hirsch(2000) cultural industries

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1047-7039/00/1103/0356/$05.001526-5455 electronic ISSN

ORGANIZATION SCIENCE, 2000 INFORMSVol. 11, No. 3, MayJune 2000, pp. 356361

Cultural Industries Revisited

Paul M. HirschJ. L. Kellogg Graduate School of Management, Department of Organization Behavior, Northwestern University,

Evanston, Illinois 60208-2001, [email protected]

It is a commonplace in most lines of economic endeavor that those who process raw materials,transformthem and merchandise the finished product receive the lions share of economic rewards. The field ofcultural endeavors is relatively unique in that we strongly desire to reward our creators, commune withtheir audiences, but avoid or ignore the organizational middlemen linking each to the other.

(Hirsch 1985 p. 110)

Abstract

In my early Processing Fads and Fashions: An Organization-Set Analysis of Cultural Industry Systems (1972), the middle

throughput phase, or most organizational aspect of cultural

industries, was emphasized. In this depoliticized exploration of

what Adorno (1991) had earlier characterized as the industri-

alization of high culture, and Powdermaker (1950) as Holly-

woods dream factory, I emphasized the key roles of gate-

keeper and distributor organizations as critical in connecting the

artist/creators to audience/consumers of mass, or popular

culture (as it had more acceptingly come to be called). Alto-

gether, this network of organizationsfrom creators (artists,

musicians, actors, writers) and brokers (agents), through the

cultural products producers (publishers, studios), distributors

(wholesalers, theaters), and media outletscollectively consti-

tute cultural industries. This article on industries producing

cultural productsdefined as nonmaterial goods di-

rected at a public of consumers, for whom they generally serve

an esthetic or expressive, rather than a clearly utilitarian func-

tion (Hirsch 1972 p. 641)appeared at the same time that

organizational sociologys focus on what became known as the

production of culture took off, and continued to flourish into

the 1990s (Peterson 1994, Crane 1992).

How has the study of cultural industries changed over the

last generation? A simple answer is that the subjectthe key

role of distribution and the importance of organizational mid-

dlemen in the making and sale of popular cultureremains an-

alytically the same. From actors, musicians, and writers;

through studios, labels and publishers, to videocassettes, movietheaters, record stores, and booksellers (in stores or via the In-

ternet)cultural products flow. How this sequence is organized

and traversed remains a fascinating forest of power plays and

techniques, employed by role-occupants in the same positions

as have existed since the advent of mass media. While this

substantive field has changed little analytically, what we also

see is a wondrous expansion in the disciplinary approaches be-

ing taken to examine the multitude of topics available for ex-amination under the broad rubric and framing of the term, cul-tural industries. Because I was a graduate student at the time(my roommate dared me to submit the Processing. . . paperto the American Journal of Sociology), it is a great pleasure tofind the concept has retained its value for other researchers sincethat time.

In this article, I will (1) reexamine and discuss the originalframing of the term cultural industries; (2) briefly review someof the more recent complementary perspectives which expandthe possible arenas for studying this topic; and (3) append ashort note on how the more recent inclusion of nonprofit cul-tural products (e.g., symphonies, museums) in this frameworkposes interesting analytical questions and opportunities.

(Economic Sociology; Organizational Field; CulturalIndustry; Mass Media; Entertainment)

Revisiting the Original FrameworkThe concept of industry system takes the focus of atten-tion away from any single firm or role in the sequence ofdiscovering, producing, and delivering a product, redi-recting attention to the interconnections and interdepen-dencies between them in order to get to the final (fin-ished) product or outcome. As Scott (1995) notes, it issimilar to the concept of organizational field (DiMaggio

1991), which maps out the universe of organizations en-gaged in processing a product or project from its incep-tion to completion.

In the case ofcultural products, by the start of the newmillennium the organizational field would encompassroles and organizations ranging from the talent agenciesand personal managers handling the artists career to the


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PAUL M. HIRSCH Cultural Industries Revisited

ORGANIZATION SCIENCE/Vol. 11, No. 3, MayJune 2000 357

satellites carrying signals for both broadcast organiza-tions and consumers, internet delivery of recordings andsong lyrics, and video cassettes of movies for purchaseand rental. In between these are a small number of pow-erful intermediate organizations producing and dis-tributing the movies, books, recordings, and television

programs which are developed and delivered at the earlier(production) and later (retail) stages of these productscreation and distribution (Stearns et al. 1987, Barnett andStarkey 1994, Saundry 1998).

