Culture and Commerce

The Value of Entrepreneurship in Creative Industries

Mukti Khaire

• Publisher: Stanford Business Books
• Year: 2017
• ISBN:
  9781503603080
• Edition: 1
• Topic: Business
• Subtopic: Comportamento dei consumatori
• Index: Business

Art and business are often described as worlds apart, even diametric opposites. And yet, these realms are close cousins in creative industries where firms bring cultural goods to market, attaching price tags to music, paintings, theater, literature, film, and fashion.

Building on theories of value construction and cultural production, Culture and Commerce details the processes by which artistic worth is decoded, translated, and converted to economic value. Mukti Khaire introduces readers to three industry players: creators, producers (who bring to market and distribute cultural goods), and intermediaries (who critique and rave about them). Case studies of firms from Chanel and Penguin to tastemakers like the Pritzker Prize and The Sundance Institute illuminate how these professionals construct a vital value chain. Highlighting the role of "pioneer entrepreneurs"—who carve out space for radical, new product categories—Khaire illustrates how creative professionals influence our sense of value, shifting consumer behavior and our culture in deep, surprising ways.

Part I

MARKETS, ENTREPRENEURS, AND CULTURE

1

THE BUSINESS OF CULTURE

The work of an artist is . . . to change the value of things.

—Yoko Ono¹

Paul Durand-Ruel was a successful and astute businessman in mid-nineteenth-century Paris. He also changed the course of art history. As an art dealer who was willing to take risks and defy the authoritative diktats of art academics and the sensibilities they reinforced about what constituted “good art,” Durand-Ruel cultivated a group of high-status collectors and convinced them of the aesthetic, social, and economic value in the unusual paintings of a group of radical French artists who were ridiculed as “Impressionists” by many art critics and commentators of the era. Labeled as such because their works comprised landscapes and real-life scenes in bright colors and fluid brushstrokes that rendered a general “impression” of the scene rather than a detailed representation, these artists’ paintings looked nothing like “good art” as defined by the rigid academic conventions of that time, which called for historical or religious subjects and portraits, depicted realistically and precisely in muted tones and dark colors. Art critics and other commentators deemed the new style of painting an outrage—strange, bewildering, even subversive—and the Impressionists were banned from the official shows that were, at the time, the primary means for artists to garner critical attention and cultivate customers. Although the new art and the artists were marginalized for a time, Durand-Ruel and a few other brave and visionary art dealers and critics defied prevailing conventions to promote the genre among collectors and thus create a market for it.

The story of Impressionism (as the style came to be legitimately known) is the story of many innovations. When first presented, radical ideas that defy or deviate from accepted conventions, standards of quality, and prevailing norms about appropriateness face an indifferent reception, if not outright hostility,² and yet a few of these ideas overcome this initial resistance and gain attention, acceptance, and respectability, as well as (high) value in a market. Though initially banned, Impressionism as a genre was soon accepted, and eventually desired and coveted, as it is today.

A similar story unfolded in early twentieth-century France in a different creative field—fashion—where cultural norms were arguably more rigid, influential, and powerful than in art, and social pressure to conform to these norms was more extreme. At the time, society women were expected to wear elaborately restrictive dresses that were considered appropriate because they signaled wealth and status (of the women’s husbands and/or fathers). Coco Chanel’s radically minimal, modern aesthetic in clothes, introduced in 1913, changed this notion of acceptable fashion over a decade that also witnessed social upheaval and changes in other cultural norms. Chanel’s influence can still be seen in the wardrobes of today’s women, which typically contain several staple pieces—the little black dress, a handbag with a shoulder strap that leaves the wearer’s hands free, and costume jewelry that is boldly attractive but not ostentatious, for example—that derive from Coco Chanel’s original ideas about what women should wear.

These examples from the art and fashion worlds are similar in two key respects. For one, the trajectory of both innovations—from marginal to mainstream—required a transformation in the established cultural norms regarding what was appropriate, accepted, and valuable. Second, in both cases this cultural change was facilitated by entities operating in the market (dealers of Impressionist art and Coco Chanel’s eponymous firm, respectively). The role of business ventures in the cultural arena is, at first glance, puzzling: growing revenues by selling more seems to be at odds with pushing artistic and cultural boundaries, which typically occurs through the introduction of radical, innovative works that consumers do not usually want to buy (at least initially). Even though the production of cultural goods in a market economy by private firms is now the most common mode of cultural production, such firms presumably and understandably wish to grow revenues (by selling goods that consumers want to buy). Under these circumstances, introducing radical innovations that defy conventions of acceptability and appropriateness and are unlikely to be desirable to consumers would seem not to be the best business strategy.

