Amsterdam Business School

Cultural industries

Lecture week 7: Competition

Dr. Joris Ebbers

Intro case:
Gouden Kalf

Most important Dutch Film Award

Jury system change:

Until last year:

Small jury with changing membership

Peer (and expert) selection

Since this year:

Academy system with all previous nominees having voting rights

Peer selection

Question:
What might be the effect of this selection system change on the
Gouden Kalf as a quality signal for the industry as a whole?

Todays program

Crane, D. (1997). Globalization, Organization Size, and Innovation in

the French Luxury Fashion Industry: Production of Culture Theory
Revisited. Poetics, 24, 393-414.
Gemser, G.; Leenders, M.A.A.M and Wijnberg, N.M. (2008). Why
some Awards are more Effective Signals of Quality than Others: A
study of Movie Awards, Journal of Management, 34(1): 25-54.
Franssen, T., Kuipers, G. (2013). Coping with uncertainty, abundance
and strife: Decision-making processes of Dutch acquisition editors in
the global market for translations Poetics, 41, 48-74.
Frank, E. & Nuesch, S. (2007). Avoiding StarWars Celebrity
Creation as Media Strategy. KYKLOS, 60(2), 211230.

Competition

Who is successful?

Which competitor achieves competitive advantage?

By doing what, how, to whom, according to who?

Diana Crane 1997

The French luxury fashion industry

The article in a nutshell:

Market dominated by large conglomerates using name
designers as brand names. Globalization inhibits new
entry by smaller producers. Innovation mainly by wellfunded foreign (=non-French) firms.

Innovation in cultural industries:

Large versus small firms
LARGE FIRMS (CORPORATION)
More innovative when here is a need for large
investments over considerable period of time
Dominated by risk averse managers

SMALL FIRMS
More innovative when it is not labor and capital intensive
and success depends on close contact with a young public
Dominated by risk taking creators

Remember week 2?
France: Umbrella holding

Core competence

Design / creation

Other competences

Bernard Arnault

Haute couture

Brands as autonomous business units

Designer or couturier control

Outsourcing

Outsourcing of manufacturing of subsidiary product lines

Nicholas Ghesquiere

Perfumes, accessories & ready-to-wear

Designer controls subsidiary lines of products

LMVH portfolio: Givenchy, Kenzo,

Christian Lacroix, Christian Dior etc.
7

Hypotheses about the

fashion industry
(1) Firms resemble those in other culture industries in terms of business
strategy, attitudes toward innovation, favoring profits over originality.
(2) A few successful conglomerate-owned firms function as oligopolies, as
seen in their dominant share of annual sales.
(3) Large firms capitalize on the innovative capacities of small and
medium-size firms by hiring their designers who tend to be in closer touch
with the market (often referred to as the 'street' in fashion jargon).
(4) Globalization has led to enormous increases in the costs of entering
markets, which affected the capacity of new firms to enter the business.
(5) Oligopolization of the industry and globalization of markets have created a
situation in which small firms are less likely to be recognized as
innovative by fashion experts while large firms are able to survive with a
low level of product innovation.

Business strategy after WW2

Fashion houses owned by large conglomerates

Parent company has financial expertise and scale

Artistic director is employee (not owner)

Haute couture to create prestigious image

Only 5-10 % of annual sales

Original designers replaced by new talent

Product licensing major source of revenue

Ready-to-wear clothes

Perfume

Jewelry

Hedi Slimane:
Creative Director @ (Yves) Saint Laurent

Entry barrier haute couture

before 1970s

Haute couture:

Can be defined as the creation of exclusive custom-fitted clothing made

to order for a specific customer

Chambre Syndicale de la Haute Couture

Professional association that set up rules stating that the label haute
couture can exclusively be used by companies that:

Employ 20+ people in production of clothes in the companys studios

Present for each season spring & fall a collection of 75+ designs

Present these collections with the help of 3+ live models

Do this in the house itself in special areas designed for this purpose

Created significant market entry barriers

Difficult for (foreign) competitors to obtain label haute couture

10

Escalation of entry costs 1970s

Costs of entry are defined as costs that must be incurred until the
firm begins to show a profit.
Globalization of the fashion industry has increased entry costs
since the 1970s:

Investments to set up the business

Costs of creating a collection

Opening a boutique on a fashionable street (in Paris)

Showing collections twice a year in a prestigious settings

Starting a perfume

Advertising perfumes and clothing

Opening shops in several countries (outside of France)

Innovation in fashion industry

Trade Journal du Textile ranks fashion designers

15 leading fashion journalists and 70 managers of stores

Only 3 (12%) of the 26 couturier firms producing clothes appeared in the top
10 ranks at any time and these were large firms.

