The Australian government reviews its tax concessions to independent film production

The following article appeared in Crikey on March 4th:

The federal government has just finished a review of federal film financing arrangements — and given itself a rather large pat on the back. The result is an endorsement of film financing arrangements in which more and more taxpayers money is being given to Hollywood studios.

Confirming Sir Humphrey Appleby’s famous principle that you should “never commission an inquiry without knowing the outcome first”, the federal Arts Department’s 2010 Review of the Australian Independent Screen Production Sector makes a series of rosy findings about the state of the sector and the effectiveness of the government’s Australian Screen Production Incentive, a large tax refund to film producers.

More money is certainly leaving Treasury coffers: the report states that “in the three years since the introduction of the Australian Screen Production Incentive, the government has provided $412.1 million in support through the tax system, compared to $136.7 million in the three years before the package.”

But delve further into the report, and all sorts of questions start to pop up. First and foremost is the crucial question of whether those extra taxpayer dollars are really stimulating an upswing in domestic production across the board, or merely co-financing large Hollywood studio films such as Happy Feet 2 and Australia.

Arts Minister Simon Crean trumpeted the review’s findings. “The boost in government funding is a great achievement and contributing to the viability of the local film production industry,” he announced in a media release.

“Although it’s still early days, the increase in activity, particularly the production of Australian large budget films, such as Baz Luhrmann’sAustralia and George Miller’s Happy Feet 2, and the box office performance of films such as Tomorrow, When the War Beganshows the government support for the sector is having a significant impact.”

In fact, a close reading of the review suggests that the effect of the new funding arrangements is far less positive than the minister and the department claim. Much of the extra money — $169 million, in fact — has gone to foreign movie studios in the form of international production subsidies, though that’s not a fact that the review chose to highlight. But despite this, levels of foreign production in Australia have actually been falling, as the strengthening Aussie dollar and strong competition from other countries and locations have made the foreign production incentives less attractive.

More private investment has been attracted to Australian feature films, however, and more films are being made. Despite this, the domestic box office takings of Australian feature films has risen only slightly, from 3.8% between 2005-2007 to 4.4% in 2008-2010. That’s better than the subterranean levels of 2004, but still worse than the performance of Australian features in the early 2000s — let alone the 1990s.

As for television, the report found that while drama budgets had increased, total hours for Australian-produced adult television drama had remained steady. The reason? Television production is driven by local content quotas. To quote the report, “Australian television production levels remain stable over time and are closely linked to requirements under the Australian Content Standard.” In other words, the television networks are receiving more taxpayers money to produce drama that they are required to by the regulations. It’s a nice deal if you can get it.

Most of the money continues to flow to the big productions, such as Luhrmann’s upcoming Great Gatsby. These are loved by the industry, as they provide lots of employment for local casts and crew. But the review points out that a large part of the Australian screen sector is made up of small companies, many of which produce documentaries. These smaller firms have struggled to access the tax refunds, owing to high production thresholds. Features and documentaries made for less than $1 million or $250,000 respectively are ineligible for the offset, ruling out a large swathe of the independent sector.

Yet the review thinks this is a good thing, as it precludes the low-budget and arthouse features and documentaries that would be unlikely to make a return in any case. “Lowering the offset threshold for feature films to ensure access for emerging producers would to an extent alter the intent of the offset,” it says, “from one encouraging commercially focused features, to one that includes films less likely to be market and box office driven.”

The review confirms a subtle shift in Australian screen funding priorities away from backing emerging film-makers and new voices and towards big budget, Hollywood-financed productions. This may result in bigger box offices for bigger-budget Australian films — or it may not. The federal government’s last effort at supporting commercial film finance was the Film Film Corporation, a 20-year initiative that acted as a for-profit investor in feature production. The FFC lost more than a billion dollars in that time-frame, booking investment returns of negative 80%.

The new policy gets around this problem by simply giving tax refunds to big producers, regardless of how much money their film eventually makes. And it’s uncapped and open-ended: the bigger the budget of the film, the larger the taxpayer contribution.