Many individuals and firms nevertheless succeed in juxtaposing these two seemingly conflicting goals to build cultural acceptance, as well as new markets, as the preceding examples indicate. These two episodes are not isolated instances: record companies Sugar Hill Records and Def Jam were central to popularizing rap in an era when disco and classical rock were de rigueur; Sylvia Beach published Ulysses, a modernist novel that not only broke all traditional narrative conventions but also gravely offended the social sensibilities of its time and yet is today considered an exemplar of modern literary fiction, and the Sundance Festival is widely acknowledged as being primarily responsible for changing the public’s tastes in movies by promoting an alternative to big-budget blockbusters—independently made films that shine a spotlight on new and diverse stories and viewpoints.

How and why does this interaction of business and culture occur? Who are the entities generating this type of economic and cultural change? This book addresses these questions, taking as its starting point the (somewhat counterintuitive) premise that, as in the preceding examples, the creation by commercial ventures of a market for a new, radically different category of cultural goods is an entrepreneurial act that occurs in conjunction with changes in cultural norms, despite the seeming contradictions between the commercial and cultural worlds. The specific process by which commercial ventures in the creative industries create a market for novel cultural goods is related to the nature of value in markets, as well as to the particular characteristics of cultural goods, all topics on which this book will shed some light.

Understanding markets and consumption requires comprehending how and why people develop affinities for particular objects or goods, a process that is particularly complex and slow in the case of novel items that are unintelligible to most consumers and are even considered controversial or unacceptable by many. How consumers begin to covet once unfamiliar goods—sometimes to the point of becoming willing to pay exorbitant prices for these goods—is a complex puzzle. Further, the acceptance of radical novelty is particularly challenging to understand in the case of cultural goods, which don’t always offer the consumer value in the form of objective utility or measurable improvements relative to prior iterations or alternatives in the way that, say, a faster and more powerful car, computer, or smartphone does. Cultural goods (such as music, literature, films) have greater symbolic than material or utilitarian worth,³ and the value they provide to consumers falls primarily in the realm of art or entertainment; these factors slow down the pace at which consumers’ tastes in these goods change.

Indeed, cultural goods are not much more than physical manifestations of ideas. Chanel’s little black dress, for example, was not merely a garment but also a comment on modernity and the changing roles of women in society. Sergei Diaghilev and the Ballets Russes provide another helpful example. Diaghilev’s choreographies fundamentally departed from the conceptualization of proper ballet (and, at an extreme, dancing as a whole) at the time—they were a manifestation of Diaghilev’s ideas about movement, music, and performance in an increasingly social and globalized world. In the cases of both Chanel and Diaghilev, the resulting product is something the consumer does “use” in a certain capacity—even products that have less utility than clothing or food, such as fine art or classical music, still have a use, oftentimes as entertainment—but the product is far more than a purely utilitarian object. It is the idea of the artist manifested in a physical form. Another way of understanding cultural goods (and the artistic endeavors that typically result in the creation of such goods) is to view them as products of actions that use concrete resources to convey intangible ideas that have intellectual and symbolic value: paintings made from paint and canvas, clothing made from textiles, and theater created via performers, sets, and costumes.

In both understandings—cultural goods as physical manifestations of ideas and cultural goods as the symbolic output of material inputs—there is a juxtaposition of the symbolic value of the object, related to its underlying meaning, and its material value, which is the result of the physical properties of the object. What is manufactured, bought, and sold is an amalgam of both kinds of value. In this way, cultural goods are quite different from most other objects that are bought and sold in markets;⁴ consequently, the artistic or cultural paradigm and the market paradigm are generally regarded as different and often contradictory.⁵

Of course, these two paradigms do intersect and interact in the putative creative industries: art, music, fashion, theater, film, publishing, and haute cuisine. Since the end of the system of royal patronage of the arts, firms in these industries have brought cultural goods to consumers via the market mechanism. In this process, multiple entities translate and convert the symbolic value of artistic creations into economic value through discourse that renders the goods intelligible, acceptable, and valuable.⁶ However, when new artistic goods embody radically innovative ideas, they may be slow to gain acceptance in the market. Therefore, entrepreneurial firms in the creative industries must work to render new categories of cultural goods acceptable and desirable in order to create a new market; in so doing, they may engender cultural change.

