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/ 16
“OREATIVE BCONOMY.
Terry Flew
CREATIVE ECONOMY
bichord Florida puts it, “fiom an older corporate-centered system defined by
‘companies toa miore people-diiven one” where new ideas and innova-
c paramount (Forida 2002: 6). 2
1 concepe of the creative industries draws a great deal fom this ce of a
ive ceonomy. It is related to the rise of the kiowledge economy, ad to the
Jing importaice of innovation, research and development, investment i
Sand education and taining as the principal drivers of growth in
saly-fist-century econoaties (OECD 20012). Such developnients draw
Fention to the relationship between creativity and innovation, with the
winerstood a5 the development of new products, services, organiza~
al forms, and business processes (OECD 2001b). The link between cre
'y and the knowledge economy is peshaps seen most clearly inthe
Bevclopment of ICT sofware. The development of new forms of computer
Creative Industries and the “New Economy” bfbare involves creativity ini production, generates new for of incl-
fival property, and conveys syrnbolic aicaning to its wsers, There isa great
feal of creativity embedded in computer code, and computer software pro-
ni ate frequently both an input to and the output of artists and artistic
ks defined in 4 more conventional sense
The vse of the creative industries is ako associated with the growing
nificance being attached to the preduction and consumption of symbolic
goods As Chris Bilton and Ruth Leary (2002) observe:
A first glance, the words “creative” and
together. The conjunction recalls the “Vocational Guidance
sketch on Monty Pytlon’s Flying Circus, about the chartered accouil
really wanted to bea lion tamer. Indeed, the history of the creat
is replete with tales of creative people who have found theme
vith corporate structures, Vet there is clearly change ia the ait ‘The
industries globally were estimated to have generied revenues 0 4 Ve ‘ 6 Hs
trillion in 1999, and to have accouinted for 7.5 percent of gh Coote ndioeies prediee tomate rote) Glee nee
National Put (Uowkis 208 119 the Unie St ee ee es ee
1m 2001, fer 5.9 percent of national employment, dnd $85 3m hoc good” i terefore dependent upon the users perception ss much 36 on
‘exports (Mitchell et al. 2003: 20). In “hot spots" such as London, the the creation of original content, and that value may or may not translate into a
industries now rival business seevices as the key economic sect sn, (Hilton and Leary 2002: 50)
half'a million Londoners working ditectly im the creative indost
cteative occupations in other industries (London Cultural Capital 200 his definition of creative industries is useful as it acknowledges the often
Moreover, the creative industries concept ~ associated with ings won-pecuniary dimensions of creative production, ant its relationship. with
-taking, new basinesses and start-ups, intangible assets, and eteathy stems of meaning and symbol, as well 5 the growing imporance of sym
cations of new technologies ~ has developed a wider provenance Fholic production and design to manufactured consumer goods as diverse as
much discussion worldwide about how to generate creative of Eoccwear, motor vehicles, and mobile telephones
fegions, and strategies to develop the creative industries as part of Devclopitents in information 4nd contmunications technologies (CTS)
innovation stratery are being developed in the United Kingdom, [the 1990s, such as the rapid diffison of the intemet, generated elaine that a
Australia, New Zealand, Taiwan, Kores, Hong Kong, and Singapor cw conomy had emerged, whose laws and dynamics were qualitatively dif.
such a5 Charles Leadbeater (Leadbeater 2000), John Howkins ent © those of the twentieth-century industeial economy (CE Stroh 1999;
2001), and Richard Florida (Florida 2002) have proposed that we are appala 2002). Drawing apon US Federal Reserve Chairman Alan Green
Espan’s observation that the value of US economic output had trebled over
at a ~ 2 M5 TERRY FLEW
the last 50 years while its volume ~ as measured in physical we
increased only marginally, Diane Coyle (1999) argued that we were nog ‘The “Old” and “New” Economies
“weightless economy,” increasingly based upon demateralized ontp
forms of computer code, media content, design, information, and ¢
Taking more of a historical perspective, Manuel Castells. (1996)
there had been a fundamental transformation within the capitalist : Sule Dynan
production, from an industrial to an informational mode of develop, Scope of competition National Se
core dynamics of this economic system arose out of the fusion of | Onganizationa form Hierarchical Neswork
tics of knowledge generation, information-processing, and symbol
ld Bonny ‘New Eason
4 1g core Services/information,
nication: with the processes of globalization, digitization, and’ nety st “Manuifictaring s es
leading to the rise of the network society as the dominant form 4 fone Honan and socal
physical capital capital
that epi experiences 50-year eyles of techaolovieal md one
iimovation, aad that the pervasive applicition of [CTs and growth
JnGrnation services tector constituted the basi for a “fifth long wave!
“Mast production Flexible production
© Organisation of
ete
cree Keyaiver ofgowih ——_CapiuVaboue IanovaiDinosledes
1970s and 1980s (c£ Flew 2002; 58-64). y | Key technology diver Mechianization. Digitisation
Giuice dFeompenine ——_ Lowernip cit fenoeidon, gia.