Three of the 4 firms in the top 20 were over 15 years old at the time they first
appeared in these rankings.

Conclusion:

Large and old firms can afford lavish fashion shows with which to publicize
their designs and thus to bring them to the attention of the fashion experts

Conclusion

Large and old firms

can afford lavish fashion shows to bring them to the attention of the
fashion experts on whose assessments the rankings were based.

Small and new firms

dont receive recognition for their innovations by fashion experts, whose

judgments affect the selections of clothes for sale in trendy boutiques and
for the editorial pages of fashion magazines.

Fashion industry

Since new small firms are important source of innovation this is likely to have
serious consequences for the health of the fashion industry.

Gemser, Leenders & Wijnberg (2008)

Why some Awards are more Effective Signals of Quality
than Others: A studie of Movie Awards

The article in a nutshell:

Awards have more effect on market performance if the
jury consists of selectors of the same type as the
dominant selector in the market

Competition in terminology
of selection system theory

The selected: produce products

The selectors: evaluate quality of those products

The selection system:

Market: consumers are selectors

Peer: other producers are selectors

Expert: experts, who are consumers nor producers, are selectors

1. Market selection
Producers

Consumers

2. Peer selection

Producers

3. Expert selection
Producers

Experts

Consumers

The setting

Awards, such as:

q

Oscars

Golden Globes

MTV movie award

These awards are signals of quality

The movie industry is divided into:

q

Mainstream films

Independent films

Hypotheses

1.

2.

In the case of mainstream films, the positive effect of an award

on box office revenues and share of screens will be greater
when the award winner is selected by a jury composed of end
consumers (than by a jury composed of peers or experts).

In the case of independent films, the positive effect of an award

on box office revenues and share of screens will be greater
when the award winner is selected by a jury composed of experts
(than by a jury composed of peers or end consumers)

Awards

MTV movie award: market consumers

Golden Globe: experts

Oscar: peers

Outcomes

Market awards have no significantly stronger effect

than peer awards on the box office of mainstream
movies

Hypothesis 1 largely not confirmed

Expert awards have greatest effect on the box

office of independent movies

Hypothesis 2 largely confirmed

BUT

Results to be explained by the special status of the

Oscar
which while technically being a peer-award,
seems to function to a large extent to transmit
market judgments
so it affects the box office of mainstream more
strongly than that of independent films

(Peer) selection
across industries:

The Hollywood Oscars Ceremony

Celebrities, designer dresses & red carpets
Natalie Portman in Rotarte dress
by Kate and Laura Mulleavy at
the Oscars 2011 (winner best
actress)

Cate Blanchet in
Givenchy dress by
Riccardo Tisci at
the Oscars 2011

The Oscars:
Celebrities, designers & Payola

Stars are often paid by major fashion labels to wear their

dresses on the red carpet of the Oscars
There is in-depth coverage by fashion magazines of what
stars wear at the Oscars

The Oscar fashion designer challenge

Vogue magazine coverage (with zoom): Link

New fashion talent trying to make it onto the Oscar stage: Link

At after parties stars experiment with fashion from lesser

known designers

Franssen and Kuipers 2013

Coping with uncertainty, abundance and strife: Decisionmaking processes of Dutch acquisition editors in the
global market for Translations

The article in a nutshell:

Editors select titles for translation that are published by
successful foreign publishers that look like their own
publishing houses, and titles that look like the books they are
already publishing.

Acquisition editors
Dutch acquisition editors are confronted
with three main problems:
1.
2.
3.
4.

An excess or oversupply of new titles

Uncertainty over the nature and quality of new titles
Strong competition
Small fraction of books will be successful

Core question:
How do they deal with these problems?

