Tuesday, 13 October 2020
BOM WEEK 5 NOTES
BOM
Peltoniemi - Cultural
Industries: Product-market
Characteristics, Management
Challenges and Industry
Dynamics
- Introduction
• Cultural industries are those that produce experience goods with considerable creative
elements and aim these at the consumer market via mass distribution. The creative
elements consist of stories and styles, and they serve the purposes of entertainment,
identity-building and social display
• First, there is a persistent oversupply of creative labour, which is independent of
economic cycles
• Secondly, there is extreme uncertainty regarding the success potential of any specific
product
• At organization level, the objective is to explore the organizational interactions taking
place in cultural production, and the effects they have on the end product
- Cultural Industries Definitions
• Distinction between three approaches: (1) the political economy of culture, concerned
with how cultural production is financed and organized, and the effects of this on
power and social justice; (2) organizational, business and management studies on the
specifics of cultural production including innovation, organizational structures and the
management of creative labour; and (3) cultural studies aiming to study popular culture
as a social phenomenon.
- Product-Market Characteristics
• Taste and Popularity
- Cultural goods are experiential, and consumers have a desire for novelty
- Most cultural industries operate under increasing returns
- There is extreme variance in sales, i.e. products diverge into hits and misses
• Taste
- So far, most attention has been targeted at social class, cumulative learning and
various demographic variables. In the spirit of Bourdieu, the upper classes have
1
, Tuesday, 13 October 2020
been found to have more highbrow tastes, and the lower classes more popular
tastes
- Several studies have also shown a nostalgia effect in tastes. Mature consumers tend
to prefer musical styles that were popular in their youth
- Demand forms as a combination of taste, price, infor- mation and other factors,
whereas taste either forms cumulatively through consumption or is inherent.
- Some nationalities are more inclined to like certain genres and to stick to those
likings.
• Popularity
- Cultural goods tend to diverge into hits and misses and this is confirmed by research
on sales distributions
- Producers try to create positive word of mouth by reporting box office performance
and investing in advertising
- The second factor predicting popularity is signals, i.e. superstars and exotic
locations
- Superstars & Sales: Small differences in ability translate into large differences in
success. Unfortunately, the additional sales generated by superstars tend to be
smaller than their cost, rendering their films poorer financial per- formers
- The third explanation for popularity rests on the balance between novelty and
familiarity; consumers need a level of familiarity to understand a product and a level
of novelty to enjoy it.
- Secondly, the idea of information cascades, where consumers dis- cover what they
like and inform their friends about such products
• Gatekeeping
- Gatekeeping is a central concept in the production of culture view
• Upstream Selectors
- Selection meetings, selections are made on the basis of an artist conforming to a
genre, not imitating other artists, having a good reputation
- Logically, advertising budgets are allo- cated to products that have already
succeeded in other markets
• Downstream Selectors
- The findings on whether positive or negative reviews are more influential are mixed.
Negative reviews have been found to influence consumer expectations more,
whereas positive reviews have been found to influence sales more
- Information provided by lay critics does not necessarily differ from professional
offerings: the more experienced lay critics are, the more their reviews concur with
those of experts
- At national level, volume has been found more important, and valence in local
settings
- Management Challenges
2
, Tuesday, 13 October 2020
• Art for art’s sake and art for profit
- The production process shapes artistic expression because artists and distributors
have different critical standards.
- Creative individuals need to conform simultaneously to both artistic and financial
logics in cultural production
• Reconciling artistic and profit goals
- These two views of art and profit as mutually exclusive and complementary goals
hint at the exist- ence of varying levels of domination of these goals, and varying
combinations ending up with different results
- An artist with a pure art motive teamed up with a manager with a pure profit motive
is hardly likely to perform well on either dimension.
• Suits and Creatives
- Symbol creators are granted considerable autonomy because of the need for
originality and novelty
- In companies engaged in cultural production, artists and managers must
collaborate. Artists are dependent on support personnel, and this constrains their
range of artistic options
• Inferior working conditions
- Even though the poetry profession, for example, is not lucrative, it is considered
prestigious and attractive
- Formal training in the cultural professions does not predict individual financial
success as it does in many other professions
- The majority of artists earn relatively little from copyright, while the majority of
earnings goes to corporations and a small number of superstars
• Work Allocation
- Artists form latent networks, which activate when projects are launched
- In an insecure job market, risks are offset by networking, and by building semi-
permanent groups, which offer artists a source of competitive advantage and
collaboration opportunities
- Previous co-productions successful in terms of audience size increase the likelihood
of success of future collaborations
- Closed networks have been found to perform better in domestic markets and worse
in international markets
- Industry Dynamics
• Cultural Industries as Communities
• Sense-making within the community
- Sense-making research has focused on popularity charts, events and award rituals.