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In response to Kathy Keele

Australia Council CEO Kathy Keele has formally responded to my article in Overland about the future of Australia’s art funding body. In this post, I continue the dialogue.

Firstly, I should acknowledge Keele’s engagement in the debate, and I welcome the fact she has taken the opportunity to respond.

Secondly, there are some specific points Keele raises which I should address. These relate to my imprecise phrasing in certain sections of the Overland article. Basically, where I’ve said the Australia Council “doesn’t fund” certain artforms, I should have written “the Australia Council contributes tiny or negligible funding”. You can see what I mean below. Keele’s points first, then my response:

  • [Eltham] states that the council ‘funds opera but not musicals (except when opera companies mount musicals)’. This is incorrect. The music and theatre boards have an initiative called Music Theatre which supports the development of musicals.

This is true in the narrow sense, but in the broader sense my point holds. The Australia Council does fund a Music Theatre Initiative, but at a risible level. The Initiative distributes a tiny proportion of funding compared to that devoted to opera. In 2009, the Music Theatre Initiative gave out $288,000 to 9 projects. Opera Australia received $17.9 million and Opera Queensland received another $318,000. Hence, music theatre totalled less than 1.6% of opera funding. In fact, the extra money Opera Australia received to produce Bliss nearly totalled what the Music Theatre Initiative distributed!

  • He argues for the artistic importance of gaming, and asks ‘why doesn’t the Australia Council support gaming?’ It does. The council has over many years funded artists who create game art works and explore game culture as an artistic practice.

The Australia Council’s support for game art and game culture is tiny. There is no game art board, in the way there are Theatre, Music, Dance or Major Performing Arts Boards. The Council has over many years funded all sorts of things with very small amounts, but that doesn’t change the big picture, which is that the Australia Council overwhelmingly funds a very narrow palette of artforms and practices – gaming is not one of them.

  • He states that the council supports ‘serious novels, generally, but not genre fiction or online writing’. Not true. The Literature Board has funded genre novels, interactive media writing, websites, iPhone apps and graphic novels through our New Work and Write in Your Face grants programs. The board recently completed a three-year initiative called the Story of the Future and published the Writer’s Guide to Making a Digital Living.

Again, this is true in the narrow sense, and these intiatives are important. Unfortunately, they are also comparatively minor. Indeed, Keele’s response only reinforces my point – Story of the Future, for instance, the Literature Board’s most substantive effort to support these practices, has finished and has not been renewed. The Write In Your Face initiative, while worthy, distributes tiny grants of only $5000 to a lucky few applicants. Go through the New Work Assessment Meeting Reports and you will see mainly literary writers working in traditional forms sch as novels or literary non-fiction.

In fact, the Literature Board itself recognises that it is not really addressing digital literacy and writing in its Sector Plan. One of the goals of the Sector Plan is “Targeted support for multimedia writers by the end of 2011” –  suggesting that not only is there a need for such support, but that the Literature Board does not currently meet that need.

  • Eltham states that the council ‘funds companies that only produce a few works a year but not festivals that produce hundreds’. In fact, each year the council funds dozens of works that are presented at festivals all over the country. We also fund the Major Festivals Initiative which commissions new Australian work for presentation at the seven capital city festivals.

Again, while it is true that Australia Council funds works that appear at festivals, it is stretching the truth to argue that the Australia Council provides much meaningful funding to the festival sector. Key festivals like the Melbourne Fringe and Adelaide Fringe receive nothing from the Australia Council, despite their key role in presenting small-to-medium work. The Major Festivals Initiative, at $3 million over four years, is a tiny fraction of the funding given to Opera Australia or the orchestras, and largely funds major performing arts board organisations anyway.

Where does the money go? We know where the majority goes: to the big companies in the Major Performing Arts Board.