dnipe eben le adopaenes
‘The New Economy and the “dot.com” Crash E iesperanee of cud High
research innovation
Goi alone Collboration,
contouring
In the popular imaginary, new economy claims were best sysnbolized
shen nal stock market performance SE newh founded “dot ts other ftms. |
i r ae - Consumers/ Workers
Subie Changing midly
Zmaroncom a by the tpl sie of the NASDAQ, the US- be fa : Job-specic sll road sl od
for high-technology shares. Suspicions that the NASDAQ boom sas e44 psa adipushiliy
tally a speculative bubble driven by hype and selinterest, and that ‘Baseanonlocet One-ifcaittnimng ——_aflong leming
economy’ arguments were 4 form of "alicon snake oil” (eg. Sill or dese
ovale 20023), appeared io he validated by che sharp lin he NASDAQ | workplace relations Adverse Calaborive
ies April 2000, ffom above 5,000 porns to 1300, One-sime dotcom eS aeen Sable ae
lings found + increasmely hard to saise venture capita, and many of
‘business plans of internet stirt-up companies were found to be not worth t Government
on ee Dancers taps, mg at put
jiebed Co electfonte Comieiee ers seriously, queidoned tl ee oo ce
dotcom gradually dasppeared fom respectable conversation, a cap Egon onus
‘nea edpes became » new growth industy (ea. Kuo 2001; Malet : Welle sate obling sate
Lovink 20025, | : Covminntteven ——_Welarsints Eb
Suc: Coyle an Quah 2002: 6
6 tert CREATIVE ECONOMY
Sjorcome of a proves; nther than & pesoita, and how snoments of creative
Paiscovery are characteristically the outcome of incremental procestes under
sere pu ofa team of people that posses diverse skis (Bilton and Leary
"but eather 0s arising ftom a cul E2002), Moreover, since creativity is Requently domain-specific ~ ie. the
Tsduional ralicu that promotes auiovation and experimented Doecity invelved in mathematics difersffom diat of sculpture, and arses
Horlgson (2000) has deseribed this as a learning ecomomy, whens 3 sf Econ vegy diferent forms of profesional taining ~ then the search 8
from an economy dominated by manufactured goods and manual ld “Jingu eveative archetype is bound to prove ilwsory. When itis applied in
* one where ideas, intangible assets, services, and retional skills predon | fnaragement training, the results are frequentiy disappointing, sce the focus
‘New economy arguments also receive support from recent de aon creative individuals frequently comes up against the organizational bariens
in economic theory. One of these is new guvuth tory, which Eso realizing cxeatviy i
tchnsloial ene inl ccnonle puts ae euiclly on cE + Noni the growing inert in crevty oubide of the talons
the welkpring of growth is innovation in products and processes, aid § B domains of cnc i rellecive of what has bosn termed the alton of
ways of combining inputs to generate new types of output. As econgif Economic fife. This argument was proposed by Lash and Urry (1994), who
Paul Romec puts it, “Human history teaches as . that econoniie g Sroued that contemporary capitalian was marked by 2 growing dearee of
Ce on bona abe st ian a ou aa ee luion in canonie Hie, dnt included 4 new dee of see
184). Romer abo argues that the cential economic change of the Tas pfexivity in the spheres of both production and consumption, as eapitait
deciles has been the shift toward what he terms the “Microsoft foduction becane increasingly design-intensive and oriented coward niche
‘where “the whole economy will srt to eal ike Micresea, WAAlE eee markers Turning the “ohlrare indusery” thers on ies Head, (bey
lage faction of people cheaged in discovery as oppo «8 prolucag cer the producron models ofthe ull ines ~ based pom
(Romer 1995: 70), Heonome hinorian Paul Ded concue Ged rae eee pred developmen» high lee! of Ble among 4 any
account, finding that intangible capital has become increasingly impo! “prototypes,” the development of a “star system” as 2 means of mantel
a driver in the US economy over the last 100) years, and ne his 4 os ee md an economy increasingly driven by the production of new
embedded in investment gested ether roward the production and dis | (dew tater than the reproduction of established commodities ~ vas increas
sion of information or improvements in human capital (David and Fo Jnaly permeating all sector of advanced capitalist conor
2002; cf Abramovite and David 2001) Q © Du Gay and Pryke 2002) have usefully broken down the question of
Diane Coyle and Danny Quah (2002) have provided a summary accet whether there has been a culturabization of economic life into three compo-
‘of the distinctions that are made beeween the “old” and “new” econanmes, F nent clements:
in tenn of economy-wide characterities. business behavioe, work sine Gage
surmption, and government policies Ge table 1.
2 aleure has become the key to
© arguments that the management of culture hi
improving organizational performiance, particulaely when it can abgo
oruinizational goals to feeknes of self realization among those working
‘within the orgnization;
© the observation that economic processes inevitably possess 2 cultural
dimension, particularly with the growth of the services sector, where
economic transactions are often more directly related to interpersonal
relations and communicative practice:
fe the tise of the cfeative industries as employers of Tabor and sources of
‘new wealth, and the adoption of practices throughout the economy that
have their genesis in these industries.
Creativiey and the “Culturalization” of Economic
if.
‘There has been 2 growing interest i the importance of creativity ih
knowledge economy. ‘The angiment that everyone is creative, ot that e
‘ae at least has creative potential, has increasingly become a staple of corpo
fate management literature (eg, de Bono 1998). Such arguments ate,
however, too offen based upon a common but flawed understanding 0
creativity. The attbution of creativity to unique individual personaliGes
loses sight of the extent to which creativity is best understood as being the
8
MB ae US ESSE SSS ee
TERRY FLEW
© Work in the Creative Industries: From Bureaucracies to
When Markets Give Way to Networks | Networks =
Everything is a Service: Jeremy
Ta The Age of Aces, Jeremy Rifkin locates the ise of both the
and service industries in a wider pattern of transformation of the nety | omy, a8 part of what Ridkin terms cultural capitalism, raises important issues
of property and markets, including shifts: ‘ghout the nature of work in these creative industries sectors. Miége (1989),
sg = Rayan (1992), and Hesmondhalgh (2002) have observed that work in the
‘canitive indunttios has been characterized by high degree of autonomy for
| iss and other creative professionals, 9 relatively loose division of bo it
users, : © the production process, and the existence of a wide “pool” of creative talent
fiom wealth based upon the ounership of tangible asset (plane, equi which ean be drawn upon on a contract or project basis, Such sectors are also
ment, inventory, ete}, t the outsourcing of productions characterized by what Midge has termed “a permanent cris in ‘creativity’
wealth creation based upon acess 10 dangle assets, most [where] producers must constantly be on the lookout for new ‘om’ or new
goodwill, ideas, brand identities, copyrights, patents, talent, _ talent’ (Migge 1989: 44).
