they are included in. The earnings gap remains high even when controlling for several of the factors mentioned above. As the poor fit of an earnings function signals, education has a smaller positive effect on the earnings of artists than for the general labour force (Frey and Pommerehne, 1989). Why? I review two candidate explanations:   The first explanation lies in the art sector heterogeneity. Not all art disciplines demand the same degree of initial specialized education. Admittedly, differences between disciplines are not stable ones. The existence and content of education varies over space and over time. Moreover, dispersion cuts across artistic disciplines. Think of the stark contrast between classical and popular music.   The second reason lies in the composition of artists’ income. Investment in artistic education yields returns that cannot be apprehended very well by standard analysis of earnings factors. The relationship between education and income actually falls into two causal sequences: that between education and probability of obtaining paid

The Market for Creative Labour   151 work, and that between type of work done and income level. The first is radically different from the link between educational degree and employment prospects on the classic labour market; i.e., landing a job that will involve a stable, lasting relationship with one employer. Most creative artists’ work situations are characterized by numerous, often brief transactions with several different employers. The career construction process may be described as a stochastic one: the probability of working at any given moment is determined first and foremost by the value of the performances or works the artist has been capable of in the preceding period (rather than the power of any art school degree). Not only is an artist’s activity discontinuous, but of the different jobs he or she may do, some are in art and some are not. According to a wide range of international surveys, artists come out at the top of the list of occupations whose practitioners hold multiple jobs. Yet, the employment survey data used to estimate earnings equations do not distinguish between income from creative work, from art-related activities, and from non-artistic jobs. Once multiple jobholding has been taken into account, it appears that artists’ investment in education has a positive effect on expected income from non-artistic activities and arts-related activities such as teaching, but the effect is considerably weaker in relation to primary creative practice, due to the unspecified role of talent and other innate ability factors. Actually, the artist’s on-the-job experience has a much greater influence on the latter income source (Throsby, 1996). Disaggregating income thus enables us to locate the main source of interindividual inequalities. Artists’ earning levels and their skewed distribution are an overall monetary expression of the risks they take, but also how they manage those risks. The income breakdowns due to multiple jobholding show that income gaps are significantly narrower for secondary employment than for the vocational work, or ‘labour for love’, as Freidson (1990) phrased it.

Job Stratification and the Reward of Talent The result of this complex combination of income sources and effort as distributed among multiple jobs is itself quite simple. All national surveys without exception show that earnings inequality, income variability over time, and unemployment and under-employment rates are higher among artists than for nearly all the other occupations included in the same statistical category. Neil Alper and Greg Wassall (2006) have calculated that in the United States in the last 60 years, occupational income inequality among artists increased faster than for other categories of ‘professional, technical and managerial workers’. Of a total of 123 higher occupations, nine of the 11 art occupations

152  Pierre-Michel Menger figured among the 15 occupations with the highest degree of internal income variation. Among the nine, actors and musicians showed the widest variations. Income distribution in art occupations generally follows the Pareto curve: one-tenth of professionals in the given field earn half of all annually distributed income; one-fifth earn 80%. In sum, in art there are more individuals earning nothing—or less than nothing after art-related expenses—than in any other higher occupation. At the other extreme we have the elongated tip of the distribution, signalling the presence of artists with astronomically high incomes—a level that brings to mind lottery payoff matrices. Thus, whereas the distribution of human capital factors of the sort included in earnings equations typically forms a bell curve wherein individuals of the given population are fairly symmetrically distributed around mean values and the majority of individuals are at the centre of the distribution, here we have an extremely asymmetrical curve. Income distribution is structured entirely differently from the skills and qualifications distribution associated with earnings equations. To what mechanisms of the art labour market should this discrepancy and the resulting extreme inequalities be attributed? Let’s have a closer look at the multiple job holding combination. Jobs in the portfolio belong to different categories. Acccording to the theory of job stratification (Stinchcombe, 1986; Jacobs, 1981; Baron and Kreps, 1999), each position and profession can be assigned certain characteristics and capacity requirements whose social and economic value is assessed according to their degree of scarcity and the nature of the collaboration between those working together. The degree of scarcity reflects the vertical ranking of skills and performance, which results in the qualities of the work being classified according to a scale of social prestige and economic desirability: an extraordinary talent will be admired and, where a market value exists, exploited at considerable profit, provided that it is sought after by a sufficient number of people willing to pay for it. Moreover, a talented worker may make an unusually high contribution to the success of his organization, more than proportionate to the differential between his qualities and those of his teammates. It is in these professions that competition to attract and reward individuals deemed exceptionally talented is fiercest and it is here that earnings concentration creates winner-take-all or winner-take-the-most situations (Frank and Cook, 1995). In this category, one may cite scientific research, university teaching, the entertainment industry (cinema, radio and television, concerts, shows and performances for a wide audience), and sports. Let’s call these jobs ‘star jobs’, following Baron and Kreps’ reworking of the stratification model of Stinchcombe. And let’s add another important dimension: that of how a good or bad performance may affect a given activity. In star jobs, even a poor performance does not considerably hurt the organization or firm, while a good performance can win it considerable gains. In such professions, the probability of obtaining an exceptionally fine result is low and most performances produce average results. The cost for the company of hiring an average professional is low compared to the profits it will reap if it finds someone exceptional, and this leads to an employment policy or contract

The Market for Creative Labour   153 relationship that brings in a great number of different individuals, the aim being to find the ‘real gem’. By stressing the horizontal dimension to the valorization of talent, we are saying that his talent is a ‘complementary’ factor of production, and that such talent alone can be a powerful lever for the group’s success or reputation. A research laboratory employing a world-famous researcher, for example, will benefit from infinitely more development opportunities than another offering simply the sum of individual contributions from a team of excellent researchers. In a second category of activities, even spectacularly excellent individual contributions cannot bring the organization or team any additional reputation or profit. In these ‘guardian jobs’, the skills required for performing the activity are an ‘additive’ production factor and they are more homogeneously distributed among the individuals concerned. Lastly come ‘foot-soldier jobs’, where variation in individual performance has limited impact and the range of individual differences is slight. Here the success of the organization depends on the aggregation of all individual performances. Employees are hired on the basis of a simple wage negotiation: anyone who accepts the proposed wage gets hired. Now recall the multiple job portfolio of a typical artist. We find the two or three types of job mentioned in the functional analysis: • the creative artist (novelist, painter, composer, solo performer) is obviously the star job; • the supplementary artistic or intellectual activity (i.e. the teaching associated with a career in painting or composing, the journalism associated with a writing career, etc.) falls into either the guardian or the foot-soldier job category; • lastly, extra-artistic activities are usually the equivalent of foot-soldier jobs.

Relative Comparison and Dynamic Amplification of Differences in Talent Star jobs (i.e. primary creative activities) are those that earn their successful incumbents the highest rewards (monetary and non-monetary, like esteem and social recognition) and those for which cultural enterprises such as publishers, gallery owners, recording and film companies are very clearly looking for the rare gem. How do they do that? How to detect talent? I contend that overproduction and the ensuing use of tournament-like processes of selection of artists and items in the market are rational responses to the issue of talent detection and testing. It would be easy to evaluate artists and their work and perceive qualitative differences if everything could be assessed in absolute terms, on the basis of a univocal scale

154  Pierre-Michel Menger and a stable set of perfectly unambiguous criteria. The selection process in the course of artistic education would filter the many candidates through some simple tests and contests. According to Rosen’s view of ability in human capital theory (Rosen, 1987), such reasoning applies only to the first part of an occupational career: people choose to specialize their human capital investments in activities on which they get the highest return, according to what they can learn about their abilities in selecting the best occupational match. Thus, because educational and occupational choices are closely linked, the overall ability bias is likely to boil down to a selection effect and to be relatively small. Things take another course once ability is viewed as a multidimensional and multifac­ torial component. As already noted, the fundamental properties of a creative activity are unlimited differentiation of its products and originality-driven competition. Therefore, in stark contrast to a timed athletic performance or problem resolution, aesthetic origin­ ality and artistic value can only be measured in relative terms. Now how can value be measured and rewarded in relative terms? Through rankings and remuneration scales and career advancement profiles that take the form of tournaments (competition for specific prizes in music, auditions and casting sessions for actors, literary awards, hit-parade lists, critics’ evaluations, etc.) wherein assessment is based on incessant comparison. Artists work to differentiate themselves from each other on several points and this in turn sustains competition based on originality; meanwhile, critics, art world professionals, and market intermediaries (producers, employers, organizers, agents) and consumers are constantly comparing and ranking them. The cultural knowledge required for appreciating and assessing art works can be defined as the sum of significant comparisons an individual is capable of making, explicitly or implicitly, for the purpose of attributing meaning and value to a work of art. In this way, works that were initially merely juxtaposed by the law of originality get hierarchically ordered by art world professionals and audiences in terms of preferences and investments, through a long, trying series of competitions and comparisons. What is called ‘talent’ can be defined as the quality gradient attributed to the individual artist by comparisons that cannot be supported by any absolute external reference points or touchstones. The difficulty of defining talent derives from the fact that it is not arbitrary value but rather purely differential quality. Taken together, these three characteristics correspond to and are reflected in the way cultural entrepreneurs operate. Their strategy is entirely organized around two moves: exploiting uncertainty and reducing it. Very little is known of the ingredients for success; uncertainty about the market potential of each work and innovation leads each company to multiply its bets on artists, and this in turn leads cultural industry entrepreneurs as a whole to offer excess supply. As soon as the cultural entrepreneurs manage to identify an artist with ‘high potential’, they set about over-exposing him or her and pulling all the levers that will trigger movements of contagious imitation in the general public. They do this by exploiting the self-reinforcing dynamic that transforms an artist’s success from an effect into a cause of the quality consumers attribute to him or her. They may then seek to ‘develop’ an artist who is enjoying early success, just as is done with scientific inventions or technical

The Market for Creative Labour   155 innovations in R&D. Thus, after using uncertainty about who will come out a winner by exploiting competition through originality, they now work to reduce uncertainty about a clearly promising artist’s chances of future success by transforming his or her instant­ aneous value into lasting value—an asset in which they can now continue to invest. What does a career modelled on a competitive tournament look like? According to James Rosenbaum’s model,1 the tournament mechanism requires (1) substantial interindividual differences, as these justify the fact that the most deserving win out over others; (2) imperfect information on individual aptitudes, as this requires reiterated contests (to obtain the information), in contrast to activities in which aptitude seems unambiguously measurable; (3) significant past accomplishments, as this influences chances of succeeding in the present (in contrast to the door-to-door salesman in Rosenbaum’s example, whose previous success rate will not really influence the chances of his succeeding with his next customer); and (4) an effective/efficient system for interpreting information on past accomplishments. These hypotheses derive from two simple observations: it is difficult or impossible to specify and directly measure the nature and exact quantity of resources (aptitudes, effort, acquired skills) individuals are using, and the value of the result or accomplishment can only be assessed through ordinal rankings. Rosenbaum’s hypotheses correspond closely to what I have been analysing here. For example, if we postulate that there are indeed differences in artist aptitude and product­ ivity, what characterizes those differences? The answer is valid for analysis of success not only in the arts but also the sciences, sports, politics, and business. Certain qualities can be measured (intellectual capability, physical and psychological qualities), and they function as necessary, readily detected conditions; i.e., when competition is governed by succeeding in initial scholastic and higher education tests, since quickly achieving scholastic success means attending good schools where one will then come into contact with high-level teachers and fellow students, all of which will procure what are called cumulative advantages, examined in detail below. Other qualities can be documented through biographical exploration: quantity of work, tenacity,2 fertility of the individual’s imagination; his or her aptitude for ‘divergent thinking’, a wellspring of creative invention, and the individual’s ability to concentrate on activities that so intensely stimulate his or her interest that intrinsic motivation functions as a kind of ideal lever for near-obsessive behaviour of a sort that combines the values of work and play.3 The hierarchy of these qualities varies by the nature of the activity under consideration. Having a substantial edge in a specific area of activity gives candidates for success in that area a means of attaining the next higher level in the competitive selection process. But from this point onward, reasoning in terms of success factors become spurious, because above and beyond a certain threshold, possessing a greater amount of one or another of these qualities and, for example, much greater intellectual capabilities than the candidates against whom one is competing, no longer really increases one’s chances of succeeding in the activity in question. It is of course the combination of various types of qualities and skills that counts, but there is no detectable ideal formula for an optimal combination or optimal proportions of

156  Pierre-Michel Menger those qualities and skills.4 We suspect that the skewed distribution of those qualities and their indecipherable combinations may create sharp inequalities in chances of success, but it is impossible to estimate that distribution a priori. This is why people engage in relative comparison. In this context, artists’ careers can be analysed as a stochastic process: young artists themselves are uncertain about the quality of their work, and their exhibitions, publications, performances, or concerts constitute a series of assessment ordeals and tests. If initial evaluations by peers, critics, and members of their reference group are favourable, they will choose to pursue the profession. Artists who do not succeed in this first career phase are exposed to a cumulative disadvantage mechanism. Whether an artist stays in the career in the hopes of overcoming the negative effects of a poor debut depends on his or her available resources for managing occupational risk (multiactivity, unemployment insurance coverage when one is underemployed, diversifying areas of activity in which to acquire visibility, entrepreneurial initiatives, public subsidies) and the value he or she attributes to the non-monetary gratifications of the activity compared to that of alternative activities that he or she would be more likely to succeed in. If we consider the reputation hierarchy at a given moment, it appears to display substantial differences in quality as revealed through a series of consecutive comparisons and competitions. But as Rosenbaum (1989) points out, comparison and rankings do not merely reveal unequally distributed qualities nor select individuals on this basis. These competitions cause contestants’ careers to diverge despite the fact that their aptitudes may be similar or, according to radically relativist reasoning, equivalent. The fact that earnings and reputation get concentrated on a very small number of individuals thus means differences in success that are wildly disproportionate to aptitude or ‘talent’ gaps. The signal emitted by winning a competition or contest works as the lever in a process of reputation accumulation. But does such reputation intensification correspond to a ‘plus’ in intrinsic quality that would necessarily have become obvious and ‘grown’? Or does the reputation of an artist who has become famous have the effect of positively skewing perception of his or her quality compared to his or her competitors?

Star Jobs In his oft-cited article, Rosen (1981) examined the phenomenon of superstars in art, sports, and the liberal professions, activity sectors that typically encompass what he calls star jobs, characterized by the fact that the perceived talent of those who hold them is considered scarce and highly desirable. Sherwin Rosen’s model has two properties: it posits difference in degree of talent and demand sensitivity to that difference. His explanation is therefore close to the essentialist understanding mentioned in my introduction, wherein talent is an exogenous factor. But it also differs from that approach in

The Market for Creative Labour   157 that it shows how differences in artist remuneration can be extremely disproportionate to differences in artist talent. Rosen’s initial distinction is quite simple: Some tasks are so routine and so circumscribed by existing practice that nearly any competent person achieves about the same outcome. Others are more difficult, more uncertain, and, this being so, allow greater possibilities for alternative courses of action and decision. Such tasks offer greater scope for superior talent to stand out and make its mark. More capable physicians spend smaller fractions of their time on routine cases and larger fractions on difficult ones than do physicians of more ­modest ability. (Rosen, 1983, p. 455)

In the latter type of occupation, goods and services are highly differentiated, expertise and originality highly valued, and perceived differences in quality are of decisive importance in orienting consumer preferences. At a given price for a good or service, a consumer’s utility will be greater if she chooses a professional who is considered more talented than another. A surgeon with a 10% greater ability to save lives than others will be in great demand and his fees will exceed those of his colleagues by much more than 10%: his total earnings will thus be highly disproportionate to the quality gap distinguishing him from them. Professionals of superior talent are therefore able to sell their services at a higher price as well as work more to meet demand—as long as they can find a means of meeting relatively intense demand without sacrificing the quality of the good or service they’re selling. In this model, performance quality difference amounts to an intrinsic value: it can be perceived without bias. In the case of art commodities, the mechanism that concentrates earnings on a professional elite is of course also activated by consumer perception of quality difference. That perception orients demand toward artists deemed to have superior talent. If the commodity can be reproduced (book, CD, film, video, etc.), the artist and the production company can simultaneously serve much greater markets. Highly reputed artists make intensive use of joint consumption technology. Classical means for physically duplicating commodities, audiovisual diffusion, and the cascade of innovations resulting from digitization and the development of trading networks of all sizes allowing for instantaneous exchange of digitized content mean that artists in these areas too can now serve a market that encompasses the entire planet. The superstar is someone whose audience is enormous relative to the scale on which most of us operate. Personal markets of that magnitude are almost exclusively sustained by use of media as a cooperating resource. These markets represent technologies that, in effect, allow a person to clone himself at little cost. More precisely, costs do not increase nearly in proportion to market size . . . Once an author delivers a manuscript to a publisher, it can be duplicated at small expense practically indefinitely. A television or radio program is communicated virtually costlessly and identically to whomever happens to tune in. The performer or author puts out more or less the same effort whether one thousand or one million people show up to listen to the concert or buy the book.5

158  Pierre-Michel Menger And even if the commodity in question cannot be reproduced, as in the case of a painting, or if the service or performance can only be realized live, as in musical or theatrical performances, current developments in information systems and artist mobility have swollen these artists’ potential market to planetary proportions: the demand for fine arts, and classical and lyric music performances at the worldwide scale is concentrated on a small number of artists, giving extraordinary leverage to their reputations and careers. The second essential point in Rosen’s model is talent’s power to attract demand. Obviously, in contrast to the surgeon, artist and art commodity quality of artists represents subjective utility, but a quality difference that will yield greater subjective utility is an inherent feature of the service demanded by the audience—it’s precisely what the consumer is looking for. Without the hypothesis that quality differences play a fundamental role in orienting consumer preferences, we could not understand why there is competition among artists. For, as in the case of the superior surgeon who saves more lives than another (but with much less dramatic consequences), an artist deemed super­ ior is much more desirable than an artist of inferior quality, and this holds without consumers being subjected to any kind of external influence. Two concerts, exhibitions, or films of moderate quality will not give me as much satisfaction as one high-quality concert, exhibition, or film. The quality perceived as superior is powerful enough to trigger demand concentration and therefore celebrity and great wealth for those artists reputed to have the greatest talent. But how much ‘greater’ than other artists’ talent does a given artist’s talent have to be to garner demand in this way? Referring to classical musicians, Rosen notes: ‘Interestingly, income differences between first-rank and second-rank performers are substantial, even though, in a blind hearing, an infinitesimal portion of the audience could detect more than minor differences among them’.6 His model goes further than claiming that returns to talent are increased by larger markets, themselves the result of media and communication technologies, professionals’ and consumers’ spatial mobility, and the globalization of trade and elite careers. He also claims, and seeks to explain, how minimal differences in talent among professionals can suffice to concentrate disproportionate demand on those deemed either significantly or slightly more talented than others and to win them a reputation and opportunities for working that will greatly enhance and bolster their competitive edge for an indeterminate length of time. If we decide that difference in artist talent is exogenous and that it is decisive when it comes to income gaps, then it is logical to assume that the value of an artist’s talent will be a function of the intensity of demand for that artist. Consumers, then, are sensitive to differences in artist quality. But what accounts for their perception of such differences, even minimal ones? Direct experience? Acceptance of professional critics’ evaluations? Informal evaluations exchanged in social circles (word-of-mouth)? Imitative contagion? Information and cultural industry marketing pitches? All of the above, or some combination of it (depending on commodity and audience)? Some combination of signals (see Menger, 2014, ch. 4, for a detailed discussion of this issue)?

The Market for Creative Labour   159 It is possible to establish a graduated scale of consumption behaviour. At one end of the spectrum, a consumer who lacks direct information on the presumed value of available supply and lets himself be guided by others’ choices in a situation of weakly informative mimetism; at the other, an expert consumer who invests in knowledge of artistic production (a given artist, period, genre, etc.) and converses with other cultured individuals. Between the two, extremely various intermediary situations and variability in individual consumer behaviour. Consumers have preferences that are situated within a triangular forcefield: they both benefit from the extreme variety of supply and reduce that variety by the information they acquire from observing others’ behaviour and conversing with others, all the while converting experiences into investments that structure a space within which to make choices. Note that in Rosen’s model, the entire analytic dynamic is on the demand side in that what accounts for successes disproportionate to relative differences in quality is the way demand behaves, specifically, whether or not it increases. Changes in demand cannot be understood if we do not see that consumers learn, seek information, talk to each other, imitate each other. But how can we describe artists’ behaviour? We cannot simply assume that they have got through competitive tests and ordeals that enable them to attain vast markets, with the understanding that they have been endowed from the outset with talent and that that talent need only be expressed in order for them to succeed. What do they learn in the course of those competitive career ordeals that then enables them to affect the course of events? What mechanism offers a convincing explanation for artists’ behavioural dynamic?

Cumulative Advantage and its Mechanics The cumulative advantage model allows for analysing social inequalities as the product of a dynamic of increasing divergence between trajectories that originated in a situation of nearly equal opportunity. The argument is as follows: an individual, a group, a company whose characteristics are all quite close to those of their competitors manages to obtain a minimal advantage over them. This advantage may consist in a particular aptitude, an investment opportunity, the good fortune of having invented something, or the intervention of chance pure and simple. At first it only puts them in a slightly better position, but that situation will then improve and their advantage will increase to the point of causing considerable inequality in the distribution of benefits (income, profits, prestige, market clout). This model, known as the Matthew Effect (Merton, 1968, 1988), comes to us from sociology of science. Merton began with the hypothesis that considerable inequality in success and reputation in scientific careers as measured by impact, monetary and

160  Pierre-Michel Menger non-monetary reward, access to high-status positions, prestige, and social recognition can very well result from an initially insignificant difference in the intrinsic quality of the individuals in question. The hypothesis does not put all possible candidates for a career in the sciences (or the arts, or any world that values individual creativity) on the same starting line; the point rather is to compare the professional trajectories of individuals endowed with equivalent education, skills, and economic and social resources. This way of describing the action system and actor behaviour leads to the following explanation of how the gap between two scientists tends to increase with time. A researcher who has called attention to himself by producing high-quality studies early in the career will have readier access to work resources and an easier time publishing, and his works will be cited more frequently (than a researcher displaying none of these characteristics). Overall, what he produces will benefit from a kind of halo effect, brought about by the reputation acquired with his most important productions (Cole and Cole, 1973, p. 220–221). His advantage is twofold. First, for a given study, the chances of obtaining rewards (additional resources, a more competitive research team, stronger market power in the competition for the best academic positions) is greater for a researcher of higher status, and this holds even for research of a quality no higher than the average produced by his colleagues. Because even if the work of a less renowned colleague is of comparable quality, as can readily be imagined for article co-authors, for example, the more prestigious author will get more recognition. Second, as Joel Podolny (2005) notes in his commentary on Merton’s model, it is easier—i.e. less costly—for a high-status researcher to produce work of a given quality level. He is more likely to be invited to present his work at high-level institutions, and he can hope to improve his work through more fruitful exchanges. In the stratified academic world, his value gives him market clout that will help in getting him hired at a strong, renowned university and negotiating a better ratio than elsewhere of teaching hours to research time. He is more likely to develop collaborative projects with scientists at his own level or higher, and to attract brilliant students who will invest themselves heavily in their doctoral studies, which in turn will lead to later collaborations with them, of which he will reap most of the benefits (Podolny, 2005, p. 26–27). As Thomas DiPrete and Gregory Eirich (2006) point out, Merton’s cumulative advantage model leaves open the question of differences in talent. There is no reason not to assume there could be real differences in talent or aptitude, but the cause of increasing inequality may be purely random as well. Let’s go back to the start of the fame accumulation process. Can reputation be entirely disconnected from talent? The cumulative advantage mechanism kicks in as soon as a gap in the performances of a set of candidates for success appears and one young scientist takes the lead. The explanation lies in the self-reinforcement mechanism: the scientist who got himself noticed due to a remarkable performance early in his career then attracts the attention of his peers and receives the support of mentors and colleagues further along in their careers. They enable him to lower the cost at which he produces quality research and to increase his chances of enlarging his audience.

The Market for Creative Labour   161 The cumulative advantage mechanism requires the existence of an initial difference to be set in motion. It is in this initial phase that competitive tests and trials (publishing, obtaining grant and job applications) lead every time to judgements of who does best, before enabling those thus identified to move upward at an accelerated pace and attain greater opportunities for accumulating accomplishments in the stratified competition system. But what explains why someone ‘does better’ from the very start? The result predicted by Merton’s model is that inequalities in researcher productivity within a given cohort do increase. To obtain this result, we have to introduce interindividual heterogeneity (Allison, Long, and Krauze, 1982). All researchers, then, do not start out with the same propensity to publish. And all researchers, after their first publication, do not receive an additional leg-up to publish at an increasingly fast rate: only those whose articles are deemed good or remarkable are encouraged to produce more. In sum, to explain increasing inequalities, we have to go beyond the hypothesis that all competitors have the same initial capacity to produce. A heterogeneity or qualitative difference coefficient has to be introduced from the outset to account for inequalities in success, as those inequalities amount, in the end and first and foremost, to unequal abilities to produce high-quality results. Another way to make the point is to turn the argument around. Suppose the initial edge has only to do with chance. The chance issue is worth elaborating on since it plays a particular role in the arts. The ‘chance’ coefficient is usually used to explain the unpredictability of discovery and original novelty. The high value placed on creativity in the science and art professions corresponds to the component of chance in the very nature of creative work, a characteristic indicated by descriptions of the discovery process as a sequence of distinct phases:  intensive labour, subconscious rumination, unpredictable unconscious connecting of heretofore disconnected ideas, emergence of the discovery, scrupulous weighing of the value of the new idea, communication of it to the public.7 Work organization may be the cause of increased variability and uncertainty coefficients. Once again, in contrast to science, competition and success in most art professions are not at all closely correlated to initial education. The importance of ‘on-the-job’ learning is explained by the heavy exposure of an individual’s work to the uncertainty of an extremely turbulent environment, i.e. organization on a project basis and the variable degree of control that the individual has over the result of team work. A successful career can be likened to a gradual increase in an artist’s control over the relatively variable dimensions of her activity and over relations with her environment, in a world where stratification by reputation—unlike in the sciences—is disconnected from stable work organization. It is the very system of artistic labour that creates conditions allowing chance to intervene. Art careers are constructed from one project to the next, and not all projects are equally likely to be successful. Moreover, the individual work is usually immersed in a collective undertaking whose chances of success are imperfectly correlated with the quality of each team member. The skill or talent of an actress evaluated in terms of personal performance does not fundamentally differ, of course, by whether the film she plays in is a success or failure,

162  Pierre-Michel Menger but her visibility and the likelihood that she will be involved in more or less promising projects later on depend in part on the film’s success.8 Organizing work on a project basis introduces strong variability into professional activity and multiplies possible bifurcation points: e.g. being called in at a moment’s notice to replace the star opera singer, who has caught cold; discovering just the right information on a future project or employment opportunity; landing a role in which, against all expectations, one can reveal one’s aptitudes without having ever been cast in that job category before.9 Project complexity increases the role of chance and in some cases the sequence in which good or bad luck strikes. Moreover, there are few occupations whose practitioners make such frequent recourse to superstitious practices and rituals, the counterpart to that other essential behaviour mechanism characteristic of the art world: excessive self-valuing. But here as in Allison’s analysis cited above, we have to acknowledge that the individ­ uals are not equally capable of exploiting the opportunies they have, even those provided by chance. Analysing the extreme inequalities generated by uncertainty about success in the film industry, Arthur De Vany (2004, pp. 239–242) raised the question of what degree of success was to be attributed to luck and what to talent. Suppose that for a director or actress the film they make can be either a success or a failure. If the film succeeds they can continue; if it fails they have to stop and do something else (television work, another audiovisual occupation) or else leave the sector entirely. If luck governs the entire process, then the distribution follows a binomial law as in a game of heads or tails: the probability of making two films is 0.5. According to this hypothesis, half of debuting actors and directors will not make more than one film; the probability of making three is 0.25, of making four is 0.125, etc. What do we learn from De Vany’s data on distribution of number of films by actor and director in North American cinema from 1982 to 2001? That distribution follows the binomial law curve; in other words, that playing at heads or tails is a fine way of determining the probability of my making another film or not. However, ‘beyond 7 movies, the odds depart from pure chance’ and the probability of continuing is higher than random selection of one of two possible results. Other factors affect career chances, and the study brings to light a threshold effect illustrating Pareto’s law: The high odds ratios for the most prolific directors suggests there is something beyond luck in determining how many movies a director will make. In seeking to further draw the line between luck and talent, we rely on the remarkable property of the Paretian distribution. A  merely lucky director would find that the probability of succeeding with her next film is 0.5. And this would be the same for each film, no matter how many the director made. That is to say, the probability of success is not altered with experience as measured by the number of successful films made. If talent, skill, or learning have anything to do with success, then the probability of success should not remain constant; it ought to increase with the number of successes realized. And this is just what the Pareto distribution implies. (De Vany, 2004, p. 241)

The Market for Creative Labour   163 The lesson to be learned here is that making a career implies getting through elimin­ ation tournament stages (here represented roughly by heads or tails) and that getting through those stages means beating chance. The forward progress of a career works to reveal, underlying the individual’s qualities and strengths (those that enabled him or her to get through the stages), qualities and strengths that are unequally distributed among individuals. An individual who succeeds in developing her career in the project-byproject context can enjoy the benefits of a well-established reputation, padding her relational network with contacts that will convey information and work offers through which to increase her skills. This dynamic is particularly influential in occupations where on-the-job learning plays an important role and where the reputation signal is a highly functional means of passing on information in professional network exchanges when it comes to organizing projects.

Talent Seeks Talent In the models discussed thus far, spectacular inequalities in success primarily concern artists, or professionals with valued expertise, who are competing individually, and through direct interaction with the market, to capture demand. Those individ­ uals do not seem to have any partners. In reality, however, in order to work, in order to make or diffuse their products, cultural sector professionals usually come together in a permanent or temporary organization (orchestra, theatre company, film production crew) or contract with an organization that acts as an intermediary (publishing house, recording company, art gallery) to materially realize copies of reproducible commodities or put non-reproducible works into circulation and onto the market. It is during this process that another inequality lever comes into play: selective or ‘assortative’ matching. Introducing assortative matching into the overall model makes it possible to resolve some of the difficulties encountered in Rosen’s and Merton’s versions of it. Assortative matching refers to the multiplicative nature of the production function in artistic work. As in the case of the scientist in Merton’s cumulative advantage model, it is in a creator’s interest to associate with professionals whose quality in his own area or each of their own areas is reputed to be equal to or greater than his own. For a promising artist to have the best chances of developing her talent, it is important for her to associate and work with professionals of comparable value in the other occupations required for producing and circulating her works. A highly reputed director will look to work on films where the key filmmaking jobs (director of photography, scriptwriter, editor, costume designer, etc.) are occupied by top-notch professionals. The head of a publishing house will want her most seasoned editor to handle work relations with the house’s most talented or promising writers. Indeed in the very early stage of the artist’s or scientist’s career, both formal education and later on-the-job learning are heavily determined by association with experienced

164  Pierre-Michel Menger partners who provide the individual who is in the process of becoming a professional with improved opportunities for developing his skills by enabling him to work on demanding projects with partners who have themselves been selected as a function of their potential. We readily see the connection between the assortative matching argument and the analysis holding that careers in art and science advance by way of tournament competition and cumulative advantage. In the course of their early, formative experiences, would-be artists manifest capacities in ways and degrees that vary by individual. The nature of what kind of difference in talent exists between creators who will succeed (more or less lastingly) and others who will not come out as well remains undetermined. Expressed in terms of probability of succeeding, the benefit that hoped-for talent provides early in an artist’s career may be weak, but it will be enough to create a small, or not-so-small and in any case perceptible difference with each competitive comparison test, and this in turn will polarize the investments and ‘wagers’ of system actors (artists themselves, trainers, professionals, patrons, entrepreneurs, critics, consumers). The intrinsic learning content of work/work situations is of a similar origin. There is an optimal profile for increasing one’s skills: it is a function of the number and variety of work experiences an artist has and the quality of the collaboration networks she can mobilize as she moves from project to project.

How to Solve the Talent Puzzle? A Summary The whole formed by the different pieces of the analytic puzzle I have laid down in this article in order to explore the question of talent and inequalities in the arts and sciences is actually more simple than it may appear. It is similar to a model developed by Roger Gould (2002) to explain the emergence of social hierarchies. The four components of Gould’s theoretical model as presented by DiPrete and Eirich (2006, 290ff) are as follows. First, there are intrinsic differences in quality by individual when it comes to performing activities that generate hierarchical rankings and segmentations by status. The differences (or the distribution of quality that they reflect) are an exogenous characteristic of the action system. Their magnitude cannot be determined with precision, but their existence is revealed by relative comparison. This point emerged in our analysis when I examined the scope of two models of disproportionate reward amplification: Rosen’s model and Merton’s cumulative advantage model. Second, the differences in quality that underlie gaps in success are not fully observable. The power of the relative comparison mechanism lies in the fact that the personal factors implicated in success, or at least how those factors are combined, are unobservable. And the incomplete observability of difference in quality serves a major function. It actually creates a veil of ignorance, thereby allowing a high number of would-be

The Market for Creative Labour   165 artists to nourish the hope of making a career in the invention and creation occupations and professions, despite the iron law symbolized by the sharply asymmetrical Pareto distribution of chances of success. Each candidate will assume that success is the result of a combination of work factors, chance, and intrinsic aptitude; meanwhile, the highly imperfect specification of those factors and their proportions leads each to overestimate his or her chances of success. The benefit of this indeterminacy for the individual lies in what she may acquire through the experience of on-the-job learning. Her loss in the matter may be measured in terms of the squandering of strengths that could be better used in other ways. Artist and scientist careers need to be tightly fastened to a constellation of adjacent professional roles (teaching, entrepreneuring, management) that offer resources for managing the uncertainty attaching to the most attractive role, that of creator—that provides a narrow minority of professionals with abnormally high reputation and rewards. Third, it is from the attention that others pay to an individual that we infer that individual’s quality. Winning others’ attention also means entering a situation in which one is judged by and compared to others. With this in mind we can readily understand how the cumulative advantage dynamic gets triggered by selective attention to individuals and works in a professional community or from an audience. Attention from others is a signal transmitted to other others; operating through interpersonal relationship networks, it can quickly lead to rational contagion of an increasing number of individuals. The status granted the individual who succeeds particularly well in concentrating attention on himself and his work wins that individual a disproportionate reward (Gould, 2002, pp. 1146–1147). Fourth, I have emphasized the assortative matching dynamic. Assortative matchings boost the operation of the cumulative advantage mechanism. Their specific characteristic is to win ‘matched’ individuals higher returns on their respective aptitudes than what they would get in the case of random matching. Talent association has a multiplicative effect. This is particularly so when work is organized on a project basis, as is so often the case in the arts. In organization of this kind, where teams and crews are incessantly being assembled and disassembled, the individuals who form them are selected and matched on the basis of their reputation and value. The assortative matching analysis bolsters the stratification-by-status argument for the highly competitive worlds of the arts and sciences. Whenever individuals’ qualities and strengths are not fully observable, reputation reduces uncertainty about individual value, and, as Podolny explains, the status that comes from a given position in professional-world structure strengthens the credibility of the information that reputation represents. But assortative matching does not amount to an iron law of success. There are two contradictory forces in operation. Competition mechanisms wherein uncertainty is used to fuel innovation foster reputation rankings whose ‘memory’ is not very deep: an artist ranked by means of these mechanisms is worth what his latest performances or works are worth. Meanwhile, crew composition should achieve a balance between the value of matched members’ reputations and the quest for new talents that would also ‘match’ with the given project. But artistic work is also organized

166  Pierre-Michel Menger into careers, and this reduces excessive reputation volatility:  an artist has intrinsic value, attested to by the cumulative dynamic of her career, and this value affects how new creations by her are perceived.

Conclusion Things would be simple if artists could form correct expectations about their chances of success or at least about their odds of decent living within the occupational sphere they choose to enter. Competition would seem to be less wasteful, failures and occupation switching less frequent if not marginal, misallocation of talents due to excessive lure of stardom or of self-achievement promises wouldn’t hamper the development of other occupational worlds that might be short of such diverted abilities, training systems wouldn’t favour wasted investments, risky occupations wouldn’t claim public support at the expense of other economic sectors, and competition might gain in fairness, since artists would have enough time to prove themselves. Yet, the risk of failure is a built-in characteristic of artistic undertakings. Moreover, failure or success does not merely depend on the creators’ own appraisal of their work, unless their art world forms a community of producers who have no interest in others’ production or in anyone’s consumption. Individuation through creative work, which greatly accounts for the admiration of artists, requires that others have an interest in one’s work and consequently that some competitive comparison occurs. Thus, artistic individualism could hardly be equated with an intrinsic, competition-free striving towards self-expression and self-actualization. Individualism, apart from characterizing a lifestyle and referring to a loosely structured occupational community, may signal the tension between a strong sense of personal achievement experienced in absolute terms, and the way one’s creative work unavoidably involves relative comparison with others. Overconfidence and optimistic excess entry in a business may be due to the fact that people neglect the reference group of competitors, each one estimating they are skilled enough to succeed. Relative skill perception may entail miscalculation of one’s chances, especially when the skill requirements are underspecified, when the performance feedback needed to adjust one’s level of aspiration is fairly noisy, and when the employment system magnifies heterogeneity among the workforce. The creative worker may be portrayed neither as a conventional rational actor well-equipped to survive in an ever more competitive market, nor as a myopic one induced to take occupational risks only because she forms probabilistic miscalculations of her chances of success or because she was programmed by her initial socialization to enter an artistic occupation. Rather, she may be portrayed as an imperfect Bayesian actor gathering information; learning by doing; revising her skills, expectations, and conception of herself; building networks in order to widen her range of experiences; and acting without knowing her initial endowment of ability and talent or what she may be able to express over the course of her loosely patterned career.

The Market for Creative Labour   167

Notes 1. See Rosenbaum (1979, 1984). His studies focus primarily on career management in organ­ izations, showing how tournament mechanisms and eliminatory contests are implicated in organizing upward mobility in organizations that value the non-objectifiable productivity factors called talent and potential; i.e. just those quality differentials that are visible only through relative-comparison tournament mechanisms. For a generalization, see Rosen’s model of prizes and incentives in elimination tournaments (1986b). 2. Huber (2001) considers talent (manifested by productivity over a given period—e.g. a year) and tenacity (manifested by length of time during which the individual is productive) to be the two decisive criteria for success in a scientific career and hypothesizes that continuous distribution of these two qualities in a population of scholars or scientists is highly skewed, creating the observed Pareto inequalities. Lamont and her colleagues conducted studies on peer review of social science grant applications. Here the originality criterion plays an important role. But can it be universalized in keeping with Merton’s ideal? These authors argue that multiple psychological, moral, and cultural considerations are implicated in evaluation and work to define a given grant project’s degree of originality. See Guetzkow, Lamont, and Mallard (2004) and Lamont, Fournier, Guetzkow, Mallard, and Bernier (2006). 3. See studies edited by Sternberg (1999) and Csikszentmihalyi (1991). 4. It is in the United States that we find the most abundant supply of literature—scientific studies but also introductory works for a broad readership and best-sellers—on creativity, geniuses, and exceptionally gifted persons. The high degree of American tolerance for inequality (relative to the French) and American readiness to value spectacular success are anchored in meritocratic individualism, which chooses to see exceptional talent as an illustration of the ultimate indeterminateness of success. Simultaneously, establishing a list of separate success factors provides criteria on the basis of which to select talent, develop creativity, and search for signs of being ‘chosen’ for an uncommon destiny. For an attractive presentation of this analysis of ‘ingredients’ for success see Gladwell (2008)—a book that itself became a best-seller. 5. Ibid., p. 455. Rosen’s model has been applied to various areas of activity. Among the recent applications is an ingenious study by Gabaix and Landier (2008) on pay for American CEOs. The authors demonstrate that though CEOs are ranked by talent, hiring the CEO in 250th position instead of CEO number 1 would result in a mere 0.016% loss of company value, whereas CEO number 1 is paid five times as much as CEO number 250. The explanation lies in demand intensity from companies looking to hire a CEO. 6. Rosen (1983), p. 453. 7. In line with Poincaré’s (1947) phase model of scientific discovery and Donald Campbell’s evolutionist epistemology (1960), Simonton (1988) conceives of genius as a powerful ‘mechanism by which chance permutations can be generated’ of ordered combinations of previously unrelated ideas, a small number of which prove capable of surviving a selection process in which the idea’s fruitfulness is tested and of forming stable configurations that are then further elaborated, and ultimately communicated to the scientific community so that it can conduct one last selection process, in which some of those ideas are accepted. In this model, chance is at the core of inventive combinations and genius manifests itself by high volume of ideas it produces and then sets in motion to bring about unpredictable associations and collisions from which a discovery emerges. See also Merton and Barber’s

168  Pierre-Michel Menger book (2006) on ‘serendipity’, a mixture of inspiration, tenacity, and good fortune or lucky chance. 8. Robert Faulkner’s study of Hollywood movie music composers (1983) and William and Denise Bielby’s study of film and television scriptwriters (1999) show how sensitive reputation is to the effect of immediately preceding successes or failures; also, counter intuitively, how participation in a series of successful projects over several years may become a negative signal in an industry whose genre and content renewal cycle is very short. 9. For an analysis of the role of luck in careers of women orchestra conductors see Diaz de Chumaceiro (2004). For an analysis of women’s musical careers that reveals the dark side of chance—in this case, discrimination against women in symphonic orchestra hiring—see Goldin and Rouse’s highly original, methodologically impeccable study (2000). The use of screens to conceal candidates’ identities during hiring auditions has led to increased hiring of women musicians. Here the point was to eliminate a ‘chance’ factor, discriminatory gender bias of hirer evaluators, which varies by orchestra and may be extremely entrenched, as in the case of the Vienna Philharmonic Orchestra, one of the most reputed in the world but also the last great orchestra to start admitting women.

References Alper, Neil and Wassall, Gregory (2006). Artists’ Careers and their Labor Markets. In V. Ginsburgh and D. Throsby (eds.), Handbook of the Economics of Art and Culture. Amsterdam: Elsevier, 813–864. Allison, Paul, Long, Scott, and Krauze, Tad (1982). Cumulative advantage and inequality in science. American Sociological Review, 47(5): 615–625. Baron, James and Kreps, David (1999). Strategic Human Resources. New York: John Wiley and Sons. Becker, Gary (1975). Human Capital, 2nd edn. New York: Columbia University Press. Bielby, William and Bielby, Denise (1999). Organizational mediation of project-based labor markets. American Sociological Review, 64(1): 64–85. Campbell, Donald (1960). Blind variation and selective retention in creative thought as in other knowledge processes. Psychological Review, 67(6): 380–400. Cole, Jonathan and Cole, Stephen (1973). Social Stratification in Science. Chicago: The University of Chicago Press. Csikszentmihalyi, Mihaly (1991). Flow: The Psychology of Optimal Experience. London: Harpers. De Vany, Arthur (2004). Hollywood Economics:  How Extreme Uncertainty Shapes the Film Industry. London: Routledge. Diaz de Chumaceiro, Cora (2004). Serendipity and pseudoserendipity in career paths of successful women: orchestra conductors. Creative Research Journal, 16(2–3): 345–356. DiPrete, Thomas and Eirich, Gregory (2006). Cumulative advantage as a mechanism for inequality, Annual Review of Sociology, 32: 271–297. Faulkner, Robert (1983). Music on Demand. New Brunswick: Transaction Books. Freidson, Eliot (1990). Labors of love: A prospectus. In K. Erikson and S. Vallas (eds.), The nature of work: Sociological perspectives. New Haven: Yale University Press, 149–161. Frank, Robert and Cook, Philip (1995). The Winner-Take-All Society. New York: The Free Press. Frey, Bruno and Pommerehne, Werner (1989). Muses and Markets: Explorations in the Economics of the Art. Oxford: Basil Blackwell.

The Market for Creative Labour   169 Gabaix, Xavier and Landier, Augustin (2008). Why has CEO pay increased so much? Quarterly Journal of Economics, 123(1): 49–100. Gladwell, Malcolm (2008). Outliers: The Story of Success. London: Little, Brown and Company. Goldin, Claudia and Rouse, Cecilia (2000). Orchestrating impartiality: the impact of ‘blind’ auditions on female musicians. American Economic Review, 90(4): 715–741. Gould, Roger (2002). The origins of status hierarchies: a formal theory and empirical test. American Journal of Sociology, 107(5): 1143–1178. Guetzkow, Joshua, Lamont, Michèle, and Mallard, Grégoire (2004). What is originality in the humanities and the social sciences? American Sociological Review, 69(2): 190–212. Hadamard, Jacques (1959). Essai sur la psychologie de l’invention dans le domaine mathématique. Paris: Blanchard. Huber, John (2001). A new method for analyzing scientific productivity. Journal of American Society for Information Science and Technology, 52(13): 1089–1099. Jacobs, David (1981). Toward a theory of mobility and behavior in organizations. American Journal of Sociology, 87(3): 684–707. Lamont, Michèle, Fournier, Marcel, Guetzkow, Joshua, Mallard, Grégoire, and Bernier, Roxane (2006). Evaluating creative minds: the assessment of originality in peer review. In A. Sales and M. Fournier (eds.), Knowledge, Communication and Creativity. London: Sage, 166–182. Menger, Pierre-Michel (2011). Les intermittents du spectacle: Sociologie du travail flexible. Paris: Editions de l’EHESS. Menger, Pierre-Michel (2014). The Economics of Creativity: Art and Achievement under Uncertainty. Cambridge, MA: Harvard University Press. Merton, Robert (1968). The Matthew Effect in science. Science, 3810: 56–63. Merton, Robert (1988). The Matthew Effect in science, II: cumulative advantage and the symbolism of intellectual property. Isis, 79: 606–623. Merton, Robert and Barber, Elinor (2006). The Travels and Adventures of Serendipity, 2nd edn. Princeton: Princeton University Press. Mincer, Jacob (1974). Schooling, Experience and Earnings. New York: Columbia University Press. Podolny, Joel (2005). Status Signals:  A  Sociological Study of Market Competition. Princeton: Princeton University Press. Poincaré, Henri (1947). Science et méthode. Paris: Flammarion. Rosen, Sherwin (1981). The economics of superstars. American Economic Review, 71(5): 845–858. Rosen, Sherwin (1983). The economics of superstars. The American Scholar, 52(4): 449–460. Rosen, Sherwin (1986a). The theory of equalizing differences. In O. Ashenfelter and R. Layard (eds.), Handbook of Labour Economics. Amsterdam: North Holland, 641–692. Rosen, Sherwin (1986b). Prizes and incentives in elimination tournaments. American Economic Review, 76(4): 701–715. Rosen, Sherwin (1987). Human capital. In J. Eatwell, M. Milgate, and P. Newman (eds.), The New Palgrave. A Dictionary of Economics, vol. 2. London: MacMillan, 681–690. Rosenbaum, James (1979). Tournament mobility: career patterns in a corporation. Administra­ tive Science Quarterly, 24: 220–241. Rosenbaum, James (1989). Organization career systems and employee misperceptions. In M. Arthur, D. Hall, and B. Lawrence (eds.), Handbook of Career Theory. Cambridge: Cambridge University Press, 329–353. Rosenbaum, James (1984). Career Mobility in a Corporate Hierarchy. New York: Academic Press. Simonton, Dean (1988). Scientific Genius:  a Psychology of Science. Cambridge:  Cambridge University Press.

170  Pierre-Michel Menger Sternberg, Robert (1999). Handbook of Creativity. Cambridge: Cambridge University Press. Stinchcombe, Arthur (1963). Some empirical consequences of the Davis-Moore theory of stratification. Reprinted in Stinchcombe, Arthur, 1986. Stratification and Organization. Cambridge: Cambridge University Press. Throsby, David (1996). Disaggregated earnings functions for artists. In V. Ginsburgh and P.-M. Menger (eds.), Economics of the Arts. Amsterdam: North Holland, 331–346.

Chapter 9

Stars and Sta rd om i n t he C reative I ndu st ri e s Elizabeth Currid-Halkett 1

Introduction In 2001, Jeff Koons’ larger than life size ceramic sculpture of Michael Jackson and his chimp Bubbles (eponymously titled) sold for $5.6 million. Six years later, Hanging Heart, his enormous aluminum heart sold for $23.4 million. Not one year later, Balloon Flower (Magenta/Gold) (from the same series as Hanging Heart) sold for $25.7 million. These may seem like extraordinary events and indeed they are not the garden-variety activity of art auctions. However, they are not complete aberrations. In 2008, during the same September week that Lehman Brothers collapsed, Young British Artist bad boy Damien Hirst broke records with $200 million in sales of works from his series Beautiful Inside My Mind Forever at a Sotheby’s evening auction where he circumvented his dealer and sold his work straight to the seller. Only that past summer his diamond skull For the Love of God fetched $100 million at auction. There is no question that both Koons and Hirst have had their fair share of naysayers. Koons’ work has been called ‘artificial and cheap’ by the New York Times art critic Michael Kimmelman. Hirst has equally scathing criticism. ‘It looks like the kind of thing Asprey or Harrods might sell to credulous visitors from the oil states with unlimited amounts of money to spend, little taste, and no knowledge of art’, remarked art critic Richard Dorment with regard to the diamond encrusted skull. ‘I can imagine it gracing the drawing room of some African dictator or Colombian drug baron. But not just anyone made it—Hirst did. Knowing this, we look at it a different way’ (Dorment, 2007). Like all sectors, the creative industries possess a highest stratum of workers, those who reap the greatest rewards. However, the creative industries produce a peculiar type of individual success that is not simply rewarded financially. In fact, the financial rewards of the industry are also part and parcel of the ability for the artist to become part spectacle; a person whose contribution transcends their talent and also becomes a part

172  Elizabeth Currid-Halkett of the larger entertainment complex (Currid-Halkett and Scott, 2013). These producers’ goods become intertwined with their personae. These individuals are rewarded concurrently with symbolic and cultural capital along with the financial rewards for their talent (Bourdieu, 1993). We might call these individuals ‘elite cultural producers’ but in common parlance they are ‘stars’. What distinguishes cultural stars from other industries (e.g. finance or technology) is that their public personae are valued in tandem with their skills. Surely, personalities exist in other, more obviously merit-driven industries. What will Apple become in the post-Steve Jobs era or imagine real estate without Donald Trump? But of course, in both cases, their stardom hinges on their successes (and at times failures) not the other way around. In the case of creative industries, even those stars born from their talent become, to use Boorstin’s (1961) phrase ‘known for their well knownness’ and after their talent may have dissipated (e.g. they have not starred in good films as of late, their albums flop) their celebrity remains. The critical quality of contemporary stars is that society is collectively fascinated with these individuals as people and this fascination transcends their tangible or meritorious contributions to society. Celebrity has existed since the beginning of civilization. Yet our increased interest in these individuals in the twenty-first century is a function of two attributes of contemporary society: our desire to share collective experiences and information in an increasingly globalized and anonymous world and the information technology communication revolution that enables us to do so. In short, stars have become the ‘global water cooler’. But stars do not simply deal in the currency of information. Our twentyfirst-century stars are able to translate their public’s fascination into economic rewards. This article will consider the emergence of stars in their many forms, the role of social media and new entertainment in creating them, the commodification of the stardom phenomenon, and the consumption and production processes by which stardom arises, and ultimately dissipates. Finally, this chapter discusses what these dynamics mean for the future of stardom in contemporary society.

Creative Industries and the Commodification of Stardom This quality of stardom, seemingly nebulous and uncertain, is reified through the process of commodification within the creative industries, whereby the star’s cultivated personae are used to endorse products and at times to create brand empires that hinge on the star’s name (McCracken, 1989). The symbolic qualities of stardom have translated into brands, endorsements, and other revenue streams that are aligned with the cultural producers’ personae as much as their original point of origin (e.g. art, music, fashion). The basketball player Michael Jordan is particularly emblematic of this process. Through his signature Nike Air Jordan line of sneakers and clothes, steakhouses, cologne, and various endorsements ranging from McDonald’s to Hanes underwear,

Stars and Stardom in the Creative Industries   173 Jordan is thought to have contributed some $10 billion to the world economy (Johnson, 1998). Others too have been able to capitalize upon their stardom: Paris Hilton, former Spice Girl Posh Spice, her husband soccer player David Beckham and so forth. The success of such cultural commodification hinges on more than talent alone. While elite cultural producers become known also for their personae post facto, for many stars, part of their market success can be explained by the interweaving of their personae with their work. Andy Warhol exemplifies this quality: At a time when artists were supposed to embrace their starving status and revile economic rewards, Warhol not only celebrated wealth, he painted dollar bills (Currid-Halkett, 2010). Warhol’s art can hardly be disassociated with celebrity, both in terms of his subject matter (e.g. Jackie O., Marilyn) but also the star-studded parties he held at his infamous Factory. Thus for many cultural stars the link between person and production is inherent in their stardom. Their stardom is attributable to our desire to know about them as individuals rather than their talent alone. The desire on our part to connect with them as people translates into tangible goods that are associated with specific attributes: supermodel Kate Moss’ Top Shop clothing line is successful because of her reputation for being one of the most stylish women in the world. Jordan’s sports gear aligns with his talent as a basketball player. Golf player Tiger Woods was the face of sports drinks and clothing alike, raking in some $6 billion in endorsements through the course of his career. However, when his countless extramarital affairs disabused the public of his persona as a clean living family man the commodities associated with his celebrity became inauthentic. Woods lost an estimated $23 to $30 million in the months after the scandal broke (Rovell, 2010). As Surowiecki (2009) remarked, ‘The problem isn’t a question of morals, exactly. It’s that a huge gap has opened up between Woods’s advertising persona and his public image.’

The ‘Demotic Turn’ in Stardom The anointment of stardom for personality more than talent is increasingly evident in the twenty-first century and its translation into a commodity form is not relegated to simply the exceptionally talented. Partially this transformation can be explained by advances in technology and the rise of social media and the round-the-clock news cycle which inevitably translated into an incessant deluge of gossip on blogs and websites purely devoted to celebrity reportage. Social media and the paparazzi and advent of gossip blogs also changes what we want to know about our stars’ lives. We are not as interested in their glamorous outings as the banality of them getting coffee or pumping gas—they become, to use a popular US celebrity tabloid’s phrase, ‘just like us’. As a result, the very nature of stardom and what society wants from its stars has fundamentally changed. In short, we simply want to know more about other people’s lives and our cultural producers are the primary foci (Currid-Halkett, 2010; Turner, 2006). As a result, stardom is not strictly relegated to the talented. This ‘demotic turn’ (Turner, 2006) of celebrity has established new types of celebrities and new conduits in which stardom is cultivated,

174  Elizabeth Currid-Halkett commodified, and distributed. First, in the clearest way, television programming now revolves significantly around reality television, thus providing many new outlets for regular folks to become stars. On any given day dozens of reality programmes are on TV, with most channels running several during a season. Second, the commodities associated with stars (high end apparel, nightclubs, and rococo condominium complexes) are increasingly at the mainstream consumer’s disposal, while stars are ‘just like us’ in their banality, we are just like them in our conspicuous consumption and hedonistic lifestyle. Even if stars are not present at the nightclubs and restaurants we patronize, these institutions have all the trappings such that, at least theoretically, they could be (Currid-Halkett and Scott, 2013). Finally, the evolution of stardom from elite to democratic has enabled an increasing number of auxiliary ‘ordinary’ individuals to partake in stardom directly. These individuals emerge into stardom and its commodity forms based on their personae alone. The proliferation of social media and reality TV has made this process all the more possible by reducing barriers to the conventional star system (Andrejevic, 2004; Jenkins, 2006a, 2006b).

New Forms of Stardom The changes in social media and consumer behaviour towards stars have created entirely new archetypes of stardom. While once we had the distinction between what one might call Braudy (1986) stars, those whose celebrity emerged out of achievement and talent, and Boorstin (1961) stars, those ‘known for their wellknownness’, we now have more ambiguous versions of stars that can exist in fractals within the larger framework of celebrity. Below I will consider a few examples.

Paris Hilton: famous for being famous Heiress Paris Hilton may be the clearest example of the Boorstin star but her stardom also translates into great economic dividends that are comparable to talent-driven stars. Paris followed the prescription ‘noise plus naked equals celebrity’ (Hirschberg, 2009). She was undoubtedly a rarity in the world of high society, a woman who danced on tabletops rather than attended literary luncheons. Hilton also benefited from the hedonistic gilded age of the early 2000s when conspicuous consumption and prosaic hedonism were de rigueur. She represented the zeitgeist of the early twenty-first century. But what made Hilton’s fame distinct from predecessors such as Warhol hanger-on and socialite Edie Sedgewick was her ability to translate her stardom into a commodity form. Hilton was not simply featured in society and gossip columns during her tenure as a celebrity; she used this stardom to launch a reality programme (and then another), a perfume line, and

Stars and Stardom in the Creative Industries   175 was paid to the tune of tens of thousands of dollars to make appearances at events and parties in Los Angeles, Las Vegas, and beyond. Hilton’s worth, outside of the original Hilton hotel empire, is estimated between $15.5 and $50 million.

American Idol and YouTube: the ordinary to extraordinary The democratic surge in contemporary celebrity does not mean that all stars are talentless, ordinary folks. Instead the new democracy of stardom is thought to enable new channels for individuals to attain stardom by circumventing normal vetting processes and gatekeepers. American Idol is a reality talent show that has captured the country for ten seasons and has become one of the most popular programmes in American television history. At the programme’s peak it boasted a viewership of 30 million. The programme is perhaps the most obvious and now formulaic means through which such democratic stardom occurs. The show is hosted by the telegenic Ryan Seacrest and a series of rotating ‘judges’ and formerly Simon Cowell (who retired from the show). Cowell, it ought to be noted, is the host of several extraordinarily popular programmes in the UK, Pop Idol and Britain’s Got Talent. American Idol and its UK counterparts live up to their namesake, which is actually explicit in the subtitle of Idol: The Search for a Superstar. Over the course of its many seasons, Idol has produced countless bonafide superstars who have won Grammy’s, broken music records, hit number one on the charts and one (Jennifer Hudson, a season-three contestant, not even a winner) won an Oscar. Idol’s stars do not, however, rest merely on famous for being famous. Instead, Idol rests on the premise that under the radar talented folks have a chance at true stardom without being vetted by elite gatekeepers. As the cultural critic Neil Gabler remarked of one of the programme’s most successful contestants, ‘Kelly Clarkson . . . who had that big, powerful voice but not the drop dead good looks that everybody in the recording industry now seems to have, was made a star by the audience. The audience said, “This is real . . . Kelly Clarkson, Ruben Studdard, Clay Aiken, they’re real, they belong to me, and I will make them stars” (Gabler, 2004). Similarly, YouTube offers a chance for people with no obvious channels into Hollywood executives’ offices to possibly make it big. Justin Bieber, a young teenager from Canada, posted a video of himself on YouTube. Bieber got discovered by Scooter Braun who placed Bieber in the hands of multi-Grammy winning musician and producer Usher and ultimately helped him land a record label with Island Records and an album that went platinum. Contrast the Bieber path to stardom with the conventional Disney Channel and Mickey Mouse Club vetting process through which Justin Timberlake, Britney Spears, and Miley Cyrus have emerged. YouTube, like American Idol, lowers the barriers of entry and circumvents traditional means to celebrity. They provide ordinary people with extraordinary talent the chance to beat the system.

176  Elizabeth Currid-Halkett

Jersey Shore: the ordinary remains ordinary On the other end of spectrum is a peculiar phenomenon that has emerged on both sides of the Atlantic: ordinary individuals who do not get discovered to actually be extraordinary but instead emerge into the spotlight and are regaled in part because of their ordinariness. The reality programme Big Brother and its splinter series in various countries is the prototype of this new type of commodified stardom. The plotline of Big Brother revolves around bunking up strangers in a confined space in which their every move, conversation, and fight is recorded as if by Orwellian Thought Police. The people in this show are not remarkable in any ostensible way and the programme is not designed to select people to become pop stars or supermodels. Yet many of those who participate become bonafide stars in the conventional sense, gracing the pages of glossy tabloids and giving interviews to mainstream media. British Big Brother contestant, Jade Goody came from a working class background, was not educated, was not beautiful or aggressively thin in the Hollywood archetype, and publicly made racial slurs, and yet ended up as something of an everyman’s demagogue. As Mark Frith, the editor of the popular celebrity tabloid remarked, ‘Jade Goody was the first person in the modern reality TV era who people identified with in a major way’ (Currid-Halkett, 2010). Indeed, Goody’s celebrity was based on her public’s ability to connect with her and to believe that they were something like her and thus by extension could be (perhaps in an alternative reality) stars too. Goody was tragically diagnosed with cervical cancer in 2008 and died very shortly thereafter. Her death was so mourned that even Prime Minister Gordon Brown made public remarks on her influence on British society. However, Goody’s ability to achieve fame rested on a public who wanted to know everything about her life and largely celebrated her lack of airs, beauty, or inherited riches because in some way these inadequacies reminded them of their own. Similarly, the American reality show Jersey Shore, now in its fifth season, has become an unprecedented phenomenon of democratic stardom. So much so that even high brow mainstream cultural commentary from Brett Easton Ellis to the New York Times to Vanity Fair have acknowledged (and been fascinated by) its impact on popular culture and media. Jersey Shore’s premise is based on a stereotyped cast of Italian Americans (called ‘Guidos and Guidettes’) who appear crass, materialistic, and bad mannered in the episodes, which were initially filmed on the Jersey Shore but in subsequent series located in Florida and Italy before returning home. The stereotyping has been met with public outcry from Italian Americans. More recently the clothing label Abercrombie and Fitch attempted to pay one of the characters, the ‘Situation’ (named for his apparently remarkably toned stomach), to stop wearing the company’s clothing for fear he was harming its reputation. Yet, despite the offensiveness of the contestants, the banality of the content, and the public outcry, Jersey Shore has achieved true cultural iconography in contemporary society and the show’s characters (Snooki, Pauly D, and JWoww, to name a few) have attained international fame, and grace the same tabloids as conventional Hollywood stars.

Stars and Stardom in the Creative Industries   177

Processes of Stardom: Consumption and Production Given the ‘long tail’ (Anderson, 2008) of consumer options how do stars, who require a very large collective of adoring fans and consumers, emerge in the first place? Would it not be more logical in an age of social media, iTunes, and any number of other sources of unfettered choices, that stars would cease to exist? And yet, if anything, stars are even more pronounced than ever. As Krueger (2005) found, in 1981 the top 1% of artists were responsible for 26% of concert revenue. By 2003, the figure jumped to 56%.

The consumption of stardom There are four interweaving qualities that underpin the production and perpetuation of stars. First, stars are primarily a product of taste-driven, highly visual industries such as fashion, art, music, and film (Currid, 2007; Currid-Halkett, 2010) or what Caves (2000) calls the ‘nobody knows’ property of creative industries. As such, stars are chosen through subjective evaluation processes that are often socially embedded (Becker, 1982; Currid, 2007). Gallery openings, Fashion Week, and other social activities are often where gatekeepers (e.g. editors, curators, movie directors) engage with people and products that they may anoint as stars through writing an outstanding review, casting a young starlet, or listening to a demo tape. Such social events enable gatekeepers and aspiring stars to establish the personal contact that can drive artistic success. In this context, chance may trump merit. The second key explanation for the perpetuation of a star system revolves around the process of consuming creative goods more generally. Music, books, and films—the products of our stars—are both socially evaluated and consumed (DiMaggio, 1987; Elberse, 2008; Molotch and Treskon, 2009). In other words, part of the joy of reading Jonathan Franzen’s new novel or downloading Britney Spears’ latest single is our ability to share the experience with others. The fun of going to a rock concert hinges on more than just the music; we are also collectively consuming the experience. The observation that 50 000 other people are in attendance informs our enjoyment as well. Stars are the most obvious example of collectively consuming a good. In contemporary society, discussing universally known individuals (Paris, Lindsay Lohan, Mel Gibson, etc.) acts as a glue for bonding with others. Or to paraphrase the media scholar Henry Jenkins (2006a), ‘It’s not who you are talking about but who you are talking with that matters’. The ‘media as message’ also partially explains how our stars are created (McLuhan, 1964, 1967). The media, in bombarding us with countless photos of Jennifer Aniston or Angelina Jolie means that consumers are only partially in control of who is given attention (Adorno, 1991). Katz (1957) calls this dynamic between media and consumer the ‘two-step model of communication’. In other words, consumers may circle around one

178  Elizabeth Currid-Halkett star over another but they were still only given limited information in the first place. The rise of social media and its lower barriers-to-entry have, however, changed the playing field somewhat. While most mainstream media does foist particular A-list stars upon consumers, the rise of blogs, Twitter, and YouTube mean that unknown individ­ uals outside of conventional paths to stardom can become virally popular. Justin Bieber or the fashion blogger Tavi Gevinson are two such examples. In both cases, the media responded to the already established popularity generated by followers. Finally, the rise of stars is mitigated upon the collective consumption of a particular good or person, we are able to reduce our search costs (Rosen, 1981; Adler, 1985). In more practical terms, why search for another blond pop star to hum along to when Britney Spears will do just fine? It is unlikely that hours of trolling iTunes will ultimately come up with a better version of bubblegum pop than Spears. For those not trained in art history, taking cues from New York Times’ art reviews or splashy exhibitions at the Tate guide us to view the art that collectively is thought to be the best. The same can be said for music, films, and restaurants. Because most of us are not experts in taste-driven markets and the choices are overwhelming, we tend to glom onto those consumer goods that are affirmed by obvious experts and the ‘wisdom of crowds’ (Surowiecki, 2004). These processes result in what Frank and Cook (1995) call ‘winner-take-all’ markets. There may be thousands of artists in New York City, many of them quite talented, but most of these artists will struggle to pay their rent while a few (Jeff Koons, Ryan McGinley) will make millions. Similarly, there is only one Jonathan Franzen or Ian McEwan, only 20 or so A-list Hollywood actors and, as already discussed, over half of concert revenues go to just a tiny fraction of musicians. Thus the selection of stars is not simply a social phenomenon but a legitimate commodity market where the star is the point of origin for not simply his or her direct creative good (a song, book, or film) but an additional industry that emerges and is branded by his or her stardom. A celebrity can generate significant profits by translating their stardom into products directly branded by his or her name. The most obvious example is the celebrity endorsement (e.g. being the ‘face of ’ a make-up company, sports drink and so forth). But additionally, stars can create goods that are synonymous with their name: Britney Spears’ perfume line, Victoria Beckham’s clothing line and so forth. The ‘star’ has become his or her own multi-tier industry autonomous to the creative industries themselves. As a result, a multitude of occupations and industries solely exist to prop up the persona of the star (Currid-Halkett, 2010; Currid-Halkett and Scott, 2013) ranging from publicists, lawyers to nutritionists, stylists, and agents.

The production side of stardom Producers of stardom are happy to capitalize upon the social processes that prop up particular individuals to adore. The ‘winner-take-all’ market is equally created by the agents, media, and intermediaries who represent stars as much as the willing consumers. The low cost of reproducing creative products (e.g. music singles, e-books, images

Stars and Stardom in the Creative Industries   179 of celebrity sightings) and the ability to enable ready access to these goods and services allows those within the production system to catalyse collective consumption, perhaps even to the detriment of free markets and individual choice (Frank and Cook, 1995). Frank and Cook (1995) take the case of authors Brett Easton Ellis and Donald Trump to demonstrate the ways in which intermediaries can prop up stars even if the quality of their work is questionable. Despite a scathing review in the New York Times that both derided Ellis’ latest book along with most of his previous work as nihilistic, sensationalist, and shallow, The Informers became a national best-seller and several of his books (Less Than Zero, American Psycho, and the Rules of Attraction) were adapted to film. Trump’s Art of the Deal maintained an artificially long-standing run on the best-seller list because Trump purchased thousands of his own books. Despite causing outcry from his critics, this stunt only made other consumers think the book was worth purchasing because it appeared everyone was reading it, further perpetuating its bestselling status (Frank and Cook, 1995). Producers of stardom thus rely on the social fabric and collective consumption that upholds stars in the first place. By manipulating the perception of collective consumption and using sensationalism (as witnessed in the case of Ellis), producers are able to create winner-take-all products. Other examples of this process include dealers buying their own artists’ work at auction if there are no other buyers and music labels paying radio stations to play particular songs with greater frequency (a practice known as payola). Similarly, media use what Thrift (2008) calls the ‘mechanisms of fascination’, selecting particular stars to focus on in order to perpetuate and intensify the connections between fans and their stars, or more clinically consumption and production. Through ‘technologies of intimacy’ (Thrift, 2008), the media is able to record the pedestrian activities of stars in real time such that consumers feel that they are indeed with their stars at all times and further engage in the propping up of particular anointed individuals. Historically, the production of stars has existed since the early 1900s in the form of the Hollywood studio system (Scott, 2005), whereby managers, directors, and agents invested in particular star talent and carefully calibrated the products they were associated with, the number of interviews, and the lifestyle that was projected to a star’s fan base. Today, stars are no longer tied to contractual agreements that allow studios to control their entire public personae. Thus a wider market of companies and brands now capitalize upon the aura associated with particular stars through paying them to endorse, wear, drink, or create their own line of products that further reinforce the dominance of particular cultural icons within consumer markets (Rojek, 2001; Marshall, 1997; McCracken, 1989; Currid-Halkett, 2010). A few economic figures demonstrate this trend. In Los Angeles and New York City alone, celebrity-driven occupations generate $2.3 billion in payroll and this figure is not taking into account publicists, lawyers, agents and so forth—those individuals that prop up the stars and maintain the business of stardom. Britney Spears is thought to contribute $110–120 million annually to the economy. Michael Jordan was thought to contribute $10 billion to the economy during his heyday. In the midst of his public demise, there was a virtual cottage industry built around Charlie ‘Sheenisms’ including mugs and t-shirts with his bizarre utterances plastered in boldface.

180  Elizabeth Currid-Halkett

The Erosion of Stardom As Louis Menand remarked in his glorious New Yorker essay, ‘The Iron Laws of Stardom’, most stars have, at most, three years of true stardom. All stardom is inherently ephemeral. Even for the talented, most stars cannot endlessly produce great songs or bestselling books. Nor can most stars remain perennially interesting to us. Eventually every public seeks out a new star to obsess over and imitate. As Menand puts it, ‘Stardom is the condition in which the star penetrates reality so thoroughly that you feel you can no more run away from it than you can run away from oxygen. Then suddenly there is a different oxygen.’ In the twenty-first century, the time span between rise and fall of stardom is getting shorter. Technology and new media have made it almost impossible for stars to maintain their position without sharing more and more information about themselves in the public sphere. Hollywood blockbuster stars and Grammy-award winning musicians may have their occupation to channel their stardom but those celebrities who rely primarily on their public personae will have to continually upkeep their existence as there is always another blogger, socialite, or reality TV star to swiftly replace them. For those with star branding, commodification certainly extends stardom and its financial rewards. Long after we become uninterested in Kate Moss’ love life and personal habits, her iconic sense of style may perpetuate future clothing lines at Top Shop, in the same way that Michael Jordan may no longer be in the limelight but his influence on Nike’s Air Force One remains. Partially, the ability of a star to perpetuate the commodification of stardom long after stardom has receded relies on the authenticity of the brand and the star. This linkage explains success and failure in both longand short-term examples of the commodification of stardom (Kahle and Homer, 1985; Erdogan et al., 2001). For example, Kate Moss’ supposed drug habit and wild partying did not challenge her position as a tastemaker. The two attributes were not incongruent. Initially, when she was first caught with cocaine, her endorsement companies did fear that her personal life clashed with her star brand and major fashion houses from Burberry to Chanel fired her immediately. As it turned out, the scandal only amplified her position in the fashion and tastemaking world and the companies rehired Moss with gusto. Yet, of course, for the golfer Tiger Woods there was no possibility that he could reconcile the clean living image he purported as the face of Gatorade and Accenture with the exposure of his extramarital affairs (Surowiecki, 2009). Similarly, when O. J. Simpson was accused of murdering his wife, the car company Hertz had no choice other than to drop the football player. The ‘O. J. risk’ as it has been called prompted companies to put in a ‘good behaviour’ clause. Other than bad or criminal behaviour, star products and endorsements can also fail because a star overbooks. Several academic studies point towards a link between consumer oversaturation and brand failure. Multi-endorsing stars cannot possibly have the expertise in all the products they

Stars and Stardom in the Creative Industries   181 claim to support and thus their credibility diminishes with too many products (Tripp et al., 1994).

The Future of Stardom Stars will always exist as an extension of creative industries, as these sectors are highly visual and frequently reported on in mainstream media. Increasingly, however, stardom is also awarded to those external to the creative industries and through more ‘democratic’ means: social media and reality TV. One of the defining aspects of twenty-firstcentury stardom is that consumers are increasingly investing in stars who they identify with rather than those they admire as icons of perfection. Another defining feature of twenty-first-century stardom is its multipolar geography; there is no central economic or social capital. The world is indeed flat (Friedman, 2007) for innovation and the star system alike. While Hollywood will remain important, other geographies both real and virtual are becoming equally significant hubs of stardom. Bollywood, the Internet, and reality TV are apexes of stardom and its accoutrements and their stars may never enter the studios of Los Angeles. Shahrukh Khan, the most famous Bollywood actor, may in fact be the most celebrated star in the world. Westerners may not be aware of Khan’s existence but India’s 1.13 billion population versus the United States’ 304 million, along with the dramatic Indian diasporas in the United States, Middle East, and United Kingdom, virtually guarantees a larger fan base. India produces some 1100 films a year (two times as many as produced in the US) and sells 3.6 billion movie tickets, one billion more than sold in America (Lorenzen and Taube, 2008; Lorenzen and Mudambi, 2012). Similarly, virtual spaces—Facebook, Twitter, the blogosphere and so forth, are just as relevant as the physical spaces where stars emerge. Stardom is not a new phenomenon, we have anointed people as special for as long as human civilization has existed (Braudy, 1986). Yet, the landscape is indeed changing. The dynamics that have changed other parts of society—technology, globalization, and social media—have also transformed the production of stardom and the ways in which individuals emerge as stars, whether self-appointed or publicly anointed. We are entering a whole new era of stardom, whereby entirely new types of people and aspects of society are producing our stars and their commodity forms. Some of these stars will come from our films, others from our reality programmes, and still others from our Facebook pages and Twitter feeds. In all of these instances, we will exhibit the collective fascination with their banality and extraordinariness all at once until we have found another star to focus on.

Note 1. Associate Professor, University of Southern California, Price School of Public Policy, Ralph and Goldy Lewis Hall, 301B, 650 Child’s Way, Los Angeles, CA 90089. [email protected]

182  Elizabeth Currid-Halkett

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Stars and Stardom in the Creative Industries   183 Katz, E. (1957). The two-step flow of communication: An up-to-date report on an hypothesis. Public Opinion Quarterly, 21(1): 61–78. Kahle, L. R. and Homer, P. M. (1985). Physical attractiveness of the celebrity endorser: a social adaptation perspective. The Journal of Consumer Research, 11: 954–961. Krueger, A. B. (2004). The economics of real superstars: the market for rock concerts in the material world. Cambridge, MA: NBER. Leibenstein, H. (1950). Bandwagon, snob, and Veblen effects in the theory of consumers’ demand. The Quarterly Journal of Economics, 64: 183–207. Lorenzen, M. and Mudambi, R. (2013). Clusters, connectivity and catch-up: Bollywood and Bangalore in the global economy. Journal of Economic Geography, 13: 501–534. Lorenzen, M. and Taube, F. A. (2008). Breakout from Bollywood? The roles of social networks and regulation in the evolution of Indian film industry. Journal of International Management, 14(3): 286–299. Marshall, D. P. (1997). Celebrity and Power: Fame in Contemporary Culture. Minnesota: University of Minnesota Press. McCracken, G. (1989). Who is the celebrity endorser? Foundations of the endorsement process. Journal of Consumer Research, 3: 310–321. McLuhan, M. (1967). The Medium is the Massage: An Inventory of Effects. New York: Ginko Press. McLuhan, M. (1964). Understanding Media: Extensions of Man. New York: Signet. Menand, L. (1997). The iron law of stardom. The New Yorker, 24 March. Molotch, H. and Treskon, M. (2009). Changing art: SoHo, Chelsea and the dynamic geography of galleries in New York City. International Journal of Urban and Regional Research, 33 (2): 517–541. Rojek, C. (2001). Celebrity. London: Reaktion Books. Rosen, S. (1981). The economics of superstars. The American Economic Review, 71(5): 845–858. Rovell, D. (2010). Tiger’s lost endorsements lost IMG $4.6 million last year. CNBC accessed 18 June 2015. Scott, A. J. (2005). On Hollywood: The Place, the Industry. Princeton: Princeton University Press. Smart, B. (2005). The Sport Star: Modern Sport and the Cultural Economy of Sporting Celebrity. Thousand Oaks, CA: Sage Publications. Surowiecki, J. (2004). The Wisdom of Crowds. New York: Double Day. Surowiecki, J. (2009). Branded a cheat. The New Yorker, 21 December . Thrift, N. (2008). The material practices of glamour. Journal of Cultural Economy, 1 (1): 9–23. Tripp, C., Jensen, T. D., and Carlson, L. (1994). The effects of multiple product endorsements by celebrities on consumers’ attitudes and intentions. Journal of Consumer Research, 20 (4): 535–547. Turner, G. (2006) The Mass Production of Celebrity. International Journal of Cultural Studies, 9(3): 153–165.

Chapter 10

Creative Entre pre ne u rs The Business Models of Haute Cuisine Chefs Silviya Svejenova, Barbara Slavich, and Sondos G. AbdelGawad

Introduction The cultural industries are a ‘fascinating forest of power plays’ (Hirsch, 2000). Producers, distributors, dealers, and investors, driven by economic interests, search for, select, and shape cultural products, exercising control over what gets made and shown, assigning value to it, and appropriating part of that value (Caves, 2000; Lampel, Lant, and Shamsie, 2000; Wijnberg and Gemser, 2000; Khaire and Wadhwani, 2010). Artists, in turn, driven by the need for expression, seek to maintain control over their artwork and make a living with it (White and White, 1965; Storr, 1985). Yet, most of them seldom reach an audience. When they do so, their rewards are usually ‘precarious and meager’ (Storr, 1985, p. 33). They have to get other jobs to support themselves and sustain an artistic career (Menger, 1999; Strom, 2006). In the words of film director David Lynch, ‘It’s such a tricky business. You want to do your art, but you’ve got to live. So you’ve got to have a job’ (Lynch, 2006, p. 163). A question remains how artists can live off their talent, having more power over their work and appropriating a larger part of the value created with it. Scholars have pointed to creative entrepreneurship, i.e. an artist starting up a firm, as a means to achieving autonomy and securing income (Lampel, Lant, and Shamsie, 2006b; Strandgaard Pedersen et al., 2006). An artist’s firm, as any other venture, requires a sound business model, i.e. a ‘content, structure, and governance of transactions designed to create value through the exploitation of business opportunities’ (Amit and Zott, 2001, p. 511). The business model reveals what a firm does to make money (Magretta, 2002). It is also a source of identity that legitimates the venture to multiple stakeholders (Perkmann and Spicer, 2010). Despite the growing interest in business models, they have been rarely examined in the context of creative ventures (for exception, see Svejenova et al., 2010, 2011).

Creative Entrepreneurs   185 However, these ventures exhibit a number of unique properties (Caves, 2000; Lampel, Lant, and Shamsie, 2000; Jones, 2001) that challenge received ideas on business models and are of relevance for broader issues (Lampel, Lant, and Shamsie, 2006a). First, they are established to serve the needs of a creative founder, not those of customers. As such, they operate through individual business models, which are strongly dependent on the personality, talent, and brand of the artist and, as such, are difficult to sustain beyond the founder’s lifetime (Svejenova et al., 2010). Second, creative entrepreneurs seldom take an interest and have abilities to pursue profits through their ventures. For that, they usually establish and co-own them with trusted associates, mostly close relatives or friends who understand their artistic needs and shield their creative process from isomorphic and other pressures (Alvarez and Svejenova, 2002, 2005; Alvarez et al., 2005). Further, they usually shape the venture’s entrepreneurial capabilities, i.e. the abilities to envision and mobilize action for the exploration and exploitation of opportunities (Zahra et al., 2011), which are particularly relevant in a context of profound technological changes in the way creative products are conceived, reproduced, distributed, and consumed. In this chapter we put forward the understanding of creative entrepreneurs’ business models by highlighting, defining, and illustrating their particularities. We suggest that, depending on the scale and scope of their activities, creative entrepreneurs use different types of business models. Further, we extend the central business model notion of entrepreneurial opportunity, traditionally depicting business and social prospects, to encompass artistic openings. Finally, we also add to the discussion on what creative industry is, suggesting why haute cuisine can be considered one. The article is structured as follows. First, we introduce haute cuisine as a creative context. Second, we delineate four questions that determine the nature of creative business models and outline their elements. We also discuss the value created with an artist’s business model. Next, we suggest how entrepreneurial capabilities influence the functioning of a business model and propose two main types of artists’ business models—workshops and enterprises. We illustrate the theoretical discussion with examples of renowned international haute cuisine chefs who are creative entrepreneurs. We conclude with implications for professionals who seek to live off their passion and suggest opportun­ ities for further research.

Haute Cuisine as a Creative Context Chefs engage in creativity and enact symbolic value. Chefs are increasingly creative in their work. They are no longer employees who keep their recipes a secret and replicate them for years in small, overcrowded and overheated kitchens. Rather, they are more than ever creators who explore and experiment with ideas in dedicated culinary labs and continuously evolve the menu of their restaurants. Their innovations are presented at international events, such as summits, competitions, or food festivals, where

186   Svejenova, Slavich, and AbdelGawad novel practices are shared, culinary excellence celebrated, and local distinctiveness recognized. Chefs operate in the realm of the symbolic. Regardless of their inherent materiality, haute cuisine meals are experiences enjoyed not so much for their functional value as nourishment but, rather, for their aesthetic, emotional, and intellectual worth. For example, at elBulli, the no longer existing legendary restaurant of Spanish gastronomic innovator Ferran Adrià, acknowledged five times best restaurant in the world, ‘[d]‌econtextualisation, irony, spectacle and performance are completely legitimate’ (in Hamilton and Todolí, 2009, p. 281). Similarly, the website of Italian Michelin-starred chef and restaurateur Moreno Cedroni of Madonnina del Pescatore reveals that on the menu ‘you can discover . . . ingredients such as irony, linguistic games’. Beyond the expected superb taste and zero defects in a meal’s preparation and serving (Slavich, Capetta, and Salvemini, 2011), chefs seek to provoke diners and evoke emotions in them. They draw inspiration for their dishes from different art forms and use artistic analogies to explain what they do, e.g. choosing a ‘pallet’ of ingredients, ‘composing’ a menu, and ‘performing’ it to the restaurant patrons. For example, USA chef Grant Achatz of Chicago-based Alinea, sixth in the 2011 St Pellegrino world’s best restaurants ranking, explains: For this course, ‘rabbit, parfait, rillette, consommé,’ we wanted an unmistakable association with autumn. So we chose a palette of oranges, browns, and black, as well as flavors of brown spices, apple, cinnamon, wild mushrooms, and squash—all of which go well with the various manipulations of rabbit. The course progresses in temperature from a chilled section in the beginning, to a warm one in the middle, to a hot one in the end. The unveiling of each section adds an element of surprise and anticipation for the guest. (quoted in Kummer, 2011)

The meal’s symbolic value is further enhanced by the use of industrial design for the dishes and architecture and interior design for the space in which it is consumed. Overall, its symbolic value is an outcome of engaging in creativity throughout all stages and aspects of the culinary process and experience. Thus, haute cuisine is a creative industry and chefs are creative entrepreneurs.

Business Models of Haute Cuisine Chefs Below we discuss the main questions and elements of creative entrepreneurs’ business models, the value created with them, and the role of entrepreneurial capabilities in the business models’ operation.

Creative Entrepreneurs   187

Questions and elements The questions advanced here are derived from and extend previous work on business models of creative entrepreneurs (Svejenova et al., 2010; Svejenova et al., 2011; Vives and Svejenova, 2011). They can be used analytically, to examine and compare business models across creative and other contexts, as well as practically, to design, operate, and transform them. There are four questions at the heart of a business model: (1) Why?, or what motivates the creation of a venture; (2) What?, or the nature and range of opportun­ ities pursued; (3) Who?, or actors targeted and mobilized, and (4) How?, or activities involved in opportunity realization. Below we discuss and illustrate these questions and their elements.

Why? Motivation for establishing a venture To realize their passion for creation, artists are willing to accept payment below ‘their opportunity cost in humdrum employment’ (Caves, 2003, p. 74). However, as they become entrepreneurs, they can increase the economic rewards from their work, while enhancing their professional gain in terms of authenticity and freedom of expression. That allows them to claim entrepreneurial identity and legitimately engage in business transactions (Perkmann and Spicer, 2010), which permits them to appropriate a larger part of the value they create. In addition to the quest for professional gain through the pursuit of their passion, artists can be motivated by secondary motives, such as financial gain, power, and fame (Storr, 1985). They can also combine the pursuit of passion, profits, and social gain (Vives and Svejenova, 2011). Some chefs engage in entrepreneurship in order to innovate without restrictions. For example, chef Ferran Adrià and restaurant manager Juli Soler acquired elBulli from its founders to have control over its future so that the chef is able to pursue a novel, risky style of cooking (Svejenova et al., 2010). Similarly, Grant Achatz’s co-ownership of restaurants Alinea and Next with manager Nick Kokonas is driven by the chef ’s need to operate and experiment with new ideas ‘at a level of creative and financial freedom enjoyed by very few artists and only a handful of chefs in history’ (Moskin, 2011). Chefs also become entrepreneurs for greater profits, which they can realize through launching new fine dining concepts and other luxury experiences. In that, they have to perform management roles and are rarely present, if at all, in the kitchens of their numerous restaurants. For example, French chef Alain Ducasse keeps launching predominantly high-end restaurant concepts that offer ‘durable luxury’ in France and internationally, and compete for Michelin stars. He is interested in differentiating the restaurant concepts, yet, in the main, he is not seeking to grow them into chains, as luxury requires exclusivity. Overall, he is ‘more of a chef d’entreprise than a chef de cuisine’ (Passariello, 2003) and delegates the high-end restaurant kitchens to trusted disciples who have been trained in his own culinary school. Finally, chefs may become entrepreneurs for the social gain that can be obtained through their creative and business endeavours, such as generating employment

188   Svejenova, Slavich, and AbdelGawad opportunities for others, reviving local traditions, or supporting producers of indigenous varieties. For example, Peruvian chef Gastón Acurio continuously introduces new restaurant concepts related to Peruvian cuisine and then swiftly franchises them. Beyond immediate economic gain, Acurio’s broader agenda involves using ‘Peruvian food as an instrument to put our culture in the world’ (McLaughlin, 2011b) and ‘a way of transforming lives to help build a more just, prosperous and democratic society’ (Chauvin, 2011). As he explains, ‘you can do thousands more things by being a cook for your country than you can by being a politician’ (Mapstone, 2009). Overall, the motivation of creative entrepreneurs is a combination of professional, economic, and social gain, and influences the opportunities they explore and realize.

What? Nature and range of opportunities pursued Entrepreneurial opportunities reside in sources of input, production methods, new products, ways of organizing, and markets (Schumpeter, 1934). Creative entrepreneurs pursue three types of opportunities: artistic opportunities that involve introduction or recombination of input resources and invention of methods that open up new avenues for artistic expression, business opportunities that entail the creation of new products and initiation of novel activities and ways of organizing for profit, and social opportun­ ities that consist in creation or expansion of markets for the advancement of causes. Artistic opportunities are of highest priority for creative entrepreneurs, as they permit the fulfilment of their primary motivation—engagement with art for art’s sake (Caves, 2003). Chefs experiment with ingredients, techniques, and aspects of the culinary process and dining experience. For example, according to elBulli’s philosophy, ‘[t]‌he search for technique and concept is the apex of the creative pyramid’ (in Hamilton and Todolí, 2009, p. 280). That is, the most significant artistic opportunities in haute cuisine reside in the discovery and introduction of new culinary concepts and techniques. An example of such path-opening discovery is ‘basic spherification’, defined as ‘the instantaneous, interrupted jellification of a liquid to form spheres of varying sizes with a liquid interior’, employed for the making of caviar, marbles, or balloons, among others (Exhibition leaflet, 2012, p. 40). Further, dishes such as elBulli’s ‘Textured vegetable panache’, in which a range of vegetables are served presented in different textures, are considered ‘representative of the start of a revolution’ and mark a ‘new path’ (in Hamilton and Todolí, 2009, p. 290). According to Italian chef Massimo Bottura, owner of Osteria Francescana, fourth in the 2011 St Pellegrino world’s best restaurants ranking, ‘There are two paths open to today’s chefs. Both of them right. One is to follow the score as a musician would . . . following the recipe to produce a good cover version. Others are trying to create their own way, their own music.’ In its highest form of expression, artistic opportunities are about the creation of new genres and styles, i.e. an entire new system or language, as the one developed by Ferran Adrià, with novel culinary concepts (e.g. foams), techniques (e.g. spherification), and principles for creating and consuming food (e.g. use of acoustics, irony). Business opportunities are geared towards revenue generation through the introduction of new products that leverage artists’ talent and brand as well as new activities that

Creative Entrepreneurs   189 guarantee resources for sustaining creative work. Although unprofitable or low margin undertakings, elite restaurants are the backbone of chefs’ business models as they allow for the accumulation of reputation and expertise. Brand recognition and know-how then become resources employed in the pursuit of other business opportunities that bring in revenues. In addition, they help sustain artwork and pursue social causes. Chefs can leverage their individual and/or restaurant brands as well as their expertise in creativity into related activities, such as catering, consulting, training, managing restaurants for others, product development, or food-related media productions. Further, they may want to ‘democratize’ the gourmet dining experience by translating it into restaurant concepts and products that are affordable for a wider range of customers. For example, José Andrés, American celebrity chef of Spanish origin and co-owner of the ThinkFoodGroup, pursues business opportunities that range from exclusive Chicago-based minibar by josé andrés to The Bazaar by José Andrés in the SLS Hotel at Beverly Hills. The former is a restaurant within the restaurant, offering an imaginative menu to only six diners twice an evening, while the latter consists of different spaces that combine dining, lounging, and shopping experiences. He is also the executive producer of the PBS series Made in Spain and is engaged in numerous other media initiatives. Further, he receives revenues from consulting, as culinary director for a luxury hotel brand. Social opportunities draw on artists’ reputation and skills, as well as on other resources they obtain through their business activities. They involve the creation or expansion of employment or product markets that help realize important causes that affect communities. Chefs are using their know-how, economic and organizational resources, and influence as public figures to support and realize important social causes. For example, chef Ferran Adrià is the leading force behind the Spanish food and science foundation Alicia, which employs cutting edge haute cuisine techniques and knowledge to pursue projects that improve the food diet of patients with rare diseases and food intolerances. The team at Alicia also engages with local farmers for the recovery and preservation of home-grown varieties and aims to promote and support their distribution. Peruvian chef and food ambassador Gastón Acurio pursues a range of social opportunities that aim at ‘globalising Peruvian food’ (Mapstone, 2009). Further, he expands the employment possibilities for low-income youth through the Pachacútec Cooking Institute that offers training into the craft of fine cooking by the best Peruvian and international chefs in one of Lima’s poorest areas. A creative entrepreneur can discover or create opportunities (Alvarez and Barney, 2007; Zahra, 2008) through prior knowledge (Shane, 2000), alertness (Kirzner, 1973), or replication (Winter and Szulanski, 2001). She can also fabricate them ‘from the mundane realities of her life and value system’ (Sarasvathy, 2008, p. 10). These opportunities are usually time and location-bound, and require entrepreneurs to set priorities in their pursuit (Bingham, Eisenhardt, and Furr, 2007). Further, they pose demands on the chefs’ time and attention, as far as their personal involvement is required, as well as on the entrepreneurial capabilities of the venture team. For chefs who seek to maintain elite

190   Svejenova, Slavich, and AbdelGawad status, business opportunities need to be approached with coherence and moderation, and with thoughtful selection of actors to target and mobilize.

Who? Actors targeted and mobilized Creative work and the pursuit of business and social opportunities require the involvement of a ‘motley crew’ of actors (Caves, 2003; Townley, Beech, and McKinlay, 2009), such as partners, consumers (foodies and others), or critics, each playing a distinctive role in a creative entrepreneur’s business model. Partners engage in activities that support the realization of artistic, business, and social endeavours. Even the most individual forms of art require the support of an art world in order for artwork to be brought to life and reach audiences (Becker, 1982). To be coherent and compatible with an artist’s vision and reputation, partners are usually selected on the basis of status (Faulkner and Anderson, 1987) and complementary competencies and approaches, with preference given to repeated relationships as a source of authenticity (Svejenova, 2005) and ease of collaboration (Bechky, 2006). For example, Spanish chef Joan Roca, co-owner of the 2011 St Pellegrino world’s second best restaurant, El Celler de Can Roca, as well as Italian chef and restaurateur Moreno Cedroni, of Madonnina del Pescatore, get inspiration from and collaborate with renowned perfumists, ‘translating’ perfumes into dishes, and dishes into perfumes. Moreno Cedroni works together with industrial food companies and supermarket chains to create, produce, and sell high-quality long-term expiration food (e.g. marmalades, pasta sauces, canned fish). Chefs, such as Ferran Adrià or Rene Redzeppi, collaborate with Phaidon, a prestigious publisher with global network, to enhance the outreach of their books. Consumers of experiences in haute cuisine restaurants are mostly foodies, gastronomic connoisseurs and chefs’ most dedicated audience, who take keen interest in culinary innovation and travel across the globe in search of new dining experiences. Chefs may also reach larger customer groups through other restaurant concepts or food products. For example, when introducing new restaurant concepts that are to be franchised, Gastón Acurio relies on precise segmentation, ‘because restaurants are spaces for different typologies of customers with different needs and different economic availabilities, who consume products in different moments’ (Acurio, 2006). Unlike the case of ventures in other industries, customers’ needs and wants are rarely taken into account when creative products are created. Critics offer judgement on the works of art and educate the audiences of their value and significance. They provide both evaluative reviews and publicity, drawing the attention of the audience to innovative works of art. Further, they also help consumers ‘understand and admire the technique and theoretical knowledge of the artist and to make its value judgment on these terms’ (White and White, 1965, p. 120). With the spread of the Internet, diners increasingly take on the role of critics, providing—through blogging, tweeting, and other forms of social media interaction—immediate evaluations of and images from their fine dining experiences. In haute cuisine, traditionally critics confer value and reputations to chefs by assigning coveted Michelin stars or leading positions in rankings of best restaurants. The Michelin

Creative Entrepreneurs   191 Guide has dominated the role of defining quality and endorsing restaurants, recognizing in 2011 only 93 restaurants around the world with three stars, its highest recognition. Since 2002, it has had to deal with competition from UK Restaurant Magazine’s world ranking of best restaurants, which recognizes culinary innovation, with rare presence of French chefs on the top ten list. The increase in stars has further effects on the chefs’ business model and profits, drawing customers in, allowing price increases, attracting media attention to the chef as well as business interests in collaboration with him or her.

How? Activities for opportunity realization Creative entrepreneurs realize the opportunities they have selected to pursue by engaging in a set of activities, which in turn need resources, organizing, and governance (Zott and Amit, 2010; Svejenova et al., 2010). Some of these activities have to do with the creative act, while others capture aspects of production, management, and ‘humdrum’ commerce needed for the artwork to reach markets and audiences (Caves, 2000). The commercialization and market acceptance of these products is usually beyond a creator’s immediate interest and attention, and requires involvement of intermediaries from the cultural industry system (Hirsch, 1972). Overall, creative entrepreneurs engage in innovation, replication, and diffusion activities. Innovation activities involve the creation of new ideas. Elite chefs from Spain, Italy, Peru, or Scandinavia, among others, have embarked on major reinvention of their national or regional culinary traditions, shifting their practices away from the dominant models of French classical and nouvelle cuisine. Inspired by the pioneering efforts of Ferran Adrià to introduce creativity as a separate activity at elBulli in 1994, which later became elBullitaller, a permanent, dedicated creativity workshop, a growing number of chefs engage in research and development, not only for the creation of new dishes but also of new restaurant concepts. For example, Cedroni explains: ‘The evolution of my business initiatives is the result of the development of my continuous research on food. Madonnina del Pescatore is a gourmet restaurant; with Clandestino Susci Bar I have started my research on raw fish, with Anikó I have started my research on pret-à-porter street food, and through Officina, I have been able to create exclusive recipes for long term expiration high quality food’ (quoted in Slavich et al., 2011). Similarly to other sectors, novelty in haute cuisine comes from recombination of familiar and foreign elements (Powell and Sandholtz, forthcoming), which have been transferred into cuisine from other domains, geographies, or time periods through transposition and translation (Djelic and Ainamo, 2005; Sahlin and Wedlin, 2008; Jones et al., forthcoming). For example, chef Carles Tejedor of Via Veneto in Barcelona employed xanthan gum, an industrial food thickening agent, to create olive oil jellies (Chang, 2010). Chef Grant Achatz’s menu for his restaurant Next is based on travel in time and space, and was inaugurated with dishes capturing the spirit of Paris in 1906. Innovation activities, particularly those of a radical kind, require persuasion to ensure support and adoption. For that, creative entrepreneurs use rhetorical strategies (Jones and Livne-Tarandach, 2008) and stories (Lounsbury and Glynn, 2001; Wry, Lounsbury, and Glynn, 2011) to persuade investors, partners, critics, or customers of their worth and uniqueness.

192   Svejenova, Slavich, and AbdelGawad Replication activities entail standardization and codification of practices to ensure growth. As chefs introduce and expand new restaurant and other business concepts, they are expected to articulate a success formula (including recipes, menu structure, restaurant layout, service) that has to be perfectly reproduced across time and space in order to guarantee zero defects (Slavich et al., 2011). Replication entails articulation of routines, standardization and codification of practices, and knowledge transfer. For example, on the preparation for franchising of his restaurant concept La Mar, Gastón Acurio (2006) emphasizes the importance ‘to standardize some elements . . . and to guarantee a good service and a friendly atmosphere’. Further, knowledge transfer that ensures replication could be achieved through training. For example, with the growth of his operations, Alain Ducasse opened a professional training centre in November 1999 to ensure the preparation of talent for his growing number of restaurants. The opening of the training school required from Ducasse involvement in a new set of activities, ranging from developing teachable experiences to transferring them in an appealing and professionally useful way. Diffusion activities facilitate the communication and flow of innovation among the actors of a system (Strang and Meyer, 1993). They enable creative entrepreneurs to spread their ideas and practices and enhance recognition and influence. In an industry where intellectual property is hard to enforce due to the ephemeral nature of the culin­ ary creations, chefs increasingly publish books that reveal and explain their guiding principles, creative processes, and innovations. For that they engage in activities akin to scholarly endeavours, such as theorization, which involves ‘development and specification of abstract categories and the formulation of patterned relationships’ (Strang and Meyer, 1993, p. 492) by both critics (White and White, 1965) and creators (Svejenova, Mazza, and Planellas, 2007). For example, chef Ferran Adrià and his team have judiciously registered and dated every culinary experiment and discovery, evaluated and ‘measured’ its novelty, and positioned it on an evolutionary map that captures their evolution along different abstract categories, such as organization, philosophy, products, technology, preparations, styles, and features. They have published that in an extensive, over 5000 pages, General Catalogue of elBulli creations, referred to in the media as a ‘culinary bible’, which captures ‘the significance of each new contribution’ (in Hamilton and Todolí, 2009, p. 271). Other diffusion activities involve participation in international culin­ ary forums or the creation of documentaries on chefs’ creative processes, such as Anthony Bourdain’s Decoding Ferran Adrià or Gereon Wentzel’s El Bulli: Cooking in Progress.

