Streamlining Entertainment Value: A Sustainable Model for the Creative Industries

DESCRIPTION: Economic Theory: Justification for a community environment in which the audience and the artist connect directly and share equally in the value generated.
STATUS: Notes for initial articulation

The Value of Creativity

The untapped value in society exists on the perimeter of the mainstream. When a mass cultural phenomenon naturally implodes peripheral phenomenon naturally take its place. This theory might account for for the cyclical nature of popular culture, where creativity that exists on the fringes of society occasionally chimes in time with current affairs, is appropriated by the mass media and connected with the mainstream. Undeniably the mass media is the principal conductor of creativity, be it Harry Potter, Grand Turismo, Avatar or X Factor but besides these break though cultural events a wealth of creativity bubbles away in the background of our everyday lives, seldom acknowledged by mainstream media and infrequently reaching an audience that can benefit from and share its inherent value.

Few would disagree that the most wide spread and familiar examples of creative value, in socio-economic terms, can be found in literature and music. Music is perhaps the most accessible and transferable of the two. As a medium it presents an opportunity to transcend cultural boundaries and communicate the cultural themes of its origins; the upbeat post-war hysteria of rock'n'roll; the beatnik idealism of the 60's; punk rock's backlash to the economic slump of the 70's; 80's stark synth-pop industrialism and the technology revolution straddling the millenium, played out through Brit pop's seudo-political attempt to reconcile the seemingly uncontrollable rise of repetitive beats. These trends followed political and economic agendas motivating their audiences to behave a certain way and profoundly affecting the individual. Musical movements have redefined our core values and continue to pass them down over generations. Following this logic the wider and more diverse the content broadcast over mass media the more educated society as a whole becomes. If eduction the base criteria for stabilised economic development, driven effectively by the transfer of creative value, we are presented with a partial explanation for discordant global economic development and an opportunity to moderate it through a more inclusive approach.

Moderating economic development, as opposed to driving economic growth is a difficult sell to corporations whose remit is to drive up shareholder value. It becomes a question of priorities and weather we value global equality or are happy to speed ahead regardless of the consequences, leaving underdeveloped areas to catch up, or not, in their own time. Professor Tim Jackson, Director of the Economic and Social Research Council's group on Lifestyles, Values and the Environment states that there is no historical precedent of current level of economic growth. "The global economy is almost five times the size it was half a century ago... It is totally at odds with our scientific knowledge of the finite resource base and the fragile ecology on which we depend for survival." Tim presents compelling evidence showing that the planets resources, rather than being shared, are being consumed by economic growth at an unsustainable rate. It's perhaps ironic then that the cutting edge of economic growth, the Internet, has become driven by sharing.

'Free' Is A Myth

The one-to-many nature of traditional broadcasting has inevitably constrained diversity suppressing our collective creative wealth by limiting its potential for exposure. Economic models are however gradually adapting to the many-to-many opportunity enabled by the Internet, where choice is the ultimate commodity. The greater or lesser the choice of creative output the more or less informed its audience becomes and the greater or lesser the resulting economic development. The synchronous nature of the Web gives way to potentially self perpetuating economic models that divide the value chain into tangible as well as idealogical benefits to the audience. An audiences level of engagement can be acutely measured enabling individuals to be rewarded, effectively sharing in the revenue streams realised from content exploitation, their share of proceeds commonly being in 'free' or discounted services rather than monetary. By selecting from diverse content and being rewarded as a result audiences directly influence supply and demand, naturally channeling economic development. In order to fund free services new business models look to revenue streams associated with the derivative idealogical behaviour that creative content inspires in order to broaden their penetration. Though it now has many revenue streams Google's primarily ad funded model is perhaps the most successful example to date.