expertise; Davis and Seate (2000) describe ercative industries ongnizations as having
from the ounership of goods to the auesing of series developed a tsipartte division of labor between creative personnel, fechnical
from production aiid sales to eustoruer relationship marketing: : [ pessonnel asociated with creative production, and managess and administra,
fom production-tine manufacturing and long product cycles for involved with control and coordination functions. ‘They observe th
Hollywood oxanizatoual model of project-bused collaborative team: Since *modem cultural production is an interpretative activity with @ pre-
Drought together fora limited period of time. : nium on the ability to communicate ideas and emotions in
‘he rise of the creative industries as a template for other areas of the econ
bon eles (od ee lige ence bape a
neaworks based upon ongoing relationships between suppliers
a | constantly
S «Eine environments roles and occupations sociated with the creative
; .
For Rifkin, these changes together mark the rise of a neve form of Fraction ae nypically characeized by “reflective, ineractive and intuitive
‘altura capitalism, ansing out of new forms of linkage berween digital ‘processes with a indeterminate outcome," where “the sovial organization of
communications technologies and cultural commerce, where “more work tasks is implicit rather than explicit
and more of our duly lives are already mediated by the new digit | Tinked to evaluation by peers, cities and audiences rather than. purely quanti-
ani uman expesion” ln 2000 13, The cea a 4 tative indicazors" (Davis and Sease 2000: 53-4). This is in contrast to the
cs are “the front line commircial fields of the Age of Acces” (Ri veformance of managerial task, which remain strongly linked €9 the objec:
time production, heavy investment in prototypes, and the selling of procedures for achieving these goals
acces to lived experiences. Rifkin nominates tourism as the olden: [Davis and Sease identify two main ways in which this interface between
cultural indus “the most visible and powerful expression 07 creative and managerial tasks has been handled in creative organizations. The
the new experience economy” (Ritkin 2000: 146). He proposes that | frst is that o€ bureaucny, which has historically prevailed both within large
‘Thomas Cook's establishment of package tourism in the 1850s can be | Goinmnercial creative industries organizations and large publidy funded orga
seen, in retrospect, a8 providing the template (or the modetn experi: [> zations, fn the bureaucratic model, the mechanisans of control are explicit
ence-based economy. In what he terms the Age of Access, Ritiir | End hictarchical, lines of accountability are. predetermined, the mechanisms
proposes thet “cultuial production is going to be the main playing flee = Gf coordination axe explicit, and the performance of employees i» monitored,
for high-end global commerce in the twenty-first century,” and that it | measured, and appraised. Creative personnel enter into. employment relations
wll constitute the “fist tier” of economic life, above informations ane | eth commercial or public sector organizations, and arc mouvated both by
services, manuficturing and agriculture (Rifkin 2000: 167). : F the conventional messores of income and status within the organization, and
by some degeee of “internalized commitment” to the organization and is
= {and} performance criteria are
35
350, ‘TERRY FLEW
between the formal, rule-governed natute of bureaucracy and the a
indeterminacy, and onconformity thar characterize creative work
‘The chronic danger is that creative personnel experience such pro
inhibiting the realization of their personal intellectual capital, and t
their intrinsic motivations in pursuing creative tsks, As a managing
‘ofa large advertising company notes:
People will say in any place a long. as they are getting out of thar pi
they want = For creative people, if they can get very, very good ware
and be well paid, they will say, And most creative people would rather
50,000 s year for doing good work than 100,000 a year and be doing sti
(QUioted in Davis sid Sease 2000: (33)
‘The second approach, which i& growing in significance, is that of oe
cnnoizaticna (CE Castells 200). ln the networked organization) aici”
cetriployed individuals or small teamns undertake creative work on. paojeces
contract bass, Such structures allow for a high degree of autonomy.
are based upon informal and tacit mechanisms of control and coordina
In such atrangemients, itis market rlayons, ather than. employment fli
that dictate the delivery of outcomes. Management by contract rather
Control has been the historical norm for nuany areas of the creative inhi
ost notably book publishing and recorded music. It has increasingly b
adoptid by fae coainerclil aid pablic coresiaes. who have won Cam
outsourcing creative activities to independent subcontractors in «
‘maximize flexibibty, reduce fixed costs, and achieve better outcomes the
the ability ¢o draw apon a “pool” of competing providers. ‘The But
Broadcasting Corporation explicitly adopted a purchaser-provider model
the 1990s throwgh the “Producer's Choice” initiative, which requleed
Ticuks BBG erenive teams @ coupele wick idepentor paxduceon
for contracts to produce prograins in areas of aced identified by the EBC:
Creative Work and Networked Organizations
‘The network organization model loosens considerably the contecl nexus
between content creicors and content distributors that had informed the:
large-scale cultural organization, replacing control through bureaucratic cote
sand with contol through the market mechanism, directed toward a well
{qualified and increasingly mobile creative workforce. It growing significa
can be seen in a recent European Union sorvey of employment in
352
CREATIVE ECONOMY.
siltual sector, which found tbat employment growti rates in cultural oeet~
| gations were fou times the EU average (1.8 percent growth besveen 1995
Jp 1999, compared eo overall employment growth iv the EU of 12 per
cnt) and that people working in cultural decupations were almost thse
= [hes as likely to be self-employed as che EU average (40.4 percent compared
Sto Lad percent for the EU as a whole) (MKW 2001: 84-6), The BU study
© bo indicates that workers in cufteral occupation are tvice os key to ave
- jtertiacy qualcation as those in other sectors, and that higher degree quali-
fcatons are parielarly pronounced among self-employed cultural worker.