Value creation Entrepreneurs create economic value through their business models’ profit and growth engine (Vives and Svejenova, 2011). Revenues, costs, and investments are primary elements for value creation in haute cuisine.

Creative Entrepreneurs   193 In the case of haute cuisine, the primary source of revenues is the price charged for a meal, usually for a fixed menu, which could be in the range of 100–500 euros, depending on the restaurant and whether it involves wine pairing or not. Chef Alain Ducasse justifies his pricing strategy: ‘I’ve had criticisms of my prices for years . . . Haute gastronomy is like haute couture: the materials are so expensive, it requires so much rigour. It’s expensive, but it’s the right price. And I have bistros that are not expensive’ (quoted in Day, 2011). Similarly, Kokonas—the business partner of chef Grant Achatz—explains why they had to drop Alinea’s $145 multicourse menu in favour of a larger one at $195: ‘It’s not because we want to make more money. It’s because we’re thinking long term. We’re really, really trying to steer Alinea toward being the best in the world’ (quoted in Tanaka, 2011). As Kokonas argues, that brings less money, as with the shorter menu of $145 they could do two sittings at a table per night, while the longer, 22-course menu takes four hours to consume and rarely allows reseating. In recent years, chefs have introduced innovation in their restaurant pricing models. For example, at Achatz’s Next restaurant diners pay a fixed fee, a ticket of sorts, as if for a performance, which varies depending on the attractiveness of the time of the seating selected. Further, tickets can be auctioned, creating a secondary market and opportun­ ity for diners to appropriate the extra value obtained. Further, ancillary revenues at the restaurant come largely from beverages consumed and chefs’ books sold. Chefs receive additional income from franchising, licensing, product endorsements, consulting and management fees, as well as catering, book publishing, participation in or production of TV shows, and creation of culinary products. The cost structure of an haute cuisine restaurant is heavily burdened, and contributes to it being a breaking-even or money-losing operation. It is represented by the high prices of luxurious perishable ingredients, the high staff-to-customer ratio, the impossibility to better leverage space as a table cannot be used several times during a meal due to the length of a menu that requires hours of consumption, and the need to maintain certain quality standards at the venue. A way to decrease the impact of labour on cost structure is the growing use of unpaid stagiers who work in elite kitchens for the learning and career opportunities they offer. In addition to revenues and costs, investments in initiating and sustaining a certain level of operation are also important. For example, chefs embark on substantial renovation of their dining spaces and kitchens to update their appearance and equipment, or creation of such spaces anew. For that, they usually count with partners who get involved through capital and management. Growth also poses capital requirements, especially if quality and reputation standards are to be maintained. Thus, chefs generate not only symbolic value through their imaginative dishes, but also profits that can be further reinvested in the business. In addition, they also create value for the profession, by developing new practices that help it evolve, for managers of business from other industries who benefit from the chefs’ advice, and for society at large, which can create a strong identity along with a wealth of income opportunities through the activities put in place by haute cuisine chefs (Svejenova et al., 2010).

194   Svejenova, Slavich, and AbdelGawad

Entrepreneurial capabilities The functioning of a creative entrepreneur’s business model requires entrepreneurial capabilities, i.e. abilities to envision and mobilize action for the exploration and exploit­ ation of opportunities through the integration of diverse inputs and actors (Zahra et al., 2011). These capabilities are necessary both for translating a creative act into a product that reaches the audience and for exploiting other opportunities that bring in revenues and/or enhance a creator’s brand equity. Entrepreneurial capabilities influence the business model through their role in sensing, selecting, and shaping opportunities, and synchronizing their realization (Zahra et al., 2011). For example, Chef Ferran Adrià’s business model included elBullicarmen, a dedicated unit whose team identified and selected opportunities for applying creativity to business endeavours and obtaining revenues from them. These opportunities ranged from consulting services for the executives of hotel chains who required novel restaurant concepts, to collaborations with food and beverage manufacturers for the creation of innovative products. For example, the partnership with the Damm Group resulted in the introduction of Inedit, a wine-like concept for a high-end beer. These opportunities were shaped and synchronized so that their resource needs did not interfere with the operation of the chef ’s restaurant and creativity workshop. Similarly, by observing canned products in supermarkets, Cedroni identified an opportunity for creating high-quality, long-term expiration food, what he denoted ‘food’s eternity’. He started investigating how to do that on an industrial scale, without compromising his reputation in the field of haute cuisine. He selected SSICA, Experimental Lab of the Industry of Preserved Food, as a partner in the creation of a modern lab that could support the fusion of hand-made quality with quantities allowed by industrialization. He also partnered with Bontà del Mare and Iper to sell the products in the supermarkets. However, as that did not bring the expected success, he started selling the products under his own brand. While he succeeded in achieving good quality, he did not obtain enough revenues. As he concludes: ‘In this period I won as a chef, but not as an entrepreneur’ (Cedroni, interview 2011). Hence, for chefs to embark on mobilizing partners and realize new value propositions, they need entrepreneurial capabilities to sense, select, shape, and synchronize the opportunities pursued.

Types of Business Models: Workshops and Enterprises Depending on their motivation and the scale and scope of their activities, creative entrepreneurs differ in the type of business models they establish and operate. Two main models are discernible: workshop and enterprise.

Creative Entrepreneurs   195 The workshop business model has as its centre of gravity the creative activity itself. The pursuit of opportunities is rather focused on those that allow for artistic expression, innovation, and learning, and in their sequencing priority is given to research and development rather than growth and expansion. These business models are geared towards discovery, advancement, and diffusion of novel ideas and approaches, more so than to their monetization. While creative entrepreneurs operating with workshop business models do engage in the pursuit of revenue-generating opportunities to cover the costs of their creative operation and have the freedom to create, they rarely reach significant size and usually operate with a small core team and numerous partners. Their primary audience is the profession, as they seek to improve it and the extensions to other audiences are largely with social gain in mind, through their foundations. The entrepreneurial capabilities required for the operation of such business models are oriented towards synchronizing different activities for achieving coherence around artwork. An example of workshop business model is that of Ferran Adrià, for whom the anchor was in the creativity lab where innovation took place, and the restaurant, with its uniqueness and exclusivity, the only place where the chef ’s creations could be tried. Additional revenues used to come from catering and consulting but in both cases they had to do with the selective leveraging of the core competence in creativity to different audiences and domains. Similarly, Massimo Bottura’s business model is rather focused and oriented to creation, rather than profit generation. Also, Grant Achatz works with a rather narrow business model, pursuing fewer business opportunities and focusing on a limited number of restaurants. The enterprise business model is oriented towards the pursuit of opportunities that have strong potential for growth and profitability. With it, chefs pursue both scope and scale. They engage in internationalization and diversification of their operations, branching out to more or less related activities and spreading their efforts across different customer segments. They open restaurants outside their home countries, in fashionable cities, such as New York, Tokyo, or Dubai. By producing and running TV shows or writing books and magazine columns, they are also powerful media brands and opinion leaders who attract followers and shape consumers’ behaviours. Both Alain Ducasse and Gastón Acurio’s ventures are examples of the enterprise model. Ducasse pursues opportunities locally and internationally through the Alain Ducasse Entreprise, co-owned with Laurent Plantier, the firm’s general manager. He does so through over 27 haute cuisine and other restaurants in eight countries, representing different dining concepts, as well as other activities, such as business events, a gastronomy schools, and hotels. He seeks to create unique personality for each of his restaurants. He seems to have ‘a knack for expansion without over-stretching’ (Day, 2011). Gastón Acurio has 32 restaurants in 14 cities around the world (McLaughlin, 2011b). In 2009, his brands’ worth was estimated at $60m (Mapstone, 2009). The case of Acurio is that of creating restaurant concepts with appeal to different segments, standardizing the know-how and franchising them, obtaining fast and profitable growth. Given that both workshop and enterprise are individual business models, largely dependent on their creative founders, succession is an issue for both. In some cases, it

196   Svejenova, Slavich, and AbdelGawad can be secured by moving into a partnership structure with younger artists whose styles are aligned with the founder’s values and vision, as have done some architects. Creators may also sell their brands and/or labels to larger companies or on the market, through an initial public offering, as in some cases of fashion design. Also, they can convert a firm into a foundation or establish a foundation anew, to sustain influence, preserve legacy, and enhance revenues from their work.

Implications for Creative Entrepreneurs and Opportunities for Further Research In this chapter we advanced novel insights into creative and cultural industries by bringing in creative entrepreneurship, business models, and entrepreneurial capabilities as understudied, yet important notions for understanding the interaction between art and commerce. We explored main questions and elements related to business models, as well as the value created with them and the role of entrepreneurial capabilities in their operation. We also advanced two main types of business models—workshops and enterprises—that reveal different trajectories pursued by creative entrepreneurs. Further, by using illustrations from cases of haute cuisine chefs, we broadened the contexts in which business models have been examined. These insights can be of relevance for other professionals who seek to live off their passion and capture more value from their work (Svejenova et al., 2010). They can be used as a recipe for action (Baden-Fuller and Morgan, 2010) in the design, management, and transformation of business models by artists and other professionals who seek to combine professional, economic, and social gain. As a framework for thinking (Baden-Fuller and Morgan, 2010), they allow comparisons among ventures across cultural and creative industries, and different geographic contexts. Further work may also address the business models established and entrepreneurial capabilities used by artists’ foundations as well as the trade-offs and opportunities for the creative activity when it unfolds in a creative entrepreneur’s venture versus another organization, in which the artist is a hired hand.

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Chapter 11

Entrepren e u rsh i p in  Creative I ndu st ri e s and Cu ltu ra l  C ha ng e Art, Fashion, and Modernity in India Mukti Khaire

Products of firms in creative industries—art, fashion, design, and entertainment (film, television, music, books)—are material objects of culture and manifestations of symbolic values and expressions of identity (Peterson, 1979) that crucially affect the production and reinforcement of cultural elements (Crane, 1992; Peterson and Anand, 2004) and norms, through their acquisition and use (Crane and Bovone, 2006). This chapter posits that pioneering entrepreneurship and innovation in creative industries have a broader impact on culture and society, beyond that of the products, and can lead to cultural change. Culture—the system of beliefs, customs, conventions, and norms held and followed by a particular social group (Jaeger and Selznick, 1964; DiMaggio, 1997)—constructs the identity of the social group by defining appropriateness and value. Therefore, the introduction of new cultural products requires entrepreneurs to reconfigure value systems and conventions in society in such a way that the new product is now perceived as appropriate and valuable. Such reconfiguration of value systems can be manifest as a change in cultural norms; entrepreneurs in creative industries are thus capable of not only influencing culture, but also contributing to cultural change. Using examples of the emergence and institutionalization of a market for modern Indian art and of a high-end fashion industry in India, this article argues that the entrepreneurial and organizational actions underlying these processes had a broader collective and cultural impact in that they entailed a redefinition of value in a manner that de-emphasized the previously-valued traditional and instead valued the individual and original. In doing so, these entrepreneurs ushered in modernity among Indian consumers, who, on account of the newly-conceptualized systems of propriety and value and the availability

Entrepreneurship in Creative Industries and Cultural Change   201 of novel alternatives, became more individualistic rather than bound to tradition and its attendant conceptions of value and propriety. The terms ‘creative’ and ‘cultural’ are often used interchangeably to describe those industries that ‘supply goods and services that we broadly associate with cultural, artistic, or simply entertainment value’ (Caves, 2000), whose products—books and magazines, paintings, sculpture, films, television programming, opera, fashion, and design items—are the result of creative effort and are imbued with greater symbolic than mater­ ial value (Hirsch, 1972, 2000). These definitions imply that the value of creative and cultural products is socially constructed; what differentiates a painting by Picasso from a cubist abstract painting by me may well be the difference in quality, but it is important to note that the criteria of quality are defined by the discourse (Wadhwani and Khaire, 2011) among intermediaries, i.e. people anointed by society as being ‘knowledgeable’ about art—critics, art historians, museum curators—that in turn draws upon and reinforces, in a virtuous cycle, the conventions of value in broader society. In this manner, cultural industries and their products are closely intertwined with broader cultural mores (Dowd, 2004). Hence, firms, faced with a certain set of value conventions and evaluation norms, which determine consumption patterns and preferences, generating specific market demand profiles, will recreate and reinforce existing cultural themes and tropes, in order to succeed in the marketplace. This leaves limited scope for the introduction of products that go against the cultural grain or don’t fit within existing norms (Markert, 1985). Therefore, pioneering entrepreneurs in creative industries, who introduce radically innovative products in the creative or cultural arenas, have to encounter resistance due to the unfamiliarity of their products and the absence of norms and conventions that make these products acceptable and appropriate, rendering them difficult to value in both cultural and economic terms. In creating a market for their products, such entrepreneurs need the help of intermediaries that constitute a ‘field of cultural production’ that generates and reinforces the conventions that enable society to evaluate, appreciate, and value cultural goods (Bourdieu, 1993) through value-constructing discourse. Intermediaries, critical to the functioning of creative industries (see Foster and Ocejo, 2013), are, therefore, particularly integral to the creation of markets for these novel goods. They have the necessary influence to create demand (Gay, 2008), which for novel and unfamiliar cultural goods necessarily lags supply (Bourdieu, 1993), by educating and cultivating consumers’ tastes. In the course of constructing a market for novel cultural goods by educating consumers about their value, intermediaries have to define and present new norms and value criteria that change perceptions and accepted conventions of what is acceptable and valuable in society, i.e. culture; if the intermediaries are successful, these new conventions get widely disseminated (Svejenova et al., 2007) among consumers. Entrepreneurs in creative and cultural industries, therefore, are a potential contributor to change in cultural norms, through the introduction of new products that necessitate a change in the discourse of intermediaries. The remainder of this chapter examines two empirical settings—the market for modern Indian art and the high-end fashion industry in India—and describes the

202  Mukti Khaire reconfiguration of value (against the backdrop of prevailing norms) by entrepreneurs and intermediaries in these settings as well as the cultural impact that such reconfiguration had. I then conclude with the implications of this perspective on creative industries, entrepreneurship, and culture for scholars interested in any or all of the above topics.

The Case of Modern Indian Art In 2005, a small ripple went through the art world when a work of art from India sold at auction for nearly $1.5m.1 While exquisite Indian artefacts like ancient bronze statues created by the lost-wax process or detailed miniature paintings had long been prized by collectors worldwide and had often fetched similarly high prices, this was the first time a painting by a living artist had crossed the million-dollar barrier. The sale was especially momentous in light of the fact that the first-ever global auction of twentieth-century art works from India had been held only ten years ago, before which the genre had been practically unheard of in art circles both within and outside India. The category was particularly neglected within India; the artist had sold the same painting for less than ten dollars to a neighboor 30 years ago, when he painted it. In a country with a strong tradition of bold folk art and exquisite crafts, where people were brought up to appreciate beauty in the familiar, which depicted culturally-appropriate and valued ideas and religious icons, the strange graphic imagery of modern art that did not narrate a well-known fable or portray a deity or totem did not appeal broadly to individuals’ sense of aesthetics and value. And yet, within a few years of breaking onto the world stage, modern Indian art commanded respect and garnered value, even among Indians. How had this transformation come about? See Figure 11.1 for a timeline depicting the evolution of the market for modern Indian art. A strong artistic tradition has long existed in India, evident in the miniature paintings of the Mughal era that were the cornerstone of global auctions of art from the Subcontinent, which also featured other Indian antiquities such as statuary. The value of these paintings was largely driven by their age, state of preservation, and historical significance rather than their aesthetic significance. Other artistic traditions in India were generally classified as folk art since they repetitively depicted traditional motifs and patterns, using age-old techniques and representations; the perceived lack of originality and individualistic expression in these paintings lowered their value in the modern Western art world that placed a premium on these attributes. Early colonial and post-colonial paintings by artists trained in Western styles and techniques at academic institutions established by the British rulers of India comprised another small portion of Indian art in global markets. These paintings, being mostly representational, did not command high prices among global art collectors either. However, Indian art created in a modernist aesthetic by a new wave of artists trained in these same schools, fired by nationalistic and anti-colonial passions, and reflecting broader political and social sentiments also suffered neglect in the global art market, despite its originality and emphasis

Entrepreneurship in Creative Industries and Cultural Change   203 Sotheby’s & Christie’s hold mixed auctions of ‘South East Asian Art’ featuring modern art with antiquities, including sculptures

Pre-1900

1900–1947

1947

1947–1990

1991

1995

2000

The art being created is predominantly ‘folk art’. Religious representations, depictions of life. Miniature paintings from the pre-British, Mughal era (16th to 18th century) dominate the subcontinent’s art

The representational art of the colonialists and early postcolonialists gains preeminence. Paintings of still life and portraits are symbolic of the oeuvre

India gains independence from British rule. A parliamentary democracy is established. Economic policies of the new government are defined by central planning

Artists working in a modernist tradition create most of their work, but the art market in India is weak and unstructured. There are few galleries and no formal secondary market. Not much domestic or global interest in modern Indian art

Economic reforms are implemented following a fiscal crisis. The reforms are widely credited with the creation of a consuming middle class. The Indian economy is opened to foreign firms; but media and retail sectors are still subject to restrictions

The first auction of modern Indian art is held by Sotheby’s, which receives a collection of 129 paintings from the Herwitz estate

Saffronart is founded. The first Saffronart auction (exclusively of modern Indian art works) is held in Dec 2000

2005– 2007 Christie’s The and market Sotheby’s for too start modern holding Indian stand-alone art is modern stabilized Indian art auctions, without any Indian antiquities 2003

Fig. 11.1  Timeline of evolution of the market for modern Indian art

on iconoclastic and non-traditional, non-representational styles. These art works were summarily dismissed by intermediaries as being provincial and/or derivative (or Western art works), and therefore remained undervalued in global art markets and the situation was much the same within India, where modern art held very little value in the eyes of consumers across the nation. The art market within India was not very well-developed, and unlike the West, few galleries existed, which were mostly small and run by enthusiasts, often from their houses. There were no exclusive deals and contracts between artists and galleries, and the other market infrastructure commonly seen in Western contexts—academics, dealers, critics and reviewers, secondary sales—did not exist for modern art, although it was well-established for other forms of Indian art. As a consequence, most Indians continued to place a premium on traditional forms of art or miniature paintings and modern art remained aesthetically and economically underappreciated and undervalued. This situation began to change somewhat in the late 1980s and early 1990s, when academics and art historians in India and abroad recast twentieth-century Indian art as modern, original, and reflective of individual expression rather than traditional tropes and icons, while nevertheless having a strong Indian-ness that was combined in innova­ tive ways with Western modernist concepts. The definition of modernism itself was problematized to enable the categorization of Indian art from the twentieth century as modernist and this broad academic discourse implied that this group of paintings deserved greater attention from art critics and collectors alike. Nevertheless, the change in the academic discourse, occurring in relatively rarefied circles, did not affect market conditions for modern Indian art; secondary trade continued to be sporadic and sparse, and the primary market stayed more or less opaque. The few modern Indian art

204  Mukti Khaire works that came to global art markets in auctions at Sotheby’s and/or Christie’s were often sold along with Indian antiquities, due to which customers did not perceive these works as being part of a new market category. Moreover, grouping these art works with antiquities meant that category-appropriate valuation criteria were not developed, due to which they continued to be valued at low prices. A new firm—Saffronart.com—that specialized exclusively in online auctions of modern Indian art was established in 2000. The mere founding of a firm whose raison d’être was modern Indian art held significance, since it implied the existence of a well-defined market category. As one of the founders of the firm remarked in an interview, ‘People used to ask me—is there such a thing as modern Indian art?’ While their focus on the single category helped define the boundaries of the new category somewhat, that alone was insufficient to create a market and increase the value of art that had previously been dismissed by collectors. Saffronart’s strategy was to expropriate the new academic discourse as a foundation for their efforts to educate customers about twentieth-century Indian art and construct its value. The founders published beautiful and comprehensive auction catalogues, with high production values, which provided detailed information about selected art works, their position in the history of Indian art as a whole as well as their relative importance within the individual artist’s oeuvre and body of work, and the relative significance of the artist and his/her style within the aesthetic evolution of the genre. Many of these valuation criteria were borrowed from the Western tradition of emphasizing the individual, while placing the art within a broader social, cultural, and artistic context and mapping the evolution of the aesthetic. Saffronart did not conceptualize the value criteria, but rather borrowed and subsequently simplified concepts from the academic discourse to generate an understanding of twentieth-century art as modernist fine art, which could be evaluated using criteria commonly used in the Western art world, thus constructing the economic value of the category. The discourse in Saffronart’s catalogues was an attempt at tastemaking (White and White, 1965) and value-redefinition. In that sense, the firm played the role of ‘middlemen of culture’ described by Gay (2008), ‘[engaging in] commercial activity [that] often was a pedagogic enterprise . . . [and advancing] the aesthetic cultivation of the buying public’. Saffronart’s practices were soon emulated by other auction houses, particularly Sotheby’s and Christie’s, which started to not only incorporate similar edifying and value-constructing discursive elements in their catalogues, but also to hold ‘pure’ modern Indian art auctions. These auctions and the values that the art works attained resulted in increased attention from journalists and art critics, who contributed to the discourse surrounding modern Indian art in the popular press, often adopting the valuation attributes used by the auction houses. This broadening of the circle of engagement in the discourse about modern Indian art not only disseminated and validated the valuation criteria promulgated by Saffronart, but also reinforced the value of modern Indian art in the minds of collectors as well as the lay public, institutionalizing the new market category. This was reflected not only in the widening of the market to include lesser-known artists since they could now be evaluated according to accepted criteria and the soaring prices of modern Indian art works, but also in the inter-subjective agreement

Entrepreneurship in Creative Industries and Cultural Change   205 (among collectors and auction houses) on the monetary value of the art by 2007. Finally, the broader art world in India underwent a significant change as well; other entrepreneurs followed Saffronart in establishing auction houses and several new galleries were founded, which granted exposure to a greater number of artists, which in turn legitimized individuals’ choice of careers in art. Thus, entrepreneurship in the art market contributed to the construction of value for modern, individualistic, original art that departed from traditional Indian themes and folk-iconography. Not only had modern Indian art been previously undervalued in global art markets, but customers within India also had largely neglected the category, preferring instead the familiar images of traditional, representational, or devotional and mythological art. In creating a new market category, therefore, the actions of Saffronart and other entities in the art world also transformed cultural perceptions by demonstrating the value of individuality and originality over long-held inward-looking notions of respect and esteem for tradition—the consumption of such art was thus related to modernity (Burger, 1984). Entrepreneurial action in the Indian art market, then, promoted a modernist mindset, which entailed acceptance of departures from established and understood (artistic) habits, questioning of the past, and tolerance of conflict and difference (Gay, 2008).

The Case of High-end Fashion in India Travellers to India quickly realize that India is one of the few countries where women continue to wear traditional attire in large numbers and with high frequency; the homogenizing force of Western attire has not yet fully subsumed the dressing habits of Indian women.2 Yet, just 30 years ago, the proportion of traditional attire visible on the streets was far higher, and Indian dress was nearly universal, except among very young girls. Moreover, women’s clothing was not merely traditional in style and structure, but was also made from traditional fabrics that were woven in specific patterns and typical colours by craftsmen practising the same craft for centuries in rural India. Today, however, traditional textiles in their pure incarnation and old patterns are far less common. One of the factors that contributed to this change in what types of clothing were considered appropriate and acceptable was the rise of the high-end fashion industry in India, which emerged in the mid-1980s, when a few entrepreneurial men and one woman, who called themselves designers, first set up small studios. Their future was uncertain, and their path was not likely to be easy; over and above the usual difficulties confronting an entrepreneur in any industry, these individuals had to contend with significant cultural obstacles generated by a lack of understanding of the value in fashion design among Indian consumers, who also had an accepted, and strong alternative to designer clothes available to them. Overcoming these obstacles meant changing the cultural context of consumers, causing them to change long-held preferences and patterns of behaviour. See Figure 11.2 for a depiction of the timeline of the evolution of the Indian fashion industry.

206  Mukti Khaire Apparel industry consists of handloom weavers, embroidery craftsmen, tailors, and a few retailers. Women mostly wear Indian clothing, and social norms dictate Indian clothing at formal occasions. The value and acceptability of clothing is defined along the lines of regional speciality textiles.

Pre-1947 Although men have adopted Western clothes to some extent, not even urban women wear Western clothes. Women wear saris that are either handwoven according to traditional patterns, or made in mills

1947 India gains independence from British rule. A parliamentary democracy is established. Economic policies of the new government are defined by central planning

1959 India’s leading Englishlanguage women’s magazine— Femina— is founded. It covers topics of interest to women— recipes, social issues, parenting, clothes, etc.

mid-1980s The first three fashion designers set up their enterprises. Early fashion designers mostly create Indian-style clothing, using traditional textiles, albeit with nontraditional motifs and embellishments. Although there is reinterpretation of tradition, it isn’t a radical transformation

1986 The National Institute of Fashion Technology is established in New Delhi. It operates under the aegis of the Ministry of Textiles

1991 Economic reforms are implemented following a fiscal crisis. The reforms are widely credited with the creation of a consuming middle class. The Indian economy is opened to foreign firms; but media and retail sectors are still subject to restrictions

2000 The trade association— Fashion Design Council of India —is founded by a group of designers. The FDCI starts organizing the Indian Fashion Week along the lines of New York and Paris

2005 The fashion industry is institutionalized. There is a prevailing understanding of Indian fashion as being derived from traditional crafts, but there are also several younger designers, who create purely Western-style clothes. Both coexist in modern India

Fig. 11.2  Timeline of evolution of the fashion industry in India

The cultural and sartorial context in India in the 1980s was heavily weighted towards tradition and ritual, particularly among women. As in other colonized countries, Indian men, particularly in urban centres, had adopted Western clothing earlier than women, while women predominantly wore traditional clothing (i.e. saris and salwar-kameezes) at this time, even in cities. In particular, women were expected to wear appropriate, traditionally-prescribed clothing at formal occasions such as festivals or weddings. In the absence of organized apparel retail, women went to tailors in order to get their clothes made; the concept of ready-to-wear clothing was not fully established. The value of clothes inhered in the quality of the material and the perceived status of the particular weave or fabric used to make the garment, which in turn was determined by convention. Thus, a silk sari from a particular region was treasured for the intricacies of its embellishments and design, which were a function of the particular weaving tradition in the region as well as the exquisite skill and craftsmanship with which it was made. As a consequence of a rich, well-developed, and unique tradition of textile crafts in India, regional specialities abounded, and the textiles from different regions had different values in the minds of consumers. Thus, at the time of the emergence of the first few fashion entrepreneurs, the propriety and acceptability, and consequently the value, of a garment was defined not by the creativity and individuality embedded in it, but rather by the extent to which it conformed to traditional manifestations of centuries-old motifs, patterns, and techniques of weaving and embellishment or embroidery. Moreover, the ubiquitous use of tailors meant that all individuals could obtain a customized fit, even before the advent of designers. However, tailors, unlike designers, remained anonymous, the value of a garment did not derive from being created by a particular tailor, and consumers’ interaction with tailors was essentially a collaborative, rather than dictatorial process; all these elements of the

Entrepreneurship in Creative Industries and Cultural Change   207 garment-buying process among women served only to reinforce the perception that the value of an item of clothing was defined by conventions regarding the relative acceptability of different regional textiles rather than individual creativity and style. As a consequence, the individual creativity and originality that were embedded in a ‘designed’ garment were not especially valuable in the market for apparel, which implied considerable difficulties for fashion design entrepreneurs trying to create a market for their products. Moreover, prevailing social norms that emphasized the use of traditional garments further limited the design and aesthetic creativity of designers, since consumers would not have easily accepted structural innovations (like Western-style clothing) in the basic styles of garments either. Faced with these constraints, the earliest fashion designers in India took to designing traditional-style garments because they could be worn at weddings and other festive and formal occasions; this lowered the social and cultural barriers to their adoption by consumers. Additionally, designers often employed weavers with knowledge of traditional regional specialities and other craftspeople with traditional embroidery and embellishment skills, so that the clothes also gained, by association, the value perceived in those traditional fabrics and skills. However, given these garments’ consequent lack of innovation and absence of differentiation from tailored garments made from the best traditional fabrics, designers demonstrated their creativity and originality by combining weaving techniques, yarns, patterns, and embroideries or embellishments from different regions in one garment, or by suggesting new patterns and motifs to traditional weavers. This led to the creation of what purists called ‘bastardized’ saris or garments, with unclear geographical and traditional cultural provenance, but with the stamp of (the originality and creativity of) an individual. Indian designers, particularly the earliest ones, redefined value through incremental steps by not departing entirely from tradition, but instead engaging in some recombination of traditional and individualistic elements to gain legitimacy in the market. Through such recombination, designers introduced Indian consumers to a modern (because it departed from the typical patterns and motifs that were traditionally accepted, without questioning or modifications) form of dress in a relatively palatable format, which made the acceptance and subsequent diffusion of the new form possible. As in the market for modern Indian art, the designers’ redefinition of what was acceptable and valued in women’s apparel was institutionalized by being reinforced by the actions of members of the institutional field—i.e. fashion education institutions, fashion media, and fashion retailers—of the fashion industry. The two most prominent and prestigious fashion education institutions in India, for instance, reinforced the links between fashion design and traditional textiles but also, by their very existence, established fashion design as a valid profession, separate from tailors, and therefore capable of imbuing garments with a different value proposition. Fashion designers were perfect subjects for fashion magazines due to the glamour and high status associated with them. Magazines covered fashion shows, featured interviews with fashion designers, and published mostly uncritical reviews of designers’ collections, thus creating larger-than-life personae that seeped through consumers’ psyche, creating a subconscious foundation for the belief in the value of garments designed by these exalted personalities. Finally,

208  Mukti Khaire specialist retail stores that sold only high-end fashion garments generated an aura of exclusivity and status that added to the perceptions of the value of designer clothing. A newly-formed trade association—the Fashion Design Council of India—established in 1999/2000, organized Fashion Weeks along the lines of similar events in Paris, New York, and London. These events in turn received extensive and lavish coverage in the print and visual media, further cementing the sense among consumers that fashion was something special and unique and rendering it a high-value status symbol. The adoption of designer clothing by film stars and women in the upper classes of society and the fashion-related value-constructing discourse in the media also made the category aspirational for middle-class consumers, creating a market for knockoffs of designer garments, sold as ‘designerwear’ in prestige and mass retail outlets. Thus, even though the actual clothes created by designers were consumed only by a small section of society, the modern values these garments represented had become acceptable more widely. By 2005, 20 years after the earliest designers in India established their studios, regional saris with their traditional motifs and weaves were difficult to spot at a wedding reception, particularly on younger women. The cache of the ‘designer sari’ was far higher than the best and most expensive traditional sari, which was gradually being relegated to museum status. Over time, as society changed, designers (and consumers) became more willing to experiment with new styles and structural innovations, including Western-style clothing, but high-end Indian fashion remained predominantly influenced and shaped by the Subcontinent’s craft identity, albeit with individual reinterpretations and creative modifications. And it was these individual reinterpretations and creative flourishes that were valued by the consumers of high-end fashion in India. The rise of fashion designers and the strategies that these entrepreneurs adopted in order to survive and thrive thus resulted in creating an emphasis on individuality, experimentation, and autonomy, and a decline in the importance of items that were valued purely for the sake of tradition. Whereas it would have been unthinkable for a bride from a particular region to not be dressed in the special sari of that region, the rise of the ‘designer sari’ made it permissible as well as acceptable and legitimate for consumers to break away from those traditions and choose designs that did not conform solely to a particular regional style or tradition. The rise of the fashion industry, therefore, changed perceptions of what constituted appropriate dress and redefined value in garments. In fact, like those in the art market, entrepreneurs in the fashion industry in India contributed to the decline in the system of clothing (‘tracht’) that promulgated set clothing styles that were anchored in the past; such a decline is an indicator of the rise of modern society (Bovone, 2006).

Discussion and Conclusions Culture has been variously defined, but there is broad consensus around the view that culture is the set of conventions and norms that define propriety and behaviour in a (given) social group and guide actions (DiMaggio, 1997; Dollard, 1939; Swidler, 1986;

Entrepreneurship in Creative Industries and Cultural Change   209 Willey, 1929; Wuthnow and Witten, 1988). Culture thus defines what is perceived as valuable (Dolfsma, 1999; Schurman and Munro, 2009). The conventions and norms that constitute culture are manifest in the patterns of behaviour and actions of social groups and in explicit physical objects—‘recorded culture’ (Crane, 1992)—such as art, clothing, print, film, etc. In market economies, therefore, the production of culture is controlled by those firms that operate in what are known as the creative (or cultural) industries (Caves, 2000; Hirsch, 1972, 2000) to produce these physical objects of culture. However, the acceptability and value of different variants of these objects, produced by firms, are socially constructed and negotiated on the basis of prevailing cultural norms. Therefore, the creative and cultural industries are unique in that they are closely and recursively intertwined with prevailing cultural norms (Dowd, 2004); on the one hand, firms in these industries produce cultural objects and on the other, economic value in these industries is closely tied to whether their products are considered appropriate, acceptable, and valuable in broader society. Particularly due to the latter relationship, firms that desire to perform well in the marketplace, therefore, tend to create products that align with broader cultural norms and conventions of value. Together with other unique properties of creative products—uncertain demand, infinite variety (Caves, 2000)— this relationship between cultural conventions of value and the economic performance of firms contributes to greater homogeneity in cultural products and lower risk-taking tendencies among cultural producers. Firms that wish to introduce and create a market for new products, therefore, have to engage in a valorizing process (Verdaasdonk, 1983; van Rees, 1983), through which new value systems that render the new product acceptable and valuable are introduced. Given that such value systems are an important constituent of culture, the introduction of new products by pioneering entrepreneurs in cultural industries is a means of effecting cultural change in a way that circumvents the equilibrium that exists among cultural producers. We see that at the time of both the creation of a market for modern Indian art and the emergence of the high-end fashion industry, the Indian cultural context shaped consumers’ preferences through a value system that was enmeshed in and defined by rules and routines that emphasized the traditional over the new. As explained in the description of the two cases, Indian society at the time was largely defined by its history and traditions, which circumscribed consumer preferences and consumption patterns. (See Table 11.1 for a comparison of the two cases.) In the case of clothing, what women wore was circumscribed not only by social norms and rules but also by the finite designs and garments that were traditionally created by craftspeople (who rarely, if ever, innovated since the value of the textile lay in its distinguishing and recognizable pattern that marked its provenance; different weavers from the same part of the country wove nearly identical textiles, with very little to differentiate one weaver from another) across the country. Traditions defined the supply of clothing (the ‘tracht’ form of clothing persisted, rather than the ‘mode’ form), thus limiting consumers to certain designs and motifs. With art, similarly, paintings with historical subjects and representational depictions of important fables or historical events were considered valuable because of the importance of history and tradition in people’s lives. In this case, not only Indians,

Table 11.1  Comparison between the two cases of modern Indian art and Indian fashion Case of modern Indian art

Case of Indian fashion

Context before pioneering entrepreneurial action

Diffuse and weak art market; religious imagery and/or antique or contemporary folk art is the most broadly valued art from the Subcontinent; abstract art is equated with the Western world and its paradigms. Globally, abstract art from the Subcontinent, like art from other post-colonial cultures, is viewed as ‘derivative’

The ‘tracht’ rather than ‘mode’ sensibility prevails in women’s apparel styles. Women’s clothing is determined by age, socio-economic class, geographic region, and other cultural factors, rather than used as a means of individual expression. Certain traditional regional textiles and patterns are more valued than others

Cultural and social elements

Society not oriented towards consumption; high value placed on conformity with norms and tradition; heavy emphasis on history and traditions; variety and uniqueness rare among goods in marketplace

Society not oriented towards consumption; high value placed on conformity with norms and tradition; heavy emphasis on history and traditions; variety and uniqueness rare among goods in marketplace

Determinants of legitimacy, acceptability, and value

Age of the art work (in case of antiquities), subject matter of art work (religious, folk art)

Quality of textile, provenance of textile, normative alignment of garment, traditional style

Locus of entrepreneurial action

Auction house (seller/producer)

Fashion designers (seller/ producer) Education institutes (intermediary) Retailers (seller/ producer) Media (intermediary)

Mode of entrepreneurial action

Construction of new value criteria through discourse

Appropriate framing, construction of new value criteria, dissemination of new value criteria

Basis of new valuation criteria

Mostly Western

Mostly historical

Impact of entrepreneurial action

Abstraction, originality, technique, and individual style (of the artist) were rendered valuable and began to be appreciated

Novelty, originality (and creativity of the designer), and individual stamp (of the designer) were rendered valuable and began to be appreciated

Evidence of institutionalization

Convergence and agreement on value of art works within the field; increased number of galleries and auction houses in India

Prevalence of designer knockoffs, sold to middle-class customers as ‘designer-wear’, which became a new category in the apparel market

Cultural change

Modernity that integrated Indian sensibility with Western paradigms

Modernity rooted in Indian traditions with Western practices

Entrepreneurship in Creative Industries and Cultural Change   211 but also outsiders valued traditional mythological, representational, or historical works that were familiar and well-understood in the absence of a paradigm for understanding, evaluating, and placing a value on modernist works of art created in the Indian context. For individuals in the market for art or clothing, the socially safe and acceptable thing to do was to conform to expectations and norms and buy items that were sanctioned by society, which led to uniformity. The context rewarded the routine, tried, and the familiar rather than the original, experimental, and the novel. As a consequence of the cultural context, entrepreneurs in the clothing and art sectors, who offered goods that were new and different and not culturally and socially sanctioned, faced cultural barriers as well as economic challenges. Despite these challenges, however, entrepreneurs in both sectors succeeded in creating new markets that were later institutionalized, for the novel products they introduced. The successful creation and institutionalization of a market for the novel goods was a result of customers’ actually buying the goods, which in turn was a result of their shared cultural understandings and representation (Zelizer, 2011), which had changed after the successful redefinition of appropriateness and value by entrepreneurs and the field. These, therefore, are instances of the broader cultural impact of entrepreneurship, particularly pioneering entrepreneurship in cultural industries. The impact of the rise of these new economic activities and markets and the attendant generation of new value criteria was cultural. In the process of defining and constructing the worth and value of modern art or fashion design, these pioneer-entrepreneurs challenged long- and widely-held (and thus culturally-embedded) understandings of what was considered appropriate and valuable in these arenas, consequently generating a new and different value hierarchy and system. These new conceptions of value were a departure from prevailing broadly-accepted cultural norms, and as such, their acceptance and institutionalization in Indian society implied a break from tradition and a move towards a modern conception of human existence. The introduction of original thought and designs that broke away from the trad­ itional forms in fashion and art markets, and the cognitive reconceptualization of value conventions by the entrepreneurs and the field made it acceptable and appropriate for consumers to embrace originality and individuality, i.e. to become ‘modern’, which entailed accepting and consuming change for the sake of change (Bovone, 2006). Modernism is a way of life that emphasizes individualism, identity, and ‘discovery’, and tolerates and accepts departures from tradition and traditional conceptualizations of appropriateness and beauty and value. Modernism frames the untried as better and therefore more valuable than the familiar and traditionally-normative (Armstrong, 2005; Gay, 2008). In both these cases the changes in consumption patterns, generated by the valuation activities of entrepreneurs, were, in the words of Slater (1997), linked to the modern creation—the ‘choosing self ’—an individual, who chooses from among options rather than follows pre-defined paths obediently and unquestioningly, one whose identity is determined not by birth and ascription, but by individual choices (Slater, 1997; Zukin and Maguire, 2004) and self-expression (Buchmann and Eisner, 1997). Such individualistic consumption is a hallmark of a modern consumer and society (Zukin and

212  Mukti Khaire Maguire, 2004), and the consumption of modern art and high-end fashion in India was a manifestation of a modernist way of thinking. The scope of the impact of the art and fashion entrepreneurs was different. First, while entrepreneurs in the art market were merely redefining value parameters for art that had been previously created, fashion entrepreneurs were constructing the value of an unfamiliar product (that was nevertheless similar to the familiar product). Second, the entrepreneurs borrowed value conceptions from the Western world in the case of art, while the fashion field borrowed more from the past. Finally, in the case of modern Indian art, the value-construction and redefinition carried out by the entrepreneur and the field not only changed how Indian consumers conceptualized aesthetic and economic value in art, but also changed the perception of India among global art worlds, repositioning it as a venue for modernist thought and movements. The impact of Indian fashion entrepreneurs, on the other hand, was largely restricted to changing Indian consumers’ perceptions by endorsing and making available a new alternative to prevailing clothing and consumption patterns. The cases of Indian art and fashion show that pioneer-entrepreneurs in cultural industries combine ‘economic entrepreneurship’, which is the Schumpeterian creation of something new and economically profitable, with ‘cultural entrepreneurship’, which aims to create a new and appreciated product that will influence culture. In particular, pioneering entrepreneurship in a cultural arena creates new cultural artefacts and is thus a means of breaking the self-reinforcing cycle of cultural production to influence and change the culture of the target social group of consumers. As we saw, the influence of pioneer cultural entrepreneurs on culture is the consequence of the economic imperative facing these entrepreneurs; in order to generate economic value, they need to create markets, which in turn requires them to redefine broader cultural perceptions of what is acceptable and valuable. Through such entrepreneurial processes of redefinition, previously undervalued, or un-valued products come to be considered appropriate and valuable. This requires sense-making that in turn requires a change in the mindset in broader society and creates new value hierarchies and systems. In this manner, pioneering entrepreneurs in cultural industries are similar to what Bovone (2006) termed ‘articulator-entrepreneurs’, generating new perception of what is acceptable and valuable, and have an influence on broader cultural norms. In this process they are aided by the value-construction efforts of the entire field of cultural production in which they are embedded. Needless to say, the efforts of these pioneer-entrepreneurs and their respective surrounding fields were not the sole causal contributors to the changes in society (Peterson and Anand, 2004); broader political and resultant socio-economic changes were also occurring in India at the time. In 1991, facing a fiscal crisis after several decades of having closed the economy to the rest of the world to promote ‘self-reliance’, of implementing central planning, and of pursuing economic policies that aimed to achieve equality of outcomes rather than opportunity (manifest as heavy taxation), the Indian government adopted a radically different ideology that promoted exports and reciprocally opened up the economy to imports and the entry of foreign firms. These reforms led to a period of

Entrepreneurship in Creative Industries and Cultural Change   213 rapid economic growth in India, causing an increase in job opportunities, which in turn created a large and rapidly-growing middle class. This, of course, changed consumption patterns, as the increasingly upwardly mobile middle class freely consumed both basic and lifestyle products. This rapid growth in the Indian economy also focused the attention of the world on India. The newly-open economy also wrought cultural change through increased exposure to Western television programming, the entry of foreign magazines (which entered later than TV channels), and substantial increases in international travel by Indians (UN World Development Indicators Report). This being said, the Indian fashion industry emerged in the mid-1980s, before the economic reforms were implemented and their impact experienced. Therefore, while the reforms certainly may have accelerated and magnified the modernist influence of the pioneering fashion entrepreneurs, they did not play a role in the initial years of the value redefinition process by the entrepreneurs. As such, in the case of the fashion industry, the reforms and the changes they wrought in society served largely to reinforce the cognitive constructions of the field that generated broad consensual understanding across several social sectors. Absent the availability of a new paradigm of value and the goods to fulfil that new paradigm, therefore, a change in mindset would have been more difficult to achieve with policy change alone. In the art industry too, since demand is known to necessarily lag supply (Bourdieu, 1985), the institutionalization of the market indicates that there was a change in value conventions, which encouraged individuals to buy and collect art that was previously undervalued.3 This change in value conventions was correlated with an increasingly modern mindset among Indian society. Moreover, as we have seen, the market for modern Indian art was created through the reconstruction of value parameters for art that had already been created; the art remained the same, what changed was merely how it was understood, evaluated, and valued (Khaire and Wadhwani, 2010). Also, scholars have found that the opening up of the Indian economy to the world did not lead to a change in cultural attitudes (Derne, 2005), implying that economic policy alone was not sufficient to generate cultural change; while the new economic policy may have created avenues for consumption, Indians could well have continued to consume items that aligned with traditional, conformist norms, but the actions of entrepreneurs and the value-reconfiguring discourse generated the acceptability of modern, individualistic expression, creating a demand for the products of the entrepreneurs. Culture as produced and influenced by cultural goods and cultural norms embedded within the social structure of a group are often closely intertwined and conflated (Dowd, 2004; Jones, 2001), making it difficult to precisely identify how much cultural change is effected by novel cultural production and how much is effected by natural change and evolution and/or revolution. Nevertheless, it is known that it requires the agentic actions of entrepreneurs to convert and harness macro-level (but subtle) societal changes in attitudes and discourse into the construction of a field (Lawrence and Phillips, 2004) that, through its pervasiveness across different levels of social structure, can bring about cultural change. In India, the fashion and art entrepreneurs and their surrounding fields did just that kind of translation (Foster and Ocejo, 2013) of discourse into action and products.

214  Mukti Khaire Scholars have studied and described the impact of firms in cultural industries and their systems of production on the culture of a social group. Prior expositions of firms’ impact on culture, however, have explicated the influence of these firms as being exerted through the firms’ products and their consumption (Peterson, 1979; Crane and Bovone, 2006). Representing culture as a system of valuation allows us to gain a nuanced view of how new products have impacts on culture through the reconfiguration of value systems by firms as well as the field of cultural production. In particular, such a perspective provides insight into the process of cultural change even when the structure of a cultural industry is in equilibrium, emphasizing the importance of entrepreneurs as well as the centrality of the production field to this process of cultural change. Additionally, taking an historical perspective, as in this article, provides deeper and more nuanced insights into the process and contextual dimensions of cultural change that occurs through developments in creative industries. The role of the entrepreneur and the entrepreneurial firm is integral to this perspective. Entrepreneurs are individuals and/or entities that undertake processes of value reconfiguration in order to create markets for radical, new products introduced by them. Uncaring about prevailing conventions, norms, and demand patterns, such entrepreneurial entities are responsible for breaking the self-reinforcing cycle of cultural production that established firms indulge in, by providing an alternate conception of value. When these alternate conceptions of value take hold in society, these entrepreneurs have effectively changed culture. Understanding cultural change as the result of entrepreneurial action and value reconfiguration provides us with an analytical handle for understanding cultural change and may help us predict the direction and nature of the impact of cultural production. For instance, knowing that the product of the new high-end fashion industry in India broke away from tradition in particular ways and aspects gives us an insight into what aspects of the value conventions would be attacked by the entrepreneurs (in this case, they tried to create a value hierarchy that did not include authenticity and purity of traditional weaves as one of the value attributes, but instead allowed for, and even celebrated, departures from typical designs), which in turn can help approximately predict that the impact of the introduction of high-end fashion apparel would be to elevate originality, creativity, and individuality and de-emphasize the traditional. However, it is important to note that the actions of entrepreneurs (or producers) alone are not sufficient to create markets and induce cultural change; this perspective returns to the classic view of cultural industries to re-emphasize the integral role of the field of cultural production. Given that cultural products have greater symbolic than mater­ ial worth (Hirsch 1972, 2000), value in cultural industries is subjective, uncertain, and intangible, and therefore socially constructed by a broader field of institutions of consecration (Bourdieu, 1983, 1993) that are culturally-embedded. The redefinition of value constructs in such industries, therefore, requires broad consensus and reinforcement across a variety of market actors. Such widespread cognitive change in turn contributes to broader cultural change (DiMaggio, 1997). In the case of modern Indian art, for instance, although Saffronart was the original market player to engage in discourse that

Entrepreneurship in Creative Industries and Cultural Change   215 delineated new valuation criteria for Indian art, they were preceded by art historians and academics, who introduced the concept that twentieth-century Indian art was aesthetic­ ally undervalued in their academic discourse. Moreover, Saffronart’s simplifications of the academic discourse were widely adopted in other parts of the discursive universe by critics, reviewers, and journalists. Journalists, in particular, were responsible for a widespread diffusion of the new value conventions among the broader public (which would have included art-buyers and non-buyers alike) through the general-purpose print and visual media. Such broader diffusion is critical to the process of challenging long-held beliefs among the general population and providing an alternative to those beliefs in order to facilitate change in mindset. Similarly, as described in the case of high-end fashion in India, the entire institutional field of educational institutions, media, specialized retailers, and the industry trade association played a pivotal role in constructing new criteria and benchmarks to evaluate the unfamiliar form of clothing introduced by designers and in conveying the new value conventions to the broader public. In the case of fashion as well, as in art, coverage of the new industry (especially the spectacular fashion shows) in the specialized fashion magazines as well as in the general-purpose print and visual media increased the dissemination of the new value system and norms among large swathes of society, and helped these new norms take hold. These inter-relationships among creative industries, entrepreneurs, and their field, socially constructed processes of valuation, and culture are critical to the study of the sociology of culture. In particular, it acts as a bridge between the object-oriented, humanistic and the field-oriented institutional approaches to culture (Verdaasdonk and van Rees, 1991). If we understand cultural change as being driven by the value reconfiguration processes initiated by cultural entrepreneurs in creative industries, we can see that both the objective qualities of the cultural object as well as the value constructivism that intermediaries in the field engage in, are responsible for bringing about change in the meaning of the objects, beliefs in their acceptability and propriety and value, and thus in cultural conventions and norms. Finally, understanding culture and the consumption of cultural products in terms of valuation conventions and entrepreneurship diminishes the difference between restricted production and large-scale production of culture; once we accept that the value of cultural products, due to their embedded nature, has to be constructed by intermediaries in order to make them acceptable and therefore worth consuming, both kinds of products are governed by a set of criteria that interpret and define value and make that definition widely-known and accepted. By extension, this may imply and explain the narrowing of the gap between the so-called elites and masses, something that scholars have also found through empirical evidence. Linking social constructivist views of valuation with entrepreneurship in the creative industries and culture is an important step towards enhancing our understanding of cultural change and how it occurs. Naturally, much needs to be done in order to understand the process better; for instance, a deeper study of the different discursive strategies used by producers and intermediaries during the process of value-construction and reconfiguration of value conventions would increase the analytical and prescriptive power of

216  Mukti Khaire this perspective. Similarly, undertaking a comparative study in order to understand the process in a variety of cultural industries and/or contexts could yield a broadly generalizable framework for understanding cultural change emanating from the production of material objects. Research in these and other relevant aspects of the process has the potential to make contributions to the fields of sociology (particularly cultural soci­ ology), entrepreneurship, and institutional theory.

Notes 1. This section is based on research conducted for a paper on the creation of a market for modern Indian art (Khaire and Wadhwani, 2010). 2. This section is based on data collected for a project on the emergence of the high-end fashion industry in India (Khaire, 2011a; Khaire, 2011b; Khaire and Richardson, 2011). 3. Multivariate analysis of prices of modern Indian art in the secondary market indicate that inter-subjective agreement on value among collectors and auction houses was significantly correlated with the discourse post-Saffronart, even after controlling for real GDP and real consumption in India, the UK, and the USA, which are proxies for the rising buying power of Indians and India’s sudden rise to prominence after the change in economic policy.

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Chapter 12

Pe rform anc e i n t h e Creative Indu st ri e s Allègre L. Hadida

‘When the BBC programs get high viewer ratings, the Board accuses the Channel of “dumbing down”. When the programs get awards, the Board accuses the Channel of “elitism”. You can never win . . .’ Michael Grade, Annual Magdalene College-Investec Lecture in Business, Cambridge (UK), 24 November 2010.

Introduction The valuation of creativity is often politically contested. Creative processes and outcomes (a term which encompasses both tangible products and intangible experiences) are also characterized by their ‘high variance’ (Faulkner and Anderson, 1987): while some of them impress industry experts and delight customers, others fall short and are soon forgotten. Due to their symbolic content and ‘unusual liability of newness’ (Nohria, 1992), success and failure in the creative industries are often multifaceted, and customarily hard to define and assess. These difficulties have led profuse streams of research to develop around the statement that ‘nobody knows anything’ (Goldman, 1983) when it comes to predicting performance, most notably in the film industry (Collins, Hand, and Snell, 2002; De Vany and Walls, 1997, 2004; Walls, 2005). Even so and in the hopes that ‘somebody knows something’ after all (Simonton, 2009a; Wei, 2006), scholars across a range of social sciences disciplines have set out to propose systematic approaches to the definition and measurement of performance in the creative industries. This chapter provides a critical account of their efforts. Research exclusively published in English and specifically investigating performance in the creative industries was collected through systematic bibliographic searches carried out on EBSCO and JSTOR in 2010 and 2012. Three core keywords (‘performance’, ‘success’, ‘failure’),

220  Allègre L. Hadida three general terms (‘creative industry/ies’, ‘cultural industry/ies’, and ‘art’), and several industry-specific qualifiers (including ‘advertising’, ‘cinema’, ‘film’, ‘fashion’, ‘festival’, ‘music’, ‘performing arts’, ‘theatre’, ‘television’, ‘publishing’, and ‘videogame’) were combined in the searches, which were carried out regardless of publication date. For the sake of brevity and consistency across literatures, the searches were completed entirely within the five social sciences disciplines of: management (including strategy, organization theory, marketing, and accounting), cultural policy, cultural economics, psychology, and sociology, to the exclusion of other disciplines such as design, aesthetics, or art history. Articles and monographs on motion picture performance previously reviewed within some of these five academic disciplines (Hadida, 2009) were also added to the search results. Performance definitions and measurements acknowledged by creative industry practitioners and by creative industry experts and academic researchers might differ. The present chapter focuses on the latter, under the assumption that it accurately represents the former—a task that all authors reviewed below set out to fulfil—and that these differences, if any, are marginal. The final sample consists of 182 relevant studies across disciplines and creative industries: 159 peer-reviewed articles, 5 book chapters, and 18 monographs, all published up to January 2012. The predominance of peer-reviewed articles mirrors the importance of this format in disseminating knowledge in the five selected disciplines of the social sciences. The chapter is structured as follows. The next section presents the motivations for (and cases against) performance definition and measurement in the creative industries. The 182 studies are then reviewed, with a particular focus on their choice of performance dimensions and process or outcome levels of analysis. A  first suggestion for further research into the definition and measurement of performance in the creative industries concludes this section. The fourth section discusses the inter-connectedness of performance dimensions in the creative industries, and their articulation through time. It also proposes four additional suggestions for further research. The concluding section summarizes and expands the chapter findings.

Motivations For (and Cases Against) Defining and Measuring Performance in the Creative Industries Defining and measuring such a broad and complex concept as performance in the creative industries is bound to be fraught with difficulties, and—as illustrated through Michael Grade’s opening citation—riddled with controversies. This section provides a few hints as to why anyone would (and possibly, should) bother to do so.

Performance in the Creative Industries   221

Logics of performance definition and measurement in the creative industries According to Townley, Cooper, and Oakes (2003), the first philosophical underpinning of performance definition and measurement takes roots in the enlightenment discourse of Kant and Weber. It aims for the pursuit of ‘reason in human affairs’ through the process of shedding light on the justifications by which policies and actions are pursued. Performance measures, in this perspective, have the potential to achieve agreement on action. An alternative philosophical foundation of performance definition and measurement derives from Hobbes and Habermas. It defines rationalization as the increasing dominance of a means-end ‘instrumental rationality’, and bears the risk of measures dictating action rather than justifying it (Townley, Cooper, and Oakes, 2003). The conflicting pursuit of reason in human affairs and instrumental rationality informs the existing literature on the logics of performance definition and measurement in the creative industries. The fact-building process through which ideas about performance and efficiency developed and became increasingly influential in the Office of the Auditor General of Alberta (Gendron, Cooper, and Townley, 2007) and the Polity’s failure to reconcile idealism (reason in human affairs) with reality and practicality (instrumental rationality: Craik, 2005; Eckersley, 2008) illustrate their divergence. The latter is also exemplified in the McMaster report commissioned by the UK Department for Culture, Media and Sport (DCMS) to suggest ways to support ‘excellence in the arts’ (McMaster, 2008). The report, which exclusively focuses on reason in human affairs, fails to propose practical definitions and measures of such excellence and to acknow­ ledge the inherent difficulties involved in trying to do so (Eckersley, 2008). These difficulties partly explain why a survey of 95 performing arts non-profit organizations in Quebec concludes that although managers clearly identify artistic excellence as their most important success factor, their most widely used performance indicators are economic. All in all, budgeting performance may be easier to measure, funding agencies might induce a bias toward financial performance measures, and financial accounting may be overemphasized as a form of accountability within these organizations (Turbide and Laurin, 2009). Other authors are equally critical of the instrumental rationality approach. They note the inherent intricacies associated with defining and measuring dimensions of perform­ ance that are, in essence, subjective and unquantifiable (Marotto, Roos, and Victor, 2007; Matarasso, 1996; Steele, 2004; Sukel, 1978), and question the validity of indicators purporting to do so. Observations that, in the absence of a credible economic case, economic impact is a misplaced basis for developing arts policy in the UK (Garnham, 2005) and that resources would be better spent trying to understand the arts rather than looking for proof of their impact (Belfiore and Bennett, 2007; Radbourne, Glow, and Johanson, 2010) belong in this stream of research. So does the conclusion that the greater the effort of managers involved in the now defunct National Centre for Popular Music in Sheffield to adjust and control failure through measurement, the more that failure seemed

222  Allègre L. Hadida uncontrollable (Kam, 2004). More fundamentally, Gilhespy (2001) notes that although the adoption of performance measures implies that arts organizations behave in a strategic manner, a number of organizations in his sample are unclear about their objectives and policy priorities. This observation raises the issue of the justification of the use of public money to support them (Gilhespy, 2001). Ultimately, reason in human affairs and instrumental rationality represent two sides of the same rationalization process and can hardly be dealt with in isolation. Some research may be needed, however, to further explore their articulation, and their relative importance and relevance to the various dimensions of performance in the creative industries. These philosophical foundations underpin other difficulties associated with the definition and measurement of performance in the creative industries.

Difficulties in defining performance in the creative industries The definition of the creative industries as: ‘those industries which have their origins in individual creativity, skill and talent and which have a potential for wealth and job creation through the generation and exploitation of intellectual property’ (DCMS, 1998) is extremely wide-ranging. The grouping of potentially disparate industries under the common ‘creative’ umbrella makes the boundaries of the creative industries hard to draw (Jones, Comfort, Eastwood, and Hillier, 2004). It also prompts questions relative to the perception of their workers as a congruent group, and to the relevance and feasibility of imposing a common business model on the creative industries (Townley, Beech, and McKinlay, 2009). The DCMS’s choice of intellectual property rights as the central criteria for inclusion as a creative industry also creates issues relative to specific sectors, including software consultancy, engineering, and other activities classified by default within an extremely broad ‘design sector’ (Taylor, 2006), and relative to other undertakings such as haute cuisine, where intellectual property rights on recipes are difficult to ascertain. These difficulties in defining the creative industries affect the definition of performance in the creative industries. They also force experts and workers to consistently manage ambiguity (Lampel, Lant, and Shamsie, 2000), defined as ‘an on-going stream that supports several different meanings at the same time’ (Weick, 1995, p. 91) and makes multiple explanations possible and plausible (Weick, 1995). Defining performance in the creative industries is all the more difficult as the outcomes of creative production often have the characteristics of merit (Craik, 2005; Gilhespy, 1999, 2001), public (Hesmondhalgh and Pratt, 2005; Holden, 2004; Steele, 2004) or semi-public (Bjorkegren, 1996; Hesmondhalgh, 2007) goods. As such, competition for them is non-excludable and non-rival, and their value is assessed above and beyond market prices and revenues. They are not only consumed in the context of a private transaction (e.g. by purchasing a museum pass, a cinema ticket, or a music CD). They also enter public consumption as collective properties (Steele, 2004). Art, in

Performance in the Creative Industries   223 particular, is not a commodity: it is abstract, subjective, non-utilitarian, and unique (Hirschman, 1983). Cultural product quality relates to ideas, values, truths, and dreams, and is therefore difficult to determine—a problem which may prevent the emergence of industry standards, including relative to performance definition and measurement, in the cultural industries (Lampel, Shamsie, and Lant, 2006). Other works exclusively focused on the pursuit of reason in human affairs do not provide either concrete instruments aimed at assessing society’s success in fulfilling its ‘moral imperative to support and nurture true art’ (e.g. Kubacki and Croft, 2005).

Difficulties in measuring performance in the creative industries With the collective property premise in mind, the value and by extension, performance of the creative industries becomes very difficult to objectively assess, let alone quantify (Craik, 2005; Eckersley, 2008; Sukel, 1978). In cinema, for instance, Steele (2004) reflects on the difficulties of ‘put[ting] a price on the UK film culture’, particularly relative to government spending decisions through the UK Film Council. He notes that most indicators of UK film value, including the power of visual storytelling through film, the power to engage and force spectators’ identification with both universal human themes and specific human situations and contexts, and the ability to reflect national identity, confidence, and self-esteem, are not specific to cinema in the UK, and could be applied across borders. He recommends their measurement through contingent valuation, which may be more objective than hedonic pricing (Steele, 2004). The likelihood of an objective valuation of creative outcomes is also called in question in classical music, as the collective virtuosity displayed by orchestras in moments of peak perform­ ance is difficult to describe without resorting to subjective criteria, and may be impossible to quantify (Marotto et al., 2007). In the fine arts, the valuation of works in the context of their production, promotion, and exhibition according to the preferences of individuals and groups who act as selectors is partly subjective and political (Wijnberg and Gemser, 2000): distinct selection systems may prioritize and assess differently the multi-functional aesthetic, expressive, and utilitarian purposes (Jones and Thornton, 2005) displayed in creative outcomes. Arts organizations have, however, an interest in engaging effectively and creatively in evaluation, inasmuch as this process of calculating worth allows them to contribute to shaping values in the public domain and to assess progress toward their objectives (Matarasso, 1996). In effect, performance indicators provide a bridge between cultural economics—the goals of arts policy—and arts management—the management of arts organizations (Towse, 2001). Performance evaluation is a learning tool that allows non-profit organizations to make sure that they are on track against their goals, to ground future programmes in an understanding of what works, and to use this information to build stronger cases for support (Bailey, 2009). The performance

224  Allègre L. Hadida measurement process contributes to the cultural organization’s continuous improvement and increased accountability, and should be based on fundamental values of the cultural sector (Soren, 2000). It also provides a valuable contribution to understanding the creation of value and the exploration of adequate actions, and serves as a management device and a marketing instrument targeted to external partners (Gstraunthaler and Piber, 2007). A performance measurement system linked to the organization’s mission and strategy and using a multiple set of performance indicators, including non-financial and shortand long-term indicators, is essential in non-profit cultural organizations (Turbide and Laurin, 2009). Before reaching decisions and in line with the Balanced Scorecard approach (Kaplan and Norton, 1992), such organizations need to expose managerial assumptions, conduct rigorous measurements, and correct imprecise or missing mission statements, inadequate financial systems, and subjective or non-existent performance indicators (Krug and Weinberg, 2004).1 Performance indicators also need to be prioritized to overcome likely conflicts among them (Gilhespy, 1999; Towse, 2001) and to distinguish between ‘dial’ indicators that can be read as barometers and ‘opener’ indicators that form warning flags (Gilhespy, 2001). Funding agencies have an influential role in non-profit organizations’ performance measurement. They should be concerned with both the nature and use of performance indicators in the cultural sector, and make sure that enough of them are used to avoid undesirable behaviour (Schuster, 1997). When measured against the intricacies of assessing hard-to-quantify qualitative performance indicators (Bailey, 2009; Holden, 2004) and of translating often vague and general objectives and recommendations into quantifiable performance indexes (Craik, 2005; Eckersley, 2008; Nivin and Plettner, 2009), the wealth of economic, financial, and commercial data available may also lead policy-makers to exaggerate the economic impact of the creative industries and focus on low-hanging quantifiable economic goals, to the detriment of more complex qualitative dimensions of performance (Towse, 2001; Turbide and Laurin, 2009; Turok, 2003). In other words, performance indicators may provide unintended incentives to alter management decisions (Towse, 2001). Furthermore, the adoption of business-based performance evaluation methods increases the risk of artistic sacrifices (Caust, 2003), and the efficiency considerations that they represent should not hamper artistic decisions (Boorsma and Chiaravalloti, 2010). There is also a danger of focusing on irrelevant information, developing an illusion of control, and making excessive use of measuring activities instead of analysing results (Gstraunthaler and Piber, 2007). Even so, performance indicators have the great advantage of being published and well known, enabling thus comparisons between arts organizations to ensure the effective management of subsidy (Towse, 2001). In their willingness to fairly represent the complexity of performance definition and measurement in the creative industries, researchers and practitioners run the risk of ending up dangerously ‘trapped in a measurement panopticon’ (Townley et al., 2003, p. 1060; Cairns, Harris, Hutchison, and Tricker, 2005). The following section introduces a taxonomy of performance dimensions aimed at making sense of existing

Performance in the Creative Industries   225 research on performance definition and measurement in the creative industries, and at subsequently avoiding such predicament.

A Taxonomy of Performance Dimensions and Levels of Analysis in the Creative Industries Bourdieu (1986) identifies three fundamental forms of capital: economic capital, observable in the financial assets, access to liquidity, or monetary income of its owner; cultural capital, which manifests itself as long-lasting dispositions for and ownership of academic knowledge, skills, and cultural goods; and social capital, defined as the resources accumulated through belonging to a durable network of institutionalized relationships (Bourdieu, 1980, 1986). Symbolic capital transcends economic, cultural, and social cap­ ital as a form of prestige bestowed upon its owner on the basis of the recognition of her legitimate competence and authority (Bourdieu, 1986). These four categories are closely reflected in the literature on performance in the creative industries, and form the basis of the following taxonomy. Symbolic capital, first, acts as a pervasive meta-dimension of value and performance in the creative industries. All creative industries display a significant ratio of ‘symbolic content’ to ‘functional usage’, which also varies from one to the next. As a result, creative outcomes derive a large part of their value from subjective experiences that rely heavily on using symbols to manipulate emotions and perceptions (Hesmondhalgh, 2007; Hirsch, 1972, 2000; Pine and Gilmore, 1998). Cultural goods, in particular, are ‘non material’ goods directed at a public of consumers for whom they generally serve as an aesthetic or expressive, rather than clearly utilitarian function (Hirsch, 1972, pp. 641–642; Jones and Thornton, 2005). Second, economic, cultural, and social capitals are all reflected in the following three core dimensions of performance in the creative industries: commercial performance, artistic merit, and societal impact. These three dimensions also mirror Holden’s instrumental, intrinsic, and institutional value of the arts, respectively (Holden, 2004). They are assessed in the literature across a variety of levels of analysis, and both in the short and longer term. The first two core dimensions, commercial performance and artistic merit, traditionally form the key components of creative industries performance research (Caves, 2000; Hirsch, 1972, 2000; Lampel et al., 2006; Long Lingo and O’Mahony, 2010; Simonton, 2009b; Townley et al., 2009). Whilst the former directly reflects the notion of economic capital, the latter is close, in its definition, to that of ‘symbolic cultural capital’ as ‘the capacity to define and legitimize cultural and artistic values, standards and styles’ (Townley et al., 2009, p. 952). The present section introduces a third core dimension of performance in the creative industries: societal impact. Unlike commercial performance and artistic merit,

226  Allègre L. Hadida the societal impact of a creative worker, project, or industry goes beyond the restricted professional sphere of the parties involved in their development, launch, positioning, or management. It encompasses social, cultural, and symbolic forms of capital, and is hereby defined as the sustained effects of its owner on the life of the community by and for which it was initially developed. The section ends with the discussion of a potential fourth dimension of performance, managerial performance, defined as creative managers’ commitment to and effectiveness in the execution of their functions. Secondary criteria of performance, namely productivity and economic sustainability (commercial performance), service quality of the consumption experience (artistic merit), and environmental sustainability (societal impact), are also discussed below. This taxonomy is hereby applied to all relevant levels of analysis of performance in the creative industries. They form two distinct categories in the existing literature. The first focuses on the creative production process, and looks into the roles and contributions of the individual creative worker, the creative project team, and the creative group to this process. The second deals with the creative outcome and its distribution and consumption. It examines the creative project, the creative organization, and the creative network of organizations, from one-off event (e.g. an annual festival) to semi-permanent regional cluster and industry.

Commercial performance Even though the commercial value of creativity and art are difficult to determine objectively (Barrere and Santagata, 1999; Baumol, 1986), the definitions and illustrations of commercial performance in the creative industries are more straightforward than those of artistic merit, societal impact, and managerial performance. This may create an artificial hierarchy of performance dimensions, which has far less to do with their actual relevance across creative organizations and industries than with the immediate availability and ease of measurement of their indicators.2 Creative organizations may also lack the technological capability to generate timely and relevant qualitative information, and the management commitment and employee training needed to do so (Turbide and Laurin, 2009). Ultimately, 134 of the 182 works hereby reviewed define performance in economic terms. Fifty-four also deal with artistic merit, and only 30 make a mention of societal impact. At the creative production process stage, the commercial performance of top executives is assessed quite broadly as their ability to optimally forecast the entry position of pop music singles in national charts (artists and repertoire managers: Seifert and Hadida, 2013), to produce best-selling records (country music producers: Long Lingo and O’Mahony, 2010), and innovative and financially successful movies (Hollywood studio heads: Miller and Shamsie 2001), and to successfully allocate financial resources and screens to new releases (film distributors: Krider, Li, Liu, and Weinberg, 2005). Economic and artistic success breeds success for both individual artists and creative project teams, as singers in the Veneto classical music cluster (Sedita, 2008),

Performance in the Creative Industries   227 Hollywood actors, screenwriters, and producers with similar commercial and artistic track records (Faulkner and Anderson, 1987), and popular Japanese film directors and their long-established core production crews (Wakabayashi, Yamashita, and Yamada, 2009) tend to work together repeatedly within the same wide-open (e.g. USA) or closely-linked (e.g. Japan) network. In Italy, strong vertical economic ties among director, producer, and distributor positively impact film commercial performance, but strong horizontal artistic ties among director, screenwriters, cinematographer, and leading actors restrain innovation and artistic merit (Delmestri, Montanari, and Usai, 2005). Conversely, in Hollywood and after controlling for release date and marketing, repeat collaborations between distributors and producers end up detrimental to box office receipts (Sorenson and Waguespack, 2006). Stand-alone producers working with director-screenwriters (P/DS) also outperformed all other combinatorial patterns (PD/S, PS/D, PDS, P/D/S) from 1973 to 1980 (Baker and Faulkner, 1991). In the music industry, longevity, being female, and voice quality are the strongest predictors of a singer’s record sales (Hamlen, 1991). Last, in the non-profit performing arts, direct marketing efforts have a positive influence on season-ticket subscriptions and sales performance (Arnold and Tapp, 2003). Cultural policy studies focus on the impact on regional commercial performance of the ‘creative class’, defined as members of the workforce whose primary economic function is to create new ideas (Florida, 2002). Differences in methodologies, however, yield variations across studies regarding the relative importance of the ‘artistic dividend’, defined as ‘the aggregate economic impact that would not occur without the presence of artists’ (Markusen and King, 2003, p. 4) within a given town or region (Nivin and Plettner, 2009). Florida’s (2002) three measures of creativity (talent, technology, and tolerance) may also be weaker predictors of metropolitan job and income growth than more traditional indicators of commercial performance, including the development of programmes investing in quality education, workforce retraining, and businesses creation and development (Donegan, Drucker, Goldstein, Lowe, and Malizia, 2008). They have to be complemented, in smaller cities, with indicators of long-term urban health and vitality (namely, economic and environmental sustainability), in order to truly account for their creative economic potential (Lewis and Donald, 2010). Studies of the creative production process provide interesting insights into the relationship between the parties involved in it and commercial performance. Yet, the vast majority of commercial performance research, in particular in management (and more specifically, marketing and strategy) and in economics, centres further down the creative industries value chain on the distribution and consumption of the creative outcome. Analyses of creative project performance focus on creative products (Townley et al., 2009) and cultural goods (Hirsch, 1972, 2000) in general, and on Broadway shows (Hirschman and Pieros, 1985; Reddy, Swaminathan, and Motley, 1998; Uzzi and Spiro, 2005) and feature films (see Hadida, 2009 for a review) in particular. The commercial performance of a creative project may be defined and assessed directly, for instance as the price paid to own it (e.g. mainstream fashion, software games, and fine arts), the number of copies sold (e.g. literature and recorded entertainment), total attendance and

228  Allègre L. Hadida box office receipts (e.g. festivals, spectator sports, recorded entertainment, and performing arts), and rankings in industry performance indexes (e.g. Variety’s three-category index of a Broadway show as ‘hit’, ‘flop’, or ‘failure’ used by Uzzi and Spiro, 2005). Common measures of commercial performance of feature films include cinema attendance (Zuckerman and Kim, 2003); box office receipts (Elberse and Eliashberg, 2003; Sawhney and Eliashberg, 1996; Schwab and Miner, 2008; Zufryden, 1996); relative market share (Nelson, Donihue, Waldman, and Wheaton, 2001); and return on investment (Lehmann and Weinberg, 2000; Miller and Shamsie, 2001; Ravid and Basuroy, 2004). Analyses of creative organizations often use proxies of commercial performance similar to those used in studies of creative projects, albeit at an aggregate level. They include, for instance, the box office receipts of a movie studio (Canterbery and Marvasti, 2001; Robins, 1993) and movie theatre (Eliashberg, Jonker, Sawhney, and Wierenga, 2000), and the number of visitors and financial solvency of a flagship music centre (Kam, 2004) and non-profit theatres (Voss and Voss, 2000). Other studies develop specific organizational measures. This is the case, for instance, of Von Nordenflycht (2007), who challenges conventional wisdom on professional firms’ ownership by demonstrating that from 1960 to 1980, public ownership was not associated with lower commercial performance, measured in terms of annual growth rate, in larger advertising agencies (Von Nordenflycht, 2007). Similarly, indicators of growth, productivity, and commercial efficiency (Vozikis, Clevinger, and Mescon, 1984) and objective (e.g. subscriber and single-ticket attendance, total income, net surplus or deficit) and subjective (e.g. managers’ perceptions of how well the theatre is doing relative to ticket sales and financial performance) performance measures (Voss and Voss, 2000) assess US theatres’ commercial performance. Two additional indicators of commercial performance, the economic development of a flagship cultural institution’s neighbourhood (Grodach, 2008) and a museum’s accountability to external funding authorities (Thompson, 1999), parallel pointers of societal impact. The network of organizations is the most aggregate level of analysis of creative outcome performance. It comprises, from least to most cumulative, festivals, partnerships between organizations, political lobbies, regional districts and clusters, and industries. The commercial performance of festivals is measured objectively as their attendance and revenues (Ballou, Godwin, and Tilbury, 2000), and as the amount and nature of visitors’ expenditures, the change in turnover of the local businesses in the short and long term, and the estimated amount of money attendees and non-attendees would have spent in the area if the event had not been on (Wood, 2005). It also manifests itself as the physical transformation of the festival location during the event, ‘from dull and quiet to a lively never sleeping place’ (Einarsen and Mykletun, 2009). The economic priorities of festival organizers also change over time, from audience development for new medium-sized festivals to commercialization for established ones (Finkel, 2009). All the events reviewed in the literature have a positive, albeit often transient (Wood, 2005), impact on the commercial performance of the communities hosting them. Creative districts and creative industries also provide catalysts for urban economic regeneration, and have the capacity to contribute to a region’s

Performance in the Creative Industries   229 competitiveness and image (Jones et al., 2004). In the UK, the DCMS has made steady efforts to establish the economic input of the creative industries to the country’s economy, focusing on their contribution to employment, GDP, and the balance of trade (Taylor, 2006). Commercial performance in the creative industries is well researched across units of analysis and social sciences disciplines. Yet, creative activities also entail significant investments and social costs (Wood, 2005), and may constrain as well as facilitate regional business growth and economic development (Turok, 2003). Their economic impact should therefore not be overestimated, particularly in regions where cultural districts are still underdeveloped (Le Blanc, 2010) and where policy-makers tend to overemphasize the economic importance of the creative industries (Turok, 2003). This recommendation also applies in countries where the cultural lobby exercises an effective and unremitting pressure on government (Craik, 2005)—even though its voice may be disproportionate relative to its absolute and relative size in employment terms (Taylor, 2006).

Artistic merit Commercial performance and artistic merit form the two pillars of the existing literature on performance in the creative industries—to the point that works that define and assess artistic merit in isolation from commercial performance are few and far between. The imbalance, however, is still blatant:  as noted above, most of the contributions reviewed in this chapter focus on commercial performance, with less than 30% of them considering artistic merit. Artistic merit in the creative industries derives from institutionalized assessments of artistic recognition, by peers (industry awards) or experts (critical reviews). In the experience economy (Pine and Gilmore, 1998) and in an age when aesthetics have become pervasive (Michaud, 2003), artistic merit is no longer exclusively associated with the cultural sector. It applies, to varying degrees, to all creative industries. At the process level of analysis, Wijnberg and Gemser (2000) examine the institutional shift in the selection system of the visual arts market from peers (the Academy) to experts (art museums, commercial galleries, and art critics) in the second half of the nineteenth century, and the resulting redefinition of artistic merit around the impressionists. Marotto et al. (2007) observe the conditions leading orchestra musicians to a transformative, extraordinary, and subjective aesthetic experience of collective virtuosity, and Boerner and von Streit (2007) find a significant effect of positive group mood and conductor transformational leadership on artistic achievement in an orchestra. At the creative outcome level of analysis, few studies of motion picture performance consider film artistic merit on its own, in the form of best picture honours (Kaplan, 2006) and best picture honours and movie guide ratings (Simonton, 2004). The relational view of the arts argues that artistic value is co-created with arts consumers, and realized in the experience of art (Boorsma, 2006; Radbourne, Johanson, Glow, and White, 2009).

230  Allègre L. Hadida As such, arts consumers’ experiences of the creative outcome and the supporting services built around it ‘should form the basis for performance measurement and the development of reward systems’ (Boorsma, 2006, p. 87). The Arts Marketing Performance Evaluation Model, based on the Balanced Scorecard (Kaplan and Norton, 1992), is centred on the organization’s artistic mission (Boorsma and Chiaravalloti, 2010), and the Arts Audience Experience Index quantifies the intrinsic benefits of the performing arts experience to audiences (Radbourne et al., 2010; Radbourne et al., 2009). Customers who subjectively assess the artistic merit of one opera performance also tend to value its staging more than its musical dimension, and to consider both soloists and the congruency and fit of the whole performance in their evaluation (Boerner, Neuhoff, Renz, and Moser, 2008). Although expert spectators are more precise in their judgements than non-experts, there is also a high agreement among them on overall performance quality (Boerner and Renz, 2008). However, the atmospheric attributes and service quality of the creative consumption experience, which is distinctly predicated upon customers’ perception of how the live theatre play, opera, or ballet is delivered and their post-purchase evaluation of what was delivered (Davis and Swanson, 2009), is essential in particular to occasional customers (Kotler and Scheff, 1997). Conversely, performing arts patrons predominantly value the intrinsic quality of a live performance (Davis and Swanson, 2009). Research investigating artistic merit in conjunction with commercial performance is far more abundant than research considering the former in isolation. At the individual contributor level of analysis, the collective creative process of recorded country music is characterized by high levels of ambiguity in the musical production process itself, in the occupational jurisdictions of project participants, and in the quality metrics of what constitutes success in this industry (Long Lingo and O’Mahony, 2010). With these qualifications in mind, Long Lingo and O’Mahony (2010) settle for a dual assessment of music producer success as record sales (commercial performance) and Country Music Association Awards and Grammy Awards (artistic merit). Artistic merit is also reflected within analogous complementary approaches in musicians’ reputation (Fisher, Pearson, Goolsby, and Onken, 2010) and short-listing for Grammy Awards (Anand and Watson, 2004), in the hybrid aesthetic logic of solo and small-firm architects who define themselves as artist-entrepreneurs (Thornton, Jones, and Kury, 2005), in individual and group festival contributors’ short-listings for awards (Einarsen and Mykletun, 2009), and in closely-knit Japanese film crews generating top grossing and highly ranked movies (Wakabayashi et al., 2009). At the creative outcome level of analysis, artistic merit encompasses both short-term peer- and expert-based evaluations, and longer-term expert-based evaluations. The former take the form of nominations and awards (Ginsburgh, 2003; Ginsburgh and Weyers, 1999; Hadida, 2003, 2010), ratings by professional critics (Hsu, 2006; Smith and Smith, 1986; Uzzi and Spiro, 2005), or both (Delmestri et al., 2005; Simonton, 2009b). The latter are assessed through the inclusion of the creative project within ‘best of all times’ rankings (Ginsburgh, 2003; Ginsburgh and Weyers, 1999) and reproductions of works in textbooks and anthologies (Galenson, 2006).

Performance in the Creative Industries   231 The artistic merit of the creative organization, just like its commercial performance, is measured in aggregate terms. They include the quality and readiness of the theatrical act (Vozikis et al., 1984), the profile quality (programme) and performance quality (execution of the programme and artistic production process) of the opera company (Boerner, 2004), and success in winning awards for creative excellence in advertising—with some evidence that agencies that had gone public experienced declines in their creativity afterwards (Von Nordenflycht, 2007). At the network level of analysis, Finkel (2009) identifies arts exposure as a potential priority for large and long-established festivals, and recommends the introduction of better management systems including aesthetics and creative content as well as economic concerns. Most indicators of artistic merit, including nominations, awards, and critical evaluations, are factual and tangible. As such, they can be reported objectively, and in some instances, quantified. Yet, the existing literature also points out that some of them may be conferred on subjective political or socially constructed criteria (Wijnberg and Gemser, 2000), rather than on objective assessments of intrinsic value or ‘quality’. Taylor (2006) insists on the usefulness of artistic merit and societal impact criteria to assess overall performance in the creative industries. The next sub-section examines such societal impact criteria.

Societal impact At the process level of analysis, studies of the creative class demonstrate its members’ contribution to regional development (Florida, 2002). Yet, they tend to measure the latter mostly in economic rather than societal terms. Creative individuals and project teams may also work together to improve specific community members’ conditions. For instance, music making may become part of the psychological self-healing process of troubled teenagers and their families (Lehtonen and Shaughnessy, 2002), and city council members may take steps to improve their town’s environmental sustainability, in order to get creative workers and industries to relocate there (Lewis and Donald, 2010). At the creative outcome level of analysis, specific creative projects and organizations, including flagship cultural institutions, may be publicly commissioned to increase the exposure to arts and culture of specific communities, cities, and regions, and to improve their ability to attract and support arts-related activities (Grodach, 2008). Professional creative lobbies may also advocate the introduction of policies aimed at protecting and shoring-up national culture (Craik, 2005). Festivals often explicitly serve a similar purpose to cultural districts (Le Blanc, 2010) and creative industries in general (Jones et al., 2004) of local cultural, touristic, and economic regeneration (Ballou et al., 2000; Einarsen and Mykletun, 2009), to which image regeneration and civic pride (Wood, 2005), and community cohesion and social inclusion (Finkel, 2009) may be added. At the other end of the activism spectrum, the societal impact of creative outcomes may be more accidental, as was the unexpected regeneration of the city of Fargo, North Dakota, after the Coen brothers’ eponymous 1997 film, and the cultural, touristic, and economic

232  Allègre L. Hadida consequences on Wellington and New Zealand of Peter Jackson’s ‘Lord of the Rings’ film trilogy (Jones and Smith, 2005). At the organization level of analysis, Rentschler and Potter (1996) note the perception, in nine Australian non-profit museums and performing arts organizations, that the societal mission of enrichment, education, and arousal is best served by commercial means and objectives—an apparent contradiction that has implications on external parties’ definition of performance. Ultimately, the societal impact dimension of performance is crucial to the justification of the public funding and societal importance of the creative industries (Craik, 2005; McMaster, 2008). Exposure to art has a ‘civilising effect’ on society (Hesmondhalgh and Pratt, 2005), and ‘excellence in culture occurs when an experience affects and changes an individual. An excellent cultural experience goes to the root of living’ (McMaster, 2008, p. 9). The societal impact of the creative industries is therefore potentially incommensurable—a property which renders it extremely difficult to define and measure, and may therefore partly explain why, in spite of the media impact of Richard Florida’s work on the creative class, this third core dimension is still under-researched in the five social sciences disciplines under scrutiny.

Managerial performance: the forgotten dimension? A fourth dimension, managerial performance, is only mentioned in five articles out of the 182 contributions reviewed. In his study of public museums in New Zealand, Thompson (1999, p. 512) notes that: ‘Performance, in a public sector context, means the accomplishment or carrying out by civil servants of their duties, but the term is commonly used in the context of evaluation or measurement of those accomplishments.’ Staff commitment is important: for a quality management system to work, leaders need to commit to it and act as its champions (Cairns et al., 2005). Correspondingly, the observation that the members of the most effective organizations in a sample of 19 US performing arts non-profits shared high levels of engagement in monitoring organizational effectiveness leads to the recommendation that managers should create structures that promote and reward such engagement (Kushner and Poole, 1996). Vozikis et al. (1984) additionally point out that intra-organizational and inter-organizational performance indicators are as important to organizational effectiveness in US theatres as traditional artistic and commercial performance indicators. The timid appearance of managerial performance in the creative industries perform­ ance literature is partly counterweighed by the crucial importance given by the four contributions cited above to this forgotten dimension—although again, only 20% of respondents in the 95 organizations reviewed by Turbide and Laurin (2009) mentioned performance indicators related to their internal processes. Organizing effectively may well be a prerequisite to commercial performance, artistic merit, and societal impact. The first suggestion for further research is therefore to provide more systematic definitions and measurements of managerial performance in creative industries performance

Performance in the Creative Industries   233 research. Undertaking this endeavour in collaboration with creative organizations may also partially take care of concerns relative to managerial commitment and employee training in the creative industries (Turbide and Laurin, 2009).

Inter-Connections among and within Performance Dimensions through Time This section discusses the direction and nature of the relationships within and among performance dimensions across time. All arrows in Figure 12.1 represent acknowledged and empirically tested relationships among performance dimensions, and their direction mirrors the direction of the relationships they depict, from origin to effect. Full arrows represent complementary relationships, dashed arrows competing or conflicting relationships, and dotted arrows substitutive relationships among dimensions. The analysis below generates four additional suggestions for further research into unexplored relationships among dimensions and into hitherto neglected dimensions of performance.

Societal Impact

Craik 2005

e.g. Grodach 2008, Jones et al. 2004

Commercial Performance Process: • Individual contributor • Project team • ‘Creative class’

Outcome: • Project • Organization • Network

e.g. Strongman 2002, Le Blanc 2010, Ulibarri & Ulibarri 2009

Outcome: Process: • Project • Project team • Creative group • Organization • Network

e.g. festival: Finkel 2009, Einarsen & Mykletun 2009, Ballou et al. 2000; organization: Gilhespy 1999; Voss & Cova 2006

Artistic Merit

e.g. Voss & Voss 2000, Kubacki & Croft 2005 Long Lingo & O’Mahony 2010 e.g. Hadida 2003 (USA, France), 2010 e.g. Smith & Smith 1986, Hadida 2003 (France), Ginsburgh & Weyers 1999

complementary,

conflicting,

Process: • Individual contributor • Project team • Creative group

Outcome: • Project • Organization • Network

substitutive relationship

Fig. 12.1  Performance in the creative industries: dimensions and relationships

234  Allègre L. Hadida

Commercial performance and artistic merit: an ambiguous relationship Whilst some authors report the nature of the relationship between commercial perform­ ance and artistic merit as complementary, the majority notes its antagonistic nature. For the former, the artistic dividend derived from the presence and merit of artists directly contributes to commercial performance in the creative industries (Nivin and Plettner, 2009). Being recognized on artistic merit, and in particular being short-listed for or winning a prize in important institutionalized tournament rituals such as the Oscars (cinema), Grammy Awards (music), Booker Prize (literature), or Clio (advertising), may be exploited to enhance customer awareness and induce customer trial, and may thus positively feed back into commercial performance. At the process level, the complementarity between artistic merit and commercial performance is recommended (McCarthy, Ondaatje, Zakaras, and Brooks, 2004), and manifest in music (Fisher et al., 2010). At the creative outcome level of analysis, although several authors report a positive correlation between the two dimensions in cinema (Ginsburgh, 2003; Wakabayashi et al., 2009), research on the direction of this relationship yields mixed results (Hadida, 2009; Simonton, 2009b). The positive feedback loop that exists in France between film nominations and awards (artistic merit) and box office receipts (commercial performance) from 1988 to 1997 is not statistically significant in the USA, where the former follows and substantiates the latter without markedly influencing it (Hadida, 2003, 2010). These findings mirror cinema’s definition as both art and industry in France, and as primarily industry in the USA. They are contradicted however by demonstrations that Oscar nominations and awards significantly influenced box office receipts in the USA between 1950 and 1970 (Ginsburgh and Weyers, 1999), and that getting a best picture award in the 1970s positively affected exhibitors’ rentals (Smith and Smith, 1986). Overall, Oscars seem to positively influence total box office much more than first weekend box office receipts, and best picture nominations have more impact than best picture awards (Simonton, 2009b). This result stands in contrast to the observation that in literature, being short-listed for and winning a Booker Prize does not produce significantly different effects (Ginsburgh, 2003). Rather than complementary, the majority of authors point to an antagonistic relationship between artistic merit and commercial performance. Authors in the Frankfurt school define the cultural industries as detached from economic laws, and having every­ thing to lose from confronting them (Benjamin, 1935; Horkheimer and Adorno, 1974). Compared to their artistic facets, the business components of cultural industries may indeed seem ‘humdrum’ (Caves, 2000, 2003; Voss, Cable, and Voss, 2000). The creative industries’ competing (and as illustrated in Michael Grade’s opening citation, often conflicting) artistic and economic priorities are mainly referred to as art versus commerce (Caves, 2000, 2003; Townley, 2002), culture versus business (Lampel et al., 2000; Lampel et al., 2006), normative artistry (‘a world class orchestra in a world class city’)

Performance in the Creative Industries   235 versus utilitarian economics (‘the best orchestra we can afford’: Glynn, 2000), technical (art) versus managerial (utility) subsystems (Hirsch, 1972, 2000), and symbolic and managerial aspects (Cappetta and Cillo, 2008; Cappetta and Gioia, 2005). Complex organizational and managerial tensions develop in the cultural industries when goals to develop art and wealth attempt to coexist (Bloodgood and Chae, 2010). At the individual contributor level of analysis, the overpowering economic logic of market-driven organizations and labour markets stand in sharp contrast to the artistic logic of product-driven musicians (Glynn, 2000; Kubacki and Croft, 2005) and stage actors (Eikhof and Haunschild, 2007), and to the editorial logic of higher education publishers (Thornton, 2002; Thornton et al., 2005). Eikhof and Haunschild (2007) remark that the economic ‘commercial appropriation’ logic of German repertory theatre actors operating in tight internal and external labour markets tends to crowd out their artistic logic, endangering thus the resources vital for creative production and forcing them to develop means to safeguard them. The economic logic has also closed the stage to many innovative musicians who refuse to forfeit their artistic integrity to commercial objectives (Kubacki and Croft, 2005). The artistic imperative underlying a product strategic orientation increases non-profit theatres’ overall performance. In contrast, the economic imperative manifest in a consumer strategic orientation and implemented in efforts to produce shows in response to customers’ requests is not rewarded with improved bottom lines and increased attendance and revenues. Its precedence over the artistic imperative may therefore be detrimental to both commercial performance and artistic merit (Voss and Voss, 2000). Creative (Townley et al., 2009) and cultural products (Becker, 1982; Faulkner, 1983; Hirsch, 1972, 2000; Long Lingo and O’Mahony, 2010) also face competing aesthetic and market imperatives. Even assuming that: ‘To be “successful”, creative products must satisfy the first; to be economically viable they must balance these twin poles and encompass both’ (Townley et al., 2009, p. 955), success on one dimension only may prove sufficient for certain creative outcome categories for which commercial performance may consciously work against artistic merit. For instance, art films and entertainment films seem to be neatly segregated, as critics published in movie guides after the film release (artistic merit) and domestic box office after the first weekend (commercial performance) turn out to be two largely independent judgements of cinematic success, which also build on divergent antecedents (Simonton, 2009a; Townley et al., 2009). Whilst reconciling artistic merit and commercial performance is recommended (Hirsch, 1972, 2000), the tension between them often leads creative organizations to engage in trade-offs (Sukel, 1978) and to fine-tune the level of integration of an artistic mode relying on the flexible and decentralized expertise of distinct creative communities of specialists within a management mode ruled by time, cost, and market constraints (Cohendet and Simon, 2007). It is also typically embodied in the distinct professional identities of artists and managers, and may be resolved through the definition of a new, integrated, and negotiated organizational identity. The latter is personified and embraced by the organization’s leaders and unifies its membership by bridging professional and organizational identities (Glynn, 2000). Individual employees of fashion houses also act

236  Allègre L. Hadida as ‘integrators’ of conflicting symbolic and managerial priorities (Cappetta and Cillo, 2008). In the end, however, effectively balancing ‘show business and the business of doing shows’ remains daunting (Vozikis et al., 1984). The abundance of works comparing and contrasting artistic merit and commercial performance reflects the fascination for the set of values, rules of behaviour, practices, and professional identities associated with these two dimensions of performance. In the existing empirical literature, the antagonistic nature of art and commerce is often taken for granted, with very few authors providing further consideration for its philosophical, ideological, and institutional underpinnings. The second suggestion for further research is therefore to focus as much on the underlying foundations of the existing tension (or lack thereof) between artistic merit and commercial performance as on its manifestations. Doing so may provide new insights into the nature of the relationship between the two dimensions, and help to move from the current ‘either-or’ dominant logic to a more integrative and nuanced approach of these essential facets of performance.

Commercial performance and societal impact and artistic merit and societal impact: complementarity and substitution The relationships between commercial performance and societal impact and between artistic merit and societal impact are much less ambiguous. All authors describe them as complementary, with one contribution (Craik, 2005) also hinting at a possible substitution of commercial performance metrics with societal impact indicators (for instance, neighbourhood rejuvenation or community cultural development) in sectors which have particular difficulties demonstrating their profitability (e.g. poetry, classical ballet, or classical music). Existing research on the complementarity of commercial performance and societal impact corroborates the view that seeing business and societal dimensions as unconnected or antagonistic is detrimental to long-term economic competitiveness and societal impact (Porter and Kramer, 2006). In the UK, the DCMS has deployed steady efforts in recent years to complement traditional local narratives of culture-led regeneration (assessed in terms of societal impact and artistic merit) with a regional economics focus on commercial performance metrics. In doing so, it has failed to fully acknowledge the imperative to distinguish between cultural policy and economic development objectives with respect to regional development (Taylor, 2006). Even though the creative class is encouraged to take residential decisions based on the two complementary criteria of economic (living conditions, affordability) and environmental (societal impact, ecological footprint) sustainability (Lewis and Donald, 2010), its economic and societal contributions to regional development are assessed almost exclusively in economic terms, and not clearly differentiated (e.g. Florida 2002).

Performance in the Creative Industries   237 At the creative outcome level of analysis, the ability of flagship cultural organizations to attract and support arts-related activity primarily depends on the faculty of their surrounding areas to physically and economically support a diversity of smaller-scale arts activity (Grodach, 2008). Successful regional economic regeneration in the creative industries also contributes to the wider public policy agendas of social and cultural regeneration (Jones et al., 2004). Artistic merit and societal impact are also complementary. The latter may be a direct consequence of the former, as demonstrated, at the creative outcome level of analysis, by the example of the Booker Prize. At least up until 1999, the winning novels mirrored the history and legacy of British imperial culture after empire, redefining thus a whole field of literature and literary canons before and after British colonialism (Strongman, 2002). In a way, the Booker Prize consequently created a new body of literature that may not have emerged otherwise (Anand and Jones, 2008; Strongman, 2002). Similarly, the successful promotion of a cultural heritage site or of a cultural district’s architectural heritage leads to increasing their societal impact and supports tourism and local socio-economic development (Le Blanc, 2010; Ulibarri and Ulibarri, 2009). Last and as represented in the centre of Figure 12.1, successful festivals seem to combine the three performance dimensions (Ballou et al., 2000; Einarsen and Mykletun, 2009). Their relative importance and precedence vary along with festival longevity, standing, and size (Finkel, 2009). Positive changes to visitors’ attitude toward the host region, however, may not be sustained over the long term (Wood, 2005). All the studies cited above provide insights into the dynamics of performance across dimensions. However, contradictions in the definitions and measurements of key indicators of the three dimensions, in particular artistic merit and societal impact (e.g. McMaster 2008), have limited their number and narrowed their focus. Thus, studies comparing and contrasting the three dimensions of commercial performance, artistic merit, and societal impact are infrequent, and mostly centred on festivals. A common rating system focused on cultural organizations and their external stakeholders (Gilhespy, 1999) and an analysis of the prominent effect of patrons’ perception of non-profit theatres’ values on their customer satisfaction (Voss and Cova, 2006) constitute interesting exceptions. The third suggestion for further research is to develop more integrative studies of performance in the creative industries across dimensions, industries, and units of analysis—thereby shifting the focus away from a quasi-exclusive emphasis on commercial performance.

Performance dimensions through time Longitudinal studies of film performance have led to the following conclusions at the creative outcome level of analysis (Hadida, 2009; Simonton, 2009b). First, commercial performance is cumulative through time and space. In the movie theatre, early box office gross is often the best predictor of later box office gross (e.g. De Vany and Walls, 1996;

238  Allègre L. Hadida Walls, 2000; Hand, 2001; Simonton, 2009a), including from one country to the next (Elberse and Eliashberg, 2003). Cinema blockbusters also tend to perform well on subsequent distribution platforms, including television and video (Desai and Basuroy, 2005; Ginsburgh and Weyers, 1999; Hennig-Thureau, Henning, Sattler, Eggers, and Houston, 2007; Prosser, 2002). However, their theatrical commercial performance goes down as soon as they are released on video (Frank, 1994; Lehmann and Weinberg, 2000). Second, artistic merit is also cumulative through time and in the short term, across peer-based (awards) and expert-based (critics) selection systems. Although they reflect different types of evaluations of artistic merit (Simonton, 2004), awards and nominations and critical evaluations are not independent from each other, and bear complex causal interconnections. For instance, initial critical evaluations may influence movie awards, which may in turn impact subsequent critical evaluations (Simonton, 2009a). The relationship between early critical evaluations and awards is also consistently positive through time, and a strong consensus among early-theatrical run and post-theatrical run critical evaluations demonstrate the stability of this form of artistic merit over time (Simonton, 2009a, 2009b). Conversely, Oscar and Cannes awards and nominations and long-term nods as ‘Best Movies of all Times’ do not significantly overlap (Ginsburgh, 2003; Ginsburgh and Weyers, 1999). This result casts doubts on the propensity of awards to reveal artistic merit rather than commercial fads and ripple effects. Home video spectators, who seek distraction more than cinematic ambition, also pay less attention to artistic merit than moviegoers (Hennig-Thureau, Houston, and Walsh, 2006). Artistic and commercial success in the arts may only come late in life and after decades of creative efforts, as exemplified by ‘experimental innovators’ (Galenson, 2006). The relationship between short- and long-term societal impact is indirectly addressed by Einarsen and Mykletun (2010), who note that a festival’s capacity to improve its host location may attract future residents and visitors. Across performance dimensions, the longitudinal relationship between artistic merit and commercial performance is the only one explicitly discussed in the existing literature. The divergent antecedents of these two performance dimensions and the unstable nature of their relationship over time (Simonton, 2009b) confirm their definition as two largely independent dimensions of performance (Simonton, 2009a). At the creative outcome level of analysis, initial commercial performance partly conditions later indicators of artistic merit, including the Oscars in cinema (Holbrook, 1999) and the Grammy Awards in music (Anand and Watson, 2004). Longer-term critical evaluations of artistic merit also partially build on short-term artistic merit and commercial performance (Simonton, 2009a). More generally, at the level of the organization, long-term perform­ ance indicators are more clearly visible to external stakeholders, including funding bodies, than to internal ones (Gilhespy, 1999). These contributions stretch the focus of performance in the creative industries across time and dimensions. They open an exciting path in performance research, which the fourth suggestion for further research invites to expand.

