Creative Industries: Contracts between Art and Commerce

This book explores the organization of creative industries, including the visual and performing arts, movies, theater, sound recordings, and book publishing. In each, artistic inputs are combined with other, "humdrum" inputs. But the deals that bring these inputs together are inherently problematic: artists have strong views; the muse whispers erratically; and consumer approval remains highly uncertain until all costs have been incurred.

To assemble, distribute, and store creative products, business firms are organized, some employing creative personnel on long-term contracts, others dealing with them as outside contractors; agents emerge as intermediaries, negotiating contracts and matching creative talents with employers. Firms in creative industries are either small-scale pickers that concentrate on the selection and development of new creative talents or large-scale promoters that undertake the packaging and widespread distribution of established creative goods. In some activities, such as the performing arts, creative ventures facing high fixed costs turn to nonprofit firms.

To explain the logic of these arrangements, the author draws on the analytical resources of industrial economics and the theory of contracts. He addresses the winner-take-all character of many creative activities that brings wealth and renown to some artists while dooming others to frustration; why the "option" form of contract is so prevalent; and why even savvy producers get sucked into making "ten-ton turkeys," such as Heaven's Gate. However different their superficial organization and aesthetic properties, whether high or low in cultural ranking, creative industries share the sameunderlying organizational logic.

David Throsby

By documenting a wide range of commercial interactions across the creative industries, this comprehensive and immensely readable book shows persuasively that economic theory can help us understand the sheer business of making art happen. [Caves] uses contract and industrial-organization theory to throw light on how and why the industries producing cultural goods and services—from literature to film, from rock music to opera—work as they do...Caves does not engage issues of ideology, nor of the political or economic importance of the arts, but simply sees the creative industries as fascinating areas of economic activity which have been largely neglected by economists...By documenting a wide range of commercial interactions across the creative industries, this comprehensive and immensely readable book shows persuasively that economic theory can help us understand the sheer business of making art happen.

Richard E. Caves is Nathaniel Ropes Research Professor of Political Economy at Harvard University.