Strong Aussie dollar hammers Australian screen production

Pop star Rihanna in uniform on the shoot of Peter Berg's Battleship. The big-budget movie was scheduled for production in Australia but was moved to Louisiana owing to the strong Australilan dollar and attractive production subsidies from the US state.

When Alex Burns and I set out to examine the past two decades of Australian screen policy, we concluded that the biggest influence on the success or failure of the Australian film industry was macro-economic factors like currency fluctuations – and not the perceived quality of Australian writers or directors.

You can read that paper – “Boom and Bust in Australian Screen Policy: 10BA, the Film Finance Corporation and Hollywood’s ‘Race to the Bottom‘” in the August issue of Media International Australia, reposted by Alex in proof version here.

Recent developments have only reinforced our findings. Yesterday, for instance, the Australian Financial Review published a feature-length article about the serious trouble posed for that the export-intensive parts of Australian screen industry by the strong Australian dollar, which briefly reached parity with the US dollar last week.

You can’t read the AFR article (by Brook Turner, entitled ‘Dollar dampens local film production’) online, so I’ve transcribed important sections below:

 

 

 

For the first  time in decades there are no major American films being made in Australia, and none in the pipeline, a clear sign of the devastation the dollar has wrought on a $2.3 billion business.

NSW hasn’t had had a major US  film since Wolverine wrapped at Fox Studios in mid-2008, Victoria since Don’t Be Afraid of the Dark in September last year, Queensland since Narnia last November. The Sunshine State is hanging in thanks to local production and Steven Spielberg’s 13-part, $150-million TV dinosaur epic Terra Nova. But there are fears that may go the way of films such as Green Lantern and Battleship, which migrated back to the US with their $US150 million budgets ass the dollar rose, as estimated $200 million loss to the Australian industry.

“This is unprecedented”, Ausfilm’s chief operating officer Tracey Vieira, said this week from Los Angeles, where she has the job of enticing US production to Australia. “We have always had a good momentum of production inquiry about filming in Australia; I’ve never been in a position where we haven’t had a US production that is seriously considering Australia. And there’s nothing in sight.”

Ausfilm hass asked the federal government to at least double Australia’s production offset – a 15% tax rebate on local expenditure on foreign films – to bring it into line with North American, UK and European competitors as part of the government’s independent film sector review, due later this year.

The article reinforces the problems faced by Australia’s screen industry, which features anaemic levels of locally-financed production and is heavily reliant on “runaway production” from Hollywood studios. As we pointed out in the paper, Australia’s foreign-financed production is highly vulnerable to currency fluctuations and “race to the bottom” competition from other jurisdictions offering their own generous production subsidies.

More on The Tote closure

Well-wishers line up outside The Tote hotel, 5.30pm, Sunday 17th January. The line strecthed several blocks. Image: Sarah-Jane Woulahan.

Yesterday, more than 2000 people attended the public protest over the closure of The Tote hotel due to the vastly increased licensing costs mandated by Liquor Licensing Victoria. I was there, as you can see above. The protest was peaceful but passionate, with many placards and some speeches, all making the point that live music was being penalised over so-called “high risk” provisions in new licensing laws that bear no correlation with the actual safety record of Victorian music venues.

But don’t expect the Victorian government to take notice. Showing her typical tone-deaf approach to media management, Liquor Licensing Victoria’s Sue McLellan opted to attack the Tote’s Bruce Milne in an interview with the Herald Sun. Asking for a meeting with Milne to discuss mediating an issue that has quickly mushroomed into a public relations disaster was clearly not on McLellan’s agenda.

Let’s get personal here. The salary for a senior public servant like McLellan would comfortably cover the annual running costs of a low-profit venue like the Tote. We can’t expect her to understand the appeal of sticky carpet or rock music, but wew can ask her to get out of her air-conditioned office and actually engage with the issues at hand. Or maybe not.

Today’s Crikey has an article by Andrew Crook with further details on the Tote story. Crook reveals that a consortium of small bar licensees have offered to take over the license from Bruce Milne, with Milne reported interested:

A trio of white knights look set to assume control of iconic Melbourne rock pub The Tote, which was scheduled to close its doors for the last time today.