Performance in the Creative Industries   239

The ‘dark side’ of performance evaluation Several contributions discussed above demonstrate the existence of a Matthew effect (Merton, 1968) in the creative industries (e.g. Faulkner and Anderson, 1987; Ginsburgh and Weyers, 1999; Sedita, 2008; Smith and Smith, 1986; Wakabayashi et al., 2009). Success breeds success within the same performance dimension (e.g. short-term commercial success leading to long-term commercial success) and across performance dimensions (e.g. from artistic merit to commercial performance). Very little research, if any, has been carried out yet on how and why negative performance in one dimension may become positive through time in that same dimension or in another one. This so-called ‘so bad, it’s good’ phenomenon is well known to Broadway, cinema, and tele­ vision professionals and researchers and exemplified in Mel Brooks’s ‘The Producers’. For instance, poor expert- and audience-based rankings on www.rottentomatoes.com and www.imdb.com or an entry into a ‘worst movies of all times’ list in other printed or online sources may ultimately lead to the consecration of said movies as ‘cult’. The fifth and final suggestion for further research is to look into the ‘dark side’ of performance evaluation. That is, at how and why negative performance in one dimension may turn positive through time in this same dimension or in another one. This new area of investigation potentially represents interesting and hitherto under-explored opportunities to contribute to the growing stream of research into performance in the creative industries.

Conclusions This chapter and its proposed taxonomy represent a first attempt at taking stock of the growing literature on performance in the creative industries across five relevant social sciences disciplines. They hopefully contribute to the development of a general theory of performance in the creative industries. Such an endeavour is fraught with difficulties. As noted above, some indicators of societal impact and artistic performance may be used to promote ideological and political agendas, leading to questioning their relevance and neutrality. This potential limitation is important, as very few studies go beyond the definition of performance in the creative industries in strict economic terms. Indeed, data availability and inherent difficulties associated with quantifying mostly intangible and subjective indicators of societal impact and artistic merit have led most researchers to focus on cinema and music and on commercial performance, to the detriment of other, often non-profit creative sectors and of other performance dimensions. Methodological caveats also abound. The following four, initially identified while reviewing cinema research (Simonton, 2009b), also apply to creative industries research: first, the use of disparate samples across studies; second, the lack of agreement on which variables should be included in investigations; third, the prevailing incongruence in

240  Allègre L. Hadida defining and measuring a same variable across studies; and fourth, the absence of consensus on the relevance and suitability of particular analytical methods to investigate performance (Simonton, 2009b). The lack of methodological coordination among researchers investigating creative industries performance from different perspectives and academic disciplines further increases confusion (Hadida, 2009; Simonton, 2009b). Whether performance should be assessed using a reflective, inside-out process (e.g. creative workers or organizations providing self-measures of their own performance) or an objective outside-in process (e.g. a systematic use of externally-defined performance indicators) remains unresolved. While some researchers rely exclusively on objective measurements (for instance, Hamlen, 1991; Long Lingo and O’Mahony, 2010; Reddy et al., 1998), others use subjective, reflective, and self-reported assessments of performance (Boerner and von Streit, 2007; Marotto et al., 2007), possibly complemented by a peer-review system managed by selectors (Wijnberg and Gemser, 2000): for instance, funding bodies and other financial sponsors (McMaster, 2008). Using rigorous analytical and (whenever appropriate) multi-methods approaches to investigate under-researched dimensions of performance in hitherto neglected creative industries may help resolve these issues, and provide a better-rounded and more realistic and comprehensive view of performance and performance measurement in the creative industries. This challenge entails developing both objective and subjective performance indexes (Fisher et al., 2010; Voss and Voss, 2000). Ultimately, these limitations should be blessings in disguise, as research diversity brings richness and a unique opportunity to better define, measure, and subsequently, predict performance in the creative industries.

Notes 1. This contribution at the organization level conjures earlier conclusions at the individual level of analysis that the expectation of external evaluation stifles artistic creativity, unless the person is explicitly told how to perform creatively (Amabile, 1979). 2. The relevance claim is further discouraged by the fact that arts and humanities research (e.g. in art history, philosophy of arts, aesthetics) generally appears to be more introspective and to focus more on artistic merit and societal impact than research carried out in the five social sciences disciplines reviewed in the present chapter.

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Pa rt  4

ORG A N I Z I N G C R E AT I V E I N DU ST R I E S

Chapter 13

Projects and Proj e c t Ec ol o gies in C re at i v e Industri e s Tara Vinodrai and Sean Keddy

Introduction Over the past decade, observers have highlighted the growing economic importance of creative activities, and the critical role that cities play in incubating and fostering them (Hall, 1998; Florida, 2002; Scott, 2008; see also Florida et al., 2015). Observers note that creative activities are predominantly concentrated in urban centres. Cities—as both sites of creative production and consumption—are critical to the competitiveness and dynamics of the creative industries (Scott, 2004; Currid, 2007; Silver et al., 2010; Silver, 2012). Moreover, a wealth of research confirms the geographic patterns of these creative activities and their location in urban settings (Pratt, 1997; Scott, 2001; Power, 2002; Markusen, 2006). Geographers and other social scientists have contributed greatly to our understanding of the spatial patterns and dynamics of these creative industries having studied many of these activities individually and in great depth, including: music, animation, film and television, fashion, design and advertising (Scott, 1984; Christopherson and Storper, 1986, 1989; Leslie, 1997; Coe, 2000; Grabher, 2002b; Power and Hallencreutz, 2002; Ekinsmyth, 2002; Rantisi, 2004; Power, 2004; Lorenzen and Frederiksen, 2005; Vinodrai, 2006; Hracs, 2009; Johns, 2010). And while the geographical patterns in the distribution of creative activities are revealing, it is important to understand how these particular spatial patterns are produced and reproduced over time. More specifically, in a group of industries where careers are often boundaryless and work is often organized on a project-by-project or temporary basis (Jones, 1996, 2010; DeFillippi and Arthur, 1998; Arthur et al., 2001; Grabher, 2001, 2002a), spatial proximity provides a number of benefits in terms of access to work, collaboration, ideas, and networks—all of which are critical to learning

252   Tara Vinodrai and Sean Keddy and innovation. Individuals and firms engaged in project-based work tend to cluster together in particular locations forming dynamic local project ecologies. These project ecologies become arenas that allow firms to reorganize resources, learn, produce ongoing novelty, and manage risk. Similarly, project ecologies allow workers to access the networks, knowledge, and jobs so important in developing their careers, as well as cope with risk. But for a handful of stars (see Currid-Halkett, 2015), whether they be designers, musicians, architects, or other creative workers, the careers of most workers in the creative industries remain highly localized and bound to particular places. In other words, geography is fundamental—rather than incidental to—project ecologies and the local labour markets that are central to them. Thus, this article explores how geography shapes, facilitates, and enables the innovation and organizational dynamics of the creative industries and examines how and why there remains a persistent local geography of cool careers bound up in particular cities, spaces, scenes, and neighbourhoods. The article begins with a discussion of how work is organized in the creative industries, emphasizing the role of project ecologies as a mechanism by which workers and firms innovate and learn, as well as the consequences for individual workers in terms of risk. Following this discussion, the article delves into how geography matters to the dynamics of project ecologies and their underlying local labour markets in the creative industries. First, local networks play an important role in learning, knowledge exchange, and job search, yet—as the discussion highlights—there are potentially exclusionary dimensions to these networks. Second, local scenes or spaces within cities act as critical infrastructure for project ecologies. These local scenes and spaces provide opportunities for creative workers to hang out in places where they can tune into background noise and buzz (Storper and Venables, 2004; Bathelt et al., 2004; Grabher, 2004). These same distinctive urban environments often have unique identity and place characteristics, which become embedded in products thereby enhancing their competitiveness (Molotch, 2002; Drake, 2003; Rantisi, 2004). Finally, while there is an overarching narrative of project-based creative work, there are nuanced differences in its articulation and outcomes that are dependent on geographic, industrial, and institutional context. Overall, the article draws upon a deep empirical base of research examining project-based work in the advertising, videogame, publishing, design, film and television production, music, fashion, and new media industries to argue that geography is critical to the organization and dynamics of project ecologies and local labour markets in the creative industries.

The Logic of Projects, Project Ecologies, and Local Labour Markets The growing literature on projects, collaboration, and team work is instructive as an entry point for understanding the organization of work and labour markets in the creative industries (Jones, 1996; DeFillippi and Arthur, 1998; Ekstedt et al., 1999; Arthur et al.,

Projects and Project Ecologies in Creative Industries   253 2008; see also DeFillippi, 2015). Project-based organizational models have routinely been used in many industries, including construction, engineering, and shipbuilding. These industries often create one-off customized or specialized products; in other words, there is an element of novelty involved in their creation. Thus, while this organizational form is by no means new, it is no surprise that is has become increasingly widespread within creative industries that similarly rely on one-off products and novelty as sources of value. Creative industries are susceptible to rapid shifts in consumer demand, necessitating high rates of innovation, the generation of novelty, and easy access to information about changing tastes and styles. In fact, in industries such as advertising, music, and design, where traditional organizational models have historically prevailed, firms are increasingly shifting towards project-based modes of work organization to mitigate risk and remain innovative. Moreover, emergent creative industries, such as new media and videogames, have adopted this model of organization (Christopherson, 2002; Christopherson and van Jaarsveld, 2005; Cohendet and Simon, 2007). However, it should be noted that well-established creative industries such as architecture and film have long been organized on a project-basis with institutionalized rules of the game that define social dynamics, roles, responsibilities, and career success (Christopherson, 2002; Jones, 2010). Grabher (2004) and others identifies several key characteristics of project-based work in the creative industries (see also DeFillippi, 2015). First, projects rely on improvisation as a means to foster creativity through experimentation (Weick, 1998). Creative workers must adapt to change and improvise as projects often evolve along unexpected trajectories. Second, as scholars of innovation have long noted, innovation is often the outcome of ideas that are recombined in new and novel ways; thus, an important element of projects relates to the opportunities for recombination (Grabher, 2002b, 2004; DeFillippi, 2015). Projects allow for the recycling and adaptation of organizational and technical experience from previous projects in order to gain efficiencies in subsequent projects. For example, Cohendet and Simon’s (2007) study of Montreal’s videogame industry illustrates how firms recycle or adapt some elements of game design for use in future projects. Moreover, firms continuously shift the roles and responsibilities of the individuals working on the project, as well as the individuals themselves to exploit the need for diversity in ideas, opinions, and perspectives. This allows for a deliberate interruption of habits and patterns, thereby resisting locking-in to particular routines that have previously been successful (Grabher, 2002b). Finally, projects are often rife with conflict and rivalry (Grabher, 2002b). This rivalry is not seen as an unintended side effect of project-based work, but rather as an essential ingredient that fosters creativity and innovation. Rivalry arises both through differing visions of creative professionals participating in a project and through tensions between individuals with different project roles and motivations (Grabher, 2002b; Neff et al., 2005; Cohendet and Simon, 2007). Thus, in order for project-based industries to function effectively and efficiently, firms and other project-based organizations must have access to a large pool of specialized labour that can be brought into a project on short notice. Once the project is complete, the project team dissolves and individuals move on to other projects. Firms

254   Tara Vinodrai and Sean Keddy rely on networks of specialists that continuously enter into short-term formal and informal contracts and collaborations. And while this process can occur within individual firms and internal labour markets, it has become increasingly commonplace for this model to be used at the industry-wide scale in external local labour markets where firms can readily access deep pools of talent (Grabher, 2004; Vinodrai, 2006; Jones, 2010). In other words, as Lorenzen and Frederiksen (2005) note in one of the first studies articulating how geography matters to the formation and dynamics of project ecologies, local labour markets play a central role in organizing project-based creative industries, reinforcing the local geography of project ecologies. The characteristics and dynamics of these local labour markets reflect the nature of innovation, the constant quest for newness or freshness, the pace and tempo of work, and the rapid turnover in personnel in the creative industries. Creative industries such as music, design, and publishing have high proportions of freelancers, contract and temporary employees, and self-employed individuals, especially in comparison to the workforce as a whole (Ekinsmyth, 2002; Hracs, 2009; Vinodrai, 2009). Skilled professionals often move between projects, firms, and—sometimes—between industries. For example, Vinodrai (2006, p. 251) describes how project-based labour markets operate in Toronto’s design ecology, There is a significant amount of circulation throughout the regional economy as designers move from workplace to workplace and between industries. This circulation is more apparent in the early stages of career development, yet it pervades even the later stages of career development for graphic designers. Far from fluid, this process is characterized by disruption as industrial and graphic designers move between workplaces, often not by choice.

While project-based work and local labour market mobility may appear ideal from an innovation perspective in creative industries where novelty, improvisation, and experimentation are key to competitiveness, it has consequences for individual workers. One the one hand, local labour market mobility is viewed as a necessary means by which creative workers build and further their careers. Thus, freelancers and other contract workers not only act as knowledge-transfer agents passing information and techniques between firms, but simultaneously acquire skills that one day will allow these workers to set up their own consultancies and agencies (Perrons, 2004). Upward mobility may not be possible without building an extensive repertoire of experiences. There is an expectation that creative workers will develop a portfolio that demonstrates a wide range of capabilities, a strong network and reputation, and a multitude of experiences in different settings; careers are boundaryless and workers must build up career capital (Jones, 1996; Arthur, et al., 2001; Vinodrai, 2006). However, all too often, shifting between projects and firms is structural. In addition to the obvious innovation-related benefits of project-based organizing, firms adopt such a model to reduce costs and outsource risk in order to be more competitive in the global market. The result is that more risks and responsibilities are borne by individual creative workers rather than firms. As Hracs (2009, p. 6) describes in the case of musicians,

Projects and Project Ecologies in Creative Industries   255 Put simply, as the broad range of creative, managerial and technical tasks associated with the production process have been ‘downloaded’ to individual musicians the nature of musical employment is becoming increasingly precarious . . . Moreover, as many young musicians are entering the labour market without joining unions the once enforceable standard union scale, paid per hour of performance, has become a free for all where musicians undercut each others’ prices to get on stage. Indeed, many working musicians in Toronto complained about the difficulty in making a sustainable living.

Risk is transferred from firms to individuals, who are then responsible for their own training and skills development, as well as a variety of other tasks. Often, such workers also no longer have access to social benefits (e.g. pensions, health insurance), which have historically been collectivized through firms and key intermediary organizations, such as labour unions (see also Coe, 2000; Christopherson, 2002; Ekinsmyth, 2002). This switch from hiring full time, permanent employees to using freelance and contract workers as a cost-reduction strategy, has led to an industry-wide reliance on freelance workers in some creative industries, such as advertising and publishing. For this reason, labour market mobility is often the result of involuntary separations, such as layoffs or the expiration of short-term contracts. Again, this leads to greater risk and uncertainty being transferred to individual workers. For some creative workers, this is viewed as an exciting and cool dimension of their career that can stimulate creativity. Constantly changing jobs and work environments prevents career stagnation and enables creative workers to maintain current and up-to-date skills and practices. However, this same practice also exposes individual workers to higher levels of risk, insecurity, stress, fatigue, and anxiety due to the short-term, contractual, and/or freelance nature of this work (Ekinsmyth, 1999, 2002; Garrick and Clegg, 2001; Gill and Pratt, 2008; Hracs, 2009). For example, Dex (2000) found that while some workers in the UK television industry enjoyed uncertainty in their working lives, the majority viewed it as a source of stress. Such views were also dependent on life stage; uncertainty became a greater concern for workers when there were dependents involved (e.g. partners, spouses, children, parents) or they had greater financial responsibilities (e.g. loans, mortgages). And, as some critics note, this uncertainty, coupled with the long working hours required of creative workers, can place a heavy burden on personal relationships outside of work with friends, partners, and children (Gill and Pratt, 2008).

Local Networks The contract, temporary, and freelance nature of work and the labour market dynamics associated with project ecologies described in the previous section necessitate that workers constantly search for new contracts, jobs, and work opportunities. For this reason, workers in the creative industries must develop extensive social and

256   Tara Vinodrai and Sean Keddy professional networks to enable this search process, as well as learn about new practices, techniques, and trends. These underlying networks reflect loyalties, trust, and reputation that form and develop over time. Yet, the short-term, episodic, and cyclic nature of project-based work undermines the very conditions required to develop loyalty and trust. The continuous combining and recombining of project members can lead to a lack of opportunities for meaningful relationships to develop inside the project itself (Wittel, 2001). As such, this reinforces the importance of networks as a means by which to overcome this issue, since social and professional networks extend beyond the completion of individual projects and allow for career capital to build up over time. In this way, loyalties, reputation, and trust reside in local social and professional networks rather than with particular firms (Ekinsmyth, 2002). And while different types of social networks facilitate different types of interactions, learning, and search functions, and have different capabilities for developing loyalty, reputation, and trust, these networks are best developed under conditions of closeness or proximity; in other words, project-based creative work demands being there (Gertler, 1995). Grabher (2004) identifies three types of networks that are essential to project-based work in the creative industries: connectivity, sociality, and communality; these latter two types of networks are particularly well-suited to local interactions. These networks are differentiated by their purpose, the strength of ties between individuals in the network, and the types of information exchanged. Informational or connectivity networks are those where actors have weak ties and individuals use these networks as mechanisms to transfer knowledge for specific projects. These networks continuously change as projects progress through their lifecycles and different actors enter into and leave these networks as necessary. This form of network contains virtually no personal connections and focuses primarily on the specific subject matter of a given project (Grabher and Ibert, 2006). Connections are made with individuals who have complementary skill sets and who can quickly offer their expertise to a specific problem (Hauge and Hracs, 2010). A second type of network relies on sociality and requires more face-toface interaction. Relationships are characterized by a high intensity that leads to a swift trust developing between individuals in order to complete a project (Grabher, 2004; Grabher and Ibert, 2006). Finally, a third type of networking involves communality, which relies on long-lasting relationships developed through shared projects, common career histories, and other collective experiences. In these cases, reputation and trust are built slowly over time and involve strong social and professional ties. For example, in Toronto’s design community, Vinodrai (2006) found that many designers had shared career paths that developed over long periods of time, and included common schooling, stints at the same employers, as well as episodes where there was little interaction or collaboration. These overlapping career paths and the fluidity of moments of intense or minimal interaction in local networks reinforce and reproduce local project ecologies over time. However, there are several other potential downsides to such a strong emphasis on local networks that encompass the blurring of personal and professional identities. First,

Projects and Project Ecologies in Creative Industries   257 creative workers may fear turning down jobs offered by friends and colleagues. This can negate many of the perceived benefits of the flexibility to pick and choose which projects to work on. For many creative workers, the fear of not being called on for future work makes them willing to take on any jobs that come their way regardless of how uninteresting the job may seem and how little pay may be offered. For example, in Ekinsmyth’s (2002) work on freelancers in the UK magazine industry, job opportunities largely arose from social networks where individuals within these networks were connected by both personal and professional relationships. Many within the industry perceive others in their networks as friends, making refusal of work even more difficult. In addition to the risk that they will be seen as unreliable if they refuse work, there is also the fear of losing a friendship and an important connection in the industry. Such concerns extend to the wages offered for a project, with many creative workers resisting wage negotiations for fear of losing a contract (Ekinsmyth, 2002). Second, these forms of flexible, risky work—increasingly normalized in the creative sector—often do little to overcome traditional inequalities often evident in the labour markets of advanced capitalist economies. For example, Perrons (2004) finds that women are paid significantly less than their male counterparts in the digital media industries. Batt et  al. (2001) find similar trends amongst new media workers. These authors suggest that the long hours, the necessity to actively participate in social networking activities outside of regular working hours, and the pace of work often preclude women’s participation due to familial and household obligations and perpetuate a gendered division of labour. Finally, the highly social nature of local networks places all aspects of personal identity under great scrutiny; workplaces and the related scenes and spaces (see below) where freelance and contract work is found are highly performative (Banks, 2007). Elements of personal identity are amplified and can become instrumental to defining how well individual workers in the creative industries are able to succeed in accessing jobs, clients, and markets. How individuals dress and cut their hair, the types of music they listen to, the books (and more recently, blogs and websites) they read, the activities in which they engage, and the events that they attend become defining characteristics of their creative identity. These elements act as market signals communicating the edginess of their work and whether or not it is cool or avante-garde. However, McRobbie (2002) cautions that these dynamics are similar to exclusive club cultures. She notes that these emergent forms of creative work reproduce older patterns of marginalization (of women and people from different ethnic backgrounds . . . [The] question of ‘are you on the guest list?’ is extended to recruitment and personnel, so that getting an interview for contract creative work depends on informal knowledge and contacts, often friendships. Once in the know about who to approach (the equivalent of finding where the party is being held), it is then a matter of whether the recruitment advisor ‘likes you’ (the equivalent of the bouncer ‘letting you in’), and all ideas of fairness or equal representation of women or of black or Asian people (not to mention the disabled) fly out of the window. (McRobbie, 2002, p. 523)

258   Tara Vinodrai and Sean Keddy In an ironic twist, while it is cool to be different in some regards, it is not necessarily cool to be all that different. And while networks allow for reputation and trust to be developed, it can also makes access for newcomers difficult (Grabher, 2002b). Thus, the highly social nature of the way in which work is found can—in fact—reproduce systemic inequalities; local social and professional networks often systematically include some individuals and exclude others.

Local Scenes and Spaces As noted at the outset of this chapter scholars studying the creative industries have argued that cities provide an ideal setting for the formation of localized clusters and industrial districts specialized in particular sets or subsets of creative activities (Scott, 2001; Power and Scott, 2011). Within the city, specific places, neighbourhoods, and scenes play a critical role in producing and reproducing project ecologies and their underlying labour markets. First, local neighbourhoods, scenes, and spaces offer a milieu in which local networks are produced and reproduced over time: work is found, collaborations are formed, loyalties and trust are developed, and reputation is gained and lost. Second, these same spaces act as sources of inspiration, resulting in elements of place becoming deeply embedded in products leading to the development of particular local or regional styles (e.g. Seattle’s grunge music scene, Kingston reggae, Scandinavian design) (Power and Scott, 2011). Each of these two aspects of how local scenes and spaces contribute to the dynamics of project ecologies is discussed below. The concentration of creative work in particular cities and neighbourhoods provides opportunities for freelancers and other creative workers to easily access and partici­ pate in local social and professional networks, thereby more readily facilitating the transmission of knowledge about jobs and market trends through intensive face-toface interaction. While these local scenes and spaces act as conduits for local learning, they are particularly important for developing career capital; professional and career advancement is gained by building reputation through showcasing one’s skills and portfolio, but also through keeping in touch with and rubbing shoulders with others in the industry (Grabher and Ibert, 2006). Career progression and development is determined by repetition in terms of collaboration and employment and reputation, defined by working for particular firms and stars or on particular iconic projects, as well as through recommendations made by others (Vinodrai, 2006). In terms of collaboration, current and future collaborators and contacts are found through actively hanging out in particular scenes and spaces (Grabher, 2002b; Lloyd, 2006). While formal industry networking events are important places where creative workers can be seen and interact, a great deal of this networking activity occurs in informal settings outside of the workplace and industry events, and include such spaces as clubs, bars, galleries, coffee

Projects and Project Ecologies in Creative Industries   259 shops, and cafes. Hanging out in these spaces facilitates casual conversation, potentially leading to the expansion of contacts, gaining knowledge and insight into industry rules, standards, and practices and meeting, as well as learning about and meeting other professionals in the field (Grabher, 2002a, 2002b). In their work on fashion designers and musicians in Toronto and Stockholm, Hauge and Hracs (2010) argue that creative collaborations are greatly enabled through interactions in spaces and scenes where workers from a range of creative industries can interact both formally and informally. Moreover, such collaborations across industrial boundaries are often viewed as necessary and co-branding efforts may also create and enhance the value of products. As Hauge and Hracs (2010, p. 120) explain, . . .  indie fashion designers struggle with limited resources including small or non-existent marketing budgets, word-of-mouth marketing, often through friends and acquaintances, has become crucial to their success. By extension, indie fashion designers expressed a growing need to collaborate with musicians because of their status as trendsetters and ability to market fashion brands and products to sophisticated consumers. Indeed, business savvy designers, who are scene members themselves, exhibit an acute awareness that sending messages through the right people is a very effective way of spreading ideas and promoting products.

Such spaces may also be places where customers or clients also hang out, meaning that work can be found both directly by making contacts with new clients, themselves often part of other related creative industries, as well as indirectly, by hearing about upcoming contract or project opportunities or job openings at particular firms or agencies. In industries with more traditional forms of organizations, unions, associations, and guilds would serve the purpose of certifying and ensuring that their members’ skills were up to date or that workers were well qualified and suited to particular tasks on a project. However, within many of the creative industries, the assurances of and opinions about quality, ability, and professionalism are sought from other professionals that have had past experiences with the individual in question (Christopherson, 2002; Grabher, 2002b). Thus, the ability to compete for and land particular contracts or secure work greatly depends on reputation. Reputation is held within and developed through gossip, rumour, and exchange in these same local social and professional networks embedded in particular local scenes and spaces (Grabher, 2001, 2002a, 2004). Potential collaborators, employers, or clients often make assessments by interpreting cues and signals that are indicative of reputation. In other words, individuals’ careers are determined by their portfolio of work in terms of with whom they have worked with or for (Vinodrai, 2006). Beyond acting as a key location for social interaction and networking, place itself has an important role to play. Place acts as a source of innovation and novelty. As noted earlier, the quest for novelty is an essential and necessary ingredient for market success in the creative industries. For example, Molotch (2002) demonstrates how place becomes embedded in particular everyday products, from toasters to toilets,

260   Tara Vinodrai and Sean Keddy thereby providing differentiation in the market. For many creative workers, pinpointing exactly where innovation and creativity comes from can be quite difficult. Often cited is the general spirit or zeitgeist of the locality as the source of inspiration (Drake, 2003). Workers consciously and unconsciously absorb elements of local culture and aggregate this knowledge into workable ideas that result in innovation. Based on interviews with creative workers in the craft metalwork and digital design industries in the United Kingdom, Drake (2003) identifies several key elements specific to a physical location that workers viewed as essential to innovation and design. First, workers were able to exploit their local experiences as sources of ideas and inspirations. Such experiences can be based around specific, tangible places or events that are unique to the location. In other cases, it is the personal, emotional responses evoked by workers’ experiences in a specific city or neighbourhood. Second, creative inspiration is triggered by specific visual cues in the local environment (Drake, 2003). These visual cues can encompass any number of things that are unique to the built environment. For example, architecture lends itself to stimulating inspiration not only because of the inherent uniqueness of the final product, but because the buildings are imbued with local history and culture. Whether they are historic buildings that showcase the city’s past or are pieces of signature architecture that are attempting to convey a specific message, they ultimately add to the social and cultural milieu of the city. In essence, such rich urban environments offer creative workers the ability to stockpile knowledge, traditions, memories, and images that are specific to the local area and culture as a source of inspiration (Scott, 2010, p. 123). For example, in Toronto, designers identify the importance of downtown neighbourhoods, citing the grit and texture of these urban spaces as inspiration for their work (Vinodrai, 2013). Similarly, Bain (2003) and Rantisi (2004) respectively find that artists in Toronto and fashion designers in Montreal likewise draw on their surroundings to influence their work. Lloyd’s (2006) influential work on artists living in Chicago also highlights the critical role that the Wicker Park neighbourhood plays in creative production. As these examples make clear, for workers in the creative industries, it is therefore of the utmost importance to live and work in particular neighbourhoods and spaces. However, it should also be noted that the high housing costs in major cities can also be a concern to freelance and contract workers with relatively low and insecure wages (Ekinsmyth, 2002). However, this is not a static phenomenon. Due to rising rents, gentrification, and land development on the one hand and a constant need for freshness and authenticity on the other, scenes migrate to different neighbourhoods, there is a constant struggle for space and a shifting of scenes within the city (Catungal et al., 2009; Silver et al., 2010; Hauge and Hracs, 2010). For example, in Toronto, the now posh, upper class neighbourhood known as Yorkville was once a hotbed for artistic production in the 1960s (Bain, 2003). Likewise, while Toronto’s Queen West and Parkdale neighbourhoods became well-established in the past ten to fifteen years as hipster havens, more recently artists, musicians, and other cultural producers have migrated to other Toronto neighbourhoods, including Queen East and Leslieville in the east end of the

Projects and Project Ecologies in Creative Industries   261 city (Hauge and Hracs, 2010). Such struggles over space profoundly shape the nature, location, and dynamics of fragile project ecologies and add yet another dimension of risk to project-based creative work.

Are all Local Project Ecologies the Same? As this discussion has highlighted so far, the creative industries have many common characteristics, such as high levels of individual risk, freelancing, and contract work; a heavy reliance on social and professional networks; and an innovation process that requires experimentation and novelty, all of which lead to agglomeration in particular places. And while the above narrative of project-based work provides a clear picture of how geography matters to the function of project ecologies and the development of ‘cool’ creative careers, there remain open questions as to whether this holds across industry boundaries and national borders. As organizational and institutional theorists are quick to note, labour markets function differently within different national and regional contexts due to the particularities of the localized social and institutional relations upon which they rest; careers, identity, and reputation are rooted in social and professional networks based on shared occupations and regional cultures (Christopherson, 2002; Lam, 2002). Furthermore, these same social and institutional relations may shape firms’ capacity to absorb and effectively utilize (creative) knowledge (Cohen and Levinthal, 1990; Hall and Soskice, 2001) or shape the evolutionary path of a particular industry (Jones, 2001). Christopherson (2002) argues that it is important to understand the institutional, regulatory, and geographic contexts and rules in which projects take place and that embed workers in a particular place. These ‘boring institutions’ (Grabher, 2002a) shape the particular dynamics of project work in different industrial and national contexts. Institutions and regulatory regimes differ both across industries and space, yet there remain few international comparative studies of work in the creative industries (cf. Gill, 2002; Hauge and Hracs, 2010), and even fewer that specifically address the role of institutions in shaping creative labour markets and project ecologies in different industrial and national contexts (cf. Christopherson, 2002; Christopherson and van Jaarsveld, 2005; Vinodrai, 2013). Christopherson’s (2002) work is perhaps exemplary for making clear the role of institutions in shaping the dynamics of projects and project ecologies in the creative industries. She notes that in the North American film and television industries, unions and guilds have continued to play a defining role in shaping the industry. For example, these organizations are instrumental in providing recognized credentials, training, and setting rates of pay. Thus, while work in the film industry might well be ‘boundaryless’ (Jones, 1996; DeFillipi and Arthur, 1998) in the sense that individ­ uals move between different film projects and studios with relative ease, such mobility

262   Tara Vinodrai and Sean Keddy within the industry has been the result of often contentious negotiations and collective bargaining between industry and labour unions. By contrast, in emerging creative industries, like new media, there are no such long-standing traditions and institutions. Codified and negotiated rules governing work do not exist nor are there norms and standards leading to a diversity of job titles, minimal agreement about roles and functions, greater individualism and a more entrepreneurial approach to the ‘newer’ digital media industries (Christopherson, 2002; see also Batt et al., 2001; Christopherson and van Jaarsveld, 2005). Creative work, project ecologies, and local labour markets are also shaped and constrained by the broader national institutional context in which it takes place. Vinodrai (2013, p. 172) argues that a national ‘institutional orientation towards either liberal or coordinated market forms heavily imprints upon demand dynamics, influences the character and function of local social and professional networks, and conditions entrepreneurial and risk-taking behaviour’. Her research comparing design work in Toronto and Copenhagen shows that national level institutions play an important role in shaping labour market outcomes and the dynamics of project ecologies (Vinodrai, 2013). First, the industrial structures of the local (and national) economies offer different opportunities for creative work with implications for how risk is mitigated. For example, in Copenhagen, the relative dominance of the architecture industry results in more long-term projects, which—in essence—provides creative workers some immunity against shifts in the business cycle and economic downturns. Second, due to a high level of public sector involvement in Copenhagen compared to Toronto, creative projects often have stable state funding, allowing designers to take risks and experiment. Toronto (and Canada more broadly) has much more limited public funding and has few provisions related to public procurement or rules related to art and design content. In other words, the government acts as a sophisticated and demanding customer for design work in Copenhagen in a way that does not exist in the Toronto case. Third, while social and professional networks are clearly important to the functioning of project ecologies and local labour markets in both Toronto and Copenhagen, these networks are distinctly different in terms of their character. In Toronto, local networks are quite impersonal with a more individual orientation, whereas in the Copenhagen case, local networks have a more intimate and caring character with a broader collective orientation. In Copenhagen, the underlying institutions of the Danish labour market—oriented towards a coordinated market economy with strong social welfare provisions—allow designers to take risks, including starting new firms, experimenting with new products and product designs, and seeking entry into new markets, while at the same time not compromising their own or their family’s broader social welfare (as alluded to in the previous section) and having broader, collective concerns for society. This stands in stark contrast to the ‘all-or-nothing’, individual approach to entrepreneurship taken in Toronto, where the institutions of liberal market economies are more prevalent. Overall, industry-specific and national institutions have a persistent influence on the character and dynamics of project ecologies and local labour markets in the creative industries.

Projects and Project Ecologies in Creative Industries   263

Conclusions In this article, we have argued that geography matters to the formation and dynamics of project ecologies in the creative industries. Project-based work has become increasingly dominant across the creative industries. As a form of organization, it has clear benefits for the production of novelty and fresh, new ideas. However, it also demands particular forms of work, which are inherently flexible and include freelancing, short-term contract and temporary employment. Because of the nature of work, individuals working in the creative industries tend to concentrate in particular scenes and spaces where they can learn about job opportunities and cutting edge practices, as well as build reputation and trust with current and future collaborators from across the creative industries. These same scenes and spaces are themselves important and become embedded in the outputs of these industries. However, the ways these processes unfold are sensitive to geographic and industrial institutional contexts. Far from being simply a mere container for creative activity, cities and nations become the critical infrastructure for the production and reproduction of project ecologies, contributing to the functioning of labour markets, embedding and shaping social and professional networks, mitigating risk, influencing the nature of cultural products, and fostering innovation. Some have gone so far as to suggest that project-based and contractual models of organization observed in the creative industries are harbingers of the next ‘new economy’ and could become the dominant organizational model for the broader knowledge-based economy (Wittel, 2001; Barley and Kunda, 2004; Arthur et al., 2008). For this reason alone, it is necessary to improve our understanding of how these organizational models work, as well as their implications for well-being and prosperity for individuals and broader society. Moreover, it is clear that there is still work to be done to more clearly understand the nuanced differences in the form, structure, and function of project ecologies and project-based work across different creative industries in different places. It is also clear that we still know very little about these dynamics in places beyond North America and Western Europe. In a group of industries where global production networks are increasingly taking hold (see Coe, 2015) connecting a variety of local project ecologies to one another through complex webs of collaboration and interaction, it is critical that future research brings our understanding of these dynamics and differences into sharp relief.

Acknowledgements The authors would like to thank the editors of this volume, particularly Mark Lorenzen of the Copenhagen Business School. Funding and support for the research that informs this article was provided by the Social Science and Humanities Research Council (SSHRC) of Canada, the Design Industry Advisory Council (DIAC), and the Martin Prosperity Institute at the Joseph L. Rotman School of Management, University of Toronto.

264   Tara Vinodrai and Sean Keddy

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Chapter 14

M anaging Proj e c t - Base d Organiz at i on i n Creative In du st ri e s Robert DeFillippi

Project-Based Organizations in Creative Industries Creative industries provide many opportunities for the observation and study of projectbased organizations (Castañer and Campos, 2002, p. 42). Indeed, the production of theatre plays (Eikhof and Haunschild, 2007; Goodman and Goodman, 1976; Uzzi and Spiro, 2005), movies (Cohendet and Laurent, 2007; DeFillippi and Arthur, 1998; Jones, 1996; Sydow and Staber, 2002), videogames (Ayoama and Izushi, 2003; Cadin, Guérin, and DeFillippi, 2006), music (Lorenzen and Frederiksen, 2005), advertising campaigns (Hällgren and DeFillippi, 2014; Grabher, 2002), or software (Grabher, 2004) all provide relevant contexts satisfying the four conditions (four Ts) of temporary systems associated with project-based organization: to manage a specific set of tasks that are time limited, and typically performed by a semi-temporary collection or team of individuals with different expertise who collectively enable the sponsoring or host organization to transition from one state of performance and capability to a new state (Bakker, 2010; Lundin and Söderholm, 1995). Creative industries thus demonstrate the flexibility and ability of project-organized temporary systems to generate new knowledge; however, they also reveal significant tensions due to opposing forces acting upon project organization (Sydow, Lindkvist, and DeFillippi, 2004). For example, where creativity calls for diverse teams and the introduction of newcomers (Perretti and Negro, 2007), managerial practice may favour homogeneous and proven teams. In this sense, insights from the creative sectors of the economy may offer insights into the tensions facing project-based industries more generally and options for reconciling these tensions in practice.

Managing Project-Based Organization in Creative Industries   269 A variety of reviews have sought to classify types of project-based organizations (e.g. Hobday, 2000; Whitley, 2006). One major distinction seems to be between the role of temporary project organization within the firm’s overall task design and operations. ‘Project-led’ firms undertake projects as a growing part of their operations even while their primary ‘productive’ activity might be volume-based or operations-oriented (e.g. Midler, 1995; Hobday, 2000; Keegan and Turner, 2002). Other firms organize most of their internal and external activities in projects. These ‘project-based’ organizations (PBOs) can either be entire firms (as in construction, consultancy, and professional services) or multi-firm consortia or networks (Hobday, 1998). DeFillippi and Arthur (1998) identify project-based enterprises as single-purpose production organizations that contain all production support functions within a temporary project organization setting but where the marketing and distribution of the company’s products are typically managed by more durable independent organizations. Such project-based enterprises are most common in creative industries such as film production and theatre, and also in professional services such as public relations and conference management. For this review, our focus will be on so-called project-based organization (PBO) in its various manifestations in the creative sector. In the review to follow, we examine three parameters of organizing that we see as essential elements in all project-based organizations: roles, relationships, and routines. We do not claim that these three organizing elements fully specify all relevant param­ eters of project-based organization but we do suggest how these three elements influence the project-based organization’s operations and performance in creative industries. We also identify some of the tensions likely to arise from particular configurations of these project-organizing principles.

Roles Several important elements seem to distinguish the various classifications of project-based organization (PBO). One distinction is between those PBOs that expect project participants to utilize standardized, separate and stable roles and skills versus those PBOs that require project participants to utilize changeable roles and skills (Whitley, 2006). Stable and separate roles are most likely to be found in craft-dominated sectors, such as the feature film industry (Christopherson, 2002; Davenport, 2006). In these creative industry contexts, roles are skill based, craft standardized, and remain stable over a succession of projects for various project participants, who can move quickly from project to project and join new project teams with their roles pre-defined by their skill specialization and function (Bechky, 2006). This enables project teams to be quickly assembled and to work effectively together at short notice (Jones, 1996). Detailed coordination of tasks can be delegated to teams of specialists without needing to establish an elaborate control system as long as task uncertainty and complexity remain limited. Learning in these kinds of PBOs tends to occur within established skills and roles rather than between them, and innovations, or ‘freshness’ (Grabher, 2004b),

270  Robert DeFillippi are often developed more through changing team members than through developing new ways of working together and combining expertise in novel groupings. Whitley (2006, p. 82) contrasts this stable work role scenario with PBOs characterized by changeable roles and skills: In other kinds of project-based organizations, such as those in the Munich enterprise software industry (Grabher, 2004b; Ibert, 2004), workers adopt different roles over the course of projects and in different project teams, and the division of labor is not so strongly structured around previously codified skills. The mutability of task organization and project-based firms expertise means that staff are often required to adapt their roles and knowledge to changing circumstances, and so a capacity for developing new competences together becomes as, if not more, important as formally certified skills. Learning and new knowledge development are here more team and organization-specific than individual, with greater emphasis on cumulative improvements in collective capabilities than on individual skill enhancement. Coordination of tasks and skills is more complex in these kinds of PBOs, but their greater organizational flexibility enables them to change work processes more readily.

Based on the preceding Whitley (2006) distinctions, this paper will examine some of the tensions observable in creative sector PBOs that utilize either stable or flexible roles and skill assignments to their participants. A frequent challenge facing PBOs in the creative sector is to integrate creative project workers into organizational contexts that may require periodic subordination of creative impulses to commercial or practical project requirements. Those PBOs that rely largely upon skill-based, specialized roles and skills are especially likely to confront this challenge when a particular creative project may require some artists to compromise their artistic or professional aesthetics or preferences to a collective requirement that is dictated by external factors, such as a more commercial market demand or the conservatizing, risk averse concerns of a project promoter or financier. An alternative scenario is where a group of creative performers have grown accustomed to an unchanging set of performance requirements and thus they constitute a conservative source of resistance to more avant-garde opportunities. For example, Gotsi, Lewis, Andriopoulos, and Ingram (2008) have examined how creative workers in design-based industries negotiate conflicting identities revolving around worker passions for artistic expression versus their commitment to business and project management disciplines needed to meet business demands for profitability. A second dilemma arises from the conflicts between the demands for hierarchical coherence within PBOs and the flexibility requirements provided within those PBOs that expect their project participants to adopt different roles over the course of projects and in different project teams. The Oticon Spaghetti organization (Oticon is a Dutch hearing aid company that was an innovator in hearing aid technology) is one of the most famous of the early PBOs that expected project participants to learn new skills and take on different roles according to the dictates of different projects (Kolind, 1998). Though

Managing Project-Based Organization in Creative Industries   271 hailed as a revolution by management gurus like Tom Peters in the 1990s, the spaghetti organization was termed a ‘failure’ in an influential article of Foss (2003). Grant (2011) was far more critical, writing that ‘the absence of hierarchical control can produce chaos . . . Within six years [under Kolind], lack of coordination, confused incentives and excessive internal politicking cause Oticon to dismantle much of its “spaghetti organization” and reinstitute hierarchical control’ (2011, p. 470). Both Foss and Grant are influenced by a paradigm of internal organizational coherence and internal firm ‘complementarities’ (Milgrom and Roberts, 1994) that views modes of organization as successful when they are stable and as unsuccessful when they are unstable. However, a retrospective update of the Oticon case suggests the relative impermanence of radical flexibility in the assignment of PBO roles and skills (DeFillippi and Lehrer, 2011). Oticon’s radical project-based organization seems to have gradually evolved in the direction of a more hybrid organization rooted in project-based principles that have endured long after Lars Kolind’s departure as CEO and have become institutionalized into the operating routines of Oticon. There is no evidence of spiraling between radically different principles of organization. Rather, Oticon evolved its structure over time into a hybrid PBO form that integrated some elements of hierarchy. This was done not only to fix certain dysfunctions of the radical spaghetti organization, but also to cope with growth and to enable greater exploitation of innovations made possible by its project-based organizing. Oticon evolved its capabilities over time in a flexible manner that retained basic project organizing principles while infusing hierarchical elements to accommodate the expanding scale and scope of its business operations. A broader implication of the Oticon case study for PBOs in the creative sector is the conjecture that radical role flexibility in PBOs may be a temporary phase in a longer course of organizational evolution which changes once market opportunities and organizational requirements for Chandlerian type economies of scale and scope arise. Future research on PBOs in the creative sector may benefit from similar longitudinal studies that examine the evolution of project roles and their coordinative and governing routines as creative organizations grow in scale and diversity of offerings. A conceptual framework for examining the strategic context of PBO evolution is suggested at the conclusion of this review.

Relationships Much of the literature on PBO has emphasized the importance of social relationships for project success (Wikström, Artto, Kujala, and Söderlund, 2010). A recurring theme in much of this literature is the claim that social relationships may indeed be more enduring than the temporary interactions that arise within any given project or even any specific project-based organization (Sydow, Lindkvist, and DeFillippi, 2004). For example, Sedita (2008) asserts that the project-based organization emerges when an event has to be carried out, and the PBO functions as a bridge between permanent

272  Robert DeFillippi organizations and latent networks. These latent networks seem to be the real repository of durable relationships between past, current, and prospective project participants. Sedita employs a network analysis of live music performances in the Veneto, Italy region. This argument is similar to that of Starkey et al. (2000, pp. 299–300), who examined the British television industry and identified as successful for that industry the latent network organizational form, which binds together configurations of ‘key players who know and trust each other’ in ongoing relationships that ‘persist through time’. Also, Ebbers and Wijnberg (2009) observe in the Dutch film making industry that labour contracts connected to the PBO are mostly transactional in nature, while the members of the latent organization are linked by relational contracts. Interviews with Dutch film producers show that the transactional contracts connected to the PBO are less important than the relational contracts connected to the latent organization in governing the actual behaviour of the involved actors. Finally, we have a stream of research on project networks in German television production suggesting that project entrepreneurs form core teams with particular clients and service providers, and establish sequences of related projects thereby forming collaborative paths. These paths allow partners to exploit and stretch existing capabilities and explore new capabilities and partner resources across time and contexts of collaboration. Paths are promoted by connecting practices that partners apply to establish task and team linkages between past, present, and potential future projects (Manning and Sydow, 2011; also Manning, 2008). The development of these more durable latent networks and their mobilization in temporary project-specific relationships are fostered by the co-location of creative resources. For example, the London advertising industry is geographically centred in one square mile, roughly bounded by the London district of Soho. In response to the industry’s short lead times for developing new advertising in response to intense brand competition, the London-based advertising industry has evolved an agile ecology for organizing projects in which teams of advertising firm ‘creatives’ can work in partnership with other resource suppliers from the media, public relations, or design firm sectors to co-create advertising campaigns and associated support media materials. These rapidly formed temporary project alliances are fostered by the geographic co-location of project resources and the history of previous project engagements by members of these diverse but complementary organizations (Grabher, 2002). Closely related to project-based working relationships are the reputations associated with past or current relationships. In a study of Italian film making, Delmestri, Montanari, and Usai (2005) found that commercial success was favoured by a director’s strong vertical ties (with producers and distributors) and economic reputation, while artistic merit was positively affected by a director’s weak horizontal ties (with other creative partners) and artistic reputation. These empirical findings from a large-scale study support earlier case-based research by Alvarez and Svejenova (2002), which argued that for real path-breaking innovation to occur, artists had to create ‘their own collaborative networks’ in order to not be constrained by extant cinematographic relationships,

Managing Project-Based Organization in Creative Industries   273 which would be focused on the replication of formulas or genres that proved successful in the past. These findings suggest that too closed or redundant a network of relationships across projects tends to constrain artistic originality. Hence there is a need for project organizations to draw upon new relationships in order to provide new creative combinations of experience and perspective. One of the consequences of the digital revolution has been the increasing dependence of media news and entertainment organizations upon audience-generated content (whether digital images or audios). The role of the customer as a co-producer of content can be seen in many creative industries (e.g. interactive advertising, interactive television, videogames etc.). How project teams incorporate their user communities into their development processes is a project management challenge facing creative sector organizations (DeFillippi, 2009). Managing relationships with external content providers will become an increasingly important set of project capabilities. These co-production and user community relationships are likely to create new tensions with previous content creation practices and thus introduce new dilemmas as creative industry professionals attempt to reconcile their roles as content creators with their new roles as user community service providers and content co-producers. The boundaries between content creator and content user become increasingly blurred due to digital content convergence (Jenkins, 2004, 2006). The theoretic implications of these observations suggest that durable relationship networks may be the glue that allows more transient project-based organizational relationships to function effectively and efficiently with relatively limited hierarchical control. However, the ties that bind may also be the ties that blind these networks to new artistic and creative possibilities. Hence, creative project organizations must be mindful of the need to infuse old relationships with new ones in order to foster new creative combinations of skill and experience.

Routines This review will examine two distinctive types of routines in PBOs: creative exploration versus commercial exploitation. March (1991) summarized the classic dilemma of exploration-exploitation as follows: Adaptive systems that engage in exploration to the exclusion of exploitation are likely to find that they suffer the costs of experimentation without gaining many of its benefits. They exhibit too many undeveloped new ideas and too little distinctive competence. Conversely, systems that engage in exploitation to the exclusion of exploration are likely to find themselves trapped in suboptimal stable equilibria. (March, 1991, p. 71)

Turner (2003) has described two different modes of media industry business production (linear and liquid production) that suggest an analogue to exploration-exploitation

274  Robert DeFillippi for creative industries more generally. Linear production refers to the predictable iteration of a media franchise in subsequent project created product offerings. The projects are directed to appeal to a mass market with cultural commodity offerings that offer a substantial revenue stream to its investors. Opposing this linear production logic is the relentless demand within media-based industries for new and original products (Lorenzen and Frederiksen, 2005). Therefore liquid production also occurs, with its emphasis on the ‘production of ground breaking, unconventional new media formulas, hybrid genres, and unexpected or otherwise experimental storytelling formats’ (Deuze, 2007, p. 51). Linear production is an exploitation-based project-learning orientation and liquid production is an exploration-based project-learning orientation. Presumably both modes of learning are required but how is the tension between these two learning orientations played out within creative industry contexts? Tschang (2007) has comprehensively examined this dilemma in the US videogame industry by noting the creative tension existing between two distinct sets of participants in the industry. Cutting edge game designers and hard core game players and media industry game reviewers seek ever greater innovation and creativity in game development. By contrast, game publishers, large game studios, and large retail distributors favour game development projects based on existing intellectual properties with proven track records for licensing and franchising into multiple media outlets. These game industry franchises are periodically updated with either sequel games or incremental improvements that incorporate technological advances in game play without modifying the enduring content formula and franchised character elements. The overall attractiveness of these exploitation-oriented game projects is that they reduce the financial and market risk to their project sponsors and financiers. Tschang (2007) argues that such risk aversion and subsequent bias toward imitative, exploitation game projects has increased as the costs of game development have rapidly escalated and as the marketplace tends to support a few huge winning games while many other games are likely to achieve modest financial returns on their investment. A similar set of industry forces exist in film making, where imitative remakes of classic film titles and endless movie sequels constitute the bulk of Hollywood film fare available to mass market audiences at multiplex theatre complexes while daringly creative and original film projects are the focus of independent film producers and their more limited art-house and independent film festival outlets (Epstein, 2005). Television offers a similar picture of exploitative projects based on popular genres such as crime shows (e.g. Law and Order), soap operas (the BBC’s East Enders and ITV’s Coronation Street in the UK), and even cartoon franchises such as The Simpsons prevailing over original content (Deuze, 2007). In the popular recorded music industry, musical trends can quickly emerge and consumer tastes rapidly change. As a result, leading recording companies have developed exploration-oriented project organizations focused on the identification and acquisition of talent worldwide. However, the use of arts and repertoire (A&R) project teams to explore new musical possibilities must be reconciled with the desire by the music industry’s major recording companies to assure that musical franchises can

Managing Project-Based Organization in Creative Industries   275 be developed and exploited fully for their market reach and commercial potential. There is a distinction within the music industry between project capabilities that support and enable the generation of new music, and those that exploit the music products commercially (Caves, 2000, p. 4). Gander, Haberberg, and Rieple (2007) identify two distinctive sets of recording industry organizations: the four dominant music recording companies (the Majors) and the many independent music producers (the Independents). Gander, Haberberg, and Rieple (2007) further observe in their research that the Independents’ resources are typically focused on the creative effort that identifies and develops the music and artist(s), whereas the Majors focus their financial, promotional, and distributional resources to exploit the music product. The music industry’s Majors do invest in project capabilities to explore new music possibilities through their own in-house A&R project organizations, but the overall risk of exploring musically creative possibilities is shared with the more numerous independent music producing firms. This division of labour between exploitation focused music industry global producers and distributors and exploration focused independent music content producers appears to bear similarities to the exploration-exploitation partition of industry project resources found in other creative sectors, including film making (Scott, 2002), videogames (Tschang, 2007), and television (Deuze, 2007; Scott, 2004). In summary, it may be argued that creative industries tend to engage in much imitative and exploitation type creative project work due to the high market and technical uncertainty surrounding content creation and the escalating costs of producing such content. A comprehensive literature review of the imitation literature suggests that imitation is a preferred mode of response to high market and technological uncertainty in order to both reduce risks and achieve commercially successful outcomes at low relative cost (Ordanini et al., 2008). Brady and Davies (2004) suggest that one resolution of this exploration-exploitation dilemma is to view project-based learning as a sequential activity in which firms create distinctive project-based organizations whose routines are oriented toward exploratory learning and then subsequently replace these exploratory project-based organizations with more durable project organizations or even non-project organ­ izational forms whose routines can exploit the learning gained previously. Their paper introduces a model of project capability-building consisting of two interacting levels of learning. First, it describes the bottom-up, ‘project-led’ phases of learning that occur when a firm moves into a new technology/market base: an exploratory ‘vanguard project’ phase; a ‘project-to-project’ phase to capture lessons learned; and a ‘project-toorganization’ phase when an organization increases its capabilities to deliver many projects. Second, it addresses the ‘business-led’ learning (within which the project-led learning is embedded) that occurs when ‘top-down’ strategic decisions are taken to create and exploit the company-wide resources and capabilities required to perform increasingly predictable and routine project activities. These exploitation routines allow the sponsoring project organization to capture economies of repetition (Davies and Brady, 2000).

276  Robert DeFillippi

Dynamic Contexts for Project-Based Organizations The current review will conclude with an examination of how contexts shape the evolution of project-based organizational forms within the creative sector. Several dynamic drivers of the creative sector are proposed as impacting how roles, relationships, and routines may be configured in future project-based organizations. These include the evolution of a creative sector’s market context, the industry’s dominant institutional context, and the strategic context of project-based management systems.

Market context Caves (2002) characterizes most creative industries as markets for hits, where approximately 20% (or less) of new offerings are commercially successful (hits) and 80% (or more) of creative projects fail to recover their costs. Under this scenario, the market most resembles a winner-take-all competition in which only a few creative projects prevail as major winners and these few winners subsidize the costs of the majority of the failing creative projects (Frank and Cook, 1995). Under the market for hits scenario, the exploration-exploitation paradox is likely to be resolved in favour of continued emphasis upon low risk exploitation projects that leverage existing brands, franchises, and IP. Anderson (2006) argues that the proliferation of inexpensive digital technologies for storing, accessing, and disseminating creative content products significantly lowers the aggregate costs of capturing sales from many small markets (micro niches). These micro niches are profit opportunities to be exploited through digital access and distribution of creative content. The long tail scenario suggests that all creative projects (whether exploratory or exploitative) can generate some market returns due to the ability to capture sales from very small and specialized appreciative audiences for the esoteric, the avant-garde, or the otherwise non-mainstream creative product. This market scenario supports more balanced creative sector markets for both creatively daring exploratory projects and less risky franchise exploiting projects. In his study of the music industry, Wikström (2009) suggests that illegal and pirated digital distribution of music over the Internet is eroding revenues from the sale of musical recordings—but that there are other parts of the music industry which are growing (e.g. live performances), and many potential ways to make money from music. Falling revenues from music sales mean that licensing and live music are increasingly treated as sources of revenue—evidenced by the growth of these sectors as music sales have declined. Indeed a recurring theme of Wikström’s analysis is that the present crisis in ‘the music industry’ is actually largely confined to the sub-industry occupied by the Major record labels whereas social media and digital savvy artists are developing more

Managing Project-Based Organization in Creative Industries   277 direct means to connect with their fan base and to establish digital brands outside the Major record label economy of the music industry. In summary, two starkly different scenarios are suggested with radically different implications for the project-based organization of creative work. If the ‘market for hits’ ethos prevails, our review suggests that project-based organizations in the creative sector will tend to emphasize more stable roles and skills amongst project participants, the reliance upon long established relationships among participants in previously commercially successful creative projects, and the utilization of creative content genres and formats that exploit existing brands, franchises, and IP. If today’s digital technology revolution indeed makes possible a long tail for creative products, then this digital market will support more flexible deployment of the skills and experience of its project participants in more experimental creative ventures that make possible the participation of new creative talent and new creative relationships between these new artists with each other and with their digitally connected followers.

Industry institutional context The institutional context of any creative industry may be understood in part in terms of the prevailing understanding of various institutional players or stakeholders (content producers, publishers, retail distributors, investors) regarding appropriate industry practice (Sydow, 2006). The institutional context constrains the resolution of project organizing tensions between creative autonomy and corporate control. Within the film and videogame industries, the high risk and uncertainty associated with escalating costs of content development have fostered a bias toward the selection of projects based on established brands and franchises of previously successful content offerings. Within television, there is a trend toward more rapid cancellation of programmes that fail to meet the expectations of their investors and sponsors (DeFillippi, 2009). Tschang (2007) has documented the increasing control by large publishers and their in-house studios over the creative autonomy of videogame developers. This control is particularly pronounced in the major console game formats (e.g. Sony’s Playstation, Microsoft’s Xbox) where the console manufacturers dictate the technical constraints under which game development occurs, and the large publishers (e.g. Electronic Arts) dictate increasingly stringent deadline, quality, and cost requirements for each project, and closely supervise each stage of game development (Sapsed et al., 2007). Additionally, these publishers enact content management or product development protocols that standardize various elements of a media project’s content development and quality assurance processes (Deuze, 2007). As a result the creative space available to game developers is constrained by external corporate control over game development project management processes. The overall evidence of the institutional contexts of creative sector businesses suggests increasing institutionalized pressures for corporate control over creative autonomy in creative industry projects. Such trends if they prevail will reinforce the previously

278  Robert DeFillippi forecasted configuration of stable roles and skills amongst project participants who have long-standing previous relationships rooted in commercially successful creative projects and who are now exploiting past brands, franchises, and IP in their current and future project work. To further understand the impact of the institutional context on creative sector PBOs, it is necessary to examine the strategic context in which PBOs are increasingly subject to coordination and control.

The strategic context Emerging perspectives in project management have begun to adopt a strategic orientation (Morris, Pinto, and Söderlund, 2011). Narayanan and DeFillippi (2012) suggest that a useful vantage point for a strategic orientation are the decisions made by senior management that set the context for the conduct of project management, including the organization of project management systems or PMS. A firm’s strategic context sets the contingencies under which the project management system is either designed or evolves. These contingencies include size, variety, and number of projects, together with the central premises under which projects will be executed, such as the stringency of timelines, the expected interface with external and internal agents, and the degree of innovation expected. These project management systems are the organizational infrastructure in which an organization’s projects are developed, funded, monitored, and controlled and elements of PMS include features relevant to this review’s focus on roles, relationships, and routines. Narayanan and DeFillippi (2012) suggest that project management systems co-evolve with an organization’s own evolving project portfolio complexity and sophistication in project management competencies. Most organizations initially adopt an ad hoc project management system in which formally approved projects are organized as temporary project teams that can be created and disbanded at the discretion of their sponsors. Project teams are staffed with flexible project roles defined by the project leader. The most important project management system relationships are those between the project leader and the project sponsor. Project management routines tend to be ad hoc and learning is tacit and non codified for future reuse. These ad hoc project management system arrangements are similar to earlier accounts of PBO within many creative sector organizations, including film making production companies (DeFillippi and Arthur, 1998) and theatre production companies (Eikhof and Haunschild, 2007), whose project outcomes tend to be customized and of a one time character. The ad hoc project management system also is relevant to the strategic context of the exploratory ‘vanguard project’ phase of project learning and project organization described by Brady and Davis (2004) to foster knowledge exploration and discovery. However, for creative sector organizations that have developed a portfolio of creative projects which may include recurring types of projects, the ad hoc project management system is likely to evolve into a more allocative or portfolio-based project management

Managing Project-Based Organization in Creative Industries   279 system. Within these strategic contexts, the most important project relationships are more formalized to distinguish between project budget reviewers and performance evaluators on the one hand and project proposers and implementers on the other. Project management routines are more systematic and formalized and learning from past projects is more likely to be codified to foster economies of repetition (Davies and Brady, 2000). These allocative and portfolio-based project systems are typically found in large-scale videogame companies (Tschang, 2007), major music production and distribution companies (Gander, Haberberg, and Rieple, 2007), and media conglomerates (Deuze, 2007). The allocative or portfolio-based project management system is also relevant to the strategic context of the ‘project-to-organization’ phase described by Brady and Davis (2004) when an organization increases its capabilities to deliver many projects. In summary, the evolution of project management systems to match the increasing complexity and diversity of creative project offerings and the increasing risks associated with managing a creative project portfolio is a co-evolutionary process that links evolving forms of PBO to evolving strategic requirements of creative sector organizations. Future PBO research in the creative sector should examine the links between evolving forms of creative project management systems and evolving strategic contexts (project variety, complexity, and risk) in which creative projects are proposed, funded, and controlled.

Conclusion The preceding review suggests that managing project-based organizations in creative industries can be usefully examined by attention to the roles and identities of project participants, the relationships amongst project participants, and the routines for enacting project organizational work and its coordination. The review revealed that certain recurrent tensions arise within PBOs as organizational choices are enacted concerning alternative designs for project-based roles, relationships, and organizational routines. The reviewed concluded with an identification of three contexts (market, institutional, and strategic) that impact both the recurring tensions facing PBOs and the PBO design choices responsive to these contexts and tensions. Much of the research upon which this review is based is derived from case studies of specific PBOs in specific creative industry contexts. The underlining theoretic argument of this review is that PBO design choices evolve over time in response to the tensions that arise from competing internal and external stakeholders that populate a creative industry. Hence this review is sympathetic to a co-evolutionary perspective that requires a longitudinal research design identifying the changes in PBO roles, relationships, and routines as well as the simultaneous attention to changes in the market, institutional, and strategic contexts of these project-based organizations and their organizational sponsors. Although this review focuses upon creative industry contexts, the design choices

280  Robert DeFillippi and dilemmas described are unlikely to be limited to creative industries. Hence, a fruitful area for future PBO research includes comparisons of a wider range of creative and non-creative industry contexts.

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Chapter 15

Organizin g Ev e nts for C onfi g u ri ng and M ainta i ni ng Creative Fi e l d s Elke Schü ß ler and Jörg Sydow

Introduction Based upon a review of the literature on conferences, trade fairs, festivals, award cere­ monies and similar events and our own research in the German music, fashion, and design industries, this chapter discusses the role of different kinds of organized field-level events in the context of the creative industries. We use the term ‘organized field-level events’ to denote that the phenomena we study are intentionally set-up temporally and spatially bounded social arenas at which diverse individuals from different organizations come together and interact with potential impacts on wider organizational fields. Organized field-level events thus differ from environmental jolts (Meyer, 1982), critical events (e.g. Hoffman, 1999; Hoffman and Ocasio, 2001; Nigam and Ocasio, 2010), or rare events (Lampel et al., 2009) that impact on organizations and organizational fields as unexpected external shocks in that they are the outcome of reflexive structuration, exhibit formal boundaries, and often take place periodically as a part of regular field cycles (Müller-Seitz and Schüßler, 2013). They also differ from organization-level events such as acquisitions (e.g. Isabella, 1990), strategy meetings (e.g. Hoon, 2007), or critical group processes (e.g. Gersick, 1988) in that they are located at the level of organizational fields, assembling actors from diverse backgrounds in one location (Lampel and Meyer, 2008).1 Hereby, we develop three perspectives. First, organized field-level events are a creative product, developed to provide unique experiences to participants. Their set-up demands improvisation and innovation and is often the result of project-based organizing.

Organizing Events for Configuring and Maintaining Creative Fields   285 Second, such events are important stages for presenting creative output, which allow processes of networking, sensemaking, status attribution, and value transformation. In this sense, they are mechanisms of configuring and maintaining creative fields. Third, and integrating the former two aspects, organizing field-level events can be considered as a medium and outcome of institutional work, that is, as the reflexive efforts of embedded agents ‘with an eye towards influencing field evolution’ (Lampel and Meyer, 2008, p. 1026), encompassed by unplanned and unanticipated dynamics. Traditionally a subject of anthropologists (e.g. Appadurai, 1986; Moeran, 1993) or tourism research (e.g. Getz and Andersson, 2009; Hitters, 2007), venues like festivals or award ceremonies are becoming of increasing interest to management and economic geography scholars as ‘temporary social organizations’ that encapsulate and shape the development of organizational fields (Lampel and Meyer, 2008, p. 1026). For this purpose, Meyer, Gaba, and Colwell (2005, p. 467) have coined the term ‘field-configuring events’ (FCEs) to denote such events as ‘places where business cards are exchanged, networks are constructed, reputations are advanced, deals are struck, and standards are set’. In a similar line of reasoning, economic geographers conceptualize professional gatherings as ‘temporary clusters’ (Maskell, Bathelt, and Malmberg, 2006) that enable processes of intense knowledge exchange, network building, and idea generation similar to those found in permanent regional clusters. While the concepts of FCEs and temporary clusters are applied in different empir­ ical settings, a large part of the research on organized field-level events comes from a creative industries context. Paleo and Wijnberg (2006), for instance, examine festivals and live concerts as platforms for presenting and promoting musicians and for sending signals about artists, products, and genres. Anand and Watson (2004) and Anand and Jones (2008) study award ceremonies like the Grammy Awards or the Booker Prize for Fiction as ‘tournament rituals’ that endow prestige on selected field actors, create symbolic capital, and establish cognitive categories that underpin organizational fields. This research has culminated in a recent volume on the role of fairs, festivals, and competitive events as places for the negotiation of values in the creative industries (Moeran and Strandgaard Pedersen, 2011). Fairs and festivals have traditionally evolved as institutions with which to attach value to and exchange resources (Lampel, 2011). While in most industries this valuation function has been replaced by markets, such a substitution has not taken place in the creative industries because of the uncertainty involved in valuating creative products prior to consumption (e.g. Caves, 2000). There is thus an inherent link between organized field-level events and the creative industries that this chapter sets out to explore in more detail. We hereby contend, with only loose reference to Goffman (1959), that events are an important pillar both front stage—as a creative product—and backstage—as a mechanism for the configuration and maintenance of creative fields. Organizational fields can form around markets (e.g. DiMaggio and Powell, 1983), industries (e.g. Anand and Peterson, 2000), professions (e.g. Greenwood et al., 2002), issues (Hoffman, 1999), or cities (Glynn, 2008). The notion of an organizational field extends the notion of an industry in that it refers more openly to ‘a community of

286  Elke Schüßler and Jörg Sydow organizations that partakes of a common meaning system and whose participants interact more frequently and fatefully with one another than with actors outside of the field’ (Scott, 1994, pp. 207–208). In a more recent perspective, fields are seen as a system of actors, actions, and relations, irrespective of whether they are composed of organizations or individuals (McAdam and Scott, 2005). This latter perspective is more applicable to the context of creative and cultural production that typically contains both a traditional industry structure and a relational structure of (temporary) networks among individual agents, many of them only temporary ‘involvees’ (Hedberg et al., 1998). Each creative industry can thus be considered as an organizational field, but creative fields can also form across different creative industries or around a creative issue or even a temporary event, such as the community forming around the Burning Man festival aiming to stimulate individual and social creativity (Chen, 2009). On the visible front stage, the number of events in creative fields has increased in the past two decades. Rüling and Strandgaard Pedersen (2010) quote estimates that the number of film festivals worldwide has risen from about 700 in 2003 to about 3500 presently, due to both internationalization and specialization processes. Tang (2011) refers to a process of ‘biennalization’ in the field of art that is symptomatic of the creative industries’ policy agenda geared towards economic revenues. In a similar vein, ‘festivalization’ has become a popular urban branding strategy (Lena, 2011; Richards, 2007), resulting from the discussion initiated by Florida (2002) about an urban creative class and the pressure on cities to attract creative talent. Gemser, Leenders, and Wijnberg (2008) quote sources to claim a 27% rise in the number of awards handed out in the US entertainment industry between 1999 and 2000 alone. In the music industry, revenues are increasingly gained from live performances rather than from record sales, so a new reliance on events may also result from digitalization and the associated need to develop new business models (Mangematin et al., 2014). Increasingly, new event formats such as ‘unconferences’, ‘barcamps’, or ‘innovation camps’ are invented to stimulate creative exchange in the creative industries and beyond (e.g. Ingebretsen, 2008; Wolf et al., 2011). Some start-up firms, such as the Berlin-based firm ‘until we see new land UG’, build their entire business model around the development of new formats for workshops and conferences to design spaces for creative interaction and open innovation. Events are thus a central product category with high symbolic content (see Figure 1.1 in Chapter 1 of this Handbook), typical of the creative and cultural industries known to create experiences rather than utilitarian products (Hirsch, 1972). Backstage, less visible for outsiders, events are important mechanisms for structuring activities, networks, meanings, and resource flows in creative fields. Film and music festivals, for instance, are not only a source of entertainment for audiences or a source of revenue for event organizers. They also perform economic functions for the film and music industries in that they bridge providers of aural or visual goods to final consumers and connect these actor groups to selecting agents from the media (Paleo and Wijenberg, 2006). They are entry points for new or peripheral field actors (Rüling and Strandgaard Pedersen, 2010). Trade fairs, albeit important in other industries as well, constitute particular selection environments with a high symbolic importance in the

Organizing Events for Configuring and Maintaining Creative Fields   287 creative industries. Presence at one of the four major art fairs worldwide, for instance, gives prestige to the galleries and artists that are selected (Thompson, 2011). Events are thus not only creative products, but also act as gatekeepers or brokers of creative production (e.g. Hirsch, 2000; Long Lingo and O’Mahoney, 2010). We will now discuss these aspects in more detail, paying close attention to the role of event organizers as the orchestrators behind the ‘collective performances’ (Garud, 2008; Rao, 2001) provided by organized field-level events. We conclude with an outlook on methodological challenges and open questions on events and event organizing in creative fields.

Organized Field-Level Events as Creative Products Fairs, festivals, award ceremonies and similar events are often the result of creative organizing efforts aimed at producing unique experiences and symbolic values. Organized field-level events are similar to other forms of temporary organizations, most notably projects (e.g. Løwendahl, 1995; Lundin and Söderholm, 1995; Lundin et al., 2015), in that they are typically set up by highly interdependent, fluid teams or project networks for a limited period of time in uncertain environments to achieve largely unpredictable and possibly creative outcomes (Jones, 1996; Jones and Liechtenstein, 2008). Chen (2009, 2011) provides an intimate example of the particular challenges faced by the organizers of the week-long Burning Man event that annually brings together nearly fifty thousand people in Nevada’s Black Rock Desert to celebrate and participate in countercultural arts. The organizers struggle to balance the tensions between participation and bureaucracy in order to be able to sustain creative activity while maintaining the overall project organization. Event organizers in creative fields thus face the typical conflicting demands between artistic and economic logics as well as the high output and demand uncertainty found in most creative production (DeFillippi et al., 2007; Manning and Sydow, 2011; Miller and Shamsie, 1999). The organization of such events hereby requires specific inputs. First of all, different events compete for corporate or public funding, audiences, and media attention (Schüßler et al., 2014a; Rüling and Strandgaard Pedersen, 2010). Since funding is often not guaranteed, or acquired very late in the process, an organizing team can only be put together on the basis of informal contacts and informal contracts, typically with a volunteer labour force. Events also draw on specific place-related resources such as buildings like exhibition halls, fairgrounds, or concert halls, specific off-road or rural spaces such as the fields of Glastonbury or Wacken, or the popularity of cities. Municipalities, especially big cities, play a particularly important role in that they not only subsidize many events, but also provide important infrastructural resources, such as hotels or airports, needed for the organization of big events (e.g. Pipan and Porsander, 2000).

288  Elke Schüßler and Jörg Sydow As an output, organized field-level events, if successful, not only provide unique experiences to their participants, but also lend symbolic and economic value to their host location. This renders event organizers sometimes quite powerful actors. The moves of the Bread & Butter fashion fair between Berlin and Barcelona, for instance, were closely monitored, not only by the respective local politicians and fashion scenes, but also by actors far beyond the fashion industry, such as club owners and hoteliers. Accordingly, Berlin was only able to manifest its status as a city for fashion and design when the fair permanently relocated to Berlin in 2009, at a time when the former Tempelhof Airport became available as a large and visible exhibition ground. Similar to most projects (e.g. Grabher, 2002; Manning and Sydow, 2011; Schüßler et al., 2012; Sydow and Staber, 2002; Windeler and Sydow, 2001), events as temporary organizations are usually embedded in more permanent structures from which they draw inputs, and for which they provide outputs. In addition to their regional anchor, events are embedded in a wider event cycle (Power and Jansson, 2008) or event ecology (Evans, 2007). Art fairs, for instance, form a network of fairs, with several hundred fairs running all year round (Thompson, 2011). In the field of fine art, this means that at least the European Fine Art Foundation (TEFAF) in Maastricht in March, Art Basel in June, Frieze in London in October, and Art Basel Miami Beach in December are fixed points in every gallery’s and art dealer’s diary. In such event landscapes, event organizers often compete, but also collaborate with other events. Initiated by the c/o pop festival in Cologne in 2006, for instance, music festivals from all over the world have formed an international festival network, Europareise, to exchange information, speak about common challenges, and organize joint activities. This network now comprises over 70 festivals, and collaborates with institutions such as the German Goethe Institute and several music export offices. Within Germany, events from the three major national music cities, Berlin, Cologne, and Hamburg, have recently formed a network to coordinate their activities (Schüßler et al., 2013), albeit competing fiercely for national and international audiences and funding opportunities. Event organizers thus not only act as project, but also as network, managers in their respective fields and quite often take on further representative functions for the local creative clusters in which they are embedded.

Organized Events as Mechanisms of Configuring and Maintaining Creative Fields The recent stream of research on FCEs conceives of events as particular moments in the lives of organizational fields during which multiple actors meet in bounded time and space to shape the emergence and developmental trajectories of technologies, markets, industries, and professions (Lampel and Meyer, 2008, p. 1025). Most empirical work on

Organizing Events for Configuring and Maintaining Creative Fields   289 FCEs has so far focused on notable events that have led to major changes in a field, such as a conference of Jewish lawyers in 1944 that established an independent legal profession in Israel (Oliver and Montgomery, 2008), or a series of three technology conferences that set standards for cochlear implants (Garud, 2008). Events in creative fields, in contrast, typically take place periodically and do not necessarily create radical novelty, but rather play a role in structuring horizontal networks and activities over time (Anand and Watson, 2004). We thus propose to consider events in creative fields not only as potentially field-configuring, but also as field-maintaining, that is, as enabling and directing the activities of diverse field actors over space and time, far beyond the actual happening. Anand and Jones (2008), drawing on the field theories by DiMaggio and Powell (1983) and Bourdieu (1993), derive four criteria that need to be fulfilled for events to be field-configuring: (1) enabling increased interaction and communication among field constituents, (2) providing field members with a sense of being interested in a set of common issues, (3) facilitating structures of dominance in social hierarchies, and (4) allowing for the transformation of capital within a field. Integrating these with a field maintenance perspective, we derive four processes, relational structuring, cognitive structuring, facilitating structures of dominance, and resource structuring, through which events configure and maintain creative fields over time in an ongoing process of structuration (Giddens, 1984). Relational structuring:  Most studies of FCEs highlight their role as platforms for interaction and for the formation of ties between participants. Not least in the typically decentralized creative industries, they bring together the key actors and institutions of a field in an orchestrated performance (Entwistle and Rocamora, 2011). Because they are spatially and temporally bounded, FCEs enable unusual encounters and constellations of actors that are not normally available within a field. Skov (2006) describes festivals as a form of anti-structure that deliberately deviates from the normal in order to enable innovative activity. The temporal and spatial boundedness of events allows for information exchange, learning, and access to knowledge (Maskell et al., 2006), but also fosters the emergence of trustful relations by allowing for face-to-face interactions among often globally dispersed actors (Bathelt and Schuldt, 2008). Events thus have the potential to shape and tighten horizontal linkages within a field. Cognitive structuring: At FCEs, interests and issues are identified and reinstated so that a sense of common purpose can emerge. Events are also arenas for open contestation, because participants can strategically propagate their accounts while challenging those of competing actors within the same venue (McInerney, 2008). Over a series of events, narratives and meanings may be produced that result in the creation of new institutions (Hardy and Maguire, 2010). Events also have a classificatory function (Paleo and Wijnberg, 2006):  by making a certain selection of bands, for instance, popular music festivals transmit to the audience that these performers stand apart as a group, which may result in the creation of new musical genres. In the field of literature, the Booker Prize for Fiction ceremony has shaped the emergence of the category of postcolonial Commonwealth fiction now associated with a certain set of authors, readers, critics, publishers, and booksellers that would otherwise not have formed a recognizable

290  Elke Schüßler and Jörg Sydow group (Anand and Jones, 2008). In turn, new musical genres may bring about new events, which illustrates how deeply interwoven events are with organizational fields. Facilitating structures of dominance: As argued above, most creative industries share the difficulty of evaluating the quality of cultural goods. Tournaments of value such as award ceremonies that provide a selection system to guide evaluation and consumption thus play a critical role. Events can hereby involve a combination of market, peer, and expert selection mechanisms (Wijnberg, 2011). Even without formally established tournament rituals, however, organized field-level events establish a shared space in which field participants can evaluate themselves and others (Bathelt and Schuldt, 2008). The physical layout and set-up of events typically not only reveal field-level power structures, but also help to reproduce them. At book fairs, for instance, famous publishers are given a larger and more central space at the venue, thereby demonstrating and reinforcing this dominant position (Moeran, 2011; Skov, 2006). Events thus contribute to establishing patterns of domination within organizational fields, particularly in status markets such as the creative industries (Aspers, 2008). Resource structuring: Directly related to this, events such as film and music festivals, auctions, or trade fairs have a strong impact on the flow of resources in their respective fields. Winners of the Grammy Awards (Anand and Watson, 2004), for instance, are likely to achieve higher sales due to the exposure granted by the award ceremony, and are likely to receive further benefits and privileges, or even generate continuous income—a rarity in most creative industries. Field actors can also generate social and reputational resources (Lampel and Meyer, 2008). In international television markets or trade shows, scarcity is created by the deliberate, artificial construction of boundaries through several layers of areas with restricted access. Access translates into prestige, which then allows distributors of television programmes to create a universal demand for their products (Havens, 2011). Such areas of exclusivity grant a reputation to certain actors, which can be used by buyers as a decision-making criterion to deal with the uncertainty inherent in the trade of creative and cultural goods. The extent to which events enable these four processes of field configuration and maintenance varies, and is strongly mediated by an event’s position in a field. First, there are different kinds of events with different targets (Paleo and Wijnberg, 2006). Non-competitive festivals, for instance, may bring less visibility to individual artists than competitive events, whereas for-profit events typically reach a larger and wider audience than non-profit endeavours. Some events may target predictable or mass markets, whereas others may target the co-production, promotion, or selection of novel products (Foster et al., 2011). These factors are important in determining the kinds of networks or categories that are shaped by events. Second, events that are themselves established as an authority in their field are likely to have a stronger impact on field development. Mezias, Pedersen, Kim, Svejenova, and Mazza (2011), for instance, find that the Festival International du Film in Cannes has a stronger effect on a film’s performance than the Berlinale or the Venice Film Festival. While all three festivals are premier events in the international market for films, Cannes clearly enjoys the highest prestige and influence. To achieve this status, event organizers have to work actively to

Organizing Events for Configuring and Maintaining Creative Fields   291 first institutionalize and position their event in a competitive event landscape and then to maintain the status once it is achieved (Rüling, 2011). Third, field members’ interpretations and sense-making activities are important to create and sustain an event’s influence in a field. As illustrated by Anand (2011), American wine makers have co-opted the 1976 Judgement of Paris event retrospectively to (re-)shape the collective memory of the field according to their interests. Ephemeral tournaments of value may thus either be forgotten over time, or (strategically) be kept in the collective memory of the field. Finally, many of the processes described above, such as the concentrated bonding of field members or the provision of status, are especially effective or even meaningful only when they are reenacted periodically. At the same time, periodic reenactment can inhibit the potential of events to act as catalysts of change in organizational fields (Schüßler et al., 2014b). There is thus a further important distinction between singular and periodically re-occurring events.

Organizing Field-Level Events as a Medium and Outcome of Institutional Work Based on the previous discussion, we derive several reasons for promoting an institutional work perspective on events, particularly in creative fields. Such a perspective not only attends to the role of event organizers as important actors in a field, it also acknow­ledges the fact that their agency is limited, in the sense that events are sites of ‘predictable unpredictability’ (Lampel, 2011, p. 342), that is, intended to create emergent and unplanned outcomes. Finally, it considers that events are themselves institutions in creative industry fields and need to be institutionalized and maintained through practices of institutional work (Rüling, 2011). In the face of unacknowledged conditions and the unintended consequences of action and possible counteraction by opponents (Giddens, 1984), their positive impact upon the field—and on the event organizers—is anything but guaranteed. The concept of institutional work has recently been introduced within the framework of neo-institutional theory to denote ‘the purposive action of individuals and organizations aimed at creating, maintaining and disrupting institutions’ (Lawrence and Suddaby, 2006, p. 215). Building heavily on structuration theory’s notion of a duality of structure (Giddens, 1984), institutional work emphasizes the distributed efforts of reflexive agents that are deeply embedded in the social structures they produce, reproduce, and transform. In the context of events, this means that event organizers both draw on and impact upon structures—rules and resources in structuration theory terminology—in a field. Although they are knowledgeable agents (Giddens, 1984), event organizers may do so in a routinized way, not always being aware of the effects of their actions on the organizational field. At the same time, possible intended effects may never materialize or materialize in a different way to the one expected. Croidieu’s (2011)

292  Elke Schüßler and Jörg Sydow study of the historic Bordeaux Wine Official Classification event of 1855 is an impressive example of the kinds of unintended outcomes an event can achieve: despite contestation and an increasing dissatisfaction among field members, the event has unintentionally defined the classification system for the best wines in the Bordeaux region in France for now over 150 years. In making intentional organizing choices such as programming, scheduling, or accreditation, event organizers draw on the material and symbolic rules and resources inherent in their field. The choice of a specific location, for instance, involves drawing on related networks of supporters, and alludes to existing cognitive frames attached to the location. An example here would be the German music festival c/o pop that chose the Schauspielhaus Cologne, a classical theatre, as its main location in the year 2009 in order to bring electronic and popular music closer to a wider audience. The auction Sotheby’s is located in New York’s expensive Upper East Side neighbourhood, thereby positioning the event within its appropriate community and attaching an ambience of affluence (Smith, 2011). Some events also aim directly to influence regulatory institutions. One of Europe’s main music industry events, the Popkomm in Berlin, represents the interests of the major industry players and cancelled its 2009 event with reference to the industry crisis allegedly caused by illegal downloads. It thereby aimed to promote a hardline stance on the regulation of copyright. This cancellation of an incumbent event indeed resulted in a huge media debate on Internet piracy, which shows how the non-existence of an event can also produce institutional effects, if only in a discursive way (Dobusch and Schüßler, 2014). These brief examples demonstrate that the institutional work of event organizers directed at field-level institutions such as classification systems or regulation can take many forms. Yet a different type of event-related institutional work is directed towards establishing events as institutions in a field and maintaining this status. In some fields, events enjoy a ‘quasi-monopolistic legitimacy position’ (Lampel and Meyer, 2008, p. 1028), either when they are granted formal authority by field actors, when a field lacks complementary institutions, or when a central event faces little competition. In the creative industries, typically none of these conditions are provided. In the film festival industry, for example, there are not only several competing dominant events such as Cannes, Berlin, or Venice, in addition, many alternative film festivals have been formed, such as Sundance Film in Utah addressing the independent sector, which was itself, once it had become more established, challenged by the Slamdance Film Festival, also held annually in Utah. Event organizers, therefore, not only have to institutionalize their event, they also have to reposition their event continuously in an evolving field context in order to maintain its status. As Delacour and Leca’s (2011) case study of the deinstitutionalization of the French Salon de Peinture shows, events with a ‘strong field mandate’ (Lampel and Meyer, 2008) are particularly likely to be challenged when they begin to lose touch with developments in the field: in the Salon’s case this was the emergence of Impressionist painting. Balancing the exclusivity of an event with its openness towards field developments is thus another important organizing task.

Organizing Events for Configuring and Maintaining Creative Fields   293 Whether event organizers are powerful international firms, small entrepreneurial organizations, public agencies, or networks of individuals, what is needed to make an event field-configuring and maintaining is a mix of project managerial capabilities, awareness of field evolution, and reflexivity with regard to specific organizing and institutionalizing practices. These capabilities may be used for creating networking hubs, for enabling the transformation of values, or for driving institutional change processes. Stimulated by institutional work, an event’s position in a field is likely to change over time; and more often than not, this work will be carried out in projects or temporary organizations that are themselves, to a different degree, creative.

Researching Organized Events and Event Organizing in Creative Fields Because of, but also independent of these theoretical considerations, events constitute an important site for research in creative fields. They are ‘microcosms’ of industries and markets and hence provide unique opportunities to observe and meet all the relevant field actors in one location (Meyer et al., 2005, p. 467). Particularly in creative fields, characterized by a high degree of temporary and virtual organization, such locales constitute possible starting points from which to grasp the membership structures of a field in the first place. In many emerging, often local and urban, creative markets such as the Berlin design scene, events can be a focal point from which to analyse how creative individuals work to establish networks, form professional scenes, and develop new market categories (Lange, 2011). As heterotopias, different spaces outside the normal order of things (Foucault, 1984, 1970), organized field-level events allow for the observation of unusual encounters and creative processes at work. Finally, studying not only the effects, but also the organization of events may lead to new insights regarding organizing and managerial practices in temporary, creative organizations. Organized field-level events particularly deserve to be studied as mechanisms to address the paradoxes of creative production. One paradox commonly identified is that of artistic and commercial values. These values have been found to be balanced by specific organizational practices that either enable their coexistence (e.g. Eikhof and Haunschildt, 2007) or delineate separate spaces and phases for each (e.g. Svejenova et al., 2007). They can also be brought together at events, where values are not only negotiated, but also translated and exchanged from one sphere to the other and back. A further paradox lies in the question to what extent cultural goods respond to customer demand, or rather to what extent customer demand is created by the creative construction of new market categories (Lampel et al., 2000). As selection and classification systems, events are important sites for shaping consumer preferences (Watson and Anand, 2006), but at the same time they provide experiences that exactly meet this demand that they have created. As sites for networking and tie formation, furthermore

294  Elke Schüßler and Jörg Sydow events may aid the establishment of project networks or latent organizations (Starkey et al., 2000). These organizational forms provide a solution to the paradox regarding the efficiency of permanent vertical integration and the flexibility of specialization and temporary engagements (Jones et al., 1997). Finally, as ‘functionally unbounded’ (Moeran and Strandgaard Pedersen, 2011) and highly uncontrollable settings outside the realm of routine interactions, events enable creative innovation. At the same time, because of their routine occurrence, such events also provide for stability and continuity in uncertain and decentralized industry contexts. While event organization is itself often a mani­ festation of the paradoxes inherent in creative production, organized field-level events can also provide a solution to at least some of them. In terms of research methods, participating in events as a researcher may be a part of a larger ethnographic research project, or the event analysis itself may stand as a ‘mini-ethnography’ in the context of a document-based or quantitative field analysis. Organized field-level events are also ideal occasions for conducting both formal and informal interviews. When dealing with repeated events, an ongoing interview relationship may be established with certain field members (Garud, 2008). Events themselves typically produce a large array of documents such as presentations or minutes, as well as audiovisual data that can be used as a document database. Furthermore, events can deliver data for certain types of quantitative analyses. Both cross-section and longitudinal network analyses can be performed on the basis of participant lists or keynote speakers, for instance. As many events are reported and reflected by the press or in personal blogs, they can also form the basis of media discourse analyses. The measurement of event performance and success hereby constitutes a question in urgent need of new methods. These suggestions, however, are by no means an exhaustive list of the questions and methods open to creative industries scholars in relation to organized field-level events. Rather, this chapter should be read as an invitation to consider events as unique ‘spaces for play’ (Hjorth, 2005) that allow for the exploration of exciting new research questions across disciplinary boundaries, theoretical frameworks, and methodological preferences in research on creativity and the creative industries.

Note 1. The concept of ‘events’ is ubiquitous in the social sciences and has many more uses than those sketched here. It is a common term in process theories such as path dependence (Arthur, 1989) and a core construct in process methodologies (e.g. Abbott, 1984, 1992; Pentland, 1999); the temporal lens on organizations and management focuses on events in structuring social practices (e.g. Ancona et al., 2001; Orlikowski and Yates, 2002); Sewell (1996) theorizes about historical events as sequences of occurrences or ruptures that bring about enduring transformations in social structures; in the context of project management research, events are often studied as unplanned occurrences that constitute a risk for project implementation (e.g. Söderholm, 2008); similarly, the wider management literature has been interested in unexpected events in the form of surprises (e.g. Bechky and Okhuysen, 2011; Cunha et al., 2006), catastrophes (e.g. Birkland, 2006; Perrow, 2011;

Organizing Events for Configuring and Maintaining Creative Fields   295 Weick and Roberts, 1993), or disruptions (e.g. Bode et al., 2011). Maoret, Massa, and Jones (2011) have recently proposed to study projects as events. This chapter does not intend to review the vast literature on the concept of events, but instead focuses on very specific kinds of events—conferences, festivals, trade fairs, award ceremonies, and related phenomena—and their role in creative fields. If we use the term ‘events’ in this text, it is only in reference to the phenomena we study if not indicated otherwise.

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Chapter 16

User innovat i on i n creative indu st ri e s Eleonora Di Maria, Vladi Finotto, and Francesco Rullani

Introduction This chapter integrates different perspectives on user communities to show how professionals and firms in creative industries can create fruitful business models and produce value from users’ creative potential, competences, and knowledge. In the last 20 years management research has documented and analysed the changing nature of innovation. The traditional idea according to which innovation processes—that is the creation of novel knowledge and solutions—are undertaken within the boundaries of the firm has been challenged by the increasingly informal nature of innovation activities and the wider dispersion of the sources of innovation. Innovation studies have documented that in a variety of industries, from software to sporting equipment and others, many sources of novel knowledge are found outside of the firms’ boundaries (Chesbrough, 2003; Laursen and Salter, 2004, 2006; Dahlander and Gann, 2010; Baldwin and Von Hippel, 2009). Individuals external to firms—e.g. users, experts, and hobbyists—are often involved in the improvement and modification of existing products on the basis of their passion and interest, even when no monetary compensation is provided (Jeppesen and Frederiksen, 2006; Jeppesen and Molin, 2003; Ghosh et al., 2002; David et al., 2003). The investigation of distributed innovation processes has revealed that individuals invest their time and attention mainly in the context of communities emerging from their shared interests (David and Foray, 2003). We witness communities of software developers, fashion connoisseurs, brand enthusiasts, and the like. These communities represent a fascinating and puzzling topic for management research: How can loosely connected groups of individuals develop novel knowledge? How can firms

302   Eleonora Di Maria, Vladi Finotto, and Francesco Rullani cooperate with them and benefit from their creativity while fuelling the community at the same time? These questions have been at the centre of a multitude of research streams which will be synthesized in the present chapter. We will mainly focus on innovation studies that emphasize the role of users and communities in creating novel solutions and improving products or services offered by firms. The chapter will provide a review of management and innovation studies oriented to explain how user communities contribute to firms’ innovation processes and how they become active players in the process of economic value creation based on those contributions. In the first section of the chapter we will focus on the definition of lead users and on their role in innovation processes within the community framework. In the second section we synthesize the different strategies through which firms can benefit from the contribution of users and communities in innovation, while the third section focuses specifically on business models for the creative industries.

Lead User, Communities, and Value Creation through Shared Innovation Software such as Android (Childers, 2009), computer games such as Counter Strike (Postigo, 2007), and artefacts such as snowboards (Shah and Tripsas, 2007) have not been created and engineered within the R&D department of existing firms. On the contrary, they were the results of a distributed effort involving a number of autonomous individuals cooperating to improve existing products or to create new ones. The economic relevance of these and many other user-created innovations is clear (Von Hippel, 1998): snowboarding now represents a significant share of the worldwide ski market, Android is the prominent operating system running on smartphones all over the world, and Counter Strike has been one of the most used online multiplayer games in the history of online gaming. These results have been achieved because actors outside the boundaries of the firm are increasingly responsible for the creation of value in the form of novel knowledge. They contribute actively to the improvement, transform­ ation, and redefinition of products, services, and the overall offering of firms. The established perspective on users and their communities as sources of innovation moves from the analysis of the differences between the incentives to innovate of manufacturers and those of users (Von Hippel, 1988; Harhoff et al., 2003). Manufacturers expect to benefit from a given innovation by selling it. On the other hand, innovations are likely to be developed by users if they are to benefit from their use (Franke and Shah, 2003). While not all users are capable of playing such a part in the innovation process, research on the sources of innovation has identified a particular typology of users able to identify specific and sophisticated needs and to elaborate innovative responses: these are called lead users (Morrison et al., 2004; Von Hippel, 1988, 2005). As defined by

User Innovation in Creative Industries   303 Von Hippel (1988), lead users have needs that anticipate general demand in the marketplace and they expect to obtain high benefit from solutions that can fulfil their needs. Some studies have depicted the profile of lead users (i.e. Ozer, 2009; Schreier and Prügl, 2008), giving evidence of the special characteristics of those customers for the success of the co-production process. By exploiting their intense product experience and personal ability, lead users develop highly valuable knowledge about new product features, completely new products, and market trends. These special users show innovative behaviours that lead to high rates of new product ideas as well as pioneer purchasing processes. The theoretical contributions on co-production stress that customers can be connected to the firm as singles—who offer their material and knowledge-based work—or as members of social entities (communities, tribes, etc.). In this second capacity, the effort and work of individuals is enhanced by the activity of interaction with other customers (Cova and Dalli, 2009). The social scale is an unavoidable element of the co-production, which may not necessarily generate the same results from single customers’ involvement. Studies on communities have identified different community members’ roles (e.g. Kozinets, 1999; Ouwersloot and Odekerken-Schröder, 2008): customers’ involvement and participation vary depending on their status as lead users, their expertise, and their willingness to spend time and personal effort in the interactions of consumption discourse and shared work (e.g. Shah, 2006). The shift of the locus of innovation towards users has been explained as a consequence of ‘information stickiness’. Much product-related information is embedded in the specific contexts where the product is used (Von Hippel, 1994). Users often use languages that are very different from those used by manufacturers. Manufacturers think in terms of processes, technologies, and features, while users think in terms of performance, practices, and desires. Since information on product usage is heavily context-specific (i.e. sticky), users are the actors best suited to innovate in valuable directions. In addition, new phenomena have emerged pushing users and communities increasingly to the centre of the stage. First, information and communication technologies (ICT) have allowed individuals to codify and disseminate knowledge and competences they have matured in their everyday life activities. While the modification of products and services by users is not a completely new phenomenon (e.g. de Certeau, 1984), before the widespread diffusion of ICT, knowledge created in the contexts of consumption tended to be limited in its diffusion and valorization. Web technologies have provided users with a set of instruments that allow them to disseminate knowledge and the outcomes of their creativity to a potentially global audience, and to develop shared ideas and collaborative projects within wide communities (Cova et al., 2007; Kozinets et al., 2010; David and Foray, 2003). Second, the proliferation of innovative activities among users outside the boundaries of the firm is also the direct result of the quest for differentiation that has characterized consumption in the last 30 years. After they satisfied their basic needs through standardized and mass-produced goods, consumers in developed societies started to demand increasing personalization and differentiation in the products they bought. This demand for differentiation, continuous innovation, and

304   Eleonora Di Maria, Vladi Finotto, and Francesco Rullani improvement of products has triggered the creativity of sophisticated consumers, who are willing to invest attention, time, and resources to adapt complex products and services to the specificities of their use (Von Hippel, 1994, 2005; Cova et al., 2007; Di Maria and Finotto, 2008; Bessen, 2006).

Relations between firms and communities: sponsorship vs. autonomy Many studies have explored how firms can rely on user communities to support their strategy and reinforce their competitive advantage (Dahlander, Frederiksen, and Rullani, 2008). A first important distinction in community management strategies refers to the degree of autonomy a community has with respect to the firm (Dahlander and Magnusson, 2005). Sponsored communities are communities created or supported by firms with the explicit aim of involving members in firm-related processes as well as directly benefiting from community members’ contributions. In sponsored communities one or more entities directly connected to the firm controls the community activities and manages its governance both in the short and in the long run (Shah, 2006; West and O’Mahony, 2008; Dahlander and Wallin, 2006; Miller et al., 2009). Autonomous communities are communities developed and managed by members independently of corporate organizations (O’Mahony, 2007; West and O’Mahony, 2008; O’Mahony and Ferraro, 2007). Networking technologies and the Internet have enabled this process and provide individuals with electronic platforms to gather and interact on a global scale. In these communities users can produce value for themselves and for other users, for example in terms of support between peers, where the engagement of manufacturers is not necessarily required. Studies on communities have shown that communities can take different forms, according to what they provide to their members, leading to alternative implications in terms of what firms can draw from them (Armstrong and Hagel, 1996; Kannan et al., 2000: e.g. communities of relationships, communities of interests, transaction-based communities, communities of fantasy). Product innovation can thus be the core of the activities of a community, but users can also aggregate to support and be part of a brand experience (brand community) (e.g. Schau et al., 2009), or share a consumption practice that shapes their identity, with potential marginal impacts on firms’ innovation. Sponsored communities require an explicit and formalized community management strategy, strongly interconnected with its internal processes. The control on members’ activities and community processes is high and the firm can shape the community structure as well as the regimes under which the benefits (and costs) are allocated between the firm and the community. In autonomous communities the power of the firm is limited:  the firm is an independent player. The firm has to put more effort into the involvement of members in its processes, activities, and goals.

User Innovation in Creative Industries   305 Besides control, also the degree of openness and transparency in the firm’s community management processes determines the capability of the community to attract new members. The nexus linking these factors is complex. As West and O’Mahony (2008, p. 152) state: one of the primary challenges sponsors faced was how to manage the tension between controlling the community in order to leverage their investment in it and opening up access to the community in order to attract greater growth of participants.

In thinking about creating a new user community or approaching an existing one, firms have to think carefully about community management to avoid participants perceiving the presence of the firm as a threat, and its contributions and actions as a means to appropriate the value they produce (Cova and Dalli, 2009).

Lead users and communities in innovation processes Innovative processes carried out by users, and lead users in particular, are seldom the outcome of isolated efforts. On the contrary they are the result of the collaboration among users in emergent social networks and systems of relationships (David and Foray, 2003). As Franke and Shah (2003) noted, novel solutions and innovative knowledge developed by users are the results of complex interactions within communities in which users assist each other applying their specific competences, capabilities, and knowledge. Thanks to the possibility of interacting with other members of a community, especially through the use of web technologies, users can collaborate to create novel know­ ledge, thus generating value in the form of innovative features and new solutions. Lead users, in particular, can use their deeper knowledge of the product acquired via its intensive use to propose advancements that are then shared with the larger user community (David and Foray, 2003; Langlois and Garzarelli, 2008). The emergent structure of a community can be represented as a series of concentric circles (Crowston and Howison, 2006) defining a core and a periphery (Crowston et al., 2006; Muller, 2006; Lakhani, 2006). The former is composed of a relatively small number of individuals who are responsible for the majority of the most important activities undertaken by the community. The latter contributes to the many less central activities needed for the community to work, and distributes the effort to deploy them across a plethora of different individuals. David and Rullani (2008) estimate that in open source software (OSS), a community of software developers (see Box 16.1), each circle comprises a number of individuals that is one order of magnitude higher than its inner circle. Core and periphery thus establish a very fruitful division of innovative labour (Arora and Gambardella, 1994), allocating tasks based on the large quantity of low-quality contributions by many individuals to peripheral members (Raymond, 1998), and letting the fewer high-quality non-divisible tasks remain in the hands of the few core members of the community.

