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CMNS 230 1
Economics of the Cultural
IndustriesExamine changes in capitalism, and especially cultural economics over time
Explore the nature of the cultural commodity
Look at the nature of the cultural production process
CMNS 230 2
Learning Objectives
Identify three main similarities and three main differences between industrial consumer good and cultural consumer good production
Key Q: what is special about the cultural industries? (Hes: pages 17-22)
Key Q: within the cultural industries, what are some key differences?
CMNS 230 3
Part One: Changes in Capitalism
CMNS 230 4
Review of Hesmondalgh
Chapter 2 examined some of the basics in the issue of transition to a new form of cultural capitalism, concurrent with the shift to the so-called information economy Is there a radical shift?
Chapter 3 highlights the reasons for the ‘shift’ thesis ( however continuous and not discontinous) Especially impact of the big recession of the 70s
( starting what Hesmondalgh calls the Long Downturn)) Rise of neoliberal thinking: growth of world trade Accelerated with fall of communism in Eastern Europe
around 1990 Chapter 5 explores the complex professional
capitalist form of organization
CMNS 230 5
Decoding Hesmondalgh
- Defines his approach- Political economy from a cultural
industries perspective - Particularly likes the theories Miege
( page 22): why?- Notes what Cultural Studies Has to Offer
( page 38-41)- Starts from an epistemological position of
realism- Realism: the assumption that there is a
material world external to our cognitive one which is accessible to understanding
CMNS 230 6
Defining Hes’ Approach
- NOT Neoclassical Economics- Wants to ask questions beyond what efficiently
satisfies want- Determining human needs and social justice
- NOT Liberal Pluralist- Does not posit a competitive universe of policy
interests- Wants to look at power over time; structured forms of
inequality- Not only procedural
- Hesmondalgh the Humanist:- “we need to rethink how massive presence of entertainment in
people’s lives affects not only our notions of how democracy works, but also how we think about other aspects of human life, including ourselves as feeling, emotional beings”
CMNS 230 7
Defining Hes’ Approach
- Indebted to Raymond Williams- Aligns with political economy which places a
greater emphasis on ethics and normative questions
- Aligns with critical political economy- Characteristics:
- Holistic- Historical- Look at the balance between private and public- Ask questions of justice equity and public good ( page 32)
- An organic, historical thinker in the tradition of media historian John Thompson in Media and Modernity
- Note: he rejects the dichotomy of political economy versus cultural studies ( page 41)
CMNS 230 8
Hesmondalgh on the Cultural Industries
- Likes Miege and Garnham and others because they are better dealing with:- Contradiction between structure and agency and
contradictions within industrial segments- Specificity- Tensions between production and consumption- The sociology of creation- Popular contents like entertainment- Historical variations in cultural production
CMNS 230 9
The Historical Trajectory
Like many historians, asking himself: what, if anything is unique about contemporary capitalism and cultural production after 1980?
Looks for patterns of continuity and change What is at issue:
Discussions of fordism and post fordism Is there a radically different transformation of capitalism
underway?
