Economy Culture: The majors and independents

The oligopoly with fringe or the theory of center and periphery

The key cultural industries, book publishing, music and cinema, are each dominated by oligopoly consisting of a few companies is mostly all markets at once, and designated as the majors. Yet each of these areas contain a large number of companies with a myriad of very small businesses (independent producers or editors for example). Each of these sectors therefore has a structure of oligopoly fringe. Around very large companies that have the means of production, distribution and promotion very important gravitate to small businesses, which serve as first filter in the artistic offerings. Thus, it is common that a successful artist produced by a small house has resulted in the takeover of the House by a large group.

In the field of recorded music, Mario Angelo has studied the phenomenon by applying the approach system (the area is considered a system based on the interdependence between its members, who are called majors and those who are qualified independents). Policies can then be analyzed according to central or peripheral positions in the system characterized by an oligopoly, not frozen, which feeds continuously from the periphery
center, companies are multinational organizations, diverse in different trades in the chain of recorded music and belong to a large worldwide group invested in several branches of cultural industries and media. They are also structured to ensure global distribution and mastery of promotion and market is linked to their ability to manage the reputation of their artists,
at the periphery, a variety of businesses, local (related to one or several territorial markets), so small size with a diversification variable but often more productive activity. Their strength lies in their innovativeness and creativity, most often related to proximity to or control over these companies by production artists. But businesses in the periphery depend heavily on companies which have their center outsourcers, either because they market their products, either because they ensure the defense of the profession (eg lobbying for legislation protecting rights of producers).

In the analysis of Angelo, the strategies reflect the merger history of the Constitution of the majors in the disk: the center is not monolithic nor static, but rather constantly renewed by the periphery. Paradoxically, the ideological conflicts between large (central fringe oligopoly) and small (peripheral or fringe oligopoly) are strong while on the ground, complementarity has long prevailed in strategies adjusted for redemptions, mergers , of equity.

The theory of center and periphery also finds application in all industries where the cultural action groups worldwide was key to the early 2000s. However we can not speak of an oligopoly to this whole branches. The term Major before him as to be limited strictly to a branch. Thus in 2002, the Sony group, studied by Mario D'Angelo, occupies a position of major in the film industry (through its subsidiary, Columbia Tristar), music (via his filali Sony Music), video games. However this group is virtually absent from the world scene in the book and the press, radio and television broadcasting. In the constitution of the twenty giants that shape the cultural industries and media, financial strategies and access technologies have been more critical that strategies for product / market (or content). In the Industry wrote of Angelo Mario analysis that the language areas have long been (and still are) natural brake to a considerable expansion of businesses in central position. So the financial strategies used in opportunities (especially when there is possibility of acquisition of an independent in a market in another language area) who are paying more (for example, the collapse of Vivendi Universal and the restrictions imposed by authorities regulating the market of the European Union to buy back its publishing activities by Lagardère (via its subsidiary Hachette) have finally resulted in the forced sale of certain subsidiaries operating in the book and Press to non-French groups such as Bertelsmann.

We must however now question the future of this model of concentration and growth in cultural industries and media, insofar as the Internet, not only encourages new entrants without experience of the content industries, but also modifies rules that existed a long time. The appearance and components of the fringe oligopoly began their transformation.


Majors

By Staff, means international companies operating primarily in the markets of rich countries, whose production and publishing of cultural property constitutes the bulk of the activity. The phenomenon of majors is old, as existed in the 1920s of large conglomerates (RKO Pictures for example) gathering activities of film and television. However, the majors formed in the 1990s belong to a different logic. They are indeed built either by extending to the neighboring markets of content groups (News Corporation, Pearson (edition)), either by repurchase of old content providers (Time Warner, Universal) by groups or networks containing (Vivendi, Sony, AOL). The actors waiting for their union in a group of containers and content synergies in terms of production efficiency (economies of scale) and market power. Some like the others have not realized, because of the uncertainty inherent in cultural property, especially because each group has experienced the loss he was content to exclude competitors from its own distribution network, and vice versa of what not to be distributed by the competing networks. This resulted in the early 2000s, a wave of reorganization of these groups in the sense of focusing on a number of complementary activities (press and publishing, film, television and music), leading to the creation of industry groups.




