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Questions and Answers
What is a primary characteristic of the Motley Crew Problem in creative industries?
What is a consequence of low residual value in creative projects?
Which type of selection system relies heavily on expert judgment?
In creative industries, what is a common arrangement for revenue-sharing?
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What is the primary consequence of having too much organizational slack?
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How did the rise of Impressionism affect evaluation in the art world?
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Which type of slack is most likely to promote exploitation over exploration?
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What differentiates creativity from innovation in the context of creative industries?
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What is ambidexterity in the context of organizational slack?
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What strategy can help creative industries adapt to changing market conditions?
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What type of innovation is characterized by creating entirely new categories?
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How does high environmental threat affect unabsorbed resources?
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Which statement best reflects the relationship between creativity and stress in organizational slack?
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What is product exploration in the context of innovative strategies of organizational slack?
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What effect does customer-relational slack have under low environmental threat?
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Which type of slack is characterized by unused facility capacity?
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What is one of the main characteristics of cultural industries?
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Which type of selectors evaluate creative projects once they are in the market?
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What is NOT a revenue source mentioned for creative industries?
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What challenge do cultural industries face regarding revenue?
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What is one objective of pricing for museums?
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What is the innovative pricing model known as 'exit prices' designed to achieve?
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What is a con of the mass distribution focus in cultural industries?
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Which of the following is a misconception about cultural goods?
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What primary factor influences the success of experience goods during their product launch?
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Which type of goods benefits more significantly from the quality evaluation via online ratings?
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Why does eWOM have a greater impact than traditional WOM?
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What effect does negative feedback have during a product's growth phase according to the negativity bias concept?
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What is the impact of eWOM during the later stages of a product's life cycle?
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What can companies do to enhance their product launch strategy based on consumer sentiment?
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What is a key characteristic of credence goods?
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Which phase of the product life cycle is eWOM most critical for?
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What is the relationship between organizational slack and artistic innovation?
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How does the size of an organization affect innovation?
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What distinguishes conceptualists from experimentalists according to Galenson?
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Which type of artist typically experiences a 'dawn peak' in creativity?
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What does Galenson's critique of his own model emphasize?
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According to Accominotti's argument, what primarily influences individual creativity?
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What benefit does participation in an artistic movement provide to artists?
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Why has there been a drop in peak creativity age in the art world?
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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)
- Product Exploration: Introducing radical innovations or new competencies (pushing the organization beyond existing limits).
- Product Exploitation: Refining or improving existing products (capitalizing on current competencies).
- 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
- Unabsorbed Slack: more exploration under high environmental threat but reduces exploitation.
- Absorbed Slack: Favors exploitation over exploration, as resources are tied to ongoing operations.
- 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
- Consumer Feedback: Collect feedback prior to product launch to understand consumer sentiment and target marketing strategies effectively.
- 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.