CMNS 230 10
Fordism and Post Fordism Compared
Fordism Mass Production Unionized Labour Standardization Market aggregation
Centralization Technology of Production
Concentration
Post Fordism Flexible Production
Casual Labour Individualization/ Niches/Segregation Decentralization Technology of Consumption
Coordination: Networks
CMNS 230 11
Historical Changes in Capitalism
Shift away from manufacturing and resource sectors to service Rise in cultural employment Rise in advertising as a proportion of GDP
Internationalisation Owners of business invest abroad to spread fixed costs, and exploit lower labour in LDCs
Removal of trade barriers Emergence of international networks
CMNS 230 12
Changes 2 The Networked Economy
New methods of interfirm networking, especially to lower costs of R & D
New strategic alliances Changing work: flexible, part time workers
Implications of Cultural Industries Propagate neo liberalism Appeal to changing values, rising leisure Growing discretionary budgets
CMNS 230 13
Changes 3Rise in demand for computer innovationImplication of military, and transnational corporations
Key innovations: miniaturization, mobility, taping
CMNS 230 14
PostFordism Today Transition uneven Thesis of radical transformation disputed by
many scholars Both continuity and change
CMNS 230 15
Hesmondalgh’s Bottom LineCannot ignore the broader economyCannot ignore continuityArgues there is not, as yet radical change in the modes of cultural productionDisputes myth of new technologiesDisputes power shake up of the Internet
CMNS 230 16
Mapping the Historical Trajectory: Four Periods
of Cultural Economic Production
Once again, begins with Williams who identified three historical moments or eras in cultural production
Hesmondalgh introduces a fourth eraPatronageMarket ProfessionalCorporate ProfessionalComplex Professional
CMNS 230 17
Patronage ( 1400-1800)
Where rulers or aristocracy support the artists
Prevalent from middle ages to 19th century as the dominant form of social relations between symbol creators and wider society
CMNS 230 18
Market Professional ( 1800-1940)
When works offered for sale, creative production becomes a market, offered through intermediaries which make
more money need middle class to emerge with both the
time and money to acquire cultural products Characterized by:
More complex division of labour Small to medium size enterprises (SMEs) Mostly contained geographic markets Higher levels of competition Viable public studios
CMNS 230 19
Corporate Professional (1950s
-1980s) Increasing agglomeration into very large companies
Oligopoly power more creators become employees commissioning of works more professionalized New technologies, new techniques for marketing
It is this period the Frankfurt school Critiques as the emergence of the mass society
Shift to commercial dominance/eclipse of public sector
CMNS 230 20
Complex Professional
(1980s+) Defined by Increasing division of labour in production of texts
Hesmondalgh prefers this concept Features new relations of small, independent, and large companies, together with free lance workers
CMNS 230 21
Historical Contrasts
Before Creative stage carried
out by individuals
Creator/Owner simple diadic relationship
Large degree of autonomy
After Now carried out by a
project team with various roles
Craft/Creator; Owner/Manager now differentiated
High degree of autonomy; BUT control tightens in later stages of cultural production
( source: Hesmondalgh, 54)
CMNS 230 22
Contrasts Continued
Before Regular wages Multiple, competitive
companies usually in one industry
Internationalisation of narrow elite markets followed trade flows/imperial centre periphery relations
Highly regulated( eg: role of US state in film.. Page 52)
After Royalties Concentration and
oligopoly– firms now in multiple industries( conglomeration)
Successive waves since 19th century of:
Cultural forms Technologies Industries/Texts Capital
Intensification( H:63) Growing business self-
regulation
CMNS 230 23
Importance of the “Long Downturn”
50s to 70s Period of global economic boom Characterised by central role of the State ( welfare
state) Twin Recessions (1974-1975; 1979-1982)
OPEC energy crisis triggers economic stagnation High inflation Fiscal crisis of the state
80s-90s Neo Liberal Economic Adjustment Dismantle state monopolies Seek to contain wage costs Increase in mobile money/investment/labour substitution Shift to service sector Deregulation
Effects: accelerates emergence of oligopoly; internationalisation
CMNS 230 24
Internationalization Waves of investment and trade in film, then
sound recording, then television After the 1970s the US dominates the complex
professional era in creative production US cultural industries benefit from:
Large domestic market where cultural producers can recover their costs at home, and lower costs abroad to gain price advantage for entry to foreign markets
CMNS 230 25
Recurrent Historical
Continuities Miege:
Creative labour is underpaid Tends to bear full costs of creative risk: foregoes secure work
Why? Permanent oversupply of non-professional cultural workers in reservoirs
These ‘amateurs’ take other work to subsidise artistic activities
Wages kept down by transferability from other cultural industries
So, historically, successive job markets where most creative workers are under employed to underpaid– limited penetration of guilds, and where there are guilds, guilds tend to be technical
BUT, complex professional/contemporary era is increasingly characterised by several ‘vastly overpaid’ supernumeraries
CMNS 230 26
Recurrent: Cont’dCreative workers and distributors struggle to negotiate rewards via contract to set royalties: now overseen by Copyright Law which is increasingly international in focus
CMNS 230 27
The Bottom Line Hesmondalgh downplays the proposition we are in a
radical, transformative shift in the cultural industries 1. Large size of cultural industries still does not approach
the size of the world’s largest corporations… not yet the new core
2. The distinctive feature of this period is the emergence of the cultural industry networked economy: Large and small are increasingly interdependent and mutually
entangled in complex networks of licensing, financing,and distribution
But this a change in form, not power 3. There is greater challenge to the US in international
markets ( Bollywood, Latin America, Hong Kong) but these not new: Hollywood hegemony rises and falls, but new production centres do not yet approach the size and power of the US market control– significant inequality of access remains
- 4. Increasing rate of technological innovation, but Internet is increasingly commercialized and a supplement to other media… thus WHAT IS THE AUTHOR’S CONCLUSION?