Box 16.1  Open source software and user communities in the software sector User communities are important for modification and improvement of existing products as well as for their ability to create novel solutions and products from scratch. This has been particularly evident in the software industry, where many dedicated user communities engage on a voluntary basis in complex sets of activities oriented to the development of novel features and improvements to existing products. Open source software (OSS) is the most important example of such a phenomenon in the sector (Lerner and Tirole, 2002; Von Hippel and Von Krogh, 2003; Dalle et al., 2004). OSS is an alternative to proprietary software developed by established firms in the software industry such as Microsoft. The peculiar characteristic of OSS is that it is mainly developed by a worldwide community of programmers who voluntarily develop specific modules and pieces of code, engage in debugging activities, and provide immediate solutions to the problems manifested in different contexts and uses. Most OSS is distributed under the terms of OSS licences that allow anyone to read, modify, improve, copy, and redistribute the code and its derivative work, provided that the new code is released under the same terms. It is evident that such a clause pushes the price of the code to zero (Arrow, 1962) and results in the impossibility of generating revenues simply by selling the code. However, recently (Ghosh et al., 2008; Fosfuri et al., 2008) firms have also entered the arena of OSS development more prominently, creating a series of new business models (Henkel, 2006; Dahlander and Magnusson, 2005, 2008; Dahlander and Wallin, 2006; Bonaccorsi et al., 2006) able to balance the voluntary imprinting of the community and the free distribution of OSS code with the extraction of economic value from firm–community collaboration (West and O’Mahony, 2008; Shah, 2006). In the same sector, another less well-known example is Counter Strike (Postigo, 2007; Kucklich, 2005), a first-person shooter computer game, which is the result of the modifications a community of game enthusiasts made to an existing game. A worldwide community of developers intervened on the basic characteristics of the original game—Half Life, published by Valve Software in 1998—and dramatically changed its specificities. The entire setting of the game was changed. While Half Life was a typical sci-fi game, Counter Strike (the user-created modification) involves a hyper-realistic storyline involving terrorist and counter-terrorist teams. The community of developers modified the entire multiplayer experience, introducing innovations such as the in-game audio interaction among fellow gamers as well as a team-vs.-team game instead of the original one-on-one mode of playing. Again in this sector, another example is the software created by the hobbyist community born around Propellerhead Software, a firm producing computer-controlled music instruments (Jeppesen and Frederiksen, 2006). After the release of its product, ReBirth, in 1999, a community of interested users gathered on the Internet and started to produce modifications of the original product. As Jeppesen and Frederiksen report ‘Later, the hackers began to integrate their own sound samples and graphic designs into their hacked product version: “It was a form of friendly competition among us”, a user recounted. [. . .] these users thought that the firm should know about these new creations. From then on, a frequent two-way communication between users and firm employees (mostly via e-mail) was established’ (Jeppesen and Frederiksen, 2006, p. 48). These three examples show that in the software sector not only have user communities begun to play a crucial role, but also that their relationship with firms and value creation is complex and can take the form of a variety of different business models.

User Innovation in Creative Industries   307 This perspective allows also the isolation of another advantage of communities in terms of innovative capabilities. Peripheral members are many and very heterogeneous (Lakhani et al., 2006; Demazière, 2007). This means that the knowledge basis upon which the community can rely is much broader than the knowledge possessed by the core members. When a problem is broadcasted and shared with the periphery, it is very likely that a peripheral member possesses knowledge from a field diverse from those mastered in the core and closer to that needed to find a solution for the posted problem (Lakhani et al., 2006; Jeppesen and Lakhani, 2010). Precisely because of this property, Pötz and Schreier (2012) show that the quality of the ideas coming from users can be even higher than those created by experts and professionals working for firms. This mechanism is proportional to the number of peripheral members, so that the larger the periphery orbiting a community, the higher the probability that at least one member of the peripheral ‘crowd’ (Surowiecki, 2004; Howe, 2006) can become a useful source of innovation. The literature investigating the role of user communities (Marchi et al., 2011) has focused on low-tech manufacturing activities (like fashion or sports equipment), on mid-tech industries such as motorbikes, and on high tech industries such as OSS. Within these studies, the analysis of OSS stands out, as it has generated an extraordin­ ary amount of literature related to technological innovation carried out in the digital domain, and in particular software development. Such a growing and rich field of studies has, however, given little attention to the limits of involving users in innovation processes. On the one hand, the firm can benefit from cognitive proximity with its users as knowledge can easily flow between the firm and the community. On the other hand, the same close intimacy can generate a ‘cognitive trap’ narrowing the firm’s exploratory scope and preventing the discovery of disruptive innovation paths (Christensen, 1997).

Firm Strategies to Create Value through Communities User communities as partners in organizational processes and functions Users and user communities are increasingly taking charge, autonomously or under the control of firms, of relevant business processes and functions. Communities actively contribute to, and often undertake on an exclusive basis, both technical and symbolic research and development. At the same time, lead users and community members are involved in marketing and promotion of novel products, processes, and contents as well as brand management, and they also provide users and clients with support and assistance.

308   Eleonora Di Maria, Vladi Finotto, and Francesco Rullani

Innovation, R&D, and product development For professional communities, and in general for communities of practice aggregating actors affiliated to the same organization or sharing the same function in different organizations (Lave and Wenger, 1991; Wenger, 1998; Wenger and Snyder, 2000; McDermott, 1999), the firm can formally identify and support the community as in the famous Xerox case with the Eureka project described by Cox (2007). From this point of view users are valuable sources of knowledge in the innovation process due to their specific professional profile (i.e. in the case of software programmers). Members engage in the community to learn how to better perform their tasks and to develop collaboratively a pool of sophisticated competences and skills. Within professional communities the continuous engagement in job-related discussions generates a quantity of information, documents, and data that can be used as inputs for new product development processes and for customer care services (e.g. Wenger et al., 2002). Firms can support and deploy these knowledge management processes by increasing the connectivity among the members of the community through: • Yellow pages/social networks: members are represented online by a profile describing their expertise so that anyone can quickly find the course of the best know­ ledge in a certain area (i.e. 3M and its ‘R&D work centre’ networking website1); • knowledge repositories where produced knowledge is codified through the ‘people-to-document’ strategy (Hansen et al., 1999) and then stored and made easily retrievable; • collaborative and interactive spaces allowing not only the circulation of the know­ ledge produced by the community but also realizing a continuous interaction able to generate learning, new ideas, and new content; • each member should have the opportunity to blur the boundaries between work and private spheres and to transfer personal learning into working practices and vice versa. Similar to professional communities, members of customer communities can be involved in the knowledge management processes of the firm. Sawhney et al. (2005) recall March’s framework (1991) to distinguish between strategies to explore and to exploit community members’ knowledge, specifically through online tools. First, firms need to develop deep relations and stable contacts with leading community members (i.e. lead users). The aim of this exploratory phase is to identify who can contribute to detecting new opportunities for product innovation. This means: • organizing events and other forms of firm–community contacts (both online and offline); • launching idea competitions; • involving community members in new product development evaluation (both formally and informally).

User Innovation in Creative Industries   309 In a second phase, the community should take part in the exploitation activities, through product testing and product customization. With this aim, the production of toolkits for innovation (analysed later in the text) to provide customers with the means to technically innovate around the current version of the product has been proved to be a fruitful strategy (Von Hippel and Katz, 2002).

Customer support As said, when facing user communities firms should actively listen to them (Spaulding, 2009) and provide rapid feedback about the requests that come from the members. In advanced knowledge management strategies, firms should be able to codify all such requests and provide an online repository of solutions that can be used by other members and non-members to readily solve the possible problems they may experience when using the product (Rullani and Haefliger, 2013). However, as the analysis of community-driven innovation processes shows, user communities can also directly offer customer support. Expert members can provide aid to other members as well as non-members who address the community in a peer-to-peer fashion (Lakhani and Von Hippel, 2003). Customer-to-customer support systems usually flourish in the areas not covered by the firm’s customer care official service (Ozer, 2009). From this point of view the firm can see in the community a sort of customer-relationship management system, both in the domain of R&D and in pre-sale and post-sale activities. In all the mentioned processes, and specifically in the case of sponsored communities, the firm has to adapt its organizational structure to be able to integrate the user community activities. Specific organizational roles oriented to community management (Hagel and Armstrong, 1997) should be included in the R&D or marketing department including: • moderator and community editor: specialized in the management of community communication and content, able to keep the discussion emerging from the community alive and at the same time open and fruitful; • community development manager: focused on creating and deploying strategies to foster community growth, especially in terms of membership; • community marketing manager: focused on the analysis of the information generated by the community as well as on new member acquisition; • customer service manager: specialized in promoting and managing the relationships with community members as specific targets of the firm.

Tools for the involvement of the users What are the instruments that enable firms to effectively apply the strategies described above to leverage the user community’s potential in their business processes? The literature in community management has analysed how firms in different industries engage

310   Eleonora Di Maria, Vladi Finotto, and Francesco Rullani communities and establish a sustainable relationship with them. One way to do it is to provide users with a set of tools that will allow them to act directly and autonomously on the products. A second set of instruments to obtain users’ engagement includes social networks and the more recent generations of web applications and services, synthetically defined as Web 2.0. Those new technologies are increasing their relevance in particular in the creation of symbolic value related to the firm offering as well as in content development in creative industries. Von Hippel in his wide research on user-based innovation models (1988, 2005) highlights that firms should provide toolkits to their counterparts (lead users, communities) to increase the efficiency of the collaboration and the effectiveness of their contribution (Von Hippel and Katz, 2002). The idea is to increase the creative possibilities of users via the toolkit, which allows them to augment their ability to alter and improve the product. At the same time, the toolkit constrains the action of the users along those directions not consistent with the provided tools, and thus keeps the improvements within a path compatible with the firm’s processes. The rise of network technologies—and specifically of the Internet—has provided new opportunities for individuals to improve and act upon products. Nambisan and Nambisan (2008) provide a clear and complete picture of the different virtual customer environments (VCE)—online environments providing customers and users generally with a shared context for knowledge exchange and interaction—that a firm could rely on to involve them in value co-production. Through such shared platforms the firm formally recognizes the role of users and communities and invests directly to involve them in its business.

Challenges: community members’ incentives and rewards Many studies on communities and on co-production of value have analysed users’ motivation to participate in community activities (e.g. Füller, 2010; Jeppesen and Frederiksen, 2006; Ouwersloot and Odekerken-Schröder, 2008). This issue is of specific importance since firms should carefully consider the drivers behind users’ decisions to take part in the innovation process. Ryan and Deci (1985) offered a comprehensive theoretical framework to classify incentives, a model also applied by many scholars investigating community and knowledge production (Lakhani and Wolf, 2005). According to these studies, when individuals spend time and resources taking part in social and economic activities related to a community they are moved by extrinsic as well as intrinsic motivations. Intrinsic motivations refer to incentives relating directly to the undertaken activity, such as curiosity or the perception of a playful activity; extrinsic motivations relate indirectly to the performed task and redirect to fulfilment of unmet needs or search for compensation such as monetary rewards. Sometimes extrinsic motivations are internalized and become rules and

User Innovation in Creative Industries   311 values with which individuals feel the need to comply. Among these we may find altruism, skill development, need for recognition or visibility, or the opportunity to make friends (Füller, 2010). Motivations depend not only on the exogenous preferences and characteristics of the individual, but also on the role she or he plays in the community. Wenger et al. (2002) clearly identified three different layers of member participation: the core group, active members, and the periphery. Each type of membership relates to a different series of activities, rights, and obligations, and, as said in previous sections, influences the kind and level of involvement of an individual in the community activities. The list of motivations is long and very heterogeneous, and each individual participating in the community follows an idiosyncratic combination of incentives (Ghosh et al., 2002; David et al., 2003; David and Shapiro, 2008). It is thus clear that a firm has to carefully evaluate how to involve community members into business processes to manage the trade-off between its own goals and members’ interests, values, and principles. Intrinsic and extrinsic motivations require very different approaches and rewards (Füller, 2010). Extrinsically motivated members are goal-oriented, and look for outcomes of clearly recognizable value. In this first scenario, the most interesting rewards firms can offer are monetary benefits or other financial compensations. Intrinsically motivated members are instead experience-oriented: they look for enjoyable experiences. In this second scenario, engaging experiences, recognition, and reputational rewards provide the most important incentives, and firms should structure their activities in order to provide the community members with such compensations. Moreover, the opportunity of providing collaborative users with an economic incentive should be carefully considered. Intrinsic and extrinsic motivations interact, and their joint effect may be complex. For example, in certain settings extrinsic motivations can ‘crowd out’ intrinsic motivations (Frey, 1994; Osterloh and Frey, 2000), i.e. hinder the development of intrinsic motivations to the point of nullifying their impact (Gneezy and Rustichini, 2000).

Community-Based Business Models in Creative Industries Having defined the strategies firms can follow to relate and collaborate with users and customer communities, it is now necessary to define possible business models firms in creative industries can follow to generate and appropriate economic value. In order to do so, it is useful to consider the business models developed in one of the industries where the collaboration with communities is the most important asset of the firm (Dahlander and Wallin, 2006): open source software (see Box 16.1). Besides some specific cases (Henkel, 2006), OSS is produced mainly by the community of developers, and firms operating in this sector need to create business models starting from this code

312   Eleonora Di Maria, Vladi Finotto, and Francesco Rullani basis and from the community behind it (Fosfuri et al., 2008). Investigating what firms do in OSS can thus provide useful ideas also for possible models in the creative industries, mutatis mutandis. In this respect the literature on OSS has stressed the trade-off between openness and control already signalled above (West and O’Mahony, 2008). In this scenario, OSS business models are oriented to solve the trade-off between the openness of the code—a necessity given that OSS is usually distributed with licences that do not allow for any appropriation of the code and its derivative developments—and control of the know­ ledge underlying the code. Openness and control in this case interact in a synergistic way: free availability of the code (i.e. openness) increases the number of potential users, while profits are assured by the provision of services and complementary products based on the deep knowledge of the software that the firm can acquire, for example, contributing to its development. In fact, the most typical business model in the OSS domain is based on complementary services provision: the firm offers services to support the use of the code created by the community, for example to adapt it to the user’s needs or specific context. Several studies have tried to identify the different characteristics of OSS-based business models (Fosfuri et al., 2008; Bonaccorsi et al., 2006; Shah, 2006; West and O’Mahony, 2008; Dahlander and Magnusson, 2005, 2008). Fosfuri et al. (2008) emphasize the role of firms’ investments in patents as a positive strategy to appropriate commercial returns of OSS products. At the same time, there is a negative relationship between investments in trademark (reputation) and OSS projects, specifically for firms with large proprietary software trademark portfolios. In contrast, firms with large proprietary hardware trademark can benefit from investing in OSS projects—hence involving also users in software development, which is where the conditions of appropriability are weakened and the power is more balanced between independent developers and the firm. In their review of business models in the OSS domain, Bonaccorsi et al. (2006) stress that firms tend to adopt a hybrid business model in the case of OSS, by mixing investment in proprietary software and in OSS (types of licences, sources of revenues). This ‘openness’ to OSS is positively influenced by the firm’s past experience in working on community-based projects. Shah explores the link between users’ motivation to participate in OSS projects (goal-oriented vs. experience-based) and the governance mechanisms a firm has to develop to rely on them. On the one hand, the lower the control on the code, the higher the participation and satisfaction of users (both need-oriented and hobbyists): from this point of view the firm has to reduce the users’ perception of their limited freedom of expression and behaviour within the project. On the other hand, the firm has to regulate the degree of appropriability of the results gained through the communitarian effort in gated source projects, otherwise users may perceive an unfair behaviour and stop their participation in the long run. From this perspective, the key process is that of aligning the firm’s strategy to the community and users’ motivation: a tactic adopted by firms can refer to the adoption of licensing practices that clarify ownership (Dahlander and Magnusson, 2008).

User Innovation in Creative Industries   313 A recent contribution by Carlo Daffara (2009) gathered data from 275 firms and using cluster analysis found ten archetypes able to capture the main characteristics of the business models observed among the surveyed firms. The most diffused business models account for more than 80% of the firms in the sample, and thus are those we will focus on.





1. The business model applied by the majority of the firms is that of product specialists. The idea behind the model is that the firm moves its control from the product (the software) to the knowledge behind it. The model is based on the  penetration OSS has in the market, fostered by its free provision, and on the capability of the firm to target users who need to adapt the software to their needs, convincing them that the knowledge the firm has is distinct and more valuable than that of other competing firms. As said before, actively participating in the development of the code is a way not only to gain knowledge about it, but also to signal such competence on the market. 2. The second most diffused model, called open core, couples a basic version of the software distributed as OSS and an advanced version that extends the basic version via some proprietary plug-ins. This model is interesting for external developers, who can access the OSS version of the code and improve it independently, as well as for the firm that can maintain the control of the proprietary part of the code. However, it is difficult to sustain this model in the long run due to the continuous competition between the free and proprietary advanced features and the possible cannibalization (Fosfuri et al., 2008). 3. The third interesting business model is related to the generation of indirect revenues coming from the offering of products complementary to a specific OSS project. In this case the firm benefits from the diffusion of the OSS running on its hardware devices and from the work of the OSS community of developers, which increases the features of the software and keeps it up to date, most of the time at no cost to the firm.

This review of business models emphasizes some critical areas firms competing in creative industries have to focus on in order to effectively exploit the contributions of users in innovation processes: (a) A first decision refers to the approach towards users and communities a firm has to adopt to extend its resources: developing a new community of users or relying on an existing one both have advantages and disadvantages, as described in this chapter. In choosing one option over the other the firm should consider its organizational capacity to manage constant contact with users. (b) A second crucial dimension is related to the regime of ownership of the results coming from the creative effort of users. The firm may adopt complete control of the outputs of the innovation processes, but in this case the firm has to promote a careful evaluation of the extrinsic and intrinsic motivations at the basis of users’ participation.

314   Eleonora Di Maria, Vladi Finotto, and Francesco Rullani (c) A third domain, related to the previous one, concerns the rewards given to the users, coherent with their direct participation in the innovation process and the firm’s exploitation of the innovation outcomes. In this case the firm’s capability to monitor and identify users with different degrees of participation and potential for valuable contribution becomes a key issue. (d) A final factor is related to the firm’s strategy of product portfolio management. Specifically the firm should define the right mix of products developed internally and based on users’ contribution. In the creative industries this is one of the most relevant issues since the creative inputs offered by users can be really valuable and reduce the risks related to a specific firm’s investments (e.g. in the case of artists’ selection), but at the same time, this choice can heavily affect the competitive advantage of the firm, e.g. with respect to copyright and control issues of the kind discussed in point (b). Firms and professionals operating in the creative industries can take inspiration from the business models proposed above and adapt them to their strategies and goals. By opening their business process to their fans and customers, and by defining a revenue-sharing system, they will be able to induct user communities into the common construction of competitive advantage based on technical as well as symbolic innovations.

Note 1. .

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Chapter 17

User Innovati on i n t h e M usi c Soft ware I ndu st ry The Case of Sibelius Stephen Flowers and Georgina Voss

Introduction While writing a big band chart in Sibelius, I found that I spent a lot of time hiding playback-only passages and creating slashes and rhythmic cues in other voices. This plug-in is intended to automate those tasks. Ross Lafleur

A small piece of software that assists jazz composers in depicting the rhythms on their digital music scores symbolizes the changing role of increasingly active and powerful users within the music industry. ‘Rhythm Section Assistant’ is a plug-in for the Sibelius music notation software which was created by Ross Lafleur in 2006, and which has been downloaded over 15 000 times since its release. The plug-in is one of hundreds which have been developed by enthusiastic customers and users of the Sibelius program who enjoy using the software but, as the above quote indicates, want to improve its use for their own sake and that of others. In creating the little pieces of ‘add-on’ software, these user-innovators represent a shift in the very ways that firms in the creative industries do business. User innovation is now widely recognized as a potent force in many parts of the economy and society, with significant theoretical, practical, and public policy implications. Innovations that flow from the users (as opposed to the producers) of a technology have been documented in both firms and individual consumers in a wide range of contexts including scientific instruments (e.g. von Hippel, 1976), medical instruments (Lettl et al., 2006), extreme sports (Luthje, 2004), and music software (Jeppesen and Frederiksen, 2006). Recent studies have found significant levels

User Innovation in the Music Software Industry   321 of user innovation activity amongst individual consumers (von Hippel, de Jong, and Flowers, 2012), in manufacturing firms (e.g. Gault and von Hippel, 2009), SMEs (e.g. de Jong and von Hippel, 2008), and in a general industrial population (e.g. Flowers et al., 2009). Users can be highly active innovators in their own right, creating and distributing their own products or services. Innovation by users may be a challenging, complex, and contested process with users playing an important role in the creation, shaping, and diffusion of new products, services, and ideas. Some users may prefer to modify products that they have purchased or they may wish to provide feedback to firms so that they can improve the products they are able to buy (see von Hippel, 2005; Flowers et al., 2008). Alternatively, other highly creative users can create products, services, or workarounds that compete with or bypass mainstream offerings, thereby more actively resisting ‘official’ innovations. This form of user innovation, termed Outlaw Innovation (Flowers, 2008) is prevalent in digital environments and has been a constant feature of the creative industries for some time. The music software industry is an important part of the creative economy that is also a lead sector for the new and emerging relationships between firms and users. Music software is part of the modern software tool industry, producing a range of software toolkits aimed at the professional, domestic, and educational markets. These systems, produced purely as software or as hardware/software combinations, are designed to automate or simplify important aspects of the creative process and include tools to assist in the creation of music scores, record and/or mix live performances, or mix music to create a final master version of a track. Music software is a good example of a modern information industry in which established firms are located within a complex ecosystem which includes individual users and user communities and which transcends national boundaries. Firms are the commercial actors within this ecosystem, but they operate in a market that is also served by low-cost shareware and software that is developed and distributed by individual users and user communities at no cost. Although some user-developed software is complementary to commercial products, some of the more complex systems developed by user communities could also be viewed as competitor products. Firms are very important within this ecosystem, and may be dominant. As Di Maria et al. (2012) have discussed in this volume, a major issue for firms is finding ways to set up relationships with, and create value through their user communities. For the music software industry, this presents a particular challenge as firms in this sector have a quite different relationship with their users and consumers to those in other sectors. One major difference is that many users possess the high levels of technical skill required to develop their own music software, as evidenced by the large amount of shareware and freeware available. In this sector users may be consumers, but they may also become collaborators developing software that is complementary to commercial products. Crucially, they may also develop low-cost or no-cost competitor systems or software that is incompatible with commercial offerings and may serve to undermine their market position.

322   StePHen Flowers and Georgina Voss In response, firms in the music software industry have produced the type of tools described by DiMaria and colleagues in this volume, which are designed to improve the creative process for the musicians that use them. Users are often highly demanding and intimately engaged with product functionality and performance, seeking out liked-minded others for discussion. Online communities are commonplace around this activity and have either emerged spontaneously or been created or supported by firms, with both types then acting as knowledge repositories for firms to draw on. As a result, music software users are likely to play a more central and creative role in the innovation process, and have been drawn into an active role in organizational processes and function. In the following case study we describe how one firm—Sibelius, a world leader in music notation software—have made use of these strategies to harness value from their users.

Sibelius—A User-Led Firm Sibelius was founded by Ben and Jonathan Finn in 1993 to sell music notation software. Today it is the world market leader in software for writing, teaching, and publishing music notation, with customers in over 100 countries, and has received the prestigious Queen’s Award for excellence in innovation. Much of this success can be attributed to the firm’s origins in the interests and activities of its founders, which continues to be reflected in the company’s products and activities, and the commercial context of the firm that enables users to be much closer to the production process than in more ‘traditional’ industries such as automobile manufacture—although both sectors create outputs, the architecture of the Sibelius product has been specific­ ally designed to enable users to provide content which supports and extends the core product. The original ‘Sibelius’ notation software program was written by the Finn brothers for their own use in 1987, and was written for the Acorn—an early UK home computer which lent itself to ongoing user engagement. Despite its growing commercial success, the firm continues to remain close to its user populations, and users play a hugely popular role in product development and support. Sibelius has a series of highly active user communities around its portfolio of products, some of which have emerged spontaneously and some of which have been deployed by the firm. One important group is the user community that creates and shares software (also referred to as ‘plug-ins’) that provides additional functionality to the Sibelius program; users also develop content including sound sets, drum loops, demos, tutorials, and general feedback. A great deal of effort has been expended in maintaining some form of presence within these professional and educational music communities, and users are actively encouraged to both engage in innovation around the core product and also support other users.

User Innovation in the Music Software Industry   323

Harnessing User Feedback and Support through Communities For firms engaged in innovation activities, user feedback and involvement are extremely important aspects of the product development process; for those involved in user innov­ ation, such as those in the music software industry, the practice of building strong relationships with users is a key part of the business model. Sibelius has developed several means of harnessing user feedback, including its Chat Pages, a series of online discussion forums for user feedback and support hosted on the homepage. These pages are a central feature of the firm’s approach in building sustainable relationships with its user base. Initially set up as a technical support forum in which users were able to discuss the software with each other, the pages were subsequently modified to allow the company to build up a knowledge base which could then be developed into a set of searchable questions and answers. In its early incarnation, only Sibelius users were allowed to see and use the forum—in order to see it, one had to be logged in as a user, and in order to be logged in one had to have a Sibelius serial number. However, in its current form, only Sibelius users are allowed to interact on it but the site can now be openly read by anyone online. The questions and answers have also been developed into a separate Frequently Asked Questions page on the site, but the Chat Pages remain and the two sections complement each other. All historical articles are also archived and searchable. Although the individuals who populate the Chat Page only make up a small percentage of Sibelius users, many of them are long-term Sibelius customers who possess greater technical know­ ledge than the majority and represent a significant resource. These types of approaches illustrate how firms enable users to provide ongoing customer support which draws on a more complex and varied knowledge base than resides within the company itself.

Communities, Lead Users and Plug-Ins Beyond support, user innovators often also develop a large number of complementary products around the company’s core offering. For Sibelius users, these products include software plug-ins, sounds, scores, and music fonts.1 To do so is no small feat and requires at the base entry level, significant musical ability. At its most sophisticated level, developing this type of content also require users to possess high-level skills in programming, design, or musical arrangement. Of the large volume of user-generated resources the software plug-in is perhaps the most complex, requiring both deep musical understanding and high-level programming ability. Plug-ins provide additional functionality to the basic Sibelius program which allows users to do things such as import in music from other notation programs, alternate time

324   StePHen Flowers and Georgina Voss signatures, and emulate Mozart’s ‘musical dice’ game to randomly compose music. An active community of users is engaged in developing these plug-ins, and their activities are an integral part of Sibelius’ R&D process. Although the installed base of Sibelius is very large, the plug-in developer community is relatively small. Over 150 user-developed plug-ins are currently freely available on the company website, and a further 110 user-developed plug-ins have been acquired2 and are included within their latest software release. The value created by these plug-ins, both to the individual user and the firm, is significant, with the freely available plug-ins having generated nearly 6 00 000 individual downloads. The top five plug-ins alone account for some nearly 1 90 000 downloads, with the top user-developed plug-in (German Chord Names3) being downloaded over 86 000 times in its own right. In addition to plug-ins, Sibelius also encourages users to share the music that they have developed using their products. SibeliusMusic.com is a separate website that enables users to self-publish scores using a specialist plug-in, Scorch, that was developed by Sibelius specifically for this purpose. The site currently has over 95 000 scores available as pay-per download, and some free scores. ‘Lead users’ are a key part of this user innovation ecosystem. Within the pool of plug-in developers one individual, the super-developer Bob Zawalich, is responsible for generating a large proportion of the plug-ins. Zawalich is a retired Microsoft programmer who was involved in developing the macro function in Word, but is also an active guitarist and composer. He is a highly productive and innovative user who combines high-level musical and programming ability to enable him to produce a large number of complex plug-ins. Zawalich has developed a large percentage of the plug-ins that are made freely available on the Sibelius website, and his plug-ins have been downloaded by other users over 2 00 000 times. Zawalich’s productivity—and the popularity of his offerings—demonstrates that an often comparatively tiny population of ‘lead’ users bearing exceptional technical skills can provide disproportionate value to both users and the firm.

Product Architecture and User Toolkits Enabling user-led innovation can also require a firm to adjust the nature of their core product offering. To facilitate user activity, the Sibelius core product has been designed in such a way that users can develop and share their own content and applications. The firm’s products are not fully ‘open’ in the accepted sense but the APIs of part of the product architecture have been published, enabling users to innovate around the core product. This partial opening of the product architecture was a formal recognition that users had needs that could not be anticipated by Sibelius and, moreover, that some users were able to create plug-ins that would satisfy these needs. By partially opening the product architecture in this way, Sibelius becomes a platform around which users are able to innovate. As described in the previous chapter, toolkits provide a way for firms to transfer manufacturing capability to users, and Sibelius has also provided a series of toolkits

User Innovation in the Music Software Industry   325 that provide users with the means to create their own applications and other content. To enable users to create plug-ins, Sibelius created their own programming language called Manuscript, a specialist music-based programming language. Sibelius provides a range of resources around Manuscript, including a tutorial, a plug-in developer mailing list, and a Tech Support forum. User-developed plug-ins are effectively open-source, and the code may be viewed by any user who wishes to develop their own plug-in. Sibelius provides a series of Sound Sets that are designed for use with synthesizers, and also makes available a Sound Set editor for users. The Sibelius plug-in developer community also makes and shares their own user-developed tools on an ongoing basis. The Sibelius plug-in developer community has developed into a toolmaking community in which tools are developed and shared, with the result that the user-developed plug-ins have become more ambitious and sophisticated. This dual approach illustrates how multiple lines of engagement must often be developed by firms in order to cater to, and engage with, the variant levels of expertise in their user base.

Conclusion Creating sustainable value from enthusiastic and innovative users is a challenge for many firms in the creative industries in an age of fast-moving democratized digital innovation. Sibelius is an example of a company that has benefited enormously from its large population of committed and eager users, who continue to be a source of feedback, ideas, and software innovations, and who are an important aspect of the wider R&D environment that now surrounds the firm. Although a tiny percentage of the functionality of the product is user-built, nearly all of the features added to the program in the past five years have been derived in some form or another from user suggestions. As this case indicates, engaging with a wide group of keen and engaged users requires highly specific strategies engineered around their musical and technological capabilities, their behaviour, and their needs, and the Sibelius Group make use of a tailored mix of sponsored and autonomous communities, toolkits, partially open product architecture, and business model development to get the most out of their users.

Notes 1. A  list of third-party resources can be found here:  http://www.sibelius.com/download/ plugins/index.html 2. These are acquired from the user for around $500 US per plug-in. 3. This plug-in converts chord symbols text in your score between the German (B = B flat, H = B) and standard (Bb = B flat, B = B) conventions for chord symbols. This is useful when transposing German chord symbols (e.g. convert them to standard chord symbols, transpose, then convert them back to German chord symbols).

326   StePHen Flowers and Georgina Voss

References de Jong, J. and von Hippel, E. (2008). User innovation in SMEs: incidence and transfer to producers. SCALES working paper, H200814. Flowers, S. (2008). Harnessing the hackers: the emergence and exploitation of Outlaw innov­ ation. Research Policy, 37(2): 177–193. Flowers, S., Mateos-Garcia, J., Sapsed, J., Grantham, A., Nightingale, P., and G. Voss (2008). The New Inventors: How Users are Changing the Rules of Innovation. London: NESTA, 44. Flowers, S., Sinozic, T., and Patel, P. (2009). Prevalence of user innovation in the EU: Analysis based on the Innobarometer surveys of 2007 and 2009. INNO-Metrics Thematic Paper. Brussels: EU, 27. Gault, F. and von Hippel, E. (2009). The prevalence of user innovation and free innovation transfers: Implications for statistical indicators and innovation policy. MIT Sloan School of Management Working Paper, 4722–4709. Jeppesen L. B. and Frederiksen, L. (2006). Why do users contribute to firm-hosted user communities? The case of computer-controlled music instruments. Organization Science, 17: 45–63. Lettl, C., Herstatt, C., and Gemuenden, H. G. (2006). Users’ contributions to radical innovation: evidence from four cases in the field of medical equipment technology. R&D Management, 36(3): 251–272. Luthje, C. (2004). Characteristics of innovating users in a consumer goods field: An empirical study of sport-related product consumers. Technovation, 24(9): 683–695. von Hippel, E. (1976). The dominant role of users in the scientific instrument innovation process. Research Policy, 5(3): 212–223. von Hippel, E. (2005). Democratizing Innovation. Cambridge, MA: MIT Press. von Hippel, E., de Jong, J., and Flowers, S. (2012). Comparing business and household sector innovation in consumer products:  findings from a representative study in the UK. Management Science, 58(9): 1669–1681.

Chapter 18

N iches, Gen re s , a nd Cl assifications i n t h e Creative Indu st ri e s N. Anand and Grégoire Croidieu

Introduction In this chapter we review the concepts of niche, genre, and classification in the creative industries. The concepts of niche, genre, and classification are defining and central concepts that underpin theoretical explanations and empirical studies of creative industries. The literature on niche views markets as an economic resource primarily comprising consumers. In the genre perspective, markets are seen as mediated social constructions generated through the interaction of producers, consumers, and media actors. In the research on classification, markets are seen as outcomes of categorical struggles to define the constitutive character of an industry. Each concept is most often treated in isolation, leaving unclear how they relate to each other, their differential insights and also the possibility to generate new insights by synthesizing these concepts. Comparing and contrasting niche, genre, and classification perspectives matters for three reasons: first, these approaches focus on the evolution of categorical systems that are consequential for categorized actors (Zuckerman, 1999), which generate theoretical interests across disciplines such as management, economics, economic sociology, and organizational sociology. Second, creative industries are rife with categorical dynamics that organize the lives and interactions of countless producers, consumers, and mediating actors (Becker, 1982; Caves, 2000). Understanding how the creation of economic value is intertwined with the production and evolution of these categories will shed light on fundamental economic processes. Third, these three perspectives, though comparable, have different levels of analysis and include different numbers and types of actors, which has consequences for theory and for the research strategies associated with this

328   N. Anand and Grégoire Croidieu theoretical expansion. Mapping overlap and disjoint areas between niche, genre, and classification is then key to the growth of these theoretical perspectives. We use the California wine industry as a setting to draw out the theoretical utility of these concepts. Wine can be considered a creative industry in that it has both economic and aesthetic dimensions (Beverland, 2005; Caves, 2000). As the California wine industry emerged and grew in size, a cultural phenomenon with the attendant commercial, scientific, professional, aesthetic, and administrative values paralleled this expansion. This growth gave birth to a rich, well-documented, and multifaceted categorical system, that can alternatively be understood from the niche, genre, or classification perspectives and that provides the opportunity to compare and contrast these perspectives. We organize the article first by describing our illustrative context—the California wine industry—then we examine niche, genre, and classification, ending with a conclusion and offering thoughts for future research.

Winemaking in California Winemaking in California traces its roots to the Spanish Franciscan missions of the eighteenth century. It was nearly annihilated by the ‘Noble Experiment’ of Prohibition (1919–1933). However, despite these inauspicious circumstances, California has since then gone on to become one of the leading wine regions of the world (Pinney, 2005). This industry simultaneously accommodates some of the largest wine corporations in the world (such as Gallo), and some of the most highly acclaimed small-scale farm wineries (such as Stag’s Leap Wine Cellars). The key economic indicators attesting to the rapid growth of the California wine industry during the period 1950–2010 are listed in Table 18.1. Wine production increased over fivefold from 124 million gallons to 632 million gallons. The number of bonded wineries jumped more than seven times, from 428 to 3364. This statistic underestimates the actual number of wineries, because there exist many wineries that are too small to be labelled ‘bonded’. Grape acreage increased from 500 000 acres to 748 000, while the percent of grapes produced used for wine crushing increased to 90% by 2010. During the whole period, California accounted for close to 90% of wine production in the US. Consumption trends for the US as a whole show a concomitant increase too. Per capita wine consumption rose from 0.93 gallons to 2.54 gallons. Total wine consumption also increased over fivefold from 140 million gallons to 784 million gallons. The consumption of fortified wine (a type of inexpensive high-alcohol wine) decreased by 20 million gallons during the same period, indicating that the market shifted towards higher-end premium wines. Economic factors aside, California wine grew in prestige too. The prominent ‘Judgment of Paris’ event, a tasting competition against French wines staged by a British wine-merchant in Paris in 1976 resulted in victory for California red and white wines (Taber, 2005). This event is attributed to be the day California wines ‘came of age’ (Anand, 2011). The area now boasts of a number of wineries that enjoy ‘cult’ status with

Table 18.1  Main economic trends (1950–2010) Productiona

Unit

1950

1970

2000

2010

California wine production

million gallons

124g

212

565

632

Number of California bonded wineries

Count

428

240

1450

3364

California grape acreage

in ‘000 acres

500b

479

852

748

California wine grape acreage

in ‘000 acres

-

157

480

535

California crush of wine grapes on total grapes

%

-

61%c

84%

90%

US wine consumption per inhabitant

gallons

0.93

1.31

2.01

2.54

Total US wine consumption

million gallons

140

267

568

784

Table wine consumption

million gallons %

36 26%

133 50%

507 89%

678 86%

Fortified wine consumption

million gallons %

94f 67%

112 42%

33 6%

74e 9%

Sparkling wine consumption

million gallons %

10e 7%

22 8%

28 5%

32d 5%

million gallons

close to 0

close to 0

74

110

Consumption

Exports US Exports

Notes: 1 US gallon = 3785 litres. a. Over the whole period, California’s production has accounted for at least 90% of the total US production. b.1951 figure. c.1977 figure. d. 2008 figure. e. Figure deducted from total minus the corresponding category from table, sparkling, and fortified wine consumption. f. 1952 figure. g. 1957 figure. Sources: Figures gathered by Wines and Vines, the Wine Institute of California, Lapsley (1996), Pinney (2005), Sullivan (1998) from multiple State, Federal, and trade sources.

330   N. Anand and Grégoire Croidieu celebrity winemakers and entire vintage is sold out in advance (Roberts, Khaire, and Rider, 2011). We contend that the California wine industry setting is helpful in drawing out the distinctions between the concepts of niche, genre, and classification.

Niche Niche can be most simply defined as a distinctive competitive market space created by actions of producers. However, behind this simple definition are a variety of perspectives. We focus on two approaches in particular: organizational ecology and marketing.

Niche: organizational ecology and marketing approaches In the organizational ecology approach, niche is defined through biological analogue as certain product or service organizations that ‘can survive and reproduce themselves’ (Hannan and Freeman, 1977). Niche also has a Platonic ideal form in this theory, with a ‘fundamental’ niche being an n-dimensional resource space that includes social, economic, and political dimensions (Hannan and Freeman, 1989). ‘Realized’ (or real-world) niches are understood to be constrained n-dimensional spaces found when competitors are present. The concept of niche width connotes the magnitude of resources used by an organizational population to survive (Carroll, 1985). Generalist organizations draw up a larger amount of resources and thereby are able to cover a greater breadth in the marketplace; specialist organizations use up a narrower range of environmental resources and address a narrower market space. In the US newspaper industry, generalists publish a newspaper that comprises a number of sub-sections, each catering to a specific sub-market; specialist newspapers, in contrast, address a specific audience such as a neighbourhood, ethnic, or professional community. In the discipline of marketing, niche is conceptualized as ‘a small market consisting of an individual customer or a small group of customers with similar characteristics or needs’ (Daglic and Leeuw, 1994, p. 40). Shani and Chalasani (1992) define niche marketing as ‘a process of carving out a small part of the market whose needs are not fulfilled’, and attribute the following characteristics to a niche: ‘it is of sufficient size and purchasing power to be profitable, has the potential to grow, and should provide entry barriers for competitors through accumulated customer goodwill’. Abernathy and Clark (1985) note that there are three ways in which new niches are created. First, research and development activities result in technological changes that create new applications or performance possibilities that existing technologies cannot match. Thomas Edison’s ability to record and reproduce sound through his invention of the phonograph in 1877 then created a market niche for repeat listening that we now take for granted today (Goodall, 2001). Second, new niches are created through changes in customer demands through ‘change in tastes, or through changes in prices of substitutes

Niches, Genres, and Classifications in the Creative Industries   331 or complements’ (Abernathy and Clark, 1985, p. 18). The success of independent record labels in breaking through the market with rock and roll music is attributed to the radical change in the musical taste of youth immediately after the Second World War (Peterson, 1990). Third, regulation and de-regulation that sets performance standards, imposes technical requirements, or mandates the use of certain input factors has the effect of creating new niches. The removal of high tariffs on imported electronic goods in India in the 1980s led to the widespread growth in the use of cassette tape recorders, which in turn led to the creation of niches for regional music styles that previously could be not produced due to prohibitive costs (Manuel, 1993).

Evolution of niches There are various theories that address the evolution of niches. These focus on the dialectical tensions caused by producers becoming concentrated, more generalist, and highly standardized. The cycle theory of symbol production contends that as producers in a creative industry become increasingly concentrated through consolidation, their products increasingly become bland, safe, and undifferentiated (Peterson and Berger, 1975). Over time there is an ever-growing segment of the audience that becomes alienated from the market mainstream, and new producers rise to cater to this demand. As new producers find success, they too consolidate, and then become victim to the inexorable consequences of concentration. Resource-partitioning theory argues that the rise of generalist firms that address a broad range of the market also creates conditions for specialist firms to thrive in the periphery (Carroll, 1985). This is a theory of coexistence of mainstream producers alongside niche players rather than the eventual supplanting of the former by the latter as predicted by the cycle theory. As generalist firms grow in scale, competition among the players increases, and this frees up environmental resources for specialist firms to take root at the periphery and survive (Dobrev, Kim, and Carroll, 2002). The theory of professions suggests that as a service becomes highly standardized, producers have increasing incentives to break out of their regular ‘jurisdictions’ or conventional terrain to seek to produce novel forms of services that are non-standard and less loosely regulated (Abbott, 1988). The rise in the commodification of accountancy-based services influenced the Big-Four producers to seek out novel territory such as management consulting and advisory service that they sought to ‘colonize’ (Suddaby and Greenwood, 2001).

Typology of horizontal differentiation Niches can be thought of as horizontally differentiated market spaces varying along two dimensions (Schot and Geels, 2007). The first dimension is the degree to which products

332   N. Anand and Grégoire Croidieu

High

Breakthrough niche (e.g. consumer electronics)

Low

Fad niche (e.g. seasonal clothing fashion)

Protected niche (e.g. Appellation Contrôlée)

Protection from market forces

Low

Competitive niche (e.g. genre movies)

High

Conformity to convention or technological regime

Fig. 18.1  Typology of niches (Adapted from Schot and Geels, 2007, p. 619)

or services need to conform to a convention or paradigm akin to production and process regimes in the technology industry (Abernathy and Clark, 1985). The second dimension is the degree to which a product or service enjoys protection from market forces bearing down upon it. We present a typology of niches in Figure 18.1. Niches that conform highly to convention and enjoy great protection from market forces are protected niches. Products that are deemed to be from an Appellation Contrôlée, such as Parmesan cheese, are examples of this type of niche. Competitive niches are those that conform to conventions or regimes and do not enjoy much protection from market forces. Genre movies, such as drama or thriller, are good examples of this type. There is a certain type of formula that they have to adhere to and at the same time they do not emerge from monopolies. The top left quadrant in Figure 18.1 is the breakthrough niche: products and services in this niche do not conform to existing convention because of their pioneering nature. They enjoy temporary respite from competition because of lead time or lack of imitators. New consumer goods products such as Apple’s iPod or Sony’s Betamax are examples of breakthrough niche. Finally, fad niches are those that have low conformity to conventions or technological regimes and are not shielded from market forces. Seasonal styles in clothing fashion are an example of this type. Products in this niche tend to be more transient. In summary, the concept of niche is production-centric, or very closely anchored to the orientations and actions that producers take to differentiate their economic activity from competitors in a market space. The concept as used in theoretical accounts does not actively consider the mediation of other parties such as the media, consumer interest groups, and other stakeholders in the shaping of market spaces.

Niches, Genres, and Classifications in the Creative Industries   333

California wine through the lens of niche California wine has also been notably the empirical setting for the resource-partitioning theory of niche. The dominance of generalist ‘factory wine’ producers at the centre of the market created conditions for the emergence and thriving of specialist ‘farm wineries’ at the periphery (Swaminathan, 1995). Farm wineries are defined as those that typically manufacture more expensive varietal wines, often from a designated vineyard operating on a relatively small scale of less than 50 000 cases per year. Despite the increase in the four-firm concentration ratio from 23% in 1940 to over 52% in 1990, founding of farm wineries continued to increase dramatically during the period. This empirical setting has allowed theorists to explain how the evolution of organizational populations determines the dynamics of market niches (e.g. Delacroix, Swaminathan, and Solt, 1989; Swaminathan, 2001). The California wine phenomenon can be theorized from the marketing perspective as a niche that grew over time with changes in customer taste and actions from producers. With the increasing societal affluence, US consumers moved from cheaper ‘jug’ wines to finer ones. The overall price of wine has increased constantly since the 1970s; consumption of wine costing less than $3 per bottle has decreased, and that of wine costing more than $7 per bottle increased. During this time, producers changed wine labelling practice from generic names based on European regions such as Chablis, Rhine, Sauternes, or Champagne to varietal names that reflect the grape variety comprising the wine (e.g. Chardonnay or Pinot Noir). Generic names remained dominant until the end of the 1950s for all types of wines and constituted 75% of the table wine production at the beginning of the 1980s (Sullivan, 1998). By the end of the 1980s, generics accounted only for 35% of the market, being widely supplanted by varietal labelling. Today, the only generics left are mostly sparkling wines and producers still using ‘Champagne’ as a brand name despite various rulings on the use of an Appellation Contrôlée. The level of analysis deployed in the concept of niche seems to focus on the California wine industry or subsets of it, and not so much the broader and more overarching market space.

Genre The concept of genre is a broader one than niche. Although genre can be studied in a narrower milieu in terms of the conventions of production of certain forms of discourse within a delimited community (e.g. Orlikowski and Yates, 1994), it is best understood as the social context of production, regulation, consumption, appreciation, and preservation of forms of cultural experiences. Paraphrasing Lena and Peterson’s (2008, p. 698) definition, we can define genre as systems of orientation, expectations, and conventions that bind together an industry, performers, critics, and fans in making what they identify as a distinctive sort of creative experience. In contrast to the concept of

334   N. Anand and Grégoire Croidieu niche, genre does consider the role of stakeholders beyond producers and consumers in shaping markets. The level of analysis associated with genre takes a broader perspective of industries and markets when compared to the concept of niche.

Genre linked to social context While niche is largely a producer-centric or producer-led conception, genre takes into account the orientations and actions of a multitude of stakeholders. Becker’s (1982) notion of the ‘art world’ takes a significant step in this direction. He resolved the conundrum of categorizing a genre as such by noting that ‘art worlds typically devote considerable attention to trying to decide what is and isn’t art, what is and isn’t their kind of art, and who is and isn’t an artist; by observing how an art world makes those distinctions rather than trying to make them ourselves we can understand much of what goes on in that world’ (Becker, 1982, p. 36). The art world view of genre is that the creation and legitimacy of a certain form of art requires numerous acolytes taking on specific roles besides the artist-producer. Ennis (1992) takes a parallel and more structural view of genre as ‘stream’. Based on his observation of the emergence of the rock and roll genre from out of country music, R&B, and pop stream, Ennis argues that in addition to actors there need to be changes in configurations of existing streams of activity for new genres to emerge. The ‘production of culture’ perspective provides a comprehensive theoretical account of the factors involved in the creation and modification of genres (Peterson and Anand, 2004). The production perspective identifies six factors critical to the shaping of genre: technology, law and regulation, industry structure, organization structure, occupational careers, and market. Changes in technology facilitate the creation of new genres. The emergence of rap as a music genre was facilitated by technology that allowed disc jockeys (DJs) in clubs to combine turntables together to play looped samples while producing a steady rhythm (Lena, 2004). As laws and regulations change, new genres emerge. The absence of strong copyright protection in the United States in the 1800s encouraged the creation of an ‘American’ genre of fiction (Griswold, 1981). The genre was distinctive from the novels of genteel social commentary authored by British writers such as Jane Austen and Charlotte Brontë that were pirated and sold on the cheap across the Atlantic. After the enactment of a robust copyright law in 1909 in the United States, the genres of fiction published in the United States and United Kingdom showed less divergence. The evolution of industry structure also shapes genres. Using the US newspaper industry, Carroll (1985) shows that increasing concentration of organizations producing generalist and standard types of cultural fare seems to facilitate the rise of smaller specialist organizations that help shape an innovative and distinctive genre in the market space in order to fulfil demand that has not been addressed. The mix of organizational structures within an industry also determines the types of genres that are supported. Large and bureaucratic organizations in the fashion industry,

Niches, Genres, and Classifications in the Creative Industries   335 for example, are geared towards producing content for a mass and commercially-oriented market while smaller ones spawn more innovative and distinctive styles (Crane, 1997). Prior career trajectories of those entering a creative industry are also a factor in the creation of new genres. The rise of entertainment-oriented movies in the US. film industry from 1911 onwards was due to the entry of mainly Jewish Eastern European entrepreneurs with a retail and vaudeville background as opposed to the mainly technologically-oriented entrepreneurs that dominated the industry previously (Jones, 2001). As new methods for understanding markets emerge, so do new genres. The use of retail scanner-based technology in the US commercial music industry led to a different understanding of the popularity of various commercial music genres as opposed to the one based on survey methodology (Anand and Peterson, 2000). From the production of culture perspective, the emergence of new genres can be seen as the product of the concatenation of contextual factors associated with the creation, dissemination, conventionalization, and appreciation of new forms of content. Although the process may be triggered by a single facet, as illustrated in the foregoing examples, the other factors too need to be aligned.

Genre evolution How do genres in the creative industries evolve? Recent research from the music industry suggests a prototypical sequence of evolution in four stages from (1) avant-garde to (2) scene, then to (3) industrial, and finally to (4) traditional (Lena and Peterson, 2008). The avant-garde stage of a genre is quite small in scope, involving just a few individuals loosely connected together that interact regularly with the serious and studious intent of creating a new genre ideal that diverges quite radically from mainstream genres. Guitarist Keith Richards traces the origin of his band, the Rolling Stones, to his participation in the avant-garde blues music circle of London in the early 1960s where he was able to seek out like-minded musicians such as singer Mick Jagger, guitarist Brian Jones, and pianist Ian Stewart (Richards, 2010). The scene stage of a genre is one where there is a specific spatial focus—artists, supporting creative producers, and sponsoring organizations cohere in one place or a constellation of places where audiences take root (Bennett and Peterson, 2004). In his autobiography the singer-songwriter Bob Dylan notes that his key motivation to move to New York City from his native Minnesota was to join the nascent folk music scene that was beginning to thrive there (Dylan, 2004). In the third, industrial stage, a genre is sustained by corporate organizations that are eager to exploit its commercial potential: conventions of the genre become highly codified and easily understood. The rise of speciality beers through the microbrewery movement started initially as an avant-garde type reaction to industrial beer, then became anchored to specific cities such as Seattle and San Francisco and then became industrial as large conglomerate breweries such as Coors created ‘speciality’ microbrew products such as Killian’s Red (Carroll and Swaminathan, 2000).

336   N. Anand and Grégoire Croidieu The traditional stage is the final one in the evolution of a genre. In this stage a genre is kept alive more through the memory of activist fans rather than creative personnel themselves. Lena and Peterson (2008, p. 706) cite punk rock as an example of a genre that is no longer commercially important, but remains alive through the activities of those interested in preserving the ‘performance techniques, history, and rituals of the genre’. It is important to see each of these stages as prototypes that are useful in understanding the evolution of genres rather than as a strict sequence in lifecycle terms.

Horizontal and vertical differentiation When both content and context of genre are examined, it is clear that genres are implicated in the sociological process of distinction, that is, horizontal and vertical differentiation (Bourdieu, 1984). Horizontal differentiation is the branching off of one content form from pre-existing ones as happens when new genres emerge. In this sense genres are constitutive in that they allow certain forms of expression but constrain others. There are two implications that follow from the principle of ‘categorical imperative’ (Zuckerman, 1999). First, because each genre is conceived as a distinctive creative experience, the more codified and conventional a genre is, the more attention it is likely to deserve from mediators (such as critics and taste arbiters) that help in its dissemination (Hsu, 2006). Second, genre imposes constraint on what an audience expects of creative personnel or a creative industry product in terms of the breadth of distinctive experience delivered (Hsu, 2006; Rao, Monin, and Durand, 2005). Film music composers and movie actors that stick to specific genres enjoy greater success than individuals that are not typecast (Faulkner, 1983; Zuckerman, Kim, Ukanawa, and von Rittman, 2003). Vertical differentiation is the status-ordering of taste hierarchies. In this sense genres are less about content per se and more about the context of consumption for the purpose of reproducing social stratification. Bourdieu (1993) argues that genre enables social topography with concomitant interests, dispositions, and habits. The production and consumption of mass-market genre as opposed to a more ‘restricted’ form is a means of creating social class distinction between low and high culture (Anhieir, Gerhards, and Romo, 1995). The strict one-to-one mapping between cultural consumption and status has been challenged by the so-called ‘omnivorousness’ hypothesis (Peterson and Kern, 1996), but the fact remains that the context of cultural consumption is typically a marker for social stratification (Johnstone and Baumann, 2007).

California wine through the lens of genre Peterson and Lena’s (2008) definition of genre as systems of orientation, expectations, and conventions applies well to California wine. The various facets of the production of culture are useful in understanding how the California wine phenomenon became

Niches, Genres, and Classifications in the Creative Industries   337 established as a distinctive sort of creative experience and as the example of the ‘New World’ genre of winemaking (e.g. Echikson, 2004; Jamerson, 2009). The trajectory of California wine has been heavily shaped through regulation. Along with the repeal of Prohibition, other forms of regulation such as standard-setting for labelling and allowable ingredients, tax on proportion of alcohol, and incentives for exporting have played a significant and determining role. Aside from formal regulation, the context of wine production is also influenced by normative pressure from professional associations such as the Wine Institute and advocacy groups representing diverse actors such as unions, medical professionals, and environmentalists that seek to impose the interest of their constituents. Lobbying in this manner has led to the creation of American Viticultural Areas (AVAs), which are geography-based appellations (such as Napa Valley or Alexander Valley). AVAs have freed some actors from political boundaries such as county-level authorities, while progressively defining higher standards of quality (Benjamin and Podolny, 1999). Technology has also played a key role in carving out a distinctive space for California wine. The long collaboration between winemakers and scientists from the University of California at Davis has resulted in enological practices that define ‘New World’ wine­ making (Echikson, 2004). Industry structure has also been a determining factor in the types of wines that are produced in California. Increasing concentration of production by the large four firms in the industry has opened up the space for smaller specialist producers, as consolidation of distributors (Pinney, 2005). The mix of small and large forms of organizations has resulted in a creative dialectic process. The majority of foundings in the industry since 1969 have been farm wineries that operate at really small scale of production and distribution, and have set expectations of high quality. On the other hand, larger producers such as Gallo have also been at the forefront of pioneering conglomerate-scale business models that included novel techniques of reputation-enhancement through marketing and branding (Benjamin and Podolny, 1999). As with other creative industries, California wine has developed an occupational career system with the winemaking stars at the centre surrounded by more humdrum personnel such as marketers, viticulture and enology consultants, sommeliers, and unskilled labourers. The perception of quality and the process of price-setting has become closely tied to the reputation of winemakers (Roberts, Khaire, and Rider, 2011). Both the generalist and specialized press have been the ‘midwives of change’ in defining the market for this genre (Rao, Monin, and Durand, 2005). The generalist press with TV shows such as CBS or wine columns in the New York Times or the Wall Street Journal broadly diffused the wine culture and news from the California wine industry. The specialized press with publications such as the Connoisseur Guides, Wine Spectator, or Wine Enthusiast along with trade journals such as Wines and Vines have helped develop a generation of wine critics, wine journalists, and wine writers such as Leon Adams, Robert Parker, and James Laube. These writers have built vocabularies and knowledge that have helped consumers appreciate California wine as a distinctive cultural experience.

338   N. Anand and Grégoire Croidieu California wine has also been an important empirical setting for the study of vertical differentiation. Various studies have looked at how differences in the types of wines produced and consumed are implicated in the production and reproduction of social structure (Benjamin and Podolny, 1999; Jamerson, 2009).

Classification We define a classification as a socially constructed system of categories that reflect taken-for-granted and shared assumptions of actors in a domain. In this perspective, a classification is a cognitive construct that has both enabling and constraining normative consequences, ensuring group cohesion (e.g. Douglas, 1986; Durkheim and Mauss, 1963), conformity in behaviours, and institutional stability on the one hand, while engendering differentiation and institutional change on the other hand (e.g. DiMaggio, 1987, 1988, 1997). The level of analysis associated with classification is broader than genre, given the concern on the organization of social experiences at large.

Classification as shared representations, mobilized meaning systems, and boundary shaping devices Durkheim’s (1965) pioneering work theorized classifications as shared representations that result in group solidarity and community identity. His view was revolutionary in that it conceptualized cognition, not as purely individual, but as being socially situated and collectively grounded. What ‘shared representations’ means exactly has been a matter of much discussion (Thompson and Fine, 1999). Shared could mean that representations are experienced collectively and ‘held in common’ due to spatial, occupational, or market propinquity of actors. This implies that participants in a particular creative industry share classification systems owing to their nearness and frequent interaction, as shown by Anand and Watson (2004) in the commercial music industry. Shared could also mean the representations are ‘divided up into portions’ such that different constituents hold part of the overall representation at different times. Producers and consumers in an industry make sense of categories differently as these emerge and become stable (Rosa, Porac, Runser-Spanjol, and Saxon, 1999). Shared could mean that representations are ‘partaking in an agreement’, which results from a consensus, a settlement, or an acceptance. This implies that classifications are negotiated orders that result from cultural and political processes: producers create, modify, and destroy macro-cognitive structures, while consumers engage in identity movements that provide a personal sense of significance tied to market categories (Porac, Ventresca, and Mishina, 2002; Rao and Kenney, 2008). The more agnostic view of classification as mobilized meaning systems highlights the potential for sense-making, sense-giving, and sense-hiding. In their study of charts

Niches, Genres, and Classifications in the Creative Industries   339 in the US commercial music industry Anand and Peterson (2000) showed that compilers of charts have leeway in defining the scope of the information that is presented. Inevitably, as some market trends are emphasized, others can be obscured. In general, dominant incumbents play a key role in shaping sense-making within an industry because media organizations often rely on them for information, support, and revenue, and are thus in a position to influence the creation of new categories (Negro, Kocek, and Hsu, 2010). Croidieu and Monin (2010) argue that classificatory schemes, such as the château winemaking identity in Saint-Emilion, are also ‘sense-hiding’ in that they preclude reflexivity and the exploration of alternatives, such as ones promoted by the cooperative or the garage movement. A third approach to classifications depicts them as boundary shaping devices that help separate out spheres of identity, competence, and power (Santos and Eisenhardt, 2005). As boundaries are constructed, social, cultural, and material resources are distributed (Negro, Kocak, and Hsu, 2010) resulting in strong normative pressures within established categories (Zuckerman, 1999). The work of Rao, Monin, and Durand (2003, 2005) reveals how the struggle to carve out the nouvelle cuisine category from classical French gastronomy simultaneously involved boundary-making in terms of new culinary competence that was tied to the quest for an identity and control over market power. From a general standpoint, classifications create differences between category members while presupposing commonalities among them. Building on Lakoff (1987) and Rosch (1973, 1975), Hannan, Polos, and Carroll (2007) explore the consequences of conceptualizing categories not as homogenous ‘recipient’ but as fuzzy sets organized around prototypes. Related studies in the wine (Negro, Hannan, and Rao, 2010) and movie industries (Hsu, 2006) revisit the consequences of violating the ‘categorical imperative’ depending upon characteristics of the category members and audiences. As boundary-shaping devices, classifications also rely on labels and naming processes that have performative consequences and that bring coherence and portability to the new category within a larger classificatory system (Douglas, 1986). Classifications rarely operate in isolation; they are often thought of in respect of other classifications as Zhao (2005) has shown in his analysis of wine categorization in France and California and as Kennedy (2008) has shown in his study of the linguistic strategies used in legitimizing new market categories. In their study of the emergence of the Modern Art category in India, Khaire and Wadhwani (2010) show how emerging categories become commensurate with prior ones, which facilitate their integration with pre-existing classifications.

Evolution of classification systems Several perspectives account for the evolution of classificatory systems. What they share is their emphasis on collective identities to account for the evolution of classifications, and where they differ is in terms of the types of actors involved and the manner in which existing classification schemes are challenged.

340   N. Anand and Grégoire Croidieu Social construction theories pay specific attention to how classification schemes emerge and come to be shared. Berger and Luckmann (1966) view classifications as arising from the need to resolve collective problems. At first, actors adopt behaviours that solve recurring problems. These behaviours become habitualized and are evoked with minimal effort in response to particular stimuli. Over time these behaviours diffuse as taken-for-granted so broadly that those who lack direct knowledge of the origins of the behavioural response treat these as given. Jones, Maoret, Massa, and Svejenova (2011) show that the new category of ‘modern architecture’ emerged as architects in the early twentieth century confronted problems of using novel materials such as glass and steel, and of having to construct tall buildings housing technological innovations such as the elevator. These problems were novel, and could not easily be solved by analogy to existing categories of building construction. Architects converged on three very different ways of resolving constraints—subsequently termed ‘revivalist’, ‘modern organic’, and ‘modern functionalist’. Over time these became taken-for-granted in the repertoire of modern architecture. Institutional theory emphasizes the manner in which classification schemes change through the acts of agentive actors, highlighting the role of institutional entrepreneurs (DiMaggio, 1988), cultural entrepreneurs (Lounsbury and Glynn, 2001), and social movement activists (Lounsbury, Ventresca, and Hirsch, 2003). For instance, Navis and Glynn (2010) use the example of the satellite radio industry to show how new market categories are shaped both by entrepreneurs promoting the new market and by interested audiences. They show how collective identities are built and framed to legitimate the new market category, resulting in group solidarity and in the integration of the new category in a larger classificatory system. Once the new category is taken-for-granted, attention of entrepreneurs and audiences shift. They focus then on individualistic identity claims within the new category which result in differentiation and competition. Institutional theory also elucidates the evolution of classifications through the study of processes of theorization (Greenwood, Suddaby, and Hinings, 2002), translation (Zilber, 2002), importation, transposition, and recombination processes (Clemens, 1996; Stark, 1996).

Horizontal and vertical differentiation Pioneering work on classification in organization theory focused on aspects of horizontal differentiation. For example, Porac and Thomas (1990) argued that producers in an industry were bound together in a classification system that helped them make sense of who they were similar or dissimilar to, and at what level of granularity. Similarly, consumers use classification systems to differentiate among product offerings in a market, and especially, to make sense of similarity or dissimilarity between new products and existing ones (Rosa et al., 1999). Vertical differentiation is one of the most powerful consequences of classification. Bowker and Starr (1999, p. 33) argue that classification systems essentially ‘disappear by

Niches, Genres, and Classifications in the Creative Industries   341 definition. The easier they are to use, the harder they are to see.’ Classification systems begin as seemingly technical solutions to recurrent problems. However, technical solutions are rarely socially or politically neutral; there is always an implication of superiority and inferiority, advantage and disadvantage, exploiter and exploited. The power of classification systems is in their ability to hide these vertical differences (Lukes, 2005). Although there are initial struggles over the acceptance of a particular solution, over time as the classification system grows, the initial impetus for its formation is forgotten or even perverted. When evoked repeatedly, a classification system becomes naturalized and taken-for-granted (Bowker and Starr, 1999).

California wine through the lens of classification The evolution of the California wine industry was shaped by multiple and partly overlapping categories that structured the perception of the actors. Two categorical struggles have been significant in the industry. The first concerns the difference between the categories of ‘wine factories’ and ‘farm wineries’. The rise of the farm winery organization form largely led to a shift from ‘jug’ to ‘fine wine’, and market categorization evolved from ‘fortified wine’ to ‘table wine’ and from ‘generic’ to ‘varietal wine’, while ‘blends’ were being replaced by ‘geographically-based’ wines (e.g. Swaminathan, 2001). The second struggle revolves around the establishment of California as a fine-wine producing region in the globalizing marketplace and in contradistinction to French wine. Empirical studies of these struggles support the idea that classifications are social constructions (Berger and Luckmann, 1966) and highlight the interplay between institutions and classifications (Douglas, 1986; Zhao, 2008). The distinction between the categories of factories and farm wineries has been the outcome of a long cultural and political struggle about the positioning of the industry. This struggle can be seen in the evolution of the basis of differentiating the quality of wine, which shifted from an administrative classification according to the degree of alcohol, which used a 14% threshold to discriminate fortified from table wines, in the 1960s and 1970s, to the viticultural area and grape variety in the 1980s. We can also interpret the changes in labelling practices as fundamental classificatory processes that deeply shaped the evolution of the industry. Before the 1930s, there were no varietal wines in California, zinfandel being the only exception (Sullivan, 1998). In the 1950s, Frank Schoonmaker, an influential merchant and wine writer, championed the promotion of varietal wines in order to improve the market positioning of the industry. As soon as the 1960s, this new labelling practice became dominant. However, the legal definition evolved at a much slower pace as the administration enforced the requirement of at least 75% of a named grape, as opposed to 51% previously, in 1983, the issue being contested until a final settlement in 1996. During this period of struggle, farm wineries were keen to promote grape type and geographical appellation with as much fidelity as possible; factory wineries were keen to continue exploiting the loose-coupling between labelling and (legal) winemaking practices to protect their brands. In the past 30 years,

342   N. Anand and Grégoire Croidieu the farm wineries’ struggle to recouple these practices (Hallett, 2010) has contributed to the diffusion of a shared representation of California wine. The second categorical struggle revolves around the positioning of Californian wines vis-à-vis French wines in the global marketplace. France has traditionally been considered the supreme region for quality wines, an attribution that was sought be formalized in the 1855 classification of fine wines drawn up by the Bordeaux Union of Brokers (Croidieu, 2011). This classification has been a hegemonic reference point for evaluating the worth of wines. Partially to avoid direct status comparison, wine classification systems in California revolve around grape-type rather than region of growth (Zhao, 2005). The 1976 ‘Judgment of Paris’ event that consecrated the triumph of unknown Californian wine pitched in a wine tasting competition against the best French wines, enabled the diffusion of a shared representation of the California wine industry as a fine wine region, resulting in a greater cohesion and solidarity among actors (Anand, 2011). Another factor that has helped in improving quality perceptions of Californian wine has been the popularity of the wine rating system developed by the critic Robert Parker, which seeks to create a common metric for evaluating wines based on what is in the bottle rather than pedigree and geographical origin (McCoy, 2005).

Conclusion In this chapter, we have reviewed and synthesized multiple perspectives on the concepts of niche, genre, and classification. The concept of niche largely concerns the unmediated actions of producers on a market space. Through this concept, producers are seen primarily as economic actors reacting to their environment in making choices about factors of production that capitalize on opportunities to optimize their financial perform­ ance. Actions linked to these choices enable producers to broaden the range of products offered within an industry. The concept of genre is concerned with the coordinated behaviour of producers, audiences, and other mediating agents. Producers are conceptualized as actors within an amalgam of creative as well as commercial motivations, and as agents active in co-opting a wide range of stakeholders in creating new forms of cultural experiences. The concept of classification concerns the cognitive infrastructure of categorical systems that furnish the taken-for-granted assumptions of actors within a domain that defines their role and the scope of their agency. In this view producers are seen as vested actors implicated in the creation, preservation, modification, or destruction of macro-cognitive structures that undergird the creative industries. The concept of niche views markets as an economic resource primarily comprising consumers. In the marketing approach, for example, niches are small markets comprising consumers whose needs are not satisfied by mainstream offerings. In the concept of genre markets are seen as mediated social constructions generated through the interaction of producers, consumers, and media actors seeking to create, preserve, or supplant cultural forms. In the concept of classification, markets are seen as outcomes of

Niches, Genres, and Classifications in the Creative Industries   343 categorical struggles to define the constitutive character of an industry. Consumers are seen as participants in social movements that are implicated in categories that speak to their identity and personal sense of significance. Changes in market categories, from this perspective, have the potential of changing the identities of producers and consumers. In conclusion, it seems that the theoretical utility of theories of niche, genre, and classification is dependent upon the evolution stage of the focal industry. The level of analysis used with these three concepts varies from niche as the most micro and classification as most macro. Looking at the California wine industry, it seems that niche theories are particularly suited to account for industry stages in which horizontal differentiation is key (e.g. Swaminathan, 1995, 2001). In models of resource partitioning and cyclical symbol production, for example, the concept of niche is evoked in examining actions of specialists that try to carve out a different niche from pre-existing mainstream or generalist producers. Theories of genre are probably the most polyvalent theories as the production of culture approach accounts for the emergence of genre, while recent developments suggest key sequences from nascent to decaying stages (Lena and Peterson, 2008). The concept of classifications seems also to be particularly suited to account for periods of pronounced dynamism in an industry, for example when existing categories are challenged, or when new ones are sought to be created (e.g. Croidieu, 2011). The theoretical utility of classification is somewhat limited at the stable stage of an industry where taken-for-granted assumptions are not experiencing significant challenge. The interrelated concepts of niche, genre, and classification are frequently evoked in studies of the creative industries. This article represents the first effort to delineate these concepts, and no doubt the field will benefit from further empirically grounded research that delineates the scope and theoretical utility of each.

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Pa rt  5

I N DU ST R IA L ORG A N I Z AT ION A N D C R E AT I V E E C ON OM Y

Chapter 19

Su nk C osts a nd the Dy nami c s of Creative Indu st ri e s 1 Gerben Bakker 2

Introduction Over the past two centuries several forms of mass entertainment have become industrialized. Motion pictures, for example, were adopted to automate, standardize, and make tradable live performances, the gramophone to industrialize live music, and videogame consoles to industrialize all types of board and card games. Yet new and old forms of entertainment, big-budget productions and shoestring projects, homogeneous and diverse markets often survived in an uneasy coexistence. Music recording did not kill live performances, Hollywood blockbusters did not eradicate the art-house film, and best-sellers did not destroy the enormous diversity of idiosyncratic books. The main aim of this chapter is to explain long-run change in the entertainment industries, to develop an overarching conceptual framework to understand their dynamics since the mid-nineteenth century, especially those of sub-industries such as live entertainment, motion pictures, music, and videogames. This leads to three research questions: • What are the defining economic characteristics of entertainment industries? • How have these shaped historical processes such as industrial concentration, vertical integration, and agglomeration over the past two centuries? • How have these shaped the ‘product space’, the coexistence of old and new forms, big and small producers, homogeneous and diverse markets? This investigation is worthwhile because it yields insights into the process of long-run change in the creative industries and might thus help practitioners and policy-makers to

352  Gerben Bakker understand and anticipate the shape of things to come. A focus on the long run allows us to see trends and changes that are not visible in the short run. To understand what drives the dynamics of the creative industries, it does not suffice to study the recent period since the 1990s. We need to go further back in time. In essence, this chapter does three things:  it combines an overarching conceptual framework with a focus on long-run change and the analysis of historical evidence. Existing works that focus almost exclusively on the first aspect, an overarching conceptual framework, include Vessillier (1973), Heilbrun and Gray (1993), Scott (2006), Cowen (1998, 2002), and Throsby and Withers (1979). Literature that deals almost exclusively with the third aspect, the analysis of historical evidence, includes Wasko (1982), Dale (1997), Le Roy (1990, 1992), Sedgwick (2000), and Waterman (2005). Works that address both the first and the third aspect, but do not explicitly try to conceptualize and analyse patterns of long-run change include Vogel (1986–2010), Caves (2000), and Hofstede (2000). Works that address all three aspects are sparse. They include the monumental ‘total’ histories of the global film industries by the French film historians Jean Mitry (1967–80) and Georges Sadoul (1948–54, 1972), the work by Kristin Thompson (1985) on the international expansion of the early Hollywood industry, Michael Chanan’s (1980) account of how cinema emerged from a range of popular entertainments, and Baumol and Bowen’s (1966) analysis of the evolution of performing arts’ costs in the United States. What follows will qualitatively analyse structural change in the entertainment industry since the mid-nineteenth century. First the chapter looks at ways to conceptualize and quantify the subsequent waves of creative destruction, and then investigates how sunk costs affected industry evolution through its interaction with variety, market integration, product differentiation, and price discrimination. A  subsequent section will discuss four economic characteristics that drove the evolution of the entertainment industry: how sunk costs led to quality races; marginal revenues equalling marginal profits to vertical integration; toll good characteristics to business models centred around points-of-exclusion; and the industry’s project-based character to agglomeration. A final section concludes.

The Process of Creative Destruction Industrialization and the shifting production possibility frontier During the late nineteenth century, demand for entertainment increased sharply, driven by growth in leisure time, discretionary income, and population. In addition, the demand was focused spatially by urbanization and by the growth of rapid local transport networks (Bakker, 2008).

Sunk Costs and the Dynamics of Creative Industries   353 Stimulated by this booming demand, entrepreneurs adopted new technologies such as the phonograph, motion pictures, radio, and television to automate and standardize entertainment and make it tradable, thus industrializing it. Automation resulted in low and flat marginal costs of offering additional viewings, compared to high fixed and sunk costs of making the prototype (the film negative, the manuscript), enabling massive scale economies. Thus the printing press industrialized handwritten manuscripts and verbal communication, cinema theatrical entertainment, the gramophone musical performances, and videogames the playing of games. The tradability of performances themselves (performers being shown in many venues simultaneously) led to the integration of regional and national entertainment markets. The resulting product standardization homogenized the consumer experience. This industrialization was brought about by several waves of creative destruction that swept the industry. Schumpeter (1942) originally introduced the concept of creative destruction as the way in which a new way of doing business competes away the old ways and products. Creative destruction is intricately linked to dynamic efficiency: an industry can be statically efficient if price equals marginal costs (allocative efficiency), and if all firms use the most efficient technology available (productive efficiency). Yet a statically efficient industry need not be dynamically efficient: it may not develop new products, new processes, new markets, new sources of supply, or new organizational forms, and herein, according to Schumpeter, lies the defining characteristic of capitalism: that it never is in equilibrium, but always changing from one equilibrium to the next, like a person walking. Once one equilibrium is being approached, a new better one has become possible, and entrepreneurs jump on the new opportunities offered. Thus instead of eating away at the margins, creative destruction threatens the very survival of entire firms and industries. In many industries one can see waves of creative destruction in which a new product sweeps away old products, but in entertainment old ‘products’ often survive in new, differentiated guises. A way to further conceptualize the process is the production possibility frontier originally introduced by one of Schumpeter’s contemporaries, Gottfried von Haberler ([1930] 1985). Dynamic efficiency is a process in which the frontier is being pushed outwards continuously. A production possibility frontier can show the trade-off of a society in consuming entertainment and all other products (Figure 19.1). Inside the frontier C–F, say from A to B, we can get more of both goods by using more efficient existing technology. At the frontier, starting from C to D, initially we get lots of entertainment by giving up a little of all else, but eventually we get less and less additional entertainment for an additional amount of other goods we give up. Point D is productively efficient because it is on the frontier, but not allocatively efficient, as it is not on the highest utility curve possible, unlike point E, which is both. Under competitive conditions, at point E the slope of the frontier equals the price of entertainment relative to all other products (pe/po). The second production possibility frontier, C–G, shows the

Quantity of all other products and services →

354  Gerben Bakker

C D

E B A

F

G

Quantity of entertainment products and services →

Fig. 19.1  Hypothetical production possibility frontier for entertainment and all other products and services

effect of dynamic efficiency, brought about by innovations such as motion pictures and the gramophone. Over the last one and a half centuries a series of innovations shifted the frontier outwards, followed by a series of jumps in which the industry moved closer to the frontier, but by the time it reached the new frontier, fresh innovations had shifted it outwards again. In live entertainment, for example, several exogenous innovations, ranging from urbanization and steel-frame buildings to the railroads, shifted the frontier outwards, and entrepreneurs jumped on it by building high capacity fixed theatres and founding central booking offices directing theatre groups by telegraph over railroads along the most efficient routes (Table 19.1). Other entrepreneurs built entire movable theatres on boats visiting cities along a river. Likewise, for motion pictures seven preconditional technological changes shifted the production possibility frontier outwards, ranging from projection in 1654 to sensitive emulsions in 1888, making possible the invention of cameras, film stock, and projectors. These again shifted the frontier outwards, leading to the innovation of fixed cinemas by the mid-1900s, which again shifted the frontier outwards, leading to feature films by the mid-1910s, and so on. Likewise for music, innovations such as barrel organs, disc-based music boxes, and recorded sound shifted the frontier outwards, eventually leading to the phonograph. For videogames, exogenous technological changes such as board games, pinball machines, computer software, and microprocessors shifted the frontier outwards and enabled the introduction of arcade game machines by the late 1960s, shifting the frontier further outwards and later enabling the innovation of home videogames.

Table 19.1  Qualitative analysis of successive shifts in the production possibility frontier for various forms of entertainment during the nineteenth century Exogenous technological change

First-order outward shift of PPF related to entertainment

Second-order outward shift of PPF related to entertainment

Theatre

Steel-frame buildings (19th c.) Railways (c.1840) Telegraph (1837) Urbanization (18th c.) Increasing income Switch to measured time Steamships Deregulation of theatre

Steel-frame theatres (early 19th c.) Show boats Many more theatres Stock/repertory theatre (same actors, different plays)

Theatre circuits Novel additional circuits offering different forms of entertainment (opera, big and small-time vaudeville, burlesque)

Motion pictures

Projection (1654) Persistence of vision gadgets (1826) Photography (1839) Celluloid (1868) Positives and negatives (1887) Celluloid sheets (1888) Roll film (1888) High-sensitivity emulsion (1888)

Motion picture cameras (1891) Motion picture film stock (1891) Film projection (1895)

Cinemas (c. 1905)

Music

Spiral spring (15th c.) Cylindrical home music systems (15th c.) Small cylinder music boxes with cam, not bells (1796) Barrel organs (c.1800) Barrel organ books (1892) Recording of sound (1850s) Engraved interchangeable discs & music boxes (1870s) Recording and playback of sound (1873)

Phonograph (1873)

Phonograph and gramophone used to record and sell music (1890s–)

Videogames

Board games (since times immemorial) Mechanical arcade machines (e.g. pinball) Microprocessors (1957) Simulation software (1960s) Home computers (1977)

Arcade game machines (1970s)

Home game consoles (various generations since 1970s)

Note: PPF = Production possibility frontier (see text). Sources: see text and Bakker (2006, 2008, 2010).

356  Gerben Bakker Table 19.2  Contributions to output growth in spectator entertainment, 1900–1938, per cent per annum US

UK

France

8.6

3.2

5.9

Capital

1.2

0.9

0.8

Labour

2.0

1.2

1.1

All above inputs

3.2

2.1

1.9

TFP

5.4

1.1

4.0

Output growth Contributions

Notes: The capital income share is set at 0.25; labour includes both the growth in labour quantity and labour quality. Source: Bakker (2008); because of unique sources, the US growth rates could be estimated more precisely and are based on Bakker (2012); they may not be fully comparable with the French and British rates.

Measuring dynamic efficiency A quantitative proxy of creative destruction is the growth in total factor productivity (TFP), or how much faster outputs grow than inputs, reflecting a more efficient use of production factors. Although few estimates exist, available data for spectator entertainment in the United States, Britain, and France for the 1900–38 period show a TFP increase ranging from 1.1% to 5.4% per annum, suggesting that the effect of dynamic efficiency was substantial (Table 19.2). In 1938 the USA produced ten times as many spectator-hours per unit of labour and capital than in 1900, and Britain (already highly productive in 1900) about one and a half times as many. The US data can be disaggregated into a 7.2% per annum TFP growth for film and 0.5% for live (Bakker, 2012), showing that, even while under threat from film, live entertainment in 1938 produced 20% more output per input than in 1900.3 Slightly less reliable data for France show TFP growth of 4% per annum, with 1938 TFP four times as large as in 1900. These numbers suggest that dynamic efficiency in entertainment was larger than in almost any other industry, and studies of the phonograph, radio, and television would probably further reinforce this finding. A second way to proxy an industry’s dynamic efficiency is its revealed comparative advantage (RCA): its share in a country’s exports over the worldwide industry’s share in global exports. The higher this ratio is above unity, the higher the RCA of the particular industry. Work by Nicholas Crafts (1989) shows rankings of the RCA for tradable entertainment products in a category he calls ‘Book and Film’ that comprises most media products, including books, magazines, and records (Table 19.3).

Sunk Costs and the Dynamics of Creative Industries   357 Table 19.3  Revealed comparative advantage (RCA) rankings of the tradable entertainment sector for selected countries, 1899–1950 Rank of tradable entertainment products 1899

1913

Britain

14

United States Japan Belgium

Change

1929

1937

1950

1899–1929

1899–1950

13

6

8

10

8

4

13

10

6

7

6

7

7

10

8

5

4

6

5

4

13

13

14

10

8

−1

5

Switzerland

8

10

9

8

8

−1

0

Italy

6

6

8

7

6

−2

0

India

6

7

8

6

6

−2

0

Germany

1

2

3

4

3

−2

−2

Sweden

10

11

12

13

13

−2

−3

Canada

4

8

8

8

11

−4

−7

France

3

4

10

3

6

−7

−3

Notes: The countries are ranked by the growth of their RCA in tradable entertainment between 1899 and 1929. Tradable entertainment products are labelled ‘Book and Film’ by Crafts (1989), and comprise the following: ‘books, periodicals and all printed matter, agendas, notebooks and boxed stationery, pens, pencils, toys, games and sports goods, gramophones, musical instruments, cameras, optical instruments, films and photographic paper, paintings and works of art’. The table shows the RCA rank of ‘Book and Film’ within 16 manufacturing industry groups that comprised ‘Iron and steel, non-ferrous metals, chemicals, bricks and glass, wood and leather, industrial equipment, electricals, agricultural equipment, rail and ship, cars and aircraft, alcohol and tobacco, textiles, apparel, metal manufactures, and fancy goods’. The first number, 14, for example, shows that ‘Book and Film’ had an RCA that ranked 14 out of the 16 British manufacturing sectors in 1899. Source: Crafts (1989, pp. 130–131).

The data show that the ranks varied substantially among countries. In Germany in 1899 ‘Book and Film’ was one of the top performing sectors, while in Britain and the USA it was one of the lowest performing sectors. Between 1899 and 1929, however, Book and Film’s RCA in Britain and the USA increased rapidly, by eight and seven ranks respectively, suggesting that the increasing tradability of entertainment benefited the entertainment industries in these two countries. Only Japan also showed an increase in entertainment RCA during this period. In Germany, France, Sweden, and Canada the RCA of tradable entertainment declined substantially. Yet, in absolute terms, German RCA in tradable entertainment remained the highest of all countries throughout the period, except for 1937. France, India, and Japan held a surprisingly high RCA in tradable entertainment, in many years higher than the USA, though by 1950 their rank had

358  Gerben Bakker become the same as that of the USA. The high degree of aggregation and the inclusion of non-entertainment products make more precise conclusions difficult. Another proxy of dynamic efficiency is the number of new products. This is not always easily measurable, although existing studies suggest a sharp increase in variety, based on the number of music copyrights registered, films and TV programmes released, and books published.4 We will now turn to the interaction between variety, sunk costs, and industrialization.

Sunk Costs and the Industrialization of Entertainment Sunk costs are incurred once and cannot be recovered when exiting a business. Fixed costs, such as wages, rent, or electricity costs for a factory, are incurred periodically and can usually be avoided. Endogenous sunk costs such as advertising or R&D can be chosen by the firm, and do not have a minimal exogenous level. Costs such as film production, scouting for and recording of musicians (Artists and Repertoire—A&R), or developing videogames are endogenous sunk costs because they are incurred once, cannot be recovered other than by selling tickets, and their level can be chosen (Bakker, 2005, 2013). This section will investigate how sunk costs and variety were affected by the industrialization process, the role of product differentiation, and the relation between sunk costs and price discrimination.

Sunk costs and variety The existence of fixed (and partially sunk) costs is the reason we do not have a world of infinite variety. Each consumer is unique in her tastes, and the resulting difference in the valuation of goods and services makes profitable exchange possible. All consumers’ utility could be maximized by crafting entertainment products for each individual, but the existence of fixed and sunk costs necessitates the making of entertainment products that are somewhat different from each consumer’s optimum (Figure 19.2). A second, similar trade-off is that between variety and efficiency. In the extreme, zero variety (high sunk costs per prototype and low average costs per viewing) maximizes efficiency, while endless variety (low sunk and high average costs) minimizes it. One could envisage, for example, only 25 films being produced worldwide annually, satisfying all demand—enough to see one new film a fortnight, plus a menu of older films. If total consumer expenditure remained constant, a massive increase in TFP would take place, as the same output is now produced with fewer inputs. In extremis just one film

Variety →

Sunk Costs and the Dynamics of Creative Industries   359

Sunk costs →

Fig. 19.2  Stylized relation between sunk costs and variety of entertainment products

would be made, which consumers would see over and over again, ostensibly increasing TFP to orgasmic heights. Obviously, consumers enjoy variety and would regard the availability of just one film as a massive decrease in output, even if they could watch it many times and in many different ways. Each consumer prefers entertainment products fully crafted to their own tastes. The set of different media products consumed—books read, films watched, music listened to—is unique for every consumer. It is well nigh impossible among the six billion inhabitants of the earth to find two souls that have consumed exactly and strictly the same collection of entertainment. Economic theory (Krugman, 1979) and empirical research suggest consumers strongly prefer variety. Broda and Weinstein (2006), for example, find that the benefits of the increasing variety of imported consumer products between 1972 and 2001 added 2.6% to US GDP. The degree of variety that actually materializes in free exchange is per definition suboptimal as it does not tailor each product to a specific consumer. It depends on the fixed and sunk costs needed to develop the product, but also on an inter-temporal information asymmetry: distributors do not fully know ex ante which product will sell and therefore need to distribute more than one product to make sure capacity (cinema seats, DVD shelf space, TV time slots) is used optimally. Even if consumers did not love variety, the studio would need to produce a portfolio of films to discover the best film consumers like. The mirror image are consumers who do not fully know ex ante how satisfying they will find a film, and this also makes tailoring entertainment perfectly to each individual consumer impossible, even without fixed and sunk costs. In other words, producers who don’t know what will sell make products for consumers who don’t know what they want.

360  Gerben Bakker Table 19.4  Stylized comparison of household versus market production of entertainment Household production

Market production

Sunk costs

Limited costs per prototype

High costs per prototype

Quality

Limited quality

Higher quality

Market size

Small and closed

Large and open

Market integration

Low

High

Differentiation

Perfectly differentiated to the taste of a particular household

Imperfectly differentiated to the taste of each particular household

Total amount of variety

Infinitely many varieties produced in total

A limited amount of variety produced in total

‘Effective’ amount of variety

Limited set available for each household given sunk costs

Large set available for each household, since sunk costs ‘shared’

Model

Traditional

Capitalist / exchange

Efficiency

Lower

Higher

Over-all

Perfect differentiation, limited Homogenization, large available available variety per household, variety per household, market traditional production—no market exchange—price/quality signal or price/quality signal

Sources: see text and Bakker (2008).

Only if consumers were completely indifferent to variety would they be happy with just one film being made, as the pleasure of seeing the biggest budget highest pleasure-giving movie many times would outweigh the reduction of variety to zero. Although this situation seems far-fetched for commercial entertainment products, with experiences such as religious prayers, texts, and rituals, or with centrally prescribed school textbooks in centrally planned economies, users consume a single prototype many times—and that actually constitutes the value of the experience.5 Both cases suggest that variety, for better or for worse, is intricately linked with modern capitalism, as free exchange is based on everybody having different preferences.

The effect of industrialization on variety Since the middle of the nineteenth century an industrialization process has shifted household production of many different products (songs, plays, poems, home-made toys) with limited fixed costs, and quality closely tailored to individual preferences, towards a more centralized production of far fewer products with high fixed costs and a quality less tailor-made to individual preferences (Table 19.4).

Sunk Costs and the Dynamics of Creative Industries   361 At the economy level, two forces were at work. First, new technologies such as centrally booked, railway-routed theatre circuits, cinema, and the phonograph shifted the production possibility frontier outwards. Sunk costs per prototype became far higher, but average costs per viewing became far lower. At any level of variety, more quantity could be produced. Second, in a self-reinforcing process, this stimulated market integration which then in itself further stimulated the growth of sunk costs. As a result, at the aggregate level, there was probably less variety as a whole in a country, as an enormous archipelago of small islands—the individual households—producing a large part of their own entertainment, gave way to national markets with concentrated production. At the household level, the extreme product differentiation, in which each household made its own products, disappeared. But in return each household now had access to a far larger variety of entertainment products, from which it still could choose its own truly and strictly unique combination, and of which it now could afford to consume a far larger quantity. The fixed and sunk costs per household probably declined, and rising wages increased the opportunity costs of household production. In nineteenth-century Britain, for example, the industrialized areas had the largest provision of commercial entertainment (Sanderson, 1984). Technological change since the 1950s has made the exogenous sunk costs of producing a record, film, or book—the minimum cost needed to produce a complete ‘prototype’—far lower. While for long, for example, a large recording studio was needed to make a record, since the 1980s artists have been able to produce records from their own home. Sharply declining exogenous sunk costs should lead to more variety, but were mitigated by a competitive escalation of endogenous sunk costs, leading to a dual market structure, with both mass-marketed blockbuster products and a second market with an almost infinite variety of differentiated products (see section 4, below). The evolution of exogenous sunk costs may have followed an inverted U-shape, with the difference that the pre-industrial low costs were incurred for isolated sub-markets, which together formed an infinite archipelago of largely autarkic household islands in a national economy, while the present-day post-industrial low-costs are incurred for an archipelago of specific ‘isolated’ market segments (Figure 19.3).

Dynamic product differentiation Despite the waves of creative destruction that have swept the entertainment industry since the early nineteenth century, old formats often did not disappear but instead reinvented themselves. Today theatre plays, musicals, and operas are still performed, despite the availability of radio, television, and Internet, because entrepreneurs adopted product differentiation to survive creative destruction. Product differentiation can take place across many dimensions. Horizontally differentiated products are aimed at customers who will not easily switch to another product even if its quality increases, such as a pop music fan who never listens to operas no

Exogenous sunk costs →

362  Gerben Bakker

Pre-industrial

1910s-1950s

1980s

Now

Fig. 19.3  Hypothetical evolution of exogenous sunk costs needed for the production of an entertainment prototype, pre-industrial times to the present

matter how much their quality is increased. Vertically differentiated products are clearly viewed as superior over others along a dominant quality dimension. Informationally differentiated products vary by the extent to which consumers know about them, and can be influenced by advertising. Since they increase with variety (Stigler, 1961), consumers’ search costs are high for entertainment products. Entrepreneurs attempt to differentiate their products informationally by escalating promotional expenditure. Marketing costs as share of Hollywood’s production expend­ iture, for example, are exceptionally high. Within the same product such as a particular mainstream feature film, the differentiation criterion is often the means and time of viewing, varying from first-run cinema to television, each at a consecutively lower price (Table 19.5). Besides mainstream, vertically differentiated Hollywood films, there is a second, fragmented market for independent art-house films, horizontally differentiated from each other and collectively from the Hollywood films. Between product categories differentiation is usually more based on style and format, both horizontally and vertically. Some categories such as opera also contain a large club-good character when they become a way to meet like-minded persons. Industries can be ranked informally by relative horizontal–vertical differentiation and low–high sunk costs (Figure 19.4). Vertical differentiation implies that consumers will turn their backs on lower-quality products when higher-quality products appear, so that producers are disproportionately rewarded for a quality increase, which under some conditions leads to quality races.6 Horizontal differentiation implies that consumers value variety and that few products will obtain a large market share. In practice, in

Vertically differentiated

Hollywood films Videogames Musicals Museums Concerts Fiction publishing

Opera 1st class theatre

Television

Comics

Horizontally differentiated

Amusement parks

Recorded music Academic publishing

Newspapers

Art-house films

Music hall Vaudeville Burlesque

Stock theatre Radio Advertising agencies Architects Magazines

Lower sunk costs

Higher sunk costs

Fig. 19.4  Informal comparative ranking of sunk costs and product differentiation across various entertainment products and services

Table 19.5  Product differentiation within and between product categories

Within product category

What is differentiated

Price discrimination

Differentiation criterion

Within same product

A particular product, such as a film seen in cinema, on TV

Partially coincides with price discrimination

Mode of viewing; point in time (not the product itself)

Between products

Dual market structure; Hollywood films vs. art-house cinema

Less to do with price discrimination

Content of product

Opera, first-class theatre, vaudeville, motion pictures, etc.

Coincides with different prices but also different costs and different products

Style and format of product

Between product categories

Sources: see text.

364  Gerben Bakker most creative industries products are both vertically and horizontally differentiated to varying degrees. The more vertically differentiated, the higher endogenous sunk costs can be, as they can be amortized over a larger volume. Products such as Hollywood films and videogames are far more vertically differentiated than music, television, and art-house films. This phenomenon of the survival of old media in a different form surfaced time and again in the history of the entertainment industry. We will call it here dynamic product differentiation.7 Although old formats did not disappear, they also did not stay the same, but differentiated themselves in the face of competition from the new medium. Often they could not offer as low prices as the new medium and therefore would focus on a wealthier audience segment—the part of their previous audience with the highest willingness to pay—such as many forms of live entertainment did after cinema. Sometimes they could not offer the premium quality of the new segment and therefore would focus on an audience with a lower willingness to pay or in a different segment, such as free TV after cable TV and radio after television. Radio, for example, sharply reduced advertising rates and refocused on segmented markets and on situations where television was not feasible, such as while driving, working, or shopping. That old media did not simply disappear was partially because of their unique assets, such as theatre locations and production know-how. Some of these assets were moved into new media. Many theatres were converted into cinemas, creative live professionals moved to film production, musicians began to make recordings, and radio game shows transferred to television. Distribution capacity had always been scarce, so old delivery systems could still be used to serve specific segments. Each new medium increased capacity and allowed more market segmentation, the widest channel focusing on the lowest common denominator. Old media output often shrank in relative terms. Between 1900 and 1938, for example, US live entertainment attendance declined 1.3% a year on average, to 60% of its original quantity, but in relative terms it had declined far more steeply, to only a few per cent of all spectator entertainment (Bakker, 2012). Live entertainment was an iconic example of dynamic product differentiation. In the course of the nineteenth century many new forms developed which still existed in the Boston market in 1909 (Figure 19.5). The shape of the demand curve, with high price elasticity at high prices and low prices, and rather moderate elasticity in between may to some extent explain the time lags in dynamic product differentiation. In a discovery process, entrepreneurs had to find out what was the demand for new innovative forms of entertainment. The low elasticity in the middle part of the demand curve may have slowed down attempts to provide far lower-priced forms of entertainment, as many entrepreneurs may have guessed that demand would not increase enough to make it worthwhile. Thus it may have taken many historical accidents and innovations such as cinema before entrepreneurs ‘discovered’ the responsiveness of demand at low prices. This process is not dissimilar to the ‘path dependency’ hypothesis that more efficient paths are not taken because the first few steps are unattractive and hide the large pay-offs later on. The path taken resulted from the interplay between the entrepreneurial discovery process, cost-decreasing technology, and changes in size and geographic density of demand.8

Sunk Costs and the Dynamics of Creative Industries   365 Opera

2.00 1.80 1.60

Ticket price ($)

1.40 1.20 First-class theatre and popular theatre

1.00 0.80

Stock house

0.60

Vaudeville

0.40

Burlesque

0.20 0.00

0

100,000

200,000

300,000

Vaudeville and moving pictures 400,000

500,000

600,000

Cinema 700,000

800,000

‘Cumulative selling capacity’ (maximum number of tickets per week)

Fig. 19.5  Ticket price versus cumulative ticket-selling capacity for entertainment venues in Boston in 1909 ($ and number of tickets) Source:  Compiled from Boston Committee (1909) as reported in Jowett (1974); see also Bakker (2008).

After the coming of the feature film and of sound, the live entertainment that survived did so by differentiating itself. It was either highly artistic and heavily subsidized—such as avant-garde theatre—or highly commercial and high value-added—such as Broadway musicals and plays. What lay in between was competed away by cinema. Likewise, after television took over the focus on the lowest common denominator, motion pictures focused on a younger, more affluent audience, offering more event movies at higher prices. The above can be illustrated on a classic Hotelling line, following Hotelling’s (1924) work on product differentiation (Figure 19.6). If we assume a continuum from low- to high-value entertainment, in the 1890s theatre would have been somewhere in the middle to maximize revenue. After film arrived, theatre moved upmarket, and film would move slightly upmarket as well. Eventually, new technologies occupied more and more spots on the differentiation continuum, with cinema and theatre moving further upwards. Thus dynamic product differentiation limited the effect of creative destruction. Old formats were often not completely destroyed by new technology, but instead reinvented themselves.

Sunk costs and price discrimination If a producer-distributor charges a single (monopoly) price for an entertainment product, say a film, then revenue may not be enough to cover fixed and sunk production costs, while the total surplus would be large enough. The latter includes the consumer

366  Gerben Bakker Theatre 1890s

Cinema

Theatre

1900s

Cinema (various runs) 5 th

4 th

3 rd

2 nd

Theatre 1 st

1930s

Free TV Cable DVD Pay-TV Cinema

Theatre

now

Fig. 19.6 Stylized hypothetical Hotelling ranking of selected forms of spectator entertainment, 1890s to the present Note:  The lines rank the products from a low to a high price per spectator-hour.

surplus, which is the difference between what consumers are willing to pay and what they actually need to pay, in the aggregate. The situation is shown in panel A of Figure 19.7, where price is below average costs. In other words, the producer cannot take into account the consumer surplus while setting the budget, and consumers exist that are willing to pay a price above marginal costs, but remain unserved. Through price discrimination, however, a producer-distributor can charge different prices to consumers with a different willingness to pay, and so transform consumer surplus into revenue, enabling higher fixed and sunk costs (panel B in Figure 19.7). At the extreme, with a linear demand curve, monopoly pricing, and zero marginal costs, perfect price discrim­ ination can double revenue and thus sunk outlays. In the nineteenth century, for example, consumers paid a high price to see a new play in a metropolitan theatre. Later, lower-priced versions were offered by travelling groups and resident stock companies, and the smallest communities might be visited by miniature puppet theatres (Bakker, 2008). Nineteenth-century theatre managers were well aware of the need for price discrim­ ination. The financing of the rising fixed and sunk costs spent in the railroad, utilities, and the theatre construction booms was only possible through large-scale price discrimination. In 1849, the French economist-engineer Jules Dupuit (1849, pp. 16, 25), a pioneer of modern utility analysis, mentioned the theatre business and book publishing as prime examples of price discrimination:

Sunk Costs and the Dynamics of Creative Industries   367 B: Price discrimination Price →

Price →

A: One price

Viewings sold → One single price: Product is not developed

Viewings sold → Seven different prices: Product is developed

Fig. 19.7 A stylized example of sunk costs, revenues, and average costs without and with price discrimination Note: The line shows the demand curves, the dotted line marginal costs, the bold line average costs, and the surface revenue. This necessarily is a simplified example. For a more detailed discussion see, for example, Carlton and Perloff (2000, pp. 219–224) and Romano (1991).