The extensive risk sharing and outsourcing of numer-ous aspects of this production, marketing, promotion, anddistribution process began early in the history of enter-tainment. Interestingly, these practices recently diffusedextensively throughout American business organizations,being adopted widely during the 1980s and 1990s (Arthurand Rousseau 1997). At GE and other large corporations,this process mapping conception has been applied to thefull production processfrom the start to finish of a prod-uct or project. Abrahamson, and Lawrence and Phillipshave noted similar sequences of (a) symbiotic interindus-try sequences in the production and distribution of man-agement fads and fashions, such as total quality man-agement; (Abrahamson 1996, 1999); and (b) traced theincreasing importance of (outsourced) knowledge and de-sign components for increasing numbers of industrial andservice products (Lawrence and Phillips 2000).

Within this dynamic cultural industry field, there con-tinues to be much jockeying for entry and positioning asnew technologies and legislation enable moves towardsvertical integration and cross-ownership of producing and

distributing organizations. Stratification within each in-dustry is based partly on each firms ability to control thedistribution of marginally differentiated products. Com-petitive advantage lies with firms best able to link avail-able input to reliable and established distribution chan-nels (Hirsch 1972 p. 646). Recent large-scale corporatemergers have increased concentration ratios and may alterthe internal composition of entertainments organiza-tional field. One sign of a possibly countervailing forceis the increasing utilization of the Internet by musicalgroup and author producers to release new materialswithout going through the more traditional routes of re-cording companies and publishers as their distributors.

These developments within the cultural industry fieldcontinue to move in various unanticipated directions. Onesignificant indication is the decision of its major distrib-utor organizations to combine, in such recent megamer-gers as: TimeWarner with Turner Broadcasting; Disneywith Capital Cities (ABC) Broadcasting; News Corp.spurchase of Simon and Schuster publishers, combinedwith its ownership of 20th Century Fox (movies), Fox

Television Network and major newspapers; the Bertels-mann Co.s recent acquisition of Random House; and,finally, AT&Ts purchase of 60% of the cable televisionindustry.1 It is important to note this overall increase inconcentration is primarily in the distribution and retailsectors of this industry field. As the cost of technologies

for making a record, printing a book, or filming a moviecontinues to decrease, control over their distribution be-comes more critical for organizations seeking to reduceuncertainty over the outcome of their investments (Miller1996, 1997, Hirsch 1992, Turow 1992).

As the level of concentration increases across these me-dia, an interesting empirical and researchable questionwill be whether the diversity of what becomes availableis diminished. Particularly for books and recordingswhere consumers access to alternative delivery remainslimited, a narrowing in the number of large-selling re-leases by new authors and publishers, or unknown re-

cording groups and labels may be anticipated (Schiffrin1996, Peterson and Berger 1975, 1996, Burnett 1992,Lopes 1992). For films and television, the increase inavailable outlets (e.g., satellite channels, cassette sales)may offset the increase in concentration of conventionaldistribution resources.

A rise in the number of outlets available for film andtelevision productions is facilitated largely by the frag-mentation of the retail television spectrum. From a smallnumber of three television networks and some ancillaryindependent channels for the first 40 years of this com-mercial medium, the 1990s have seen an explosion ofchannels available via cable and satellite distribution.

Television has joined radio as a medium of formats, withchannels now specializing in headline news, courtroomtrials, stock market reports, romance movies, and car-toons. The once dominant networks are still importantplayers, but less powerfulwith a vastly reduced audi-ence share, now closer to 40% than their earlier 90%. Anintriguing cultural question arising from this is whetherthe U.S. still has as clear a single dominant popular cul-ture, or whether (like radio, magazines, and now televi-sion formats), there is less of a national pop culture (net-work TV shows, with news at 6:00or nothing else),versus a multitude of what Gans (1974) and Cawelti

(1976) earlier envisioned as a variety of taste cultures,each receiving its fare with minimal exposure to the tastesof others.

This revisit to the original cultural industry systemsmodel finds the industry rife with substantive changes,yet analytically much the same as at the time of the origi-nal formulation. It still costs far less to produce manybooks, records and films than it costs to distribute and


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retail them. Competition in the industry is thus more fo-cused in this latter activity. During the 1990s, a series oflarge mergers was undertaken, probably in large part tolower these costs and enable the reduction of uncertaintyin moving successful products through the cultural in-dustry system. Unless (and until) these succeed in virtu-

ally ending the market uncertainty endemic to culturalindustries over which cultural product will become thenext hit or bestseller, this does not alter the analyticalfocus of the industry system model. Rather, it provides aprocess-orientation enabling the analyst to trace the criti-cal points at which cultural products are located, spon-sored, promoted, and retailed. This tracks the complexityof a cultural products routes and chances for success, atthe same time that key industry members seek to rein-corporate aspects of production and distribution whichhad previously been outsourced. The cultural industrysystem model, initially part of the production of cul-ture school of organizational sociology, has since beenextended and complemented by exciting developments inother disciplines, to which I now turn.