CMNS 230 28
Hesmondalgh’s Conclusion:Less than
Radically Transformative?
- There is sufficient continuity to undermine the suggestion that we have entered a new era of cultural production.
- Rather, we should think of the last twenty years as representing a new phase within the complex professional era,
- Which is marked by greater competition,balanced by oligopoly in complex arrangements and greater centrality for the cultural industries within advanced industrial economies as a whole ( h: 260).
CMNS 230 29
Part 2 The Nature of the Cultural
Commodity
CMNS 230 30
Why Cultural Commodities are Unlike Others
- Nature of the Product- Nature of Labour- Nature of the Production Process- Anatomy of Marginal Cost- Substitutability - Nature of Demand- Nature of Pricing- Type of Consumption
Source: Peter S. Grant and Chris Wood, “Curious Economics” in Blockbusters and Trade Wars, 2004, p. 45.
CMNS 230 31
•Nature of Product An ordinary product is:
A material thing serving a utilitarian function
A cultural product is: An immaterial thing ( an idea) Serving a symbolic function If it is advertising supported: what is commodified in trade is the audience, not the content
CMNS 230 32
Labour
An ordinary product:To reduce/rationalize costs of production, a business will
always seek a) to reduce material and labour input costs and b) substitute technology for human labour
A cultural productCannot achieve ‘perfect’ substitution of technology for labour:
always human labour intensive
CMNS 230 33
Nature of Production Process
Ordinary CommodityAssembly Line, RoutinizedEach Unit Requires Significant Resources
Cultural CommodityExpensive, One time ProcessCraft Line, Non RoutinizedEach Subsequent Unit Requires Trivial Resources to replicate
CMNS 230 34
Marginal Cost of Unit of Production
Ordinary CommodityVery High
Cultural CommodityVery Low
CMNS 230 35
Substitutability
Large Degree of Substitutability Between Competing Brands
Limited Substitutability: Copyright Law Protects Monopoly on Each Product
CMNS 230 36
Predictability of Demand
Demand Predictable: Amenable to Standard Curve Plotting ( Risk can be quantified)
Demand Difficult to Predict: Limited Forecast Plotting ( Risk much harder to quantify)
CMNS 230 37
Time Line of DemandDemand for Product Continues until next product cycle:
measured in years
Demand Drops Sharply after introduction until replaced: product cycle measured in weeks or months
CMNS 230 38
Nature of Pricing
Ordinary Product:- subject to supply and demand- Assumes ‘perfect’ competition- Pricing tends to be non-discriminatory
- Cultural Product- Limited supply if using scarce technology: eg. spectrum,
limited bandwidth- Assumes period of monopoly over intellectual property - Pricing tends to be discriminatory
CMNS 230 39
Nature of Consumption
Ordinary Product Exclusive: destroyed/discounted in consumption
Cultural Product: Non-Exclusive Original (book) may be consumed or read, but after it is
available to others Attributes of a Semi-Public Good
CMNS 230 40
Who Determines Demand
Ordinary Product Ultimate end consumer
Cultural Product Books and Movies/DVDs: ultimate consumer Television and Magazines ( advertising supported): advertiser
determines demand ( ie demand is intermediate/)