White paper on creativity - ebla center

Part IIIThe content and information industries:towards a theory of goodsThe content and information industries encompass the sectors of Cinema, Publishing,Radio and TV, Software and Advertising.These sectors produce goods that share some specific features which, in turn, determinethe production and organisational structure of the content and information industries.“Nobody knows anything”Content and information industry goods are primarily all experience goods. In thecultural content market, consumers’ tastes and preferences cannot be known a priori. Onthe contrary, they are only formed through the experience of consuming the good.Whether a film, book, advertising campaign, videogame or television programme, noone knows if a cultural product will be chosen by consumers, and therefore what its realvalue is, before it is launched on the market and distributed to the public. This is thefundamental principle of uncertainty of success for cultural and creative content which,for example, led the American author and screenwriter William Goldman to claim onthe subject of the film industry: “Nobody knows anything.”The demands for these goods tend in fact only to be revealed after the product isdistributed and used by consumers. Only at this point can the supply and price bematched with demand.The success or failure of a product is mainly determined by the dynamics characterisingthe way the demand for the experience evolves in time. In this field cascade effects andviral advertising phenomena, such as word-of-mouth, are crucial in determining thesuccess or failure of a product.Consequently, the content industries must adapt to these dynamics to try and optimisethe success of a product through launch strategies and advertising. The risk is that a filmor book will disappear from distribution channels before the word-of-mouthinformation spreads among consumers, thus rendering vain the initial investments andcreative effort. Not even a huge financial commitment involving the best technicians,screenwriters, directors, authors and creative advertisers can guarantee the commercialsuccess of a work.For example, independent films have achieved international success even on a very smallbudget. While, on the contrary, celebrated directors have at times failed to achieve theexpected success, even when working with top collaborators. In the USA, the attempt tospread the entrepreneurial risk led to the development of the American film industrygiants, whereas the European response to the high risk involved in film productions hasbeen subsidies, which means some of the costs of the content industry are borne bysociety.WHITE PAPER ON CREATIVITY 154