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the complete review - economics

Creative Industries

by
Richard E. Caves

general information | review summaries | our review | links | about the author

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Our Assessment:

B+ : good, comprehensive overview of the economics of the creative industries (publishing, visual and performing arts, cinema, TV, etc.)

See our review for fuller assessment.

  From the Reviews:

• "With great skill and originality, Caves has analysed the economic forces operating in music, book publishing, painting, the theatre and movies. (...) While Caves analyses the supply side of his chosen creative industries with immense perception, he is less good at making sense of the mechanisms of demand. Admittedly, this is much murkier terrain." - Winston Fletcher, Times Higher Education

Please note that these ratings solely represent the complete review's biased interpretation and subjective opinion of the actual reviews and do not claim to accurately reflect or represent the views of the reviewers. Similarly the illustrative quotes chosen here are merely those the complete review subjectively believes represent the tenor and judgment of the review as a whole. We acknowledge (and remind and warn you) that they may, in fact, be entirely unrepresentative of the actual reviews by any other measure.

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The complete review's Review:

       In his preface Richard E. Caves writes that the idea for this book came to him some two decades ago, but that he "thought it best postponed to a time when my reputation for professional seriousness could more comfortably be placed at risk." The arts are, apparently, seen as unserious business, even among practitioners of the dismal science. In fact, the arts are big business, and as such worth a closer look from an economic point of view.
       Caves' comprehensive survey examines the economics of art, focussing specifically on how art comes to the market and how artists (and publishers and recording labels and films studios and the like) are remunerated for their work. Much about the arts industry strikes outsiders (and many insiders) as bizarre and inefficient. The existence of middlemen and intermediaries (such as literary agents) where they don't appear to be needed, the surprising frequency (and enthusiasm) with which Hollywood finances huge flops, and absurdly high union wages for production staff in movie and theatre productions are only a few of the examples in the wild and weird world of art-production. Caves carefully and convincingly explains why these and other arrangements have come into being, as well as the costs and benefits associated with them.
       Focussing on the contracts that have evolved between artists, intermediaries, distributors, and others, Caves shows how market forces shaped these agreements. Some of this is dry material, but Caves' explanations are clearly presented and since the examples are taken from the entertaining world of entertainment -- lights ! cameras ! action ! books ! rock 'n roll ! -- it is, in fact, all fairly interesting and fun to follow.
       Caves covers many different forms of "creative industries", including the visual arts, publishing, theatre, movies, and music. As it turns out, each industry has come up with what are very standard contracts dealing with the basic issues.
       Many conflicts between galleries and artists, publishers and authors, and musicians and record companies -- especially regarding promotion of the artists' work -- can be explained by the economic incentives (or lack thereof) in the contracts between the two parties. A major problem in the arts is the huge failure rate -- 80 percent of all albums and 85 percent of all singles fail to recover their costs, for example. Caves emphasizes something that few publishers, record labels, or gallery owners (or artists) are willing to admit: that there is a problem of "nobody knows" (as in: nobody knows what will be successful). The idea of nobody knows is, however, implicit in the contracts (which is why they so often seems unfair to the artists, since artists are certain they will be successful (i.e. they think they do know) and thus think they are being under-compensated).
       Caves relates the fascinating history of how and why Hollywood contracts have changed over the decades as the way in which films are made has been transformed. He also offers the economic reasons for the transformation of film-making to the current methods (while also explaining the corresponding madness).
       Caves also show how the complex problem of collecting royalty payments for music led to the formation the copyright collectives ASCAP and BMI -- and how these collect and divvy up payments for musical performances (and the costs and benefits of how they do this).
       He explains the economics of non-profits intruding into the world of performing arts, as well as the ever-popular "payola" (bribery to push a particular artistic product).
       There are twenty-two chapters in the book, covering a large number of creative industries and addressing a variety of issues -- the supply of art, the demand for it, the problem of high fixed costs, and issues dealing with durable creative goods. It is a lot of material, covering a lot of ground, but it is all fairly interesting, with many fascinating titbits. Readers are unlikely to look at the creative industries in quite the same way after perusal of this volume. A rigorous yet clearly presented analysis, Creative Industries goes a long way towards explaining the economics of the arts.
       Those interested in questions of economics, or business generally, will find it an informative read. However, the people who should read it, and who really can learn something from it, are artists. The market for creative products is tough enough as is; understanding the economics behind the market would probably make life a little bit easier (and one's bargaining position perhaps a little bit stronger).
       Obviously not a read for everyone, but highly recommended to economists, artists, and those interested in the arts-industries.

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Links:

• Harvard University Press publicity page

• Times Higher Education

• Faculty page

• Tyler Cowen writes In Praise of Commercial Culture

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About the Author:

       Richard E. Caves is Professor of Political Economy at Harvard

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© 2000-2010 the complete review

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