Understanding the nature of artistic endeavors and the resulting cultural goods, the structure and functioning of markets for these goods, and the process of market creation by entrepreneurs will shed light on the relationship among business, entrepreneurship, and cultural change. These mechanisms and processes and their social and cultural implications are the central topics in this chapter. As a first step in investigating the creation of markets for novel cultural goods, this chapter addresses two questions: what events, entities, actions, and processes engender transformations in the perception and reception of novel categories of cultural goods? And how can the creation of such new markets inform the scholarly understanding of the relationship between business and cultural norms?

A Conceptual Understanding of Value and Markets

Markets are physical (or metaphorical) venues in which certain entities supply goods and/or services in exchange for money (in most cases) from other entities that demand these goods and/or services.⁷ The price at which an exchange occurs reflects the value placed on the good by the customer who buys it. In this understanding of markets, two sets of players—sellers and buyers—exchange goods for a strictly objective and commensurable value. Sellers are part of a larger group of entities—producers—that broadly comprises firms and individuals that have a direct economic interest in the good exchanged in the market because they are involved in its procurement, production, distribution, or sale (or some combination of these).⁸ Consumers are the individuals and/or groups that acquire the good in exchange for a commensurate amount of money, time, effort, or other tangible or intangible resource (or some combination of these). Thus, markets are perceived as objective realms in which goods must be rendered perfectly comparable and commensurable in quantitative, economic terms. The value assigned to goods, however, is never purely objective, a fact that has significant consequences for the conception and conceptualization of markets. In fact, scholars have suggested that “every determination of value is subject to forces that are part of the dominant context” and that “no evaluation is purely rational.”⁹

The perceived value of a good is determined by a complex amalgam of individual preferences and collective (at a societal or communal level) interpretations of its appropriateness and worth in the context of certain social norms, customs, and practices.¹⁰ Conceptualized in this way, value depends on a shared understanding of the good and of the attributes that shape its desirability or importance, all of which depend on values,¹¹ that is, the collective norms and principles held by a social group. To value a good, therefore, consumers must first understand it and then assess its appropriateness and desirability based on its congruence with prevailing personal and shared norms regarding what is acceptable and suitable.¹² In this sense, value can be understood as a social construction rather than an inherent, predetermined property of the good.¹³ Value is thus relative, deeply subjective, and fundamentally dynamic.

Because social norms play a central role in determining value, conceptions of value must be generally shared and accepted (that is, intersubjectively agreed on) to ensure smooth exchange among the entities that make up markets. As a result, value construction is predicated on broadly disseminated discourse, composed of texts and/or narratives that contextualize an object or concept/idea with the goal of explicating it and communicating its meaning.¹⁴ This discourse can take a variety of forms, ranging from publications and texts such as magazines, books, and advertisements to events such as conferences, conventions, and award ceremonies.¹⁵ The need for intersubjective agreement on value mandates that the process of value construction must be distributed across multiple actors. The social construction of value therefore occurs along a nonlinear and iterative path that involves repeated interactions among various entities, each of whom performs a different, sometimes redundant, role in contributing to a shared understanding of a good and its value. These entities constitute a value-construction chain, which is conceptually and materially very different from a supply chain, primarily in that it is nonlinear and the interactions and engagements that occur along the chain are symbolic.

THE VALUE CHAIN: ACTORS AND PROCESSES

Although consumers are the primary and intended audience for the discourse generated in the value chain, the iterative nature of the process of value construction suggests that the discourse provides information and evaluation to all entities involved, directly or indirectly. In addition to consumers, the value chain comprises two types of actors—producers, who have a direct financial stake in the sale of a good; and intermediaries, who do not have a direct financial stake but still produce discourse that contributes to the understanding of the value of a good. Producers are often responsible for contributing material/physical attributes of value (for example, raw materials, workmanship) to the good and for conferring intangible markers of value on it via their discourse, which consists of promotional materials such as advertisements and brochures. Although it may seem that producers inhabit a position of power within the value chain, their acknowledged incentive for increasing the perceived value of the good in the marketplace works against them, lowering their credibility among audiences and weakening the influence of their discourse in the value-construction process (a topic discussed at greater length later in the book). Notably, in the creative industri...