(MEW 2001: 87-2).
Clubs to Companies: Angela McRobbie
Drawing upon her work on the arts, Ashion, and music ipdusteis in
London, Angela McRobbie hax astociated the rise of the creative
industies with what she has termed the “Hollywoodization” of labor
farkets, both in the sense that the perceived glamor of creative work
fencourages people to accept long hours of work and Jow pay in the
hope of “making it" and because what Jeremy Rutkin terms the "Hol-
Iywood organizational model” — working as 1 part of creative teams in
short-term project-based acaities — is increasingly seen a dhe mort: in
‘ailtural sector employment. The need £0 manage portfolio careers aso
promotes 4 need for creative workers to develop business skills which
femable them to manage theie career possibilities in highly fluid, net~
‘worked eavironments
‘McRobbie identifies five consticitive features of this new mode of
work in the creative industries. Fist, she notes the extent to which it
draws apon the “club culture sociality” of the “dance-party-rave”
music caltite dhat rose to prominence in the 1990, where clandestine
find rebellious elements of youth culture wese fused with a highly
Entrepreneurial approach to events marketing, establishing the club
promoter a¢ a multi-skilled culeual entrepreneur, Second, she observes
that stich mulesklling is in many cues associated with people holding
imnftiple jobs, both within Formal organizations and in more informal,
networked cultures, Thitd, MelLobbie sees working long hours as
almost endemic to this model, as there is little or no regulation of
formal working hours, and becasse sel promotion and networking are
central to the gaining of new contracts and ongoing paicl work. ‘TERRY PLEW
Fourth, McRobbie argues that the highly individualized and eo
tive nature of this workforce, and the contract. nature
discourages Eritique of potential employers and workplace pl
into telaonships vith major dtibutors tbat Fook more Uke shay
fGaecing and ore am tonmacl work’ McRobbie fen (ne
nes fhe lng dance incest” an obsere tht fr my.
eres wilculdeen it thats conde of holes neat
(ea he ops Seciice (opal pac "cluy cau es
Ine on lng working hou and wighede activin, se cone
diminished.
McRobbie's article can be read as a critigue of the creative ind
concept, particulanly in the forms that have been sociated with the “hi
Way” ideologies of the Bhir Labour government in the United King
‘The article nites important questions about the «ope for exploiutlon |
these working in the creative industries as a result of the “hourghss
ture of these industries, where de number of content creators so 1
‘outweighs the number of content distributors and che scope for exploitalior
Js therefore very high McRobbie ako observes that the groups least ab
Participate in “club culture sociality” are, not surprisingly, those most
to be structurally disadvantaged in capitalist labor markets: woineit
young childrens rcal and ethnic minorities, people with disbilins,
metzopolitan centers
‘The rise of the creative industries in the context of the new econot
‘mises issues abour the relative merits of the “social market” or “Europe:
‘model of capitalism and what McRobbie terms American-style “fast capital
ism." While che lange inequalities, the pervasive sense of economic insect
and the adverse experiences of the working poor in the United States
‘well known and vridely noted (e.g. Brenner 2000), the innovation and ee
omic dynamism that have characterized the US economy since the eat
1990s ate also apparent, 2s is its relationship to rapid ICT take-up and dev
opment of the creative sectors. By contrast, a number of European econt
mies, most notably France and Germany, have been experioncitg hight
CREATIVE ECONOMY
concens about the impact of restrictive bureaveracy on the development of
face enterprises and industries (Blackbuen 2002; Baltho. 2003). Motcover,
‘exrapolating from the MICW study noted above, much of the dynamism of
these economics is emanating, fom the creative sectors, outside of the teadk-
ticnal heactlaids of “Fordist” industaalism, The challenge seems to be how #
to wed social capital formation and notions of collective security with the
_ dynamism of the creative economy. Given this challenge, it is pethaps not
| avprising that debates about creative industries often get Hed up with angus
iments about the natuce of a “Third Way” between post-World War IT social
democracy and neo-liberal free market capitalism,
Cultural Policy and Globalization = —
| The funding of antisic and cultural activities, and the govemance of culkure
mre generally, has been commonly understood through the rubtic of cultural
policy, While culeucal policy in the narrow sense has been understood as
| public funding for the arts and media through mechanisms determined by
E ceattive producers and their peets, cultural policy in a broader sense has
= been understood as the discursive an
tilutional frameworks through
‘wich culture is governed jn order to develop culeural citizenship (Lewis and
Miller 2002), Nationalism has been an important motivator of culturil
policy, as Emest Gellnes nioted when defining nationalism as “the stciviag
to make culture and polity congruent, to endow a culture with ts own
political roof, and not more than one roof at that” Geliner 1983: 43)
With the development of plobalizing meclia technologies such as film. and
broadcasting in the twentieth century, cultural policy has increasingly sought
