THE RANGE OF IMPACT(S) OF THE INTERNET ON THE PRODUCTION AND CONSUMPTION OF CULTURAL GOODS AND SERVICES
The Internet is a prime example of a general purpose technology that lowers production costs for a multitude of different activities and enables the emergence of many new products and markets.
Like most firms, enterprises in the cultural sector use Internet-based services to run back-office tasks. However, the most fundamental impact of digitization on the creative economy is that goods and services that were previously rival and excludable, at least to some extent, have become in effect public goods for Internet users. Many new ways of disseminating creative works via the Internet have been developed. A vast range of reproducible cultural products is available at no financial costs. Technical restrictions on access have become less important, and the copyright system, the possibility of technical protection methods, and perhaps user ethics are the only barrier to ‘free’ use.Digitization and the Internet have together had an impact on all manner of cultural goods and services; the obvious cases are where services are put in digital form at the point of production by the adoption of digital technology - sound recording, film, books and games being leading examples. The Internet also affects the creation of cultural works - product innovation from the perspective of specialized suppliers of arts and culture. Many video games use the Internet to link consumers and generate shared experiences, for example. The Internet enables not only access to, but also the modification and dissemination of many variations of cultural products, as discussed below. So far, this development has not generated many widely recognized new cultural genres, in contrast to the application of other aspects of digital ICT in the market for music, for instance, which was key to the development of electronic music and musical styles such as hip-hop. Product innovation per se does not feature prominently in the literature on cultural economics though there has been work on measuring cultural diversity.
The related debate on Internet-based retailing and the diversity of supply is discussed later on in this chapter.Perhaps surprisingly, even live performances of opera, ballet, spoken theatre and orchestral concerts have felt the impact of digitization and Internet, as they are digitally streamed and delivered by satellite in virtually simultaneous time to computers and, for better sound and visual quality, to venues such as cinemas, enabling audiences to access distant events that they could not otherwise attend. Moreover, these ‘performances’ generate access for a significantly wider paying audience than the ‘original’ venue could accommodate. As theatres and concert halls typically have limited seating capacity, these developments offer additional sources of ‘box office’ revenues for organizations that have previously had to rely heavily on public subsidy. It remains to be seen whether online dissemination will stimulate interest in these elite art forms. Little has so far been written on these developments and it is too early to generalize about the overall effect. The Metropolitan Opera is the oldest of these ventures and has been offering live performances in cinemas throughout the world since 2006, reaching over 3 million viewers; it is said that it took several years before it broke even (Bakshi and Throsby, 2010) and hearsay evidence has it that attendances are falling in the home theatre, that is, the transmissions are ‘cannibalizing’ them, but there are no firm data. Other than that, Internet selling of tickets and bookings has also made ‘real’ box offices more efficient for producers and consumers (Towse, 2013).
These are cases where traditional pricing models work because access is controlled and restricted to paying audiences. Even so, some of these services are provided ‘for free’, and free delivery occurs often in creative industries. One example is the Gutenberg Project, which embraces the idea of providing free access to digital sources of literary works in the public domain.
Another case in point are the various efforts of national libraries and museums to digitize their collections and the European digitalization project Europeana. These efforts are held back by the costs of obtaining permissions from copyright holders on works that are still in copyright. Clearing of copyrights is a particular problem with so-called ‘orphan works’ for which there is no traceable rights holder. This is one reason why digital archives of the cultural heritage in museums, libraries and audiovisual archives, such as those of broadcasting organizations and film institutes, are not as yet open to the public. Broadly speaking, digitization of the content of large cultural institutions has long been limited to content produced before the twentieth century. Much of the twentieth century, and even some more recent intangible heritage, is largely inaccessible online. Little work has so far been done in cultural economics on these developments and problems.7.4