A single price for tickets will not fill a theatre and might often yield only modest receipts. Hence the manager would suffer a pecuniary loss and the public a loss of utility. Divisions on the floor of the theatre and differential pricing of the tickets nearly always raise receipts as well as the number of viewers. This would be easy enough to understand if these divisions merely separated the seats where one can see and hear well from those where one cannot. But observation of how a theatre floor is mostly split up in practice shows that this is one of the least considerations in pricing the tickets; the theatre managers know how to adapt their prices to all the whims of the spectators, those that go to see and those that go to be seen, and those that may go for some other reason. They are made to pay according to sacrifice they are prepared to make to satisfy their whims, and not according to the show they enjoy.

Likewise, before 1950 motion pictures were released in metropolitan theatres at premium prices, then in the main city centre theatres across the country, then in regular theatres, and so on, at ever lower prices, until after a year films could be watched for a few cents in ramshackle sixth-run neighbourhood cinemas (Sedgwick, 2001). After 1950, cinemas reorganized into fewer windows, while television, video, pay-TV, cable, and free-to-air TV took over the other windows (Figure 19.6). Without such price discrimination, the film could not be made at the given quality. Most consumers who see Hollywood films on television can only do so because others were willing to pay premium prices to see them sooner in a higher-quality medium such as cinema. Several studies have tried to quantify price discrimination’s effect. Leslie (2004), for example, studying 199 performances of one Broadway play, found that price discrimination increased profits by 5–7%, and Huntington (1993) found that non-price-discriminating theatres could increase their revenue by 24% if they did. These might be lower bounds, as endogeneity—roughly speaking a self-reinforcing upward spiral—is ignored: if price discrimination’s increasing revenues result in higher

368  Gerben Bakker 6.00

Cinema

5.00

Ticket price ($)

4.00

Video

3.00

2.00

1.00

Pay TV Free TV

0.00

0

50,000

100,000

150,000

200,000

250,000

Cumulative number of viewings sold (1000s)

Fig. 19.8 Price versus cumulative number of viewings for a typical Hollywood film, 1990s ($ and number of viewings) Source:  Calculated from data in Dale (1997).

sunk costs that increase quality, this may increase consumers’ willingness to pay and thus allow an increase in overall prices, as well as perhaps an even sharper price discrimination, allowing higher sunk costs, increasing willingness to pay, allowing a higher overall price, and so forth. One of price discrimination’s main benefits is to allow in the consumers outside the market: those that otherwise would not be in it (Courty, 2000). When a production could not be made without price discrimination, this might have meant all its consumers would have been outside the market.9 The creative inputs and the owners of the distribution delivery system often have different interests. In pop concerts, for example, performers have an incentive to price discriminate and then to set a monopoly price within the resulting segments, maximizing revenue rather than attendance. Promoters, however, make most sales from concessions, parking, and the Ticket Master service charge split, and thus have an incentive to maximize the number of tickets sold and not ticket prices or ticket revenue. Likewise, cinemas often make most profits from concessions, and distributors from tickets. Only perfect price discrimination, clearing the market and filling every seat, serves both interests. These misaligned incentives could explain why actual ticket prices and degree of price discrimination are far below levels that maximize performer revenue.10 The importance of price discrimination can be shown quantitatively with an example of an average Hollywood movie in the 1990s (Figure 19.8). Ninety per cent of revenue came from consumers with a relatively high willingness to pay, ranging from $5.50 and above to $0.70 and above, and only 10 % from those with a very low willingness to pay

Sunk Costs and the Dynamics of Creative Industries   369 2.00

Producer's share of ticket price or average producer's costs per viewing ($)

Cinema

1.50

Video

1.00

Average costs

0.50 Pay TV 0.00

Free TV 0

50,000

100,000

150,000

200,000

250,000

Cumulative number of viewings sold (1000s)

Fig. 19.9  Producer’s share of ticket price and average costs versus cumulative number of viewings for a typical Hollywood film with a $40m production budget, 1990s Source:  Calculated from data in Dale (1997).

($0.15 and above). If all consumers saw the movie at the latter price, total gross revenue would be only $32m instead of the actual $200m and the film could only be made at a far lower budget. Even if we assume a single monopoly price is charged of say $0.30, revenue would only be $64m, still necessitating a far lower production budget. It is thus very clear that consumers who saw the movie at $0.15 could only do so because others saw it at far higher prices. The audience share of cinema and video, for example, was the obverse of its revenue share.11 If we assume a production budget of $40 million and a producer’s share of revenue of one-third, it becomes clear that in none of the windows was the producer’s price higher than average costs (Figure 19.9), but that when all windows are summed, the effect of price discrimination has lifted the producer’s average revenue per viewing substantially above average costs. If we assume zero marginal cost, a linear demand curve, and that for all windows a monopoly price was charged, given the producer’s copyright monopoly, consumer surplus will be exactly half the revenue, suggesting that although consumers would have been willing to pay $300m for the movie in the aggregate, they needed to pay only $200m, so despite the price discrimination still enjoyed a consumer surplus of about $100m. Deriving consumer surplus empirically from Figure 19.8 yields broadly similar results (Table 19.6). Cinema, with only 5% of the audience, accounted for 29% of sales and 21% of the total consumer surplus, while free-to-air television, with 68% of audience, accounted for only 11% of sales revenue, and 29% of total consumer surplus. The latter group would not have been able to watch the film without the former group with a higher willingness to pay.12 Without price discrimination, the price per viewing would

Table 19.6  Worldwide prices, audience, sales potential, and consumer surplus for a typical Hollywood motion picture, 1990s Price

Audience

Sales

($)

(1000s)

(%)

($1000)

Consumer surplus

Total surplus

(%)

($1000)

(%)

($1000)

(%)

Cinema

5.50

10,500

5

57,750

29

28,875

21

86,625

26

Video

3.00

34,000

16

102,000

51

42,500

30

144,500

43

Pay television

0.70

24,000

11

16,800

8

27,600

20

44,400

13

Free-to-air television

0.15

147,000

68

22,050

11

40,425

29

62,475

18

Total

0.92

215,500

100 198,600 100

Cinema and 3.59 video

44,500

All else

139,400

100

21 159,750

80

71,375

51

231,125

68

20

68,025

49

106,875

32

107,051 100

53,526

100

0.23

171,000

79

38,850

No price discrimination

2.99

35,833

100

Effect price discrimination

0.15–5.50

179,667

91,549

85,874

Perfect price discrimination

(1.62)

362,500

349,025

0

338,000 100

160,577 100 177,423

0

349,025

Notes: The consumer surplus shown is based on rough estimates and simplified assumptions and is for illustrative purposes only. For cinema, the consumer surplus has been calculated assuming monopoly pricing for the segment and a linear demand curve, making it equal to half the sales revenues; for all other categories it is the surface of the white triangle spaces under the connecting lines in Figure 19.8. The ‘no price discrimination’ case is based on a rough estimate speculatively assuming Figure 19.8 shows a demand schedule, that marginal costs are zero, and that monopoly pricing applies. The table shows the average of two different cases: one with a linear demand curve following the first line segment in Figure 19.8, the other following the second line segment. An average price of $3.30 under no discrimination equalizes the increased sales revenue with the lost consumer surplus. Perfect price discrimination sums total actual sales and consumer surplus, which together constitutes sales under perfect discrimination; the average price is shown. The consumer surplus under perfect discrimination is the sum of the existing surplus and the estimated surplus below the lowest price point of $0.15. The latter has been roughly estimated by speculatively assuming the demand curve intercepts the zero price line after 147 million additional viewings beyond the free-toair television price point. Total surplus, (gross) producer and consumer surplus is the sum of sales revenue and consumer surplus under the assumption of zero marginal costs. Obviously the producer would use the (gross) producer surplus to pay the fixed and sunk costs. Source: Calculated from data from Dale (1997).

Sunk Costs and the Dynamics of Creative Industries   371 have been about three dollars, while under price discrimination, prices range from as low as 15 cents to as high as $5.50. Price discrimination, in this case, increased sales by $91m and the consumer surplus by $86m (Table 19.6). Without price discrimination transforming about two-thirds of consumer surplus into sales revenue, the movie could not be made at its existing quality. This fact shapes production in many other creative industries and suggests that price discrimination might be welfare increasing in creative industries.

Four Economic Tendencies that Drove the Evolution of the Entertainment Industries Four economic tendencies have determined the entertainment industry’s evolution since the mid-nineteenth century: the importance of endogenous sunk costs; the fact that marginal revenues largely equalled marginal profits; entertainment’s quasi-public good character; and its project-based nature. We discuss these characteristics in turn, identify their dynamic implications, and assess how these expressed themselves historically.13

Sunk costs and quality races The dynamic implication of endogenous sunk costs is what we call a quality race, a market phase in which some firms escalate their sunk outlays in order to obtain a larger market share. While in other industries the lower bound concentration may fall to zero as the market size increases, because there is ‘room’ for more companies to enter the market, in some endogenous sunk costs industries concentration is bounded from below when market size grows to infinity, and does not converge to zero (Sutton, 1991, 1998). Market growth in such industries raises profits for any given quality level, on the one hand making room for new entrants attracted by the higher profits, but on the other hand also stimulating firms to raise their R&D investments—such as film production or videogame development outlays—to improve their quality level: while the marginal cost of an increase in R&D spending is unchanged, the marginal benefit from it is now higher, leading to higher fixed sunk costs and limiting the number of firms as the market tends to infinity. Which of the two effects has the upper hand depends on the distribution of the willingness-to-pay and shape of R&D costs associated with quality improvements (Bakker, 2005).14 As the market for films grew, for example, two opposite effects could happen: more companies could enter or existing companies could increase production budgets. Which effect dominated depended on how easy it was to increase perceived quality

372  Gerben Bakker 100

10,000

MGM

Paramount

Census

Fox

1,000

Portfolio outlays census ($million of 1913)

Portfolio outlays individual companies ($1000 of 1913)

100,000

Warner

100

DeMille 10 1913

1915

1917

1919

1921

1923

1925

10 1927

Fig. 19.10  Total annual production outlays for various US film producers, 1913–1927, in constant 1913 dollars: semi-logarithmic scale Notes:  All series, except ‘Census’ are scaled on the left-hand axis. The DeMille series concerns the outlays of just one producer of Paramount and is less comparable to the other series, which  are  for  entire  studios  or  the  industry  as a  whole. Census  =  total industry production outlays as recorded in the census. Source: See Bakker (2005, pp. 325–326).

through higher production outlays and to what extent higher-quality films stole sales from lower-quality films. It turns out that, in the motion picture industry, the second effect dominated. Since its emergence in the 1890s, with each new product category, such as colour film, newsreels, or cartoons, a quality race ensued, but also ended soon when further expenditures no longer yielded additional sales. Eventually, in the USA during the mid-1910s, an escalation phase began which did not have a natural endpoint: producers continuously increased expenditure on feature films, yielding ever more ticket sales and replacing shorts as the dominant format (Figures 19.10 and 19.11). European firms could hardly participate, as the European home market was disintegrating, and war made venture capital almost unavailable, as all capital allocations were targeted at the war effort (Bakker, 2000). Through a process of entrepreneurial discovery, partly by accident and partly by design, the industry had stumbled upon a format where the sunk costs could be amplified almost continuously because of the disproportionate return to higher quality. Cinemas, for example, preferred a higher-quality film, even if lower-quality ones had bargain prices, because they needed to earn back cinema fixed costs and because a lower-quality film’s opportunity costs were huge.

Sunk Costs and the Dynamics of Creative Industries   373 100

1897–1910 1907–1920 1923–1930

Four-firm concentration ratio (%)

90 80 70 60 50 40 30 20 10 0 0.4

1.0

2.7

7.4

20

54

148

403

Market size ln-scale (million $ of 1913)

Fig. 19.11  Market size and concentration in the US film industry, 1893–1927, constant 1913 dollars and four-firm concentration ratio: semi-logarithmic scale Note:  Four-firm concentration ratio  =  the market share of the four largest firms in a given  year. The three series are based on three different sources and may therefore not be fully comparable. Source: See Bakker (2005, p. 329, Appendix I).

A 700-seat cinema, for example, with a production capacity of 39 200 spectator-hours a week, weekly fixed costs of $500, and an average admission price of $0.05 per spectator-hour, needed a film selling at least 10 000 spectator-hours, and would not be prepared to pay for that (marginal) film, because it only recouped fixed costs (Table 19.7). Films thus needed a minimum selling capacity to cover cinema fixed costs. Producers/ distributors could only price down low-budget films that passed the threshold level where expected revenues equalled costs. With a lower expected selling capacity, these films could not be sold at any price (Bakker, 2004).15 Opportunity costs reinforced this even further. If the hypothetical cinema obtained a high-capacity film for a weekly rental of $1,200, which sold all 39,200 spectator-hours, the cinema made a profit of $260 ($0.05 price × 39,200 spectator-hours = $1960 revenue – $1200 film rental – $500 fixed costs = $260; Table 19.7). If a film with half the budget and, we assume, half the selling capacity, rented for half the price ($600), the cinema owner would lose $120 ($0.05 price × 19,600 spectator-hours = $980 revenue – $600 film rental – $500 fixed costs = –$120). Thus, the cinema owner would want to pay no more than $220 for the lower budget film, given that the high-budget film is available ($0.05 × 19,600 = $980 revenue – $220 film rental – $500 = $260 profit).16 If the high-capacity film were not available, the cinema would only want to pay $480 for the low-capacity film at most ($980 revenue – $500 fixed costs) in order to break even.

374  Gerben Bakker Table 19.7  Stylized comparison of revenues and profits of a high vs. a low capacity film for a hypothetical cinema Item

Unit

Ticket-selling capacity of film

Ratio

High

High/Low

Low

Film production budget Ticket-selling capacity

High=100 High=100

100 100

50 50

2.0 2.0

Spectator-hours sold Ticket price Cinema revenue

Spect.-hrs $ $

39,200 0.05 1,960

19,600 0.05 980

2.0 1.0 2.0

Weekly film rental Cinema fixed costs

$ $

1,200 500

600 500

2.0 1.0

Cinema profit

$

260

−120

−2.2

Min. capacity for break even

Spect.-hrs

34,000

22,000

1.5

Max. rental if one type available Max. rental if both types available

$ $

1,460 1,460

480 220

3.0 6.6

Notes: Max. rental if one type available = the maximum rental the cinema could pay, in this particular case, without making a loss, if only one of the two films were available. Max. rental if both types available = the maximum rental the cinema could pay, in this particular case, without making a loss, for one of the two films if the other type was available at the rental rate shown. If rental rates were allowed to vary, the ‘high’ film could fetch at most between $980 and $1,460, depending on the ‘low’ film’s rental rate, and the ‘low’ film between $480 and $220, depending on the ‘high’ film’s rental rate. This is a hypothetical example. Below a ticket-selling capacity of 39 the ‘low’ film will not be able to rent at any price if the ‘high’ film type is available. Below a capacity of 26 the ‘low’ film will not be rented even if the ‘high’ film type is not available to the cinema.

A film’s ticket-selling capacity could not always be perfectly predicted, but as a film’s release progressed and as it was exported to more countries, its appeal became better known (Bakker, 2004). In this example a film that costs twice as much could earn more than six times as much in rentals ($1,1460/$220) in case of competition, and three times as much ($1460/$480) without competition (Table 19.7, last two rows). In both cases the high-quality film gets the full rental, while the rentals for a low-quality film depend on competitive conditions. Producers thus had a sharp incentive to increase costs, making the continuous budget inflation of the 1910s and 1920s understandable (Figure 19.10). The fixed-costs threshold became lower with each new distribution delivery system. It was far lower for television and even lower for Internet distribution, meaning that

Sunk Costs and the Dynamics of Creative Industries   375 100,000

3000

Real retail sales / new right ($ of 2002)

2000 60,000 Stock

1500

40,000 1000

New 20,000

0 1920

Real retail sales / all rights ($ of 2002)

2500

80,000

500

1925

1930

1935

1940

1945

1950

1955

1960

1965

0 1970

Fig. 19.12  Average real recorded music sales per music copyright registered, new copyrights, and all copyrights ever registered, United States, 1921–1970 Notes:  Stock  =  real retail sales / all musical composition copyrights ever registered (the cumulative of the annual registrations, which started in 1870, so the 1921 stock consists of all rights registered between 1870 and 1921). New  =  real retail sales / new musical composition copyright registrations in the year. Retail sales have been deflated using the US consumer price index deflator as reported by Williamson (2013). Sources: Recording Industry of America; Harker (1980, pp. 223–224); US Department of Commerce (1975); see also Bakker (2011b).

more lower-quality products could be distributed. Opportunity costs, however, did not necessarily show such a decline. Quality races such as the rise of the feature film in the mid-1910s have happened at various points in the entertainment industry’s development. In the 1970s, for example, a new quality race started when the ailing Hollywood studios focused on high-concept blockbuster movies that were heavily marketed and advertised on television, starting with Jaws in 1975. Helped by other factors as well, the studios rapidly reached their former pre-eminence. In the music industry since the 1950s, a sharp escalation of firms’ expenditure on A&R took off, with a few big multinationals focusing on heavily marketing a few popular acts while at the same time also achieving horizontal product differentiation through a wide range of different labels and acts (Bakker, 2011b). Real revenue per music copyright increased almost fourfold between 1955 and 1970, a phenomenal average annual real growth of about 9% (Figure 19.12). In videogames probably a quality race took place from the mid-1990s onwards, when companies started to sink more and more and more outlays in the development of videogames, with a few large companies with big distribution organizations becoming prominent (Bakker, 2010).

376  Gerben Bakker

Marginal revenues are marginal profits The second tendency follows from the first. When entertainment products such as film tickets, music recordings, or videogames are sold, all development costs have already been incurred and marginal revenue therefore largely equals marginal (gross) profit. This holds, for example, for the film producer who sells the film to distributors—each sale is marginal profit—for the distributor who, once it has bought the film, sells it on to cinema owners, and cinema owners, who, once having bought the film, sell it to consumers, with every additional chair filled being marginal profits. Similar points can be made for many other entertainment industries such as music, books, or videogames. Entrepreneurs in these industries were the first to apply the concepts of fixed and sunk costs, average costs, and marginal revenues equalling marginal profits. The first documented application, for example, was by a music publisher, Gottfried Härtel, of the Leipzig firm Breitkopf & Härtel. Between 1800 and 1805 Härtel made detailed tabulations about average total cost at different quantities of sheet music sold, and used this to establish the maximum fixed honorarium he was willing to pay, i.e. the largest amount of costs he was willing to sink, in negotiations with composers such as Ludwig van Beethoven. Härtel’s practical calculations preceded the frontier of formal economic analysis by at least 70 years (Scherer, 2001). Low marginal costs should lead to very low prices, and thus an inability to incur large fixed and sunk costs, were it not that the producer-distributor is granted a monopoly through copyright law, and can use price discrimination to transfer some of the consumer surplus into revenue, as we saw above. In an unintegrated value chain in which products are sold outright, the producer’s incentive to increase quality is limited by the fact that she or he will not get any of the marginal revenues that the product generated for the distributor and for the retailer. The classic solution has been vertical integration or the use of revenue-sharing contracts. This construction aligns the interests of the participants in the various links of the value chain, and so makes sure that marginal retail revenues reach the producer, and this in turn gives the producer the incentive to make marginal improvements in product quality that will lead to additional sales, and thus more profits, also for the producer. In the early motion picture industry, for example, films were sold. This meant that cinema owners kept their marginal gross profits themselves, and the distributors did the same. This made the profit incentive for the film producer small: a good film would lead to some more sales at higher prices to more distributors, but the distributors and cinemas would get all the marginal profits (Bakker, 2003). This circumstance drove vertical integration in the industry, with producers often integrating with distributors, the latter sometimes with cinemas, and films increasingly being rented for a percentage of revenue rather than sold outright. Distributors also started to advance money for film production costs. In France, Pathé already started this integration in the 1900s; in the USA the Motion Picture Patents Company and General Film Company tried to integrate production and distribution and monopolize the film business, and from about 1912 the US

Sunk Costs and the Dynamics of Creative Industries   377 independents vertically integrated (Bakker, 2008). Integration and profit-sharing across the value chain shaped the development of many media industries. Besides stimulating vertical integration, standard industrial organization theory suggests that constant or falling marginal costs lead to an excessive number of firms. Together with low exogenous costs, the minimum costs needed to make a complete ‘prototype’, this has led to an enormous variety of media products and a dual market structure. In motion pictures, for example, the competitive escalation of endogenous sunk costs in quality races led to a vertically differentiated, highly concentrated market for big-budget Hollywood films, while low exogenous sunk costs and low marginal costs led to excessive entry and a second, separate, fragmented market with an almost infinite variety of films, each having a very small market share.17 The latter market appears characterized by monopolistic competition: price is above the competitive level, but firms do not make economic profits (Chamberlin, 1933; Robinson, 1933).

Toll good characteristics The third economic tendency was that most creative industries made products with a strong quasi-public good character: they were non-rivalrous but excludable. A product is non-rivalrous, sometimes also called nondiminishable, if one person consuming the good does not take away the quantity available to another person. One additional person ‘consuming’ national defence, for example, does not decrease the quantity available to others, while one additional person consuming bread does so. Pure public goods, such as national defence, are both non-rivalrous and non-excludable and pure private goods, such as bread, are both rivalrous and excludable. In practice, rivalrousness and excludability are often a matter of degree, and quasi-public goods can be further divided into rivalrous but excludable goods, called common pool resources, such as fishing grounds or natural water systems, and non-rivalrous but excludable goods, called toll goods, such as private clubs, daycare centres, or theatres (Ostrom, 2010). Some technical inputs to the media industry, such as broadcasting spectra, could be characterized as common pool resources, but most media outputs were toll goods. Until a cinema was filled to capacity, for example, one person watching a movie did not prevent another person watching the same movie, and one person subscribing to a cable channel did not diminish the subscription opportunity to other consumers. An almost continuous series of technological improvements made entertainment ever less rivalrous. Sharp rises in theatre capacity through steel-frame construction, and later cinema and recorded music massively increased the audience a performer could reach. Not only did radio, television, and the Internet increase this even further, but also ‘older’ technologies such as jet travel and large-scale stadiums. Between 1981 and 2003, for example, the top 1% of live rock music performers received between 30% and 50% of the total ticket revenue (Krueger, 2005, p. 14). Throughout the history of the entertainment industry, the non-rivalrousness, combined with the possibility to exclude consumers, led entrepreneurs to develop business

378  Gerben Bakker models that focused on owning the point where customers could be excluded and extract all rents there by keeping the price above marginal costs. Five major business models were important. First, the entrepreneur could prohibit entry to a theatre and thus charge ticket prices. They could physically exclude people and use their right to set prices to price-discriminate among visitors. Likewise, the early broadcasters could exclude advertisers from the airwaves and thus extract their revenue from them. Second, copyright allowed entrepreneurs a monopoly on printed and recorded media products. Third, an important group of entrepreneurs were the stars themselves, who could withhold their services and thus exclude people, depending on the extent of their talent. Industrialization made their performances tradable, and so increased stars’ earning capacity. The result was a very unequal distribution of income among the top performers, although exact statistics are lacking to test whether this was actually more unequal than the distribution among live performers before film (Bakker, 2001; Rosen, 1981). The sharply unequal income distribution has remained a property of many media industries ever since. This made it also increasingly expensive for film makers, especially new entrants, to recruit top talent. Entrepreneurs adopted various business models to mitigate this value capture by the stars. The Hollywood studios introduced asymmetric long-term (‘seven-year’) contracts that allowed them to keep stars’ pay limited when they became successful. European firms often used revenue-sharing contracts, which limited cash costs, as pay-outs were only made when cash was coming in. From the late 1940s, seven-year contracts became unenforceable and a mix of advance payments and revenue-sharing is now widely used. Fourth, production of rivalrous goods such as merchandising that could be sold at a premium was used to generate revenue. Fifth, collusion could be a means of exclusion. The inter-war Hollywood studios, for example, formed a cartel and jointly monopolized resources, preventing any firm from bidding up star pay.18 Since the collusion and seven-year contracts ended in the late 1940s, star pay has risen sharply. An example of long-run changes in the public-good nature of entertainment is the music industry, where album sales have diminished and become less excludable because of copying technologies, and the new business model depends on the remaining excludable parts, such as live concerts, rivalrous goods such as T-shirts or deluxe CD editions, or renting out artists to advertise other rivalrous goods (Krueger, 2005).

The project-based nature of entertainment A fourth economic characteristic is the project-based nature of entertainment production. Each entertainment product—such as a book, a film, or a piece of music—is unique. The making of each product is a separate project with unforeseen contingencies, for which different creative, technical, and commercial talent is assembled. Although every industry contains activities that are project-based, the proportion of it in the entertainment industry is extreme (Figure 19.13).

Sunk Costs and the Dynamics of Creative Industries   379 Project-based activities boundary

Aerospace Manufacturing Cars

R&D The creative industries

Design Servicing R&D

Almost everything

Adver tising

R&D

Investment Finance

banking

Adver tising

Venture capital Private Retail banking

banking

Manufacturing

Manufacturing

Other

Conveyancing

Chemicals

Legal services

Fig. 19.13 Hypothetical representation of the boundaries of the project-based segments of the creative industries and various other industries

The dynamic implication of this is agglomeration. Each project benefits from other projects being organized in its neighbourhood, much in the same way as Alfred Marshall described agglomeration benefits: within industries, firms locating in close proximity create a thick market for specialized inputs, external economies of scale in production as specialized firms lower costs by spreading them over more buyers, and knowledge spillover, as talent meets informally, circulates between firms, and exchanges best practices and ideas.19 In addition, Jane Jacobs (1969) emphasized the importance of inter-industry externalities. Co-location of different entertainment industries would yield similar benefits. In London, for example, music, film, radio, television, and media financing companies may all benefit from being close to each other and therefore able to better organize projects. Thus the agglomeration benefits spread at various different levels (Figure 19.14), and that makes them so important in the entertainment industry. An example is early film production which agglomerated in France in Paris and Nice, in Britain around London, and in the USA initially in New Jersey and later in Florida and California (Bakker, 2008, pp. 258–261). Until the mid-1920s, both intra- and inter-industry externalities were important. Production located close to theatrical districts such as London, Paris, and New York. In the 1920s, however, the shift of the US film industry to Hollywood was driven solely by intra-industry externalities. It was far from New York, where the studios’ corporate headquarters and distribution operations were located.20 Later, television and music production would also come to Hollywood,

380  Gerben Bakker Photography

Set craftsmen

Post-production

Actors Sound Producers

Finance Agents

Production Directors Legal services

Studios Motion pictures

Composers

Scouts A&R

Agents

Producers Recording studios

Venues

Lawyers Managers

Music

Broadcasting

Live entertainment

Performers Finance

Marketing

Videogames

Publishing

Fig. 19.14 Stylized representation of the interlinked intra- and inter-industry webs of project-based entertainment industries

adding inter-industry co-location benefits. In the late twentieth century, the large and fast-growing Indian film industry became also highly concentrated geographically in Mumbai (Lorenzen and Mudambi, 2013).21 In recorded music, agglomeration has not always been as strong as in motion pictures. In Europe, capital cities were important locations. For most styles, location was part of the brand image, and the music industry therefore agglomerated in many more locations, but with intra-industry agglomeration benefits for specific styles, such as Nashville, Chicago, or New York. The project-based characteristic contributed to this differentiation of locations. Also, because an industrial district lowered set-up costs, it could lead to ‘excess’ variety.

Conclusion We started this chapter with the question of how we can explain long-run change in the entertainment industry. We discussed the process of industrialization, creative destruction, and shifting production possibility frontiers, and how to measure its impact through, for example, total factor productivity, revealed comparative advantage, or var­ iety. We discussed the relation between sunk costs, variety, industrialization, dynamic product differentiation, and price discrimination and the trade-off between variety, quality, quantity, and efficiency. Finally, we identified four main economic tendencies

Sunk Costs and the Dynamics of Creative Industries   381 Table 19.8  Economic tendencies in the development of the entertainment industry Economic characteristic

Dynamic implications

Historical expressions

Sunk costs

Quality race

Motion pictures: 1910s and 1970s Music industry: 1950s/1960s Videogames: 2000s

Marginal revenue = marginal profits

Vertical integration Dual market structure

Motion pictures: Europe 1900s, US 1910s Music: 1910s, 1960s Videogames: 2000s

Toll good character (nonrivalrous but excludable)

Exclusion-focused business models Income inequality (superstars)

All media and entertainment industries

Project-based character

Agglomeration

Motion pictures: Jacobs and Marshall externalities: US 1900s–1920s; Europe. Marshall externalities only: US since the mid-1920s

Notes: Jacobs externalities refer to inter-industry externalities, originating in the co-location of industries, Marshall externalities refer to intra-industry externalities, where firms within an industry locate in an industrial district (see text). Sources: see text and Bakker (2010).

(Table 19.8): the importance of endogenous sunk costs that led to quality races, zero marginal costs leading to vertical integration, toll good characteristics leading to business models focused on points-of-exclusion, and, finally, entertainment’s project-based character leading to agglomeration. Key insights included the need for price discrimination, vertical integration, and business models protecting points of exclusion in the value chain to enable larger sunk outlays, and agglomeration to minimize costs and maximize effectiveness of those outlays. Old media survived by differentiating themselves, focusing on distinct, often narrower, audiences. Intriguingly, old and new forms of entertainment, big and small producers, homogeneous, vertically differentiated markets and diverse, horizontally differentiated markets all coexisted. Low and flat marginal costs and exogenous sunk costs, the simultaneity of horizontal and vertical product differentiation and agglomeration benefits, led to excess variety, organized in a dual market structure, with one part offering fewer high-concept blockbuster products, and the other part offering a flood of low-budget horizontally differentiated products. Clearly historical events interacted with economic forces, such as the quality races in film in the 1910s and the 1970s, in music in the 1950s and 1960s, the motion picture industry’s agglomeration in Hollywood in the late 1920s, and the music industry’s decentralized agglomeration in different locations since 1955.

382  Gerben Bakker Implications for business include the need to focus on either horizontal or vertical differentiation; to find the best ways to price discriminate and to vertically integrate to increase sunk outlays; to develop business models focused on dominating the point of exclusion; to be alert to the signs that a quality race is about to begin; to locate within an industrial district to lower costs; to look out for shifts in the production possibility frontier; and, finally, to be aware of dual market structures and choose one of the two markets but not both. Sound and simple as these implications may appear, the path of the entertainment industry over the last two centuries is littered with the wrecks of firms that did not heed them.22

Notes 1. Previous versions of this chapter benefited from comments received at the sports and business history seminar at the Institute of Historical Research in London, the workshop on media history of the German Society for Business History in Augsburg, the workshop on the history of the music industry at St Andrews University, the research seminar in music studies at Kingston University, and the workshop on the management and evolution of the creative industries at the Freeman Centre, University of Sussex. I thank Paul Auerbach, Christopher Colvin, Jonathan Sapsed, Candace Jones, Mark Lorenzen, and Juan Mateos-García for additional comments. I alone, of course, remain responsible for the final text and any errors of fact or interpretation that may remain. The research for this chapter was partially funded by the Economic and Social Research Council (UK) and the Advanced Institute of Management Research under the ESRC/AIM Ghoshal Fellowship Scheme, grant number RES-331-25-3012. 2. Dr Gerben Bakker, Departments of Economic History and Accounting, London School of Economics and Political Science, Houghton Street, London WC2A 2AE, Tel.: + 44 - (0) 20 7955 7047, Fax: + 44 - (0) 20 - 7955 7730, email: [email protected]. Website: . 3. In theory, all TFP growth in live entertainment could be explained by scale economies through increased urbanization (Bakker, 2012, pp. 1055–1057). 4. See, for example, Figure 19.12. 5. Outside entertainment, an extreme case is standardization. Consumers all want to drive on the same side of the road, for example, whether it be right or left. 6. See the section on sunk costs and quality races (pp. 371–375). 7. On product differentiation in motion pictures since 1945, see Sedgwick (2002). 8. On entrepreneurial discovery see Kirzner (1985). 9. On ticket pricing and price discrimination see also Rosen and Rosenfeld (1997), and Courty (2003a, 2003b). See also Orbach and Einav (2007) on pricing in cinemas, who observe that this used to be very differentiated, but is now more uniform. The latter is undoubtedly due to pay, cable, and free-to-air television as well as video cassettes and DVDs taking over the windows that were previously formed by lower-level cinemas. See also Ekelund (1970). 10. Billboard, 7 March 2009; see also, for example, Krueger (2005). 11. Including sell-through DVDs in Figure 19.8 between ‘cinema’ and ‘video’ would not basic­ ally change the revenue model, as the price per viewing of these was likely lower than that of cinema, given that they were generally watched by more than one person and multiple times.

Sunk Costs and the Dynamics of Creative Industries   383 12. We abstract here from the situation that a portion of viewers will be in both groups. 13. For a case study that applies these four tendencies to the evolution of the British entertainment industry, see Bakker (2014). 14. The term R&D is used here for sunk outlays on developing products in the creative industries rather than the more general term ‘innovation’, because we are interested here in particular identifiable products with a particular amount of money spent on their development, rather than in innovation as a whole. For a historical overview of R&D-project financing see Bakker (2013). 15. This is not dissimilar to the quality thresholds, capabilities, and minimum quality/cost ratios discussed in Sutton (2012). 16. The relation between production costs and selling capacity is assumed to be linear. Moderate decreasing returns would yield the same effect, as would increasing returns. Probably on average, increasing returns were followed by constant returns, and finally by decreasing returns to the last dollars spent on already high-budget films. 17. Mezias and Mezias (2000) borrow the term ‘resource partitioning’ from biology to study phenomena not unlike both dynamic product differentiation and dual market structure discussed here. 18. In the nineteenth century the global news agencies used the same technique to exclude non-payers. See Bakker (2011a). 19. See, for example, ­chapter 6 in Krugman and Obstfeld (2003). 20. For a detailed analysis of agglomeration benefits in the creative industries, and for present-day evidence of their importance, see Bakker (2010); for a historical analysis of Hollywood see Christopherson and Storper (1987). 21. For a comparison of agglomeration in the Indian film and software industries in Mumbai and Bangalore, see Lorenzen and Mudambi (2013). 22. See, for example, Bakker (2007).

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386  Gerben Bakker Sadoul, G. (1948–54). Histoire générale du cinema, 6 vols. Paris: De Noël. Sadoul, G. (1972). Histoire du Cinéma Mondial, 9th edn. Paris: Flammarion. Sanderson, M. (1984). From Irving to Olivier: A Social History of the Acting Profession in England, 1890–1980. London: Athlone Press. Scherer, F. M. (2001). An Early Application of the Average Total Cost Concept. Journal of Economic Literature, 39(3): 897–901. Schumpeter, J. A. (1942). Capitalism, Socialism and Democracy. London: Allen & Unwin. Scott, A. J. (2004). On Hollywood: The Place, The Industry. Princeton: Princeton University Press. Sedgwick, J. (2000). Popular film in 1930s Britain: A Choice of Pleasures. Exeter: University of Exeter Press. Sedgwick, J. (2001). The Nature of Popular Film as a Commodity: The Diffusion of Film in Britain during the mid-1930s. Homo Oeconomicus, 17(4): 427–440. Sedgwick, J. (2002). Product Differentiation at the Movies: Hollywood, 1946–65. Journal of Economic History, 62(3): 676–705. Stigler, G. J. (1961). The Economics of Information. Journal of Political Economy, 69(3): 213–225. Sutton, J. (1991). Sunk Costs and Market Structure:  Price Competition, Advertising and the Evolution of Concentration. Cambridge, MA: MIT Press. Sutton, J. (1998). Technology and Market Structure:  Theory and History. Cambridge, MA: MIT Press. Sutton, J. (2012). Competing in Capabilities: The Globalization Process. Oxford: Oxford University Press. Thompson, K. (1985). Exporting Entertainment: America in the World Film Market 1907–1934. London: British Film Institute. Throsby, C. D. and Withers, G. A. (1979). The Economics of the Performing Arts. New York: St Martin’s Press. United States Department of Commerce (1975). Historical Statistics of the United States from Colonial Times to 1970. Washington: United States Department of Commerce. Vessillier, M. (1973). La crise du théâtre privé. Paris: Presses Universitaires de France. Vogel, H. L. (1986–2010). Entertainment Industry Economics: A Guide for Financial Analysis. Cambridge: Cambridge University Press, various editions. Wasko, J. (1982). Movies and Money: Financing the American Film Industry. Norwood, NJ: Ablex. Waterman, D. (2005). Hollywood’s Road to Riches. Cambridge, MA: Harvard University Press. Williamson, S. H. (2013). Seven Ways to Compute the Relative Value of a U.S. Dollar Amount, 1774 to present. MeasuringWorth, April 2013. .

Chapter 20

Creative Indu st ri e s an d the Wider E c onomy Stuart Cunningham and Jason Potts

Introduction This chapter examines representative lines of enquiry that have explored the contribution of the creative industries to the wider economy. The concept of creative industries first emerged in the late 1990s as a model of post-industrial development coupled with urban regeneration. The principal concern of this first wave was to map this newly defined industrial sector in respect of contribution to jobs and economic value-added. These were the baseline considerations that did not yet seek to account for wider economic spillovers and contributions to other sectors or to consumption patterns and innovation processes in the wider economy. The second part of this chapter reviews the development of the creative industries concept as it began to migrate from a narrow industrial definition to broader concern with effects on employment, entrepreneurship, growth of markets, and regional clusters. This incorporates spillover effects in labour markets and the increasingly central role that design is playing as a vital input into contemporary economies. The third part of this chapter examines the broader spillovers of the creative industries into regional, sectoral, and national innovation systems. We conclude that consideration of the wider effects of creative industries suggests a rather different policy perspective than one focused on the narrow promotion of an industrial sector.

The Creative Industries as a Sector The term ‘creative industries’, though probably first used by strategy consultants Cutler & Company in Australia in 1994 (Cutler & Company, 1994), was given policy and industry prominence through initiatives taken from 1997 by the new UK Labour government

388   Stuart Cunningham and Jason Potts through the responsible portfolio minister Chris Smith (see Smith, 1998) and his Department for Culture, Media and Sport (DCMS). A Creative Industries Taskforce was set up and was followed by the publication of the Creative Industries Mapping Document in 1998, which was updated and refined in 2001. A foundational definition was promulgated: the creative industries were ‘those industries which have their origin in individual creativity, skill and talent which have a potential for job and wealth creation through the generation and exploitation of intellectual property’ (DCMS, 1998, p. 3). The standard definition of the creative industries used by the DCMS included 13 industry sectors: advertising, architecture, art and antiques, computer games/leisure software, crafts, design, designer fashion, film and video, music, performing arts, publishing, software, TV and radio. This foundational démarche has proven resilient while at the same time attracting great controversy. Above all, it has proven a useful concept. First, it is valuable because it mainstreams the economic value of culture, media, and design. It does this through recognizing that creativity is a critical input into contemporary economies that demonstrate features of ‘culturization’ (Lash and Urry, 1994; Du Gay and Pryke, 2002), digitization, and highly designed goods and services. While these claims have been criticized (e.g. Dyson, 2010) for buying in too fashionably to new economy thinking and its promotion of intangibles, ‘weightlessness’ (Coyle, 1997), and of ‘living on thin air’ (Leadbeater, 2000), the outputs of creative industries were always a mix of high value-added services and manufactured goods. Second, it brought together in a provisional convergence a range of sectors that have not typically been linked with each other. This has been the source of much criticism—the idea that such collocation was driven by the tendentious need to make Britain look a world leader in a field it had defined for and by itself. Nevertheless, it has been the basis on which the fundamental claims were made—that the creative sector was far larger than previously thought, and that it was growing at a rate significantly higher than that of economies as a whole. Third, the sectors within this classification of creative industries—the established arts (visual and performing arts, dance, theatre, etc.); the established media (broadcasting, film, TV, radio, music); new media (software, games, e-commerce and e-content), and architecture and design—move from the resolutely non-commercial to the high tech and commercial. This con­ tinuum moves from the culturally specific and non-commercial to the globalized and commercial, where generically creative, rather than culturally specific, content drives advances. This continuum is less coherent than the neat definitions for the arts, media, and cultural industries that organize thinking and policy in the field, but does attempt to take into account the profound changes wrought by digitization, convergence, and globalization. One of the reasons the idea of creative industries has been taken up so widely is that it connects two key contemporary policy clusters: on the one hand high-growth ICT and R&D-based sectors—production in the new economy—and on the other, the ‘experience’ economy with cultural identity and social empowerment, that is consumption in the new economy.

Creative Industries and the Wider Economy   389 As would be expected, much research and debate in the ensuing decade or more has been concerned with developing policies and programmes to support the sectors thus identified as belonging to the creative industries. But there has also been much refinement of definitions of the sector and development of the evidence for its size and growth rates—particularly given the imprecision of official statistics in grasping the emergent nature of the creative industries. These issues are part of the broader challenges of measuring effectively domains undergoing substantial change through the rapid convergence of the computer, communication, cultural, and content industries. This ‘megatrend’ has been the subject of a significant academic and policy literature (e.g. Pratt and Taylor, 2006; Pratt, 2008; Roodhouse, 2006; Wyszomirski, 2008). New hybrid occupations and industry sectors emerge that do not comfortably fit into standard statistics classifications. The 10–15-year gap between updates of these classification schemes means there is almost no comprehensive, standardized employment or industry data available during the critical emergence period of many sectors. Measuring the production and purchasing of physical products is difficult enough but measuring the number, size, and value of the delivery of services is an order of magnitude more difficult. The challenges in seeking to measure the flow-on impact of, for instance, emergent digital creative industries services to other sectors of the economy are even greater. This is a widely recognized problem which, in other instances of emergent or difficult-to-define sectors such as information and communications technologies, environment, unpaid household work, or tourism, has resulted in the creation of satellite accounts. Without such an initiative for the creative industries, many statistical authorities and agencies have endeavoured to improve our statistical understanding following the original Creative Industries Mapping Study by the DCMS (DCMS, 1998; see, for an overview, Higgs et al., 2008). Many attempts have been made to refine, clarify, and improve understanding of the sectors and boundaries of the creative industries. For example, NESTA (2006, p. 55) has proposed four overlapping subgroupings (originals, content, services, experiences) based on the various business models employed. Cultural economist David Throsby puts forward the ‘concentric circles’ model, in which the core is the creative arts (literature; music; performing arts; visual arts), surrounded by the ‘cultural industries’ (film; museums, galleries and libraries; photography), the wider cultural industries (heritage services; publishing and print media; sound recording; television and radio; video and computer games), and finally related industries (advertising; architecture; design; fashion) (Throsby, 2001). The Work Foundation (2007) has produced a different set of concentric circles in which the core creative fields include all forms of original product. Then there are those cultural industries that attempt to commercialize these creative products. Next are creative industries that have intrinsically functional applications (architecture, design, advertising). Finally, there are sectors selling an ‘experience’ that depends on creative inputs (for definitions based on the ‘experience economy’ see Pine and Gilmore, 1999; Andersson and Andersson, 2006). For further discussion of this sectoral definitional concern, see Garnham (2005) and O’Connor (2007) and potentially important recent developments aimed at measuring the level of creative professional

390   Stuart Cunningham and Jason Potts employment in industries to identify and classify creative industries: the ‘creative intensity’ method (Bakhshi et al., 2012).

Economic Spillovers from Creative Industries Flows to other sectors While these debates and refinements have proceeded, however, questions of the relations between the creative industries and the wider economy have been posed. These have arisen for several reasons. The incoherence of the original definition has always left the boundaries of the category fluid and therefore what is ‘in’ and ‘out’ remained contestable, and its relation to neighbouring sectors under review. In particular, there was legitimate concern over the promiscuous insertion of a broad definition of software in the original DCMS characterization of the sector (Hesmondhalgh and Pratt, 2005, p. 8). Critics argued that this was done in order to boost its size; it could also be said that it was a function of the outdated SIC (standard industry classifications) codes by which industry sectors perforce were classified. One of the ways, as we will see, that an enduring controversy over the extent to which creative industries are beholden to the ‘prestige’ of ICT and thus conflate culture and information (Garnham, 2005; and cf. Cunningham, 2009) can be answered is by tracking the nature and extent of the interdependence between creative industries and high tech manufacturing and knowledge-intensive business services (KIBS) (Chapain et al., 2010). Another productive example (Oakley et al., 2008) that addresses controversies over the relation of arts and creative industries is a study that shows those trained in what Throsby would call the creative core (i.e. the traditional arts) at a prestigious college (St Martins) over a considerable period of time have tended to remain in the arts or ‘spilled’ into the creative industries, but have tended not to make careers in the wider economy. Spillover issues have also been posed by the growing evidence base—for example, the fact that detailed statistical mapping work shows consistently there is more creative employment outside the creative industries than inside them brings into sharp relief the issue of the relation of ‘creative employment’ in wider labour markets and its effects. And there is fresh research attention to value chains, spillovers, and the actually existing spatial distribution of creative industries (rather than a naïve expectation that all regions will have them, in defiance of all logic of comparative advantage and agglomeration). Thus, without neglect of the sector-specific issues, there has been quite rapid evolution of policy-makers’ interests and a broadening of the remit of the state’s purview of creativity and the economy. Before the global financial crisis and the major fiscal reviews it brought occasioned by a new government in 2010, reviews, white papers,

Creative Industries and the Wider Economy   391 and restructures have refocused the creative industries idea in the UK. The Creative Economy Programme (www.cep.culture.gov.uk) focused on higher growth businesses, the nature and value of creative inputs into the broader economy, a broader promotion of ‘creative careers’, and clearer differentiations of economic and cultural goals. The Cox Review came out in early 2006, recommending a series of measures to refocus, including creativity/innovation ‘centres of excellence’ in all regions. The Gowers Review examined the whole canvas of IP law and its impact on how business and society can deal with the divergent trends of greater digital rights management and technical protection measures to guard IP against easier ways of accessing and using digital content on the one hand, and the public interest value of promoting appropriate and better access on the other. The most recent research has shown that spillovers can take the form of knowledge, product, and network spillovers (Chapain et al., 2010). Knowledge spillovers include flexible, collaborative models of work organization developed for highly dynamic competitive environments which can influence sectors that engage with the creative industries—this sector’s version of ‘nudging innovation’ (Potts and Morrison, 2009). Research in Britain has shown that firms which spend double the average on creative industries inputs are 25% more likely to introduce products or services which are new to the firm or market (Chapain et al., 2010, p. 24). Later in the discussion we focus in more detail on arguably the major supply-side spillover: the supply of creative professionals into the broader economy. There are also demand-driven knowledge spillovers. Often creative industries, particularly those at the cutting edge of digital applications such as high-end games, computer-generated imagery (CGI), and other special effects including telepresence, demand new and rapid advances in technology that stimulate innovation on the supply side. Innovation studies in Britain have shown that sectors such as advertising, architecture, and creative software have high levels of user innovation that may spill over to their suppliers (Chapain et al., 2010, p. 25). Product spillovers are a well-known feature of the creative industries—they include so-called ancillary markets for mass entertainment (toys, clothing, and household items themed on Hollywood blockbusters) and the ubiquity of music online has made access devices like MP3 players equally ubiquitous consumer ‘must-haves’. Network spillovers can take the form of the presence of a ‘creative milieu’ (the presence of significant numbers of creative businesses, people, and activities) influencing tourism, property values, or specialist retail (café society, etc.).

‘Creative’ clusters Ever since the Marshallian industrial district came into the economic lexicon in the early twentieth century, the economics of clusters, or external economies, have been well known. The modern evidence for cluster effects and the policy implications for urban planning and industry policy have grown since the pioneering work of Michael

392   Stuart Cunningham and Jason Potts Porter (see, e.g., Porter, 1996, 1998). Much of this work has been in relation to regional development. It is not unexpected, given the relative lack of policy and industry attention to the creative industries until recent years, that many fundamental issues about creative industries clustering remain on the drawing board. Do creative industries require dense and vibrant urban environments to flourish? This is very much the conventional wisdom, based on the fact that these are industries characterized by incessant novelty and experimentation and the clash of ideas is at its zenith in the great, culturally vibrant cities (Hall, 1998). But the greatest creative cluster of them all, Hollywood, began in orange groves and sand, and grew far from the grand metropolises of New York and Chicago (Scott, 2004). It consolidated by reproducing the dominant Fordist mode of production of its day but survived and thrived in the post-war era by pioneering particular post-Fordist production modes—such as the ‘package-unit system’ (Bordwell et  al., 1985), the ‘just-in-time’ company (Howkins, 2001), and complex contingency contracting (Caves, 2000)—that have been widely adopted as prototypical and in turn produced major spillover effects for the wider economy. Such business model spillovers have carried through to the present and to everyday, including small business activity. Can creative clusters be successfully built through direct policy-driven interventions, or are they the result of organic accretion over considerable time? And an issue often related to this one: are creative clusters typically concentrations of like organizations or do they concatenate elements of the value chain? The larger and better-known clusters, as one might expect, tend to have grown organically over time and tend also to display both cognate and value chain agglomeration and—to foreshadow findings from very recent research to be treated momentarily—tend to enjoy spillovers from cognate industries and to produce spillover effects. Notwithstanding, a grand experiment in direct policy-driven intervention is underway in China, with several hundred creative clusters built from scratch in both major cities and inland provinces (see Keane, 2009). Research on China’s embrace of creative clusters shows that there are several models—cultural quarters which may house artists while retailing cultural goods; production incubators to hothouse, for example, animation; urban renewal projects or new ground-up ventures (with new media affordances like fast broadband). Fundamentally, creative clustering or institutional geographical thickness by itself is not a panacea: spillovers are a result of social capital, willingness to share, size of companies, and types of companies and markets (domestic or international)—all these must be developed over time and are subject to factors other than the policy imperative (Gwee, 2009). This suggests that the role of tacit knowledge, trust relationships, and ‘know-who’ as much as ‘know-how’ may play a greater role in making at least some creative industries more ‘geographically sticky’ than other industries. Important early attempts to grasp this, such as Leadbeater and Oakley’s The Independents (1999), emphasized the import­ ance of market organizers (such as a commissioning broadcaster) for regional sustainability for a sector composed overwhelmingly of small businesses; a thoroughly mixed economy, connecting the non-commercial with the commercial; and the crucial role of demanding consumers (such as university student populations).

Creative Industries and the Wider Economy   393 These studies tended to focus on inputs to and spillovers of benefit to culturally oriented clusters that contributed to their sustainability. Later work on co-location and spillovers from creative businesses of benefit to other sectors (Chapain et al., 2010) has shown that it is unevenly distributed across the creative industries. Advertising and software firms, more than other creative businesses, tend to co-locate with high tech manufacturing and KIBS, although other sectors which provide content and cultural experiences show some significant co-location. What this research suggests is that those creative sectors that are focused on downstream business-to-business services also tend to co-locate with sectors that use their services, and that this can lead to spillovers based on creative supply. On the other hand, those creative sectors which are focused on producing final consumption goods and services tend to be more disposed to spillovers based on demand: in Cardiff, TV and production companies’ strong demand for technology and digital services supports the growth of local digital clusters (Chapain et al., 2010, p. 34).

Creative employment in wider labour markets Moving from a focus on industry to employment is based on the recognition that the size and significance of creative activities in the economy cannot be accurately measured by using industry codes alone. Along with cognate statistical refinement (French Ministry of Culture, 2005; LDA, 2009), the authors’ research centre has developed a ‘creative trident’ to better measure creative employment sectorally and in wider labour markets. The metaphor of the trident is used because it points to three parts of an employment quadrant composed of an occupation/industry matrix of two rows and two columns. Relevant employment is the total of creative occupations within the core creative industries (specialists), plus the creative occupations employed in other industries (embedded), plus the business and support occupations employed in creative industries who are often responsible for managing, accounting for, and technically supporting creative activity (support). This can be summarized as in Figure 20.1 and Tables 20.1 and 20.2. This approach to the creative workforce shares similarities with, but is substantially different from, high-profile, and highly criticized, work such as that of Richard Florida (Florida, 2002; Florida and Tinagli, 2004). Florida promiscuously and implausibly corralled all white and no-collar workers into the orbit of the creative class even as he very helpfully highlighted the importance of those in creative occupations being studied in their own right, rather than focusing narrowly on industries in which they work. Our approach is a much more constrained and carefully defined categorization of the creative workforce (the DCMS group of occupational categories, which are much narrower than Florida’s) but much wider than traditional arts and culture: advertising and marketing; architecture, design, and visual arts; film, TV, and radio; music and performing arts; publishing; and software and digital content. The key findings from this work include consistent results that there are more creatives (‘embedded’) working outside the creative industries than inside them. A ‘financial

Employed in creative occupations in creative industries

Employed in creative occupations in other industries

Employed in support occupations in creative industries

Total creative employment

Fig. 20.1  Figurative view of the creative trident Source:  Higgs and Cunningham (2008, p.  26).

Table 20.1  Tabular view of the creative trident Employment in creative industries

Employment in other industries

Employment in creative occupations

Specialist creatives

Embedded creatives

Employment in other occupations

Support workers

Total

Total employment in creative industries

Total Total employment in creative occupations

Total creative workforce

Source: Adapted from CIE (2009, p. 20).

Table 20.2  The UK creative employment trident for 2001 based on CCI analysis of ONS census data Employment with UK employment 2001 creative industries Employment in specialist creative occupations

552 170

Employment in business and support occupations

690 641

Total employment

1 242 811

Specialist proportion

44%

Source: Higgs et al. (2008).

Employment within non-creative industries Total employment

Embedded proportion

645 067

54%

1 197 237

690 641

645 067

1 887 878 63%

34%

Creative Industries and the Wider Economy   395 creative trident’ (see Higgs and Cunningham, 2008, pp. 18ff.) tracks personal incomes of the creative workforce based not on the turnover of organizations within the industry but the gross amount received by labour as declared on a census form or through a labour force survey. A  consistent finding from repeated applications of the financial creative trident is that creative workers have incomes above national averages, in some cases, considerably above—except for music and performing arts, which typically aggregate below national averages. Analysis of time series data based on groups of census data in national jurisdictions have been the basis for data-based claims about growth of the creative workforce over time. The creative trident represents an advance on previous creative industries mapping approaches because it: avoids the tendency to overreach; disaggregates creative employment effectively and with resulting insight; allows for the decomposition of specialist and support employment within creative industries; and uses population-based data sources rather than surveys, whenever possible. But this method is no silver bullet. It shares with all deployments of official census data sources the limitation that they only account for the respondent’s main source of income at a given time. This is a particular limitation for the creative workforce as a great deal occurs through ‘second’ jobs, cash-in-hand, and volunteer and amateur activities (but see Higgs et al. (2008, p. 65) for some estimates of the impact of second jobs on creative employment figures). That census data significantly underestimate the full amplitude of creative activity is an endemic problem. Additionally, the creative trident approach is limited to capturing employment because there are no reliable measures of output by occupation: ‘It is therefore not possible to estimate the contribution embedded creatives make to the output of the industries in which they are employed’ (CIE, 2009, p. 20). (These must be approached qualitatively, as we shall see in the case study on health, below.) But also, because it mixes the concepts of industries and occupations, ‘employment estimates are not really comparable to traditional industries. Estimating a creative trident across all industries would result in significant double counting’ (CIE, 2009, p. 20). Moreover, a full suite of standard economic indicators for the creative industries must include contribution to GDP (or its sub-national constituent parts), productivity, gross value-added, and export data. As the CIE also points out, each of these core indicators requires more fine-grained analysis than standard official statistics can provide. Nevertheless, the contributions that embedded creatives make to the industries in which they are employed offer a rich vein of qualitative exploration. A case study of the health industry (Pagan et al., 2008, 2009) found that creatives are making a range of contributions to the development and delivery of healthcare goods and services, the initial training and ongoing professionalism of doctors and nurses, and the effective functioning of healthcare buildings. Creative activities within healthcare services are also undertaken by medical professionals and patients. Key functions that creative activities address are innovation and service delivery in information management and analysis and making complex information comprehensible or more useful, assisting communication and reducing psycho-social and distance-mediated barriers, and improving the efficiency and effectiveness of services.

396   Stuart Cunningham and Jason Potts

Case study: design as key creative input The headline finding that there are more creatives working outside the creative industries than inside them must also be placed alongside the degree to which creative work supplied by specialists is an input to the broader economy. This economy-wide view (the embedded creative workforce, as well as the dynamics of business-to-business activity between the creative industries and the rest of the economy), taken together with creative industries activity and output itself, are the components of what could be called the ‘creative economy’. Much research is gravitating to design as an increasingly vital input economy-wide. The statistical evidence to support this has only recently been developed, as design activity is notoriously underestimated in official national statistics and employed designers are so broadly embedded throughout industry sectors that their contributions are significantly undercounted. Creative trident analysis (Higgs et al., 2005) shows that design is the ultimate ‘ur-discipline’ in the creative industries, being found embedded in a wider range of other industries than any other sector. This is reinforced by later findings from a 2008 study that demonstrated that over 75% of design employment was in in-house teams, predominantly in the property and business services, manufacturing, construction, and retail sectors (State of Victoria, 2010). This is completely consistent with broader notions of design as a fundamental input into more and more products and services in the ‘experience’ economy. Sources such as the World Economic Forum’s Global Competitiveness Report and the UK Design Council have demonstrated that there is a distinct correlation between design-intensity in enterprise activity and product development, and broad economic competitiveness at the firm and national level. As one recent report claimed: ‘Design can add value across all aspects of a business, including production processes, branding and communications, leadership, and company culture’ (State of Victoria, 2010, p. 6). Indeed, the ‘input value’ of design has spilled over even further, into cutting edge research and educational practice in business studies. ‘Design thinking’ is the idea that the mindset, habitus, or skill sets of designers are valuable inputs into contemporary business thinking. It is posed by Roberto Verganti (2009) as a third way between radical innovation pushed by technology or the incremental innovation pulled by the market: ‘Design-driven innovations do not come from the market: they create new markets. They don’t push new technologies, they push new meanings.’ George Cox (2005) positioned design as a bridge between the arts and engineering sciences (when design is thought of as a distinct sector) and a link between research and enterprise in the innovation chain (when design is thought of as method or mindset). Practical, policy-relevant adaptations of the notion of the broad value of design across the economy are exemplified in New Zealand’s ‘Better by Design’ programme, which was adapted in design strategies in Queensland as ‘Ulysses:  Transforming Business through Design’ (http://www.ulyssesdesign.com.au/Ulysses_Fact_Sheet.pdf) and in Victoria (State of Victoria, 2010). (The key industry player in Ulysses is not a

Creative Industries and the Wider Economy   397 design association but a leading manufacturing support unit, QMI Solutions, formerly Queensland Manufacturing Institute.) Here, the key strategy is to stimulate growth on the demand side (not at final consumption level but as a business-to-business input) as a priority that then may stimulate growth on the supply side: if design is so broadly and increasingly applicable in an ‘experience’ economy, then work with companies in any field can identify how design can address business needs, which design firms supplying services or embedded designers can then seek to meet. Better by Design was established in 2004 to increase New Zealand’s export earnings by assisting companies to grow in international markets and improve their financial performance by the strategic use of design. With an integrated set of interventions on the demand side (in manufacturing and among services firms), companies using design inputs are displaying a higher level of understanding of customers and their needs and desires, an increased awareness of the role of design in strategic and operational processes, and product and service changes, including improved look and feel particularly for products from engineering organizations. There were observable improvements including more integrated product development, branding, increased investment in design, a greater proportion of turnover from exports, and overall turnover growth.

Creative Industries over an Innovation Trajectory As is already suggested in the foregoing, research into the relation of creative industries to the wider economy has begun to focus on the question of innovation. The creative industries facilitate the origination, adoption, and retention of new ideas (the innovation process) into both the socio-cultural and economic system. Their relation to the wider economy comes not only from the effects of clustering and employment spillovers, as above, but also from their contribution to economic dynamics through the different phases of the innovation process and to institutional evolution through their facilitation of change in behaviours, norms, routines, and expectations (Heilbrun, 1991). The most promising theorization of this role has been developed from the perspective of evolutionary economics (Potts, 2009, 2011; Dopfer and Potts, 2008). An innovation trajectory is a three-phase process of the origination, adoption, and retention of a novel idea into a population (and system) of economic ideas. The creative industries are instrumentally involved, both on the demand and the supply side, in all three phases, making the creative industries manifestly part of a sectoral, regional, or even national innovation system (Bakhshi et al., 2008). This dynamic spillover view of the creative industries considers not just aggregations of cultural workers, assets, or even national treasures, but instead focuses on the ‘human capital’ of creativity, novelty generation, new interpretations and meanings, and

398   Stuart Cunningham and Jason Potts the creative skills and abilities that enable humans to continually change and adapt to changing ecological, social, technological, and economic environments. This dynamic value is increasingly recognized as a major economic contribution of the creative industries (Bakhshi et al., 2008; Howkins, 2009; Potts, 2011). A ‘dynamic value’ innovation spillover argument does not diminish the many positive non-economic externalities of the creative industries sector to personal or national identity, to community cohesion or humanistic integrity, or even to social justice. But these are not the most fundamental things about the creative industries from the evolutionary economic perspective. For that we must look to the contribution of the creative industries to the process of economic evolution in terms of its contribution to each of the three phases of an innovation process: origination, adoption, and retention (Potts, 2009, 2011). In this respect the creative industries are properly on a par with science and technology as significant forces of economic evolution. Yet whereas science and technology are well recognized as drivers of new material forms and the economic opportunities this creates (Arthur, 2009), the creative sectors deal with the human interface, with the new ways of being and thinking and interacting with, in effect, the human side of economic change (Potts et al., 2008b). The effect of the creative industries, by this account, expresses mostly on the demand side of economic evolution, whereas science and technology operate mostly on the supply side. This should not be construed as ‘hard’ (technology and engin­ eering) versus ‘soft’ (arts and play); that is a category error. Rather, we need only recognize that all innovation processes and trajectories—the processes that drive all economic growth and development as an evolutionary process of ‘creative destruction’—involve people originating and adopting new ideas, learning to do new things, experimenting with variations, and seeking to embed these new ideas into new habits, routines, and even identities (Herrmann-Pillath, 2010). This is often done in a highly social context. An evolutionary economic perspective connects the creative industries to different phases of an innovation trajectory and to the organizations, social networks, and institutions that facilitate this process. It seeks to explain how the creative industries are an integral part of the innovation system (Handke, 2006; Bakhshi et al., 2008; Potts, 2009). Whatever their cultural value or even economic value at any point in time, the creative industries also contribute to long-run economic growth and development through their role in the innovation system (Potts and Morrison, 2009). Economic growth and development means that people must change what they do and who they are. The creative industries are lead providers of these valuable dynamic economic services. This is an important and often unappreciated economic spillover of creative industries that can be traced through the three phases of an innovation trajectory. The first phase of the process of economic evolution is the origination of a novel idea as the onset of innovation. The creative industries contribute to this through the provision of new ideas that are often developed in collaboration with other industries. Music and videogames are good examples. More importantly, the creative industries provide services to generate and develop new ideas (what Dodgson et al. (2005) call ‘innovation technologies’). A media-rich society, for example, is not just good for democratic politics, but also good for the origination of innovation through the opportunities it furnishes

Creative Industries and the Wider Economy   399 for experimentation with new ideas. It should not surprise us that thriving media industries offer a rich and fertile ground for the introduction of novel ideas that are the basis of ongoing economic evolution (Hartley, 2009; Hartley and Montgomery, 2009). Interestingly, this implies that the creative industries may in fact be a precondition for economic evolution. A default setting that identifies the creative industries as just the entertainment or leisure industries should also acknowledge that a significant source of entertainment and leisure in humans is from engagement with new ideas (Currid, 2007; Leadbeater, 2008). An externality of this preference for discussing ideas, even as entertainment, may well be innovation and economic evolution. The second phase of economic evolution is the adoption of new ideas. Often modelled as a diffusion process, this is the innovation process of creative destruction through which the knowledge base of the economy changes. The creative industries are important to this process for the simple reason that it is inherently social. When dealing with uncertainty, we look to others, sometimes directly to their individual advice or choice, and at other times indirectly to the effect of their choice on price or sales, or even more indirectly, through others’ representations of these effects (Potts et al., 2008a). The most obvious creative industries contribution is in the commercial field of advertising and marketing, which seeks to inform and influence choice through the construction of various messages and rules for choice (Earl and Potts, 2004). This aims to affect the patterns of generic adoption through the production of rules for choice regarding the novel idea. This function extends through film, TV, radio, and other activities that create and process social information and focus attention (Lanham, 2006). The creative industries facilitate, accelerate, and stabilize the adoption of new ideas into the economic order and broadly function as a social selection mechanism, both selecting against particular ideas and amplifying others. The vast acceleration in economic evolution from Gutenberg onwards, and again with telephony, radio, TV, and the Internet, all suggest that the creative industries provide the evolutionary service of adoption facilitation. The third phase of an innovation trajectory is the retention of the idea into the economic order and its ongoing replication. The creative industries play a further important evolutionary role in this process through the design of ways of being and the normalization of these ways. The obvious example is the new representation, through whichever media, that transforms the new into the normal, thus ‘institutionalizing’ novelty. Almost all creative industries feature in this function, from interactive software that seeks to embed technologies into interfaces that humans like, to books, films, or TV that normalize a previously radical perspective, to design and architecture that locks these ideas into material forms. The creative industries do not neatly decompose over these three evolutionary phases, with architecture here and design there, for example. They tend to have different functions at different phases, and appear at different points with varying significance and intensity. The creative industries are part of the mechanism by which new ideas are developed. The creative industries provide the capabilities that incline us, both individually and socially, toward the origination, adoption, and retention of novel ideas. At any point in time, these will invariably seem indulgent, wasteful, or insignificant, or perhaps

400   Stuart Cunningham and Jason Potts mere entertainment. But through time, these processes have structural significance in facilitating economic change. How can an industrial sector devoted to media, fashion, craft, design, performing arts, advertising, architecture, heritage, music, film and television, games, publishing, and interactive software possibly contribute to fundamental dynamics of economic growth? At first sight, the creative industries are not progenitors of the standard causes of economic growth in developing new technology, in capital deepening, in operational efficiency, in business model innovation, or in institutional evolution. Yet many of the people and businesses in this sector are actually intimately involved in all of these things. The creative industries are deeply engaged in the experimental use of new technologies, in developing new content and applications, and in creating new business models. They are broadly engaged in the coordination of new technologies to new lifestyles, new meanings, and new ways of being, which in turn are the basis of new business opportunities. The creative industries are not seminal forces of material economic growth, but they are germinal in their role in coordinating the individual and social structure of novelty and in resetting the definition of the normal. The creative industries provide many of the inputs involved in processes of adaptation to novelty and the facilitation of change that by definition underpin the process of economic evolution.

Conclusions It is now relatively uncontentious to assert the net economic value of the creative industries. And it is increasingly uncontentious to assert a secondary spillover effect of the creative industries on the wider economy as working through a shift in analytic focus from creative outputs (the creative industries as a specific sector) to cluster effects, creative contributions as inputs into the wider economy, and creative outputs as intermediate inputs into other sectors. This idea of creativity as an economic ‘enabler’ arguably has parallels with the way information and communication technologies have been regarded as enablers of economic growth. This may lead to a broader, more inclusive understanding of innovation systems. which has traditionally been exclusively associated with the science- and technology-based industries. But a clear implication is that a focus on economy-wide creative contributions dissipates a sectoral focus on the specific needs and dynamics of especially the arts or cultural sectors of the creative industries. For the critics of the link between creative industries and innovation (e.g. Oakley, 2009; Oakley et al., 2008; O’Connor, 2009), it threatens to suborn the integrity of the case for support for culture through an untoward economism and therefore a loss of focus on what constitutes cultural value, and a belief that what can be gained from linking arts, cultural, and creative activities to innovation is more than offset by what would be lost from such sector-specific attention. Notwithstanding the difficulties inherent in linking the creative economy to innovation policy, it may assist in engaging with many animating questions of our

Creative Industries and the Wider Economy   401 field—what are the genuine advances in the cultural and creative sectors (including aesthetic advances), how would we measure them, and what has been their broader societal benefit? These are indeed core questions of cultural value. Units such the CCI and the National Endowment for Science, Technology and the Arts (NESTA) have sought to develop research and policy frameworks addressing these questions (see, for example, Potts and Cunningham, 2008; Bakhshi et al., 2008; Miles and Green, 2008; Potts and Morrison, 2009). The importance of ‘soft’ innovation—constant improvement in services, processes, and responsiveness, and functional as well as experiential design that affects potentially every member of society—comes to prominence (Stoneman, 2007, 2010). Revealing the hidden innovation in advertising, independent broadcasting, games, and product design sees them ‘emerge as particularly innovative enterprises, in terms of technological and wider innovation’ (Miles and Green, 2008). The influence of this focus on linking creative industries and innovation is evident in the UK White Papers, Creative Britain: New Talents for the New Economy (DCMS, 2008) and in Innovation Nation (DIUS, 2008). Creative Britain speaks of the need for the creative industries to ‘move from the margins to the mainstream of economic and policy thinking, as we look to create the jobs of the future’. Creative human capital development is arguably the central theme of the paper, extending to large-scale apprenticeship schemes to coordinate better human capital inputs into the volatile and slippery creative economy. There are policies for business development pathways for creative entrepreneurship, including a voucher scheme designed to promote better coordination between demand and supply, and a recognition that research and development must underpin the mainstreaming of the creative economy. The logic driving the move from creative industries to creative economy is that the creative industries are not significant only in terms of producing a particular set of products and services, but because they are engaged in the provision of coordination services that relate to the origination, adoption, and retention of new technologies, commodities, or ideas into the economic system. Nicholas Garnham’s (2005) worry about the creative industries ‘moment’ was that the model of innovation being advanced was purely about technological innovation and it was only entrepreneurs and technologists who were the ‘creative’ drivers. It may be the case that that model of innovation, about which he was right to worry, is giving way to a more inclusive model.

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404   Stuart Cunningham and Jason Potts Oakley, K., Sperry, B., and Pratt, A. (2008). The Art of Innovation: How Fine Arts Graduates Contribute to Innovation. Research report. London: NESTA. Pagan, J. D., Cunningham, S., and Higgs, P. (2008). Getting Creative in Healthcare:  The Contribution of Creative Activities to Australian Healthcare. Technical report, Creative Industries, ARC Centre of Excellence for Creative Industries and Innovation. . Pagan, J. D., Cunningham, S., and Higgs, P. (2009). Getting Creative in Health Care. Media International Australia, 132: 78–92. Pine, B. J. and Gilmour, J. (1999). The Experience Economy. Boston:  Harvard Business School Press. Porter, M. (1996). Competitive Advantage, Agglomeration Economies and Regional Policy. International Regional Science Review, 19(1): 85–94. Porter, M. (1998). Clusters and the New Economics of Competition. Harvard Business Review, (Nov.–Dec.): 77–90. Potts, J. (2009). Why the Creative Industries Matter to Economic Evolution. Economics of Innovation and New Technology, 18(7&8): 663–674. Potts, J. (2011). Creative Industries and Economic Evolution. Cheltenham: Edward Elgar. Potts, J. and Cunningham, S. (2008). Four Models of the Creative Industries. International Journal of Cultural Policy, 14(3): 233–248. Potts, J., Cunningham, S., Hartley, J., and Ormerod, P. (2008a). Social Network Markets: A New Definition of the Creative Industries. Journal of Cultural Economics, 32(3): 167–185. Potts, J., Hartley, J., Banks, J., Burgess, J., Cobcroft, R., Cunningham, S., and Montgomery, L. (2008b). Consumer Co-Creation and Situated Creativity. Industry & Innovation, 15(5): 459–474. Potts, J. and Morrison, K. (2009). Nudging Innovation: Fifth Generation Innovation, Behavioural Constraints and the Role of Creative Business. NESTA discussion paper. London: NESTA. Pratt, A. C. (2008). Locating the Cultural Economy. In H. Anheier and Y. R. Isar (eds.), The Cultural Economy. London: Sage, 42–51. Pratt, A. and Taylor, C. (Burns Owens Partnership) (2006). Creating Global Statistics for Culture: Expert Scoping Study. Paris: UNESCO Institute for Statistics. . Roodhouse, S. (2006). Cultural Quarters: Principles and Practice. Bristol: Intellect Books. Scott, A. J. (2004). On Hollywood: The Place, the Industry. Princeton: Princeton University Press. Smith, C. (1998). Creative Britain. London: Faber. State of Victoria (2010). Victorian Design Action Plan 2011–2015. Melbourne: Department of Innovation, Industry and Regional Development. Stoneman, P. (2008). Soft Innovation: Completing the Portrait of the Dynamic Economy. , accessed 8 August 2008. Stoneman, P. (2010). Soft Innovation: Economics, Product Aesthetics, and the Creative Industries. Oxford: Oxford University Press. Throsby, D. (2001). Economics and Culture. Cambridge: Cambridge University Press. Verganti, R. (2009). Design-Driven Innovation. Boston: Harvard Business School Press. Work Foundation (2007). Staying Ahead:  The Economic Performance of the UK’s Creative Industries. London: Work Foundation. Wyszomirski, M. J. (2008). The Local Creative Economy in the United States of America. In H. Anheier and Y. R. Isar (eds.), The Cultural Economy. London: Sage, 199–212.

Chapter 21

Brokerage, M e diat i on, an d So cial Net works i n t he Creative I ndu st ri e s Pacey C. Foster and Richard E. Ocejo

Scholars from a wide range of disciplines have become increasingly interested in the production and consumption of cultural products like music (Crossley, 2009; Grazian, 2003; Lingo and O’Mahony, 2010), visual art (Khaire and Wadhwani, 2010), movies (Hsu, 2006; Bechky, 2006), television (Starkey, Barnatt, and Tempest, 2000), fashion (Crane, 1999; Currid, 2007), and food (Ferguson, 1998, 2004; Johnston and Baumann, 2007, 2010). The importance of social networks and brokerage roles in these settings have been recognized for many years (Becker, 1982; Bystryn, 1989; Crane, 1987; Peterson and Berger, 1971; Ridgeway, 1989) but have only recently begun to receive systematic attention (Crossley, 2009; Foster, Borgatti, and Jones, 2011; Lingo and O’Mahony, 2010). Perhaps because the production of culture perspective has dominated organizational scholarship (Ryan, 2000) and Bourdieu’s notion of cultural intermediaries has sometimes been misconstrued (Negus, 2002), there is little consensus in the literature about the definition or operation of brokerage roles in cultural industries. As a result, significant ambiguity remains about the different structural positions, functions, and motivations played by brokers in the production and consumption of creative products and services. In this chapter we review existing approaches to brokerage roles in creative industries and offer a perspective that distinguishes among search, selection, co-production, and tastemaking activities, multiple structural roles, and motivations. We begin by discussing how brokers have been historically addressed in creative industry (Caves, 2000; Hirsch, 1972, 2000; Peterson and Berger, 1975; Ryan, 2000) and art world scholarship (Becker, 1982). In this work, a single term—gatekeeping—is used to describe roles at several places in the production chain, thereby creating theoretical and empirical confusion. We clarify this literature by using social network theory to

406   Pacey C. Foster and Richard E. Ocejo define gatekeeping in structural terms and identify functions and motivations that have not been well addressed in the existing literature. In particular, we argue that cultural brokerage often contains a third motivation in addition to the well-known tertius gaudens (Simmel, 1902; Burt, 1992, 2004) and iungens (Obstfeld, 2005) orientations. We coin the term ‘tertius transferens’ (the third who translates) to capture this third motivation of cultural brokers who engage in tastemaking and promotional activities. In the second half of the chapter we look at several empirical examples of brokerage in the music industry and new service professions that demonstrate this concept of cultural translation and meaning making (e.g. Khaire and Wadhwani, 2010) and point to additional questions about brokerage in contemporary creative industries. We suggest that digital technology and recent occupational developments have generated new (and increasingly hidden) brokerage roles, some of which occur in non-traditional culture industries like beverages and food. We argue that while these developments are often described as a process of democratization through disintermediation and a closing of the gap between production and consumption, a closer look at the relationships between brokerage roles across industries, and the relationships between different broker roles within industries, reveals that conditions favouring exclusivity and the concentration of capital have been reproduced in post-industrial creative economies. Although brokerage roles in sectors like music have been transformed by disintermediation caused by digital distribution, in new service professions we see an increase in high-touch, personalized cultural brokerage. We identify several empirical examples of tertius transferens brokerage in non-traditional culture industries, such as beverage and food. We conclude that future research could benefit from integrating Bourdieu’s (1984) notion of cultural intermediary work as social reproduction and recent developments in social network theory that treat brokerage as a structural social process (Borgatti and Obstfeld, 2008).

Cultural Brokers: Clarifying Intermediary Roles in Creative Industries We begin with a structural view of brokerage as a role played by an actor in the middle of any open triad. In social network theory, this line of thinking is often traced to Simmel’s (1902) idea of the tertius gaudens (‘third who enjoys’) and has generated a rich stream of research on the benefits that accrue to actors who connect otherwise disconnected alters (Burt, 1992, 2004). One value of network theory is that it defines brokerage roles based on the positions of actors in a triad and allows for different broker motivations (Burt, 1992; Obstfeld, 2005). Both of these features (multiple roles and

Brokerage, Mediation, and Social Networks   407 varying motivations) are critical for extending existing theorizing about intermediary roles in creative industries. Gould and Fernandez (1989) identify five different brokerage roles (coordinators, representatives, gatekeepers, liaisons, and consultants) that are defined by the organ­ izational memberships of the actors in an open triad. Figure 21.1 summarizes this model and represents brokers as white nodes, alters as black nodes, and their organizational memberships as the lines surrounding them. According to this framework, a broker that connects two alters who are in the same organization as the broker is a coordinator, while a broker that connects someone outside the organization to someone inside an organization is a gatekeeper. In the next section we use these two definitions to clarify research that has used the gatekeeping term interchangeably to describe different roles and functions. In addition to recognizing multiple brokerage roles, network theory increasingly recognizes different broker motivations. Early research followed Simmel (1902) and defined brokerage as the tertius gaudens (the third who benefits) (Burt, 1992). In this work, brokerage is viewed primarily as a position occupied by a self-interested actor who derives benefits from exploiting the disconnection of his or her alters. Recent work (Obstfeld, 2005) suggests that brokers can serve more altruistic (or less directly self-interested) functions and adds the idea of the tertius iungens (the third who connects) to capture the pro-social motivations of brokers who strive to connect others. We suggest that creative industries contain a third brokerage motivation that is not captured by either the gaudens (Burt, 1992) or iungens (Obstfeld, 2005) orientations. When cultural brokers like promoters, critics, or reviewers are acting to influence or shape the experience of a given cultural product, they are fundamentally engaged in meaning-making and translation activities. Recent research on category emergence in creative industries (e.g. Jones et al., 2011; Khaire, 2010) finds that the meaning making

Coordinator role

Consultant role

Representative role

Gatekeeper role

Liaison role

Fig. 21.1  Brokerage roles (Gould and Fernandez, 1989)

408   Pacey C. Foster and Richard E. Ocejo activities of brokers and artists themselves play a critical role in determining the legitimacy and value of new categories like modern Indian art and modern architecture. In the following, we introduce the term tertius transferens (the third who translates) to capture this translation and meaning-making function of cultural brokers. The next section reviews how brokerage roles have historically been addressed in creative industries scholarship. Adopting the organization set perspective that is typical of the production of culture research programmes, we illustrate how brokerage roles shift as products move through production, selection, and promotion subsystems on their way toward audiences. In the second half of the paper, we use the cases of disintermediation due to digitization in the music industry and the emergence of new tastemaking roles in traditional service industries to argue for a better integration of Bourdieu’s theories of cultural intermediaries (1984) with network perspectives on cultural brokers.

Cultural industries and art worlds: selection, co-production, and tastemaking functions In his foundational article on fads and fashions, Hirsch (1972, p. 648) describes the importance of selection functions in creative industries: From an organizational perspective, two questions pertaining to any innovation are logically prior to its experience in the marketplace: (1) by what criteria was it selected for sponsorship over available alternatives? and (2) might certain characteristics of its organizational sponsor, such as prestige or the size of an advertising budget, substantially aid in explaining the ultimate success or failure of the new product or idea?

Perhaps because the production of culture perspective has dominated this field in recent years (Ryan, 2000), more work has focused on ways that cultural products are made than on the methods by which they are selected and presented to audiences. ‘Indeed, brokerage roles are missing from Griswold’s (2004) famous diamond of producers, receivers, cultural objects and social worlds’ (Foster, Borgatti, and Jones, 2011, p. 248). Among art worlds and creative industries scholars, several different brokerage roles have been subsumed under the single term ‘gatekeeper’. A brief review of common uses of this term in the literature makes it clear that it refers to several different roles and functions. Caves (2000, p. 67) uses the term to refer to matchmaking functions, arguing that ‘ . . . most creative industries have to solve some job-matching problem—allocating vaudeville acts among theaters, big bands among ballrooms, classical pianists among concert series, actors among movie projects’. Similarly, in their discussion of entrepreneurial roles in the music industry, Peterson and Berger (1971, p. 99) describe the record producer as a gatekeeper who ‘ . . . spends much of his time searching for new performers. He listens to the demonstration tapes sent to him by aspiring groups and also seeks out groups in live performances’. In this usage, which is formally identical to the sense

Brokerage, Mediation, and Social Networks   409 in which Gould and Fernandez (1989) use the term, gatekeepers act as organizational boundary spanners whose job is to scan artistic production subsystems to identify desirable artistic products (in this case songs) to present to audiences. We argue that this is the proper use of the term and that other brokerage roles should be given different names for theoretical and empirical clarity. Highlighting a very different function played by producers in the music industry, Peterson and Berger (1971) note that once songs are selected, producers often play an important role in shaping the eventual content of records: Next the producer shares responsibility with the artist for choosing the tunes to be recorded and the mood or style of play. This stage is critical, because to be a successful recording in the popular field, the tune must be enough a la mode for it to catch the ear of the audience but just distinctive enough to sound different—this is the song’s novelty.

This kind of activity is called ‘nexus work’ by Lingo and O’Mahoney (2010) and is similar to the way that an editor works with an author to hone her writing or a producer works with a director to help shape the content of a movie or television programme. In the Gould and Fernandez (1989) typology, this role would be defined as coordination because the artist and broker now share a project membership. At this stage, the broker’s job is to enter the creative process as a co-producer and help shape the final product. A third common usage of the term can be found in Hirsh’s (1972) early work and in studies that focus on mass-media gatekeepers (Clayman and Reisner, 1998). Hirsch (1972, p. 642) views creative industries as organization sets in which ‘artist and mass audience are linked by an ordered sequence of events: before it can elicit any audience response, an art object first must succeed in (a) competition against others for selection and promotion by an entrepreneurial organization, and then in (b) receiving mass-media coverage in such forms as book reviews, radio-station air play, and film criticism’. While he recognizes the importance of selection functions in the first part of the sequence, Hirsch uses the gatekeeper term to describe brokers in the final sequence (e.g. as the critics who evaluate the output of creative industries and help promote specific products to audiences). This is also the way the term has been used in subsequent work on mass-media gatekeepers in the publishing industry. As it did in the shift from selection to co-production, here the brokerage role shifts to focus on promotion rather than search, selection, or co-production. In the language of Gould and Fernandez (1989), this kind of brokerage role is called representation. Here brokers face consumers (or gatekeepers in the next stage of a distribution channel) and engage in promotion, tastemaking, and other activities designed to positively influence public reaction to a given creative product. While information sharing and control is clearly implied in the tertius gaudens (Burt, 1992) and tertius iungens motivations (Obstfeld, 2005), neither of these motivations reflects the primacy of translation and symbolic work at this final stage in cultural production. Moreover, both of these motivations implies a structural feature that is not required for the transferens

410   Pacey C. Foster and Richard E. Ocejo motivation. Whereas the benefits from gaudens brokerage arise from the maintenance and exploitation of disconnected alters and the benefits of iungens brokerage arise from connecting these alters, the transferens motivation requires neither. Rather than separation or closure, a transferens motivation merely requires that alters share similar views or understandings. Derived from the Latin verb transfero meaning to transfer, convey, translate, or carry over, we offer the term tertius transferens (the third who translates) to capture the meaning-making motivations of cultural brokers. In summary, there are at least three distinct functions played by brokers in creative industries that shift as products move through different phases in the production process. At the fuzzy front end of artistic production, brokers in gatekeeper roles are engaged in scanning and selection activities to identify promising new talent and emerging trends. These searches typically rely on and help build social networks as brokers talk with each other and other members of the creative industry about emerging talent and current trends (Foster, Borgatti, and Jones, 2011). As Peterson and Berger (1971) argued, these roles are often set apart from core organizational activities and can help buffer organizations from the turbulence of artistic markets. Once products or artists are selected, brokers may shift into coordinator roles as they engage in the production process, working with artists to shape their final creative products. One important untested assumption here is that a broker’s goal in this stage is to strike the appropriate balance between novelty and familiarity of the final product in order to optimize market receptivity. When a product has been released into the market, brokers in representative roles engage in tastemaking, production promotion, and marketing activities to differentially expose their products and artists to potential consumers. Our approach identifies three primary brokerage functions of selection, co-production, and promotion as they typically occur along a stylized artistic production system linking creators with audiences for their works. At each of these stages, brokers may occupy roles that are structurally defined by their organizational or project memberships (e.g. Gould and Fernandez, 1989). However, our argument is not intended to imply that these functions are fixed at each stage or tightly coupled to specific organizational positions and roles as defined by Gould and Fernandez (1989). Indeed, one person may play different brokerage roles for a single artistic product at different points in time. For example, early in a song’s commercial life, the producer who first identifies a promising band is primarily focused on search and selection functions but may simultaneously be engaged in tastemaking activities with other members of the industry who she hopes will help in the production process. Notice that what has shifted here is both the activity (search and selection vs. tastemaking) as well as the formal brokerage role as defined by the organizational memberships of the broker and alters (e.g. Gould and Fernandez, 1989). As the band enters the studio to record, the producer may shift to a coordinator role (Gould and Fernandez, 1989) to help the band hone their songs to meet current tastes and may continue to engage in some tastemaking activities as she tries to build early interest in the band among media contacts, publicists, and promoters. Once the song or album is made, the producer will likely engage in tastemaking activities as she helps the band promote their work to media critics and the public while continuing to engage in

Brokerage, Mediation, and Social Networks   411 co-production functions by advising the band on issues of image and style. Therefore, rather than thinking of cultural brokerage merely as a structural position within a value chain or network defined by structural positions (Gould and Fernandez, 1989), we argue that it is also important to recognize that brokerage is a socially enacted process as much as a structural position. As such, brokerage roles may be enacted in multiple ways at the same structural position or in the same way at different positions. Future work on cultural brokerage should consider structural roles (gatekeeper, coordinator, representative), motivations (gaudens, transferens, iungens), and activities (search, selection, co-production, tastemaking) of brokers as they mediate the relationships between artists, creative products and services, and audiences.

Disintermediation in the Music Industry and Cultural Brokers in Service Industries Having developed a theoretical foundation in the first half of the chapter, this section focuses on two developments in contemporary creative and service industries that extend our understanding of cultural brokerage and suggest the need for additional theorizing and empirical work. First, we discuss how disintermediation (which has been driven by the digital revolution) has radically altered the organizational networks that connect producers and consumers in the music industry and transformed traditional brokerage functions in the process. We argue that scholarship on contemporary cultural brokerage needs to consider how digital disintermediation has affected brokerage roles and take a critical view on the oft-cited democratizing impacts of these changes. Second, we identify niches within traditional service occupations (like chefs, barbers, bartenders, and butchers) where these workers are acting as important cultural brokers. Rather than occupying service or manufacturing roles, these workers increasingly occupy roles as ‘brand ambassadors’ for companies within their industries and thereby operate in representative roles with tertius transferens motivations. We use these two cases—digital distribution in music and the rise of new cultural intermediaries in traditional service professions—to identify paradoxes and unanswered questions about the operation of cultural brokers in contemporary creative industries.

Disintermediation: the realities and myths of musical distribution in the digital age Anyone who has purchased music in the last ten years is probably aware of the dramatic shifts that have taken place in the music industry as a result of digitization and digital distribution. Until relatively recently, most people bought their music on a

412   Pacey C. Foster and Richard E. Ocejo physical medium (e.g. a compact disc) in a physical location (e.g. a store). According to a 2011 Nielsen and Billboard report, 2011 was the first year that the sale of digital music exceeded the sale of music on physical products like CDs. Although a complete overview of the impacts of digitization on the music industry is beyond the scope of this chapter and is well documented elsewhere (Knopper, 2010), a brief review of some recent industry statistics makes it clear how dramatic these changes have been. Over the last decade, US record sales have plummeted from $14.6 billion in 1999 to $6.3 billion in 2009 (Goldman, 2010). Since 1999, when Napster first launched, the global music industry has been fighting a war of attrition that led to the bankruptcy of such brick and mortar music stalwarts as HMV and Tower Records. Numerous factors have contributed to these dramatic changes: the growth of peer-to-peer file sharing networks and illegal music downloading; the increasing importance of music blogs and streaming services like Pandora; the ubiquitous use of YouTube as a free global jukebox; and competition from other forms of new media like videogames and cable television. In the process, there have also been dramatic shifts in the power of traditional gatekeepers and tastemakers like record labels and radio stations. In May 2011, the Rethink Music conference in Boston, MA brought together industry representatives, thought leaders, and academics to discuss the future of the music business. One of the central themes at the conference was the fact that digital distribution has allowed for direct connections among bands and fans thereby eliminating traditional brokers. ‘Through do-it-yourself distribution tools, artists can cut out middlemen and distribute music directly to their fans, earning more in royalties than they could have under traditional recording and publishing deals during the heyday of the compact disc. Some artists even raise money directly from their fans to support the production of new music’ (Berkman Center, 2011, p. 7). Out of the wreckage of the brick and mortar music industry, new business models (and intermediaries) are already beginning to emerge. Some of these trends clearly represent new models that challenge our notions of brokerage. However, in other cases the role and position of the intermediaries has merely shifted—often in ways that both consolidate and obfuscate their sources of power and capital. One rapidly growing business model is ‘fan funding’. In this approach, bands reach out directly to groups of fans who serve as investors and help the band raise money for recording or touring. In 2000, the progressive rock band Marillion raised over $100 000 directly from fans to finance the recording of their 12th studio album, Anoraknophobia. This funding allowed them to reject a record label advance and retain the rights to their own music (Marillion, 2000). Fan funding and similar business models have been adopted by subsequent artists and have led to the emergence of websites dedicated to direct fan investment. Clearly, methods like fan funding complicate traditional gatekeeper and co-production roles by diffusing them among loyal fans that serve as micro investors and sometimes influence the artistic process through their online comments and suggestions. Another new development is the growing importance of music blogs and other forms of viral marketing. In an oft-cited early example, in June 2005, a relatively unknown

Brokerage, Mediation, and Social Networks   413 band called Clap Your Hands Say Yeah began to receive attention from music bloggers and aggregators like pitchfork.com. By the end of the summer of 2005, the band had received enough free Internet promotion that they reissued their self-released CD and were offered high-status gigs at which celebrity guests were spotted (thereby further fuelling their viral marketing). They have since gone on to a productive recording and touring career. In rap music, the story of Soldja Boy is a well-known example of the combined power of viral marketing and lower barriers to entry created by digital production and distribution technology. In March 2007, his self-produced video for the song ‘Crank Dat’ first appeared on YouTube. By August of that year, the song had appeared on the hit HBO series Entourage and by 1 September 2007 it reached #1 on the Billboard Hot 100 chart where it remained for seven weeks. This latter example is especially significant because the song ‘Crank Dat’ was rumoured to have been recorded on a free demo version of the music production software Fruity Loops. The combination of low barriers to entry and viral Internet marketing made it possible for an unsigned teenage artist like Soldja Boy to manage the entire musical production chain, from inception, through production, marketing, and distribution. A process that once included multiple brokerage roles and functions spread across several organizations—e.g. an A&R person to discover the band, an engineer and producer to record them, and a distribution and marketing department to promote them—can now be accomplished by unsigned artists at very low costs. Given these examples and many others like them, it is clear that the convergence of digital production and distribution has led to a period of dramatic disintermediation (e.g. more unmediated connections between producers and consumers). However, lest we uncritically accept these developments as beneficial for artists, it is worth considering how these processes of disintermediation contain both democratizing and reactionary pressures. For example, although fan funding and other forms of direct financing and marketing may seem like the purest examples of increasing democratization, in fact, the very platforms that are used to collect and communicate these direct messages are themselves owned by commercial ventures. While independent online distributors like CD Baby have made an effort to provide maximum returns to artists, altruistic arrangements are by no means built into this model. Furthermore, even artist-centric digital distribution mechanisms like Soundcloud, and Imeem before them, are subject to shifts in the legal and financial landscape. After building a large user base of artists who posted and shared original and DJ mixes, creating a rich network of hyperlinked user-generated content in the process, Imeem disappeared as fast as they had emerged taking all the hyperlinked, user-generated content with them. Soundcloud, another music site that has grown rapidly by facilitating creative communication among musicians with their unique MP3 tagging/commenting, has recently been forced by the Recording Industry Association of America to send users take-down notices for unlicensed content appearing in DJ mixes and mashups. Indeed, as the process of disintermediation accelerates, it is important that we recognize how it simultaneously democratizes the delivery of content while consolidating new forms of social and cultural capital in increasingly opaque corporate entities.

414   Pacey C. Foster and Richard E. Ocejo

The new cultural intermediaries: barbers, bartenders, butchers, and chefs Along with issues of disintermediation brought on by new digital technologies, another empirical example that challenges existing understandings of cultural intermediaries is the transformation of select service and manufacturing jobs into more culturally nuanced representation roles with tertius transferens motivations. Bartenders, butchers, barbers, chefs, and distillers have been traditionally seen as lowly, working-class, manual labour professions not ordinarily associated with processes of cultural intermediation. Their work has generally not been tied to roles of selection, co-production, or promotion within their industries nor would these professions be traditionally seen as falling within art worlds (Becker, 1982) or creative industries (Hirsch, 1972, 2000; Caves, 2000). However, today a subset of workers within traditional service occupations are indeed engaging in tastemaking roles and these industries are themselves being seen as important cultural producers (Ferguson, 1998, 2004; Johnston and Bauman, 2007, 2010). Large companies within these industries have recognized the cultural translation work that service workers engage in within their workplaces in promoting specific products and tastes to consumers. As a result, corporations hire these service workers to promote their products by using the specialized knowledge that they have acquired and that separates them from others in their occupation. Becoming a professional in these select niches often requires an advanced demonstration of skill, formal and informal apprenticeships, a commitment to specialized knowledge and continuing education. New cocktail bartenders often begin bartending at bars that focus on speed and volume without much attention to the quality of the drinks being served. Once they begin working for specialized cocktail bars, which focus on the quality of the products and processes that go into their creations, they have to learn specific drink-making techniques, recipes, and an array of alcoholic products from more experienced bartenders as well as their own research and practice. There are even systems of formal accreditation among the cocktail community which are controlled by leaders within the niche and are used to evaluate a bartender’s level of know­ ledge and skill. Once they become professionals, cocktail bartenders are often hired by large liquor companies, such as Diageo and Pernod Ricard, as well as smaller companies, such as Maker’s Mark and Chartreuse, as consultants and ‘brand ambassadors’. These companies hire cocktail bartenders because they understand their expertise in alcoholic beverages and their familiarity with consumers to provide advantages in terms of the marketability and saleability of their products. As consultants, their role is often to develop new cocktail recipes using a certain product to promote the brand. A ‘brand ambassador’ is a more expansive position that encompasses several brokerage roles. First, they serve a gatekeeper role by locating new markets for their products, such as new bars, cities, and branches of the food and beverage service industry (e.g. targeting hotels for certain products). Second, they serve as co-producers by partnering with other professionals in

Brokerage, Mediation, and Social Networks   415 the food and beverage industry to create new uses for their products. This kind of activity occurs when brand ambassadors work with and train other cocktail bartenders on how to use a specific product or when they work with chefs on pairing drinks with food in restaurants. Finally, these cocktail professionals serve as tastemakers by adding value to the brands they represent through translation and meaning making activities. They do so by using narratives that emphasize the uniqueness of the product’s history, ingredients, or production methods. For instance, the brand ambassador for Templeton Rye emphasizes the fact that it was Al Capone’s favorite liquor, while the brand ambassador for LiV Vodka promotes the fact that it is made from potatoes grown on Long Island. The role of the cocktail bartender within the liquor industry is similar to the role of the microdistiller and microbrewer, who not only manufactures a material product but also adds value to them by promoting the uniqueness of their origins. However, due to the extremely small size of these niche brands in comparison to larger liquor companies such as Grey Goose Vodka and Budweiser, they must promote their products using strategies other than mass-media marketing. These companies understand that knowledgeable ambassadors can be important resources for marketing their products as experiences as much as commodities. In this sense, the line between manufacturer and promoter, or producer and cultural intermediary, becomes highly blurred as microdistillers and other small producers become the creators as well as the brokers for their own products, with the aid of cocktail bartenders. Svejenova et al. (2015) identify similar dynamics in their analysis of the business models of haute cuisine chefs. In particular, they emphasize the extent to which chefs have become creative entrepreneurs and identify the challenges associated with translating artistic and symbolic activities into viable commercial business models.

Towards New Interpretations and Empirical Studies of Brokerage Roles In this chapter we set out to clarify the existing literature on cultural intermediaries and gatekeepers in creative industries by highlighting the multiplicity of roles that they play. We began by setting these roles in the context of the literature on network brokerage and pointing out ambiguity in the way that the gatekeeping term has been used in the creative economy literature. By clarifying the gatekeeping term and adding the coord­ ination and representation roles defined by Gould and Fernandez (1989), we provide a stronger foundation for developing theories of brokerage in markets for experience products and services. We also identify a third brokerage motivation, the tertius transferens, that has not been identified in previous scholarship and which plays a critical role in cultural production and consumption. We suggest that future scholarship should define brokerage roles in terms of their formal structural positions, functions, and/or motivations, rather than with generic terms like ‘gatekeeper’ or ‘cultural intermediary’.