In a prima facie offer posted late this morning on music website Mess and Noise, the current proprietors of The Old Bar, and the former managers of After Dark in High Street Thornbury, wrote of their willingness to assume the licence, following a public plea from current proprietor Bruce Milne.

“Joel [Morrison], Singa [Unlayiti] and myself would dearly love to sit down with you at some point and talk about this further. As you know we are running a very similar venue (although on a smaller scale) with very similar licensing.

“I think that if there is a baton to be passed along that the three of us would consider ourselves a sincere and reasonable group of guys to accept responsibility of The Tote,” wrote Liam Matthews on the online forum. Milne responded minutes later:  “You guys would run it with the love and respect it deserves. If you can find a way, I’m there for you.”

Milne, a stalwart of the Melbourne music scene, had previously spruiked for a new licensee to keep the venue open: ”If someone can work out a way to keep the place open and deal with liquor licensing, I will work with them to make it happen. But it needs to be the Tote, not some lame-o version.”

Milne told Crikey that he would be “happy” if the trio took over the venue but that it would need to be removed from the “high-risk” category that has led to  liquor licensing fees and compliance costs skyrocketing.

In an article in this morning’s Australian Financial Review, The Tote’s millionaire landlord, Computershare mogul Chris Morris, said he was happy to keep the venue running under a new licensee. Matthews told Crikey he had contacted Morris but was yet to receive a response and a jump in running costs could still see the doors closed for some time yet.

An increase in liquor licensing fees of about $1600 was dwarfed by a requirement in Milne’s licence to have two security guards stationed at the Tote’s doors at all times — a near-doubling of his  current annual expenses of $60,000. This came on top of the installation of “quality” CCTV cameras. Attending the Victorian Civil and Administrative Tribunal to revert the licence away from the high-risk category would slug Milne with about $15,000 in lawyers’ fees.

The “high-risk” ruling puts the venue in the same category as several King Street nightclubs, leading to calls for a more nuanced approach from Liquor Licensing Commissioner Sue McLennan.

The death of Miramax and the demise of the indie cinema model

Drew Barrymore, Robert De Niro and Kate Beckinsale at the premiere of “Everybody’s Fine” in New York. Source: Paul Kramer/AP/New York Times

Continuing this week’s cinema theme, today I’m looking at one of the micro-economic reasons for the struggles of Australian cinema: the demise of the US independent cinema model, made famous by film festivals such as Tribeca and Sundance.

As we’ve explored before on this blog, the nature of cultural production makes selling cultural and symbolic products like books, movies or records inherently risky – much more so than selling simpler goods and services like lemonade, flatscreen TVs or lawnmowing. One popular explanation for the enduring importance of stars and genres is their role in reducing this risk – or at least giving producers and investors a reason to believe a particular project is less risky. You can see this strategy at play in the growing use of computer algorithms (like the one developed by Relativity Media) to try and model the projected earnings of a particular movie, based on variables. According to SBS blogger (and all-round nice guy) Craig Mathieson:

The algorithm – which really needs a catchy name based on an acronym – was originally designed to evaluate financial instruments (nice work spotting those mortgage backed securities), but it now uses 65,000 rows of a Excel spreadsheet to consider everything from an actor’s box-office draw in France (apparently Natalie Portman is the go) to whether it would be better to have an R or PG rating or more fight scenes.

Another trope of this “nobody knows” principle can be seen in the reluctance of big studios to finance independent cinema, particularly in the wake of the global financial crisis.  Now, once-famous indie producer Miramax is being dissolved, and indie production more generally is in the deep doldrums. According to the New York Times’ Carpet Bagger blog,

Kirk Jones, the British writer-director of “Everybody’s Fine,” said he worried about the future of adult drama.