Recent Formulations on CulturalIndustriesIn an overview of the recent economics literature, Di-Maggio (1994) noted an increase in the number of articlesaddressing cultural topics. In economics and the relatedfield of business strategy, an impressive number of stud-ies of cultural industries have appeared since 1990. InTable 1 (Historical Overview of Cultural Industries), wesee these publication dates correspond roughly to the in-dustry profile I label as the New Gold Rush, in Col-umn 3 (1980s2000). During this period, not only werethe providers and distributors of programming (soft-ware) for the major media undergoing dramaticchanges; the very equipment (hardware) over which itwould be transmitted and received (cables, wireless, sat-ellites, Internet transmissions) was also in a state of flux.(The key issues portrayed on Columns 1 and 2, for theindustrys earlier eras, were addressed in the previoussection, and are covered more extensively in the attendantproduction of culture literature.)

For economic modelers, this poses a question of howpeople will allocate their leisure time, i.e., which of themany platforms offering competitive entertainment, andseeking the consumers time and money, would succeedin gaining it? Following Column 3 of Table 1, we findconceptions of the mass audience giving way to masscustomization with attendant changes in marketingcampaigns, advertising, and images presented. The 1999

annual meetings of the National Association of Broad-casters was reported (Dretzka 1999) as presenting a con-test in which battle lines are being drawn between theold guardradio and televisionand the new mavericksof the Internet. Translated into the language of strategicmanagement, here is a contest between a previously dom-

inant five-forces economic framework (Porter l980) ex-periencing threats from new entrants and substitute tech-nologies, as well as changes in relations with suppliers.For disciples of Schumpeter, a possible time for creativedestruction; for DAveni and Gunther (1994), an exampleof overdue hypercompetition.

For researchers interested in cultural industries, thesepotential transformations pose a great opportunity forstudies across disciplines, of networks, strategic alliances,new corporate strategies, interorganizational conflict, andthe implementation of deregulation (e.g., AT&Ts take-over of 60% of the cable television industry). Researchersin each of these subfields are, happily, responding to this

challenge and opportunity. For a cultural product to suc-ceed, networks of relationships among a multitude of pro-fessionals must be mobilized, coordinated, and managedto get the job done (Burt 1992, Noria and Eccles 1992,Granovetter 1982). In cultural industry systems, the for-mal and informal contracts required cross-organizationalboundaries and often involve freelance professionals andtheir associates. Quantitative and qualitative studies ofthese networks, as well as comparisons between thosethat perform best and worst, are progressing and becom-ing available. An extensive bibliography of interestingprojects examining these social networks is found inJones (1996).

In the corporate strategy arena, we find the resource-based theory of strategy (Barney 1991) has been appliedto the film industry and extended by Miller and Shamsie(1996); and innovative studies by Robins (1993), Greve(1996), and Eisenmann and Bower (this issue). These arebut a small sample of the expansion of frameworks out-side of the production of culture perspective which, allcombined, lead to the conclusion that there is much leftto examine in the field, and it is well under way. Anadditional area of increasing value and importance forsocial scientistsbut beyond the scope of this reviewis the study of meaning and discourse conveyed throughthe books, films, and television programs to which we are

exposed daily.

A Note on Cultural Industries andNonprofit Organizations

To the extent organizational sociology has reestablished the obser-

vation that fine art and popular culture both exist in social en-

vironments which commingle elements of art and commerce, it


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Table 1 Cultural Industries: A Historical Overview

1940s 1950s1970s 1980s2000

Industry

Profile

Industry Stable, Controlled

(Vertical Integration)

Orderly Transitions New Gold Rush

Framings and

Context

Mass Culture:

film factories; golden age.

3 Radio Networks

4 Record Companies

5 Movie Studios

Diversity and Segmentation begin:

Less Concentrationrr Restabilization.

New Record Labels; FM stations.

Newspaper zoning begins;

CATV gets going, MCI shows up.