416   Pacey C. Foster and Richard E. Ocejo As we have implied, these terms are too narrow in the first case and too general in the second: whereas gatekeeping is only one of many brokerage functions, all brokers in cultural markets are in some sense intermediaries. We suggest that brokerage in creative industries is a complex process involving search, selection, co-production, and tastemaking functions that are accomplished by brokers in multiple formal roles (gatekeeper, coordinator, representative, etc.) who can be motivated by the desire to benefit (iungens), connect (gaudens), and/or translate (transferens). Although the discussion above may have implied that brokerage roles are tightly linked to stages in a hypothetical production chain connecting artists with audiences, we merely offer this as a prototype for the kinds of roles that are particularly salient at each phase in production. It seems more likely that brokerage roles and motivations are not tightly coupled to organizational positions and formal roles. Rather, we argue that the specific function and motivation of a given cultural broker should be understood in terms of the concrete interactions among a specific set of artists, brokers, organizations, markets, creative products, services, and broader institutional contexts at a given place and time. In this sense, we join recent scholars who argue that brokerage is best seen as a process and a set of social practices rather than merely a structural position (Borgatti and Obstfeld, 2008). The previous discussion has also suggested a connection between the tertius transferens motivation, tastemaking activities, and Bourdieu’s use of the term ‘cultural intermediary’. When he first coined the term, Bourdieu used it to describe occupations that lie at the point of mediation between the cultural and material production and consumption of goods and services. Because they are engaged in meaning-making activities, these brokers create symbolic value for products as well as influence consumer tastes. We have tried to account for these functions in our inclusion of the tertius transferens motivation and our empirical examples on disintermediation and new service and manufacturing industries. Our review also shows that network approaches to cultural brokerage overlook some of Bourdieu’s most important ideas about cultural intermediaries and suggests the need to better integrate his theory in contemporary scholarship on creative industries (see, e.g., Townley and Gulledge, 2015). Since Bourdieu’s research, scholars have applied his concept of cultural intermediaries to a wide range of occupations in the service and cultural industries (McFall, 2002; Negus, 1995; Nixon, 2003; Pettinger, 2004; Smith Maguire, 2008; Wright, 2004). However, some scholars (Negus, 2002) have noted out that this work has not done enough to link the cultural intermediary concept with Bourdieu’s larger project of identifying the mechanisms that reproduce social structure and class relations. In particular, two of Bourdieu’s central interests (how cultural intermediaries challenge or reproduce dominant social classes and in what ways they use traditional strategies of maintaining power) have been largely ignored in the existing research on cultural production. As a consequence, we know little about the tensions that arise as cultural intermediaries add value to products for consumers. This is especially the case for those cultural intermediaries who deal with products that fall within Bourdieu’s (1993) field of restricted production (i.e. producers who

Brokerage, Mediation, and Social Networks   417 make products for other producers). Our examples above suggest that this is a particularly important dynamic in contemporary creative industries where small cultural communities and affinity groups are occupying positions of power in commodity chains. Cultural intermediaries in these spheres increasingly face a tension between maintaining their professional identities as niche producers while simultaneously serving the needs of a mass market. For instance, chefs who achieve celebrity status through principles of localness and artisanal production often grapple with the difficulties, consequences, and contradictions of achieving widespread fame (Heying, 2010; Svejenova, Plannellas, and Vives, 2010). Svejenova et al. (2015) examine the business model of Spanish chef Ferran Adrià and the challenges creative entrepreneurs face in constructing businesses around their artistic and creative talents and products. Future work could address how these dynamics extend Bourdieu’s notion of the differences between intermediation in fields of restricted vs. mass production. Negus (2002) identifies two additional concerns about the treatment of cultural intermediary practices that relate to our present purposes and could help extend future work. First, he questions the fundamental assumption that cultural intermediaries always bridge a gap between production and consumption through practices that aim to connect consumers with products (i.e. work of intermediation). He points out that these activities can involve as much concealment of knowledge as they do revelation. Cultural intermediaries regularly deceive and manipulate consumers and distort and distribute false ideas for the purposes of ‘obscuring this tension between corporate knowledge and public ignorance’ (Negus, 2002, p. 508). Indeed, competitive advantage within industries as well as the precise marketing (i.e. presentation and representation) of goods and services necessitates such practices, as in the case of food companies who conceal ingredients and recipes. In this sense, cultural intermediaries can reproduce, rather than bridge, the gap between producers’ knowledge and the consumers’ need for information. Recent research on category emergence in creative industries demonstrates the power of collective meaning-making processes in determining the legitimacy and value of cultural products (Jones et al., 2011; Khaire and Wadhwani, 2010). We suggest that the meaning-making activities of cultural brokers is a particularly important dynamic to study in contemporary creative industries where information is both more widely accessible and more centrally controlled by a small number of corporate entities that manage the digital platforms upon which digital distribution systems are based. Negus (2002) also points out that the existing literature tends to view cultural intermediaries as an accessible and inclusive occupational group. This work argues for deeper inquiries into how individuals gain entry into cultural intermediary occupations and reminds us not to assume that these occupations reflect broad democratizing shifts within service industries. Despite the fact that much of the cultural knowledge that companies collect gets produced at a local level, or ‘ground-up’, rather than ‘top-down’ in a corporatized fashion (see Johnston and Baumann, 2007, 2009), these systems of cultural and social capital still exist within a social structure that is based on traditional resources of economic capital and other determinants of social class. Indeed, as noted by

418   Pacey C. Foster and Richard E. Ocejo Townley and Gulledge (2015), the specific mechanisms of translating capital vary from industry to industry. We have argued that brokers play an important role in determining how this translation happens in specific settings. In particular, we suggest that many members of creative occupations continue to engage in ‘restricted production’ in fields whose members possess autonomy and exclusivity over the presentation and production of their goods and services as well as membership within their ranks (Bourdieu, 1993). Rather than marking any kind of move towards inclusivity, these groups form cultural niches within larger industries. They construct meanings around products that continue to exclude those lacking the amount of capital needed to obtain them. The products may not necessarily be highbrow, but they maintain their ability to divide and deny access based on restrictions among members of taste communities. Again, this raises important questions about whether and under what conditions brokers in contemporary creative industries play a democratizing role. We argue that clearer definitions and theorizing is particularly necessary in the face of significant shifts that are affecting brokerage in creative industries and transforming service industries by infusing them with new cultural meanings and roles. Disintermediation in the music industry and the rise of cultural niches within service industries are only two examples of the dynamic changes that characterize the contemporary post-industrial economy. While we have discussed them here as empirical generalizations, our understanding of the nuanced nature of brokerage roles and the cultural broker as both meaning-maker of new products and services and reproducer of exclusivity requires much more detailed analyses of both quantitative and qualitative varieties.

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Chapter 22

Di gitizing Fa d s a nd Fashions Disintermediation and Glocalized Markets in Creative Industries Paul M. Hirsch and Daniel A. Gruber

Outside the West there is an enormous range of local musical traditions and styles. However, it is only under the auspices of the global music industry that these musical forms and artists have begun to receive a significant hearing outside their homelands under the banner of what is now called, by the marketing departments of leading corporations, ‘world music.’ But world music currently takes only a very small share of western markets. (Held et al., 1999, p.353) The laptop generation created a new grassroots music industry, with the fans and bands rather than the corporations in charge  . . .  The internet turned fans into gatekeepers. It also gave bands an independence they never had: the ability to communicate directly with their fans in ways their predecessors never could have imagined. (Kot, 2009, p.3)

Introduction Over the last several decades, a common concern has been the growing threat to the continuing originality, opportunities for, and distinctiveness of local and national producers of creative products (Pieterse, 2009). As the proportions of influence and control over the creation and success of new artists and genres of popular culture fluctuated—between local and national, versus global interests and organizations—large multinational corporations came to the fore. They increasingly got

422   Paul M. Hirsch and Daniel A. Gruber to choose and promote a select few artists and formats, which came to dominate the world’s attention and stages, reducing the opportunities for indigenous talent to become better known and appreciated. As Held et al. (1999, p. 347) recount: ‘a truly global set of media-entertainment-information corporations (came) into being. They have not entirely displaced domestic competitors, nor have they eradicated foreign corporations in their home states. However, there can be little doubt that above the plethora of local and national culture industries, a group of around 20–30 very large MNCs dominate global markets for entertainment, news, television, etc., and they have acquired a very significant cultural and economic presence on nearly every continent.’ In the same discussion, Held et al. also point to what has since weakened the same media giants whose rise they trace so well: the ‘digitalization of information, including music, visual imagery, and text’. What subsequently transpired was that via the same technologies media giants utilize, key players on whom they rely to create and deliver the content they sell found alternative outlets to produce and distribute their own work. Such disintermediation, via YouTube and Internet websites, enabling a more direct path from producer to consumer without having to go through intermediaries and gatekeepers, is a well-known concept espoused by economists as a more efficient market process. While the mega media firms traditionally in charge are still powers to contend with (Rossman, 2012), this impressive counter-trend toward the disintermediation of production by cutting out the ‘middle man’ weakened their control, with ripple effects on decisions in the creative community about what firms to contract with and rely on. After these artists’ productions become ready for distribution, new media powers, such as iTunes and Amazon, now take up much of the control that the earlier giants had over distribution and the broader public’s access to their material. Interestingly, while technology was originally a means for control by production companies, first through patents and then because the equipment was so expensive, as costs decreased and production became disintermediated, control over the distribution of many cultural products became re-intermediated, shifting to the companies which control the technology platforms through which they are now accessed by consumers. These changes have created opportunities for culture creators throughout the world to receive initial exposure and become better known, independent of company sponsorship. In the music field, for example, social media intersected with traditional media in the discovery of Philippine singer Arnel Pineda by the popular band Journey, and his selection as their new lead singer after they watched his performance of their songs on YouTube (Liu, 2008). Entrepreneur and Napster co-founder Sean Parker also cites Facebook as a new source of learning about new groups to sponsor and promote (O’Dell, 2011). New and more specific websites, such as Bandcamp, offer platforms for smaller artists to post demos and videos for potential buyers and sponsors to sample. Such technological innovation and global sourcing have spawned new ways to discover, create, and distribute content (O’Dell, 2011). The more traditional avenue of ‘A&R’ or artist and repertoire managers discovering new talents for companies which invest in, and develop and promote them has not entirely disappeared. In a newer format, television

Digitizing Fads and Fashions   423 talent shows like American Idol and the Voice locate and bring contestants before judges and millions of viewers to select winners who are then promoted, recorded, and sponsored for concert tours. Being selected in this way reduces the time required for new artists to be so widely presented. For the majority of new artists performing new mater­ ial, however, achieving this level of notoriety and success remains a slower process, still reliant on social media and public websites to become better known and become ‘discovered’. This chapter reviews the changing global balance of power and impact of technology on large media companies. Examples from three creative industries—music, books, and movies—are provided to illustrate this power shift. The analysis draws on theor­ etical mechanisms derived from the ‘production of culture’ perspective, organization theory, and economics’ conception of markets and disintermediation to illuminate these changes. Hirsch’s initial portrait of media processing fads and fashions (1972), and its subsequent update (2000), will be further amended to incorporate the digital revolution in which books, records, and movies can all be streamed and downloaded by consumers, with no physical product needing to be purchased or obtained through retail stores.

The Deinstitutionalization of Mega Media During the late 1990s, a globalizing media industry sought to expand and grow its multi­ national presence. Fortune magazine noted many of the leading US media companies acquired different media ‘assets’ throughout the world in a race to dominate the global media landscape. There seemed to be a sense that the more global the media company, the more successful it would be. However, they found local markets stronger than they had anticipated. Fortune’s report (Rose, 1999) concluded: ‘American pop culture was going to conquer the world, but now local content is becoming king’. The article went on to explain, ‘As the studios morphed into global entertainment conglomerates, with cable and satellite operations and music and publishing interests the world over, they started to discover something no one ever expected: a limit to the appeal of American pop culture—just as the international market became crucial’. This article foreshadowed some of the challenges that the global media giants have been battling over the last decade as technology essentially flattened the world and revolutionized the market for cultural products. The rise of Internet and other technologies—enabling the creation, dissemination, and copying (or sale at much lower cost) of music, videos, and printed materials—has in multiple ways weakened the giant corporations which for many years controlled the distribution of new products and spent enormous sums to promote them. While they remained over-embedded in procedures and commitments that no longer work (having

424   Paul M. Hirsch and Daniel A. Gruber fought the rise of new technologies and ways to work with them), the capacity of new artists and groups to introduce themselves has multiplied. In this instance, culture creators came to build local followings and become known more regionally. It was easier to introduce new materials than it had been previously. Artists are now more closely tied to a fan base, which is often smaller and more interconnected by Facebook, YouTube, and other sites. During this period, the production and distribution of many cultural items came to look more like a craft, and somewhat less like an industry. If the global media’s agents, like the Recording Industry Association of America, and newspaper publishers had been more willing to leave the cocoon of their embedded relationships and assumptions, they may have benefited and better collaborated (rather than battled) with the advents of shared music, iPods, and Google’s provision of the news. For the recording industry, especially, which today receives more of its income from iPhone and other digital apps than from the sale of compact discs, there is less money to create or promote national and international ‘super-groups’. Other mass media have been similarly, though less severely, impacted. As Knee et al. (2009) noted, the ‘gospel of going global’ is being challenged by the realization that some of the most ‘profitable media are [more] local’. Knee and colleagues also stress that global success relies on providing combinations of material, in being ‘multilocal’ rather than identical everywhere, with no variation. The multilocal consists of unique offerings for different local markets from the global company. As one result, the distance between creator and consumer is less dense and more accessible. With the major media embedded in their older practices while consumers’ access to alternative technologies and greater access increased, parallels may be found to travel agencies, which have also become ‘disintermediated’ as customers purchase directly from transportation providers. Likewise, artists and their readers or audiences are less dependent on traditional or authorized gatekeepers. As newspapers and tele­ vision networks have discovered, what used to be ‘theirs’—in the formats and times they decreed—can now be accessed at the convenience of their consumers, at any time or place. As the power of these organizations to control their products has decreased, their willingness and capacity to invest huge sums to build new global stars and products also has fallen. From the business end, declining profits and profit potentials lead to fewer promotions, lowered investment, and less return. One example from movies is the large increase in the number and greater accessibility of lower budget indie films. Additional examples include the book publishing industry, whose customers increasingly opt to download its books electronically rather than purchase the hard copy, and the music industry, which has been revolutionized by digital technology. A related empirical question is how consumers will utilize the increased libraries of media content which can only be accessed electronically. How much less companies will still invest in new content for their catalogues also becomes an important empirical question. Chris Anderson, editor of Wired, and Anita Elberse, a marketing professor at Harvard Business School, have debated whether high-budget blockbusters are out and niche programming is in, as the

Digitizing Fads and Fashions   425 ‘long tail’ of choice for consumers enables them to select from a far larger set of possibilities (Anderson, 2006; Elberse, 2010).

Power Shift in Music: Digital Distributors Pushing the Future into the Clouds Rather than gigging around town and hoping a record company’s A&R rep catches and loves your show, musicians are building up grassroots fanbases online, making and selling their own merchandise and generally finding ways to promote their music with or without help from the music-selling machines within a record label . . . Distribution isn’t the only roadblock that’s melted away . . . Because of platforms like Spotify, you can consume music, share music, build a collection, without ever having bought the music . . . You can sample on an unlimited basis. It costs nothing to make each additional copy. (Interview with Sean Parker, co-founder of Napster and Spotify, in O’Dell, 2011) My band is famous for music videos. We direct them ourselves or with the help of friends, we shoot them on shoestring budgets and, like our songs, albums and concerts, we see them as creative works and not as our record company’s marketing tool. (Damian Kulash, lead singer, OK Go in The New York Times, 2010)

Kulash’s statement of ownership for his band’s music videos summarizes the disconnect which emerged over the last decade between top record companies and many of their creative artists. EMI, the record company at the receiving end of Damian Kulash’s frustration, refused to allow OK Go’s videos to be embedded on Internet sites (outside of EMI’s) where their fans could see them, share them, and spread their music in a word-of-mouth manner facilitated by technology. Essentially, the record company put the importance of owning the video and its distribution over the possibilities of having more people hear the band’s music and seeing them perform. OK Go subsequently left EMI, and Kulash joins Sean Parker (above) in asserting record companies will die if they do not change their business models. EMI, which years ago introduced the Beatles to America, and has a catalogue containing renowned classical recordings, was on the verge of bankruptcy by 2011. Its decline illustrates how dire the situation of some the traditional powerhouses in the cultural products industry has become. Kulash’s and Parker’s assessments of the industry receive support from the Record Industry Association of America’s report that CD sales dropped by nearly 50% (from $10.5 to $5.5 billion) between 2005 and 2008. As of February 2010, Apple’s iTunes sales approached 10 billion songs, surpassing Wal-Mart as the world’s largest music retailer. Forrester Research predicted the sale of digital audio downloads would rise from 1.7 billion in 2007 to 4.8 billion in 2012 (McQuivey, 2008). The record industry’s reduced

426   Paul M. Hirsch and Daniel A. Gruber financial share from these figures is only the revenue from licensing fees enabling these vendors to make the selected excerpts from their CDs available to consumers. An example of how successful bands, even more than new arrivals, can circumvent the record industry for promotion and distribution is found in one of the biggest opening weeks for a CD in recent history, when Lady Gaga’s ‘Born This Way’ sold well over 1 million in its first week, through a unique marketing and distribution strategy (Caulfield, 2011). Several alternative distribution channels were utilized: Amazon sold the entire album for 99 cents for two days in order to promote its cloud computing service (the sale was to be for one day, but needed to be extended due to heavy demand, which crashed its servers). Cloud computing, promoted by Apple, Amazon, and Google, allows users access to their music whenever and wherever they want via digital distribution, and is seen by industry experts as a likely option for sales in the future (Sisario, 2011). Additionally, non-traditional retailers sold the Lady Gaga CD over a holiday weekend in the United States, including Starbucks (which formed a marketing partnership with the artist), Walgreens, and Whole Foods. Finally, the role of gatekeepers was retained as Lady Gaga was featured in many mainstream media (e.g. Rolling Stone, New York Times, ‘Saturday Night Live’). Billboard’s editor declared that it was a ‘watershed moment in the marketing and release of a superstar’s album’ (Werde, 2011). Lady Gaga’s managers’ use of these unconventional distribution mechanisms suggests such hybrid models may continue for a number of years until the ubiquity of technology and cloud computing takes over and makes the idea of selling physical albums, aka CDs, obsolete. As Jones (2006) has noted, both ‘technology and content’ remain critical to the successful operation of creative industries. After decades of resisting (and denying) competition from new technologies, record companies in 2011 seemed to finally become more receptive to alternative business models. In 2011, Mark Piibe of EMI Music told the International Federation of the Phonographic Industry, ‘The record industry is more open to new models now than it has ever been’ (IFPI, 2011). Although his statement may be seen as ‘too little too late’, it signals a willingness of the need for change, as the industry has long had to embrace other forms of media/technology in order to evolve and survive. These examples bring to the fore the challenge to major music companies posed by the sale of individual songs rather than purchases of the complete album/CD on which they are released at retail. The ubiquity of music sold on the Internet and especially the dramatic rise of iTunes has strongly impacted the old business model and forced the search for a new one. While the former was long the dominant model historically, it is displaced in an environment where music is digitized. Elberse’s (2010) study of the unbundling of music in digital channels concluded that they pose ‘a significant risk’ to record labels which will likely manifest itself in ‘further erosion of revenues’. According to the study consumers can expect more unorthodox bundles for established artists like Lady Gaga and more single-item releases from creative workers without a strong reputation. As phrased by a new music company founder, Tom Silverman, the music business’ historic ‘album centrism is like saying the sun revolves around the Earth. We don’t listen to albums now; we listen to collections of songs’ (Carr, 2010).

Digitizing Fads and Fashions   427

Power Shift in Books The only really necessary people in the publishing process now are the writer and reader. (Amazon executive Russell Grandinetti, quoted in Streitfeld, 2011) The simple fact is that to most consumers if you don’t exist online you simply don’t exist. (Oren Teicher, CEO of American Booksellers Assn., quoted in Osnos, 2011)

The book industry is also experiencing a digital revolution. The quote above from an executive at Amazon helps underscore the argument this article’s noting of the disintermediation occurring throughout the industries that create and distribute cultural products. Digitization of books has manifested itself in a new set of electronic ‘e-reader’ products which have proven to be extremely successful. Concrete benefits of this format include instantaneous access to, and lower prices for books, and the elimination of the physical weight of carrying them. With all of these changes a crop of new entrants into the book publishing chain has appeared, led by Amazon, Google, and Sony, as well as a new set of competitive forces which have shifted traditional partners into modern-day rivals and led to the demise of industry stalwarts, such as Borders retail booksellers, which officially closed its doors on 18 September 2011. As one literary agent told The New York Times, ‘If you’re a bookstore, Amazon has been in competition with you for some time. If you’re a publisher, one day you wake up and Amazon is competing with you too. And if you’re an agent, Amazon may be stealing your lunch because it is offering authors the opportunity to publish directly and cut you out’ (Streitfeld, 2011). Such high-profile authors as Penny Marshall and self-help guru Timothy Ferriss have signed contracts with Amazon to be their publisher. These headliners, coupled with the hiring of a traditional media mogul, Larry Kirschbaum, made Amazon, best known as a seller of books and the Kindle e-reader over its website, into a book publisher as well. Founded as an online retailer in the mid-1990s, the company recognized the strategic opportunity 15 years later to expand its role into book publishing. Early signs of promise include Amazon’s publication of 120 new books in the fall 2011 (Streitfeld, 2011). Book publishers are working with new strategies to find talent in an altered cultural market in which Amazon reports sales for digital books have eclipsed traditional print books (Miller, 2010). Still, the number of printed books published and sold in the US has continued to grow; in 2010, the 2.57 billion units sold constituted a 4% increase over the previous three-year period (BookStats, 2011). While both formats are viable, Amazon’s success may have increased the number of books sold, and has clearly rearranged both the sites and formats of their purchase. The opportunity for local talent to self-publish, anywhere in the world, and reach a global audience is illustrated by the rise of Amanda Hocking and the impressive success of her series of books. Twenty-six year old Hocking is one author who has shown

428   Paul M. Hirsch and Daniel A. Gruber the power of this digital creation and distribution model. Her initial romance novels sold in Amazon’s Kindle store as e-books for $0.99–2.99, and their sale reached millions. Interestingly, Hocking subsequently contracted with a more traditional publisher, signing a deal with St Martin Press to produce four novels (Haq, 2011). The success of ‘The Hangman’s Daughter’ series, by Oliver Potzsch, illuminates how local cultural products can seamlessly come to reach global audiences. The historical novel from Germany was translated by Amazon publishing and then sold through its digital platform. Over 250 000 copies have been sold (Streitfeld, 2011). Although this type of success may not be the norm for future local/global combinations, the technology allows for this type of experimentation to become more common as the fixed costs of distribution continue to decline. While Hirsch (1972) noted the crucial role of promotion in getting a book to consumers, and the necessity of a sales force to help make that happen, more and more examples from the contemporary book industry highlight the comparable informational role now played by digital platforms and social networks in getting the word out about new books.

Power Shift in Movies: More Outlets for Independent Films and Investors Replacing Studios . . .Web streaming and growth of video-on-demand systems in living rooms lowered the bar for distribution. Suddenly all kinds of indie films—not just the ones that showed strong theatrical promise—could be served up to wide audiences. The problem is that as digital offerings grow, these films, which come with little or no marketing budgets, have increasing difficulty breaking through the clutter. (Barnes, 2011)

Movie making has continued to evolve in ways also facilitated by technology, although it is slightly less impacted due to the presence of movie theatres. However, the declining cost of digital video cameras, coupled with the ease of editing on computers, has made it possible for many more movies to be created and distributed in different channels. Internationally, audiences have more choices and exercise the option to patronize more locally made films. In Variety’s colourful terminology: Now Hollywood stuff is no slam-dunk as foreign countries flock to their own pics in record numbers. That’s partly because the locals are more savvy . . . For decades, studios released their films worldwide with the confident knowledge that they would be eagerly devoured by movie lovers overseas. But lately, the slick Hollywood films have been surpassed by local fare. (McNary, 2008)

Digitizing Fads and Fashions   429 This dynamic has also arisen domestically in the independent film market. The Sundance Film Festival, one of the premiere venues for independent movies, had more than 10 000 entries in 2011—compared to 7500 just five years earlier (Kaufman, 2011). An interesting development occurred in 2011, when the Sundance Institute and Tribeca Enterprises, two of the biggest film festival operators, made plans to take their festivals to an entirely new level of prominence:  distributing movies directly to national and international audiences (Barnes, 2011). This shift marks an increased disintermediation of the independent film market with the festivals becoming the direct distributors and moving away from the model of festivals as conduits to commercial distributors. Disintermediation also has occurred on the feature film side of the industry. Films from more countries have increasingly appeared among the top 20 grossing movies (Trumpbour, 2008). From a production standpoint, more decisions are also being made outside the offices of major Hollywood studios. Lampel and Shamsie’s (2003) insightful study of the evolution of organizational forms and the reshaping of the Hollywood movie industry after the break-up of the major movie studios showed a shift towards movie making as a commodity type of business. The commoditization of movies increased in 2010’s Hollywood, where investing in film making ‘suddenly made sense to . . . a wave of equity investors (and) hard-headed business types who were more accustomed to bottom-fishing in the real estate market or drilling for oil’ (Cielpy, 2010). This movement towards investing directly in film projects, rather than in the studios that formerly controlled them, is interesting as it suggests more power in the industry has moved away from some of the global media conglomerates. This shift was also noted by Elberse (2007) in her study of star actors’ contribution to film studios’ financial value. Specifically, she found that while they can demand several million dollars to appear in a film, stars do not necessarily ‘drive the valuation of film studios or the media conglomerates to which they belong’. These changes in the movie industry provide additional challenges to the global media conglomerates already impacted by the unbundling of the music and book publishing industries. The distribution opportunities which drove many of their acquisitions in the television and cable fields have been contested by new forms of digital distribution (e.g. by Netflix, Amazon Prime, and YouTube). Schatz (2008) pointed to the conflict they face in choosing how intensely to pursue new media delivery when traditional mechanisms still generate significant revenues. Faced with this cannibalization dilemma, he envisions these pressures may ultimately force the movie studios to concentrate more fully on media production. This strategic balancing act is nothing new to the industry, but underscores the importance of balancing both ‘replication and renewal’ strategies. Shamsie, Martin, and Miller’s (2009) study of the Hollywood film industry from 1936 to 1965 found that overuse of one of these strategies catches up with a firm and prevents it from being able to ‘correct this imbalance’. Their study is quite pertinent to the contemporary movie business as media companies again seek to balance resource production and distribution. The role of gatekeepers also continues to evolve in the movie industry, as several interesting nuances emerged in the last decade. Specifically, Elliott and Simmons (2008) found

430   Paul M. Hirsch and Daniel A. Gruber reviews from news and industry publications affect film revenue as they become both a key component of advertisements and trigger word-of-mouth buzz for movies. This finding has been amplified in the last few years by the advent of Facebook and other social media. Many movies have their website listed as a link directly on Facebook to facilitate customers sharing their experiences with the movie. Thus, while gatekeeping remains important in getting customers to see movies, its forms and function have also expanded.

The Changing Global Balance of Power for Creative Products: Revisiting ‘Cultural Industries Revisited’ Hirsch (2000) reflected on the immense changes which had occurred since his initial (1972) mapping of cultural industries. In that update, he included a table highlighting differences between epochs of cultural industries in the 1940s, 1950s–1970s, and 1980s–2000 (Table 22.1). The immense further changes noted in this article appear in the extension of the table’s time period, adding a new column to include the 2000–2010 timeframe.

Table 22.1  Cultural industries: a historical overview 1940s

1950s–1970s

1980s–2000

2000–2010

Industry Profile

‘Industry’ Stable, Controlled (Vertical Integration)

‘Orderly’ Transitions

New Gold Rush

Integration of ‘Old’ and ‘New’ Media (mega media conglomerates lose monopoly)

Framings and Context

‘Mass Culture’: ‘film factories’; ‘golden age’. 3 Radio Networks 4 Record Companies 5 Movie Studios

Diversity and Segmentation  begin: Less Concentration → Restabilization. New Record Labels; FM stations Newspaper zoning begins; CATV gets going, MCI shows up

‘Mass Customizations’: Postmodern sensibilities; everything everywhere, and commonly owned (MTV and Nick; CNN and Warner Bros.) New entrants and entrepreneurs; networks reeling

Social Media User-generated content (Wikipedia, Flickr, YouTube, Facebook) Viral videos and Internet sensations

(continued )

Table 22.1 Continued 1940s

1950s–1970s

1980s–2000

2000–2010

Locus of Control

‘Throughput’ Production (intermediaries) in control

Creators (‘input’) freed up. New production companies arrive. Rise of new styles and players

All negotiable; Big mergers → multimedia; Focus more international

Consumers— individual customization and lower prices New distribution players arrive (e.g. Google, Apple, Amazon) Localized media and messaging

Technology and Legal Arenas

Software > Hardware Technology stable; mass media as wartime ally

Television arrives and conquers Radio → Outlet for new genres

Computing and Media Coverage; websites and Internet emerge; New Telecomm Act Restricts Field; Hardware issues contested

Mobile takes command as a means for accessing and sharing media Privacy and ownership issues arise Law struggles to keep up with fast changing technology and firms Google and Amazon expand universe of available content

Analytical Frameworks Include: Production

Bain, Industrial Organization Economics The Frankfurt School Difficult. Only able to produce content through the networks and studios

Peterson, recording industry studies; Gans, high culture and popular culture Still challenging. Need to rely on the major companies for the technological infrastructure and resources to produce content

DiMaggio, broadening culture’s definition; D’Aveni’s hypercompetition; Turow—changing company practices Gitlin—political impacts Less challenging. Digital technology enables users to make some of their own content in a cost-efficient manner. However, majority of content is produced by the networks and studios.

S. Jobs—infinite apps and content Anderson popularizes the long tail Gladwell’s ‘tipping point’ and ‘outliers’ ‘Fans’, ‘Friends’, and ‘Followers’ Easy. Entry Barriers have fallen. Need to cut through the clutter Traditional media join with new technology to distribute programs New media create programs for novel platforms of distribution

432   Paul M. Hirsch and Daniel A. Gruber Some of the highlights include the joining of ‘old’ and ‘new’ media in the last decade. ‘Social media’ and the Internet have empowered consumers to be able to exercise more control. They can create and access cultural products on their own mobile devices, wherever and whenever they wish. The rise of new players from the technology sector (e.g. Google, YouTube, and Facebook) in the creative industries was solidified as some of the larger media mergers went awry (e.g. AOL Time Warner). Analytical frameworks have emphasized the ‘wisdom of crowds’ which can be manifest as search results in Google and ‘Likes’ / ‘Friends’ in social media such as YouTube and Facebook. The creation of cultural products is easier than ever before as people in many parts of the world can produce audio, video, and text on their phones and computers. In addition to updating the major firms and types of players constituting cultural industries today, we find several trends noted by Hirsch in 2000 have since reached significant inflection points. The first, elaborated above, centred on the ‘increasing utilization of the Internet by musical groups and author producers to release new materials without going through the more traditional routes of recording companies and publishers as their distributors’ (Hirsch, 2000, p. 347). The OK Go example noted in this chapter is just one example of musicians going directly to consumers with their musical wares. In the book publishing field, some authors (e.g. Stephen King) now provide access to their e-books directly over the web. Book publishers are working with new strategies to find new talent and distribution strategies in an altered cultural market where sales for digital books may exceed those in traditional print formats. Another important change is the cost of production compared to the cost of distribution of cultural products. Back in 2000, Hirsch (pp. 357–358) noted ‘it still costs far less to produce many books, records and films than it costs to distribute and retail them’. This has changed to some extent with the direct streaming and downloading enabled by the Internet. Promotion and publicity, to assure consumers see or download the product, remains costly. As distribution and retailing costs continue to fall there also is a sense that some cultural products have moved towards commoditization, with licensing at low costs also compensating for some of these industries’ earlier losses due to unlicensed piracy. Of Apple’s new cloud initiative, one expert commented: this ‘ . . . is a good step towards post-piracy realism in copyright-based industries; a step towards a music industry that is based on rational mutually-beneficial economic transactions rather than in animosity, blame, and fear’ (Wittkower, 2011). An additional point to revisit, in light of Hirsch’s (2000) raising the issue of national media cultures, is the question of how much each country still has a single dominant popular culture of its own. Hirsch recognized that the splintering of television audiences, initially exacerbated by the dramatic growth of cable channels, was greatly extended by the growth of Internet sites and greater consumer access to the ‘long tail’ of content enabled by such sites as Pandora, Netflix, and Video-On-Demand. Without a dominant popular culture in the United States, it became more challenging to export a singular culture, styles, and images to the world. Consequently, countries and audiences around the world are able to more selectively cherry-pick the American movies,

Digitizing Fads and Fashions   433 music, books, and television shows they are most interested in, without being forced into a larger bucket of cultural products selected for them. Additionally, accom­ panying the ease of more easily producing and distributing their own cultural products, local creators have a greater ability to reach their audience more directly and efficiently. We have shown evidence of a significant decline in the concentrated power of the global media conglomerates that long controlled the production and distribution of popular culture. In 1992, McAnany and Wilkinson (p. 741) suggested the traditional Hollywood model was ‘safe’ and ‘the continued dominance of film and video productions seems assured despite increased global competition’. The evolution of technology and its impact on cultural products’ creation and distribution in the last two decades has challenged their prediction by shifting power to consumers who can not only decide what they want to see and hear, but also which ones to support in getting their song or movie more widely funded and distributed. We believe this shift will continue over time, allowing for many new cultural products to emerge from a variety of different sources. While the mega media conglomerates still exercise power over culture creation, we have shown that much of their control over its distribution has shifted to the new entrants that dominate the Internet, on which consumers rely to purchase or download cultural items. Uncertainty over which new products will become hits has led to a decrease in the amounts invested in building and promoting new talent. Overall, ‘American popular culture will continue to make money, but the 21st century will bring a broad mélange of influences, with no clear world cultural leader’ (Cowen, 2007). Although the metaphor of Hollywood remains in California, and New York may still house the largest publishers, the opportunity for new creators and culture producers to emerge, worldwide, has increased in the last decade and shows no signs of abating.

Acknowledgements The authors are grateful to Ashley Martin for her research assistance on this chapter, to the editors and participants in this Handbook’s authors’ workshop in Brighton, and to the Kellogg School of Management and Medill School of Journalism, Media, Integrated Marketing Communications at Northwestern University, for their support of this research.

References Anderson, Chris (2006). The Long Tail:  Why the Future of Business Is Selling Less of More. New York: Hyperion. Barnes, B. (2011) Tribeca and Sundance Festivals plan big growth. The New York Times. 27 February 2011.

434   Paul M. Hirsch and Daniel A. Gruber BookStats. (2011). An annual comprehensive study of the publishing industry. 9 August 2011. . Carr, A. (2010) The state of internet music on YouTube, Pandora, iTunes, and Facebook. Fast Company. 20 July 2010. . Caulfield, K. (2011) It’s official: Lady Gaga’s ‘Born This Way’ sells 1.11 million. 31 May 2011. Billboard.biz . Cielpy, M. (2010) As studios cut back, investors see opening. The New York Times. 14 November 2010. Cowen, Tyler (2007) Some countries remain resistant to American cultural exports. The New York Times. 22 February 2007. Elberse, Anita. 2010. Bye bye bundles: the unbundling of music in digital channels. Journal of Marketing, 74(3): 107–123. Elberse, Anita. 2007. The power of stars: do star actors drive the success of movies? Journal of Marketing, 71(4): 102–120. Elliott, C. and Simmons, R. 2008. Determinants of UK box office success: the impact of quality signals. Review of Industrial Organization, 33: 93–111. Haq, H. (2011) Amanda Hocking, John Locke: poster children for self-publishing success? The Christian Science Monitor. 21 June 2011. . Held, D., McGrew, A., Goldblatt, D., and Perraton, J. (1999). Global Transformations: Politics, Economics and Culture. Cambridge: Polity Press. Hirsch, P. M. 1972. Processing fads and fashions: An organization-set analysis of cultural industry systems. Amer. J. Soc., 77: 639–659. Hirsch, P. M. 2000. Cultural industries revisited. Organization Science, 11: 356–361. IFPI (2011) International Federation of the Phonographic Industry (IFPI) Digital Music Report 2011. Released 20 January 2011. . Jones, C. 2006. From technology to content: the shift in dominant logic in the early American film industry. In J. Lampel, J. Shamsie, and T. Lant (eds.), The Business of Culture. Mahweh, NJ: Laurence Earlbaum Associates, 195–204. Kaufman, A. (2011) The first to see films: film festival gatekeepers. Los Angeles Times. 22 January 2011. Knee J. A., Greenwald B. C., and Seave, A. 2009. The Curse of the Mogul: What’s Wrong with the World’s Leading Media Companies. New York: Portfolio. Kot, G. (2009). Ripped. New York: Scribner. Kulash, D. WhoseTube? The New York Times. 19 February 2010. Lampel, J. and Shamsie, J. 2003. Capabilities in motion: new organizational forms and the reshaping of the Hollywood movie industry. Journal of Management Studies, 40(8): 2189–2210. Liu, Ling Woo (2008). Journey’s YouTube lead singer. Time Magazine. 17 June 2008 . McAnany, E. G. and Wilkinson, K. T. (1992). From cultural imperialists to takeover victims’ questions on Hollywood’s buyouts from the critical tradition. Communication Research, 19(6): 724–748. McNary, D. (2008). Local films loosen studios’ global grip. Variety. 2 May 2008.

Digitizing Fads and Fashions   435 McQuivey, J. (2008). The End Of The Music Industry As We Know It. 15 February 2008 Forrester Research . Miller, C. (2010) E-Books top hardcovers at Amazon. The New York Times. 19 July 2010. O’Dell, Jolie (2011). From Napster to Spotify, Sean Parker is planning for the next music industry. VentureBeat . Osnos, P. (2011) The serious business of 21st-century book publishing. The Atlantic. 7 Jun 2011. . Pieterse, Jan (2009). Globalization and Culture: Global Mélange, 2nd edn. New York: Roman and Littlefield. Rose, F. (1999). Think globally, script locally. American pop culture was going to conquer the world, but now local content is becoming king. Fortune Magazine. 8 November 1999. . Rossman. G. (2012). Climbing the Charts: What Radio Airplay Tells Us About the Diffusion of Innovation. Princeton, NJ: Princeton University Press. Schatz, T. (2008). The studio system and conglomerate Hollywood. In Paul McDonald and Janet Wasko (eds.), The Contemporary Hollywood Film Industry, Malden: Blackwell Publishing, 13–42. Shamsie, J., Martin, X., and Miller, D. 2009. In with the old, in with the new: Capabilities, strategies and performance among the Hollywood studios. Strategic Management Journal, 30(13): 1440–1452. Sisario, B. (2011). Investors are drawn anew to digital music. The New York Times. 28 February 2011. Streitfeld, D. (2011) Amazon signs up authors, writing publishers out of deal. The New York Times. 16 October 2011 . Trumpbour, J. (2008). Hollywood and the world: export or die. In Paul McDonald and Janet Wasko (eds.), The Contemporary Hollywood Film Industry. Malden: Blackwell Publishing, 209–219. Werde, B. (2011). Editor’s note: why Billboard isn’t revising chart policies for Lady Gaga’s Amazon deal. 26 May 2011 . Wittkower, D. E. (2011). Could iCloud help lead to a post-piracy age?The Wall Street Journal. 7 June 2011. .

Pa rt  6

P OL IC Y A N D DE V E L OP M E N T

Chapter 23

C op y right, th e C re at i v e In du stries, a nd t h e Public D oma i n Fiona Macmillan

Introduction In recent times the discourse of copyright has become, for better or worse, intimately connected with that of the so-called creative industries. This discourse recognizes an essential aspect of copyright law, which is that it is focused on stimulating investment in the distribution of creative works. To some extent, this focus has an uneasy juxtaposition with copyright’s more general claim to support and encourage creativity of the artistic and cultural variety. Whether or not the aims of supporting creativity and supporting investment in distribution are inherently uneasy bedfellows, it seems that the current system of international copyright law1 has produced effects that tend to marginalize individual creativity: the cultural industries have not only spread out over most of the bed, they are also hogging the blankets.

Copyright and Creativity The threat that the international copyright system poses to creativity, and associated values such as cultural diversity,2 is a consequence of the process by which it commodifies and instrumentalizes the cultural outputs with which it is concerned. There are five interdependent aspects of copyright law that have been essential to this process.3 The first and most basic tool of commodification is the alienability of the copyright interest. This is a critical factor in the context of this chapter. Copyright law operates on the basis of a distinction between the author of copyright works and the owner of those

440  Fiona Macmillan works. While the author maintains some symbolic significance in copyright law,4 the rights conferred by copyright are enjoyed by its owners. Sometimes authorship and ownership coincide. Authors of literary, dramatic, musical, and artistic works are usually the first owners of the copyright in those works; and film directors typically have a share of the copyright interest.5 However, at least in the Anglo-American system, these interests can be freely transferred by contract. Thus, it is frequently the case that authors of copyright works come under pressure to transfer their copyright to those who are making an investment in the distribution of the works, such as publishers, and music and film production companies. In other words, it is the practice of the creative industries to take advantage of the alienability of the copyright interest to gather in as many copyright interests as it can. Since the transfer of copyright interests is a question of contract, the extent to which a publisher or production company will be successful in doing this is largely a matter of relative bargaining positions and market power. Nevertheless, where this process of ‘gathering in’ is successful, it has the consequence of uniting in the same hands the copyright interests in primary creative works and the copyright interests already enjoyed by those who invest in the distribution of those same works.6 A second significant aspect of copyright law making it an important tool of trade and investment is its duration. The long period of copyright protection increases the asset value of individual copyright interests (see Towse, 1999). Thirdly, copyright’s horizontal expansion means that it is progressively covering more and more types of cultural production. Fourthly, the strong commercial distribution rights,7 especially those which give the copyright holder control over imports and rental rights, have put copyright owners in a particularly strong market position, especially in the global context. Finally, the power of the owners of copyright in relation to all those wishing to use copyright material has been bolstered by a contraction of some of the most significant user rights in relation to copyright works, in particular fair dealing/fair use and public interest rights. Viewed in isolation from the market conditions that characterize the cultural industries, copyright’s commodification of cultural output might appear not only benign, but justified by both the need for creators to be remunerated in order to encourage them to create8 and, in particular, the need for cultural works to be disseminated in order to reap the social benefits of their creation.9 However, viewed in context the picture is somewhat different. Copyright law has contributed to, augmented, or created a range of market features that have resulted in a high degree of global concentration in the ownership of intellectual property in cultural goods and services. Five such market features, in particular, stand out.10 The first is the internationally harmonized nature of the relevant intellectual property rights.11 This dovetails nicely with the second dominant market feature, which is the multinational operation of the corporate actors who acquire these harmonized intellectual property rights while at the same time exploiting the bound­ aries of national law to partition and control markets. The third relevant feature of the market is the high degree of horizontal and vertical integration that characterizes these corporations. Their horizontal integration gives them control over a range of different types of cultural products. Their vertical integration allows them to control distribution, thanks to the strong distribution rights conferred on them by copyright law.12 The fourth feature is the progressive integration in the ownership of rights over content and

Copyright, the Creative Industries, and the Public Domain   441 the ownership of rights over content-carrying technology. Finally, there is the increasing tendency since the 1970s for acquisition and merger in the global market for cultural products and services (see Bettig, 1996, 37ff.; see also Smiers, 2002). Besides being driven by the regular desires (both corporate and individual) for capital accumulation (Bettig, 1996, 37ff.), this last feature has been produced by the movements towards horizontal and vertical integration, and integration of the ownership of rights over content and content-carrying technology. So far as creativity and cultural diversity are concerned, the consequences of this copyright facilitated aggregation of private power over cultural goods and services on the global level are not happy ones. Through their control of markets for cultural products the multimedia corporations have acquired the power to act as a cultural filter, controlling to some extent what we can see, hear, and read.13 Closely associated with this is the tendency towards homogeneity in the character of available cultural products and services (Bettig, 1996). This tendency, and the commercial context in which it occurs, has been well summed up by the comment that a large proportion of the recorded music offered for retail sale has ‘about as much cultural diversity as a Macdonald’s menu’ (Capling, 1996). It makes good commercial sense in a globalized world to train taste along certain reliable routes, and the market for cultural goods and services is no different in this respect to any other (see Levitt, 1983; cf. Gray,1998, pp. 57–58).14 Of course, there is a vast market for cultural goods and services and, as a consequence, the volume of production is immense. However, it would obviously be a serious mistake to confuse volume with diversity. The vast corporate control over cultural goods and services also has a constricting effect on the vibrancy and creative potential of what has been described as the intellectual commons or the intellectual public domain.15 As Waldron comments, ‘[t]‌he private appropriation of the public realm of cultural artifacts restricts and controls the moves that can be made therein by the rest of us’ (Waldron, 1993, p. 885). The impact on the intellectual commons manifests itself in various ways (see further Macmillan, 2002b, 2006, 2005b). For example, private control over a wide range of cultural goods and services has an adverse impact on freedom of speech. This is all the more concerning because control over speech by private entities is not constrained by the range of legal instruments that have been developed in Western democracies to ensure that public or governmental control over speech is minimized (see further Macmillan Patfield, 1996 and Macmillan, 2005b). The ability to control speech, arguably objectionable in its own right,16 facilitates a form of cultural domination by private interests. This may, for example, take the subtle form of control exercised over the way we construct images of our society and ourselves.17 But this subtle form of control is reinforced by the industry’s overt and aggressive assertion of control over the use of material assumed by most people to be in the intellectual commons and, thus, in the public domain. The irony is that the reason people assume such material to be in the commons is that the copyright owners have force-fed it to us as receivers of the mass culture disseminated by the mass media. The more powerful the copyright owner, the more dominant the cultural image, but the more likely that the copyright owner will seek to protect the cultural power of the image through copyright enforcement. The result is that not only are individuals not able to use, develop, or reflect upon dominant cultural images, they are also unable

442  Fiona Macmillan to challenge them by subverting them.18 Coombe describes this corporate control of the commons as monological and, accordingly, destroying the dialogical relationship between the individual and society (Coombe, 1998, p. 86). Some remnants of this dialogical relationship ought to be preserved by copyright’s fair dealing/fair use right. It is, after all, this aspect of copyright law that appears to be intended to permit resistance and critique (see Gaines, 1991, p. 10). Yet the fair dealing defence is a weak tool for this purpose and becoming weaker (see further Macmillan, 2006).

Protecting the Public Domain Since the contraction of the public domain is a key aspect of the problem that the copyright system poses for creativity, it is important to give some consideration to the public domain’s relationship with the propertized domain of copyright law. The juxtaposition, implicated in such a consideration, of the public domain and the propertized domain tends to suggest that the metaphorical realm of intellectual space is composed of a simple binary opposition (Hemmungs Wirtén, 2005, p. 165), which divides it between that which is subject to private intellectual property rights and that which is not. The two are envisaged as butting up against one another so that, if we were to conceive of this in physical terms, each fits snugly against the shape of the other. More than this, if the two also take up the whole of intellectual space, altering the contours of intellectual property will alter those of the public domain. In this sense, there is a tendency to imagine the public domain as a largely passive victim of the aggressive presence of intellectual property—so that the boundary between the two changes only when intellectual property rights expand. The idea of the public domain in intellectual space is heavily dependent on principles of Roman law governing physical space. Some of the conceptual problems that arose with respect to physical space in Roman law have also emerged in the modern notion of intellectual space. At the same time, the metaphorical existence of modern intellectual space seems to lack some of the complexity of its forbear in physical space. The rele­ vant Roman law principles recognized various dimensions of nonexclusive—but not necessarily public—property (see Rose, 2003). The most well-used of these so far as the intellectual property/public domain debate is concerned are res communes and res publicae, the former referring to things incapable by their nature of being exclusively owned, while the latter referring to things open to the public by operation of law. These seem to have translated into the modern day debate about property in intellectual space in the specific form of the concepts of the commons and the public domain. The fact that these expressions are often used interchangeably is probably not much of a surprise given that the Romans had a similar problem with res communes and res publicae (Rose, 2003, citing Borkowski, 1994, p. 144), which reflected the modern day tendency ‘to mix up normative arguments for “publicness” with naturalistic arguments about the impossibility of owning certain resources’ (Rose, 2003, p. 96). This confusion between the commons and the public domain, res communes and res publicae, has done nothing to simplify the epistemological basis of the dichotomy between intellectual property and intellectual

Copyright, the Creative Industries, and the Public Domain   443 public space.19 More than this, it has tended to conceal the fact that, traced back to their Roman law origins, neither of these concepts seems to provide a particularly strong basis for a vibrant public or non-exclusive intellectual space in today’s world. So far as res communes is concerned, one might be forgiven for thinking that because of the non-rivalrous and non-wasteable nature of things in intellectual space they are all incapable by their nature of being exclusively owned or appropriated.20 As is well known, there has been a tendency for law governing physical space, particularly environmental law, to foreclose or regulate the use of the physical commons. At least in some cases, this has been a benevolent response to the famous ‘tragedy of the commons’ (see Hardin,1968, pp. 1243, 1244), according to which resources held commonly are plundered, degraded, and eventually exhausted.21 The non-rivalrous and non-wasteable nature of things in intellectual space tends to suggest that this is not a reason for the foreclosure of common intellectual space, but intellectual property law has done it anyway. Or, at least, it has tried to do it. It may be that there are certain things that not even the might of intellectual property law can convert into property capable of exclusive ownership in any meaningful sense. For example, the ease of copying works available in digital form, allied with the difficulty in identifying and proceeding against unauthorized copiers, may be an indication that this part of intellectual space is incapable of the type of exclusive ownership enjoyed in relation to other types of intangible works. On the other hand, the combined effect of technology and law may render even this part of intellectual space appropriable. Intellectual property law has not, of course, sought to foreclose all of the intellectual commons. Copyright law, famously, rejects the ownership of ideas, embracing the tenuous distinction between the unprotected idea and the protected expression,22 although this concept seems to be unevenly applied23 and subject to much erosion.24 More generally, creative acts that do not fall within the realm of copyright law are not appropriated.25 However, copyright (along with intellectual property rights related to it) has been distinguished by a tendency to extend its reach over more and more creative or innovative acts in intellectual space.26 To the extent that intellectual property laws continue to exclude certain parts of intellectual space from the propertized domain, it is far from clear whether their exclusion is because they are, by their legal nature, incapable of being owned, and therefore part of the commons, or because they should not be brought into the private domain of intellectual property but should be kept in the public domain. Arguably, because things in intellectual space are all incapable of ownership in the sense that things in physical space may be owned, but are all—or nearly all—quite capable of being appropriated in another way by force of law, the concept of the commons or res communes is a difficult one to apply to intellectual space. At least, it is difficult once we concede any concept of ownership in intellectual space, unless by referring to the commons we merely mean to be descriptive and refer to those things that, as a matter of fact, have not been subsumed into the intellectual property regime. The concept of the res publicae, where there is the scope for what Rose describes as ‘normative arguments for “publicness” ’ (Rose, 2003, p. 96), seems to offer far greater promise. Unlike the concept of res communes, res publicae in physical space does not reject the notion of private property. According to Rose, res publicae is always open to the possibility of ownership ‘subject to the requirements of reasonable public access’ (Rose, 2003, p. 99; on the attributes of res publicae see Rose, 2003, pp. 96–100).

444  Fiona Macmillan In physical space, res publicae is regarded as normatively justified by the need to ensure productive synergistic interactions that would otherwise be obstructed by denying public access (Rose, 2003, pp. 96–98). The irony in the application of this concept to intellectual space is that precisely because things in intellectual space are non-rivalrous and non-wasteable there are not many reasons why productive synergistic interactions should not take place (see also Rose, 2003, pp. 102–103). That is, there are not many reasons apart from intellectual property law itself. By regarding things in intellectual space as capable of appropriation and not therefore res communes, intellectual property law has created a system of obstructions to synergistic interactions. Then, in response to these obstructions, it has created its own mechanisms to defend res publicae. Arguably, this sounds slightly more ridiculous than it actually is. One of the reasons that productive synergistic interactions might not take place in unfettered intellectual space is because, in the absence of reward, appropriate investment and effort might not be made. Even accepting this argument and accepting that the most appropriate form of ‘reward’ is the creation of intellectual property rights,27 it seems reasonably clear that to achieve productive synergistic interactions there needs to be a carefully calibrated balance between property rights in intellectual space and rights that preserve res publicae. In copyright law, this is generally achieved through two mechanisms: limits on duration and exceptions to the exercise of the exclusive rights. With respect to the first mechanism, the provisions of the law automatically defend the res publicae, whereas in relation to the second those seeking to use the exceptions must make a case. Despite the existence of these mechanisms, it would be straining credulity to suggest that the balance between property rights and rights that preserve res publicae in intellectual space is carefully calibrated. The history of intellectual property law generally, and copyright law specifically, has marked a progressive extension of the duration of intellectual property rights and the contraction of their respective exceptions and defences. The duration of copyright has expanded from the initial maximum period of 14 years28 to the current high-water mark of 90 years after the death of the author in some jurisdictions. The vitality of its fair dealing exceptions, which are essential to permitting the sort of access that allows productive synergistic interactions, has been sapped by a combination of restrictive judicial interpretation,29 technological innovations, and new legal devices that interact with that technology.30 At the same time as the Internet has opened up a panoply of apparently free artefacts in intellectual space, other forms of digital technology are being used to restrict access to highly sought after information.31 A further matter that accentuates the lack of balance in the copyright regime is the fact that the application of the exceptions is open to considerable legal disputation, which frequently means that the deep pockets of large corporate rights’ holders are pitted against those of more limited means. The dominance of res communes and res publicae in informing our notion of the public domain as it relates to intellectual property in intellectual space, appears to be connected to its somewhat impoverished and under-imagined nature. While there is nothing inherently unusual about a lack of imagination, especially in relation to legal concepts, its absence here is a little more surprising. This is because there are two further

Copyright, the Creative Industries, and the Public Domain   445 Roman law concepts that could be employed to flesh out the public domain in intellectual space. One of these is res divini juris, referring to things that cannot be owned because of their sacred or religious nature (Rose, 2003, pp. 108–110). In the physical realm, ownership of things such as temples and icons was offensive to the gods. One can only speculate that offence to the gods would have been caused by general presumptuousness and by the fact that the ownership of such property would confer the type of power that might rival their own. At first blush, the application of this category in the context of the current debate might not be obvious. These days we are not necessarily so sensitive about the feelings of divine beings, however we still recognize the cultural power of the iconic (whether of traditional religious significance or not). Like the Roman gods, if for slightly different reasons, we should be anxious about the idea that such power can be exclusively appropriated in intellectual space. To some extent, copyright law has eschewed exclusive rights in categories of the iconic. Rose suggests, for example, that in intellectual space this category might include ‘the canon, the classics, the ancient works whose long life has contributed to their status as rare, extraordinary’ (Rose, 2003, p. 109). Fortunately, the period of copyright duration has not yet become so long that we have to worry about the inclusion of these sorts of things in propertized intellectual space. However, Rose goes on to argue: [L]‌est we forget that all things godlike may be accompanied by lesser gods (or even false ones) and their representations, we might wish to include here too the iconography of modern commercial culture, the Mickeys and Minnies and Scarletts . . . though the point is controversial, the category of res divini juris could well embrace this iconography and dedicate it at least in some measure to the public, as in copyright law’s exception for parody (Rose, 2003, p. 109).

Copyright law certainly could do this, but there is little evidence currently that it would. Indeed, Mickey and Minnie have been able to rely on intellectual property law to protect them and their cultural baggage from parody.32 The exception for parody is not well-defined33 and, to the extent that it must rely on the fair dealing defences, is com­ promised by their shrinkage. The final category of non-exclusive property under Roman law that has some resonance in the context of the colonizing of intellectual space by intellectual property is res universitatis.34 In modern parlance, this refers to a regime that is bounded by property rights, but creates a type of limited public domain (or commons) within its boundaries.35 In physical space, this merges the advantages of productive synergistic interaction with the need to avoid the tragedy of the commons. In intellectual space, as discussed above, there is no need to avoid the tragedy of the commons, so the utility of res universitatis, or the bounded commons, must be to preserve productive synergies while maintaining the incentive to produce such synergies through the exercise of rights against outsiders. As the name suggests, this type of bounded community is commonly reflected in the activities of academic and scholarly groupings (see Rose, 2003, pp. 107–108; Merges, 1996). It may also describe the way in which members of traditional and indigenous

446  Fiona Macmillan communities produce innovations, knowledge, and other types of creative expressions. As this example serves to remind us, intellectual property law has some difficulties in recognizing these types of creative or innovative communities.36 The primary reason for this is that intellectual property is always anxious to identify the owner of the relevant right. In doing this, it is likely to disregard many contributions from the relevant community and to muddle up concepts of origination, ownership, and use (see further Chon, 1996). Copyright law does enjoy a very limited ability to recognize the concept of the bounded creative or innovative community through the device of joint authorship, which it transforms into joint ownership. However, this concept is so limited in law that it can rarely do justice to the dynamic relations of a creative or innovative community (Chon,1996, pp. 270–272; Rose, 1998, 158ff.). In any case, the successful use of the concept of joint authorship to nourish a vibrant creative or innovative community depends upon an unrealistic degree of goodwill, if not goodness, on the part of all the members of the relevant community.37

Does the public domain really matter so much? The importance of the various dimensions of the public domain that may be analogized to res communes, res publicae, res divini juris, and res universitatis lies in the extent to which they are capable of rising to the role that the public domain needs to play in today’s world. The reason that the public domain has come to matter so much in the debate about intellectual space and its creeping propertization is not just because of some intuitively appealing ideas about the importance of balance between it and the propertized domain; it is rather a consequence of the dangers posed by the power of those few who hold so much of the really bankable property in intellectual space. Intellectual space is no longer divided between a public domain and a propertized zone in which a rich diversity of author-originators each wield exclusive rights over a small plot. To be sure, these people still exist as owners of intellectual property rights, but the commodifiable nature of intellectual property rights means that vast tracts of prime intellectual space have been bought up by powerful multinational corporate interests, the big players of the creative industries.38 Here, the analogy with physical space similarly held is alarming—and rightly so. This power, which resides to a considerable degree in the hands of concentrated corporate sectors, means that its members are able to exert undue control over the direction of significant areas of cultural and technical development (see Macmillan, 2006; Vaidhyanathan, 2001; Lessig, 2004). Even more seriously, the power that has been acquired by the corporate players, partly although not exclusively on the back of intellectual property rights, means that they are able to exert more and more control over the shape of intellectual property law itself.39 The public domain is the only place in intellectual space in which the power of the corporate giants can be challenged and resisted. One of the reasons why the power of the concentrated corporate sectors over intellectual property law is a matter of such concern is that intellectual property has a symbiotic relationship with the public domain.

Copyright, the Creative Industries, and the Public Domain   447 That is, it shapes the public domain, which might be conceived of alternatively as its progeny, rather than being in a binary opposition to it. In this lies the tragedy of the modern public domain in intellectual space. If the formation of intellectual property law is subject to the power of those who dominate the propertized part of intellectual space, then it seems likely that this part will expand and the public domain will contract. As the discussion above has attempted to demonstrate, this is exactly what has happened. Res communes may be weakly analogized to that part of the public domain that intellectual property law deems incapable (for now) of appropriation. However, intellectual property law has shown a tendency to deem more and more of what we might have considered res communes as capable, after all, of appropriation. The concept of res publicae in intellectual space, which is justified by the importance of productive synergistic interactions, is defended (or not) by the variable and constantly changing rules on duration and a progressively weakening range of defences and exceptions. What is perhaps of equal concern to the contraction of these aspects of the public domain in intellectual space is that the public domain that has been created by intellectual property law seems to have been a rather thin concept compared to the multilayered idea of the public domain in Roman law. The bounded community envisaged by res universitatis is poorly catered for in intellectual property, although licensing devices may be used to create something that looks rather like the bounded creative or innovative community. Such communities are capable of indirectly tilting against the power of the corporate giants by developing an alternative space for creativity and innovation, although their ability to form the basis of a direct attack on the monolith of corporate power is open to question. More capable of mounting such a direct attack is the concept of res divini juris, which is grounded in the idea that the potency of some symbols gives too much power to those who might seek to appropriate them. This idea does not seem to have gained much influence in intellectual property law’s construction of the public domain, although it does have some atrophying tools that might be used for this purpose.

Is that all there is? A key aspect of the public domain in both intellectual and physical space is that in order to have vitality it needs to be defended and nurtured. It has been argued above that in intellectual space, intellectual property law, including copyright law, inadequately provides the means for the defence of the public domain. But, despite the imagined binary world of intellectual property, there are other legal tools for the regulation and order of activity in intellectual space. These include, for instance, censorship, obscenity, and blasphemy laws, defamation, laws governing national security, and laws protecting human rights, including the right to free speech. It seems that at least some of these laws have the effect of altering the boundary between the public domain and the propertized zone. For example, there is some evidence that courts will refuse to enforce copyright in material that is regarded as obscene,40 or has been produced contrary to national security obligations.41 In these sorts of cases it is arguable that artefacts in intellectual space

448  Fiona Macmillan are being forced out of the propertized zone and into the public domain, where they will become subject to other forms of regulation designed to ensure that the public domain remains an orderly and productive one. Of course, it might be argued that copyright law has attempted to internalize considerations of public policy,42 with the result that it has pushed material that transgresses certain norms into the public domain where it may be regulated by areas of law more suited to the purpose. The distinction between exactly what is pushed out by intellectual property law and what is pulled out by other areas of law is, however, rather obscure. And it is not necessarily clear that what intellectual property law pushes out into the public domain has a significant degree of identity with that which other areas of the law might seek to pull into it. The relationship between human rights law and intellectual property law is the clearest (if anything here is clear) example of an uncertain tussle at the borders of propertized intellectual space and the public domain. Human rights law, or at least norms driven by this area of law, seems to knock at the door of the propertized domain in intellectual space requesting the release of certain material for limited times and purposes. A primary human rights concern in the context of copyright law relates to freedom of speech issues.43 In essence, the tension is between the control that the copyright owner has over the copyright work and the argument that the work should, for certain purposes, subsist in the public domain. Despite the fact that copyright law grounds a system that might be argued to constitute extensive private control over speech, it has shown little concern with freedom of speech issues. The key to copyright law’s comparative inattention to countervailing concepts of free speech appears to be threefold. First, the role of copyright in stimulating expressive diversity is often considered to outweigh or nullify any negative effects on freedom of speech (see, e.g., Netanel, 1996). It is accepted that a certain degree of copyright protection is necessary for the maintenance of free speech, perhaps because it is likely to encourage expressive autonomy and diversity, but at least because it is likely to encourage the widespread dissemination of such expressive autonomy and diversity. These are, in turn, prerequisites for the sort of vigorous public domain that is essential to maintaining a democratic political and social environment, which is the main utilitarian concern of free speech principles (see Barendt, 2005, ch. 1; Netanel, 1996; Macmillan, 2005b, p. 35). This does not, however, mean that we should be blind to the possibility that under certain conditions the way that copyright law restricts activities that might otherwise take place in the public domain raises serious freedom of speech concerns. The second reason why copyright has paid little attention to free speech concerns is that there is a prevailing belief that copyright has internal mechanisms that are capable of dealing with freedom of speech issues, if they arise. Particular emphasis in this respect is placed on the idea/expression dichotomy and the fair dealing defences. There is no doubt that the idea/expression dichotomy is of considerable importance here because it prevents the monopolization of information and ideas that are capable of being expressed differently to the way in which they are expressed in the material subject to copyright protection. However, the utility of the dichotomy in relation to non-literary copyright material is dubious.44 Where the idea/expression dichotomy cannot do the job, the fair dealing

Copyright, the Creative Industries, and the Public Domain   449 defences may provide a partial back-up. But it is only partial: despite the potential usefulness of the fair dealing defence for criticism and review, the defences are unable to take into much account the most critical factor in relation to securing free speech. The critical factor in securing free speech in a vibrant public domain is not so much the question of the extent to which material is subject to property rights; it is rather the nature of the rights’ holder and, specifically, the degree of power wielded generally by that rights’ holder in intellectual space. This is linked, in a negative way, to the third key to copyright’s inattention to free speech principles, which is that the very fact that copyright enables the exercise of private, rather than governmental, control over speech means that the risks that copyright poses to free speech are underestimated or ignored. This is despite the fact that a vigorous public domain is as much threatened by the concentration in private hands of copyright ownership over cultural products as it would be if such ownership was concentrated in the hands of the state. In fact, an argument might even be made that concentration of such ownership in private hands is all the more dangerous because at least the state is accountable for the way it wields power, both through the electoral process and through the tools of administrative law. The private sector is, of course, accountable through market mechanisms. Some questions might be raised about the effectiveness of these mechanisms in the case of the media and entertainment corporations, which have vast and valuable property rights in intellectual space and hold overwhelming power in the market for cultural products. Since these corporations have acquired the ability to shape taste and demand through selective release and other devices for cultural filtering, along with the ability to suppress critical speech about the process of taste-shaping (see further Macmillan, 2002a, 2002b, 2006), one might conclude that the market mechanism is somewhat defective.

Conclusion: Re-Drawing the Boundaries As the foregoing discussion has attempted to demonstrate, while there is a range of other laws that regulate intellectual space, only intellectual property has a symbiotic relationship with the public domain. That is, the rights attaching to intellectual property shrink and expand conversely with the alterations in the contours of the public domain. Moreover, intellectual property law is largely responsible for drawing the boundary between what is subject to property rights, when, and how, and what is not. Some (shrinking) parts of intellectual space have been ignored or excluded by intellectual property law. Effectively, in Roman law terms they are for the time being something akin to res communes, legally incapable of appropriation. Doubtless, there are also vast swathes of intellectual space that might currently be analogized to the Roman law concept of res nullius, the space in which things belong to no one because no appropriation recognized by law has yet taken place. However, much of intellectual space has been

450  Fiona Macmillan colonized by intellectual property. Within that space, intellectual property law itself has declared some things to be in the public domain, either for certain limited purposes or by effluxion of time. Most of what is in the public domain for these purposes might be analogized to the concept of res publicae, although the current limits to this aspect of the public domain seem to be depriving it of much vitality. Other Roman law concepts of the public domain in physical space, such as res divini juris and res universitatis, seem to have had little impact on the way in which intellectual property law creates the public domain in intellectual space. If intellectual property law not only has a symbiotic relationship with the public domain in intellectual space, but also is largely responsible for determining the boundary between it and the exercise of exclusive property rights, then an obvious way in which to give the public domain more vitality is to alter those aspects of intellectual property law that have the most obvious impact on the shape of the public domain. Most obviously, this would involve reversing the current trend whereby more and more of intellectual space is sucked into the propertized domain. For copyright law, this would involve limiting, if not reversing, its tendency to spread horizontally to cover new forms of activity in intellectual space, along with a renewed commitment to distinguishing between ideas and expressions and keeping the former in the intellectual res communes. Due to doubts about whether the concept of res communes can have any meaningful existence in intellectual space, it may be that these are really arguments about res publicae in intellectual space. The line between these two concepts, if it exists in intellectual space, is not easy to apply. What is clearer, however, is that the protection of the res publicae in intellectual space requires more than just a re-appraisal of the horizontal scope of intellectual property laws. In order to safeguard the vitality of the res publicae in intellectual space so far as it relates to copyright, a critical re-appraisal of the duration rules is needed.45 In the early life of English copyright law, much of the justification for increases in the duration of copyright appears to be a manifestation of the influence of romantic conceptions of the author and the author’s right to control the work.46 Given that the process of commodification divorces the author from his or her work (see, e.g., Gaines, 1991, p. 10) so that the author has become a somewhat marginalized figure in copyright law, extensions of the copyright interest based upon the figure of the author seem to have little justification. A similar lack of justification affects the contraction of the defences to copyright infringement, especially the fair dealing defences, which are the other important aspect of copyright law that needs to be considered if we are to increase the protection of res publicae.47 Early on in the history of copyright, as a result of the focus on the now marginalized figure of the author, there was a transition in the application of the fair dealing defences from a focus on what the defendant had added to what the defendant had taken.48 The contraction of the right has moved forwards in leaps and bounds in recent times. Optimists may argue that subsequent decisions on both sides of the Atlantic in cases like Campbell v Acuff-Rose Music, Inc49 and Time Warner Entertainments Company LP v Channel 4 Television Corporation plc50 repair or mitigate some of the damage that Rogers v Koons51 has done to the vitality of the fair dealing/fair use defence as a weapon for

Copyright, the Creative Industries, and the Public Domain   451 securing the intellectual commons. However, the more likely result of this mish-mash of case law is to create confusion about the scope of the defence. So far as those parts of the public domain analogous to the concepts of res divini juris and res universitatis are concerned, as has been argued above, they hardly rate any recognition in the current organization of intellectual space. There is potential for productive synergies in res universitatis, but in the current climate of corporate domination too much valuable intellectual space has already been acquired by interests hostile to the type of closed creative or innovative communities that it envisages. A modern version of res divini juris might very well take its place alongside a re-invigorated res publicae in order to ensure that the power that might otherwise flow from concentrations of ownership in intellectual space do not give rise to at least some types of unacceptable abuses or limitations on the rights of others. However, even if all the different aspects of the public domain could be catered for using expanded versions of the devices that intellectual property currently uses, the question of the adequacy of these devices would remain. Other ways of drawing material out into the public domain of intellectual space may also be needed. At present the most obvious tools for this lie within the realms of human rights law. This area of law does not yet seem to have adapted itself for this purpose, although its adaptation remains a viable option. What is arguably important in any future development of this kind is that the relevant aspects of human rights law are not subsumed into intellectual property law. The inevitable result of such subsumption will be the subjugation of human rights to the essentialism of the property paradigm. Human rights will then go the way of all the other exceptions to intellectual property law designed to maintain the public domain. Rather, to be effective in manipulating the border of propertized zone and the public domain in intellectual space, human rights law needs to maintain its own integrity as an area of law in potential normative clashes with intellectual property law.

Notes 1. Comprised by the WTO Agreement on Trade-Related Intellectual Property Rights (TRIPs Agreement) and the Berne Convention for the Protection of Literary and Artistic Works of 1886. 2. As enshrined, e.g., in the UNESCO Convention on the Protection and Promotion of Cultural Diversity 2005. For an account of the overlaps between the concepts of culture with which the UNESCO Convention is concerned, and the subject matter of copyright law, see Macmillan, 2008b, pp. 163–192. 3. For a fuller version of this argument see: Macmillan, 1998, 2002a, 2002b. 4. E.g., duration of copyright in literary, dramatic, musical, and artistic works is calculated according to the life of the author: see, e.g., UK Copyright, Designs and Patents Act 1988, s 12, and EU Copyright Term Directive 93/98/EEC. 5. See, e.g., UK Copyright, Designs and Patents Act 1988, s 11.

452  Fiona Macmillan 6. I.e. copyright in the sound recording or film, copyright in the typographical arrangement of the published edition, copyright in the broadcast. 7. See esp. the WTO TRIPs Agreement, Arts 11 and 14(4), which enshrine rental rights in relation to computer programmes, films, and phonograms; WIPO Copyright Treaty 1996, Article 7; and WIPO Performances and Phonograms Treaty 1996, Articles 9 and 13. 8. See, however, Towse, 2001, esp. chs. 6 and 8, in which it is argued that copyright generates little income for most creative artists. Nevertheless, Towse suggests that copyright is valuable to creative artists for reasons of status and control of their work. 9. For arguments about the importance of copyright in securing communication of works, see van Caenegem, 1995; and Netanel, 1996. 10. For a fuller discussion, see Macmillan, 2006. 11. Through, e.g., Berne Convention for the Protection of Literary and Artistic Works of 1886, the TRIPs Agreement, Arts 9–14, the WIPO Copyright Treaty, and the WIPO Performances and Phonograms Treaty. 12. For a discussion of the way in which the film entertainment industry conforms to these features, see Macmillan, 2002b. 13. See further Macmillan, 2006; and, in relation to the film industry, see Macmillan, 2002b, pp. 488–489. See also Capling, March 1996, pp. 21–24; Abel, 1994b, p. 52, 1994a, esp. at 380. 14. However, Gray’s view seems to be that diversity stimulates globalization, which must be distinguished from the idea that globalization might stimulate diversity. 15. This is a concept that has become, unsurprisingly, a central concern of intellectual property scholarship: see, e.g., Waelde and MacQueen, 2007. 16. See, e.g., the discussion of the justifications for the free speech principle in Barendt, 2005. 17. See further, e.g. Coombe (1998, pp. 100–129), which demonstrates how even the creation of alternative identities on the basis of class, sexuality, gender, and race is constrained and homogenized through the celebrity or star system. 18. See, e.g., Walt Disney Prods v Air Pirates, 581 F 2d 751 (9th Cir, 1978), cert denied, 439 US 1132 (1979). On this case, see Waldron, 1993; and Macmillan, 2006. See also Chon, 1993; Koenig, 1994; and Macmillan eld, 1996. 19. See also Hemmungs Wirtén (2005), who suggests that it is time for ‘some good old epistemological soul-searching’. 20. Except, and for so long as, they are kept secret (Rose, 2003, p. 95. 21. See further, e.g., Hardin, 1968; and Ostrom, 1990, esp ch. 1, in which the tragedy of the commons is contrasted with other models of the commons. 22. See, e.g., Donoghue v Allied Newspapers [1938] Ch 106; Fraser v Thames Television [1983] 2 All ER 101; Green v Broadcasting Corporation of New Zealand [1989] RPC 469 and 700. 23. E.g., the two dimensional/three dimensional infringement rule in relation to artistic works in, e.g., the UK Copyright Designs and Patents Act 1988, s 17(3), arguably breaches the idea/ expression rule: see further Macmillan, 2005a, 2008a. See also, e.g., the provisions on the protection of preparatory design material for computer programmes in the UK Copyright, Designs and Patents Act 1988, s 3(1)(c). 24. See, e.g., Krisarts v Briarfine [1977] FSR 577; Ravenscroft v Herbert [1980] RPC 193; Designer Guild Ltd v Russell Williams (Textiles) Limited [2000] UKHL 58. 25. See, e.g., Merchandising v Harpbond [1983] FSR 32; Komesaroff v Mickle [1988] RPC 204; Creation Records Ltd v News Group Newspapers Ltd [1997] EMLR 445; Norowzian v Arks Ltd (No 2) [2000] FSR 363 (CA). 26. E.g., the inclusion of computer programs and preparatory design work for them within the definition of protected ‘literary works’ (see, e.g., Directive 91/250/EEC on the legal

Copyright, the Creative Industries, and the Public Domain   453

27. 28. 29.

30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51.

protection of computer programs and the UK, Copyright, Designs and Patents Act 1988, s 3(1)) and the database right established under Directive 96/9/EC on the legal protection of databases. A point that is not universally accepted: see, e.g., Smiers, 2002, p. 120; and van Schijndel and Smiers, 2005; J Smiers and van Schijndel, 2010. Statute of Anne 1709 (UK). See, e.g., Rogers v Koons, 751 F Supp 474 (SDNY 1990), aff ’d, 960 F 2d 301 (2d Cir), cert denied, 113 S Ct 365 (1992), in which it was held that the fair use right only applied where the infringing work has used a copyright work for the purpose of criticizing that work, rather than for the purpose of criticizing society in general. On the significance of this case, see further Macmillan, 2002a, 2006. The particular device in question is the anti-circumvention right. For a case that illustrates the dangers of this right, see Universal City Studios, Inc v Corley, 273 F 3d 429 (US Ct of Apps (2d Cir), 2001). See further, Macmillan, 2006. A classic example of this is the dispute over access to electronic journals. See Walt Disney Prods v Air Pirates, 581 F 2d 751 (US Ct of Apps (9th Cir), 1978), cert denied, 439 US 1132 (1979). And see n 26 supra, and accompanying text. See, e.g., Joy Music v Sunday Pictorial Newspapers [1960] 2 WLR 615; Williamson Music v Pearson Partnership [1987] FSR 97. For a description of res universitatis, see Rose, 2003, pp. 105–108. For an example of the application of this concept in physical space, see Ostrom, 1990. In relation to traditional and indigenous communities, see Blakeney, 1995, 2000. See also Rose (2003, p. 107), who observes in relation to creative or innovative communities within universities: ‘Here too there are opportunists, charlatans and zealots—and to some degree commercial users—who can disrupt the process’. For accounts of this process, see e.g. Bettig, 1996; Macmillan, 2006; Bollier, 2005. The classic example of this is the negotiation and conclusion of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights: see Sell, 2003. E.g. Glyn v Weston Feature Fims [1916] 1 Ch 261. E.g. AG v The Guardian Newspapers (No 2) [1988] 3 All ER 542; and see also Patfield, 1989. See, e.g., UK Copyright, Designs and Patents Act 1988, s 171(3). For a comprehensive overview of the relationship between copyright and free speech, see Griffiths and Suthersanen, 2005. See further Nimmer, 1984, 2:05[C]‌, pp. 2–73, concerning photographs of the My Lai massacre; Waldron, 1993, p. 858n, concerning the video film of two white Los Angeles policemen beating Rodney King, a black motorist; Macmillan Patfield, 1996. On reforming the duration rules, see further Netanel, 1996, pp. 366–371. See Bently (1994, pp. 973, 979, and 979n), in which reference is made to Wordworth’s support for Sergeant Talfourd’s famous campaign to extend the duration of copyright. See also Vaidhyanathan, 2001, ch. 2. On reform of the fair dealing defences, see further Netanel, 1996, pp. 376–382. Bently (1994, p. 979n), cites Sayre v Moore (1785) in Cary v Longman (1801) 1 East 358, 359n, 102 ER 138, 139n; West v Francis 5 B and Ald 737, 106 ER 1361; and Bramwell v Halcomb (1836) 2 My and Cr 737, 40 ER 1110, as examples of this transition. 114 S Ct 1164 (1994). [1994] EMLR 1. Note 29 supra.

454  Fiona Macmillan

References Abel, R. L. (1994a). Public Freedom, Private Constraint. Journal of Law and Society, 21: 374–382. Abel, R. L. (1994b). Speech and Respect. London: Stevens and Son/Sweet and Maxwell. Barendt, E. (2005). Freedom of Speech, 2nd edn. Oxford: Oxford University Press. Bently, L. (1994). Copyright and the Death of the Author in Literature and Law. Modern Law Review, 57(6): 973–986. Bettig, R. (1996). Copyrighting Culture: The Political Economy of Intellectual Property. Boulder, CO: Westview Press. Blakeney, M. (1995). Protecting Expressions of Australian Aboriginal Folklore under Copyright Law. European Intellectual Property Review, 9: 442–445. Blakeney, M. (2000). The Protection of Traditional Knowledge under Intellectual Property Law. European Intellectual Property Review, 22(6): 251–261. Bollier, D. (2005). Brand-name Bullies:  The Quest to Own and Control Culture. Hoboken, NJ: John Wiley. Borkowski, A. (1994). Textbook on Roman Law. London: Blackstone. Capling, A. (1996). Gimme shelter! Arena Magazine (February/March), 21–24. Chon, M. (1993). Postmodern ‘Progress’:  Reconsidering the Copyright and Patent Power. DePaul Law Review, 43: 97–146. Chon, M. (1996). New Wine Bursting From Old Bottles:  Collaborative Internet Art, Joint Works, and Entrepreneurship. Oregon Law Review, 75: 257. Coombe, R. (1998). The Cultural Life of Intellectual Properties. Durham/London:  Duke University Press. Gaines, J. (1991). Contested Culture: The Image, the Voice and the Law. Chapel Hill, NC and London: University of North Carolina Press. Gray, J. (1998). False Dawn: The Delusions of Global Capitalism. New York: New Press. Griffiths, J. and Suthersanen, U. (eds.) (2005). Copyright and Free Speech: Comparative and International Analyses. Oxford: Oxford University Press. Hardin, G. (1968). The Tragedy of the Commons. Science, 162: 1243–1248. Hemmungs Wirtén, E. (2005). Out of Sight and Out of Mind: On the Cultural Hegemony of Intellectual Property (Critique). Cultural Studies, 20: 282–291. Koenig, D. (1994). Joe Camel and the First Amendment: The Dark Side of Copyrighted and Trademark-Protected Icons. Thomas M. Cooley Law Review, 11: 803–838. Lessig, L. (2004). Free Culture: How Big Media Uses Technology and the Law to Lock Down Culture and Control Creativity. New York: Penguin Press. Levitt, T. (1983). The Globalisation of Markets. Harvard Business Review, 61: 92–102. Macmillan, F. (1998). Copyright and Culture: A Perspective on Corporate Power. Media and Arts Law Review, 10: 71–81. Macmillan, F. (2002a). Copyright and Corporate Power. In R. Towse (ed.), Copyright and the Cultural Industries. Cheltenham: Edward Elgar, 99–118. Macmillan, F. (2002b). The Cruel ©: Copyright and Film. European Intellectual Property Review, 24: 483–492. Macmillan, F. (2005a). Artistic Practice and the Integrity of Copyright Law. In M. Rosenmeier and S. Teilmann (eds.), Art and Law: The Debate over Copyright. Copenhagen: DJØF. Macmillan, F. (2005b). Commodification and Cultural Ownership. In J. Griffiths and U. Suthersanen (eds.), Copyright and Free Speech:  Comparative and International Analyses. Oxford: Oxford University Press, 35–65.

Copyright, the Creative Industries, and the Public Domain   455 Macmillan, F. (2006). Public Interest and the Public Domain in an Era of Corporate Dominance. In B. Andersen (ed.), Intellectual Property Rights: Innovation, Governance and the Institutional Environment. Cheltenham: Edward Elgar, 46–69. Macmillan, F. (2008a). Is copyright blind to the visual? Visual Communication, 7: 97–118. Macmillan, F. (2008b). The UNESCO Convention as a New Incentive to Protect Cultural Diversity. In H. Schneider and P. van den Bossche (eds.), Protection of Cultural Diversity from a European and International Perspective. Antwerp: Intersentia, 163–192. Macmillan Patfield, F. (1996). Towards a Reconciliation of Copyright and Free Speech. In E. Barendt (ed.), Yearbook of Media Law and Entertainment Law. Oxford: Clarendon Press, 199–233. Merges, R. P. (1996). Property Rights Theory and the Commons: The Case of Scientific Research. Social Philosophy and Policy, 13(2): 145–167. Netanel, N. W. (1996). Copyright and a Democratic Civil Society. Yale Law Journal, 106: 283–388. Nimmer, M. (1984). Freedom of Speech. New York: M. Bender. Ostrom, E. (1990). Governing the Commons: The Evolution of Institutions or Collective Action. Cambridge and New York: Cambridge University Press. Patfield, F. (1989). The House of Lords Decision in the Spycatcher Litigation. European Intellectual Property Review, 1: 27. Rose, C. M. (1998). The Several Futures of Property: Of Cyberspace and Folk Tales, Emission Trades and Ecosystems. Minnesota Law Review, 83(1): 129–182. Rose, C. M. (2003). Romans, Roads and Romantic Creators: Traditions of Public Property in the Information Age. Law and Contemporary Problems, 66: 89–110. Sell, S. K. (2003). Private Power, Public Law: The Globalization of Intellectual Property Rights. Cambridge: Cambridge University Press. Smiers, J. (2002). The Abolition of Copyrights: Better for Artists, Third World Countries and the Public Domain. In Copyright and the Cultural Industries. Cheltenham: Edward Elgar, 119–139. Smiers, J. and van Schijndel, M. (2010). La fine del copyright: Come creare un mercato culturale aperto a tutti. Viterbo: Stampa Alternativa. Towse, R. (1999). Copyright, Risk and the Artist: An Economic Approach to Policy for Artists. Cultural Policy, 6: 91–107. Towse, R. (2001). Creativity, Incentive and Reward:  An Economic Analysis of Copyright and Culture in the Information Age. Cheltenham: Edward Elgar. Vaidhyanathan, S. (2001). Copyrights and Copywrongs: The Rise of Intellectual Property and How it Threatens Creativity. New York: New York University Press. van Caenegem, W. (1995). Copyright, Communication and New Technologies. Federal Law Review, 23: 322–347. van Schijndel, M. and Smiers, J. (2005). Imagining a World Without Copyright: The Market and Temporary Protection, a Better Alternative for Artists and the Public Domain. In H. Porsdam (ed.), Copyright and Other Fairy Tales. Cheltenham: Edward Elgar, 147–164. Waelde, C. and MacQueen, H. (eds.) (2007). Intellectual Property: The Many Faces of the Public Domain. Cheltenham: Edward Elgar. Waldron, J. (1993). From Authors to Copiers: Individual Rights and Social Values in Intellectual Property. Chicago-Kent Law Review, 69: 841–887.

Chapter 24

C op y right a nd i ts Disc ont e nts Martin Kretschmer

Introduction Intellectual property laws have morphed from creating limited rights protecting innovators against competitors (publishers against reprinters, inventors against imitators, commercial names against misleading use) into an ambitious set of norms that appears to govern the infrastructure of an information society. Copyright law, specifically, regulates authorship, ownership, and access to content. In the creative industries, this structures the production, distribution, and consumption of culture in complex ways.1   Creators perceive copyright’s recognition of authorship in law as central to their identity, recognition, and indeed financial reward (Towse, 2006).   Consumer behaviour, in the digital sphere, is increasingly prescribed by a combin­ ation of copyright law, technology, and contract (Elkin-Koren, 1997).   Throughout the value chain, copyright has become the currency in which actors in the creative industries trade (Frith and Marshall, 2004). Thus it is tempting to conceptualize the creative industries as the copyright industries (WIPO, 2003, 2012). However, this equation is problematic. There are numerous goods in the creative industries that attract copyright protection but where copyright law is incidental. An example might be the production and distribution of news. The business model for journalistic content, for much of its history, has been one of being first to the market (Bently, 2004). Vice versa, there are goods in the creative industries that do not attract copyright protection but are traded as if they did. An example might be television formats, such as talent shows (Idols, X Factor), quiz shows (Who Wants To Be a Millionaire?), or reality

Copyright and its Discontents   457 programmes (I’m a Celebrity, Grand Designs) which are not protected under copyright law: i.e. competitors are free to imitate the essential features of these programmes without seeking permission from the originators. Still TV formats are licensed globally as if they were protected (Singh and Kretschmer, 2012). In both these cases the effects of copyright law are little understood. We do not know what goods would have been produced in the absence of copyright law, and which other business models, institutional mechanisms, or norms, if any, may complement or substitute for exclusive legal rights. In order to make progress on this particular challenge for policy-making in the digital environment, this chapter proceeds in three steps: The next section assesses through a historical excursion where causality might lie: does copyright law produce or reflect the aesthetics and economics of cultural production? The following section summarizes the stale nature of modern copyright law’s perceived agency in the creative industries, as reflected in legal norms that have become deeply entrenched in international conventions. Finally, it is argued that the digital environment has forced legal, aesthetic, and economic norms apart (disruptive technology, deviant user behaviour). Facing discontent, what follows for the prospects of copyright related norms?

Production of Culture vs. Romantic Author The production of culture literature as developed by American sociologists during the 1970s (Hirsch, 1972; Peterson, 1976) suggests that the symbolic elements of culture are shaped by their systems of production (usually understood widely to include technology, organizational structure, and legal regulation). For example, Griswold (1981) argues that the American copyright system of the nineteenth century (which only protected domestic authors while permitting the copying of foreign works) accounts for the emergence of the native ‘man against nature’ theme of the American novel, as novels of ‘domestic manners’ would be undercut by royalty-free imports of that genre from Britain. This contrasts with a traditional literary explanation: differences in symbolic production were said to be the result of cultural differences—the new American novel reflecting the new American character. Griswold also claims that after the Copyright Act of 1909, which extended copyright to foreign authors, the divergence between American and European styles disappeared again, as American authors abandoned characteristic American themes.2 Another more recent example of copyright apparent causality implicates the exclusive right to make adaptations (which national copyright laws must provide under Article 12 of the Berne Convention, an international treaty that was integrated into the global free trading system with the 1994 TRIPS Agreement of the World Trade Organization; see next section). An exclusive right to control adaptations will influence

458  Martin Kretschmer artistic collaborations, and what derivative works are being produced. When earlier creative materials are being re-used, permissions must be sought that can be refused, and creative discourse may have to be formalized at an early stage. Public Enemy’s Hank Shocklee and Chuck D have described such an effect following their seminal hip hop album It Takes a Nation of Millions (1988), constructed as a ‘sonic wall’ of digital samples (McLeod, 2001, 2002). Once copyright through case law (i.e. decisions by judges in court cases) started to conceive of samples of other sound recordings as infringements, Public Enemy had to change their style. Here, again, it appears that copyright law is producing, as an agent, culture of a particular kind. Copyright historians argue a different direction of causality altogether:  the rise of author rights at the end of the eighteenth century is often explained from the emerging aesthetic notion of genius (Woodmansee, 1984; Woodmansee and Jaszi, 1994; Boyle, 1996). Key historical citations of the ‘romantic author hypothesis’ include Edward Young’s Conjectures on Original Composition (1759) calling on his fellow writers to depart from received models and become originals (§43: ‘An Original may be said to be of a vegetable nature; it rises spontaneously from the vital root of Genius; it grows, it is not made’); Le Chapelier’s report introducing the 1791 French Revolutionary decree on the protection of dramatic works (Loi relatif aux spectacles): ‘The most sacred, the most legislate, the most unassailable . . . the most personal of properties, is a work which is the fruit of the imagination of a writer’;3 and Johann Gottlieb Fichte’s 1793 essay Proof of the Illegality of Reprinting (Beweis der Unrechtmäßigkeit des Büchernachdrucks) in which he derives proprietary authorship from a concept of characteristic inalienable form (Kawohl and Kretschmer, 2009). According to the ‘romantic author hypothesis’, modern copyright law followed the invention of authorship. Aesthetics came first: the romantic ideology of singular expressions of a unique persona gave rise to authorial rights that could be conceived analogous to ‘real property’, abandoning an earlier conception of copyright as ‘a temporary, limited, utilitarian state grant’ (Boyle, 1996, p. 56). In the context of music, Lydia Goehr has explicated the idealistic ontology of an abstract ‘musical-work concept’ as it formed at the end of the eighteenth century. A strict distinction between works (fixed with increasing precision), and performative interpretation began to regulate musical practice, and—says Goehr—set Western classical music on a path to The Imaginary Museum of Musical Works (the title of her influential 1992 book). Re-using themes and passages in different works of music, even by the same composer, was increasingly censored as derivative and unworthy. Changing notes in performance, or improvising over the written indicators of a score became a violation of a permanent work of art. Goehr’s application of this ontological shift to copyright law is brief. She concentrates on ownership rights seen ‘as the product of a free person’s labour’, rather than on the appearance of the exclusive rights to public performance, and to make adaptations.4 In our context, the genealogy is revealing. In Goehr’s account, again, the work concept came first, legal expressions followed. Anne Barron, in an important revisionary contribution, has questioned the claim that the legal concept of the musical work is identical to the musicological category. She

Copyright and its Discontents   459 identifies a shift—‘largely internal’ to legal doctrine—from ‘physicalism’ to ‘formalism’. Cultural artefacts, says Barron, ‘present complex questions of attribution and identification’ (2006b, p. 42) that cannot be solved by analogy to physical tangible things. A formalist solution, first developed in the British ‘literary property debate’ of the eighteenth century, would define property rights that will figure in market transactions, and necessarily extend ‘beyond the inscribed surface of a book’s pages’ (2006b, p. 43). Thus legal logic produced its own abstract work concept well before the idealist, romantic shift took place in aesthetic discourse. Sociologist Lee Marshall goes even further in his book on bootlegging (2005, p. 24): ‘As copyright law . . . acts as architect of modern proprietary authorship, it is fallacious to think of modern authorship as existing outside of copyright.’ We can no longer abstract authorship from the market relationships of production, distribution, and consumption constituted by copyright law. Insofar as copyright law constructs the objects it seeks to regulate, the relationship is not easily understood as causal. ‘Production of culture’ and ‘romantic author’ explan­ ations are both problematic. Copyright law may respond to the aesthetic practices it attempts to regulate, but it may at the same time force a space for transactions of a particular type.

Rigidity and Fragility of the Berne Settlement While causality remains uncertain, it appears that the core of the modern conception of copyright law has little moved since what may be coined the Berne settlement. The Berne Convention, originally signed in 1886, and integrated into the global trade system in 1994,5 relies on the abstract concept of an original, self-contained work to which all modes of exploitation are linked. The full value of ‘every production in the literary, scientific and artistic domain’ (initially awarded via the abstract work concept to the author) is in practice mostly transferred to successors in title, i.e. corporations. Thus translations, reproductions, public performances, and adaptations fall under exclusive owner control for a term derived from the lifetime of the author, plus at least 50 years (in the US and the European Union where post mortem auctoris terms of 70 years are now provided, this can easily amount to a copyright duration of 120 years).6 Exceptions to exclusive rights are only permitted ‘in certain special cases’, provided that ‘such reproduction does not conflict with the normal exploitation of the work and does not unreasonably prejudice the legitimate interests of the author’, the notorious three-step test.7 User interests or freedoms are not independently conceptualized in Berne, nor is there any recognition that all creative activity draws on other cultural production. Berne works are self-contained and original, not situated in a common cultural domain.

460  Martin Kretschmer Following Berne, a purely technological reflex appeared to drive the evolution of copyright law. Since the full value of copyright unquestionably should go to the author/ owner, the advent of gramophone, radio, television, audio-tapes, video-tapes, photocopying, satellite, cable, and computer and Internet technologies necessitated a string of copyright amendments, usually extending the scope of protection to a technologically unforeseen activity. Only where exclusive protection was deemed to be unenforceable, as for music performances and broadcasting, photocopying by libraries, cable re-transmission, or in private copying, was a mechanism of licensing via collecting societies adopted in many countries. (The principle of collective licensing is still ‘pay-for-play’ but at a rate that is not negotiated individually. In effect, it substitutes owner exclusivity with a right of remuneration.) From this perspective, it is probably unsurprising that content owners in industries with large back-catalogues of rights reacted to the arrival of the worldwide web with dismay. If digital material can be manipulated into ever new shapes of untraceable origin, if every local copy becomes a master of global reach, is it not indisputable that legislators need to act to preserve the concept of abstract, original, authored work underlying the Berne settlement? Within two years of the introduction of Netscape’s Navigator web browser in 1994 (that had turned the Internet almost overnight into a mass communication and electronic commerce medium), the World Intellectual Property Organization had secured the WIPO Internet Treaties of 19968 that promoted a combination of three legal measures: extending exclusive rights (as opposed to entitlements to remuneration), privileging technological locks (securing these rights), and targeting copyright users (as opposed to commercial competitors). The legislative proposals of the digital copyright agenda focused on ‘the industry’s right to say NO in the online environment’, as the president of a multinational record company told me about their lobbying efforts during the 1990s (Kretschmer et al., 1999). Analysis of this interview set identified the attitudes of rights-holders during the period of the digital agenda as essentially defensive.   Don’t open up a new market if it threatens you in the old. (Typical quote: ‘No, no access, you are not going to take our repertoire, we are going to strangle this baby at birth.’)   If you control content (by technology and law), the form of distribution does not matter. (Typical quote: ‘The removal company wants to buy the furniture store. This is ridiculous.’) The vision was to create a closed circuit of licensed content, and force consumers to buy into the circuit by vigorous enforcement against infringers. If the only legitimate content available is copy protected, people will eventually be prepared to pay for it. Transgressors will live to regret their actions as criminals.9 It was blind faith in law’s causality in cultural production and consumption.

Copyright and its Discontents   461

Prospects for Reform The view that the direction of causality goes from law to behaviour is still dominant among organized industry groups. During the 15 years since the digital copyright agenda became the blueprint for regulating the online environment, the focus has shifted from consumers to intermediaries as the locus of enforcement, but the underlying assumption has remained stable: discrete works which the owner controls via an exclusive right to say NO. And similarly, this is still the dominant view among legal writers in the intellectual property tradition. Forgetting the formalist tradition, they often suppose that cultural artefacts exist as objects prior to being governed by copyright law. Yet, law does not merely govern, it may constitute the objects it governs. This may involve the redefinition of a new technology so that it falls under an existing regulatory regime. For example, data transmission using telegraph technology was conceptualized as letters that should fall under the Postmaster General’s monopoly (UK Telegraph Act, 1869). More radically, the objects of regulation might not exist without the governing regime: under the system of the Internet Corporation for Assigned Names and Numbers (ICANN), assigned unique identifiers constitute the Internet. Thus regulation may evolve simultaneously, and at times at variance with the technologies and cultural symbols it seeks to turn into objects. If we take seriously the conception of copyright law as a semi-autonomous system, following its own logic, but also as an integral participant in the relationship of creators, producers, and consumers (aiming to construct what can be bought and sold), what follows for the prospects of copyright reform?10 Arguably the focus of the digital agenda on enforcement had blinded rights-holders in the transition from analogue to digital. They failed to sense how radical a reconfiguration of cultural production and consumption was taking place. Copyright law’s role in structuring what can be bought and sold may be sidelined altogether, as the traditional content industries lose their role as key intermediaries to digital platforms which interact with users through services, not discrete goods. While change in the digital world remains dynamic, meaningful copyright reform must re-enable a recursive causality between law, and cultural production and consumption—or become irrelevant.

Notes 1. There are also other forms of proprietary regulation relevant to the creative industries, such as patents (in particular where they affect the architecture of digital platforms), design rights, and trade marks. In addition there are forms of regulation outside the ‘propertized zone’, such as defamation, obscenity, and blasphemy laws, laws governing national security, and fundamental laws relating to speech (discussed in Fiona Macmillan’s c­ hapter 23). In this chapter, the focus is on copyright law, conceived as the paradigm regulatory intervention in cultural markets.

462  Martin Kretschmer 2. The International Copyright Act (Chace Act, 1891) had already removed the overt discrimination against foreign authors, but important formal obstacles remained that made it difficult for foreign authors and publishers to obtain effective protection in the US until 1909 (such as requirements that books had to be registered and manufactured in the US). 3. ‘La plus sacrée, la plus légitime, la plus inattaquable et, si je puis parler ainsi, la plus personelle de toutes les propriétés, est l’ouvrage, fruit de la pensée d’un ecrivain.’ The report then suggests that the character of the property changes once a work is published, advancing towards a rather unromantic notion of a ‘propriété du public’ (Ginsburg, 1990). 4. ‘When composers began to view their compositions as ends in themselves, they began to individuate them accordingly. When composers began to individuate works as embodied expressions and products of their activities, they were quickly persuaded that that fact generated a right of ownership of those works to themselves. Thus, as music came to be seen as the product of a free person’s labour, a change was deemed necessary in ownership rights’ (Goehr, 1992, p. 218). 5. The latest version of the Berne Convention is the Paris Act, 1971, as amended in 1979. The US acceded to Berne only in 1989. In 1994, the Berne Convention was incorporated into the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), that is all 160 members of the World Trade Organization (as of 26 June 2014) are now bound by it. The exception is Art. 6bis, the unwaivable droit moral that was excluded at the behest of US negotiators following lobbying pressure from Hollywood. Art. 6bis specifically protects the author’s right to claim authorship (paternity right), and to object to changes that would be prejudicial to the author’s honour or reputation (integrity right), even after the transfer of all exclusive copyrights. Thus the droit moral may limit the freedom of corporations to exploit works without recourse to the author. Cf. F. Macmillan (Chapter 23) on the alienability of copyright interests. 6. The European Copyright term was harmonized to life plus 70 years with the 1993 Council Directive (93/98/EEC). The US Sonny Bono Copyright Extension Act (1998) extended the term by 20 years to life plus 70 years, or 95 years for ‘works for hire’ (works created under employment by corporations, for example sound recordings). In Europe, sound recordings, broadcasts, and performances are protected as neighbouring or ‘related rights’. The term was extended from 50 to 70 years with the 2011 Directive (2011/77/EU). 7. Art. 9(2), introduced at the Stockholm revision conference in 1967. Note that under Berne, the three-step test does only apply to the reproduction right. However, Art. 13 of the TRIPS Agreement (1994) and Art. 10 of the WIPO Copyright (Internet) Treaty (1996) make the test applicable to all copyright limitations and exceptions. 8. WIPO Internet Treaties: World Intellectual Property Organization Copyright Treaty (1996), World Intellectual Property Organization Performances and Phonograms Treaty (1996); implemented in the US in 1998 through the Digital Millennium Copyright Act (DMCA: Pub. L. No. 105–304, 112 Stat.2860, codified at 17 U.S.C. sec. 1201–1204), and in the European Union in 2001 through the Directive ‘on the harmonisation of certain aspects of copyright and related rights in the Information Society’ (2001/29/EC). 9. An extreme example of this trend towards criminalization is §1204 of the US Digital Millennium Copyright Act 1998: wilful circumvention of copy-protection measures to gain access or copy can be punished on first offence with a fine of $500 000 or a five-year prison sentence, rising on second offence to $1m or up to ten years in prison. 10. Grand explanations of copyright law include the Marxist conception of law as the representation of the conditions of production in capitalism (Edelman, 1977 [1973]), an

Copyright and its Discontents   463 understanding of copyright law as part of social processes in networks of collaboration and competition (Toynbee, 2001), the orthodox economic explanation as an efficient regulatory response for the allocation of resources (Landes and Posner, 2003), a political economy explanation of regulatory capture (Kay, 1993; Lessig, 2004; May, 2000), the ‘romantic author hypothesis’ explaining copyright law from the aesthetic notion of genius (Woodmansee, 1984; Woodmansee and Jaszi, 1994; Boyle, 1996), or the formalist approach constructing intangible objects in law (Sherman and Bently, 1999; Barron, 2006a). For a review of the approaches informing this chapter, see Kretschmer and Pratt (2009).