to incorporate che popular media into sucky nationalist projects, im part
to resist the perceived “Americanization”” of mass culture. National film poli
iss, support for public broadeastes, and local content quotas for broadcast
tnedia can all be understood as applications of national cultural policy co
these ends
Creative industries and cultural markets operate on a global scale, and
amuably have done so sines the 1920s, when the Hollywood studios estab~
lished the ascendancy of US fils in European markets. The rapid worldwide
expansion of television ownership and, more recently, she internet and mul
timed, have further consolidated the ascendancy of US cultural product in
dobal markets, While tere is some evidence of “contta-flow" in global
media (Thussu 2000), a well 2s the growth of “ofbhore” production in
countries ch as Canada and Australia (Miller ct al. 2001), the overwheloe-
ig trend is toward expansion of the US share of global cultural markets, and
ae —— 3% TERRY FLEW (CREATIVE ECONOMY
pec (rentent in policyterms, By contest has been arguell dit policy
Fpproaches that draw upon government support for R&D a & cables of
and place creative industries in the vanguard of
ry ee tional innovation strategies,
ay : Eee economy sities, may generte mote fui outeomes ee Stat
: ‘Cunningham's ineroduetion to part V of eis voluiine)
oie ie | Ethie clapeer has observed the many ways i which the tke ofthe creative
shift in how we conceive of culture. We have been
; F economy entails 2
' : 5 F Sdlenged te think about culture and crenuvity in their various forms & core
‘ “ements of 2 creative economy. Creative industries sectors are key innova
sr es iv digital content production and dstibution in an er of gloals-
wey and digital networked infratractures, where there 3 a premium bang
t : S Gruched to creativity and innovation as sources of competitive advantage oe
= ‘and nations. This is different to the modernist
onus of cultural policy a6 the presenation of a great tadon, oF the
_Eipanaion of izes into a common national ela.
Figure 1. Balance of aodioviswal trade Uetween the Buropean Ur
Anperica, 1992-2000.
‘Swice: European Audioviswal Observatory 2002.
Fe
Culture and the Creative Economy in the
‘information Age: Shalini Venturelli
Shalint Ventorell gues that an understanding of the creative econoty
ees 4 signfcant rethinking of how see have understood clear
She observes that three traditions have doininated thinking about cu
aun increase in cultural trade deficits berween the US and most other
of the world. This is seen clearly in the balance of andiovisial trade bet
Noth Anietica and the European Union:
“The globalization of cultural markets chllenges curl policy fonda
‘sit points to an uncoupling of culeure and polity. National governments fi
declining capacity to regulate global media and communications DoW
‘engage in “cultural boundary maintenance” in the fice of economic atd a
tural globalization, The General Agreement on Trade in Services (GATS)
generated farther concerns about the impact of trade globalization on natior
uftural policy measures, wich its potential requirement on member sakes
dismantle existing local content quota and domestic subsidy arrangements
By and eb, ari ae to mee he devclorment fe
sures for convergent and digital media. Asa result, the European Community
suid Canada c = :
tal exception he dips ofthe GATS, aig rb dane :
‘of ealture and the nced to preserve global cultural diveraty (Footer and Grit
2000), Audiovisual services were the area where the most couttis souahe
GATS exemptions in the Unigiay Round, completed in 1994. The conf
beween the United States and Burope led by France, was particularly fcree
‘e the aesthetic tradition, and its association with excellence in the
Bae ants,
‘e the anthropological tradition, and its understanding, of culture 8 a
received and shared symbolic system, or a “whole way of Le” of 4
the indvsteal or commercial teidition, which understands cultural
products 25 industrial commodities sold to consumers
In the context of the global information economy, Venturelll proposes
iat these traditions require substantial revision, As we recognize the
distinctive features of informational and cultural products, it Becomes
Spparent that the value of ideas and creative expression can be mat
Gvely leveraged in networked digital environments, meaning that the
Value of these forms cannot be gainsaid independently of their use and
pplication, Recogeition of this new. cole of eulture as @ source of
Value-adding in che global information economy also requires a shift in
sidy-based and quota-based models have assumed that the arts are different,
and the media “not just another business,” with both therefore requiring,
386 = — 37 |
‘TRAY FLEW
policy thinking avy fo
prac ‘es, and institutions of the past — the “museum a
a tural policy — toward developing the cnvitonment th pee
ducive to creativity and the ee
means extending the remit of cultural 6
meas of cata policy «all rex of
| diveronon impor of Vers gmt
ee cullural policy in an age of globalization ier
Sal reste fat ns weed lo paca Hale
fetes al congetin, bog
- ee infiastructure though which new ideas and fonins oF eh
ae be developed, and distributed across global di
cs. There is thus a link between the vitality and health of ar
of new ideas, and competitiveness and dynamis nt
distribute, and renew
te, and their creative infissteucture or the ideas
talents of their czeative people.