“It seems to me that people at the top are saying we don’t want to do adult drama, there’s nobody that wants to be reminded of the real world, they want escapist cinema,” he said. “I love watching sci-fi movies and romantic comedies and teenage movies as much as anyone else, but I think it’s about balance, and you have to have adult drama because that’s often one of the few categories that makes people leave the cinema thinking about their own lives and reflecting on who they are and how they are in the world.”

In a previous post, the Carpet Bagger reported on how the big studios are shuttering their specialist and boutique production houses, while the smaller indie production companies are struggling to find finance. Independent cinema appears to be moving to a model similar to indie music, where word-of-mouth and guerilla marketing are the mainstay of low-cost, low-revenue artist-distributors.

Here is how it used to work: aspiring filmmakers playing the cool auteur in hopes of attracting the eye of a Hollywood power broker.

Here is the new way: filmmakers doing it themselves — paying for their own distribution, marketing films through social networking sites and Twitter blasts, putting their work up free on the Web to build a reputation, cozying up to concierges at luxury hotels in film festival cities to get them to whisper into the right ears.

The economic slowdown and tight credit have squeezed the entertainment industry along with everybody else, resulting in significantly fewer big-studio films in the pipeline and an even tougher road for smaller-budget independent projects. Independent distribution companies are much less likely to pull out the checkbook while many of the big studios have all but gotten out of the indie film business.

Lyndon Barber has also written about the issue extensively. Here’s a post on his blog from last year in which he explains that:

the Australian scene is over-saturated with distributors trying to grab a small slice of an ever-decreasing pie. Britain is clearly similar. The result is likely to be a few more failing companies before a serious change in the way cinemas and distributors release films.

Can governments pick cultural winners? The FFC’s 20 years of “commercial” film funding in Australia

Film Finance Corporation of Australia, total investment versus recoupment, 1988-2008. Source: FFC 2007-08 Annual Report

One of the key themes  of Richard Caves’ 2000 cultural economics monograph, Creative Industries: Contracts between art and commerce is his detailed exploration of the idea that “nobody knows.”

The quote comes from Hollywood screenwriter William Goldman, who famously opined that when it comes to the entertainment industry, “Nobody knows anything.”  (Goldman, by the way, also penned the line “Follow the money” in All The President’s Men – a phrase that doesn’t appear in Carl Bernstein or Bob Woodward’s notes or articles).

If high-powered Hollywood moguls struggle to predict the successes and failures of the films they finance and produce, how well do Australian screen bureaucrats do?

Not very well, if figures from Australia’s Film Finance Corporation are any guide. The FFC, an Australian government film agency, existed for 20 years between 1988 and 2008 before being amalgamated into Screen Australia last year. Unlike arts funding bodies in this country, the FFC was specifically set up to finance film and telelvision projects along commercial lines. As film critic Lynden Barber points out, “FFC production funding was triggered when a project reached a minimum level of pre-sales from mostly private sources.”

The FFC acted as a kind of automatic co-investor. If a producer could arrange seed capital for a promising screen project, the FFC would then top up this private investment with government funding. This meant it acted as a public-sector but commercial investor, taking a cut of the intellectual property and box office returns of projects it financed. In other words, the agency didn’t just hand out money: it actually recouped returns on its investments.

The problem was, these returns were meagre. Over two decades, the agency supported 1165 productions and spent $1.345 billion (these figures are from the FFC’s final Annual Report in 2007-08). Many were critical successes and some of them even won Oscars.  But only a few made money. The FFC states in its “20 years” brochure that this investment translated into a total screen production value of $2.872 billion, a multiplier of roughly two. But total recoupment to the FFC was a paltry $274.2 million. That’s an astonishing cumulative return of -80%.

No wonder Barber points out that “many of the failures of the local industry have been the result of commercial misjudgments — not only by the federal and state funding agencies, but also by private investors, distributors and filmmakers.”

Why don’t Australians like Australian films?

It’s the debate that just won’t die. Australian films continue to draw just a few percent of total Australian box offices, and the local industry continues to scratch its head and wonder why.

