Cultural Industries and Business Models
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Questions and Answers

What is a primary characteristic of the Motley Crew Problem in creative industries?

  • High residual value in failed projects.
  • Standardized contracts for all contributors.
  • Fair distribution of rewards among all artists.
  • Uneven distribution of risk and rewards. (correct)
  • What is a consequence of low residual value in creative projects?

  • Heightened risks associated with creative endeavors. (correct)
  • Decreased competition among artists.
  • Uniform contracts across the industry.
  • Increased investment in standardized goods.
  • Which type of selection system relies heavily on expert judgment?

  • Expert Selection (correct)
  • Peer Selection
  • Artist Selection
  • Market Selection
  • In creative industries, what is a common arrangement for revenue-sharing?

    <p>50/50 split between artists and facilitators.</p> Signup and view all the answers

    What is the primary consequence of having too much organizational slack?

    <p>Leads to inefficient resource management</p> Signup and view all the answers

    How did the rise of Impressionism affect evaluation in the art world?

    <p>It established expert evaluation as dominant.</p> Signup and view all the answers

    Which type of slack is most likely to promote exploitation over exploration?

    <p>Absorbed Slack</p> Signup and view all the answers

    What differentiates creativity from innovation in the context of creative industries?

    <p>Creativity relates to inputs, while innovation refers to outputs.</p> Signup and view all the answers

    What is ambidexterity in the context of organizational slack?

    <p>The capacity to explore and exploit simultaneously</p> Signup and view all the answers

    What strategy can help creative industries adapt to changing market conditions?

    <p>Engaging with relevant evaluators to gain recognition.</p> Signup and view all the answers

    What type of innovation is characterized by creating entirely new categories?

    <p>Radical innovation</p> Signup and view all the answers

    How does high environmental threat affect unabsorbed resources?

    <p>It increases exploration efforts</p> Signup and view all the answers

    Which statement best reflects the relationship between creativity and stress in organizational slack?

    <p>Moderate stress can facilitate creativity</p> Signup and view all the answers

    What is product exploration in the context of innovative strategies of organizational slack?

    <p>Introducing radical innovations</p> Signup and view all the answers

    What effect does customer-relational slack have under low environmental threat?

    <p>Promotes stability through exploitation</p> Signup and view all the answers

    Which type of slack is characterized by unused facility capacity?

    <p>Operational Slack</p> Signup and view all the answers

    What is one of the main characteristics of cultural industries?

    <p>They produce experience goods with creative elements.</p> Signup and view all the answers

    Which type of selectors evaluate creative projects once they are in the market?

    <p>Downstream selectors</p> Signup and view all the answers

    What is NOT a revenue source mentioned for creative industries?

    <p>Personal donations from employees</p> Signup and view all the answers

    What challenge do cultural industries face regarding revenue?

    <p>Finding sustainable revenue streams</p> Signup and view all the answers

    What is one objective of pricing for museums?

    <p>To educate children and gain broader support</p> Signup and view all the answers

    What is the innovative pricing model known as 'exit prices' designed to achieve?

    <p>Balance museum objectives with visitor flexibility</p> Signup and view all the answers

    What is a con of the mass distribution focus in cultural industries?

    <p>It often excludes high-end art forms.</p> Signup and view all the answers

    Which of the following is a misconception about cultural goods?

    <p>Cultural goods have primarily utilitarian value.</p> Signup and view all the answers

    What primary factor influences the success of experience goods during their product launch?

    <p>The volume of online ratings</p> Signup and view all the answers

    Which type of goods benefits more significantly from the quality evaluation via online ratings?

    <p>Search Goods</p> Signup and view all the answers

    Why does eWOM have a greater impact than traditional WOM?

    <p>It is faster, more convenient, and has a wider reach</p> Signup and view all the answers

    What effect does negative feedback have during a product's growth phase according to the negativity bias concept?

    <p>It can dramatically speed up the decline if it dominates</p> Signup and view all the answers

    What is the impact of eWOM during the later stages of a product's life cycle?

    <p>It diminishes as the product matures</p> Signup and view all the answers

    What can companies do to enhance their product launch strategy based on consumer sentiment?

    <p>Engage likely fans to generate positive reviews</p> Signup and view all the answers

    What is a key characteristic of credence goods?

    <p>Their value is difficult to evaluate even after consumption</p> Signup and view all the answers

    Which phase of the product life cycle is eWOM most critical for?

    <p>Product Launch Phase</p> Signup and view all the answers

    What is the relationship between organizational slack and artistic innovation?

    <p>Organizational slack is positively related to artistic innovation.</p> Signup and view all the answers

    How does the size of an organization affect innovation?

    <p>Larger organizations can provide more resources but may also experience inertia.</p> Signup and view all the answers

    What distinguishes conceptualists from experimentalists according to Galenson?

    <p>Conceptualists often produce early breakthroughs compared to experimentalists.</p> Signup and view all the answers

    Which type of artist typically experiences a 'dawn peak' in creativity?

    <p>Early-bloomers linked to artistic movements.</p> Signup and view all the answers

    What does Galenson's critique of his own model emphasize?