References Barron, A. (2006a). Copyright Law’s Musical Work. Social and Legal Studies, 15: 101–127. Barron, A. (2006b). Introduction: Harmony or Dissonance? Copyright Concepts and Musical Practice. Social and Legal Studies, 15: 25–51. Bently, L. (2004). Copyright and the Victorian Internet: Telegraphic Property Laws in Colonial Australia. Loyola Los Angeles Law Review, 38: 71–176. Boyle, J. (1996). Shamans, Software, & Spleens: Law and the Construction of the Information Society. Cambridge, MA: Harvard University Press. Edelman, B. (1977 [1973]). Ownership of the Image. London: Routledge. Elkin-Koren, N. (1997). Copyright Policy and the Limit of Freedom of Contract. Berkeley Technology Law Journal, 12(1): 93–113. Frith, S. and Marshall, L. (2004). Making Sense of Copyright. In S. Frith and L. Marshall (eds.), Music and Copyright. Edinburgh: Edinburgh University Press, 1–18. Ginsburg, J. C. (1990). A Tale of Two Copyrights: Literary Property in Revolutionary France and America. Tulane Law Review, 64: 991–1031. Goehr, L. (1992). The Imaginary Museum of Musical Works. Oxford: Oxford University Press. Griswold, W. (1981). American Character and the American Novel. American Journal of Sociology, 86: 740–765. Hirsch, P. M. (1972). Processing Fads and Fashions: An Organization-Set Analysis of Cultural Industry Systems. American Journal of Sociology, 77(4): 639–659. Kawohl, F. and Kretschmer, M. (2009). Johann Gottlieb Fichte, and the Trap of Inhalt (Content) and Form: An Information Perspective on Music Copyright. Information, Communication and Society, 12(2): 41–64. Kay, J. (1993). The Economics of Intellectual Property Rights. International Review of Law and Economics, 13: 337–348. Kretschmer, M., Klimis, G. M., and Wallis, R. A. (1999). The Changing Location of Intellectual Property Rights in Music: A Study of Music Publishers, Collecting Societies and Media Conglomerates. Prometheus, 17(2): 163–186. Kretschmer, M. and Pratt, A. C. (2009). Legal Form and Cultural Symbol. Information, Communication & Society, 12(2): 165–177. Landes, W. M. and Posner, R. A. (2003). The Economic Structure of Intellectual Property Law. Cambridge, MA: Belknap/Harvard University Press. Lessig, L. (2004). Free Culture: How Big Media Uses Technology and the Law to Lock Down Culture and Control Creativity. New York: Penguin. McLeod, K. (2001). Owning Culture:  Authorship, Ownership, and Intellectual Property. New York: Peter Lang.

464  Martin Kretschmer McLeod, K. (2002). How Copyright Law Changed Hip Hop: An Interview with Public Enemy’s Chuck D and Hanks Shoklee. Stay Free Magazine, 20. Marshall, L. (2005). Bootlegging: Romanticism and Copyright in the Music Industry. London: Sage. May, C. (2000). A Global Political Economy of Intellectual Property Rights: The New Enclosures? New York: Routledge. Peterson, R. A. (ed.) (1976). The Production of Culture. Beverly Hills, CA: Sage. Sherman, B. and Bently, L. (1999). The Making of Modern Intellectual Property Law: The British Experience, 1760–1911. Cambridge: Cambridge University Press. Singh, S. and Kretschmer, M. (2012). Strategic Behaviour in the International Exploitation of TV Formats: A Case Study of the Idols Format. In K. Zwaan and J. de Bruin (eds.), Idols: Authenticity, Identity and Performance in a Global Television Format. Farnham: Ashgate, 11–25. Towse, R. (2006). Copyright and Artists: A View from Cultural Economics. Journal of Economic Surveys, 20(4): 567–585. Toynbee, J. (2001). Creating Problems:  Social Authorship, Copyright and the Production of Culture. Milton Keynes: Open University, Pavis Centre for Social and Cultural Research. Woodmansee, M. (1984). The Genius and the Copyright: Economic and Legal Conditions of the Emergence of the ‘Author’. Eighteenth-Century Studies, 17(4): 425–448. Woodmansee, M. and Jaszi, P. (eds.) (1994). The Construction of Authorship:  Textual Appropriation in Law and Literature. Durham, NC: Duke University Press. World Intellectual Property Organization (WIPO) (2003). Guide on Surveying the Economic Contribution of the Copyright-Based Industries. WIPO Publication No. 893 (E). Geneva: WIPO. World Intellectual Property Organization (WIPO) (2012). WIPO Studies on the Economic Contribution of the Copyright Industries. Geneva:  WIPO. .

Chapter 25

Public P olicy for t h e Creative Indu st ri e s Hasan Bakhshi, Stuart Cunningham, and Juan Mateos-Garcia

Introduction Why do we have public policies for the arts, cultural sector, and creative industries at all? In principle, the production of arts, cultural and creative goods, services and experiences can be organized through markets on their own in the same way as most other sectors in the economy. Yet, if we look around us, we see everywhere high levels of government intervention in the production and consumption of art and culture: artists and cultural institutions receive public grants; film producers benefit from targeted tax relief; broadcasting is heavily regulated; and the intellectual property regime grants rights-holders a temporary monopoly over the exploitation of their creative works. In this chapter, we describe three frameworks and the economic rationales for cultural and creative industries policy they present—market failure, industrial policy, and creative economy. Then we outline how policy in the UK has evolved over the last three decades to illustrate shifts in the relative importance of these rationales for government intervention. In doing so, we briefly describe the most important changes in policy-makers’ definitions and categorizations of the cultural and creative industries, in the role the creative industries are perceived by policy-makers to play in the economy, and in the policy levers they have deployed in an attempt to support them. Readers are referred to Flew (2011) and Cunningham (2014) for a fuller historical account of policy in the UK. The final section concludes with suggestions for a policy-relevant research agenda. Our decision to use the language and concepts from economics is motivated by our focus on policies concerning the allocation of scarce public resources between alternative ends (of which arts, culture, and creative activity are but one).1 Where we talk about commercial creative industries, it is not hard to justify the use of an economics

466   Hasan Bakhshi, Stuart Cunningham, AND Juan Mateos-Garcia framework to study government intervention. Where we speak about subsidized arts and cultural activities, however, we acknowledge that there are other important motives beyond the economic that justify public intervention—the fact that artistic and cultural life ‘represents the values of individuals, their own aesthetic and philosophical representations and, at a more collective level, all the ways of understanding a people’s identity’ (Deroin, 2011). These are compelling, independent reasons for public investment in the arts; though, we would argue, they are at least to some extent captured by the economic rationales for policy intervention we set out below.

Market Failures in Arts, Culture, and Creativity The defining principle underpinning the functioning of modern economies is that markets are in general the most efficient mechanism to allocate scarce resources towards the production of goods and services satisfying alternative (and competing) needs. There are diverse—and to a great degree complementary—explanations for why this is held to be so. Perhaps the most well known is Adam Smith’s ‘Invisible Hand’ theorem, according to which the actions of self-interested individuals aggregate into socially desirable outcomes, and support a sophisticated division of labour that is conducive to productive efficiency (and therefore wealth creation) (A. Smith, 1991). By contrast, the Austrian School of economics stresses that markets are much more effective than other alternatives (in particular, central planning) in promoting experimentation and learning to resolve economic problems, harnessing the various pools of knowledge distributed across the economy and society (Hayek, 1945). Government intervention in the economy is justified in instances where it can be shown that, left to its own devices, the market fails to produce socially efficient outcomes (and as long as the benefits of such intervention outweigh the costs). In this section, we overview those features of arts, culture and creative goods, services and experiences that, it has been argued, give rise to these situations of market failure, and which therefore provide an economic rationale for public intervention. (a)  Arts and culture as public goods: Markets function efficiently when businesses, institutions, and households are able to capture all of the benefits from their economic activities and fully bear the costs. This requires that goods and services produced are ‘rival’—consumption by one individual precludes consumption by another—and ‘excludable’—it is possible to exclude someone from consuming the good or service in question. Goods and services not satisfying these two conditions are said to have ‘public good’ characteristics. The bene­fits and costs associated with their production and consumption that are not reflected in their prices are described as their positive or

Public Policy for the Creative Industries   467 negative ‘externalities’ (or ‘spillovers’). In the absence of government intervention, the levels of production for goods or services with positive externalities will be below those that are socially desirable. These spillovers are often believed to operate at the local level: for example, when a vibrant local cultural scene benefits the inhabitants of a city, by bringing in tourist income (Long and Sellars, 1995) or by attracting highly educated immigrants and the knowledge-intensive businesses that employ them (Florida, 2002). Such situations may warrant local public support for arts and culture. A similar case might be made for heritage sites and public architecture, whose existence and maintenance generate non-excludable and non-rival benefits for those living in their vicinity. Certainly in the UK, while local authorities account for less than 8% of overall arts funding (M. Smith, 2010),2 they play an important role in supporting local projects and organizations (Arts Development, 2011). In addition to this, some cultural and creative goods and services have ‘information goods’ features that generate ‘knowledge externalities’—they embody ‘intangible’ ideas, concepts, and themes that can inspire, be developed and built on, or be imitated by others without compensating their originators. An influential work of art, or new genre, may, for example, inspire subsequent projects that entrepreneurs exploit in the market. Some have again suggested that these knowledge externalities are strongest at the local level (Chapain et al., 2010), and may even show up in higher levels of business productivity and therefore wages. Recent research shows that wages are indeed significantly higher in British cities which have more concentrated cultural activity, but that the wage premium disappears once variations in local levels of education are allowed for.3 Of course, the arts and culture generate other externalities which are much more difficult to define, but nonetheless play an important role in justifying public funding. A cultural good or service may have social value if it conveys a sense of connection with others, for example, or helps us understand the nature of the society in which we live (Throsby, 2000). It may also contribute to a sense of identity and place. Many have notions that the arts create a ‘better society’, for example through instilling values of beauty and respect in the community (Bakhshi, 2010). Economic studies of cultural value are few and far between in the UK, but a rare exception—the contingent valuation of the British Library in 2003—concluded that such ‘non-use’ values, according to the general public, accounted for the majority of the British Library’s overall value (Pung, Clarke, and Patten, 2004). (b)  Arts and culture as merit goods: While the predominant challenge when arts and culture have public good characteristics is to coordinate collective action between self-interested individuals to ensure that they are funded, there are separate—paternalistic—arguments for publicly funding arts and culture if consumers are in fact unaware of their benefits; that is, if they are ‘merit goods’. An added consideration is that many arts and cultural activities tend to be experience goods—their enjoyment increases with experience (Van der Ploeg, 2002).

468   Hasan Bakhshi, Stuart Cunningham, AND Juan Mateos-Garcia Some governments have in the past used such arguments to justify early-years intervention to boost cultural consumption, as in the case of the Netherlands where cultural vouchers have been issued to school children (children who were issued vouchers showed a greater propensity to visit museums later in life when compared with others (Van der Ploeg, 2002)) or in the case of the UK, controversially, through the issue of free theatre tickets (DCMS/Arts Council England, 2012). (c)  Increasing returns to scale, piracy, and monopoly: Another consequence of the ‘information goods’ nature of artistic, creative, and cultural goods and services is that although the production of an initial ‘master’ may require substantial investment, subsequent copies are relatively cheap to make. In other words, the ‘marginal costs’ of producing additional units are relatively low. Think of, say, the initial investments required to produce and broadcast original television content compared with the costs of a repeat transmission. Or the costs of shooting a film or developing a new video game (now up to $50 million excluding marketing in the case of the latter), compared with the costs of reproduction (at the cost of a blank DVD, less than $1, or even lower if the content is downloaded or streamed online). This distinctive production cost structure creates both opportunities and challenges for cultural institutions and creative businesses. On the one hand, success in the market can generate substantial profits because the low marginal cost structure enables production to be scaled up quickly and at little cost. On the other hand, there is a greater likelihood of ‘cannibalization’ of sales through piracy (legal and illegal copies become closer substitutes in the eyes of consumers when the differences in quality between them are small and the costs of copying are low (Oberholzer-Gee and Strumpf, 2009)). This has implications for policy—the prospect of high and rapid economic returns on public investment make the content industries a ripe target for industrial policy-makers (which we discuss in further detail in the next section), while the challenge of piracy also warrants the attention of policy-makers, even if there is little agreement on what measures are needed to address it. Regarding the latter, as well as the obvious option of stricter enforcement of intellectual property rights, other candidates include digital rights management solutions (Liebowitz, 2002), the compensation of rights-holders through levies on technologies that can be used to make illegal copies (though there are good economic reasons for avoiding this (Oxera, 2012)), or measures to lower the transaction costs of copyright licensing to enable the development of new business models (Hargreaves, 2011). The high fixed cost structure of cultural and creative content production can also generate barriers to entry that preclude competition from new entrants, and enable incumbents to extract rents from consumers through higher prices or lower quality. This results in another class of market failure, a ‘monopoly’, which policy-makers seek to prevent and/or regulate through competition policy, or, in extreme cases, through direct state ownership of the monopoly supplier (as often happens in public broadcasting). Policy also seeks to safeguard (at least implicitly) on economic grounds some of the public goods features of impartial news and information by enshrining the principle of media plurality (Seabright and Von Hagen, 2006; Pratt and Stromberg, 2010).

Public Policy for the Creative Industries   469 Although new technologies have lowered the barriers to entry in creative markets (for example, through digital distribution of creative content), they have also reinforced the returns to scale that characterize production arising from ‘network effects’ (that is, when the value to individuals of joining a network increases with the number of existing members in the network). This can result in ‘winner takes all’ dynamics, and therefore give rise to monopolies, in digital industries such as software or social media, as well as the increasingly important digital platforms through which much creative content is now distributed (Liebowitz and Margolis, 1998, p. 671). In these complex and fastmoving areas, policy-makers face the challenge of striking the right balance between the desire for efficient scale and innovation, and protecting consumers and competitors from abuse by the companies that eventually achieve dominance. (d)  Information asymmetries and uncertainty: Another important condition for the efficient operation of markets is complete and ‘symmetric’ information about the quality of the inputs going into, and the outputs from, production, and the intentions of participants in a market transaction. When such information is unavailable, or is held asymmetrically across agents, transacting in the market becomes costly (as participants need to invest valuable resources in assessing quality, contracting, and monitoring performance of their counterparties). As a consequence, some exchanges that would otherwise be mutually beneficial are forgone. Artists and cultural and creative organizations indeed operate in extremely uncertain and volatile environments (Caves, 2000). Past performance is usually a highly imperfect predictor of present demand, not least because audiences tend to demand an element of novelty in their experiences. As Hollywood screenwriter William Goldman famously put it, ‘Nobody knows anything’. Arguably, this creates especially high barriers to finance for production of cultural and creative goods, which justifies public intervention to bridge the ‘funding gap’ (Fraser and IFF Research, 2011). It may also reinforce misalignments in incentives (actual or perceived) between intrinsically motivated creatives that are pursuing their artistic objectives (Caves, 2000) and financiers who are keen to recoup their investments, which, in turn, further exacerbates the barriers to finance. (e)  Network and system failure: Last, we mention a rationale for creative industries policy which, although rarely mentioned as a specific type of market failure, nevertheless stems from a deviation from the conditions where, according to economists, markets generate efficient outcomes. The source of the problem, in this case, is that productive activities in the creative industries take place as part of systems or networks of agents (both public and private—such as universities) who supply a variety of ideas and inputs—for example talent, finance, or a distribution infrastructure—which are combined into cultural and creative goods and services and supplied in the market (requiring a further connection with consumers or public sector procurers) (Barber and Georgioui, 2008). Although this situation obtains in many—if not all—other industries, the need to satisfy an infinite variety of needs in creative markets (for which ex ante demand is hard to gauge) has in fact led the creative industries to develop models of production which are particularly networked,

470   Hasan Bakhshi, Stuart Cunningham, AND Juan Mateos-Garcia and help it to generate novelty while dealing with uncertainty (Caves, 2000; Storper and Christopherson, 1987). A situation of ‘systems’ failure is one where gaps or holes emerge in these systems, perhaps as a consequence of externalities (those agents who act as the ‘glue’ that binds the creative network fail to capture all the value from their brokerage activities), or uncertainty (creative organizations find it difficult to measure the benefits of establishing risky connections with improbable rewards and untrusted partners like those in other sectors, types of institutions, or expertise in other creative disciplines—and therefore do so less than would be desirable), resulting in higher costs of transacting in the market, inefficiencies, and lower levels of creativity and innovation (Uzzi and Spiro, 2005). The idea of systems failure underpins the ‘National Systems of Innovation’ framework used by scholars in the field of innovation studies to examine institutional differences across countries resulting in variation in their innovative performance and, ultimately, their economic growth (Lundvall, 2007)—a concept that has started to be applied to the creative industries too, through the idea of the ‘Creative Innovation System’ (Bakhshi, Hargreaves, and Mateos-Garcia, 2013). A perception of systems failure has also informed policies and programmes to increase connectivity within the creative industries through intermediaries, as well as between creative firms and financiers and universities (Sapsed, Grantham, and DeFillippi, 2007; Mateos-Garcia and Sapsed, 2011).

Cultural and Creative Industrial Policies For all the reasons above, it is argued, targeted government interventions in the cultural and creative industries may be justified, not because of their value-added or their potential for exports, growth, and job creation per se, but if and only if there are market failures. But in practice, we often see governments adopting ‘strategic’ policies to support individual creative sectors for precisely these reasons and seemingly regardless of the strength of the case for market failures.4 One such consideration is a sector’s export potential which, according to ‘export base’ accounts of development (Thirlwall, 2002), is the main way in which industrial sectors contribute to growth and employment. Although the traditional industrial policy heartland has been manufacturing, the cultural and creative industries have also in recent years been identified as ‘strategic sectors’ across the world (Moons, Ranaivoson, and De Vinck, 2013), partly because of the particularly rapid growth in their trade volumes (UNCTAD/UNDP, 2010). There is a general perception that as the wealth of nations increases, so does their demand for the culture, media, and entertainment products from the creative industries (Andari et al., 2007), meaning that those countries with a competitive advantage in these industries stand to benefit disproportionately from global economic development.

Public Policy for the Creative Industries   471 High-productivity—that is, innovative—industries are also a frequent target for industrial policy strategies, not least because they are believed to generate beneficial externalities, such as those that we described in the previous section (and which are often believed to operate within the confines of industrial ‘clusters’). Although the evidence base is far from satisfactory, an increasing number of studies report that the creative industries are indeed relatively innovative (Bakhshi and McVittie, 2009; Muller, Rammer, and Truby, 2009; Falk et al., 2011). A third reason why the creative industries are perceived as an attractive target for industrial policy-makers is that, by definition, they are ‘upstream’ in the value chain, and as such, their activities are viewed as harder to imitate or outsource to lower cost emerging market competitors along the lines of what has happened with, say, traditional manufacturing (Miles and Green, 2008). For all these reasons, we frequently see policies making use of subsidy and tax measures to support individual creative sectors, be it through increasing the international competitiveness of indigenous producers or attracting inward foreign investments. Some governments have also implemented import quotas, tariffs, and screen quotas, although these are as often motivated by cultural factors (e.g. preservation of national identity and language) as economic ones (the so-called cultural exceptions introduced in successive trade agreements (Van Grasstek, 2006) and the UNESCO Convention on the Promotion of the Diversity of Cultural Expressions (UNESCO, 2005) are the most obvious manifestations of this). Industrial policies—including those in the cultural and creative domain—have been criticized for several reasons. In the first place they are seen as distortionary, because they interfere with the investment decisions of economic agents (favouring some sectors over others) and the operation of the market (by potentially ‘propping up’ otherwise uncompetitive industries). There are also concerns about the ability of governments to accurately identify future growth sectors or companies (what is sometimes referred to disparagingly as ‘picking winners’), about the risk of regulatory capture by rent-seeking industries, and about the sustainability of ‘beggar thy neighbour’ policies where different countries and regions compete against each other to attract inward investment from footloose sources of finance. This last consideration explains why there are grounds to be sceptical about the long-run efficacy of support initiatives such as tax reliefs aimed at boosting national film or videogames industries.

The ‘Creative Economy’ ‘Creative economy’ arguments have emerged only in recent years as an independent rationale for intervention in the creative industries and, as such, are less developed than their market failure and industrial policy counterparts. Their emergence, particularly in Australia (QUT CIRAC and Cutler & Company, 2003), the UK (DCMS, 2008), and, more

472   Hasan Bakhshi, Stuart Cunningham, AND Juan Mateos-Garcia recently, other parts of Europe (European Commission, 2010b, 2010a), is linked to parallel developments in new growth theory, institutional economics, and evolutionary economics (Potts, 2011), which emphasize the importance of ‘intangible’ investments (Corrado, Hulten, and Sichel, 2009; in particular, knowledge) and innovation (which begins with creativity (Cox, 2005)) as long-term sources of productivity growth and competitiveness. Proponents of this approach emphasize that countries achieve long-term growth only by investing in the production of new ideas (Nesta, 2009). Although these ideas are to some degree non-rival and non-excludable in the way we described previously, imitating them is not in general trivial. The reason for this is that new ideas emerge within institutional systems (‘National’ (Edquist, 1997) or ‘Regional’ (Braczyk, Cooke, and Heidenreich, 1998) Systems of Innovation) that are networked in unique, historically determined ways, and endowed with tacit knowledge (such as management expertise) and complementary capabilities (for example, access to finance) that help those who develop them harness their value ahead of competitors. The cultural and creative industries, the argument goes, lie at the heart of such innovation systems, where they produce novel ideas and ways of thinking about—and seeing—the world, as well as skills and organizational models that other industries can acquire or imitate to enhance their ability to innovate. According to one version of this vision, some parts of the cultural and creative industries, such as advertising and design, play privileged roles in the innovation system by directly feeding innovation inputs into the production processes of businesses in other sectors (Potts and Morrison, 2009). These perspectives are complementary to the notion of the ‘culturization’ of the economy, and a school of contemporary thought that seeks to radically collapse the relations between culture and the economy—called by shorthand ‘cultural economy’. The concept of the culturization of the economy, first developed by Lash and Urry (1994), directly relates to our discussion of the creative economy by first distinguishing between the ‘industrialization of culture’ (Adorno and Horkheimer’s (1979) original dystopian version of Cultural Industries) and the more contemporary ‘culturization of industry’. ‘Ordinary manufacturing industry’, Lash and Urry (1994, p. 123) state, ‘is becoming more and more like the production of culture’. Lash and Urry’s culturization thesis sees not only standard cultural products and services growing as a proportion of the whole economy (that was the starting point for the whole idea of the Creative Industries) but also cultural ideas, processes, and dispos­ itions being recognized and adopted in non-cultural products and services like mobile phones, clothes, education (games-based learning), retail precincts (malls as entertainment venues), and so on.5 This is consistent with the emphasis we will shortly place on creative employment in wider labour markets, as these economic domains need creatively trained people to inform the culturization process. Howkins (2001) pushes the claims further with his take on the management of creativity, or ‘the economics of the imagination’. Howkins talks of special personality traits of creative people, creative entrepreneurship (which unlocks the wealth that lies in human capital), the ‘post-employment job’ (in other words, the portfolio career), the just-intime company, the temporary company, and the network office.

Public Policy for the Creative Industries   473 Content industries are for their part presented as suppliers of complementary goods that increase the uptake of digital infrastructure services that enhance growth (in the language of Stephen Carter’s Digital Britain review, they are the ‘poetry’ that drives investment in digital ‘pipes’ (Carter, 2009)), lead users of advanced technologies whose innovation they pull through sophisticated demand (Chapain et al., 2010), and recruiters of high human capital individuals (Williams, Hillage, Pinto, and Garrett, 2012) whose skills are transferrable to other parts of the economy. In studying the Creative Economy as a ‘networked’ ecology, this framework challenges long-standing distinctions between the creative industries and other, technology-intensive sectors such as ‘high tech’ manufacturing, IT, pharmaceuticals, and life-sciences that have traditionally been the subject of innovation (science and technology) policy. The strong presence of creative professionals across many parts of the economy outside of the cultural and creative industries deserves a special mention. Studies within the ‘Creative Trident’ framework, which have used census and labour force surveys in Australia, the UK, France, and other parts of Europe to examine the industries where such creative occupations can be found, have shown that there are more creative professionals working outside of the creative industries (‘embedded’) than inside them (Higgs and Cunningham, 2008; Higgs, Cunningham, and Bakhshi, 2008; Growth Analysis, 2009).6 To take an example, Pagan et al. (2009) illustrate the scope of their contributions to the development and delivery of healthcare goods and services, the initial training and ongoing professionalism of doctors and nurses, and the effective functioning of healthcare buildings. Creative activities within healthcare services are also undertaken by medical professionals and patients. Key functions that creative activities address are innovation and service delivery in information management and analysis and making complex information comprehensible or more useful, assisting communication and reducing psycho-social and distance-mediated barriers, and improving the efficiency and effectiveness of services. This approach to the creative workforce shares similarities with, but is substantially different from, the high-profile work of Richard Florida which brings together white and ‘no-collar’ workers within the orbit of the creative class (Florida, 2002; Boschma and Fritsch, 2009; Clifton, 2008). While Florida’s wider thesis has been the subject of much criticism (Markusen, 2006; Pratt, 2009; Nathan, 2007), both approaches highlight the importance of those in creative occupations being studied in their own right, rather than focusing narrowly on industries in which they work. Importantly, and analogously to the way in which innovation policy encompasses both the public (primarily basic science) and private (applied and experimental development science and engineering) sectors, some advocates of the Creative Economy framework grant special importance to the role of not-for-profit arts and cultural activ­ ities within the creative economy and (by extension) the innovation system.7 Conceptually, creative activities like painting, writing, and performing are often described as being at the centre of the creative industries, as pure acts of content creation (Throsby, 2008; KEA, 2006). In the Staying Ahead report to the British government

474   Hasan Bakhshi, Stuart Cunningham, AND Juan Mateos-Garcia (Andari et al., 2007), the creative dimension of these activities is described as their creation of ‘core expressive value’, an attempt to commonly link these activities to the institution of copyright as per the official UK definitions.8 According to this view, activities in the creative industries like distribution and publication entail the direct mass exploitation of creative outputs with a high degree of expressive value, whereas sectors such as design and software benefit indirectly through their wider commercial use of the expressive value. An implication is that any commercial benefits that spill over from core artistic activity to the wider creative industries and which are not reflected in market prices (a market failure) provide a further rationale for public support. That there are very close links between the UK’s arts and cultural sector and its commercial creative industries is beyond doubt. Even a cursory look at the career biographies of the UK’s most commercially successful creative talent, for example, reveals that many of these experienced their formative moments in the subsidized sector. Albert et al. (2013) report that almost a third of talent working in commercial theatre had its ‘break’ in subsidized theatre, or moved fluidly between the subsidized and commercial sectors. As it is, this research reveals much complexity in the relationship between subsidy and commerce, with large numbers of people working in the subsidized arts attributing key moments in their career development to their experiences in commercial theatre. Perhaps the ‘spillover’ argument that resonates most with cultural institutions in the subsidized sector is that they take socially valuable risks which the wider creative industries are not prepared to. Sometimes this is expressed as the subsidized arts being an ‘R&D lab’ for the creative industries. Dempster (2006) describes the exceptionally high risks that characterize innovative theatrical productions, for example. Aside from the usual demand uncertainties (Caves, 2000), the collaborative development process is highly uncertain itself—depending as it does on the quality of a large number of individual contributions and also the coordination between them all, and over time. Using the case study of Jerry Springer the Opera Dempster shows how ‘staged investments’ can facilitate the development of a venture which is not otherwise commercially viable. The subsidized arts—in this case, the inputs of the Battersea Arts Centre, the Edinburgh Fringe Festival, and the National Theatre—all played a critical role in the developmental stages before the production went on to great commercial success in the West End and beyond.

Policy in the UK: Before and Up To the Creative Industries Having surveyed the main economic rationales underpinning government policy in the arts, cultural, and creative industries, we now move on to comment on how these policies have been framed and implemented in practice, with a specific focus on the UK.

Public Policy for the Creative Industries   475 Each of the policy frameworks that we consider has included (and excluded) distinctive subsets of the cultural and creative industries, articulated a vision about their role in society and the economy, defined and evidenced (or not) specific market failures in their provision that may prevent the fulfilment of this role (market failure having been the dominant evidence paradigm in UK policy (Ridge et al., 2007)), and implemented specific policy interventions to address them. We note at the outset that the transitions between policy frameworks, driven by wider technological, societal, economic, and ideological shifts, have not been truly revolutionary (in the sense of wholly displacing each other), but rather cumulative. However, that does not mean they have not been controversial.

Cultural industries Until the 1990s, the UK’s cultural policy as such focused primarily on the visual arts, music and performance (including theatre, ballet, and opera), libraries, and museums and heritage. The key bodies in charge of cultural policy were the Department for National Heritage (established in 1992, taking on responsibilities previously carried out by the Home Office, the Privy Council, and the Departments for Education and the Environment) and the Arts Council of Great Britain, an independent body formally set up under J. M. Keynes in 1946, to channel government funding into cultural institutions. Support for these activities was generally justified in terms of their public good and merit good benefits—on the grounds that they generated wide societal benefits such as social cohesion and an enlightened and well-informed citizenry, and helped preserve national identity. In the absence of public subsidies, it was argued, they would not take place to the extent that was socially desirable, or in the case of some cultural activities, such as opera, which required substantial fixed investments, they would not take place at all. Public funds were further argued to substitute for commercial revenues that might compromise the quality of artistic outputs, reflecting Adorno’s critique that art and culture become commoditized (Adorno and Horkheimer, 1979). Although Adorno’s criticism was not formulated in terms of a market failure, it is not difficult to interpret it in that light: the issue was not whether cultural production could or could not be organized through the market (because it self-evidently could), but that when it was, some of its defining features (e.g. ‘uniqueness’, ‘truthfulness’) became corrupted by capitalism’s accumulation logic. Cultural industries, as a concept renovated in the 1970s from Adorno’s (and the Frankfurt School’s) anti-commercial bias, challenged this traditional purview for cultural policy (Garnham, 1987). This account of cultural industries included the industrial strength of sectors such as broadcasting, film, and music and emphasized that significant cultural demand from consumers was being met by such enterprises. While massmedia markets were given their due in this account, there remained further market failures, which furnished reasons for the state to intervene. These included the need to

476   Hasan Bakhshi, Stuart Cunningham, AND Juan Mateos-Garcia mandate a major role for the BBC (and, in the 1980s, Channel 4) to address the civic, nation-binding function considered essential in the era antecedent to today’s superabundant electronic media offer. In fact, so successful has the BBC been in occupying a central role in the UK communication landscape that much media policy in recent decades has concerned itself with addressing competition concerns and the potential of the BBC to crowd out private sector initiatives (Cave, Collins, and Crowther, 2004). Another powerful historical reason for state intervention does not follow a strict economic logic but is also based on nation building and cultural maintenance. The best-known example of a cultural industry operating along the lines of Adorno’s logic of cultural commoditization and capitalist propaganda was of course Hollywood, and it was a concern about its cultural hegemony in the UK that first informed the formulation of policies to support the UK film industry, the only commercial cultural industry to benefit from government funding at the time (Magor and Schlesinger, 2009). This illustrates how indigenous cultural production for the dominant cultural medium was seen as an expression of national identity, and thus deserving of protection—first through quotas, and then subsidies—against its overseas competitors.

The advent of the creative industries By the 1990s, several trends had undermined the dominant approach to cultural policy-making, particularly in regards to the opposition it set between ‘high art for art’s sake’ and ‘popular, commercialized art’ (Garnham, 1987). On the intellectual ‘supply side’, British cultural studies had since the 1970s paid more attention to the ways in which audiences actively reconfigured culture (rather than passively absorbed it), and challenged traditional barriers between ‘high-brow’ and ‘low-brow’ culture. It also highlighted the contradictions between predictable revenues in a capitalistically organized cultural industry, and an audience’s demand for novelty. In doing this, it reconceptualized creative professionals and artists, from exploited victims of capitalism to cultural entrepreneurs (Leadbeater and Oakley, 1999). On the policy ‘demand side’, the need to formulate new growth strategies in the face of deindustrialization since the 1970s—and which stepped up a gear in the UK in the 1980s—had led to the formulation of local development strategies (exemplified by the Greater London Council) that saw cultural and creative activities less primarily as a source of cultural value, and more one of employment and urban regeneration (Hesmondhalgh and Pratt, 2005; Mulgan and Worpole, 1986). Overall, the perception of a mismatch between what cultural and creative industries in the UK were offering, and what audiences wanted (which could no longer be explained away by arguments about the elitism of the arts) prepared the ground for the advent of the creative industries framework, which brought a whole new set of market-driven and commercialized providers of cultural and creative goods and, crucially, services, to the attention of policy-makers.

Public Policy for the Creative Industries   477 Meanwhile, globalization, and increasing worldwide demand for cultural and entertainment goods reinforced by the greater access given by digital technologies, led to the replacement of a ‘market failure’ rationale for government intervention in the arts and cultural arena with a ‘market opportunity’ one—in other words, a case for a more active industrial policy for the creative industries (BIS, 2010; Cunningham, 2006). What the DCMS 1998 and 2001 Creative Industries Mapping Documents (British Council, 2010) did was to put forward the creative industries as a driver of economic growth through the transformation of individual creativity and talent into intellectual property (and in particular copyright) to be exploited commercially. Crucially, the definition of the sector was taken to include suppliers of creative services such as advertising and design, and controversially, software. The key thrust of the ‘creative industries’ way of thinking was that these were sectors where the UK enjoyed a competitive advantage over other countries, and that if only barriers to entrepreneurialism and growth were removed, they could make an even more substantial contribution to the UK economy. The Mapping Documents provided a frame for areas for policy intervention that would be later articulated in further detail in government reports like 2008’s Creative Britain strategy for the creative industries. They included talent generation through the education system and the strengthening of the copyright regime. The other main bar­ riers to growth were seen as a lack of business capacity (a manifestation of the predominantly small size of companies operating in the sector, as well as tensions between arts and commerce), and barriers to finance (Nesta, 2006). More evidence also emerged that the creative industries were characterized by high levels of innovativeness (Bakhshi and McVittie, 2009; for instance in terms of bringing new products and services to market, and finding novel ways to reach their audiences), a feature that would be further explored (including the possibility of spillovers into other sectors of the economy) in more recent attempts to develop creative economy policies.

The creative economy The principal conceptual preoccupations of the first ‘generation’ of creative industries policy we have just described were to map the newly defined industrial sector in respect of contribution to jobs and economic value-added, and to explore some of the policy avenues by which it could be better supported to grow. These were baseline considerations that did not yet seek to account for wider economic spillovers and contributions to other sectors or to consumption patterns and innovation processes in the wider economy. There were, however, several reasons to consider these relationships more expli­ citly. First and foremost, the original definition of the creative industries put forward by DCMS had a fuzzy boundary. What was ‘in’ and ‘out’ remained contestable and its relation to neighbouring sectors undecided (Pratt, 2000). In particular, and as already mentioned, there were concerns over the ‘promiscuous’ insertion of a broad definition of software in the original DCMS characterization

478   Hasan Bakhshi, Stuart Cunningham, AND Juan Mateos-Garcia (Hesmondhalgh and Pratt, 2005). Critics argued that this was done in order to boost its size. But it could also be argued that it was a function of the highly aggregated SIC (Standard Industry Classification) codes by which industry sectors perforce were classified. At the same time, there were obvious overlaps between the ‘content’ and ‘digital industries’, leading to the conflation of the culture and information sectors (Garnham, 2005), the already discussed strong presence of creative professionals outside of the creative (including ‘digital’ (Bakhshi, Freeman, and Higgs, 2013)) industries, as well as studies suggesting the presence of spillovers from creative activity into other high tech sectors (Chapain et al., 2010). Thus, there has been some evolution in policy-makers’ interests and a broadening of the remit of the state’s purview of creativity and the economy (Cox, 2005), which at times has caused some tensions with traditional sectoral interests, most obviously in the Digital Britain and Hargreaves reviews of intellectual property (Carter, 2009; Hargreaves, 2011). The sector skills councils—Creative Skillet, Creative and Cultural Skills, and e-Skills UK, whose focus is on the value of creative inputs into the broader economy—have seen their profile raised within policy (as seen, for example, in their prominent role in the government’s Creative Industries Council). The Next Gen review of skills initiative (Nesta, 2011), which started off as a review of the skills needs of two creative sectors (videogames and visual effects), quickly evolved into a general campaign for more effective technology education in schools, straddling a number of different interest groups (both creative industry and non-creative industry). The Cox Review of 2005 was an earlier example: it recommended a series of measures to stimulate the use of design solutions in different sectors of the economy (Cox, 2005). Yet, it is fair to say that concrete policies to support this wider concept of creative economy have been few and far between in the UK. It was left largely to regional policy-makers and, in particular, in England the now defunct regional development agencies to pick up the baton from the Cox Review, with relatively small-scale programmes like Designing Demand led by the Design Council, which twinned small and medium enterprises (SMEs) with mentors with design skills (Design Council, 2008), and innovation voucher schemes like Creative Credits, piloted by Nesta in Manchester in partnership with the North-West Development Agency, which connected creative service businesses with SMEs (Bakhshi, Edwards, Roper, et al., 2013). National policy-making remains a far cry from the rhetoric of creative innovation in government documents like the 2008 Innovation Nation White Paper (DIUS, 2008).9 Undoubtedly, the badly underdeveloped state of the evidence base on the creative economy helps explain this. In the absence of clear definitions, agreed metrics, and rigorous understandings of its place in the wider economy, we should not be surprised that policy-makers have struggled to develop policies to support it. Paradoxically, the success of the creative industries as a policy concept in the UK may not have helped either. There is a suggestion that in other countries, like the US, where

Public Policy for the Creative Industries   479 policy-makers have focused more on creative knowledge workers such as engineers, scientists, architects, artists, and writers—Florida’s creative class—the creative industries have not been seen as having a ‘monopoly’ over creativity (European Commission, 2010a; see also Dyson, 2010).

A Creative Economy Research Programme We briefly conclude this survey by sketching out priorities for a research programme to address the aforementioned gaps in the evidence base. We single out four areas as warranting particular attention: mapping, spillovers, knowledge exchange, and evaluating policy.

Mapping We need to ground our definitions of the creative economy in terms of where creative activity is genuinely taking place in the economy. As discussed, previous mappings have suggested that very large numbers of creative talent work outside of the creative industries in countries like the UK, Australia, France, and Sweden. However, industry defin­ itions dominate most policy discussions, at least in Europe, and are rarely connected to an analysis of creative occupations. Recent research has shown, for example, that some of the industry categories included for many years as ‘creative’ by the UK’s DCMS employed only small numbers of creative workers as a proportion of their overall workforce, whereas a number of sectors that had been excluded were intensive employers of creative professionals (Bakhshi, Freeman, and Higgs, 2013). Research is also needed on how the creative intensity of a sector’s workforce relates to the creative nature of its outputs, as per the original DCMS definitions.

Spillovers As we have discussed, a growing number of studies suggest mechanisms by which the creative industries may impart positive spillovers on other sectors of the economy: knowledge externalities on co-located firms, spillovers embodied in mobile human capital, and spillovers which operate through supply-chain links. But whether or not these are genuine spillovers, and therefore constitute a market failure which warrants policy intervention, depends crucially on such linkages with the wider economy not being reflected in market prices. No existing studies that we are aware of rigorously establish this.

480   Hasan Bakhshi, Stuart Cunningham, AND Juan Mateos-Garcia

Knowledge exchange Traditionally, the process by which university research impacts on innovation has been thought of as one in which knowledge outputs are codified, packaged as intellectual property, and then licensed out in the commercial marketplace (Lambert, 2003). Crossick (2006) warns of the damage that is done by viewing the value of research to the creative economy in terms of this model. In creative disciplines, he argues, ‘it is more difficult to identify—let alone to bottle, protect and transmit—the new knowledge. It [is] articulated through [the artist’s] creative work, [now] and in the future.’ If true, this has significant implications for the nature of any knowledge spillovers and the design of policies to exploit them. We need quantitative research into the particularities of knowledge exchange in the creative economy. Knowledge activities in the creative economy, in our view, are better thought of as sitting along a spectrum of different ‘knowledge modes’ with characteristics that are more or less ‘scientific’ (predictive, universalizable) and ‘humanistic’ (interpretive, intuitive) (Bakhshi, Schneider, and Walker, 2009). Research is needed into what approaches best promote knowledge exchange in these different cases.

Evaluating policy In devising policies in areas like the creative industries, which are so poorly supported by a prior evidence base, it is even more important than usual for policy-makers to design interventions in a way that their impact can be rigorously evaluated (Bakhshi, Freeman, and Potts, 2011). New policies should have clear and measurable objectives and have clear data strategies in place so that their performance against these objectives can be assessed. Evaluations need to be research-led and, where possible, make use of random assignment to establish the additional impact of new policies (Bakhshi, Edwards, Roper, et al., 2013).

Notes 1. It should be noted that in the sections that follow, we are eclectic in our use of economics concepts and frameworks, and some may argue, excessively loose in stretching the term to encompass the innovation studies tradition which much research on the ‘creative economy’ adopts. 2. Note that reliable estimates of local authority funding in the UK which are independent of other funding sources are hard to find (many local authorities themselves are funded by Arts Councils and other public funding sources). 3. And in fact turns negative, consistent with the idea that workers are willing to accept lower wages to live in areas with more developed cultural amenities. (Bakhshi, Lee, and Mateos-Garcia, 2013. Also see Rauch. 1993, for similar evidence in the US.

Public Policy for the Creative Industries   481 4. For example, the tax breaks and subsidies offered to indigenous videogames developers in Canada and France. In some countries, however, such measures are justified as copycat measures to ‘level the playing field’, as in the case of the development tax breaks for video­games in the UK. 5. Also see Stoneman (2010) on the growing importance of what he calls aesthetic or ‘soft’ innovation in non-traditionally creative industries, such as pharmaceuticals and financial services. 6. P. Higgs and S. Cunningham, ‘Creative Industries Mapping:  Where Have We Come From and Where Are We Going?’ Creative Industries Journal 1(1) (2008): 7–30; P. Higgs, S. Cunningham, and H. Bakhshi, Beyond the Creative Industries: Mapping the Creative Economy in the UK (London:  Nesta 2008); Growth Analysis, ‘Cultural Industries in Swedish Statistics:  Proposal on Delimitation for Future Mappings’, mimeo (2009); Deroin (2011) reviews similar work done by culture ministries in continental Europe, including the French Ministry of Culture and Communication. 7. See, for example, KEA, (2009), which argues that ‘culture-based creativity’ makes a strong contribution to innovation in Europe. 8. The DCMS defines the creative industries as ‘those activities 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’. See British Council, 2010. 9. Arguably, the European Commission has been quicker to explore policy interventions aimed at strengthening the creative economy. See also interventions like the Productivity and Innovation Credit in Singapore and the discussion in GPrix, 2012.

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Chapter 26

Gl obal Produ c t i on Net works i n t h e Creative In du st ri e s Neil M. Coe

Introduction It is somewhat curious how, given the burgeoning work on both creative industries and global production chains/networks in recent times, research which intersects the two has largely been noticeable by its absence. While there are examples—for example Mossig (2008) loosely applies global commodity chain analysis to movie distribution, and Pratt (2008) stages an initial discussion of cultural production chains—such work appears to still be in its infancy. Whereas global chain/network research has hitherto tended to favour analyses of agricultural and manufacturing sectors such as horticulture, electronics, and auto manufacturing, creative industry research has focused primarily on the sub-national clustering of such activities and the policy prescriptions that might help foster such agglomerations. The central premise of this chapter is that there is tremendous potential for a much more sustained and prolonged dialogue between these two strands of research. More specifically, I will argue that a particular form of global production system analysis—the global production network (GPN) approach—is especially well attuned to exploring the dynamics of the creative industries. The GPN framework offers a heuristic framework for interpreting the evolving multi-scalar geographies of the global economy (see Coe, 2009, 2012 for overviews). It emphasizes the complex intra-, inter-, and extra-firm networks that constitute all production systems, and explores how these are structured both organizationally and geographically. A GPN can be broadly defined as the globally organized nexus of interconnected functions and operations of firms and non-firm institutions through which goods and services are produced, distributed, and consumed (Henderson et al., 2002). The operationalization of the framework depends on the analysis of three

Global Production Networks in the Creative Industries   487 interrelated variables. First, processes of value creation, enhancement, and capture are scrutinized. Second, the distribution and operation of power of different forms within GPNs is considered. Third, the embeddedness of GPNs—or how they constitute and are re-constituted by the economic, social, and political arrangements of the places they inhabit—is investigated. The chapter unfolds in two main sections. First, I explore how the GPN perspective might constructively be applied to exploring dynamics within the creative industries. More specifically, I will argue that researchers need be attuned to all the multi-scalar and cross-activity connections that constitute creative sectors. Second, I will use the example of the film and television industries to further illustrate my arguments. My wider contention, however, is that there is considerable mileage in adopting a GPN approach in order to understand dynamics across the full gamut of creative industries.

GPNs in the Creative Industries The core characteristics of the creative industries have been widely debated and detailed (e.g. Turok, 2003), encompassing high degrees of uncertainty about consumer response and the associated levels of financial risk, the high levels of skill and talent involved, the dependence on temporary coalitions of diverse and often mobile workers, and the heterogeneous and irregular nature of the commodities produced. Much creative industry research has explored the urban agglomerations of activity that underpin the production of creative industry commodities (e.g. Currid and Williams, 2010; Florida and Jackson, 2010). This work has provided rich discussion and illustration of the various traded and untraded interdependencies that exist within such agglomerations, as well as the distinctive geographical character of the commodities produced in different places. There have also been important analyses of the ‘creative’ urban policies underpinning clusters (e.g. Markusen and Gadwa, 2010) and the mechanisms of inter-place policy transfer and emulation (e.g. Evans, 2009). What Flew (2010) terms the ‘cluster script’ is not without limitation, however. In part this reflects the limitation of the cluster concept itself, which tends to conflate simple clustering due to urbanization economies with more specialized forms of localization economies. More broadly, however, such scripts ‘have significant limitations arising from how they privilege amenities-led, supply driven accounts of urban development and how they fail to adequately situate cities in wider global circuits of culture and economic production’ (Flew, 2010, p. 85). In sum, while there is a strong body of existing research on the creative industries and related policy prescriptions, such work is arguably overly preoccupied both with the actual production of creative commodities and the intra-local relations that (may) underpin such production. Adopting a GPN frame, however, has the potential to ‘open-up’ our understandings of these industries in both functional and geographical terms. Functionally, in foregrounding the entire range of economic activities involved in the delivery of a particular good or service, the GPN approach helps reveal the domains

488  Neil M. Coe of finance, marketing, distribution, and consumption that can be equally important, if not more so, than production dynamics in creative industries. Many creative industries combine artistic-driven production processes with corporate-driven distribution and marketing networks; indeed the severe challenges of securing access to the interconnected and constricted domains of finance and marketing/distribution should perhaps be added to the list of core characteristics of these sectors. Exploring the networks of connections between all the different actors in the production system can start to lay bare the central importance of power and value dynamics. In the GPN approach power is seen as relational, meaning that it is not a commodity that can be accrued like money or land, but rather it varies according to the actors involved in the network, the structural and informational resources (i.e. rents) that they have at their disposal, and the skill with which they are mobilized. Value, in turn, is used to refer to the various forms of economic rent that can be realized through market as well as non-market transactions within GPNs (Kaplinsky, 2005). Rent is created in a situation where a firm has access to scarce resources that can insulate them from competition by creating barriers to entry for competitor firms. Firms in GPNs may be able to generate rents in a number of ways such as, for example, asymmetric access to key product and process technologies (technological rents), the particular talents of their labour force (human resource rents), or from establishing brand-name prominence in major markets (brand rents). Individual firms will not be able to create all of the different forms of rent, but rather will specialize to a degree on certain kinds of inter- and extra-firm network relations. Mobilizing these notions of power and value can serve to demonstrate how the inherent symbolic value of creative industry commodities morphs into, and combines with, other forms of economic rent—concerning for example branding and market access—allowing powerful actors within the wider GPN to capture disproportionate shares of the profits created. Put bluntly, the actors that initially create the value in the creative industries may be different to those that capture the surpluses that are ultimately generated. In this way, GPN analysis can also help to inject a sense of political economy into a research field that sometimes seems to read creative industry dynamics in rather neutral terms (cf.Garnham, 1987; Christophers, 2009). Needless to say, many creative industries are highly competitive arenas shaped by powerful corporate interests, resulting in clear patterns of ‘winners’ and ‘losers’ in both economic and spatial terms. From a geographical perspective, GPN analysis in turn seeks to unpack how the relations between the various actors within the production system as a whole entail complex combinations of local and non-local connections. Put another way, it draws explicit attention to the connections between different kinds of clusters of creative industry activity, and how they are organized at different spatial scales (e.g. national, macro-regional, global). These ‘extra-local’ connections may serve several purposes, encompassing the temporary or long-term hiring of creative talent, the formation of production partnerships, securing finance capital and investment, and accessing non-local markets. As Mossig (2008, p. 43) argues, ‘clusters and their markets do not exist in a vacuum: creative content, capital and creative talent are also traded and connected in global networks, bridging the physical gaps between these creative clusters’. Indeed, for centres below

Global Production Networks in the Creative Industries   489 the top strata of leading creative industry cities (Los Angeles, New York, London, etc.) such connections are pivotal. As Swords and Wray (2010, p. 307) describe, ‘for those cities that lack critical mass or indigenous expertise, external networks and connections that extend beyond the city and the region become crucial vehicles for firms and individuals attempting to tap into national and international creative production networks’. As noted above, these are inevitably relations of power and control; the geographical perspective inherent in GPN analysis also helps to explain how different places assume different positions within urban hierarchies of creative industries, and how significant economic value can be captured in localities other than where it was initially created. There are two further benefits to adopting a GPN perspective. First, the emphasis on embeddedness serves to place the creative industries within their multi-scalar institutional regulatory contexts. Three specific yet interrelated forms of embeddedness are employed within the GPN framework. Societal embeddedness connotes the importance for economic action of the cultural, institutional, and historical origins of the economic actor in question. Network embeddedness, in turn, captures the degree of functional and social connectivity within a GPN and the stability of the relationships involved. Territorial embeddedness captures how firm networks are ‘anchored’ in different places. GPNs do not merely locate in particular places; they both shape, and are shaped by, the institutional and regulatory contexts in which they invest. This last dimension is particularly important in the creative industries. It has been well documented that such sectors are increasingly seen as important tools of local economic development and that a wide variety of financial incentives have been created in order to try and stimulate and sustain creative industry growth. State agencies of different kinds that get involved in the protection or stimulation of creative industries should not simply be seen as part of the background context, however, but as integral elements of the value dynamics of GPNs. Indeed, the argument can be made that public subsidy regimes of different kinds are an increasingly important shaper on the landscape of creative industry production. And this is not simply the domain of local cluster initiatives; in some creative sectors it has become an international competition for jobs and investment involving government intervention at different spatial scales (e.g. national, regional, and local). In broader terms, such analysis moves beyond the ‘cluster script’ and offers a reminder of the continued salience of the national cultural policy context. Second, the explicit mobilization of a network—rather than chain—metaphor opens the potential for understanding the cross-sectoral connections between different components of the creative economy. As Weller (2008, p. 106) argues, ‘when production structures are imagined as a hierarchical linear formation . . . production and consumption are positioned as opposing ends of an elongated production sequence . . . The processes that create and reproduce consumer desires for finished products are generally underplayed’. In a fascinating study of Australian Fashion Week she details how the event creates a space for the intersection of four separate flows of value relating to media products, land and property, garments, and luxury consumables. In turn this highlights the need to further explore the technologies of branding, advertising, marketing, and distributing that serve to build consumer sentiments. This seems particularly pertinent

490  Neil M. Coe in an increasingly multi-platform creative economy—the ‘Harry Potter’ economy (Economist, 2009)—in which creative commodities are simultaneously branded across many market segments in order to try and construct global mass-media franchises.

GPNs in the Film and Television Industries The film and television sector—as one of the largest, most globalized and highly concentrated domains of creative industry activity—offers a powerful lens for exploring the potential of the GPN approach in more detail. The industry has evolved from simple internationalization processes dating back to the early twentieth century—i.e. Hollywood exporting its products—to exhibiting more complex and sophisticated globalization processes reflected in the functionally-integrated production and dissemination of film and television commodities in a system managed by leading global media conglomerates (Kaiser and Liecke, 2007). As Lorenzen (2007) argues, it is useful to further unpack the different dimensions to the globalization of the film and television industries. First, we can think of the rise of the number of places involved in film and television production, both in terms of so-called runaway production from Los Angeles—where there were 71 major film shoots in 1996, falling to 21 in 2008—and in terms of booming indigenous production centres in countries such as India, the Philippines, and Nigeria. Second, the global mass markets for film and television commodities continue to expand, alongside the use of new formats and distribution technologies to tap international niche markets. As the Economist (2011a, p. 65) pithily notes, ‘Hollywood has always been an international business, but it is becoming dramatically more so.’ Third, the financial landscape underpinning film and television production has been transformed, with strong growth in international co-productions of different forms, and the rise of a competitive landscape of financial incentives that is starting to transform both what gets made, and where it gets made. In the next three-subsections I consider these three inter-linked domains of production, marketing/distribution, and finance in more detail, utilizing the tools of a GPN perspective.

The globalization of production It has been well documented how the vertical disintegration of production processes has facilitated the cost-based dispersal of film and television shooting—or runaway production—from its traditional base in Los Angeles (Elmer and Gasher, 2005). The traditional film studios, meanwhile, have developed into fully-fledged media conglomerates that are not just concerned with feature films and television, but also music,

Global Production Networks in the Creative Industries   491 publishing, theme parks, retail stores, and advertising. The relocation of production has been actively managed by leading media conglomerates who have sought to foster ‘production networks, including territorial production complexes, while retaining centralized control of production and distribution’ (Christopherson, 2005, p. 37). In this way, they have been able to access ‘multiple, self-organized, and networked pools of skilled labour’ (Christopherson, 2006, p. 742) while reaping the economic benefits of shooting in lower cost locations. This has created a new international division of media labour in which transnational media firms exert control through ‘virtual integration’ rather than vertical integration. In short, as Goldsmith et al. (2010, p. 2) describe, ‘Hollywood . . . is now thoroughly enmeshed in an emerging system of globally dispersed film and television production’. Goldsmith et al. (2010) provide a useful account of the emergence of various different kinds of ‘local Hollywoods’—film and television production complexes—that have developed in response to these trends. Many different places now offer ‘extensive and complete packages of facilities, services, and natural and built environments’ to potential inward investors (Goldsmith and O’Regan, 2005a, p. 6), encompassing: ‘new’ centres that have developed significant industries over the past two or three decades, such as Vancouver, Wilmington, the Gold Coast of Australia, and Cape Town; existing national centres that have successfully entered into the GPNs of the leading media conglomerates, for example Toronto, Sydney, Budapest, and Johannesburg; older re-emerging regional centres that have sought to reinvigorate their film and television sectors, including Berlin, Prague, Hong Kong, Tokyo; and, at a more local scale, the reinvention of classic film making locations such as London’s Pinewood Studios and Rome’s Cinecittà. These differing and competing locations are ‘functionally integrated’ into global networks to differing degrees. For some centres, such as Vancouver, so-called ‘service’ production for Hollywood studios accounts for between 80% and 90% of total activity (Coe, 2001), in others such as Toronto there is a balance of foreign and domestic production, while for some cities, such as Munich, efforts to penetrate global production networks are largely unrewarded, leaving the film and television cluster to focus on domestic niches—e.g. family and art-house films—in which there is less competition (Kaiser and Liecke, 2007; Zademach, 2009). Importantly, however, the fortunes of these various nodes must always be read in relation to the wider global networks of the creative economy (Krätke, 2003). As Krätke and Taylor (2004, p. 461) describe, ‘today’s cultural economy is characterized by the globalization of corporate organization and the formation of huge media groups, which not only occupy a prominent position in the cultural economy of individual countries, but are also creating an increasingly global network of branch offices and subsidiaries. This global network of firms . . . has its local anchoring points in those centres of the worldwide urban network that function as media cities’. Importantly, Goldsmith et al. (2010) remind us that the formation of these global networks and local production complexes is not simply a matter of ‘Global Hollywood’ at work, fanning out production across the globe, but also actors in a variety of locations responding to these trends in locally and institutionally specific ways. ‘While we

492  Neil M. Coe can trace the expansion of a competitive market for international production, we must acknowledge that it is always to some degree linked to the local production ecology of particular cities, regions and countries’ (Goldsmith and O’Regan, 2005b, p. 58). Many localities have sought to provide, to differing degrees, the four key pillars of studios, specialized labour and support services, a range of user friendly locations, and financial incentives as part of an emerging film services approach to policy development and industry support (Goldsmith and O’Regan, 2005b). There have been many critiques of this approach, concerning the scope, character, and temporal volatility of the production that is attracted, and the links to wider modes of neoliberal, speculative urban regeneration. With respect to television production, for example, Scott (2004a) notes the tendency to relocate ‘low-end’ productions with low production values. Similarly, Gasher (2002, p. 142) describes Vancouver’s film sector as ‘an industry devoted primarily to the execution of film projects conceived, financed, and completed elsewhere, films that are subsequently imported back into British Columbia for commercial consumption. British Columbia supplies both the natural and human resources . . . to footloose Hollywood film companies, while the important creative elements of the story and character remain rooted elsewhere, usually in Los Angeles’ (p. 142). On the other hand, and as vividly illustrated in the Vancouver case (Barnes and Coe, 2011), positive feedback loops may develop in new production locales as they build capacity which makes them more attractive for further investment, suggesting that the external investment model can be viable in the medium-term at least. A more contentious area of the debate has been the extent to which production centres are able to leverage service production and the associated facilities and infrastructure to promote growth in indigenous film and television activity. The Canadian examples of Vancouver and Toronto, by far the largest recipients of sustained Hollywood runaway production, suggest that there are significant challenges in translating success in this way (Barnes and Coe, 2011; Davis and Kaye, 2010; Vang and Chaminade, 2007). Scott (2004a, p. 201) diagnoses that the runaway trend is likely to continue, but that Hollywood will maintain its innovative and control capacities, albeit ‘in symbiotic relation with a set of far-flung satellite locations’. Understanding film and television production from a GPN perspective entails looking beyond the myriad connections within clusters through which the commodities are actually produced to the multi-scalar extra-local connections upon which that production ultimately depends (Coe and Johns, 2004). The global media conglomerates are of central importance due to their role in ‘creating inter-urban connectivity by establishing the organizational links between many urban media clusters and the creative milieus of their respective locations’ (Krätke and Taylor, 2004, p. 462). And the reliance upon external connections is not only relevant to centres dependent on investment from Hollywood, as Lim’s (2006) rich analysis of the development of the Hong Kong film industry through mobilizing networks stretching across East and Southeast Asia reveals. In sum, adopting a GPN lens allows us to see beyond dynamics of local clustering and territorial embeddedness to reveal broader patterns of network embeddedness, and thereby how ‘the forces shaping the industry remain beyond the control and influence of

Global Production Networks in the Creative Industries   493 local actors. The agenda is shaped by the activities of large media companies, and local or regional production industries can only struggle to adapt to the adverse conditions of this environment’ (Robins and Cornford, 1994, p. 235). Understanding these relations of external control also requires broadening the perspective beyond production per se to include the domains of distribution and finance.

Global marketing and distribution networks It is now 20 years since Aksoy and Robins critiqued accounts that overemphasized film production processes at the expense of recognizing the importance of distribution dynamics. In their account of the restructuring of Hollywood from the 1950s onwards, they described how ‘by holding on to their power as national and international distribution networks, the majors were able to use their financial muscle to dominate the film business and to squeeze or use the independent production companies. Independent production was used to feed the global distribution networks that the majors had built’ (1992, p. 9). This statement is just as apposite today as it was when it was first offered. The corollary of the establishment of the global and often sub-contracted networks of production described above has been the sustained ability of global media conglomerates to exert a stranglehold over the global distribution of audiovisual commodities. In many ways, they are perhaps best conceptualized as marketing and distribution networks for films and television shows produced within local production hubs (Brito Henriques and Thiel, 2000). Hollywood invested early and heavily in large-scale marketing and distribution infrastructure, allowing leading studios to establish and maintain an advantage over other large film-producing markets such as India, China, France, and the UK (Lorenzen, 2007). These distribution systems have been strengthened as the global mass market for films and television shows has developed and, indeed, have been an integral part of the processes of market extension. For instance, while over the period 2001–2010 box office revenues in North America grew by around one third, they doub­ led in the rest of the world, driven by a cinema boom in the developing world, a concerted effort by studios to make films of global appeal, and global marketing pushes by the major studios. Russia’s cinema sector continues to expand rapidly, for example, and in 2010 Hollywood films made five times as much as local films, a growing ratio. The wider implication of these trends is that distribution concerns are playing an ever more important role within global production networks: ‘as foreign box-office sales have become more important, the people who manage international distribution have become more influential, weighing in on “green-light” decisions about which films are made’ (Economist, 2011a, p. 66). The leading media conglomerates have significant internal economies of scale that accrue to their distribution activities, by far the most concentrated part of the production system (Scott, 2004b). Their central focus is on the worldwide distribution of large-budget films, either through their own facilities, or various kinds of agreements

494  Neil M. Coe with distributors in other countries. This concentration of distribution allows continuous and extensive contact with large numbers of different theatre chains (e.g. to negotiate simultaneous release). They have branch offices in cities across North America in addition to extensive distribution and marketing operations overseas. The leading conglomerates also actively use their production subsidiaries (e.g. Disney’s Miramax, Warner’s New Line, Fox’s Searchlight) to distribute medium-budget films, leaving just a fraction of the market—usually small films—to independent distributors. If such independents do well, they quickly become a takeover target for the studios or their subsid­ iaries. The media giants also derive their power from having the financial muscle to invest in the marketing that is necessary to create international demand for a particular commodity. Over the period 1995–2005, for example, the average marketing costs for a major Hollywood film rose from US$18 million to US$36 million, and from a ratio of 49% to 60% of the basic production costs (Drake, 2008). As Mossig (2008, p. 56) summarizes, ‘the motion picture industry in Los Angeles/Hollywood has strong international distribution structures which are especially connected to the seven major studios . . . They coordinate and control the stages in the global commodity chain through the vertical integration of the global and local distributors through their own subsidiaries. They secure their oligopoly through cooperative agreements in the worldwide movie distribution sector’. Using the GPN frame to interpret these dynamics, what we can see is that the media conglomerates are actively using a global system of production to generate flexibility and reduce costs in the domain of value creation, while maintaining a stranglehold over the areas of value enhancement (marketing and branding activity) and value capture (distribution contracts). ‘The major studios’ power lies not so much in their ability to make good films . . . but in their ability to wring every drop of revenue from a film. With their superior global marketing machines and their ability to anticipate foreign tastes, they are increasingly dominating the market’ (Economist, 2011, p. 66). In this sense the extra-local networks that tie production complexes into GPNs are also relations of control and dependency in terms of the ability to access end markets for the commodities produced. Before turning to the global financial landscape, it is worth noting that this domin­ ance is not set in stone and there are counter-trends. The trade in programme formats which has emerged and burgeoned since the late 1990s provides an important example (Christophers, 2009; Moran, 2009a, 2009b). While one element of the global ‘trade’ in audiovisual products is the showing of ‘canned’ projects in different territories—often dubbed into different languages—there has been a growing exchange in programme formats. This trade encompasses up to four distinct components: the basic programme definition and contents; physical production aides such as artwork, set designs, etc.; the format ‘bible’ covering scheduling, ratings, etc.; and consultancy advice and in some cases production/co-production services. This market is largely dominated by game shows and reality TV, and works through a licence fee system. Interestingly, the geography of format exports is dominated by Europe, and the UK and the Netherlands in particular, with broadcasters and production companies such as the BBC and Endemol,

Global Production Networks in the Creative Industries   495 respectively, attracting strong revenues from format sales. In short, international format sales represent a new and distinctive method of capturing value from the globalization of television markets (for more, see Moran, 2009b).

Co-productions and shifting financial networks In part the power of the media conglomerates derives from the links between the financing and distribution of film and television projects, in the respect that a large portion of finance is often derived from pre-selling distribution rights for the finished commodity. However, just as the production and marketing costs of films in particular have continued to increase, the global financial landscape has also evolved as media conglomerates have sought different avenues for raising funds and spreading the risk of major productions. On the one hand, there has been a growing role for foreign financial institutions in financing Hollywood productions, a model which, as Phillips (2004) describes, serves to export risk to taxpayers and insurance policy holders. This speculative investment has created clear cycles in fund-raising; for example, investment was strong in 2006–2007, but fell sharply in the recession of 2008–2009, with a level of 25–30 banks active in film financing dropping to around 12. On the other hand, and in addition to these mobile forms of investment, there has been a significant rise in the numbers of international co-productions in recent decades which have sought to benefit from tapping into incentives available with multiple jurisdictions (Morawetz, 2008). The incentives themselves can take different forms, including wage credits, sales tax rebates, and reductions or waivers of capital tax, but all seek to attract private investments in film and television production within the locality. Indeed, Morawetz et al. (2007) make the provocative suggestion that these trends may have inverted the standard model with the result that productions now follow the availability of finance rather than the other way around. More specifically, Morawetz et al. (2007) distinguish between three different types of co-production, the second and third of which have underpinned the upturn in co-productions since the 1990s. First, there are those that are driven by creative reasons, for example whereby the plot demands cross-border production or creative inputs from different countries (e.g. low- to medium-budget European films). Second, there are co-productions driven by a search for finance, wherein the film is structured as a co-production in order to pool finance from several countries, and the constituent creative elements adjusted accordingly (e.g. single low- to medium-budget films). Third, and most intriguingly, they point to co-productions that are driven by international capital. Such films are structured as co-productions to exploit financial incentives in different territories and tend to be more mainstream in nature (e.g. medium- to highbudget films) and are often part of a slate of films. These arguments increasingly apply to expensive television dramas as well. A recent example is the BBC’s adaptation of D. H. Lawrence’s Women in Love, which aired in March 2011 in the UK. The two-part drama—set in 1910s England—was shot in South Africa (cf. Barnard and Tuomi, 2008). According to writer Billy Ivory, in addition to savings on labour costs there were ‘big

496  Neil M. Coe incentives from the South African government to get people there to help their economy . . . effectively we [were] being subsidized to work there’. Computer technology was subsequently employed to make the exteriors look more convincingly like pre-war Britain. Overall, this model can lead to the financing of previously unviable projects, and the net result at the global scale has been an influx of European capital into the US industry through co-financing initiatives. Moreover, ‘in the context of fierce tax competition, film production has become increasingly disembedded by financial dynamics that are beyond the control of a single country. Following financial capital that knows no nationality, the cultural identity of films made as co-productions is increasingly blurred’ (Morawetz et al., 2007, p. 440). Underpinning the increased availability of financial incentives in Europe in particular has been a shift in national cultural policies from an ethos of ‘protecting national culture’ to one of ‘building the local industry’. As Christopherson and Rightor (2010, p. 337) describe, ‘policy measures in European countries have transformed a film industry once predicated on protecting the expression of cultural distinctiveness, into one oriented toward attracting co-productions for global markets . . . State subsidies, once reserved for culturally distinct productions for national or international niche markets, now finance multi-producer films aimed at a broader audience’. The clear irony here, of course, is that funds previously designed to protect against Hollywood intrusion are now serving to subsidize the very same industry. Such incentives are far from unique to Europe, however, and are offered by several Canadian provinces and US states in particular—but also in Australia, South Africa, and many other locations—in a bid to attract runaway production. In that sense, neoliberally-inspired strategies of inter-place competition for economic development often intersect with shifting cultural policies. In some cases, interlocking incentives are available from local, regional, and national governments, together forming a key ‘pillar’ of the attractiveness of production complexes; ‘there is no doubt that the availability of finance for productions in a location is an important and underestimated driver of international production. Indeed, it is often the combination of these corporate logics with “film-friendly” locations offering rebates and other state and federal financial incentives that tips the balance in favour of production in a locality’ (Ward and O’Regan, 2007, p. 182). This seemingly irrational ‘quiet war’ for inward investment is premised on the assumption that the benefits of new spending and job creation will outweigh the expenditure, despite the evidence on the fiscal efficacy of incentives being somewhat mixed to say the least. The positive view on this approach is encapsulated in the following: ‘With no factories to build, the economic benefit is instantaneous. Jack Kyser at the Los Angeles Economic Development Corporation estimates that the average film (with a budget of US$32 million) leads to 141 jobs directly, from caterers to make-up artists, and another 425 jobs indirectly. And it generates US$4.1 million in sales taxes and income taxes’ (Economist, 2010, p. 47). Standing back, however, Christopherson and Rightor (2010), in a broad survey of North American cities, find limited evidence of net economic benefit, and in some states, evidence to the contrary. Instead, they point to a lack of rigorous evaluation of outcomes, biases in terms of who and where actually benefits,

Global Production Networks in the Creative Industries   497 and the consequences for other non-subsidized sectors of the economy (cf. Coles, 2010). Most pointedly, however, they argue that ‘the location decision-making process is driven by those who market and distribute media products: the major media conglomerates. As a consequence, when states undertake subsidy programs, they are not subsidizing the movie or the moviemaker but a major transnational firm such as the News Corporation or General Electric. It is their bottom lines that are padded with public money from Michigan or Connecticut’ (pp. 348–349). Interestingly by mid-2011, the Economist (2011b) was diagnosing the start of a process of ‘unilateral disarmament’ with several US states beginning to question the efficacy of these tax regimes. From a GPN perspective, such analyses reveal how these public incentive schemes have become central to the value-capture strategies of leading media conglomerates. The organization and geography of the production networks of contemporary films and television shows are increasingly shaped by the availability of territorially-specific subsidies. The territorial embeddedness of production in particular localities, then, does not only reflect the studios, services, workers, and locations available. From this perspective, the state and quasi-state agencies (e.g. film commissions) involved in promoting localities and offering subsidies should be seen as a key part of, rather than peripheral to, processes of value generation and capture within creative industry GPNs.

Resurrecting the importance of national context Before concluding, one further argument can be advanced about the benefits of an avowedly multi-scalar approach to creative industry networks—namely maintaining a place for the national scale in debates that can easily become polarized along local–global lines (e.g. local production clusters vs. global markets). In many creative industries, and the film and television industries are no exception, the national regulatory and market context is still an important shaper of industry dynamics. Put another way, societal embeddedness continues to leave a strong imprint on various aspects of creative sectors. Three brief examples can be used to illustrate this argument. First, and particularly in terms of television production, the fortunes of production clusters can be as much determined by their position in national urban media hierarchies as their role in Hollywood-funded global production networks. The dominance of London-based broadcasters in the UK is a case in point—the city accounts for approximately 70% of UK jobs in the production and distribution of film and video and 55% of jobs in television. Johns (2010), for example, details how the fortunes of the Manchester film and television industry are largely dependent on the commissioning decisions and regional (i.e. non-London) production targets of major broadcasters such as the BBC and Granada. For other UK cities such as Glasgow, achieving any kind of critical mass in film and television production is an ongoing struggle, with indigenous producers constrained by a lack of control over distribution and exhibition. In this context, the external links of the cluster are again all-important, but it is London, not Los Angeles, that is the key target (Turok, 2003).

498  Neil M. Coe Second, the way in which local production clusters intersect with global production networks continues to be heavily shaped by national regulatory contexts. Christopherson’s (2005) work is important in reminding us that incentives schemes are symptomatic of deeper shifts in national regulatory regimes. In the North American case in particular, they are reflective of neoliberal regimes of inter-urban competition but also national regulatory contexts that have allowed the concentration of corporate power in the hands of the leading media conglomerates, revealing ‘the continued role of national policy in constructing a global geography of production and distribution’ (p. 37). National cultural policies also continue to exert influence in certain contexts. Tinic (2005), for example, demonstrates the effects of national cultural policy and politics on the nature and geography of the Canadian television industry. Vancouver is somewhat isolated from the key broadcasting and domestic production centres of Toronto and Montreal, leading to an industry that is far more dependent on service production for American companies. Again, the importance of situating production centres within their national context is clear. Third, the trade in programme formats introduced above—which could on one level be read as indicative of media globalization—offers another window on the continued importance of local/domestic programming. Moran (2009a, p. 151) shows that programme formats are best thought of as ‘ . . . a flexible template or empty mould awaiting particular social inflexion and accent in other television territories’. They are often adapted on a number of levels—e.g. in terms of production values, aesthetics, or to reflect cultural sensitivities—to meet the needs of different national markets. ‘The advent of TV formats as a central element in the new TV landscape appears to signal not the disappearance of the national in favour of the global and the local, but its emphatic endurance or even reappearance’ (Moran, 2009a, p. 157). Other examples could be offered, including the development of national aesthetics and design cultures in the creative industries (Reimer and Leslie, 2008), but the basic point is well made—our attempts to insert production centres into wider GPNs must not neglect the way in which they are powerfully shaped by forces of societal embeddedness.

Conclusion This central argument of this chapter has been that—despite some initial forays—there remains considerable scope and potential for work that applies a global production network perspective to the creative industries. While the cluster approach has been very effective in revealing the dense webs of intra-place connections that underpin the actual production of creative industry commodities, GPN analysis serves to reveal the wider national and global networks of finance, marketing, distribution, and consumption within which almost all such clusters are unavoidably embedded. These are not mere appendages to the cluster approach, but rather the connections are central to the processes of value enhancement and capture within creative industries. A multi-scalar,

Global Production Networks in the Creative Industries   499 multi-actor perspective can also reveal the wider relations of power and control that structure which actors and which places benefit from enrolment into the wider GPNs. The implication for policy-makers and economic development officials is that forging extra-local connections—with, for example, potential financiers and distribution partners—may be just as important as promoting local networking.

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Chapter 27

Creative In du st ri e s and Devel opme nt Culture in Development, or the Cultures of Development? Andy C. Pratt

The aim of this chapter is to examine the relationship between the creative industries, culture, and development. It seeks to examine development debates in relation to the creative industries,1 and the ideas underpinning them, including that of culture. In a superficial sense culture and development seem a logical and positive coupling: a win-win situation. However, as the subtitle to this chapter implies, there are two competing modalities of the culture–development relationship. The first, which is termed culture in development, is characterized as being shaped by instrumental and idealist motivations. The second, cultures of development, draws upon a concern with the diverse ways in which culture is produced and consumed. The argument presented in this chapter finds in favour of the latter view for two reasons: first, cultural production, including that of creative products, has changed in its scale and organization and policy needs to respond to this; second, in absolute terms the creative industries play a more significant role in both the social and economic life of nation states: in short they have moved from the periphery to the mainstream. As a consequence the chapter concludes with a call for more investigation of the embedding of social, cultural, and economic [development?] of culture in places [is needed?]; and, local capacity building in the context of global cultural value chains and production networks.

Introduction One of the great surprises in recent years has been the documented growth of the creative industries (UNCTAD, 2008, 2010). Growth had been occurring for some years, but

Creative Industries and Development   503 it was not registered in official statistics, and therefore seldom gained the attention of policy-makers and their political masters. Research progress in the precision of definitions (UNESCO Institute for Statistics, 2009), and the subsequent establishment of the means of capturing data on the transformation of the creative industries have generated considerable debate. In part it created debate because it was unexpected: traditionally culture has been seen as at best dependent on the ‘real economy’, or more usually as an optional extra (for the rich). The added twist to the whole debate is that the creative industries have continued to grow through the recession, and that there is strong growth in the Global South. This suggests that culture may not be so easily dispensed with, even in hard times; and, that it is not simply a luxury enjoyed in the Global North. Thus, it turns out that the creative industries are both a more interesting, and perhaps a more complex debate, than many thought. In particular these headline figures should not lead us to forget important organizational, and in particular the power, asymmetries, of cultural production systems. It is useful to retrace recent developments. Stage one was a number of city regions and nation states, in the Global North, who sought to accurately assess the contribution of the creative industries to their territories. A second stage was the innovation of collation of data that represented an international picture. Both strands of work have pointed to the creative industries being a more significant part of local and national economies than previously anticipated, even in the Global South. Moreover, the rates of growth in the Global North and Global South were greater than averages in the economy; plus the impact of the recession seems less for the creative industries than the rest of the economy. These empirical findings throw up two issues. First, the relationship between the leading parts of the economy and the creative industries has always been characterized as dependent; the recent evidence does not support such a contention. This has led to an interesting debate about the relationship of the creative industries to the ‘rest’ of the economy. A second issue, the focus of this chapter, is the role of the creative industries in development. In many respects the linkage of culture and development is a political ‘dream ticket’. It is similar to that which has sustained debates about creative cities where, at a superficial level, no city wants to be a loser in the ‘most creative city in the world’ contest. Politically speaking, teaming economic development with an improved cultural offer of a city is an easy and popular combination. At the global scale the debate about ‘development’ is often characterized as worthy and difficult, and about poverty: which it undoubtedly is. However, the notion that trading local cultural resources could lead regions and nations out of poverty sounds either frivolous or utopian: the celebration of cultural diversity, economic growth, and self-reliance. Of course, the linkage of culture and development is not new, the ‘culture in development’ movement, where development is delivered using cultural instruments, has a long history; what the debate about the creative industries does is to posit that the creative industries will, like any other industrial sector, drive development prospects. However, one of the key findings of work on the creative

504  Andy C. Pratt industries has been that it does not fit the ‘generic model’ of industry, but is quite exceptional in its operation and organization. Accordingly, the question of culture and development has a number of complications and specificities. Moreover, it is non-normative in its form and operation. This creates plenty of opportunities for the misunderstanding and misapplication of ideas. The chapter draws upon the themes already raised by other authors elsewhere in this collection, but seeks to attend more closely to the implications of the growth of the creative industries in the Global South. It has a simple three-part structure; the first part reviews the framing of culture and development, and thus the normative expectations of the creative industries in development. The second part examines the challenges of the asymmetries of power and resources in the creative industries at various scales. The third section discusses responses that might be possible to alleviate such problems.

Culture in Development As has already been noted, the relationship of culture and development has both the appearance of simplicity and a popular political attraction. But, when examined more closely it discloses multiple challenges. There is a well-known and extensive literature on who is doing the development, to whom, or on behalf of whom. Moreover, there are debates about the variously imagined ‘aims’ of development—especially those that suggest, or desire, convergence with the path taken by the Global North as discussed and critiqued under the label modernization theory. In order to clarify this aspect of the debate we have sub-divided approaches into three ways in which culture has been enrolled into development; importantly this tends to characterize culture as a subject of development, not its object.

Idealist approaches There is a strong tradition of support for culture in the Global North—the justification is usually based upon idealism. The intrinsic value is idealized as a facet of human achievement and being. Good culture is celebrated and emulated as a characteristic of collective humanity. There has been much debate about the means, or even possibility, of identifying what is good culture. In the Global North it is commonly argued that the market undervalues culture, and thus it should be supported as a public good in itself by the state. Much emphasis has been paid to education and training systems that sustain and develop particular artistic sensibilities. There is an implicit question as to whether cultural values are relative, or if there is a natural order (one that should be defended by an elite). In popular expression this is the high versus low culture debate. Adorno and Horkheimer (1986 [1944]), concerned with what they viewed as the threat of Fascism and ‘mass culture’, viewed what they termed ‘the culture industry’ as

Creative Industries and Development   505 the problem: the enemy of ‘Culture’. They offered a particular reinterpretation of this division based upon the positive value of the ‘aura’ of the original piece of work and its individual appreciation, which seemed to offer a reinforcement of more traditional high-low divisions, by the means of production (craft or machine). Walter Benjamin’s (2008 [1936]) prescient critique troubled this easy division and the wholly negative characterization of mass production. Subsequent criticism has pointed to the historical and technological context of cultural production such that film and jazz, relegated to mass culture by the Frankfurt School pioneers, have been accepted latterly as high culture. Approaching the issue of culture from an analysis of the state, Benedict Anderson (1991) famously offered an insightful analysis of the historical role of culture, and the material goods, practices, and celebrations to sustain and constitute the nation state. On the one hand we can see how individual states in the Global North have used culture to bolster state-making; but it has used its version of cultural value in its interaction with the Global South, specifically in the case of colonial administrative systems internalizing such value judgements. On the other hand, post-colonial states have sought to assert their own value systems and state-building aspirations through culture. In this context the argument for the support of world heritage artefacts or sites can get very complex in terms of curation, ownership and control, and identity, let alone the availability of resources to manage them. Setting aside the question of who decides what is ‘world heritage’, the classic case of the return of artefacts to their original locations by museums of the Global North illustrates this dilemma well. To simplify: on one hand it is commonly asserted that artefacts can be better preserved for humanity by removing them; on the other hand, such artefacts are part of the local history and identity, and take their meaning from their context. Thus, culture, the state, and development are locked in tension and routinely expressed through terms like identity (national, regional, and local).

Instrumentalism A second perspective on culture and development is characterized by instrumentalism. In a flattering twist of a utilitarian approach, it is argued that because culture is so important and resonant with everyday lives it is a perfect vehicle for social and economic mobilization. So, a staple narrative of enlightened thought on development advocates the use of culture to achieve its ends. This is presented as a practical and effective solution adapting and using cultural traditions to engage the local population in collective action such as building a water well, or communicating health education. This sophisticated anthropological approach is a foundation for development agency practice in the Global South; and, as such when the term ‘culture and development’ is used, it is this usage that is most often referred to (Sen, 2000). It is not only the Global South: in recent years public bodies in the Global North have seized upon culture as a tool of social and economic regeneration, social renewal, and social inclusion (Bianchini and Parkinson, 1993). This has led to culture being used to

506  Andy C. Pratt deliver many and diverse objectives: evaluations have, as in the Global South, proven that they are effective and efficient. The nub of the issue is to ask what the objectives of such programmes are. Simply are they to achieve either some form of social inclusion, to enable other social and economic activities to occur; or to act as a carrier of a social or economic message? What they are not about is developing local culture (although that may be a spin-off, or an unintended consequence). A recent debate about the role of cultural diplomacy, elaborated more generally in Nye’s (2004) thesis on ‘soft power’, proposes culture to be deployed to achieve political aims. In state budgetary allocation systems the fact that ‘culture’ is associated with a project may lead one to assume that cultural benefits will or should follow, although as we have noted, this is not always the case. Moreover, cultural programmes, based on intrinsic cultural development are crowded out by such schemes.

Creative industries The recently reported growth in the creative industries has obviously led governments in the Global North and Global South to re-appraise policies and programmes (in this sense we are emphasizing the for profit, commercial, aspect of the creative industries). The aspiration of many is linked to viewing the creative industries as part of the know­ ledge economy: that is the ‘next big thing’. Creativity offers a way to leapfrog development, from agriculture to knowledge on one step; second, creativity is high value-added and high-skilled activity so this is a pathway to ‘upgrading’ whole economies. An earlier iteration of this process has been tourism and the means by which the Global South might capitalize on its comparative advantage of unique environments to gain foreign currency. However, the sunk costs of investment in tourism (especially real estate and transport logistics) are high; the move by some to ‘cultural tourism’ is an attempt to capture the highest value segments of tourism markets. The tension between pristine and unique cultural sites, and tourism (mass or elite) is substantial. Hence, it is not surprising that the creative industries have been considered by many nation states and cities as a potential source of growth. The real challenge here lies with the organization of production, specifically the engagement with international production and distribution systems that will not only enable products to reach markets, but to build markets for new products, and to ensure that profits are returned to the producers. It is to this aspect that we turn next, where culture is characterized as the object of development.

Cultures of Development Debates about the process of development implicitly refer to modes of organization and governance often simplified as either top-down or bottom-up. If we then turn to culture

Creative Industries and Development   507 we can consider its manifestations as economic, social, or political, or combinations thereof. We can see culture as naturalized, or as constructed, as imposed, or opposing. Moreover, we can see culture in anthropological practices or as alienated and commoditized; and everything in between. Since the 1980s the term ‘cultural industries’ has been used to ‘pluralize’ and critique the ‘culture industry’ model popularized by the Frankfurt School (Garnham, 1987, 2005). In so doing the balance of debate has shifted from an emphasis on aesthetics and consumerism to the varieties and specificities of cultural production. There is more to production than simply devising and making a product. Getting the product to market, and generating a demand is critical: the two must be synchronized with logistics and related markets. We know this even from mature creative industries markets in the Global North like film: a good product will fail if it does not have the right marketing, and is not released at the right time and place. How much harder the task is for creative products producers from the Global South seeking entry into markets in the Global North, as well as within the wider Global South. In a sense such an argument can be applied to any product; but there are additional peculiarities and specificities about cultural products that shape success or failure, and the aim of this section is to review these. We take our lead from the normative position adopted by both those in the media and communication studies tradition, cultural economics, and the policy community. In this literature the prime concern is with the regulation of monopolies. We begin by considering what are characterized as ‘bad’ monopolies, those associated with market distortions. We contrast these with ‘good’ monopolies that are associated with co-location.

Ownership and control There is a strong tradition in both economics and media and communications studies concerned with the analysis of the concentration of power and control of media operations and the tendency toward, and consequences of, the resultant monopolies (Bagdikian, 2004; Herman and McChesney, 1997). The free trade opposition to monopolies is not a new story; however, significantly, it has been argued that cultural production is peculiarly susceptible to monopolies (due to the unique organization of production, and the economies of scale)(see ‘Sunk Costs and the Dynamics of Creative Industries’ by Bakker and ‘Digitizing Fads and Fashions: Disintermediation and Glocalized Markets in Creative Industries’ by Hirsch and Gruber). Moreover, there are the issues concerning the political or social/cultural consequences of editorial power wielded by few hands, which may be in opposition to democratic society; this is a point that is brought into sharp focus when the ownership of the news media is discussed (Curran and Seaton, 2009). Likewise, with respect to film, the Paramount Case2 in the USA is perhaps the most clear cut case of government action in break-up and restructure of the film industry to avoid the worst excesses of monopoly control (Christopherson and van Jaarsveld, 2005). Despite legislative and legal action on monopolies, the ever-evolving affordances

508  Andy C. Pratt of technological convergence have generated an intensified concern with concentration and control as well as its incipient exclusions (Jenkins, 2008). A striking example is the field of music where just three conglomerates now dominate the global market, and debate continues both against this state of affairs (monopolies and foreign control) in principle, and via evidence of market and cultural distortion that ensues. There are parallel debates about the power that such control endows to particular nation states where such music media are concentrated, especially the case of the US, where economic power is claimed to support a cultural hegemony (Miller, Nitin, McMurria, Maxwell, and Wang, 2004; Negus, 1999).

Trade and regulation Just as the opposition to monopolies is foundational for neo-classical economists; so is the support of free trade and the belief in equilibrium of markets between supply and demand. On one hand, the asymmetries of global trade can be interpreted as a failure of market logic, or symptom of insufficient market control. On the other hand, asymmetries could be a result of regulatory and institutional forms that are by their nature locally differentiated. The world as it is is clearly not ‘flat’ in the neoliberal sense. In a highly differentiated world with asymmetrically structured patterns of trade and institutions: a one-size-fits-all approach to governance is doomed to failure (Pratt, 2009b). Accordingly, there is an active debate about the regulation and governance of trade that addresses local and global structural or historical inequalities.3 For example attention is paid to the close relationship that media organizations’ lobby groups have on the national and international policy arena, and how regulations, especially in the field of intellectual property issues and copyright, favour the norms of US, or developed countries’ business norms, and business environments. Thus, for some the internationalization of generic intellectual property (IP) treaties is in effect a means of creating a market environment suitable for developed countries, one that suits already well developed practices and institutions (Lessig, 2004). It is these institutions and practices that developing countries often find difficult to resource and police. Thus, it may be argued that IP non-compliance could be an unintended consequence of developing countries’ market power, or trading position, or cultural protection that renders it outside of, or in opposition to, global agreements. In a more orthodox interpretation of trade and regulation, quota systems limit, or protect, economically weaker trade partners so as to shield the local trade in products that may have particular local meaning or significance. On the other side of production, allowances for subsidies of particular products that have local cultural meaning have also been negotiated. This is in essence the field of the much-disputed ‘cultural exception’ to trade, and has been deployed specifically by France and Canada, against US goods (Acheson and Maule, 2006; Miller et al., 2004). Of course, nation states with less political and economic power are less able to oppose the status quo; that status quo may be far from equilibrium or equality, viz. the ‘Americanization’ of culture.

Creative Industries and Development   509 Next we can turn to the consequences of spatial concentrations instead of organizational ones. Of course the two are commonly related, cause and consequence. However, in contrast to organizational concentration, spatial concentration is generally regarded as something to be promoted, and aspired to.

Global hubs and clusters There is striking inequality of the concentration of creative industries in a small number of global cities (Picard and Karlsson, 2011; Scott, 2000, 2004). Moreover, other work points to the fact that within nations there is also a massive concentration inequality between the capital city and the rest (Power and Nielsen, 2010). Not all creative producers fit this model, and some industries have different patterns; but the salient point is that creative industries are primarily urban, and predominantly a global city phenomenon (Pratt, 2006). One argument is that global cities result from their strategic location at nodal points of control in the global economy; in recent years this role has been characterized by the possibility of controlling financial flows. The dominant thesis is that creative industries are advanced service providers for such nodal economic powerhouses and beyond (Kratke, 2006). A slightly different argument draws instead upon a literature on industrial districts and localization, highlighting a complex ecosystem of creative industries that embed them in place. In the classical industrial district tradition the clustering should be accounted for by the minimization of transactions costs (Scott, 2000). However, in contrast to traditional manufacturing, the transactions relate to knowledge and know-how. This occurs in rather unique organizational settings: Grabher (2002) points to the particularity of time and task limited project-based firms generating what he terms heterarchical relations (see also ‘Managing Project-Based Organization in Creative Industries’ by DeFillippi and ‘Projects and Project Ecologies in Creative Industries’ by Vinodrai and Keddy). Additionally clusters afford labour markets-based ‘job hopping’ from firm to firm, or project to project (Blair, 2003). The emergent envir­ onment is one of intimate, fuzzy, and timely knowledge interaction between consumers and producers. Global hubs are thus one dimension of what is regarded as good forms of monopoly (although places outside the city region may contest this). A further example of ‘good monopolies’ is their mobilization in urban and national branding strategies to compete for foreign direct investment.

Place marketing There is a long running instrumental account of culture and cities/place based upon tourism and cultural consumption: cities seek to compete against one another for the tourist visit, and to maximize on the subsidiary spending on hotels and related goods.

510  Andy C. Pratt Accordingly, cities have been concerned themselves with place marketing, or branding, based upon an aspect of that city (Anholt, 2007). Cities not endowed with marketable heritage, or seeking to expand their market, have created new destinations: from theme parks to modern art galleries. The current variant is to promote the ‘experience economy’ of cities (Pine II and Gilmore, 1999), a practice that is similar to what is termed ‘creative tourism’ (Richards, 2007). This accords with a dissatisfaction expressed by many with ‘hard branding’ associated with a disproportionate concern with new infrastructure projects, and instead attention to the cultural practices contained within them (Evans, 2003). A more instrumental use of culture is found in foreign direct investment strategies. Here, we can trace a line of place marketing exercises through the twentith century to attract mobile investors and jobs. Initially, such activities related to discounts on land; but a recent strategy is to link quality of life indicators to place marketing (Rogerson, 1999). A new twist to the story is the use of culture to ‘add value’ to place, or to differentiate one city from another. Florida’s analysis of the creative class and cities (see ‘Creativity in the City’ by Florida, Mellander, and Adler) thus plays well into such a debate (Pratt, 2011). Clearly, such investment has a self-reinforcing effect within nation states for the concentration of development. A further example, at a global scale, is the enthusiasm of cities to host ‘mega-events’ such as the football World Cup or the Olympics (Roche, 2000). Thus, cities use culture both as a means of differentiation, and as a strategy to leverage discretionary consumer spending. Whilst the concern with monopolies is understandable, as we have seen, they are complex in the creative industries. In general a simple support of free trade or choice can be undermined by the actual existing organization of the creative industries. At worst support for a ‘level playing field’ simply reinforces existing inequalities, making ‘development’ highly unlikely.

Discussion This chapter set out to critically examine the relationship of culture and development, and specifically the case of the creative industries. In the course of the argument we have sought to separate out the competing logics that embody this relationship. We characterized this as twofold: culture in development, and cultures of development. We have concluded that in the current period the frame of reference ‘cultures of development’ is more appropriate if we are to promote the objectives directly related to the creative industries rather than see them as an inferior subject of development. However, we have argued that dominant concerns with monopoly and its regulation, or the promotion of spatial monopolies, hints at, but does not always successfully engage with, the specifics of cultural production. It is important to acknowledge that the previous normative view of characterizing culture as just another industry subject to existing trade regulations has not worked. The

Creative Industries and Development   511 fact that there is a need to articulate a ‘cultural exception’ to trade rules is a case in point; even then there is dispute whether such exceptions are effective. Whilst viewing culture as any other industry appears to ‘take it seriously’, the reliance on cultural exception pulls us back in the direction of idealism and instrumentalism. The example of world music is a helpful illustration both of the challenges and potential ways forward. In a case study of music production in Senegal both local capacity and international value chains were mapped (Pratt, 2007). It was clear that added value activities, and critically, IP rights, took place out of country (in France). Accordingly, little in the way of income found its way back, despite considerable artistic success. Moreover, the lack of local infrastructure (recording studios, legal advice, management, and studio technicians) has forced musicians to go abroad to record. Recent investment in training and local recording facilities, as well as distribution, have led to more resources staying in, and returning to, the country, and its people. Thus simply ‘freeing’ trade does not affect the issue. In fact, as the IP system was so underdeveloped trade was likely to draw in more imports, and due to lack of support for musicians, lead to them not being supported by copyright controls—leading to the absurd situation where it would be possible for an external person to plagiarize a performance, register his or her own recording (in the UK), and then sue the Senegalese performer/writer. This brief example underlines why different perspectives rooted in the knowledge of the particularities of the structures of trade and its organization are required. At present much of this trade is asymmetric in character: as noted above, there is a debate whether this is simply an inheritance, or it is related to an intrinsic nature of cultural production (that leads to monopolies). The literature highlights a strong structural asymmetry problem with all trade, but it is one that is particularly acute with respect to cultural goods. It has been manifest at nation state level and hemmed around with legislation. At a global level the stakes are higher, where the inequalities are greater, and the legislative possibilities seem to be altogether weaker (Van den Bossche, 2007). More generally, this debate sits across multiple fault-lines: of formal versus informal activities, the nation state and the global, meaning and identity versus the global, and the economic and the cultural. The normative characterization of cultural trade is that of consistent world trade policies, that is the material flow of products across a state boundary; and remediation is focused on the limitation of the flow. However, as we have already noted, such a normative formulation in the field of culture can serve to reinforce existing or historic inequalities, and to generate new ones: doing nothing is clearly not a solution, as it supports an imperfect and problematic status quo. The most helpful basing point for analysis can be found in the work on global value chains (Pratt, 2008). This is a respected body of work that has turned attention away from simply the efficiencies of value chains (that is the focus of work in business studies), towards the focus on governance and organizational ‘pinch points’ through which strategic control can be mobilized across sometimes international production chains (Raikes, Jensen, and Ponte, 2000) and production networks (see ‘Global Production Networks in the Creative Industries’ by Coe). Little work has been carried out with specific reference to the creative industries and global value chains, and that which has thus

512  Andy C. Pratt far has focused on mapping chains and pointing to where value is added. Drawing upon recent global value chain analysis, attention clearly needs to be paid to the question of ‘upgrading’, which is the migration to higher value segments of the chain. What this means in practice is to negotiate access to markets and distribution systems; however, a critical further step is required: to build capacity in local production systems. In many respects this brings us back to a very traditional agenda of skills, training, and institutional development. Sadly, this is an approach that has seldom been considered with respect to the creative industries. It is often precisely these areas that are lacking as a result of asymmetrical development of the past, and the lack of indigenous resources. Culture and development are two complex ideas that create a confusing intersection. Separating out the ways that culture is characterized and used: from instrumentalism through to culture in, and for, itself (in economic, social, or cultural terms) is vital if we are to think through the policy implications. As we have noted, the normative inheritance has favoured an instrumental and idealist perspective. This chapter has argued for the need to focus on cultural production and its diverse forms that contribute to development in various ways. If the re-conceptualization is acknowledged then it has knock-on consequences for thinking about policy and action. We have also pointed to the value of shifting from the creation of free market forms, and moving to a wider consideration of the organization and governance of cultural markets. An important first step of engagement with this is local capacity building in local creative industries.4

Notes 1. The term ‘creative industries’ is used here as an umbrella covering the diverse labels for the cultural economy that have proliferated in recent years, such as the European usage of ‘cultural and creative industries’. In using this term the article signals both state supported and commercial activities, a wider field than the copyright-based industries, as well as UNCTAD’s (2010) notion of ‘creative economy’ focusing primarily on traded the for profit activities. The article uses ‘creative industries’ in a more anthropological sense, recapturing the for- and the not-for profit, as well as formal and informal activities, which collectively constitute the ecosystem of cultural production and consumption. For a more extensive discussion of terminologies see Pratt (2005; 2009a) 2. The Paramount Case (1948) was an anti-trust ruling that led to the breakup of the vertically integrated Hollywood studio system that previously had allowed single ownership of the studios and film theatres. 3. For example: of investment, or infrastructure and its ownership, of skills; and of trade patterns and markets. 4. UNESCO (2013). Whilst this paper was in press UNESCO produced a report proposing just this. The author drafted chapter 5 of that report.