Economy of artists' work


In contrast to a vision of the artist as a whole issue devoted to the artistic, economic analysis of labor supply of artists from the perspective of rational agents to understand the specifics of the offer artists' work. The labor market for artists in this effect four distinctive properties
a very unbalanced distribution of gains, known as the star system, where a very small number of agents are a very important part of total remuneration;
excess supply systematic: there are always more people wanting to earn a living in an artistic activity that asks:
non-monetary gains leading agents in the market to accept wages far below those that would otherwise their skill levels;
not a separation of artist and work: the artists are interested in the image that their products give of themselves.


The Star System

For his income and the attention it focuses the actor Brad Pitt plays the functioning of the Star System.

By Star System denotes the fact that the remuneration of artists, a handful of them, the Stars, are a very important part of remuneration. Initiated by Sherwin Rosen, the explanation of this phenomenon based on the dual uncertainties of the markets for cultural goods is that consumers do not know if cultural property will please him before eating (think of the detective story: it is rarely before the last pages that can form an opinion on the quality of the plot), and the producer does not know whether a given product will work or name. As a result, consumers will rely on a signal supposed to indicate a certain quality: money, recognition, or presence on the cover or poster of a famous name. Anticipating this, the producer will be willing to pay very dearly for the artist whose name functions as a guarantee of quality: the stars. Moshe Adler, and Ginsburgh and Van Ours also show that the star status depends less on a hypothetical superior talent than on questions of luck and chance. Thus, we find that the results of the Queen Elisabeth Competition is strongly correlated with the rank of passage. However, the winning students are offered much more lucrative contracts than those offered to their less fortunate competitors in the order of

The Star System was further amplified by technological media of cultural property. In the nineteenth century and early twentieth century, the audience, and thus the revenue generated by a celebrity like Sarah Bernhardt was limited by the capacity of venues. The development of the music broadcast (broadcast) or saved will reach a much wider audience, which multiplies the amount of earnings available. Insofar as all of this additional pension is not captured by the star, music producers have a strong incentive to identify and recruit future stars, thus giving a first chance for many beginners.


Too many artists?

The vast majority of people defining themselves as "artists" derive from non-artistic activities, most of their income. How to explain that among these, a party does not withdraw from the market of artistic work, and continues to offer a creative work that does not meet demand? Two explanations dominate. On the one hand, the artists receive because of their activity in unrealized currency in terms of social status and esteem within their own social milieu. On the other hand, gains some celebs are so important that many are encouraged to try their luck in the same way that very large gains in Lotto are forgetting the most players that the mathematical expectation of their earnings is less than the ticket price.

As noted by Alain Herscovici, only a small part of the production manages to be profitable in 1986, 1% of rights holders affiliated with the SACEM earned more than 300 000 dollars, while 71% had to settle for less than 4 000 dollars .


Risk Management

If the prospect of gains and non-monetary gains explain that artists earn an average 6% less than those of comparable qualifications (Randall Filer, 1986), their total cash income, however, are equivalent because of the frequent practice of a secondary activity "food" to smooth out the ups and downs of an artistic career. There is empirical asymmetric situation between the two activities. When the salary level of feeding activity increases, we see that artists tend to reduce the time spent in this activity (which therefore serves only to guarantee a minimum income) for the benefit of time spent in activities art.


The artist and his work

In general economic analysis, the nature or quality of goods produced is irrelevant to the employee paid to produce it, as it has no impact on wages. Thus, a worker may be indifferent between making cars or washing machines where the required work and wages are the same. It is not the same artists. Most consider whether the work is an expression, so a part of themselves, or they have a say on its use because it strongly determines their future income. This implies a fundamentally different organization of the production of cultural goods.

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