CMNS 230 Lecture Notes - Lecture 4: Pay Television, Economic Surplus, Fixed Cost

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CMNS 230 WEEK 4
Differences between culture and other products
- Films, music express ideas and inform, entertain while ordinary commodties, cars and detergent, are essentially
utilitarian and useful function with no intellectual discourse,
- Cultural products are to be bought and sold to. They respond to forces of supply, demand and competition. A
true and vital marketplace of cultural products.
Key economic attributes of cultural products, how the market for popular culture is different then conventional
merchandise.
*see chart on page two for differences
The Nature of Product
- The basic nature of a cultural product is to communicate ideas, emotions. The values of a cultural product is
mostly in its symbolic or representational content not physical. A product that is experienced rather than
consumed.
- Creators are driven by motives not purely profit seeking. “for art’s sake”
- Ordinary products serves a utilitarian purpose.
Nature of Product Process
- Cultural products involve in expensive, time-consuming one time process of creation. A “one-off” effort by
workers.
- Film industry, creates intellectual property embodied in the master copy that can be duplicated, delivered,
stored. Master copy is never consumed
- Ordinary commodity is produced in many copies and significant capital resources required to produce each unit,
consuming amount of raw material. Though they can cut their losses if market fails.
Marginal Cost of Additional Units
- Once master copy is produced, making additional copies incurs an insignificant marginal cost (dvd cost $10 while
the film cost $100 million)
- Conventional commodties (DVD) require raw material and a continuous capacity for production, assembly and
packaging. The additional unit marginal cost is significant.
Predictability of demand “nobody knows”
- Ordinary commodities in a market demand is predictable. Repeat consumption because of satisfactory is
predictable demand by advertising a brand continually over time.
- Risk factor in launching cultural product is impossible to overestimate. Most do not succeed and research and
pre-testing are ineffective. Until audiences experience it, it cannot be evaluated.
No Subsitutes
- Ordinary products have sustainability in market among competing products because they fulfill a utilitarian
function.
- Cultural products are infinitely variable and perceive as unique. Copyright laws protect it and effective in
reserving the market for that title it exclusive owner.
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