Nokia's 'Comes With Music' offering and the launch of music streaming service, Spotify, met with widespread debate as to whether or not music should be free. Of course it is not 'free'. Consumers indirectly pay one way or another, via mobile subscriptions or simply with their ears and eyes as advertisers pay to reach them and access their pocket by selling them peripheral services. What sparked the debate was that the economics around the current streaming models don't seem sustainable. The slice of the pie that service providers offer music rights holders is a fraction of the subscription revenues they take however their advertising revenue is not redistributed. There have been conflicting projections of the critical mass of paying subscribers required in order for featured artists to net even a singe cent, most of them seemingly unachievable. Trying to drive audience adoption and asking them to pay is of course a function of quality of service and marketing spin but with so much on offer even 'free' is losing it's value a market differentiator. On engaging Tweens and Teens Tamara Littleton, CEO of community management agency eModeration notes that 'social currency' is gained "in part through association with aspirational brands, fresh campaigns and causes that support a belief in hope and change."

Audience Engagement is Key

In 1985 a cultual implosion occurred and broke the established commercial cycle of the time. Conducted by the mass media it jarred profoundly against the capitalist rhythm of yuppiedom. Bob Geldoff and Midge Ure offered the developed world the ultimate incentive in what exposed an otherwise commercially saturated and seemingly meaningless environment. Take part in Live Aid and you will save lives! Rock concerts on either side of the Atlantic across were staged and simultaneously broadcast to a global audience of over 400 million. When David Bowie dropped a song from his set to allow images of starving Ethiopians set to the song 'Drive' by The Cars to be beamed across the planet it literally moved millions. Live Aid become an international creative phenomenon and catapulted the creative industries to the top of political manifestos alongside heath, education, immigration, national security and the environment.

Whilst Live Aid achieved global audience participation though traditional media and it's audience shared in the value chain, albeit their reward was to donate rather than receive, it failed to feedback enough value to its ultimate beneficiaries to create an economic model that might prevent a reoccurrence of the Ethiopian famine. Political corruption and perhaps lack of commercial foresight from Aid agencies played a great part in this. Thousands of lives were saved but it was a quick fix. Much has been done since to create a sustainable model, with the focus shifting to trade rather than aid and all parties benefiting from the value chain. There is a direct parallel here in creating a sustainable economic model for the creative industries. To formulate the the model you have unpick the traditional value chain, examine its participants and address their changing roles.

Creators: Individuals or groups that originate content
Producers: Individuals or groups that tailor content to market requirements
Manufacturers: Organisations that format the end product for distribution
Distributors: Organisations that sell the end product via market channels
Market Channels: The route to consumers be it physical or digital
Advertisers: Organisations that drive product awareness and consumer engagement
Consumers: The beneficiary of the end product
Investors: Individuals or groups that cash flow the process in return for potential commercial gain

Channeling Value

An alternative to the Spotify model would be to reward premium users with a monetary incentive in return for allowing personal details and preferences to be shared with advertisers and granting transferrable permission marketing rights. Advertisers could be charged a premium and offered higher returns on their investment achived through more targeted communication made possible when they have detailed demographic and personal preference data. Sharing net profit with both audience/consumer and the artist/creator is a new model. "Get paid for listening to music" certainly has PR oxygen but do consumers want to earn form their play? Would this model dilute perception of liesure time with an implied responsibility to make money, potentially eroding the magnetism of audience engament with purely aesthetic values, or would it compliment the entertainment experience on an altruistic level? As Live Aid and Live 8 since have demonstrated both outcomes are possible but few audiences are as inclusive. As with all comercial propositions, in order to drive adoption the narrative of the 'business model' needs to be tailored to niche more discerning audiences in their own terms in order to inspire.

Enabling an option for all parties to donate accrued net revenues to a charitable cause might address this and further enhance the economic development benefits of the model.

The challenge of achieving economic sustainability for the creative industries then becomes:

  • Maintaining the fringe, social and economic development
  • Widening the conductor and the content
  • Feeding back value so that there is new creative wealth to draw in
  • Sharing data with advertisers who will pay a premium for direct permission marketing rights
  • Securing altruistic investors

Sources:

Prosperity Without Growth, Economics for a Finite Planet, Tim Jackson, 2009

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