Mass Customizations:

postmodern sensibilities;

everything everywhere, and

commonly owned (MTV

& Nick; CNN & Warner Bros.).

New entrants and entrepreneurs;

networks reeling

Locus of

Control

Throughput

Production (intermediaries)

in control

Creators (input) freed up.

New production companies arrive.

Rise of new styles and players.

All negotiable;

Big mergers rr multimedia;

Focus more international

Technology

& Legal

Arenas

Software Hardware

Technology stable;

mass media as wartime ally

Television arrives and conquers

Radio rr Outlet for new genres.

Computing & Media coverage;

websites and Internet emerge;

New Telecomm Act Restricts Field;

Hardware issues contested.

Analytical

Frameworks

Include:

Bain, Industrial

Organization Economics

The Frankfurt School

Peterson, recording industry studies;

Gans, high culture and popular culture.

DiMaggio, broadening cultures

definition;

DAvenis hypercompetition;

Turowchanging company practices;

Gitlinpolitical impacts.

has rendered an intellectual service. But in making this point,

we may well have glossed over the question of what are the

proportions of, and emphases on, art versus commerce foundwithin each area? (Hirsch 1978 p. 317)

Both sociological and economic approaches to the artshave encouraged the conception of fine art as a com-modity no different than popular culture. But in fact, it

has a far different audience (smaller, more elite), and a

greater capacity to accurately estimate its costs and the

flows of incoming revenue. Although the fine arts (for-tunately) fall short of meeting my definition of cultural

products and industriesas the mostentrepreneur-

ial, speculative segments of the industry, and far more

committed to the size of the financial return than to thequality of the productions which yield itthe same role-sets are analytically operative: artists and managers at the

input stages, and organizations producing and distributing

their output (classical music, monographs, art films).

With the understanding that maximal profits reign lessas the organizational goal in these settings (for nonprofits

breaking even is cause for celebration), and that aesthetic

content has clearer standards (which are taken more se-riously than for pop culture), I am pleased to see the cul-

tural industry concept extended to the nonprofit (moreelite) sectors of the study of cultural organization. Forconsumers, the key feature common to both sectors re-mains the greater aesthetic value of the cultural produc-tions than for more utilitarian commodities, such as Band-Aids. The extension of the cultural industry concept inthis way suggests a continuum from cultural to utilitarianusage of many consumer products, enabling its extensionto such additional settings as gourmet food, professionalsports, and symphony orchestras.

Conclusion

On a personal note, I am naturally delighted that the cul-tural industry concept continues to be useful for analyzingthe popular culture around us. It connects to the widermovements in economic sociology to analyze and con-struct organizational fields, and address the social con-struction of markets of all kinds. The idea of tracing prod-ucts across organizations rather than limit analysis to asingle firm was fairly original at the time this article first


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appeared. With some notable exceptions, this processualemphasis remains underrepresented in studies of organi-zations and industries. Future developments will benefitfrom addressing the sites visited as less static andmore of a dynamic moving target.

Finally, more consideration of whether the cultural

products being analyzed are considered creative and/or well-crafted, and even good or bad by other criteria, isa luxury which our fields can afford to include in ouranalyses now and then. Our personal interest in culturalindustries invites pleasure in knowing that so long as theprediction of demand and taste preferences remains elu-sive, cultural goods will continue to be overproduced,with the result that we may all have continued access todiverse offeringsa cultural state from which we all ben-efit.

Acknowledgment

This article is a revision of presentations at two conferences, Research

Perspectives on the Management of Cultural Industries and Craft

and Commerce in Cinema, held at New York Universitys Stern

School in 1997 and 1998. The author wishes to thank Joseph Lampel,

Stephen Mezias, Jamal Shamsie, and Theresa Lant for organizing these

and making this paper possible, and to thank the Northwestern Uni-

versitys Institute for Policy Research for financial support in con-

ducting this research.

Endnote1The description of the degree of separation of these organizational

activities was noted as variable in the initial (1972) article. There, I

noted both (1) A distinctive feature of cultural industry systems at

the present time is the organizational segregation of functional units

and subsystems. (p. 644, italics added); and (2) In an earlier, more

stable environment, that is less heterogeneous markets and fewer con-

straints on vertical integration, the production of both films and popular

records was administered more bureaucratically: lower level personnel

were delegated less responsibility, overhead costs were less often

minimized. . . (p. 646). Which of these states the industry will move

towards during the coming decades remains a fascinating empirical

question.

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Accepted by Theresa Lant.

hirsch(2000) cultural industries

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