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Cultural industries: why are consumption processes strategic?

Arts and culture comprise a wide area of economic activity, whatever criteria are used to measure their role. Cultural industries are systems of organisations mediating flows of cultural goods between producers and consumers, reconciling the demands of art production with those of the marketplace. Using the words of Hirsch, the outputs of the cultural industries are “… 'non-material' goods directed at a public of consumers for whom they generally serve as an aesthetic or expressive, rather than clearly utilitarian function”. [1]

The diffusion of digital technologies has a direct impact on the production, distribution and consumption of cultural goods: the possibility of easily searching for and freely downloading a novel, a song or an entire film from the Internet promises to dramatically modify the framework in which the consumption of cultural goods have been usually analysed and, consequently, the way firms organise the supply of cultural goods.

Since in this context the consumer is constitutive in the production of cultural products, while in many other industries the consumption may be simply characterised as adoption,[2] information on consumers' potential behaviour becomes a strategic resource enabling promoters to anticipate competitors, improving the fit between supply and demand of cultural goods in the digital environment. Collecting information and building profiles of potential consumers becomes particularly important during these changing periods, as customers' preferences and the social bindings at the basis of consumer behaviour alter, keeping the whole structure of the business under pressure. [3]

In our analysis we show that:

digital technologies do not have a unique impact on consumers of cultural goods;

the presence of different consumption profiles entails a deep segmentation strategy;

each side of the strategy, from selection of artists to promotion and pricing policies, should be addressed to deal with these segments.

The empirical analysis will be narrowed to a specific cultural industry, the music recording industry. Aside from its economic size, the music business has been chosen as a field where digital technologies are showing some of the most significant impacts on the patterns of consumption and the strategies of companies — think for instance of the effects of the Napster phenomenon.[4] The implications of this analysis of the music business may be easily generalised, as they refer to consumption features that are common to the other fields of cultural industries. [5]

The key dimensions of consumption in the cultural industries

To highlight the impact of new technologies on consumption in the cultural industries, we need to consider in great detail why this activity is peculiar to such industries as against the rest of the economy. In other words, why the consumer takes an active part in the consumption process, and, thus why qualitative information on his behaviour may become strategic for managers in the cultural industries, especially during this period of technological change.

The analysis of consumption patterns is a cornerstone of strategy in cultural industries and motivations stem from typical characteristics affecting the actual consumption (rather than just the experience) of cultural ...