References
Arann a Dd QD) Te Cos Aton
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ben hid ea ttt Rowulelee Davo, Dob
fe sree Pooy Rei Daeaion pe 1-08 Aopee
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Sydney, 19-24, ae
21 Jeremy Rifkin
WHEN MARKETS GIVE WAY TO
NETWORKS .. - EVERYTHING IS
A SERVICE
“The Hollywood Organizational Model
“The Hollywood culture indstries have bad a Tong expesience with network
Tneed approaches to organization and, for that reason, are fist Decowin the
prototype for the reorganization of the rest of the ‘capitalist system along
vate lines. To begin with, the entertainment industry has £0, det with
sees that accompany products with a truncoted life cycle, Each film is 8
tmnique experience eat bas co find a quick audience if che prodae Sou So
puny i to recoup is investment, making 4 network approach £0 doing busi-
nsssa matter of necessity
Savot always been the case, however. The early film industry rele)
‘nthe kind of "Fordist” manufacturing principles that were in vogue 2508
fide range of industrcs in the 1920s. So-called “fonmula” fms were PO
Jhced like automobiles coming off an asembly line, One of the pionect, of
cuore UL che Univeral Film Manufacturing Company, produced mre thon
sri tens ina singe year. In dhe early year, films were actually soy the
se nther than by content, reflecting the bias toward a mass-production
mode of operation.”
By dhe early 1930s, a handful of studio giants ~ including Warnes Brothers,
daremoune, Metro-Goldwyn-Mayer, and Twentieth Century Fox — con
2am gm indy. ‘Their Organizations were hierarchically suctured
crys Mites (ve Wry a Neto - rnin -t Ses am leer RIE
Tee Mae ofc Hw se Sion Oe o At Tec Mee uf
0 cd pp. 24-3, 82-25. © 2000 Wy Jeremy Riki, Used by peminon ISS
Pear an img of Penguin Group (USA) Ine, and Penguin Baoks
- SUSE Ee eee TIE JEREMY RIFKIN
and d
gned to oversee and regulate every aspect of the production prog
Professor Michael Storper of the University @f
icy and Social Reseanghy
from scripts to distribution
California at Los Angeles School of Public P:
the system operated
explains ho
nanent staf of writers and production phnnemy
el to produce formula scripts in volume and push them
and stars were asemtled in
28 many ae ehiery films pe
eats charged with mak at. Studios had lange
os had!
to make ses, operate sound stages and fil labs,
marketing and distribution,
sleparcnients and carry out
A product would move from departinent ta
The internal organization — or teche
n each phase of the lbor
hat of trve mass pre
department in assembly-ine fashion
nical division of labor
ss became ineressngly
action, where routinization and task fagmene
icing principles
In 1944, the big studios eared 73 percent of all domestic
ind owned or leased 4,424 theat
houses in Movi
aillion tickets sold per week.
inema rental
four movie
ch more than 99)
5, or nearly one our of ev
joing peaked in 1946, w
In the late 1940s and early 1950s, the film industry was hit with wo
extemal shocks that forced it to reorganize along the network haselines cue:
rently in practice. The US Supreme Coust ~ in a landmark antitrust ease =
the major studios to divest themselves of their cinema chains. No
longer able to exercise control over the end office, film
companies saw their revenues decline. The advent of television farher cut
into film company profits. Millions of former moviegoers. prefern
ed to stay
home and be entertained for free. Box office receipts fell by 40 percent
between 1946 and 1956, and the film audience declined by 50 percent. The
tgross revenues of the ten Teadi 26 percent, and.
profit declined by 50 per
F
the film industry respon
at!
competition fiom the new medium of television,
ied by changing their approach to filmmaking. Rea
ng they couldn't successfilly compete with
fice medium pumping out
idio leaders began €o experiment
e entertaining. films, each a unique product that
could vie for viewer attention. The new films were called “spectaculars
hater “blockbusters” — and they moved the flim industry fiom mass produc
tion to customized production oriented toward
similar formulaic cultural produc
with maki
, the
fewer, mo
cence” each time the moviegoer walked into the theater
The new genre of films was more elaborate and expensive, and decause
cach film was a unique product and therefore untested in the marketplace
WHEN MARKETS GIVE WAY TO NETWORKS
fo be invested in advertising and promotion, In
et fils
he increasing, cost involved in making fewer, more differentiated
b cr | risks and less sure returns on investments,
brought with it greater financial
sged in the 19506 partially in
film production emerged in
aren ays snt to each unique filn
an failed at the box office,
project and
The studio gi ;
project basis, Independent production cor
to-projec es
ve formerly ander contract at the big studios, began to pro
artists formenh roi
pool risks in cas
and services on a project
ontract out for tale
mits began 0
7 sp of artisans and
panies, made up
re, Today,
° prodiice films in-hous
the remaining studio giants rarely p
od money to independent producers in retin
product at movie houses and later on
for the right to distribute the end
television and video.
4 production
long.
Every film produetion brings to a es
aed short-lived network
A ew be limited vo the duration ofthe project. Scripting
0 sound mixing and
gn, cinematography, costuming
oe ncpenent prodtion company. By 286
working. in
bin
exactly 1
make the specific fil
their risks by
ation of skills nceded
‘sccess, Independent contractors, in turn, minim
project a succes
ee 4 minimum by utilizing skills on
fects company, for example, to
ialized tasks on any giv
a live stage event. At
“at which produced
otf te fl
tripled in
sion of spe
Southern Califor
fewer than ten people.” Ind ee
nly 28 percent of all US films in 1960, were making 58 percent of che fm
; later, while the majors were producing fewer th
fa oo dete
rae had, however, chit shough the neowork approach
brought an ino numbe
commercial organization has brough e fr
fetainment companics still exe
of smaller firtns
2B inuch of the process by their abilities to partially Sane
the product. In fact, film industry
cise control ove
production and to control distribution of
‘Aaa Aksoy and Kevin Robins make the point that vertical disintegra-
— 363 JEREMY RIFKIN
io a the shi to network forms of
. us co allow the studio giants to better generate product while oa
ail rks, The key to noting elective contol over the
Aksoy and Robins, hay always revolved a ra
Aksoy and Tabi has ava evoled round contain ac
y holding 09 to dr power anton! and inten dstbuton ne
ol eas esse di nen ste tome
sins an aqueze or atte ine endem production eermpanin?