On October 22nd, Metro Screen held a sold-out forum on the issue, chaired by Andrew Urban and featuring a panel of distinguished panelists including Margaret Pomeranz, Tony Ginnane, Troy Lum, Rachel Ward and the new boss of Screen Australia, Ruth Harley.

The debate swirled around many of the same-old, same-old standards of the “what’s wrong with Australian film” issue, which has been debated extensively in the press and the industry by critics and commentators like Jim Schembri, Luke Buckmaster and Lyndon Barber.

Does “Australian film” have a branding issue? Are Australian scripts and movies too depressing, mundane and dull? Are the marketing budgets unrealistic? Does cultural imperialism mean Hollywood is a natural advantage? Should we abandon “telling stories” and instead concentrate on “creating myths”? Do Austraolian film-makers and funding bodies even understand their audiences and why they go to see movies? And is it all about to change with the coming of digital delivery anyway?

One issue that came to my mind immediately was the uphill struggle most Australian cinema faces. Not only is it competing with the Hollywood juggernaut, but the small size of the Australian market means limited sources of capital investment, development funding and ultimately cinematic audiences.

There’s also no doubt that, structurally speaking, the market for film production in Australia is skewed towards blockbusters and against independent productions. That’s just an unsurprising fact of life; even though film has certain unique facets it is still hostage to the sorts of competitive advantages and economies of scale that make it easier to market and screen Transformers than an indie Australian drama.

Having said that, as a cultural economist I am constantly amazed at the lack of price differentiation in cinema. If audiences aren’t going to see Australian films, why not drop the price? It seems insane to me that we expect audiences to pay the same to see a Michael Bay special effects monster as for a $1 million Australian indie. Maybe it would not be more profitable in the long run to do this, but in the name of market share alone it seems to me a no-brainer. Maybe Australian dramas would sell at $9 or $7 or even $5. Of course, there are structural issues to do with distributors and exhibitors that would make this unlikely.

Peter Craven is wrong, dead wrong, about Australian theatre. Again.

The grand old man of Australian criticism, Fairfax’s bombastic and often self-indulgent Peter Craven, is at it again today with some typically inflammatory comments in today’s National Times about Australian theatre.

Half the trouble with Australian theatre is caused by talented directors who feel they are above realism and well-made plays. Often they cut their teeth with student theatre and have been too narcissistic to grow up. It’s much easier to treat student actors like puppets and to improvise a text than it is to treat Judy Davis like that. Most cut-and-paste postmodern tinkerings with classics make Joanna Murray-Smith look like Racine on a good day. But for every production such as Osage, there’s hand-me-down cardboard rubbish of the traditional kind.

Oh dear. Craven is one of the best known critics in Australia. He’s also one of the most reactionary.

There are so many non-sequiturs and errors of fact in even this one paragraph it’s tough to know where to start. Firstly, let’s give Craven the professional courtesy of acknowledging that he has picked up on a real trend in Australian theatre, away from realism and towards a bolder, artier, more hybrid and more design-intensive style.

But that’s hardly news. “Director’s theatre” is a serious movement in Europe and has  been going on for decades in Germany, as the many obituaries for Pina Bausch record.  It’s not surprising the style has spread to Australia, given the many tours by Bausch and other European directors and companies here, largely through the auspices of the various capital city arts festivals. In fact, about the only people who wouldn’t know about it are those who only go to see the state theatre companies. Peter Craven appears to be amongst this under-educated minority.

As for attacking “talented directors who feel they are above realism and well-made plays” – this is not only raking over the coals of Craven’s obsession with the (finally receding) culture wars, it’s also frankly wrong. I would be very surprised if any talented directors thought they were “above realism”, but if they were – so what? Realism is a style, often a very stale style, and to claim one style of staging and producing theatre should be privileged above others is the sort of claim a critic makes when he realises he is becoming increasingly irrelevant. I wonder if Craven would recognise truly authentically staged Attic theatre as “realism”? I hope not, because it wasn’t.  As for the crack about student theatre and actors as puppets, it reads like the remarks of someone who hasn’t seen  any fringe, student or independent theatre in a long time.