    <p>Creativity cannot be reduced to a single peak.</p> Signup and view all the answers

    According to Accominotti's argument, what primarily influences individual creativity?

    <p>Interactions between artists within movements.</p> Signup and view all the answers

    What benefit does participation in an artistic movement provide to artists?

    <p>Access to shared knowledge and competitive environment.</p> Signup and view all the answers

    Why has there been a drop in peak creativity age in the art world?

    <p>Art world's demand for rapid innovation favors conceptualists.</p> Signup and view all the answers

    Study Notes

    Cultural Industries: Product-market characteristics

    • Cultural industries produce experience goods with significant creative elements, targeting consumers through mass distribution.
    • The value of cultural goods is often more symbolic, aesthetic, or socially meaningful than utilitarian (practical) value.

    Selectors and gatekeepers

    • Upstream selectors are firms that select artists or creative projects to bring to the market (e.g., publishers, movie producers).
    • Downstream selectors are individuals or organizations who select artists or creative goods that have relatively high value (e.g., reviewers, award juries).

    Business Models in Creative Industries

    Revenue Sources

    • Selling the creative product (e.g., music, film, art)
    • Advertising: Selling ads based on audience size (e.g., TV commercials).
    • Subsidies: Gaining government or institutional support based on audience interest or social value.
    • Grants/Sponsorship: Support from foundations, corporate sponsors, or loyalty programs.
    • Ancillary services: Revenue from additional offerings like gift shops or restaurants (e.g., free museum entry but income from other services).

    Challenges

    • Finding sustainable revenue streams at minimal cost.
    • Maintaining competitive advantages and preventing imitation by competitors.

    Pay as you go: Museum pricing proposal

    Museum Objectives- Why Price?

    • To help to fulfill its basic museum responsibilities, namely protect the collection.
    • To achieve economic goals - generate revenue and differentiate the museum from others through unique offerings at various levels of access.
    • To achieve other social/political goals - gaining the support of broader groups or stakeholders (e.g., by educating children).

    Exit Prices as an Innovative Pricing Model for Museums

    • Exit Prices are based on time spent or exhibitions visited, providing flexibility.
    • The aim is to balance museum objectives and address inefficiencies of traditional pricing.
    • Exit Prices can be fixed, voluntary, or obligatory but variable.

    Motley Crew Problem and Low Residual Value

    • The "Motley Crew Problem refers to the collective of specialized contributors (e.g., in film or TV) working together to produce a cultural good, where the risk and rewards are unevenly distributed.
    • Low Residual Value means that failed creative projects have little value, making them riskier than standardized goods.

    Key Findings

    • Unequal Contracts: Oversupply of artists and uncertainty give facilitators power to offer less favorable deals to artists.
    • Direct Sales Prohibition: Contracts often prevent artists from bypassing intermediaries like galleries or agents.
    • Risk Management: Complex contracts, including revenue-sharing and real option contracts, are used to balance risk and incentives in creative production.
    • Revenue Sharing: Artists often engage in 50/50 revenue-sharing deals, though specific terms vary by industry

    The Transformation of the Seleciton System in Modern Arts

    Evaluation Systems in the Creative Industries

    • The Selected: Artists or creators whose work is evaluated.
    • The Selectors: Evaluators who determine the value of creative work.
    • Selection System: The process of evaluation:
      • Market Selection: Consumers decide value.
      • Peer Selection: Other creators evaluate the work.
      • Expert Selection: Critics or curators judge value based on expertise.

    Key Findings

    • The rise of Impressionism marked a shift from peer to expert evaluation in art.
    • Public Validation: Success in creative industries depends on engaging with evaluators (market, peer, or expert) to gain recognition.
    • Creative industries adapt by appealing to the most relevant selectors in evolving business models for success.
    • Market Influence: Despite expert dominance, market preferences can still shift outcomes.

    Creativity and Innovation

    • Creativity and innovation are not the same thing.
      • Innovation: the output, new products, new ways of doing things; the end process.
      • Creativity: mainly used for the inputs.
    • In theory, these two concepts can be separated; however, in reality, if we want to measure them, they become very much merged.
      • It's hard to measure creativity without talking about innovation.
      • Why are some innovations more important than others?
      • How much creativity is incorporated in this particular innovation

    Innovations & Categories

    • Radical innovations create new categories.
    • Recombining categories is an important source of innovations, especially in the creative industries (cross-overs).
    • Innovative products/producers are difficult to categorize.
    • There is no absolute standard for innovation → you must compare to something that was there before.

    Slack resources and product innovation

    Organizational Slack

    • Unusued/surplus resources available to organizations.
    • When there is too much slack (stress), there is inefficient resource management that is costly and can lead to inertia in decision-making.
    • Creativity vs. Stress: Slack can either...
      • Facilitate creativity under moderate stress.
      • Impede creativity if stress is too high (lack of time or overwhelming pressure).

    Innovative Strategies of Organizational Slack (defined by organizational actors)

    1. Product Exploration: Introducing radical innovations or new competencies (pushing the organization beyond existing limits).
    2. Product Exploitation: Refining or improving existing products (capitalizing on current competencies).
    3. Ambidexterity: The ability to pursue both exploration and exploitation simultaneously.