Re
and Aksoy ont th ind
ft he let opus rc the bl of
ajors still veap most of the profit. In 1990, for example, the top five com
"came 7 pest fh bx ace Te eter pp
in oom wo wl se peel tne he ak
she ge ental oon rs oy
lants, equipment, and talent by cecating strategic relationships w ke
te omy ort se ompeion, move Sade
roduc and es and hater grote cs sompanes sy oe
> colin cn bn cans hip on
entities the burdens of ownership and management of phy a
The Hollywood metwosl press fo comer axochoton adi ad
he way toward a now network-based economy in cyber neces
‘tal Motors’ hierarchical fo of eR
“ orm of ergnittion cfd ate ome of he tec
lustrial revolution in the 1920s, In an article entitled “Why Ey —
Will Be Like Show Business” in. Inc. magazine, Joel Kotkin aes —
lyood hus muted fe an ind
corporations into the world’s best example of te ag
tly ever knowledges ly wl end pn the mee Hated
atomized state. Hollywood just has gotten there first.” cleleateiclanen,
The Hollywood ongnsizaonal models quickly being opted by 2 number of
cunting-edge industrics of the twenty-first century, Andy Grove, former
bum oF Intl, compas the soars ncusty to the cheater, where dies:
ith aetna ey rate ne prodhction Even gh
i ies aga a aden hove he te
reates smash hic in his book Jamming: The Art and Discipline of
hi. Jt Ro ote Hae tes Sl aes CH pe
Hollywood network mode! ino thet lng term ate Pw. You
eed to act like today’s version of a Hollywood studio.” says Kao." ie
64
WHEN MARKETS GIVE WAY TO NETWORKS
In the new network-based economy, Max Weber's idea of “organtiation”
asa eebtively fixed structure with set sules and procedures begins to disinte
Grote ln te Bistechanging, work of electronic commerce entesDrses have to
gevtge more protean in satste, able to charge shape axl forax at moment's
ve ee to accommodate newr economic consitons. In geouraphic markers
vMnverare stil counts, In cyberspace, however, boundaries fill and process
feploces structure asthe standard operating procedure for survival. Orga
seareomes as ephemeral and fleeting 2 the electronic mest im which
basines is conducted.
‘Management consultant Tom Peters aptly describes the new nerwork
approeeh to commcrce. In the farure, says Peters, “networks of Bis and
Feces of contpanis wll come cogether fo exploit markes oppe! wnt
Perhaps sey together fora couple of yems (though changing shape, deans
aly, sever times in the process), then dissolve, never to exist agnin tt the
iverywhere in the work, companies Large ard smal are in a frenticd
scrmte to become part of expanding, commercial networks, In ehe Age of
sear, company’s biggest concer is not being ineluded in che commercial
‘eebs ned relationships that create cconomic opportunities, Having access to
wrawerks is becoming, as important in cyberspace commerce 2s enjoying
venakee advantage was in the industrial era, Being left our of che Toop cm
mean instant filore in this new workd of ever changing alliances.
Tal point noeds ro be made about the Hollywood otganizaonal model
att = too ofien glossed over or missed altogether in discusions of manage
seal menegies, Ibe no Inere coincidence that other industries try to model
the way the entertinment industry is organized. ‘The cultural industiss ~
sncteding the recording industry, the as, television, and rao ~ comnoxti,
packages and matket experiences as opposed to physical products oF series
aecapck and wade i sclling short-term access ¢@ simulated works, and
dia votes of consciousness. The fict is they are an ideal organizational
aetal for 2 global economy that is metamogphosing from commodsying
frou and services to commodifying cultural experience ite
vn cyberspace, the relationships between suppliers and users increasingly
cecuble the kinds of relationships that dhe culture industries have forged with
reatlences over the years. We are entering a more cerebral period of capitalism.
Mihov product is access to time and md. The manufacture and transfer of
Fiysical goods between sellers and buyers (propery), wile sit par of out
{hay-tosday eeality, especialy in geographically sed markets, wit conde
sragate to dhe second tier of economic activity. The fine tee will meressingly
fre made up of the selling and buying of human experiences. The move
efi isthe front-runner 30 a new eta in which exch consumers life
305 JEREMY RIFKIN
experience will be commodied and tans
tensa moments dati eens a penne sain asthe
economy begins to make the shift from geographic mat a
spice not fr eling good sud sevice to comeing wcll
hatin experiences, the Hollywood studio mode of organization wil ner
ingly be looked to ar standard for organizing commercial acy
ted
The Birth of the Service Economy —§ ————______
Bian wt the este, ch
ism th pil nl em oth econing ara ata
ele res ork he lg it mat ht al
ra ava itary tetra soc choc
that had grown up around ic. oe
“The in
coming corey UF lee bane rpc, ac
cir ey lagen, Be ic etna of gies of wore
workforce led tothe introduction of busines erin and then later ou
sn helm Ls, bes sec ere a a
se oti heron fo, Roy wn es
Insel mani soca oe eer more ample fs
condnaontognton, Ban vv lng aco
iment prominent ona ton ou
nets, an alent mile cls bean to spend more of fi dace
25 cone sac fal Kink The poe sles oe
a ber ‘entered the workforce. Activities that women normalh il
te ithe ho, neigh a seo xray
hath are an th is wer moved fo the mae oi
cnc res ete 197 hme i soa
commercial bakeries rose from 4 to 2 of the I oda
bys fo 4 of dhe tonl produced. The produe-
thn feed eg te? vs sme ts le
me ing bina he dio prise hn eae
me sri whch bec, te spt fy a
publica, go 0 mig he mc hee ey er
cominerial serves of various sors, Deeverma numa the
feof chugs eros of ha
of the twentieth century this way: oe
366
WHEN MARKETS GIVE WAY TO NETWORKS
“Thus the popuiation no Tonger relies upon socal organization in the form of
fanly, friends, neighbors, community elders, cldren, bur with few e=ceP>
tory must go to market, and only to market, not only for food, clothing, nd
“fer but aso for rereation, amusement, security, forthe care of the young,
sald che sick, the handicapped. In time not only the material and service
ae fe but even the emotional patterns of fife are chauneled through the
By the time Daniel Bell wrote his book ‘The Coming of Pst-Indusiat
ning in 1973, the performance of services had eclipsed the production of
good and become the driving engine of capitalism in both Nowth Ames
wet rurope, Although “services” is abit of a mercurial, catchall eategory and
pen to widely difesng interpretations it generilly inches economse at
ape fat are not products or construction, are transitory, are consumed 2 che
time they ae produced, and provide an intangible value, The Economist.