- Trade fairs and fashion weeks generate visibility for the field and also create a
continuing global circuit
3
BOM WEEK 5 NOTES
BOM
Peltoniemi - Cultural
Industries: Product-market
Characteristics, Management
Challenges and Industry
Dynamics
- Introduction
• Cultural industries are those that produce experience goods with considerable creative
elements and aim these at the consumer market via mass distribution. The creative
elements consist of stories and styles, and they serve the purposes of entertainment,
identity-building and social display
• First, there is a persistent oversupply of creative labour, which is independent of
economic cycles
• Secondly, there is extreme uncertainty regarding the success potential of any specific
product
• At organization level, the objective is to explore the organizational interactions taking
place in cultural production, and the effects they have on the end product
- Cultural Industries Definitions
• Distinction between three approaches: (1) the political economy of culture, concerned
with how cultural production is financed and organized, and the effects of this on
power and social justice; (2) organizational, business and management studies on the
specifics of cultural production including innovation, organizational structures and the
management of creative labour; and (3) cultural studies aiming to study popular culture
as a social phenomenon.
- Product-Market Characteristics
• Taste and Popularity
- Cultural goods are experiential, and consumers have a desire for novelty
- Most cultural industries operate under increasing returns
- There is extreme variance in sales, i.e. products diverge into hits and misses
• Taste
- So far, most attention has been targeted at social class, cumulative learning and
various demographic variables. In the spirit of Bourdieu, the upper classes have
1
, Tuesday, 13 October 2020
been found to have more highbrow tastes, and the lower classes more popular
tastes
- Several studies have also shown a nostalgia effect in tastes. Mature consumers tend
to prefer musical styles that were popular in their youth
- Demand forms as a combination of taste, price, infor- mation and other factors,
whereas taste either forms cumulatively through consumption or is inherent.
- Some nationalities are more inclined to like certain genres and to stick to those
likings.
• Popularity
- Cultural goods tend to diverge into hits and misses and this is confirmed by research
on sales distributions
- Producers try to create positive word of mouth by reporting box office performance
and investing in advertising
- The second factor predicting popularity is signals, i.e. superstars and exotic
locations
- Superstars & Sales: Small differences in ability translate into large differences in
success. Unfortunately, the additional sales generated by superstars tend to be
smaller than their cost, rendering their films poorer financial per- formers
- The third explanation for popularity rests on the balance between novelty and
familiarity; consumers need a level of familiarity to understand a product and a level
of novelty to enjoy it.
- Secondly, the idea of information cascades, where consumers dis- cover what they
like and inform their friends about such products
• Gatekeeping
- Gatekeeping is a central concept in the production of culture view
• Upstream Selectors
- Selection meetings, selections are made on the basis of an artist conforming to a
genre, not imitating other artists, having a good reputation
- Logically, advertising budgets are allo- cated to products that have already
succeeded in other markets
• Downstream Selectors
- The findings on whether positive or negative reviews are more influential are mixed.
Negative reviews have been found to influence consumer expectations more,
whereas positive reviews have been found to influence sales more
- Information provided by lay critics does not necessarily differ from professional
offerings: the more experienced lay critics are, the more their reviews concur with
those of experts
- At national level, volume has been found more important, and valence in local
settings
- Management Challenges
2
, Tuesday, 13 October 2020
• Art for art’s sake and art for profit
- The production process shapes artistic expression because artists and distributors
have different critical standards.
- Creative individuals need to conform simultaneously to both artistic and financial
logics in cultural production
• Reconciling artistic and profit goals
- These two views of art and profit as mutually exclusive and complementary goals
hint at the exist- ence of varying levels of domination of these goals, and varying
combinations ending up with different results
- An artist with a pure art motive teamed up with a manager with a pure profit motive
is hardly likely to perform well on either dimension.
• Suits and Creatives
- Symbol creators are granted considerable autonomy because of the need for
originality and novelty
- In companies engaged in cultural production, artists and managers must
collaborate. Artists are dependent on support personnel, and this constrains their
range of artistic options
• Inferior working conditions
- Even though the poetry profession, for example, is not lucrative, it is considered
prestigious and attractive
- Formal training in the cultural professions does not predict individual financial
success as it does in many other professions
- The majority of artists earn relatively little from copyright, while the majority of
earnings goes to corporations and a small number of superstars
• Work Allocation
- Artists form latent networks, which activate when projects are launched
- In an insecure job market, risks are offset by networking, and by building semi-
permanent groups, which offer artists a source of competitive advantage and
collaboration opportunities
- Previous co-productions successful in terms of audience size increase the likelihood
of success of future collaborations
- Closed networks have been found to perform better in domestic markets and worse
in international markets
- Industry Dynamics
• Cultural Industries as Communities
• Sense-making within the community
- Sense-making research has focused on popularity charts, events and award rituals.
- Trade fairs and fashion weeks generate visibility for the field and also create a
continuing global circuit
3
