Contracts between art and commerce - Caves

Question 1

Suppliers of artistic input have to work together with suppliers of humdrum goods

Answer 1

→ particular types of contracts in which risk & reward are distributed very unevenly or to “motley-crew” type organization

Question 2

Motley crew deals

Answer 2

Require several artistic talents along with humdrum inputs

Cinema film, television program series, dance troupes etc.

Question 3

Unequal contracts - Nobody knows - Art for arts sake - keeping cost down

Answer 3

Nobody knows → facilators have power to tell artist they better sing bc they can find 100 others

Art for art’s sake = psychological income → artists are satisfied with less other types of income

Keeping the costs down?
Otherwise → overload of unsuccessfull products produced
E.g. ½ million in NL wrote novels but gave up

Question 4

Nobody knows

Answer 4

Fundamental uncertainty faxing the producers of creative goods

Minimal ability to predict audience perception

Artistically and commercially

Question 5

Art for art’s sake

Answer 5

Utility that artists gain from creative work, their attitudes

How it is to be performed/technique → complicated contracting process
Allocation and definition of decision rights

Question 6

Horizontal and vertical differentiation

Answer 6

Temporal coordination, durability and hazards of coordination when several artists must collaborate

Question 7

Contract theory

Answer 7

Asymmetrical information, seller knows key characteristics unknown to buyer

Nobody knows core problem → symmetrical ignorance

Question 8

3 bilaterial deals: artist and facilitator

Answer 8

Visual artist and art gallery
Author and publisher
Musician and record label

Question 9

Visual artist and art gallery

Answer 9

Romantic ideals: takes value from being contributing to art

Long-term joint venture, no explicit duration

Making vs selling art should be separate parties

Prepares for period gallery shows, dealer promotes → 50/50 split

Division of gross revenue

Reflect non-objectivity of measuring economic profit

Sharing revenue depresses each parties incentive to incur mutually beneficial costs

Shift cost onto the other

Question 10

Author and publisher

Answer 10

Orient around same body of work over a lifetime career

Trade publishing → invested in preparation for career expect more pecuniary returns

Gatekeeper

Trade-book publishing
Agent = matchmaker, interacts repeatedly with publisher, compensated by share, suffers from representing weak authors, poor track record = uncompetitive income

Publisher has revenue sharing deal

Awards author royalty, keep a little over 50%

Authors get advances, publisher keep revenue until advance is earned back

10% for writers, goes up if certain amount of books have been sold

Question 11

Musician and record label

Answer 11

Joint-venture form, creative good’s production proceeds in steps

One party supplies input, sinking its cost, incomplete good handed to next party for attaching its input specialty

E.g. music group makes album → record label manufacturers, distribution, promotes

Having extra step reduces nobody knows

Record label keeps most of revenues as they deduct the money needed for the production of the product
E.g. music video

Question 12

Cinema films

Answer 12

Hollywood studies → distribute and promote films
Separate contract linking producers to actions, director and other key talents

Each studio has gatekeeping processes → “in development” → “green light”

Producer = coordinator
Identifies + recruits principle creative participants

A-list / B-list property
Better leading actress → better performance from lead actor

Question 13

TV program series

Answer 13

Leading actors become one with character
Gain strategic leverage

Contracts are binding for long time period → 5 years ish
E.g. friends → 5+ years

As a group can claim full rent expected to flow from subsequent episodes
Divide it amongst themselves