    Types of Organizational Slack

    Resource Rare Resource Absorption
    Resource Rare Absorbed- tied to ongoing operations
    Rarity Generic Human Resource Slack # of full-time employees Total # of employees
    Operational Slack Unutilized facility capacity (e.g., unused seats in a theatre).

    Environmental Threat:

    • Perceived pressure or uncertainty from external forces, affecting how organizations utilize slack resources for exploration or exploitation.
    • High Threat: unabsored resources (financial & c-r slack) increase exploration and lower exploitation.
    • The riskier the situation, the riskier the actions.

    Main Results

    1. Unabsorbed Slack: more exploration under high environmental threat but reduces exploitation.
    2. Absorbed Slack: Favors exploitation over exploration, as resources are tied to ongoing operations.
    3. Customer Relational Slack:
      • Inhibits exploration, especially under low environmental threat.
      • Promotes exploitation (utilizing customer relationships for stability).
    • Organizational slack: (unused resources) is positively related to artistic innovation.
    • Organizational Size: The impact of an organization's size on innovation is mixed; a larger organization can offer > resources, but maybe also › inertia and resistance to change.
    • Power distribution within the organization: Managers without an artistic background are < likely to pursue artistic innovation → prioritize efficiency & financial concerns over creative value.

    Creativity Through Artistic Interaction

    Galenson's Distinction:

    • Conceptualists (having one bid idea) vs. Experimentalists (contrinual trial & error)
      • Creativity peak: the moment in career when creativity is at its highest.
      • Dawn peak: early-bloomers, often linked to artistic movements. E.g., Picasso → conceptual execution.
      • Twilight peak: late-bloomers, generally through individual experimental processes. E.g., Cezzanne → experimental innovation.
      • Galenson's measurements: out-put centered - Prices at auctions, # of illustrations from different periods in art histories, # of works from different periods in solo exhibitions.
    • Drop in Peak Creativity Age: a result of the art world's increasing demand for rapid innovation, which favors conceptual innovators who produce early breakthroughs, while experimental innovators, who develop more slowly, have become less prominent.
    • Critique of Galenson's Model: Galenson reduces creativity to a single point and overlooks the influence of artistic movements on creativity. Conceptual and experimental innovators are not easily distinguished, as artists like those in cubism mix both approaches → Picasso.

    Accominotti's Argument

    • Creativity from Interaction: individual creativity is strongly influenced by interactions between artists, especially within artistic movements.
    • Benefits of an Artistic Movement:
      • Access to Information: artists gain knowledge from their peers and new innovations.
      • Competitive Environment: Movements create pressure to outperform peers, pushing for creative breakthroughs.
      • More participation in group activities increases collaboration.
      • Group Reputation: Artists benefit from the collective recognition of their movement.
    • Drive of creativity (in individuals & history): Common membership in an artistic movement (e.g., collaborations) + competition/borrowing between movements.

    Impact of online reviews on product sales

    Electronic Word of Mouth (eWOM)

    • Online reviews as a significant source of consumer information, influencing product sales.
    • WOM vs. eWOM:
      • WOM beats other media (e.g., advertising) → credibility, trustworthness.
      • eWOM beats regular WOM → speed, convenience, reach, absence of peer pressure.

    eWOM Impact in Product Types:

    • Search Goods: Products whose value can be determined prior to consumption (e.g., electronics).
      • Valence of online ratings (= quality evaluation) plays a more significant role.
      • In films, a predictor of subsequent box office success.
    • Experience Goods: Products whose value is assessed only after consumption (e.g., video games).
      • Volume of ratings (= awareness) plays a more significant role.
      • In films, a predictor of opening box office success.
    • Credence Goods: Products that are difficult to evaluate even after consumption (e.g., medical treatments).

    eWOM Impact in Product Life Cycles

    • eWOM is Critical for Product Launch: Effective online marketing and managing online reviews (positive & negative) are essential for successful product introductions.
    • Shortens Product Life Cycles: eWOM accelerates consumer awareness (i.e., strengthened information cascades) and decision-making, shrinking the duration of stages in product life cycles.
    • Sharpens Product Takeoff: Positive eWOM boosts early sales momentum, especially for experience goods, where review volume is key.
    • Exaggerated Product Growth Phase: eWOM amplifies both positive & negative feedback, with negativity bias speeding up decline if negative reviews dominate.
    • Declining Influence Over Time: the impact of eWOM is strongest early in the product's life cycle, diminishing as the product matures and consumers have direct experience with it.

    Practical Implications

    1. Consumer Feedback: Collect feedback prior to product launch to understand consumer sentiment and target marketing strategies effectively.
    2. Review Management: Actively manage the generation of positive reviews during the launch phase by engaging likely fans.

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    Description

    This quiz explores the characteristics of cultural industries, focusing on experience goods and their symbolic meanings. It also examines the roles of selectors and gatekeepers in the creative market, as well as various revenue sources for creative businesses. Test your understanding of how these elements interact within the creative sector.

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