Field theory

Competition both over publics and legitimacy emerges

as the central problem of cultural production.
Competition is played out in terms of status dynamics
and symbolic capital (e.g. Man Booker Prize)
Competitors try to maintain / increase their symbolic
capital, and use it in the competitive process

Core mechanisms:
Conflict & competition

Neo-institutional theory

Uncertainty as compared to competition is the

central problem of cultural production.
Specialized professionals gatekeepers are needed to
help establish a cultural products worth and potential
Imitation of organizational practices and routines is a
strategy for reducing uncertainty leads to isomorphism.

Core mechanisms:
Uncertainty & adaption

Acquisition editors
in publishing industry

Boundary spanners / mediators

Producers versus consumers

Creatives versus managers

National versus transnational

Gatekeepers / selectors

Buying (and selling internally)

Risk avoidance in high-risk environment

Selection phases in
acquisition of manuscripts
Filter 1. Selection of manuscripts
Outsource initial selection to agents, industry friends & scouts

Filter 2. Positioning of manuscripts

Look at the books genre, author, storyline, agent & publisher

Filter 3. Reading of manuscripts

Read the book and determine quality based on own or others taste

Filter 4. Legitimizing choice of manuscripts

Convince colleagues through reputation, imitation & fit

Filter 5. Bidding for manuscripts

Beat competitors through economic strength & symbolic capital

Publishers catalogues
and isomorphism

Function and value of catalogues:

Safeguards the companys identity and image

Determining factor in auctions and biddings

Catalogues > isomorphism

Acquiring editors internationally look to colleagues in foreign

companies they believe to have the same taste.

In internal editorial meeting they position the book by pointing

to publishers in other countries with similar catalogues.

Publishers catalogues
and symbolic capital

Function and value of catalogues:

Used as a presentation of the self

Used to assess and classify each other

Catalogues > symbolic capital

Reflection of the taste of the publishing house and its editors.

Reflection of the publishing houses position in the field.

Functions as an opening for conversation, a way to position

oneself and others, and as a status marker.

Selection system?

Editors who select books for translation/publication

are selectors
If editors select books because other editors in
other countries have also selected them, of which
type of selection is this an example?

Market selection?

Peer selection?

Expert selection?

But:
Although a book that is not selected by editors has little
chance to be successful, the fact that editors select a book
does not make the book automatically successful.
What are other important selectors?

Book shops/retailers (as market intermediairies)

Consumers (as market selectors)

Egon Franck and Stephan Nuesch (2007)

Avoiding Star Wars Celebrity Creation as Media
Strategy

The article in a nutshell:

Stars can be found as well as created, and creating
them can be a viable competitive strategy.

Fabricating stars

Superstardom

Superstars:
two explanations

Rosen:

Real though sometimes small difference in talent can lead to

large differences and superstar status.

Lower quality is an imperfect substitute of higher quality

Talent or quality is costlessly observable by all potential consumers

Adler:

No real differences in talent are necessary, just self-reinforcing

cycles of attention

Star specific consumption capital is accumulated by:

Past consumption activities

Discussing the stars performance with other consumers

Self made stars

Excellence
Superior talent

Able to capture profits

Fame
Known for being known

(Adler)

A lot of market power

(Rosen)

Consumption capital & lock in

Fabricated celebrities

Gossip externalities & herds

(Boorstin)
(Banerjee)

Little market power

Little able to capture profits

Intro case revisited

Most important Dutch Film Award

Jury system change:

Until last year:

Small jury with changing membership

Peer (and expert) selection

Since this year:

Large Academy system with previous nominees

Peer selection

Question:
What might be the effect of this change on the Gouden Kalf
as a quality signal for the industry as a whole?

Whats next?

Exam: Questions?
Master Business Administration
Specialization track:

Entrepreneurship and
Management in the Creative
industries (EMCI)

First Semester
Block 1

Block 2

Theoris of
CEI
EMCI (6
(6 EC)
EC)
Theories
course of
other
track (6
EC)

SMMTCI
(6 EC)

Second Semester
Block 3

Block 1

Thesis
Research Elective 1
Proposal (6 EC)
(5 EC)

Block 2

Block 3

Elective 2
(6 EC)

Master's
thesis

Thesis
Research Master's thesis (15 EC)
Methods
(4 EC)

Thanks for your attention

&
Good luck with the exam!