Peter Craven: wrong again, but no less eloquent as he rages against the dying of his once-impressive critical abilities.

Is this what the new business model for popular music looks like?

The New York Times today documents the green shoots of a new model of music business, spurred by the Polyphonic not-label.

It’s not really a new model at all; instead simply a sensible combination of existing ways to make money.

Under the Polyphonic model, bands that receive investments from the firm will operate like start-up companies, recording their own music and choosing outside contractors to handle their publicity, merchandise and touring.

Instead of receiving an advance and then possibly reaping royalties later if they have a hit, musicians will share in all the profits from their music and touring. In another departure from tradition in the music business, they will also maintain ownership of their own copyrights and master recordings — meaning they and their heirs can keep earning money from their music.

“We are all witnessing major labels starting to shed artists that are hitting only 80,000 or 100,000 unit sales,” said Adam Driscoll, another Polyphonic founder and chief executive of the British media company MAMA Group. “Do a quick calculation on those sales, with an artist who can tour in multiple cities, and that is a good business. You can take that as a foundation and build on it.”

Exactly. Music business academics have long predicted the death of major music labels, because artists can no reach consumers directly through the internet. And, course, artists are. But that hasn’t meant the immediate detah of the label concept, in part because labels were in many cases merely investment holding companies anyway, and in part because labels still employ and/or contract to a pool of expertise about music marketing, distribution and concert promotion – as the artricle itself admits:

Even the major labels themselves are demonstrating new flexibility for musicians who do not want to sign the immersive partnerships known as 360 deals, in which the label manages and profits from every part of the artist’s business.

In late November, for example, EMI took the unusual step of creating a music services division to provide an array of services — like touring and merchandise support — to musicians who were not signed to the label.

The Polyphony model, therefore, is a sensible way of re-organising music industry capital that takes advantages of the diversified risks of a large artist portfolio, but can still capitalise on the hits and modest successes.  It’s still going to require a lot of clever hit curation. But if Polyphony can’t do that, it shouldn’t be attempting this model.

Nathan Jurgenson on Facebook, the transumer and liquid capitalism

Mark Bahnisch at Larvatus Prodeo has posted on Nathan Jurgenson’s blog post at Sociology Lens on Facebook, the transumer and liquid capitalism:

During this “great recession” capitalism might become lighter and more liquid while older and more solidified traditions wash away in the flux of unstable markets (potentially an economic “reboot,” similar to Schumpeter’snotion of capitalism as “creative destruction”). Zygmunt Bauman’s “liquidity” thesis about our late-modern world becoming more fluid seems relevant in light of the “transumer” and “virtual commodities”, both having received recent attention.

The transumer (video) is, in part, one who encounters “stuff” temporarily as opposed to accumulating it permanently. ZipcarNetflix and others mentioned articulate that for many, especially the young and/or wealthy, the physical amassing of “stuff” is unwanted and instead have begun to rent items people once accumulated. “Stuff”, for many, is decreasingly allowed to solidify on our shelves and in our attics, instead flowing in a more liquid and nimble sense through consumers’ lives.

Another article discusses the rise of “virtual goods” -digital commodities such as gifts on Facebook or weapons on World of Warcraft. Again, the trend is towards “lighter” exchange as opposed to the solid and heavier exchange of physical goods. Microsoft was Bauman’s example of “light capitalism”, producing light products such as software, which is, opposed to heavier items such as automobiles, more changeable and disposable. The proliferation of virtual goods also exemplifies this trend.

As Bahnisch points out, 

For quite some time, it’s been becoming easier to conceive of the commodity as something immaterial – a social relation – and indeed of economic value as a social construct. […] To cut a long story short, there is a real sense in which the concept of the ‘prosumer’ gestures towards a hypostasised economic (and social) relation as well as a blurring of borders between consumption and production of content and knowledge.