Creative Industries and Development   513

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Author index

Abbott, A. A.  294n.1, 331 AbdelGawad, S.  3, 15 Abel, R. L.  452n.13 Abernathy, W. J.  330, 331, 332 Acheson, K. 508 Acs, Z. 100 Acurio, G.  190, 192 Adarves-Yorno, I.  76, 79 Adler, M. 178 Adler, P.  3, 12 Adorno, T. W.  5, 123, 177, 234, 475, 476, 504 Ainamo, A.  6, 14, 15, 191 Aksoy, A. 493 Albert, A. 474 Albert, R. S.  41 Alford, R. B.  5 Allan, W.  133n.1 Allison, P. D.  90, 161 Alonso, W. 99 Alper, N.  150, 151 Alvarez, J. L.  14, 185, 272 Alvarez, S. A.  189 Amabile, T. M.  36, 50, 51, 52, 55, 58, 62, 80, 85, 240n.1 Americans for the Arts  5, 29–30 Amit, R.  184, 191 Anand, K.  39, 59 Anand, N.  7, 14, 16, 200, 212, 230, 237, 238, 285, 289, 290, 291, 293, 328, 334, 335, 338, 339, 342 Ancona, D. G.  61, 294n.1 Andari, R.  470, 474 Andersen, K. V.  3 Anderson, A. B.  81, 190, 219, 227, 239 Anderson, B. 505 Anderson, C.  125, 131, 177, 276, 424–5 Anderson, N. R.  55, 57, 61 Anderson, P.  6, 15 Andersson, A. E.  389

Andersson, D. E.  389 Andersson, T. D.  285 Andrejevic, M. 174 Andriopoulos, C. 270 Angle, H. L.  55 Anheier, H. 122 Anhieir, H. K.  336 Anholt, S. 510 Anselin, L. 100 Appadurai, A. 285 Ariely, D. 58 Armstrong, A. G.  304, 309 Armstrong, T. 211 Arnold, M. J.  227 Arora, A. 305 Arthur, M. B.  251, 252, 254, 261, 263, 268, 269, 278 Arthur, W. B.  14, 294n.1, 398 ArtPrice 139 ArtReview 141 Arts Council England  468 Arts Development  467 ArtTactic  139, 140, 141, 142 Artto, K. 271 Asheim, B. 107 Ashton, M. C.  38 Aspers, P.  7, 290 Atkinson, R. 109 Audia, P.  80, 87 Axtell, C. M.  55, 56, 59 Ayoama, Y. 268 Back, K. 80 Baden-Fuller, C. 196 Baer, J.  37, 78 Baer, M.  37, 52, 56, 57 Bagdikian, B. H.  507 Bailey, A. 122

516  Author index Bailey, D. E.  50 Bailey, J.  223, 224 Bain, A. L.  260 Baker, W. E.  227 Bakhshi, H.  3, 9, 20, 390, 397, 398, 401, 473, 478, 480n.3, 481n.6 Bakker, G.  4, 16, 17, 352, 355, 356, 358, 360, 364, 365, 366, 371, 372, 373, 374, 375, 376, 377, 378, 379, 381, 382n.3, 383n.13, 383n.14, 383n.18, 383n.20, 383n.22 Bakker, R. M.  268 Baldwin, C. Y.  301 Balio, T.  16, 20 Ballou, B.  228, 231, 233, 237 Banks, M. 257 Barber, E.  167–8n.7 Barber, J. 469 Barendt, E.  452n.16 Barley, S. R.  263 Barnard, H. 495 Barnatt, C. 405 Barnes, B.  428, 429 Barnes, T. 492 Barney, J. B.  6, 8, 189 Baron, J. 152 Barrere, C. 226 Barro, R. J.  100, 101, 102 Barron, A.  458–9, 462–3n.10 Barron, F.  36, 41, 85 Barthes, R.  4, 5, 13, 14 Basadur, M. 35 Bastianutti, L. 63 Basuroy, S.  228, 238 Batey, M.  38, 39, 59 Bathelt, H.  252, 285, 289, 290 Batt, R.  257, 262 Baumann, S.  124, 336, 405, 414, 417 Baumol, W. J.  226, 352 BBC News  136, 137 Bechky, B. A.  53, 64, 190, 269, 294n.1, 405 Becker, G.  101, 105, 106, 150 Becker, H. S.  5, 7, 51, 79, 87, 91n.5, 120, 177, 190, 235, 327, 334, 405, 414 Beech, N.  190, 222 Beersma, B. 59 Beghetto, R. A.  37, 41 Belfiore, E. 221

Bellandi, M. 99 Benbow, C. P.  41 Benjamin, B. A.  337, 338 Benjamin, W.  234, 505 Benner, M. J.  54 Bennett, A. 335 Bennett, O. 221 Bently, L.  453n.46, 453n.48, 456, 462–3n.10 Berger, D. G.  331, 405, 408, 409, 410 Berger, P. L.  340, 341 Berggren, N. 108 Berkman Center  412 Bernier, R.  167n.2 Berry, C. R.  101 Bessen, J. 304 Bettig, R.  453n.38 Beverland, M. B.  328 Bianchini, F. 505 Bielby, D.  124, 168n.8 Bielby, W.  168n.8 Bijker, W. E.  6 Bilalíc, M. 40 Bingham, C. B.  189 Birkland, T. A.  294n.1 BIS 477 Bjorkegren, D. 222 Blair, C. S.  34 Blair, H. 509 Blakeney, M.  453n.36 Blanc, A. 8 Blau, J. R.  19 Blau, P. 86 Bliese, P. D.  66 Bloodgood, J. M.  235 Bloom, B. S.  39 Blum, T. C.  51, 54, 59 Bode, C.  295n.1 Boden, M. A.  3, 35, 52 Boerner, S.  55, 229, 230, 231, 240 Boland, R. J., Jr.  18 Bollier, D.  453n.38 Bonaccorsi, A.  306, 312 BookStats 427 Boorsma, M.  224, 229, 230 Boorstin, D.  172, 174 Bordwell, D. 392 Borgatti, S. P.  6, 19, 80, 405, 406, 408, 410, 416

Author index  517 Borkowski, A. 442 Boschma, R. A.  106 Bourdieu, P.  119–22, 131, 172, 201, 213, 214, 225, 289, 336, 406, 408, 416, 418 Bovone, L.  200, 208, 211, 212, 214 Bowen, W. F.  352 Bowker, G. C.  340, 341 Boyle, B. 63 Boyle, J.  458, 462–3n.10 Braczyk, H. 472 Bradley, R. 475 Bradshaw, G. L.  35 Brady, T.  275, 278, 279 Brass, D. J.  76 Braudy, L.  174, 181 British Council  477, 481n.8 Brito Henriques, E.  493 Broadbent, J. 81 Broda, C. 359 Brodersen, R. 38 Brooks, A. 234 Brown, V. R.  53, 63 Broyles, S. J.  37 Brubaker, R.  120, 122 Bruce, R. A.  51, 56, 57 Buchmann, M. 211 Burch, G. J.  38 Burger, P. 205 Burt, R. S.  58, 76, 77, 78, 86, 406, 407, 409 Byrne, D. 61 Bystryn, M.  123–4, 405 Cable, D. M.  234 Cadin, L. 268 Cairns, B.  224, 232 Caldwell, D. F.  61 Caldwell-Nichols, A. 475 Callon, M. 126 Campbell, D. T.  55, 63, 167n.7 Campos, L. 268 Canterbery, E. R.  228 Capling, A.  452n.13 Cappetta, R.  186, 235, 236 Carlton, D. W.  367 Carnevale, P. 61 Carr, A. 426 Carroll, G. R.  330, 331, 334, 335, 339

Carroll, J. B.  40 Carter, S.  473, 478 Castañer, X. 268 Catmull, E.  53, 64 Cattani, G.  3, 7, 20, 76, 77, 80, 81, 86, 89 Cattell, R. B.  40 Catungal, J. P.  260 Caulfield, K. 426 Caust, J. 224 Cave, M. 476 Caves, R. E.  5, 6, 53, 57, 128, 132, 139, 177, 184, 185, 187, 188, 190, 191, 200, 201, 209, 225, 234, 275, 276, 285, 327, 328, 352, 392, 405, 408, 414 Chae, B. 235 Chalasani, S. 330 Chamberlin, E. 377 Chaminade, C. 492 Chamorro-Premuzic, T.  37, 38, 59 Chanan, M. 352 Chang, K. 191 Chapain, C.  390, 391, 393, 467, 473, 478 Charters, S. 6 Chauvin, L. 188 Cheek, J. M.  39 Chen, D. 78 Chen, G. 66 Chen, K. K.  286, 287 Chesbrough, H. W.  301 Chevalier, M. 60 Chiaravalloti, F.  224, 230 Childers, B. 302 Choi, H. 63 Chon, M. 446, 452n.18 Christaller, W. 99 Christensen, C. M.  8, 15, 59, 307 Christophers, B.  488, 494 Christopherson, R. W.  124 Christopherson, S.  4, 16, 251, 253, 255, 259, 261, 262, 269, 383n.20, 491, 496–7, 498, 507 CIE (Centre for International Economics) 394, 395 Cielpy, M. 429 Cillo, P.  235, 236 Ciment, M. 84 Clark, K. B.  330, 331, 332 Clark, T. N.  101, 103, 105, 108 Clarke, A. 467

518  Author index Clayman, S. E.  409 Clegg, S. 255 Clemens, E. S.  82, 340 Clevinger, D. L.  228 Clifton, N. 473 Coe, N. M.  8, 20, 251, 255, 486, 491, 492 Cohen, S. G.  50 Cohen, W. M.  100, 261 Cohendet, P.  235, 253, 268 Cole, J. 160 Cole, S. 160 Coleman, J. S.  77 Coles, A. 497 Collins, A. 219 Collins, R.  75–6, 77, 81, 82, 85, 90, 476 Colucci, M.  3, 7, 20 Colwell, K. A.  285 Comfort, D. 222 Conlon, D. E.  53, 57 Cook, J. M.  82 Cook, P. 152 Cook, P. C.  276 Cook, P. J.  179 Cooke, P.  99, 472 Coombe, R.  442, 452n.17 Cooper, D. J.  221 Cooper, W. 63 Cornford, J. 493 Corr, P. J.  38 Corrado, C. 472 Coser, L.  127, 129 Costa, P. R.  37 Courty, P.  368, 382n.9 Cova, B.  303, 304, 305 Cova, V.  233, 237 Cowen, T.  352, 433 Cox, A. 308 Cox, G. 396 Cox, T. 61 Coy, P. 98 Coyle, D. 388 Craft, A. 54 Crafts, N.  356, 357 Craik, J.  221, 222, 223, 224, 229, 231, 232, 233, 236 Crane, D.  7, 15, 20, 79, 82, 91n.4, 200, 214, 335, 405

Croft, R.  223, 233, 235 Croidieu, G.  7, 14, 291, 339, 342, 343 Cronin, M. A.  62 Crossick, G. 480 Crossley, N. 405 Crowston, K. 305 Crowther, P. 476 Crump, J. 38 Csikszentmihalyi, M.  51, 55, 76, 78–9, 90, 167n.3 Cumming, S. P.  37 Cummings, A.  51, 64 Cunha, M. P.  294n.1 Cunningham, S. D.  3, 4, 9, 20, 390, 394, 395, 401, 465, 481n.6 Curran, J. 507 Currid, E.  108, 177, 251, 399, 405, 487 Currid-Halkett, E.  4, 16, 172, 173, 174, 176, 177, 178, 179 Curwen, P.  133n.1 Cutler & Company  387, 471 Daffara, C. 313 Daglic, T. 330 Dahlander, L.  301, 304, 306, 311, 312 Dale, M.  352, 368, 369, 370 Dalle, J.-M.  306 Dalli, D.  303, 305 Damanpour, F. 55 Davenport, J. 269 David, G. M.  39 David, P. A.  301, 303, 305, 311 Davies, A.  275, 278, 279 Davis, C. H.  492 Davis, C. J.  230 Day, E.  193, 195 DCMS (Department of Culture, Media and Sport of the UK Government)  4, 5, 20, 21, 29–30, 125, 138, 222, 388, 389, 401, 476, 477, 479, 481n.8 de Certeau, M.  303 De Dreu, C. K. W.  55, 59, 61 de Jong, J.  321 de Propris, L.  467, 473, 478 De Vany, A.  7, 162, 219, 237 De Vinck, S.  470 Deci, E. L.  310

Author index  519 DeFillippi, R.  3, 7, 17, 19, 51, 251, 252, 261, 268, 269, 271, 273, 277, 278, 287 Dehler, G. 57 Delacroix, J. 333 Delmestri, G.  227, 230, 272 Deloitte 142 Demazière, D. 307 Dempster, A. M.  12, 139, 141, 475 Dennis, A. R.  63 Deroin, V.  466, 481n.6 DeRosa, D. M.  63 Desai, K. K.  238 Design Council  478 Deuze, M.  274, 275, 277, 279 Dex, S. 255 Di Maria, E.  7, 8, 304, 321 Diaz de Chumaceiro, C.  168n.9 Diehl, M. 56 DiMaggio, P. J.  6, 12, 122, 177, 200, 208, 214, 285, 289, 338, 340 DiPrete, T.  160, 164 DIUS (Department for Innovation, Universities and Skills)  401, 478 Djelic, M.-L.  6, 14, 15, 191 Doares, L. 34 Dobrev, S. D.  331 Dobusch, L.  8, 292 Dodds, R. A.  40 Dodgson, M. 398 Dolfsma, W. 209 Dollard, J. 208 Donald, B.  227, 231, 236 Donegan, M.  109, 227 Donihue, M. R.  228 Dopfer, K. 397 Douglas, M.  6, 338, 339, 341 Dowd, T. J.  201, 209, 213 Drach-Zahavy, A.  55, 57 Drake, G.  252, 260 Drake, P. 494 Drazin, R. 66 Drucker, J. 227 Du Gay, P.  388 Duffin, C. 145 Duguid, M. M.  63 Dunlop, S. 5 Dupuit, J.  366–7

Durand, R.  82, 336, 337, 339 Durkheim, E. 338 Duymedjian, R. 17 Dylan, B. 335 Dyson, J.  388, 479 Earl, P. E.  399 Easthope, H. 109 Eastwood, I. 222 Ebbers, J. 272 Echikson, W. 337 Eckersley, S.  221, 223, 224 Economist, The  4, 12, 13, 16, 17, 490, 493, 494, 496, 497 Edelman, B.  462–3n.10 Edmondson, A. C.  51, 56, 57 Edmundson, M. 37 Edquist, C. 472 Edwards, J.  478, 480 Egan, T. M.  60 Eggers, F. 238 Eikhof, D. R.  235, 268, 278, 293 Einarsen, K.  228, 230, 231, 233, 237, 238 Einav, L.  382n.9 Eirich, G.  160, 164 Eisenbeiss, S. 55 Eisenhardt, K. M.  189, 339 Eisner, M. 211 Ekelund, R. B.  382n.9 Ekinsmyth, C.  251, 254, 255, 256, 257, 260 Ekstedt, E. 252 Elberse, A.  177, 228, 238, 424–5, 426, 429 Eliashberg, J.  228, 238 Elinder, M. 108 Elkin-Koren, N. 456 Elliott, C. 429 Elmer, G. 490 Elsbach, K. D.  75 Ennis, P. H.  334 Entwistle, J.  124, 289 Epstein, E. J.  274 Erdogan, B. Z.  180 Ericsson, K. 39 European Commission  4, 472, 479, 481n.9 Evans, G.  487, 510 Evans, O. 288 Everett, M. G.  80

520  Author index Ewen, R. B.  62 Exhibition leaflet  188 Eysenck, H. 36 Faggian, A. 108 Falk, M. 471 Falk, R. 471 Farmer, S. M.  51, 58 Farr, J. L.  50, 51, 55 Faulkner, R. R.  81, 86, 168n.8, 190, 219, 227, 235, 239, 336 Feist, G. J.  37, 38 Ferguson, P. P.  405, 414 Fernandez, R. M.  407, 409, 410, 411, 415 Ferraro, F. 304 Ferriani, S.  3, 7, 20, 76, 77, 80, 81, 86, 89 Feser, E. J.  109 Festinger, L. 80 Fine, G. A.  338 Finke, R. A.  34 Finkel, R.  228, 231, 233, 237 Finkelstein, D. 130 Finotto, V.  7, 8, 304 Fisher, C.  230, 234, 240 Fleming, L. 78 Flew, T.  465, 487 Florida, R.  3, 12, 17, 52, 97, 98, 101, 105, 106, 107, 108, 109, 110, 227, 231, 232, 236, 251, 286, 393, 473, 479, 487 Flowers, S.  7, 8, 321 Foray, D.  301, 303, 305 Ford, C. 79 Fosfuri, A.  306, 312, 313 Foss, N. 271 Foster, P.  17, 201, 290, 405, 408, 410 Foster, S. 120 Foucault, M. 293 Fournier, M.  167n.2 Frank, B. 238 Frank, R. H.  152, 179, 276 Franke, N.  302, 305 Fraser, S. 469 Frederiksen, L.  17, 251, 254, 268, 274, 301, 304, 306, 310, 320 Freeman, A. 490 Freeman, J. 330 Freidson, E. 151

French Ministry of Culture  393 Frensch, P. A.  40 Frey, B. S.  5, 127, 150, 311 Friedland, R. 5 Friedman, A. 80 Friedman, T. 181 Frith, S. 456 Fritsch, M.  106, 473 Fuchs-Beauchamp, K. D.  41 Fujita, M. 99 Füller, J.  310, 311 Furnham, A.  37, 38, 39, 59 Furr, N. R.  189 Gaba, V. 285 Gabaix, X.  167n.5 Gabe, T. M.  107 Gabler, N. 175 Gadwa, A. 487 Gaines, J.  442, 450 Galenson, D. W.  230, 238 Galloway, S. 5 Gallupe, R. 63 Galunic, C.  14, 15 Gambardella, A. 305 Gander, J.  275, 279 Gann, D. M.  301 Garcia, J. 36 Gardner, H.  39, 40 Garnham, N.  5, 6, 221, 389, 390, 401, 488, 507 Garrett, R. 473 Garrick, J. 255 Garud, R.  287, 289, 294 Garzarelli, G. 305 Gasher, M.  490, 492 Gault, F. 321 Gay, P.  201, 211 Geels, F. W.  331 Geiger, W. 471 Gemser, G.  184, 223, 229, 231, 240, 286 Gendron, Y. 221 George, J. M.  38, 50, 51, 58 Georgioui, L. 469 Gerhards, J. 336 Gersick, C. J. G.  284 Gertler, M. S.  108, 256 Getz, D. 285

Author index  521 Getzels, J. W.  41 Ghosh, R. A.  301, 306, 311 Giddens, A.  289, 291 Gilhespy, I.  222, 224, 233, 237, 238 Gill, R.  255, 261 Gilmore, J. H.  225, 229, 389, 511 Gilson, L. L.  3, 50, 51, 53, 54, 56, 58, 59, 61, 65, 66 Gino, F. 58 Ginsburg, J. C.  462n.3 Ginsburgh, V. A.  5, 230, 233, 234, 238, 239 Gioia, D. A.  235 Gladwell, M.  167n.4 Glaeser, E. L.  101, 102, 105, 106, 108 Glow, H.  221, 229 Glynn, M. A.  12, 66, 191, 235, 285, 340 Gneezy, U. 311 Gobet, F. 40 Godart, F.  7, 14, 15 Godwin, N. H.  228 Goehr, L. 458 Goetzmann, W. N.  138 Goffman, E. 285 Goldberg, L. R.  37 Goldin, C.  168n.9 Goldman, D. 412 Goldman, W. 219 Goldsmith, B.  492–3 Goldstein, H. 227 Goncalo, G. A.  63 Goncalo, J. A.  58, 59, 80, 87 Goodall, H. 330 Goodman, E. 99 Goodman, L. P.  268 Goodman, R. A.  268 Goolsby, J. R.  230 Gotsi, M. 270 Gough, H. G.  51, 56 Gould, R. V.  164, 165, 407, 409, 410, 411, 415 Grabher, G.  3, 251, 252, 253, 254, 256, 258, 259, 261, 268, 269, 270, 272, 288, 509 Graen, G. B.  50, 58 Granovetter, M.  77, 80 Grant, R. M.  271 Grantham, A.  7, 17 Gray, C. M.  140, 352 Gray, J.  452n.14

Grazian, D. 405 Green, L. 401 Green, S. G.  57 Greenwood, R.  285, 331, 340 Grenfell, M. 123 Grice, E.  136, 137, 143 Griffin, M. 37 Griffin, R. W.  51, 85 Griffiths, J.  453n.43 Griswold, W.  334, 408, 457 Grodach, C.  228, 231, 233, 237 Gruber, D. A.  8, 17 Gstraunthaler, T. 224 Guérin, F. 268 Guetzkow, J.  167n.2 Guilford, J. P.  43, 56, 59 Gulledge, E.  3, 129, 130, 131 Gustafson, S. B.  54, 55, 61 Gwee, J. 392 Haberberg, A.  275, 279 Haberler, G. 353 Hadida, A. L.  4, 220, 226, 227, 230, 233, 234, 237, 240 Haefliger, S. 309 Hagel, J.  304, 309 Hagtvedt, H. 6 Hahn, D. W.  59 Hall, E. R.  62 Hall, P. A.  251, 261, 392 Hallencreutz, D. 251 Hallett, T. 342 Hällgren, M. 268 Hamilton, R.  186, 188, 192 Hamlen, W. A. J.  227, 240 Hand, C.  219, 238 Handke, C. 398 Hannan, M. T.  6, 7, 16, 330, 339 Hansen, H. K.  107 Hansen, M. T.  308 Hantula, D. A.  63 Haq, H. 428 Harburg, E. 62 Hardin, G.  452n.21 Hardy, C.  123, 289 Hargadon, A. B.  50, 53, 64, 85, 88 Hargreaves, I. 479

522  Author index Harhoff, D. 302 Harker, D. 375 Harrington, D. M.  41, 85 Harris, M. 224 Hartley, J. 399 Hartman, E. 34 Haslam, S. A.  76 Hauge, A.  256, 259, 260, 261 Haunschild, A.  235, 268, 278, 293 Havens, T. 290 Hayek, F. A.  466 Hayes, J. R.  39 Hedberg, B. 286 Heidenreich, M. 472 Heilbrun, J.  140, 352, 397 Held, D.  421, 422 Hemmungs Wirtén, E.  442, 452n.19 Hemsley, D. R.  38 Henderson, J. 486 Henkel, J.  306, 311 Hennig-Thureau, T. 238 Henning, V. 238 Herman, E. S.  507 Herrmann-Pillath, C. 398 Hesmondhalgh, D.  4, 5, 119, 222, 225, 232, 390, 476, 478 Hesterly, W. S.  6, 19 Heying, C. 417 Higgs, P.  389, 394, 395, 396, 473, 478, 479, 481n.6 Hillage, J. 473 Hillier, D. 222 Hinings, C. R.  340 Hirsch, P. M.  4, 5, 8, 17, 79, 119, 125, 184, 191, 201, 209, 214, 225, 227, 235, 286, 287, 340, 405, 408, 409, 414, 423, 428, 430, 432, 457 Hirschberg, L. 174 Hirschman, E. C.  223, 227 Hirst, G. 63 Hitters, E. 285 Hjorth, D. 294 HM Treasury  4 Hobday, M. 269 Hoffman, A.  284, 285 Hoffman, L. R.  61, 62 Hofstede, B. 352 Holbrook, M. B.  238

Holden, J.  222, 224, 225 Holling, H. 41 Hollingshead, A.  52, 56 Hollinshead, A. B.  64 Homans, G. C.  80 Homer, P. M.  180 Hoon, C. 284 Horkheimer, M.  5, 123, 234, 504 Horn, J. L.  40 Hotelling, H. 365 Houston, M. B.  238 Houtz, J. C.  80, 87 Howe, F. 307 Howell, C. 475 Howison, J. 305 Howkins, J.  5, 97, 98, 392, 398, 473 Hoyer, W. D.  6 Hracs, B. J.  251, 254–5, 256, 259, 260, 261 Hsu, G.  6, 7, 16, 230, 336, 339, 405 Huault, I. 8 Huber, J.  167n.2 Hughes, T. P.  6 Hulsheger, U. R.  55, 56 Hulten, C. 472 Hum, A. 37 Huntington, P. 367 Hutchison, R. 224 Hutton, W.  470, 474 Ibert, O.  256, 258, 270 IFF Research  469 IFPI (International Federation of the Phonographic Industry)  426 Ilgen, D. R.  50 IMF 9 Ingebretsen, M. 286 Inglehart, R.  103, 108 Ingram, A. E.  270 Isaacson, W. 53 Isabella, L. A.  284 Isherwood, B. 6 Ivory, B.  495–6 Izushi, H. 268 Jabri, M. 51 Jackson, M. H.  62 Jackson, P. W.  41

Author index  523 Jackson, S. E.  57, 60, 61, 487 Jacobs, D. 152 Jacobs, J.  98, 101, 379 Jacobsohn, G.  52, 56 Jaeger, G. 200 Jaffe, A. B.  100 Jamerson, H.  337, 338 James, K. 65 Janis, I. L.  62 Janssen, O.  58, 59 Jansson, J. 288 Jarvin, L. 40 Jaszi, P.  458, 462–3n.10 Jeffcutt, P. 119 Jehn, K. A.  61 Jenkins, H.  174, 177, 273, 508 Jensen, M. F.  511 Jeppesen, L. B.  301, 306, 307, 310, 320 Johanson, K.  221, 229 Johns, J.  251, 492, 497 Johnson, C.  53, 79 Johnson, L. J.  41 Johnson, R. S.  173 Johnson-Laird, P. N.  35 Johnston, J.  336, 405, 414, 417 Jones, B. C.  237, 285, 289, 290 Jones, C.  3, 6, 8, 12, 14, 18, 19, 20, 77, 185, 191, 213, 223, 225, 230, 251, 252, 253, 254, 261, 268, 269, 287, 294, 295n.1, 335, 340, 405, 408, 410, 417, 426 Jones, D. 232 Jones, P.  222, 229, 231, 233, 237 Jonker, J.-J.  228 Jowett, G. S.  365 Kahle, L. R.  180 Kaiser, R.  490, 491 Kam, J.  222, 228 Kamdar, D. 64 Kannan, P. K.  304 Kanter, R. 88 Kaplan, D. 229 Kaplan, R. S.  224, 230 Kaplinsky, R. 488 Karlsson, C. 510 Karnes, M. B.  41 Karpik, L.  119, 124, 127, 132

Karr, S. 471 Kasof, J.  78, 85 Katz, E. 177 Katz, R.  309, 310 Kaufman, A. 429 Kaufman, J. C.  3, 33, 37, 38, 40, 41, 51, 59 Kaufman, S. B.  40, 41 Kawohl, F. 459 Kay, J.  462–3n.10 Kaye, J. 492 Kazanjian, R. 66 KEA  5, 29–30, 481n.7 Keane, M.  139, 141, 392 Keddy, S.  17, 19 Keegan, A. 269 Keil, T. 54 Kemple, K. M.  39 Kenney, M. 338 Keppel, C. 471 Kern, R. 336 Kerr, D. S.  63 Khaire, M.  9, 14, 184, 201, 213, 216n.1, 216n.2, 330, 337, 339, 405, 406, 407, 417 Kim, J.-H.  290 Kim, K. 41 Kim, T.-Y.  228, 331, 336 Kimbrel, N. A.  39 King, D. 227 King, L. A.  37, 38 Kinney, D. K.  39 Kirton, M. J.  51, 87 Kirzner, I. M.  189, 382n.8 Klamer, A.  127, 132 Klein, S. R.  50 Knee, J. A.  424 Knight, S.  137, 138, 140, 144 Knoke, D. 81 Knopper, S. 412 Koçak, O.  6, 7, 16, 339 Koelling, R. A.  36 Koenig, D.  452n.18 Koestner, R. 37 Kogan, N. N.  41 Kolind, L. 270 Kot, G. 421 Kotler, P. 230 Kozbelt, A. 41

524  Author index Kozinets, R. V.  303 Kramer, M. R.  236 Kramer, R. M.  75 Krätke, S.  491, 492, 509 Krauze, T. 161 Kreps, D. 152 Kretschmer, M.  4, 8, 457, 458, 460, 462–3n.10 Krider, R. E.  226 Krueger, A.  177, 377, 378, 382n.10 Krug, K. 224 Krugman, P. R.  99, 359, 383n.19 Kubacki, K.  223, 233, 235 Kucklich, J. 306 Kuhn, T. S.  106 Kujala, J. 271 Kummer, C. 186 Kunda, G. 263 Kurtzberg, T. R.  50, 61 Kury, K. 230 Kushner, R. 232 Kyllonen, P. C.  37 Lakhani, K. R.  305, 307, 309, 310 Lakoff, G. 339 Lam, A. 261 Lambert, R. 480 Lamont, M.  167n.2 Lampel, J.  5, 7, 184, 185, 222, 223, 225, 234, 284, 285, 288, 290, 291, 292, 293, 429 Landes, W. M.  462–3n.10 Landier, A.  167n.5 Landry, C. 98 Lange, B. 293 Langley, P. 35 Langlois, R. 305 Lanham, R. 399 Lant, T.  5, 7, 184, 185, 222, 223 Lanza, A. 89 Lapsley, J. T.  329 Larey, T. S.  50, 59, 64 Lash, S. M.  388, 473 Latour, B. 86 Laughlin, P. R.  64 Laurent, S. 268 Laurin, C.  221, 224, 226, 232, 233 Laursen, K. 301 Lave, J. 308

Lawrence, T. B.  213, 291 Lazer, D. 80 LDA (London Development Agency)  393 Le Blanc, A.  229, 231, 233, 237 Le Roy, D.  352 Leadbeater, C.  388, 392, 399, 476 Lee, J. 59 Lee, K. 38 Lee, N.  480n.3 Leenders, M. M.  286 Leeuw, M. 330 Lehmann, D. R.  228, 238 Lehrer, M. 271 Lehtonen, K. 231 Lena, J. C.  6, 7, 14, 20, 286, 333, 334, 335, 336, 343 Leo, H. 471 Lerner, J. S.  88, 306 Leslie, D.  251, 499 Leslie, P. 367 Lessig, L.  462–3n.10, 508 Lettl, C. 320 Levine, E. 123 Levinthal, D. A.  100, 261 Levitt, T. 441 Lewis, M. L.  270 Lewis, M. W.  57 Lewis, N. M.  227, 231, 236 Lewis, R. D.  104 Li, T. 226 Lichtenberger, E. O.  41 Lichtenstein, B. B.  19, 287 Liebowitz, S. J.  468, 469 Liecke, M.  490, 491 Liénard, G. 122 Lim, K. F.  492 Lindkvist, L.  268, 271 Litchfield, R. C.  55 Liu, L. W.  422 Liu, Y. 226 Livne-Tarandach, R. 191 Lloyd, R.  101, 258, 260 Lloyd-Evans, R. 39 Lobel, S. A.  61 Lofland, J. 80 Long, P. D.  90, 467 Long, S. 161

Author index  525 Long Lingo, E.  225, 226, 230, 233, 235, 240, 287, 405, 409 Longergan, D. C.  34 Lorenzen, M.  3, 9, 16, 17, 20, 181, 251, 254, 268, 274, 380, 383n.21, 490, 493 Lösch, A. 99 Lounsbury, M.  12, 191, 340 Lowe, J. R.  37 Lowe, N. 227 Løwendahl, B. 287 Lubart, T. I.  35, 36 Lubinski, D. 41 Lucas, R. E.  101, 102 Luckmann, T.  340, 341 Lukes, S. 341 Lundin, R. A.  268, 287 Lundvall, B. Å.  470 Luria, A. R.  41 Luthje, C. 320 Lynch, D. 184 Lyytinen, K. 18 McAdam, D. 286 McAnany, E. G.  433 McAndrew, C.  138, 139, 142 McCann, E. 109 McCann, P. 108 McCarthy, K. F.  234 McChesney, R. W.  507 McCleery, A. 130 McCoy, E. 342 McCracken, G.  172, 179 McCrae, R. R.  37, 38 McDermott, M. R.  37 McDermott, R. 308 McFall, L. 416 McGranahan, D. A.  107 McGrath, R. G.  50 McGrew, K. S.  41 McInerney, P.-B.  289 McKee-Walker, L. 37 McKinlay, A.  190, 222 MacKinnon, D. W.  56 McKinsey Global Institute  12 McLaughlin, K.  188, 195 McLaughlin, N.  77, 83, 84, 85, 89 McLeod, K. 458

McLeod, P. L.  40, 61 McLuhan, M. 177 McMaster, B.  221, 232, 237, 240 MacMillan, F.  4, 8, 17, 451n.2, 451n.3, 452n.10, 452n.12, 452n.13, 453n.18, 453n.23, 453n.29, 453n.30, 453n.38, 453n.44 Macmillan Patfield, F.  441, 453n.44 McMurria, J. 508 McNary, D. 428 MacNeill, S.  467, 473, 478 MacQueen, H.  452n.15 McQuivey, J. 425 McRobbie, A. 257 McVittie, E.  471, 477 Madjar, N. 54 Magnusson, M.  304, 306, 312 Magor, M. 476 Magretta, J. 184 Maguire, J. S.  211, 212 Maguire, S. 289 Maier, N. R. F.  61, 62 Malizia, E. 227 Mallard, G.  167n.2 Malmberg, A. 285 Maneker, M. 143 Manfield, J.  39, 59 Mangematin, V. 8 Manning, S.  272, 287, 288 Manuel, P. 331 Maoret, M.  8, 18, 19, 295n.1 Mapstone, N.  188, 189, 195 March, J. G.  273, 308 Marchi, G. 307 Margolis, S. E.  469 Marillion 412 Markert, J. 201 Marks, M. A.  56 Markusen, A.  99, 105, 107, 108, 227, 251, 487 Marlet, G. 106 Marotto, M.  221, 223, 229, 240 Marshall, A. 99 Marshall, D. P.  179 Marshall, L.  456, 459 Martin, R.  109, 110 Martin, X. 429 Martindale, C.  7, 78, 85 Marvasti, A. 228

526  Author index Maskell, P.  285, 289 Massa, F. G.  8, 12, 18, 19, 295n.1, 340 Matarasso, F.  221, 223 Mateos-Garcia, J.  3, 9, 20, 480n.3 Mathieu, J. E.  50, 56, 64, 66 Mathur, V. K.  101 Matthews, G. 38 Maula, M. 54 Maule, C. 508 Mauss, M. 338 Maxwell, R. 508 May, C.  462–3n.10 May, K. E.  61 Maynard, M. T.  50 Mazza, C.  7, 15, 192, 290 Mazzalovo, G. 60 Mednick, S. 35 Mei, J.  138, 142 Melcher, J. 40 Mellander, C.  3, 12, 106, 109 Menger, P.-M.  4, 16, 184 Merges, R. P.  445 Merton, R. K.  80, 86, 159, 160, 161, 163, 167–8n.7, 239 Mescon, T. S.  228 Meyer, A. D.  284, 285, 288, 290, 292, 293 Meyer, J. W.  192 Mezias, J.  383n.17 Mezias, S. J.  290, 383n.17 Michaud, Y. 229 Midler, C. 269 Miles, I.  401, 471 Milgrom, P. 271 Miller, C. 427 Miller, D.  6, 226, 228, 287, 429 Miller, K. D.  304 Miller, T. 508 Millner, C. 144 Mills, E. S.  99 Mincer, J.  101, 105, 106, 150 Miner, A. S.  228 Mischel, W. 37 Mishina, Y. 338 Mitchell, R. 63 Mitchell, S. 474 Mobley, M. I.  34 Moeran, B.  285, 290, 294

Mohan, J. 38 Molin, M. J.  301 Molotch, H.  177, 252, 259 Monin, P.  82, 336, 337, 339 Montanari, F.  227, 272 Montgomery, K. 289 Montgomery, L. 399 Moody, J. 80 Moons, A. 470 Moore, S. 144 Moran, A.  494, 495, 498 Morawetz, N.  495, 496 Moret, M. 340 Morgan, K. 99 Morgan, M. 196 Morley, E. D.  53 Morley, L. 478 Morris, P. 278 Morrison, K.  391, 398, 401 Morrison, P. D.  302 Moscovici, S. 56 Moser, V. 230 Moses, M.  138, 142 Moskin, J. 187 Mossig, I.  486, 488, 494 Motley, C. M.  227 Mudambi, R.  9, 16, 20, 181, 380, 383n.21 Mueller, J. S.  61, 64 Mulgan, G. 476 Mullen, B. 53 Muller, K. 471 Muller, P. 305 Müller-Seitz, G. 284 Mumford, M. D.  34, 54, 55, 61 Munro, W. 209 Murnigham, J. K.  53, 57 Murthy, U. S.  63 Muth, R. F.  99 Mykletun, R. J.  228, 230, 231, 233, 237, 238 Naglieri, J. A.  41 Nambisan, P. 310 Nambisan, S. 310 Nandagopal, K. 39 Narayanan, V. K.  278 Nathan, M. 473 Navis, C. 340

Author index  527 Neff, G. 253 Negrey, C.  106, 108 Negro, G.  268, 339 Negus, K.  405, 416, 417, 508 Nelson, R. A.  228 Nemeth, C. J.  52, 61 Nemiro, J. E.  55 Nesta  389, 472, 477, 481n.6 Netanel, N. W.  452n.9, 453n.45, 453n.47 Neuhoff, H. 230 New York Times 13 Nicholas, S. 63 Nielsen, T. 509 Nigam, A. 284 Nijstad, B. A.  55 Nimmer, M.  453n.44 Nitin, G. 508 Nivin, S.  224, 227, 234 Nixon, S. 416 Nohria, N. 219 Noll, J. 40 Norton, D. P.  224, 230 Nunamaker, J., Jr.  63 Nye, J. S.  506 O’Brien, D. 126 O’Connor, J.  389, 400 O’Dell, J.  422, 425 O’Flaherty, D. 475 O’Keeffe, A.  470, 474 O’Mahony, S.  225, 226, 230, 233, 235, 240, 287, 304, 305, 306, 312, 405, 409 O’Regan, T.  491, 492, 496 O’Reilly, C. A.  61 Oakes, L. 221 Oakley, K.  392, 400, 476 Oberholzer-Gee, F. 468 Obstfeld, D.  78, 86, 406, 407, 409, 416 Obstfeld, M.  383n.19 Ocasio, W. 284 Ocejo, R. E.  17, 201 Odekerken-Schröder, G.  303, 310 OECD 4, 126 Okhuysen, G. A.  294n.1 Oldham, G. R.  37, 51, 52, 56, 58, 64 Oliver, A. L.  289 Ondaatje, E. H.  234

Onken, M. H.  230 Orbach, B. Y.  382n.9 Ordanini, A. 275 Orlikowski, W. J.  294n.1, 333 Ortega, H. 50 Osborn, A. F.  55, 62, 64 Osnos, P. 427 Osterloh, M. 311 Ostrom, E.  377, 452n.21, 453n.35 Ottati, G. D.  99, 103 Ouwersloot, H.  303, 310 Oxera 468 Ozer, M.  303, 309 Pagan, J. D.  395, 473 Paleo, I. O.  285, 286, 289, 290 Pappi, F. U.  81 Park, M. 59 Parkinson, M. 505 Passariello, C. 187 Patfield, F.  453n.41, 453n.44 Patrick, V. M.  6 Patten, L. 467 Patterson, M. J.  40 Paulus, P. B.  50, 53, 59, 62, 63, 64, 66 Pavelis, C. 38 Pearson, M. M.  230 Peck, J. 109 Pedersen, J. S.  290 Pentland, B. T.  294n.1 Perkmann, M.  184, 187 Perloff, J. M.  367 Perretti, F. 268 Perrine, N. E.  38 Perrons, D.  254, 257 Perrow, C.  294n.1 Perry-Smith, J. E.  50, 52, 58, 64, 76, 77, 78, 81, 82, 85 Peterson, R. A.  14, 123, 125, 200, 212, 214, 285, 331, 333, 334, 335, 336, 339, 343, 405, 408, 409, 410, 457 Peterson, R. R.  6, 7, 14, 20 Pettinger, L. 416 Phillips, G. D.  84 Phillips, N. 213 Phillips, R. 495 Piber, M. 224

528  Author index Picard, R. G.  509 Pieros, A. 227 Pieterse, J. 421 Pinch, T. J.  6 Pine, B. J.  225, 229, 389 Pine II, J. P.  510 Pinney, T.  328, 329, 337 Pinto, J. 278 Pinto, R. 473 Piore, M. J.  99 Pipan, T. 287 Planellas, M.  7, 15, 192, 417 Plettner, D.  224, 227, 234 Plucker, J. A.  37, 41 Podolny, J. M.  86, 160, 337, 338 Poincaré, H.  167n.7 Polanyi, M. 81 Polos, L. 339 Pomfret, J. 137 Pommerehne, W. 150 Ponte, S. 511 Poole, M. S.  55, 62 Poole, P. 232 Porac, J. F.  338, 340 Porsander, L. 287 Porter, M. E.  99, 236, 392 Posner, R. A.  462–3n.10 Postigo, H.  302, 306 Postmes, T. 76 Potter, B. 232 Potts, J.  4, 9, 391, 397, 398, 399, 401, 480 Pötz, M. K.  307 Powell, W. W.  86, 191, 285, 289 Power, D.  251, 258, 288, 509 Powers, D. E.  37 Pratt, A. C.  4, 119, 222, 232, 251, 255, 389, 390, 462–3n.10, 487, 508, 509, 510, 511, 512n.1 Preckel, F. 41 Pretz, J. E.  37, 41 Pritzker, S. R.  3 Probst, T. 61 Prosser, E. K.  238 Prügl, R. 303 Pryke, M. 388 Pung, C. 467 QUT CIRAC  471

Radbourne, J.  221, 229, 230 Raikes, P. 511 Rammer, C. 471 Ranaivoson, H. 470 Rantisi, N. M.  251, 252, 260 Rao, H.  82, 287, 336, 337, 338, 339 Rapp, T. 50 Rathbone, N. 478 Rauch, J. E.  480n.3 Rausch, S.  106, 108 Ravid, S. A.  228 Raymond, E. 305 Reddy, S. K.  227, 240 Reimer, S. 498 Reisner, A. 409 Reiter-Palmon, R.  34, 38, 52, 59, 62 Renneboog, L. 138 Rentschler, R. 232 Renz, S. 230 Renzulli, J. S.  41 Reyburn, S.  137, 145 Richards, G.  286, 510 Richards, K. 335 Richards, R. L.  39, 41 Richardson, E.  216n.2 Rider, C. I.  330, 337 Ridge, M. 475 Ridgeway, S. 405 Rieple, A.  275, 279 Rightor, N.  496–7 Roback, J. 101 Roberts, J. 271 Roberts, K. H.  295n.1 Roberts, P. W.  330, 337 Robins, J. A.  228 Robins, K. 493 Robinson, J. 377 Rocamora, A.  124, 289 Roche, M. 510 Rogers, E. M.  86 Rogerson, R. J.  510 Rojek, C. 179 Romano, R. E.  367 Romer, P. M.  3, 101, 102, 105 Romo, F. P.  336 Roodhouse, S. 389 Roos, J. 221

Author index  529 Roper, S. 478 Roring, R. W.  39 Rosa, J. A.  338, 340 Rosch, E. 339 Rose, C. M.  443, 445, 452n.20, 453n.34, 453n.37 Rose, F. 423 Rosen, S.  150, 154, 156–7, 158, 163, 167n.5, 167n.6, 178, 378, 382n.9 Rosenbaum, J.  155, 156, 167n.1 Rosenfeld, A. M.  382n.9 Rossman, G. 422 Rouse, C.  168n.9 Rovell, D. 173 Roy, D. 38 Rubinstein, G. 39 Ruliani, F.  7, 8 Rüling, C.-C.  17, 286, 287, 291 Rullani, F.  304, 305, 309 Runco, M. A.  3, 35, 41 Runser-Spanjol, J. 338 Rustichini, A. 311 Ryan, J.  405, 408 Ryan, N. 123 Ryan, R. M.  310 Sabel, C. F.  99 Sahlin, K. 191 Salas, E. 53 Salgado, J. F.  55 Salter, A. 301 Salvemini, S. 186 Sanderson, M. 361 Sandholtz, K. 191 Santagata, W. 226 Santiago, M. 78 Santos, F. M.  339 Sapsed, J.  8, 14, 16, 17, 21, 277 Sarasvathy, S. 189 Satchell, S. 142 Sattler, H. 238 Saunders, K. N.  40 Sawer, P. 145 Sawhney, M. S.  228, 308 Sawyer, J. E.  51, 85 Sawyer, R. K.  55 Saxenian, A. 102

Saxon, M. S.  338 Schachter, S. 80 Schatz, T. 429 Schau, H. J.  304 Scheff, J. 230 Scherer, F. M.  376 Schilling, M. A.  77, 81, 91n.2 Schlesinger, P. 476 Schneider, H.  451n.2 Schneider, P. 480 Schooler, J. W.  40 Schot, J. 331 Schreier, M.  303, 307 Schrock, G.  105, 107, 108 Schuessler, E. 8 Schuldberg, D. 38 Schuldt, N. A.  289, 290 Schumpeter, J. A.  4, 6, 8, 14, 188, 353 Schurman, R. 209 Schüßler, E.  14, 284, 288, 291, 292 Schuster, J. M.  224 Schwab, A. 228 Scott, A. J.  102, 109, 110, 172, 174, 178, 179, 251, 258, 260, 275, 352, 392, 492, 493, 509 Scott, G. 34 Scott, R. W.  286 Scott, S. G.  51, 56, 57 Scott, W. R.  286 Scottish Publishers Association  130 Scully, J. 478 Seabright, P. 468 Seaman, B.  126, 127 Seaton, J. 507 Sedghi, A. 14 Sedgwick, J.  352, 367, 382n.7 Sedita, S. R.  226, 239, 271–2 Seifert, M. 226 Sell, S. K.  453n.39 Sellars, A. 467 Selznick, P. 200 Sen, A. K.  505 Servais, E. 122 Sewell, W. H., Jr.  294n.1 Sforzi, F. 99 Sgourev, S. 20 Shah, S. K.  302, 303, 304, 305, 306, 312

530  Author index Shalley, C. E.  51, 52, 53, 54, 56, 58, 59, 61, 65, 77, 78, 81, 82, 85 Shamsie, J.  5, 7, 184, 185, 222, 223, 226, 228, 287, 429 Shane, S. 189 Shani, D. 330 Shapiro, J. S.  311 Shaughnessy, M. F.  231 Shaw, D. 478 Sherman, B.  462–3n.10 Shils, E. 80 Shoda, Y. 37 Sichel, D. 472 Sifonis, C. M.  40 Siggelkow, N. 15 Silver, A. 53 Silver, D.  251, 260 Silvia, P. J.  38, 39, 41, 59 Simmel, G.  7, 15, 406 Simmons, R. 429 Simon, H. A.  35 Simon, L.  235, 253 Simonton, D. K.  14, 39, 51, 54, 64, 76, 85, 167n.7, 219, 225, 229, 230, 234, 235, 237, 238, 239, 240 Singh, S. 457 Sisario, B. 426 Skov, L.  289, 290 Slater, D. 211 Slavich, B.  3, 15, 186, 191, 192 Slayton, K. 34 Smiers, J.  453n.27 Smith, A. 466 Smith, C. 388 Smith, C. L.  63 Smith, C. W.  292 Smith, D. A.  80 Smith, G. 106 Smith, K. 232 Smith, M. 467 Smith, R. E.  37 Smith, S. M.  34 Smith, S. P.  230, 233, 234, 239 Smith, V. K.  230, 233, 234, 239 Smith-Maguire, J. 416 Smithies, R. 474 Smoll, F. L.  37

Snell, M. C.  219 Snyder, W. M.  308 Söderholm, A.  268, 287, 294n.1 Söderlund, J.  271, 278 Soldz, S. 37 Solow, R.  100, 102 Solt, M. E.  333 Somech, A.  55, 57 Soren, B. J.  224 Sorenson, O. 227 Soskice, D. 261 Spaenjers, C. 138 Spaulding, T. J.  309 Spicer, A.  184, 187 Spiro, J.  76, 77, 78, 227, 228, 230, 268 Spitzlinger, R. 471 Spotify 17 Staber, U. H.  268, 288 Stahl, S. S.  39 Stark, D. 340 Stark, R. 80 Starkey, K.  272, 294, 405 Starr, L. S.  340, 341 Stasser, G. 61 State of Victoria  396 Staw, B.  58, 59 Steele, D.  221, 222, 223 Stein, M. 78 Sternberg, R. J.  3, 33, 35, 36, 40, 41, 51, 52, 54, 91n.1, 167n.3 Stewart, G. L.  66 Stinchcombe, A. 152 Stokburger-Sauer, M. E.  6 Stoneman, P.  401, 481n.5 Storper, M.  20, 100, 102, 251, 252, 383n.20 Storr, A.  184, 187 Strandgaard Pedersen, J.  184, 285, 286, 287, 294 Strang, D. 192 Streitfeld, D.  427, 428 Stroebe, W. 56 Strom, S. 184 Stromberg, D. 468 Strongman, L.  233, 237 Strumpf, K. 468 Subotnik, R. F.  39–40 Suddaby, R.  291, 331, 340

Author index  531 Sukel, W. M.  221, 223, 235 Sullivan, F. L.  329, 333, 341 Surowiecki, J.  173, 178, 180, 307 Suthersanen, U.  453n.43 Sutton, J.  371, 383n.15 Svejenova, S.  3, 7, 8, 15, 18, 19, 184, 185, 187, 190, 191, 192, 193, 196, 201, 272, 290, 293, 340, 417 Swaminathan, A.  333, 335, 341, 343 Swaminathan, V. 227 Swanson, S. R.  230 Swidler, A. 208 Swords, J. 489 Sydow, J.  14, 268, 271, 272, 277, 287, 288 Szulanski, G. 189 Taber, G. M.  328 Tagger, S.  50, 52, 61 Tajfel, H. 61 Tanaka, J. 193 Tang, J. 286 Tang, M. 57 Tapp, S. R.  227 Taübe, F. A.  9, 181 Taylor, C.  222, 229, 231, 236, 389 Taylor, F. 16 Taylor, P. J.  491, 492 Tempest, S. 405 Tesluk, P. E.  50 Tetlock, P. E.  88 The Independent 139 Thiel, J. 493 Thirlwall, A. P.  470 Thomas, H. 340 Thompson, D.  287, 288 Thompson, G. D.  228, 232 Thompson, J. B.  131 Thompson, K. 352 Thompson, L.  63, 338 Thornton, P. H.  127, 223, 225, 230, 235 Thrift, N. 179 Throsby, C. D.  119, 125, 126, 352 Throsby, D.  5, 151, 389 Tierney, P.  51, 58, 64 Tilbury, V. 228 Tinagli, I. 393 Tinic, S. 498 Tirole, J. 306

Tiwana, M. 38 Tjosvold, D. 57 Todolí, V.  186, 188, 192 Todorova, G. 62 Torrance, E. P.  61 Townley, B.  3, 119, 190, 221, 222, 224, 225, 227, 234, 235 Towse, R.  126, 223, 224, 451n.3, 452n.8, 456 Toynbee, J.  462–3n.10 Treskon, M. 177 Triandis, H. C.  62 Tricker, M. 224 Tripp, C. 181 Tripsas, M. 302 Truby, J. 471 Trumpbour, J. 429 Tschang, F. T.  14, 274, 275, 277, 279 Tsujinala, Y. 81 Tuomi, K. 495 Turbide, J.  221, 224, 226, 232, 233 Turner, B. 273 Turner, G. 173 Turner, J. C.  61 Turner, J. R.  269 Turner, S. R.  35 Turok, I.  224, 229, 487, 497 Tushman, M. L.  6, 15, 54 Uhl-Bien, M. 50 Uhlman, C. E.  34 Ukanawa, K. 336 Ulibarri, C. A.  233, 237 Ulibarri, V. C.  233, 237 UNCTAD  5, 29–30, 470, 502, 512n.1 UNDP 470 UNESCO  4, 5, 29–30, 471 UNESCO Institute for Statistics  503 United States Department of Commerce  375 Unsworth, K.  54, 91n.1 Uotila, J. 54 Urry, J.  388, 472 Usai, A.  227, 272 Uzzi, B.  76, 77, 78, 82, 227, 228, 230, 268 Vaidhyanathan, S.  446, 453n.46 Vaillant, G. E.  37 Valacich, J. 63

532  Author index van Caenegem, W.  452n.9 Van de Ven, A. H.  55 Van de Vlirt, E.  58 Van den Bossche, P.  451n.2, 511 Van der Ploeg, R.  467 Van Grasstek, C.  471 van Jaarsveld, D.  253, 261, 262, 507 van Knippenberg, D.  55 van Rees, C. J.  209, 215 van Schijndel, M.  453n.27 Van Woerkens, C.  106 Vang, J. 492 Vargas, A. 100 Veblen, T. 143 Vega, L. A.  35 Velthuis, O.  124, 125, 132, 141 Venables, A. J.  252 Ventresca, M.  338, 340 Verdaasdonk, H.  209, 215 Verganti, R. 396 Vessillier, M. 352 Victor, B. 221 Vinodrai, T.  17, 19, 108, 251, 254, 256, 258, 259, 260, 261, 262 Vives, L.  187, 192, 417 Vogel, H. L.  352 Von Hagen, J.  468 Von Hippel, E.  301, 302, 303, 304, 306, 309, 310, 320, 321 Von Krogh, G.  306 Von Nordenflycht, A.  228, 231 von Rittman, J. J.  336 von Streit, C. F.  229, 240 von Thünen, J. H.  99 Voss, G. B.  7, 8, 228, 233, 234, 235, 240 Voss, Z. G.  228, 233, 234, 235, 237, 240 Vozikis, G. S.  228, 231, 232, 236 Wadhwani, R. D.  9, 184, 201, 213, 216n.1, 339, 405, 406, 417 Waelde, C.  452n.15 Waguespack, D. 227 Wai, J. 41 Wakabayashi, N.  227, 230, 234, 239 Waldman, D. M.  228 Waldron, J.  441, 452n.18, 453n.44 Walker, A. 37

Walker, C. 480 Walker, R. 104 Wallach, M. A.  41 Wallas, G. 34 Wallin, M. W.  304, 306, 311 Walls, W. D.  219, 237, 238 Walsh, G. 238 Walters, A. M.  37 Wang, T. 508 Wang, Y. 39 Ward, S. 496 Ward, T. B.  34, 40 Wasko, J. 352 Wassall, G.  150, 151 Waterman, D. 352 Watson, M. A.  285, 289, 290, 293 Watson, M. R.  16, 230, 238, 338 Watt, J. C. Y.  142 Weber, D. 128 Wedlin, L. 191 Wei, L. 219 Weick, K. E.  222, 253, 295n.1 Weinberg, C. B.  224, 226, 228, 238 Weingart, L. R.  61, 62 Weinstein, D. E.  359 Weller, S. 489 Welsh, M. A.  57 Wen, F. 142 Wenger, E.  308, 311 Werde, B. 426 West, M. A.  51, 55, 56, 57, 58, 61 West, R. E.  304, 305, 306, 312 Weyers, S.  230, 233, 234, 238, 239 Wheaton, C. 228 White, C. A.  7, 184, 190, 192, 204 White, D. R.  80 White, H. C.  7, 80, 184, 190, 192, 204 White, T. 229 Whitley, R.  269, 270 Whitney, K. 61 Widiger, T. A.  37 Wierenga, B. 228 Wiese, M. 41 Wigert, B.  38, 59 Wijnberg, N. M.  184, 223, 229, 231, 240, 272, 285, 286, 289, 290 Wikström, K.  271, 276

Author index  533 Wilkinson, K. T.  433 Willey, M. M.  209 Williams, K. Y.  61 Williams, M. L.  63, 473 Williams, S. 487 Williams, W. M.  76 Williamson, S. H.  375 Windeler, A. 288 Winter, S. 189 Withers, G. A.  352 Wittel, A.  256, 263 Witten, M. 209 Wittkower, D. E.  432 Wojan, T. 107 Woldfradt, U. 37 Wolf, P. 286 Wolf, R. G.  310 Wood, E. H.  228, 229, 231, 237 Woodman, R. W.  51, 52, 55, 85 Woodmansee, M.  458, 462–3n.10 Work Foundation  389 World Intellectual Property Organization (WIPO)  5, 29–30, 456 Worpole, K. 476 Wray, F. 489 Wright, D. 416 Wright, J. C.  37 Wry, T. 191

Wuthnow, R. 209 Wyszomirski, M. J.  389 Yamada, J.-I.  227 Yamashita, M. 227 Yang, H.-C.  62 Yang, L. T.  76 Yates, J.  294n.1, 333 Ye, Z. 4 Yoo, Y. 18 Young, E. 458 Yuan, F.  51, 55 Zacarro, S. J.  56 Zademach, H.-M.  491 Zahra, S. A.  54, 185, 189, 194 Zakaras, L. 234 Zelditch, M., Jr.  79 Zelizer, V. 211 Zhang, J.  37, 59 Zhao, W.  339, 341, 342 Zhou, J.  38, 51, 58 Zilber, T. 340 Zott, C.  184, 191 Zuckerman, E. W.  79, 89, 228, 327, 336, 339 Zufryden, F. S.  228 Zukin, S. 211 Zytgow, J. M.  35

Subject Index

3M 308 access restrictions, typology of change  15 accountability to external evaluators  88 Achatz, Grant  186, 187, 191, 193, 195 Acurio, Gastón  188, 189, 190, 192, 195 adaptations, and copyright  458–9 Adrià, Ferran  186, 187, 188, 189, 190, 191, 192, 194, 195, 417 advance forward incrementation (propulsion model) 42 advertising creative clusters  393 innovation 399 knowledge spillovers  391 market for symbolic goods  124 performance 228, 231 projects  253, 255, 272 stardom  172–3, 178, 179, 180–1 toll goods  378 typology of change  11, 13, 17 agglomeration creative city  99–100 global production networks  487 project-based nature of entertainment  379 agreeableness 38 Ai Weiwei  141 Alicia 189 Alinea  186, 187, 193 Amazon  131, 422, 426, 427–8, 432 American Idol 175, 423 American Viticultural Areas (AVAs)  337 Andersson, Ake 98 Andrés, Jose  189 Android 302 Anikó 191 animation 16 anti-circumvention right  453n.30 antiques/antiquities

dealers 10 market 138–9, 146 China  139–40, 141–2, 144 Indian antiquities  204 typology of change  12 anxiety 39 Apple cloud computing  426 iTunes  8, 15, 131, 422, 425, 426 team creativity  53 architecture change drivers  8 classifications 340 knowledge spillovers  391 local scenes and spaces  260 performance 230 projects and project ecologies  253, 262 as public good  467 symbolic and economic values  4 symbolic capital  123 typology of change  11, 12, 18–19, 21 Armani, Giorgio  60 art classifications 339 fairs 287, 288 genres 334 India  202–5, 209–12, 213, 214–15 local scenes and spaces  260–1 market 138–9, 146 artistic merit  229 China 136–47 Indian modern art  203–5, 212 symbolic goods  123–4, 132 typology of change  12 nature of 223 organized field-level events  292 social networks  76, 81, 87, 91n.4 artistic dividend  227

536  Subject Index artistic merit  225–6, 229–31, 232, 233–6, 237, 239 Matthew effect  239 organized field-level events  292 across time  238 artistic opportunities, creative entrepreneurs 188 Arts Council of Great Britain  476 assortative matching, labour market 163–4, 165 auctions Chinese art market  136–47 Indian modern art  204–5 organized field-level events  290 typology of change  10 audience-generated content see user innovation authenticity art market  137, 144–5 haute cuisine chefs’ partners  190 stardom 173 autonomous communities, user innovation 304–5 avant-garde stage of a genre  335 award ceremonies  285, 287, 289–90 Bach, Johann Sebastian  76 BACON 35 Bainbridges auctioneers  136–8, 139, 140, 142, 144–5, 146 ballet change drivers  8 market for symbolic goods  124 performance 236 typology of change  10, 12 Bandcamp 422 barbers as cultural intermediaries  414 barcamps 286 barriers to entry see entry barriers bartenders as cultural intermediaries  414–15 Bazaar by José Andrés, The  189 Beckham, David  173 Beckham, Victoria (Posh Spice)  173, 178 beer 335 beggar thy neighbour policies  472 Berge, Pierre  60 Berne Convention  457, 459–60

Better by Design (New Zealand)  396, 397 Bieber, Justin  175, 178 Big Brother 176 big-C creativity  54 Bilbao effect  12–13 bipolar disorder  39 blogs, music industry  412–13 Bollywood  9, 16, 20, 181, 380 Bonhams 145–6 Bontà del Mar  194 book fairs  290 Booker Prize  234, 237, 289 books see novels; publishing Borders 427 Bottura, Massimo  188, 195 boundary shaping devices, classifications as 339 brainstorming 53, 62–3 brand ambassadors  414–15 brand rents, global production networks  488 branding haute cuisine chefs  189, 193, 194, 195 projects and project ecologies  259 stardom  172–3, 178, 179, 180–1 urban and national  509 user innovation  307 Bread & Butter fashion fair  288 breakthrough niches  332 Breitkopf & Härtel  376 British Library  467 British Museum  13 brokerage 405–20 core–periphery perspective  86 roles 406–11 new interpretations and empirical studies 415–18 service industries  414–15 Brooks, Mel  239 built environment  260 Burning Man festival  286, 287 business models  3, 4, 6–7, 8, 222 copyright licensing transaction costs  468 Creative Class  110 creative clusters  392 haute cuisine chefs  184–99 activities 191–2 actors 190–1

Subject Index  537 entrepreneurial capabilities  194 motivation for establishing a venture  187–8 opportunities pursued  188–90 value creation  192–3 workshops and enterprises  194–6 journalism 456 music industry  412 organized field-level events  286 symbolic goods, market for  125 toll goods  378 typology of change  13, 15, 17, 19–21 user innovation  306, 311–14 business opportunities, creative entrepreneurs 188–9 butchers as cultural intermediaries  414 c/o pop  288, 292 capital career  254, 256, 258 symbolic goods, market for  121–7 see also cultural capital; economic capital; social capital; symbolic capital capitalism accumulation logic  475, 476 creative destruction  353 Marxist conception of copyright law 462–3n.10 regulation theory of  98 career capital  254, 256, 258 career trajectories before entering a creative industry 335, 337 cartels 378 categorical imperative  336, 339 Cedroni, Moreno  186, 190, 191, 194 celebrity see stardom Celler de Can Roca, El  190 chance labour market  161–3 stardom 177 Chandler, Alfred  98 change drivers 7–9, 20 global balance of power for creative products 430–3 typology 9–22 see also cultural change and entrepreneurship

CHC theory  40–1 chefs as cultural intermediaries  414, 415, 417 see also haute cuisine; nouvelle cuisine chess players  40 China art market  136–47 creative clusters  392 culture as strategic industry  13 film industry  16 China Guardian  140 Christie’s  137, 140, 204 cinema see film cities characteristics 12 creative cities  503 creative clusters  392 creativity in the  96–115 3Ts of economic development  102–4 clustering and agglomeration  99–100 Creative Class approach  97, 98, 101–10 economic spikiness and inequality 108–10 human capital  100–1, 102, 103, 104–8, 109 innovation and growth  100 place, central role of  104–6 global hubs and clusters  509 global production networks  487, 489, 491 marketing 509–10 new media and technology companies  17 organized field-level events  286, 287 projects and project ecologies  251, 258 urban renewal  12 Clandestino Susci Bar  191 Clap Your Hands Say Yeah  413 Clarkson, Kelly  175 classical conditioning  36 classical music bad reviews  36 change drivers  8 expertise acquisition  39, 40 material base of creative products  6 performance  223, 229, 236 semiotic codes  6 social networks  76 team creativity  53, 57 typology of change  10, 12, 21

538  Subject Index classifications 327–8, 338–43 California wine  341–2 evolution 339–40 horizontal and vertical differentiation 340–1 shared representations, mobilized meaning systems, and boundary shaping devices 338–9 cloud computing  426, 432 clusters creative 391–3 creative city  99–100 cultures of development  510 global production networks  487, 488–89, 492, 497–8 organized field-level events  285 cocktail bartenders as cultural intermediaries 414–15 Coen brothers  231 cognitive–social approach to personality coherence 37 cognitive structuring  289–90 collectors 10 collusion, toll goods  378 combinations and recombinations projects 253 typology of change  14 commercial performance  225–9, 230, 232, 233–7, 239 Matthew effect  239 organized field-level events  293 across time  237–8 commoditization 432 copyright 439–40, 450 public policy  475, 476 vs. singularization  132 of stardom  172–3, 180 communality networks  256 communities autonomous 304–5 business models  311–14 sponsored 304–5, 309 user innovation  301–14, 321–4 competitive advantage brokerage 417 industrial policy  471–2 public policy  477

skilled labour  105 technology 8 user innovation  304, 314 competitive dynamics  6 competitive niches  332 complementarity 236–7 componential model of creativity  36 team creativity  52 computer games see videogames conflict 253 conformity pressure social networks  76, 78, 80, 81, 82, 84, 85 team creativity  63 connectivity networks  256 conscientiousness 37–8, 39 conspicuous consumption  143 consultants 407, 414 consumer goods  18 consumer surplus  366, 369–71 control, cultures of development  507–8 coordinators  407, 409, 410 co-productions cultural brokers  409, 410–11, 412, 414–15, 416 global production networks  495–7 see also user innovation copyright 439–64 Berne Convention  460–1 change drivers  8 creative economy  474 creativity and  439–42 cultural production vs. romantic author 457–9 duration  444, 445, 450, 459 economic capital  125 genres 334 marginal revenues/profits  376 public domain protection  442–9 publishing 131 reform prospects  461 toll goods  378 transaction costs  468 user innovation  314 see also piracy core–periphery continuum creativity in social networks  76–7, 80–90 niches 331, 333 user innovation  305, 307, 311

Subject Index  539 cost structures change drivers  8 material base of creative products  6 Counter Strike 302, 306 country music  230 Cox Review  391, 478 Creative Britain White Paper  401, 477 creative cities  503 Creative Class  97, 98, 101–10 creative economy  473 labour market  393 organized field-level events  286 performance in the creative industries  227, 232, 236 place marketing  511 public policy  478–9 Creative Credits  478 creative destruction  352–8 dynamic product differentiation  361, 365 innovation 398, 399 creative economy  97, 98, 396, 401, 512n.1 global production networks  490 mapping 479 public policy  471–4, 477–80 research programme  479–80 Creative Economy Programme  391 creative entrepreneurs see entrepreneurship Creative Industries Council  478 Creative Industries Mapping Study 389, 476–7 creative labour market see labour market creative mind  33–49 creative person  35–42 expertise, knowledge, and intelligence 39–41 personality 36–9 theories 35–6 types of individual creative contributions 41–2 creative process  34–5 creative tourism  511 creative trident  393–5, 396, 473 creativity in the city  96–115 continuum 54–5, 60 defining  33–4, 52–3, 55, 78 factor (c) 37

nature of 3 as outcome  58–61 in social networks  75–95 core–periphery perspective  80–5 legitimacy 77–8 social structure of creativity  78–80 social structure of  78–80 in teams  50–74 innovation 55–8 as outcome  58–61, 65 as process  61–5 types 42–3, 91n.1 creativity factor (c) 37 critics haute cuisine  190–1 symbolic capital  124 cultural brokerage see brokerage cultural capital art market  142 disintermediation 413, 417 market intermediaries  142 performance in the creative industries 225–6 stardom 172 symbolic goods, market for  121–2, 123, 124, 127–9, 132 cultural change and entrepreneurship  200–18 Indian high-end fashion  205–8, 209–12, 213, 214, 215 Indian modern art  202–5, 209–12, 213, 214–15 cultural competence  121 cultural development  126 cultural economy  472, 491 cultural enhancement  144 cultural entrepreneurship  212 cultural exception to trade rules 508, 510–11 cultural identity  126, 129 art and heritage objects  143 co-produced films  496 cultural industries  504, 507 public policy  472, 475–6 cultural infrastructure, China  141 cultural policy  498 cultural regeneration  237 cultural value  20, 467

540  Subject Index culture changes 4 and development  502–14 culture in development  502, 503, 504–6 cultures of development  502, 506–10 economic development  20 film industry  16 homogenization 441 Indian 9 local 260 merit goods  8–9 museums as showcase for  13 national 3 performance in the creative industries 231, 232 production, and copyright  457–9 semiotic codes  16 sociology 215 as strategic industry  13 cumulative advantages  155, 159–63, 164, 165 customer communities  308–9 customer support  309 cycle theory of symbol production  331 Cyrus, Miley  175 Damm Group  194 definitions creative industries  5, 10–12, 29–30, 222, 388, 477, 481n.5, 481n.6, 481n.7, 503 creativity  33–4, 52–3, 55, 78 deinstitutionalization of mega media  423–5 demand art market China 140–1 Indian modern art  213 as change driver  7, 10, 20 creative economy  473 design as key creative input  397 economic evolution  398 entrepreneurship and cultural change  213 knowledge spillovers  391 labour market  157–9 niches 330–1 organized field-level events  293 projects and project ecologies  253 user innovation  303

democratization brokerage 417, 418 disintermediation in the music industry 413 Department for National Heritage (UK)  475 depression 39 design as key creative input  396–7 local scenes and spaces  260 projects  253, 254, 256, 260, 262, 270 public policy  478 typology of change  18, 19 Design Council (UK)  478 design rights  461n.1 Designing Demand  478 developing countries  20 development 502–14 culture in  504–6 cultures of  506–10 economic see economic development diffusion activities, haute cuisine  192 digitalization 421–33 books  424, 427–8, 432 copyright 460, 461 deinstitutionalization of mega media  423–5 digital revolution  273 digital rights management  468 film 424, 428–30 global balance of power  430–3 music  424, 425–6, 432 disintermediation  405–6, 417, 418 books 427–8 digitalization 422–3 global balance of power for creative products 430–3 mega media  423–5 movies 428–30 music 411–13, 425–6 distillers as cultural intermediaries  414, 415 divergent creativity  77, 80, 81, 82–3, 84, 87 diversification 15 Dubstep 14 Ducasse, Alain  187, 192, 193, 195 Dylan, Bob  335 dynamic efficiency, measuring  356–8 dynamic product differentiation  361–5, 375 dynamics of creative industries  351–86

Subject Index  541 creative destruction  352–8 economic drivers  371–8 sunk costs and industrialization  358–71 earnings knowledge externalities  467 labour market  150–1, 153, 154, 156, 163–4 star jobs  157–8 projects and project ecologies  257 stardom  171, 172, 173, 378 economic capital performance in the creative industries  225, 226–9, 234–5, 236 stardom 181 symbolic goods, market for  121–2, 123–4, 125–32 economic development  96, 503 China 139 cities 12 creative city  100, 106–10 Creative Class model  102–4, 106–10 creative economy  472 creative industries as engines of  4 economic value of creative industries  126 India 213 innovation 398, 400 performance in the creative industries  228–9, 236, 237 public policies  20 economic drivers of entertainment industry’s evolution 371–8 economic entrepreneurship  212 economic spillovers  398 economic sustainability  226, 227, 236 economic value  4, 20 art market  138, 142, 143–4 entrepreneurship and cultural change  212 Indian high-end fashion  206–8 Indian modern art  204–5 haute cuisine chefs  187, 192–3 market intermediaries  142 organized field-level events  286 performance in the creative industries  221 project-based organizations  274 stardom  171, 172, 173, 179 symbolic goods, market for  119, 120–4, 125–32

user innovation  306, 311 wine, Californian  327 see also earnings economy 387–404 creative industries as a sector  387–90 creative industries over an innovation trajectory 397–400 spillovers from creative industries  390–7 education  150–1, 154, 161 Einstein, Albert  90 Einstellung Effect  40 elBulli/elBullitaller  186, 187, 188, 191, 192 elite talent  40 Ellis, Bret Easton  179 embeddedness, global production networks  487, 489, 492, 497–8 emerging economies  20 repatriation of cultural objects to  143, 144, 145 trophy purchases  143 EMI 425, 426 emotional stability  38–9 employment see labour market endorsements haute cuisine chefs  193 stardom  172–3, 178, 179, 180–1 enterprise business model, haute cuisine chefs 195–6 entrepreneurship British Cultural Studies  476 cultural 212 cultural change  200–18 Indian high-end fashion  205–8, 209–12, 213, 214, 215 Indian modern art  202–5, 209–12, 213, 214–15 dynamics of creative industries creative destruction  353 marginal revenues/profits  376 product differentiation  362, 474 production possibility frontier  354 toll goods  377–8 economic 212 haute cuisine chefs  184–99 activities 191–2 actors 190–1 entrepreneurial capabilities  194

542  Subject Index entrepreneurship (Cont.) motivation for establishing a venture 187–8 opportunities pursued  188–90 value creation  192–3 workshops and enterprises  194–6 labour market  154–5 projects and project ecologies  262 typology of change  15 entry barriers  20, 21 creative city  103 global production networks  487, 488 music industry  413 public policy  468, 469 stardom 178 environmental sustainability  226, 227, 231, 236 Eskenazi, Giuseppe  140, 144 Europareise 288 event landscapes  288 see also organized field-level events evolution of entertainment industries  371–8 evolutionary economics  397–400 experience economy  388, 389 design 396, 397 place marketing  510 experience goods, arts and culture as  467 expertise acquisition 39–40 team creativity  58 exploitation creativity continuum  54 project-based organizations  273–5, 276, 277 user innovation  308–9 exploration creativity continuum  54 project-based organizations  273–5, 276 user innovation  308 exports 470–1 externalities see spillovers extraversion 38, 39 extrinsic motivations, user innovation 310–11, 313 Facebook  422, 424, 430, 432 facilitating structures of dominance  290 fad niches  332

fair dealing/fair use, and copyright  440, 442, 444, 445, 448, 450 fairs 285 fakes and forgeries  137, 141, 144–5 fan funding  412, 413 Fargo 231 fashion change drivers  9 co-branding 259 genres 334–5 haute couture  7, 13, 15, 60 India  205–8, 209–12, 213, 214, 215 local scenes and spaces  260 market for symbolic goods  124 organized field-level events  288 performance 236 projects and project ecologies  259 semiotic codes  6 symbolic and economic values  4 team creativity  60 typology of change  11, 13, 14–15, 18, 21 Ferriss, Timothy  427 festivals performance  228, 230, 231, 237, 238 see also organized field-level events Fichte, Johann Gottlieb  458 fiction see novels field-configuring events (FCEs)  285, 288–9 field-level events see organized field-level events film animation 16 bad reviews  36 Bollywood  9, 16, 20, 181, 380 change drivers  7, 8 classifications 339 digitalization 424, 428–30 dynamics 351 industrialization 353 marginal revenues/profits  376–7 product differentiation  361, 364, 365 production possibility frontier 354, 355 project-based nature of entertainment 379–80 revealed comparative advantage  356–7 sunk costs  358–60

Subject Index  543 sunk costs and price discrimination 367, 368–71 sunk costs and quality races  371–4 total factor productivity  356 genres 335, 336 global production networks  490–8 labour market  162 material base of creative products  6 monopolies 507 organized field-level events  286, 290–1, 292, 429 performance  223, 227–8, 229, 230, 234, 237–8 projects  253, 261–2, 269, 272, 274, 275 public policy  476 returns to scale  468 social networks  84 stardom  179, 180, 181 symbolic capital  124 team creativity  53, 56, 64 typology of change  15–16, 17, 20, 21 financial networks, film and television 495–7 fine arts performance 223 typology of change  13 see also specific fine arts Finn, Ben and Jonathan  322 five-factor personality model  37–9 foot-soldier jobs  153 foreign direct investment  509, 510 forgeries and fakes  137, 141, 144–5 forward incrementation (propulsion model) 42 freedom of speech  441, 448–9 freelance workers  254, 255, 257, 258, 260 Freudian thought  83–4, 89 Fromm, Erich  83–4, 89 Galcotti, Sergio  60 galleries 10 gaming see videogames Garcia, John  36 gatekeepers  407, 408–10, 414, 415–16 film 429–30 music 412, 426 Gates, Bill  102

Gehry, Frank  12–13, 18 gender factors, projects and project ecologies 257 Geneplore model of the creative process  34 genius 167n.7 genres  327–8, 333–8, 342–3 California wine  336–8 evolution 335–6 horizontal and vertical differentiation 336 social context  334–5 geography see cities; projects and project ecologies Gevinson, Tavi  178 global hubs and clusters  509 global production networks (GPNs) 486–501 film and television  490–8 global value chains  511–12 globalization art and antiques market  146 as change driver  9, 10, 14, 16, 20 copyright 441 deinstitutionalization of mega media 423, 424 and diversity  441 national identity  131 public policy  476 stardom 172 television markets  490–3, 495, 498 glocalization 428 goals, team creativity  59–60 Goody, Jade  176 Google  15, 426, 427, 432 government policy see public policy Gowers Review  391 Grandinetti, Russell  427 Grocholski, Luan  137, 138 group creativity see creativity: in teams guardian jobs  153 Guggenheim museum, Bilbao  12–13 Half Life 306 Hall, Peter  98 halo effect  160 Härtel, Gottfried  376 haute couture  7, 13, 15, 60

544  Subject Index haute cuisine business models  184–99 activities 191–2 actors 190–1 entrepreneurial capabilities  194 motivation for establishing a venture 187–8 opportunities pursued  188–90 value creation  192–3 workshops and enterprises  194–6 change drivers  7 intellectual property rights  222 typology of change  13, 14, 15, 21 healthcare goods and services  474 heritage culture in development  505 parks 10 performance in the creative industries  237 as public good  467 repatriation of heritage objects  143 typology of change  10–12 high culture  504–5 Hilton, Paris  173, 174–5 hip hop music  8 Hirst, Damien  123, 171 Hocking, Amanda  427–8 honesty 38 horizontal differentiation classifications 340 genres 336 niches 331–2 products 361–4, 375 Howe, Elias  34 Hudson, Jennifer  175 human capital creative city  100–1, 102, 103, 104–8, 109 creative economy  473 dynamic spillovers  397–8 economic theory of  150 labour market  150, 152, 154 human resource rents, global production networks 488 human rights law  448, 451 humility 38 hypomania 39 idea generation, team creativity  52, 55, 56, 58, 59, 62–3

idealism, culture in development  504–5, 511, 512 Ideate change type  9–10, 11, 13–15, 20 identity cultural see cultural identity national 476 organizational 235 personal 257 professional 235, 236 in project-based organizations  270 Imeem 413 imitation 274, 275 improvisation 253, 254 incremental creativity  54 innovation 274 legitimacy 77 social networks  77, 80, 87 teams 57, 60, 65 India entrepreneurship and cultural change 200–16 high-end fashion  205–8, 209–12, 213, 214, 215 modern art  202–5, 209–12, 213, 214–15 film  9, 16, 20, 181, 380 globalization 9, 14 indirect revenues business model  313 industrial districts  509 industrial policies  468, 470–1, 476 industrial stage of a genre  335 industrialization of entertainment  351, 352–5, 358–71 and variety  360–1 industry structures change drivers  7, 8 genres 334, 337 typology of change  19, 20 Inedit 194 inequality art market  138–9 Creative Class  108–10 labour market  148–9, 151–2, 156, 163, 164–6 cumulative advantage  159–63, 164, 165 star jobs  157–8 projects and project ecologies  257–8 stardom 378 toll goods  378 information asymmetries  469

Subject Index  545 information goods, arts and culture as 467, 468 information stickiness, and user innovation 303 informational product differentiation  362 innovation architecture 18–19 camps 286 cities 12 combination as core process of creativity  14 creative city  100, 105 Creative Innovation System  471 economy  391, 397–401 haute cuisine  185–6, 191, 193, 195 industrial policy  471 knowledge spillovers  391 material base of creative products  6 museums 13 National Systems of Innovation framework 470 organized field-level events  286, 294 phases 398–9 project-based organizations  269–70, 272–3, 274, 278 projects and project ecologies  252, 253, 254, 259–60 public policy  477, 478 creative economy  472, 473, 474 Schumpeterian tradition  19 social networks  87 team creativity  51, 54–8, 64 typology of change  13, 14, 15, 16, 18–19, 20 user see user innovation videogames 16 Innovation Nation White Paper  401, 478 institutional context, project-based organizations 277–8 institutional theory  340 institutional work, organized field-level events as 291–3 instrumental rationality  221–2 instrumentalism, culture in development  505–6, 511, 512 integrated entertainment companies  15 intellectual commons  441–2 intellectual property rights (IPR) cultures of development  508 economic capital  125

performance in the creative industries  222 public policy  468 see also copyright intelligence 40–1 intermediaries see mediation Internet Corporation for Assigned Names and Number (ICANN)  461 intrinsic motivations, user innovation 310–11, 313 introversion 38 investment theory of creativity  35–6 Invisible Hand theorem  466 Iper 194 iTunes  8, 15, 131, 422, 425, 426 Jackson, Peter  232 jazz 4 Jersey Shore 176 job stratification  150, 151–3 Jobs, Steve  102, 172 joint authorship, and copyright  446 Jordan, Michael  172–3, 179, 180 journalism 456 Journey 422 Khan, Shahrukh  181 King, Stephen  432 Kitschbaum, Larry  427 knowledge 40 spillovers  391, 467, 479 Kokonas 187, 193 Kolind, Lars  271 Koons, Jeff  171 Kubrick, Stanley  84 Kulash, Damian  425 labour market  148–70 assortative matching  163–4 clusters 509 cumulative advantage  159–63, 164, 165 differences in talent, relative comparison and dynamic amplification  153–6 education and earnings  150–1 job stratification and the reward of talent 151–3 projects and project ecologies  252–5, 258, 259, 261, 262 public goods, arts and culture as  467

546  Subject Index labour market (Cont.) public policy  472 spillovers 393–5 star jobs  156–9 Lady Gaga  426 Lafleur, Ross  320 Lally, James  144 Lam, Pearl  144 laws and regulations copyright 439–64 cultures of development  508–9 genres 334, 337 global production networks  497–8 human rights  448, 451 wine industry  341 Le Chapelier, Isaac René Guy  458 Le Corbusier  18 lead users innovation  302–7, 308, 310 music software industry  324 leadership, team creativity  64 legislation see laws and regulations legitimacy brokerage 408, 417 creativity and social networks  76, 77–8, 79, 81, 84, 85, 86, 87, 88, 89, 90 economic and symbolic value  119, 122, 129 Indian high-end fashion  207 organized field-level events  292 liaisons 407 licences Berne settlement  460 open source software  306, 312 television show formats  457, 494–5 linear production  273–4 liquid production  273–4 literature see novels; publishing live entertainment dynamics  354, 356, 364–5 see also performance arts; specific forms of live entertainment local scenes and spaces  258–61 Lord of the Rings film trilogy  232 Louvre 13 low culture  504–5 McClintock, Barbara  76 Madonnina del Pescatore  186, 190, 191

magazines 257 managerial performance  226 manic depression  39 Mar, La 192 marginal revenues/profits  376–7, 381 Marillion 412 marketing music industry  412–13 niche 330–1, 333 place 509–10 markets for creative labour see labour market failures  466–70, 474, 475 genres 335, 337 project-based organizations  276–7 Marshall, Penny  427 Marxist conception of copyright law 462–3n.10 mass culture  504–5 material base of creative products  5, 6–7 change drivers  7, 8 typology of change  9–22 material value  201, 214 Matthew Effect  159–60, 239 media deinstitutionalization 423–5, 433 dynamics 356–7 haute cuisine  191 Indian high-end fashion  207, 215 Indian modern art  215 innovation 398–9 lobby groups  508 organized field-level events  287 plurality 468 project-based organizations  273–4, 279 stardom 177–8, 179 user innovation  273 mediation 405–20 entrepreneurship and cultural change  201 Indian high-end fashion  207, 215 Indian modern art  204, 215 film industry  429–30 genres 336 music industry  411–13 roles 406–11, 415–18 symbolic capital  124–5 Mendelssohn, Felix  76 mental illness  38–9

Subject Index  547 mental models, shared  64 merchandising 378 merit goods  9, 467–8, 475 Michelin Guide  190–1 minibar by josé andrés 189 mobilized meaning systems, classifications as 338–9 modernism 211–12 India 213 art  202–5, 209–12, 213, 214–15 modernization theory  504 monopolies cultures of development  507–8, 509, 510, 511 public policy  468–9 Morandi, Giorgio  81 Moss, Kate  173, 180 motivations brokers  407, 410, 416 user innovation  310–11, 312, 313 movies see film Mozart, Wolfgang Amadeus  39, 40 multilocalization 424 multiple job holding  151, 152, 153 museums China 141 culture in development  505 material base of creative products  6 performance 228, 232 typology of change  10, 11, 12–13, 21 music brokerage 408–9, 410–11 disintermediation 411–13 change drivers  7, 8 classifications 338, 339 co-branding 259 copyright 441, 458 country 230 digitalization  421, 422, 424, 425–6, 432 dynamics 351 industrialization 353 marginal revenues/profits  376 product differentiation  361 production possibility frontier  354, 355 project-based nature of entertainment 380 sunk costs  358, 361 sunk costs and price discrimination  368

sunk costs and quality races  375, 377 toll goods  377, 378 economic and social value  131 genres  334, 335, 336 hip hop 8 jazz 4 local scenes and spaces  260–1 material base of creative products  6 monopolies 508 niches 331 organized field-level events  286, 288, 289, 290, 291, 292 performance  227–8, 230, 231, 234, 235, 238 project-based organizations  272, 274–5, 276–7, 279 projects and project ecologies  253, 254–5, 259 software 320–6 stardom 180 typology of change  12, 14, 15–16, 17, 21 world 511 see also classical music; opera national identity  476 national security violations, and copyright 447 Netflix  8, 15–16, 17 Netscape Navigator  460 network embeddedness, global production networks 489, 492 network spillovers  391 networks architecture 19 change drivers  7, 8, 9 creative economy  473 creativity in  75–95 core–periphery perspective  80–90 legitimacy  76, 77–8, 79, 81, 84, 85, 86, 87, 88, 89, 90 social structure of creativity  78–80 embeddedness 489, 492 failure 469–70 financial 495–7 labour market  163, 165 latent 272, 294 market for symbolic goods  121, 132 organized field-level events  286, 289, 290, 293–4

548  Subject Index networks (Cont.) performance in the creative industries 228, 231 project-based organizations  272–3 projects and project ecologies  254, 255–9, 262 returns to scale  469 social capital  121 spillovers 391 user innovation  304, 305, 308, 310 see also financial networks; global production networks; social networks neuropsychological model of creativity  41 neuroticism 39 New Urban Economics (NUE)  99 newspapers 330, 334 Newton, Sir Isaac  79 Next  187, 191, 193 Next Gen review  478 nexus work  409 niches  327–8, 330–3, 342–3 California wine  333 evolution 331 horizontal differentiation  331–2 organizational ecology and marketing approaches 330–1 typology 332 normalization, innovation trajectory  399 nouvelle cuisine  82, 339 novels bad reviews  36 Booker Prize  234, 237, 289 copyright  457, 458, 459 expertise acquisition  40 genres 334 organized field-level events  289–90 performance 234, 237 see also publishing obscene material, and copyright  447 Officina 191 OK Go  425, 432 open core business model  313 open source software (OSS) Sibelius plug-ins  325 user innovation  305, 306, 307, 311–13 openness to experience  37, 39

opera change drivers  8 dynamics 361, 362 market for symbolic goods  124 performance 230, 231 public policy  475 typology of change  10, 12 opportunity costs, quality races  373, 375 optimal marginality  83 optimal network structuration strategy  77, 83–6, 87, 88 organizational ecology  330–1 organizational structures genres 334–5, 337 material base of creative products  6 social networks  87–8 organized field-level events  284–300 as creative products  287–8 film  286, 290–1, 292, 429 as institutional work  291–3 as mechanisms of configuring and maintaining creative fields  288–91 researching 293–4 Osteria Francescana  188 Oticon 270–1 Outlaw Innovation  321 ownership, cultures of development  507–8 Paramount Case  507 Parker, Robert  342 Parker, Sean  422, 425 parody, and copyright  445 patents 461n.1 material base of creative products  6 open source software  312 path dependency hypothesis  364 patriotism 143 pay see earnings P-E-N theory  36 performance arts artistic merit  230 commercial performance  227–8 typology of change  10, 11 see also live entertainment; specific performance arts performance in the creative industries  219–47 defining and measuring  220–5

Subject Index  549 taxonomy 225–33 across time  233–9 personality 36–9 stardom 173 team creativity  56 philosophy 81, 82 photography 124 Picasso, Pablo  54, 90 Piibe, Mark  426 Pineda, Arnel  422 piracy 276 fiction 334 organized field-level events  292 public policy  468 publishing 131 typology of change  17 Pixar 53, 56, 64 place marketing  509–10 Plantier, Laurent  195 plug-ins, music software industry  320, 322, 323–5 poetry 78, 236 policy global production networks  498, 499 lobby groups  508 public see public policy Poly International  140 post-industrial production  104–5 Potzsch, Oliver  428 power cultures of development  507–8 global production networks  487, 489, 494, 498 Prada 123 preinventive structures  34 Preserve change type  9–13, 21 price discrimination marginal revenues/profits  376 sunk costs  365–71 privacy 17 problem solving  52, 56, 61, 62, 64 Producers, The 239 product differentiation  361–5, 375 product specialists business model  313 product spillovers  391 production possibility frontier  353–5 sunk costs and industrialization  361

productivity 226, 228 professional communities  308 professions theory  331 project-based organizations (PBOs), managing 268–83 dynamic contexts  276–9 relationships 271–3 roles 269–71 routines 273–5 projects and project ecologies  251–67 commonalities and differences  261–2 dynamics of creative industries  378–80, 381 local networks  255–8 local scenes and spaces  258–61 logic 252–5 Propellerhead Software  306 propulsion model  41–3 protected niches  332 psychoanalysis 83–4, 89 psychological safety  56, 62 public domain  441 importance 446–7 protection 442–9 Public Enemy  458 public goods, arts and culture as  466–7, 468, 475, 504 public interest, and copyright  440 public policy  465–85 as change driver  8–9, 10, 16, 19, 20, 21 China creative industries  141 repatriation of cultural heritage  145 copyright 448 Creative Class  107 creative economy  471–4, 479–80 creative industries in the wider economy 390–1 evaluation 480 global production networks  496–7 India 212–13 industrial policies  470–1, 476 market failures  466–70, 474, 475 performance in the creative industries  229, 231, 236, 237 projects and project ecologies  262 UK 474–8 public subsidies  8–9, 21

550  Subject Index publishing book fairs  290 digitalization  424, 427–8, 432 dynamics  353, 356–7, 366 economic and social value  127–31 haute cuisine chefs  190, 192, 193 material base of creative products  6 performance 235 projects and project ecologies  254, 255 Scottish 129–31 stardom 179 typology of change  15–16, 17, 21 see also novels QMI Solutions  397 quality races  362, 371–5, 377 radical creativity  54, 60 radio classifications 340 product differentiation  364 Raphael 76 reason in human affairs  221–2 ReBirth 306 recombinations and combinations projects 253 typology of change  14 reconstruction/redirection (propulsion model) 42 Recreate change type  9–10, 11, 18–19, 20 redefinition (propulsion model)  42 redirection (propulsion model)  42 Redzeppi, Rene  190 regional development  392 regulations see laws and regulations reinitiation (propulsion model)  42 relational structuring  289 Remote Associates Test  35 rents, global production networks  488 repatriation of cultural objects to emerging economies  143, 144, 145 replication haute cuisine  192 propulsion model  42 representational gaps  62 representatives 407, 409 reputation

changes 76 haute cuisine chefs  189, 190, 193, 194 labour market  148, 149, 153, 156, 158, 159–60, 161, 163, 165–6 open source software  312 organized field-level events  290 performance 230 projects and project ecologies  254, 256, 258, 259, 272 publishing 127, 128 stardom 173, 176 user innovation  311, 312 res communes  442–4, 446, 447, 449, 450 res divini juris  445, 446, 447, 451 res nullius 449 res publicae  442–4, 446, 447, 450 res universitatis  445–6, 447, 451 resource-partitioning theory  331, 333 resource structuring  290 restaurants see haute cuisine; nouvelle cuisine returns to scale  468, 469 revealed comparative advantage (RCA)  356–8 risk project-based organizations  274, 275, 276 projects and project ecologies  254–5, 257, 261, 262 risk-taking 36 rivalry 253 Roca, Joan  190 Rockwell, Norman  54 Rolling Stones  335 romantic author hypothesis  458–9 Saffron art.com  204, 205, 214–15 Saint Laurent, Yves  60 scale, returns to  468, 469 scene stage of a genre  335 schizophrenia 39 Schoonmaker, Frank  341 science bad reviews  36 combination as core process of creativity 14 cumulative advantage  159–61 personality of creative scientists  38 social networks  76, 79, 81, 86 Scottish publishing  129–31

Subject Index  551 search functions, cultural brokers  408, 409, 410–11, 416 Sector Skills Councils  478 security violations, and copyright  447 selection functions, cultural brokers  408, 409, 410–11, 416 semiotic codes of creative products  5–7 change drivers  7, 8 typology of change  9–22 serendipity 167n.8 Service Class  109–10 service quality of consumption experience 226, 230 shared mental models  64 shared representations, classifications as  338 Sheen, Charlie  179 Sibelius 322–6 Silverman, Tom  426 Simpson, O.J.  180 singularization vs. commoditization  132 size of the creative industries  5 skunk works  59–60 small-c creativity  54 Smith, Adam, ‘Invisible Hand’ theorem  466 snowboards 302 social anxiety  39 social capital art market  142, 144 Chinese creative industries  141 disintermediation 413, 417 haute cuisine chefs  187–8 performance in the creative industries 225–6 stardom 181 symbolic goods, market for  121–2, 124, 132 social construction theories  340 social context, genre linked to  334–5 social inclusion  126 social media  422, 423 film industry  430 global balance of power for creative products 432 haute cuisine  190 monopolies 469 music industry  276–7 stardom  173, 178, 181 social networks  405

publishing 428 roles 406–7, 410–11 social opportunities, creative entrepreneurs 188, 189 social stratification  89 social value  467 sociality networks  256 societal embeddedness, global production networks 489, 497–8 societal impact of performance  225–6, 231–2, 233, 236–7, 238, 239 sociology of culture  215 software creative clusters  393 as creative industry  477 knowledge spillovers  391 monopolies 469 music 320–6 project-based organizations  270 user innovation  302, 305, 306, 307, 311–13 Soldja Boy  413 Soler, Juli  187 Sony 427 Sotheby’s  136, 140, 204, 292 Soundcloud 413 spaghetti organizations  270–1 Spears, Britney  175, 178, 179 speech, freedom of  441, 448–9 spillovers 390–8 innovation 397–8 public goods  467 public policy  477 creative economy  474 industrial policies  471 research 479 sponsored communities, user innovation 304–5, 309 Spotify 15, 17 SSICA 194 standardization 382n.5 haute cuisine  192 team creativity  65 star jobs  152–3, 156–9 stardom 171–83 commodification 172–3 consumption 177–8 democratic turn  173–4

552  Subject Index stardom (Cont.) erosion 180–1 future 181 new forms  174–6 processes 177–9 production 178–9 toll goods  378 valuation of film studios/media conglomerates 429 state making, and culture  505 status haute cuisine chefs’ partners  190 Indian high-end fashion  208 labour market  165 organized field-level events  291, 292 social networks  89–90 trophy art  143 strategic context, project-based organizations 278–9 substitutability 236–7 sunk costs dynamics of creative industries  353, 358–71, 381 marginal revenues/profits  376 and price discrimination  365–71 quality races  371–5, 377 and variety  358–60 entertainment companies  16 industrialization 104 tourism investment  506 typology of change  16, 17 videogames 17 sustainability economic  226, 227, 236 environmental  226, 227, 231, 236 symbolic capital market for symbolic goods  122, 123–5, 127–32 performance in the creative industries 225–6 stardom 172 symbolic goods, market for  119–35 Bourdieu and the symbolic realm  120–2 publishing field  127–31 translating capitals  122–7 symbolic power  131 symbolic value  4, 214

brokerage 416 global production networks  488 haute cuisine chefs  186, 193 market for symbolic goods  119, 120, 122–5, 127–32 organized field-level events  286 user innovation  310 synthesis (propulsion model)  42–3 system failure  469–70 talent creative city  102, 103, 105, 106 Creative Class model  102, 103, 105 labour market  148–9, 151–6, 164–6 assortative matching  163–4, 165 cumulative advantage  160 star jobs  156–9 projects and project ecologies  254 public policy  477 stardom  172, 173, 175, 179 tastemaking functions, cultural brokers  409, 410–11, 414, 415, 416 teams creativity see creativity: in teams diversity 60–2 technological rents, global production networks 488 technology as change driver  7–8, 10, 12, 13, 15, 17, 19, 20, 21 copyright 443 creative city  102, 103, 105 Creative Class model  102, 103, 105 creative economy  473 deinstitutionalization of mega media  423–4 dynamics 361 economic growth  100, 102, 103, 105 genres 334, 337 innovation 400 knowledge spillovers  391 levies 468 niches 330 stardom  172, 173, 180 team creativity  63–4 user innovation  303, 305, 307, 309, 310 see also digitalization Teicher, Oren  427

Subject Index  553 Tejedor, Carles  191 television dynamics 365 formats  456–7, 494–5, 498 global balance of power  432 global production networks  490–8 organized field-level events  290 project-based organizations  272, 274, 275, 277 projects and project ecologies  255, 261 public policy (UK)  475 reality programmes  174, 175, 176, 181 returns to scale  468 talent shows  423 temporary clusters  285 tenacity, labour market  155, 167n.2 territorial embeddedness, global production networks 489, 492 tertius gaudens  406–7, 409–10, 416 tertius iungens  407, 409–10, 416 tertius transferens  408, 409–10, 411, 414, 415, 416 textiles India 206–7 typology of change  11, 18 theatre dynamics industrialization 354, 355 product differentiation  361, 365 sunk costs and price discrimination 366–7 total factor productivity  356 performance  231, 232, 235, 237 project-based organizations  269 public policy  474 typology of change  13 threshold theory  41 Timberlake, Justin  175 tolerance  102, 103–4, 105, 108 toll goods  377–8, 381 total factor productivity (TFP)  356, 358–9 tourism creative 511 culture in development  506 cultures of development  509 economic value of creative industries  126 heritage 237

museums 12 performance in the creative industries  231, 237 public goods, arts and culture as  467 tournaments labour market  148, 149, 153, 154, 155, 163, 164 organized field-level events  285, 290, 291 trade, cultures of development  508–9, 511 trade fairs  286–7, 290 Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement  453n.39, 457, 462n.5, 462n.7 trademarks 312, 461n.1 traditional stage of a genre  336 tragedy of the commons  443, 445 transactive memory  64 Transform change type  9–10, 11 15–17, 20 TRIPS Agreement  453n.39, 457, 462n.5, 462n.7 trophy art  143 Trump, Donald  172, 179 trust art market  141, 145 atmosphere of 99 organized field-level events  289 projects and project ecologies  256, 258 UK Restaurant Magazine  191 Ulysses (Australia)  396–7 unconferences 286 UNESCO Convention on the Promotion of the Diversity of Cultural Expressions  471 universities creative city  100, 105, 107, 108 creative/innovative communities  453n.37 innovation 100 until we see new land UG  286 urban environment see cities user innovation  301–19 business models  311–14 firm strategies to create value  307–11 lead user, communities, and value creation 302–7 music software industry  320–6 project-based organizations  273 value 3–4 brokerage  408, 415, 416 chains 511–12

554  Subject Index value (Cont.) creation, haute cuisine chefs  192–3 cultural 20, 467 culture in development  504, 511–12 entrepreneurship and cultural change  200–1, 209, 211, 212, 213–15 Indian high-end fashion  206–8 Indian modern art  203, 204–5, 215 of film studios/media conglomerates  429 global production networks  487, 488, 494, 498 labour market  154–5, 165–6 material 201, 214 organized field-level events  285, 290 performance in the creative industries  222, 223, 225 place marketing  510 public policy  467 social 467 user innovation  302–11 Sibelius 324, 325 see also economic value; symbolic value Valve Software  306 variety industrialization of entertainment  360–1 sunk costs  358–60 vertical differentiation classifications 340–1 genres 336, 338 vertical product differentiation  362–4 Via Veneto  191 videogames dynamics 351 industrialization 353 product differentiation  364 production possibility frontier  354, 355 sunk costs  358 sunk costs and quality races  375 project-based organizations  274, 275, 277, 279 projects and project ecologies  253 returns to scale  468 team creativity  60 typology of change  11, 16–17

user innovation  302, 306 viral marketing  412–13 virtual customer environments (VCE)  310 virtual working  55 Voice 423 wages  see earnings Warhol, Andy  173 Web 2.0:  310 Williamson, Oliver  98 wine Californian  328–30, 333, 336–8, 339, 341–2, 343 classifications 339, 341–2 genres 336–8 niches 333, 343 organized field-level events  291, 292 typology of change  13, 14 winner-takes-all markets project-based organizations  276 public policy  469 stardom 178–9 Women in Love 495–6 Woods, Tiger  173, 180 workshop business model  195–6 World Intellectual Property Organization (WIPO) Internet Treaties  460 world music  511 World Trade Organization (WTO) TRIPS Agreement  453n.39, 457, 462n.5, 462n.7 Wright, Frank Lloyd  18, 19 Xerox 308 Young, Edward  458 YouTube 175 deinstitutionalization of mega media 424 global balance of power for creative products 432 music  412, 413, 422 Zawalich, Bob  324