partly dn est, once saggested that services are “anything sold in wade at
par nor be dropped on your foot.””” They include professional work
flga, accounting, and consolting), the wholesale and retail ras, eranspor_
cee communications, health care, child eare, senior care, entertainment
snd paid leisure activity, and government social programs
12 1973, anty-five out of every hundred workers were already engaged in
semikes. In the European community. 47,6 percent of workers were in the
service sector in the eatly 1970s."* Today, the service industies employ mors
than 77 percent of the US workforce and account for 75 percent ofthe wale
ued ie the US economy and more than half of the value added in the
gjotsl economy.” Percy Bamevik, the former CEO of Asea Brown Bove
Bal. predicts that by the year 2010, services will make up more than $0
percent of the US economy, and manufacturing actives less than 10 per=
“The shift in primary commerce fom goods to services makes property Fr
less important in both business and personal lif, In the Age of Access, we are
more likely to measure economic activity in "MTBH ~ the mean Gime
teeareen heicute” than by the aumber of widgets produced and sold, writes
Peter Martin in the Financial Times! Daniel Bell captured, at least in part
the significance of the transformation taking place in capitalist commerce
arene observed that “if an industrial society is defined by dhe quantity of
Moods ss marking a standard of living, the post-indastial society is defined bY
are quality of hfe as measured by the services and amenities ~ health educa
a reereation, and the ats which are now deemed desirable."
Of course, what has been left unsaid in all of the discussions about che
tension to a service economy, and what bears repeating, i that services do
367 JEREMY RIFKIN
not qualify as property. They are immaterial and intangible. ‘They
ey ate poe
hey cannot be hel cumulated, herited, iproliica ao
ee ‘es are made available. In a service economy en ae
itis human time th:
cece, ane pi oF Wiiek Sonic sways tocke a alll
ship between human beings a
si beings as opposed to a relationship between @ suman
ingly mediated by pecuniary relationships,
and a thing. Access to one another, as social beings, becomes increas.
The metar
duction a
ind commercial exchange aa
fied service relationships is trans eee yoramoca, a
C y relations are fiandamental when, in reality, economic free
se ting psa proper en, ow leva. Psa we Tae bea
na to come to grips with a world in whieh the production and exchange
of prapereyls wes longer ie ate raha Gr Ree ESSE aie
to actas if prope
activity because we are affaid of losing, our m
seine esi wont si s our moorings. Our codes of ecnduct,
people, the institutional forces, and th ee
1s mst os bode, te tang and posal wo of ee
inning to end if we were to wrestle se1 wail
based more on access than on ownershiy realy ith he pace oF od
That day of reckoning, how
Daniel Bell and othe foe
rer, may be near because of two changes that
ede ated eee ee
advent of electronic comme:
advent of el mmumerce and sophisticated data fecdback mechanis
services are being reinvented as long-term multif a
are becoming,
perty as a defining
cnovenandl die, od relationships between
The Evolution of Goods into Services
As goods become more information-inte id
censive and interactive and are conti-
noually upgraded, they change character. They lose t
metamorphose into evolving serv storage
pl wing services. Their value lies less in i physical
368
WHEN MARKETS GIVE WAY TO NETWORKS
scaffolding or container
provide. Taichi Sakaiya, she director-general of the Economic Plannin
Migoncy of Japan, understood the change taking place inthe way we Resa
Agency Oyen he wrote, “The signficaice of mateial goods [will be] as
containers or vehicles for knowledge-value.”™
Companies are revolutionizing product designs to n
i of thinking of products as fixed items with set f
lect the new emphasis
con services. Instea
emt as “platforms” for
onal a one-time sales value, companics now think of
cervices. In the new
all sorts of upgrades and value-adde
aa aen the services and upgrades that cout The platform is merely the
vided, In a sense, the product becomes
idea is
vessel to which these services are
verge of cont of doing business than a se ice in and of ise. TB
viform as 2 beachhead, a6 a way of establishing physical pre
“customer's place of business or domicile. ‘That presence allows
fina Jongeterm sorvice relationship with the customer. For
he vendor to b
ary the pak often are sokd at cost in the expectation of sling
th rstrertve services to the customer over the lifetime of the product
owiie toy maker Lego Group AS of Denmark is selling a new toy
combines computer brain with Lego building blocks so that children
