www.forum(avignon.org.

Account.

Debate.‘Towards.a.necessary.hybridiza<on.of.business.models.to.foster.culture’!

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July.10th.2015

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ACCOUNT''‘Towards'a'necessary'hybridization'of'business'models'to'support'and'foster'culture’'

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Philippe!Pestanes!and!Véronique!Pellet!of!Kurt!Salmon!opened!the!10!June!debate!organized!by!the!Forum!

d’Avignon!with!an!executive!summary!and!key!figures!of!the!2015!study!for!the!Forum!d’Avignon.!!

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Four!speakers!have!presented!their! resolutely!optimistic!vision!but!still! realistic!about! the! links!between!

public!and!private!sector!and!the!future!of!cultural!entrepreneurship.!!

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The!speakers:!

!Kurt!Salmon’s!team:!! ! !

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!Phillipe'Pestanes' Véronique'Pellet'

Adrien'Aumont,'!' ' KissKissBankBank,!HelloMerci!and!Lendopolis’s!coP

founder.!!

Emmanuel'Durand,!!! ! VicePPresident,!Marketing!at!Warner!Bros.!!

Steven'Hearn,!!! ! Scintillo!Group’s!President.!!

Laurence'Marchand,'!' ' Production!and!artistic!coordination!Manager!at!the!

Théâtre!du!Châtelet.!!!

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For!the!Forum!d’Avignon:!!Laure'Kaltenbach'!

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Excerpt!from!the!presentation!(more!information!in!the!press!release)!

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1st!assessment:!There'is'a'correlation'between'a'digitalization'rate'and'a'hybridization'index'of'a'sector:'

the'more'a'sector'is'digitalized,'the'more'hybrid'it'is'–'apart'from'the'noteworthy'exception'of'the'music'sector!

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The!more!a!sector!is!digitalized,!ie!the!more!the!public!pay!for!dematerialized!art!works,!the!more!sectors!

are!hybridP!except!from!the!music!sector.!

Today! the! FFS!model! is! still! largely! prevailing,! it! is! worth!more! than! 80%! of! revenues! if! you! take! into!

account!revenues!generated!by!physical!and!digital!models.!Even!if!the!public!seems!to!always!more!prefer!

an!access! logic!rather!than!a!property! logic:!the!subscription!model!represents!13%!of!revenues!and!has!

experienced! a! rise! of! 39%! last! year! claims! the! IFPI.! On! the! contrary! the! FFS!model,! ie! the!work! of! art!

property!fall!by!8%!on!the!same!period.!!

Yet!for!other!sectors,! it! is!remarkable!that!models!should!become!more!hybrid!as!habits!become!digital.!

There!is!for!instance!a!hyperPhybridization!of!the!video!game!sector–!the!latter!is!for!30%!digitalized!and!it!

has!comparatively!a!very!high!hybridization!of!56%–!because!it!was!already!hybrid!before!the!emergence!

of! the! digital! world–! film! purchase,! physical! rental! or! subscription–! and! because! these! models! were!

transposed!in!the!digital!era:!physical!purchase!led!to!the!EST!model,!rental! led!to!the!VOD,!subscription!

led! to! the! SVOD! (Netflix).! It! is! particularly! interesting! to! consider! that! revenue! streams! stemming! from!

these!different!models!divided!up!in!a!relatively!balanced!way,!which!explains!this!high!hybridization!rate.!!!

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Emmanuel!Durand’s!testimony,!Marketing!Vice=President!at!Warner!Bros!!

‚The!hybridization!of!business!models!in!culture!is!no!choice!of!the!creative!industry!but!rather!an!evolution!

which! imposes! itself! to! its! stakeholders.! This! hybridization!may! be! explained! by! an! evolution! of! cultural!

habits!in!three!domains:!!

1.significant!habits,!which!involve!an!emotional!commitment!–concert,!film!etc=!and!which!are!making!

more!attractive!by!social!media,!

2.transactional!habits,!which!are!grounded!on!the!access!convenience!–!dvd!purchase,!cds!etc,!

3.finally!opportunistic!habits,!which!favour!digital!–streaming,!svod!etc.!

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2nd!assessment:!Business'models’'hybridization'creates'growth'dynamics'if'it'happens'as'habits'are'more'

digital'!

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The!process! is!positive,! ie! the!business!models’!hybridization!creates!value!only! if!digitalization! rate!and!

hybridization!index!are!related!to!each!other.!

Indeed!about!the!book,!video!and!video!game!sectors,!new!business!models!–in!blue!on!the!graphicP!have!

generated! value! and! even!managed! to! create! enough! of! it! to! compensate! the! fall! in! revenue! streams!

coming!from!traditional!physical!business!models.!!

Therefore! these!new!business!models! pull! their!market! growths:! their!weigh! tripled!between!2010! and!

2014!in!the!book!sector!and!more!than!doubled!in!the!video!and!video!game!sector.!Their!creation!of!value!

Pin!absolute!termsP!is!more!important!than!the!destruction!of!value!on!physical!models.!!

Here! again! only! one! exception:! the!music! sector! is! growing! as!well! but! thanks! to! the! ‘live’! segment,! ie!

concerts! and!not! thanks! to! recorded!music,!which!has!been! through!a! continuous!drop! since! these! last!

years.!

Two!explanations!to!this!observation:!on!the!one!hand!the!music!sector!is!the!one!which!suffered!the!most!

from!pirating!and!on! the!other!hand! it!may!also!have!been! too! slow! to! start! fostering!business!models!

corresponding! to! new!habits! to! consume! culture,!which! give! always!more! granted! to! the! access! rather!

than!to!property.!!

In! terms! of! value! creation! what! matters! is! not! so! the! stakeholders’! capacity! to! make! models! become!

hybrid!rather!than!their!capacity!to!do!so!as!the!sector!becomes!more!digital.!The!very!difficulty!resides!

then! in! the!capacity!of!being! sufficiently!agile! to! invent! the!models!of! tomorrow!which! respond! to!new!

habits!and!to!mix!them!in!a!balanced!way.!!

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The!speakers’!point!of!views:!

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• Laurence!MarchandP!production!and!artistic! coordination!manager!of! the!Théâtre!du!ChâteletP!precisely!

described!the!Théâtre!du!Châtelet’s!economic!model!reinvention.!She!explains!that!the!latter!was!drawn!by!

five!dynamics!which!complete!each!other:!

1. !to!optimize!artistic!resources,!in!particular!through!longer!programming!series!to!optimize!set!costs!

and!to!increase!the!number!of!representations:!+25%!in!10!years,!!

2. to!develop!international!co=productions,!!

3. to!reinforce!the!link!with!private!companies!–!through!room!rental!for!example:!+!30%!in!10!years,!!

4. to! develop! a! pro=active! audiovisual! policy! at! the! top! of! new! technologies! and! digital! arts! and!

addressed!to!broadcasting!platforms.!!

5. Promote! a! ‚yield!management’! policy! and! active!marketing! on! social!media! for! the! ticket! office:!

+30%!of!sold!tickets!in!10!years.!!!

6. Without!forgetting!a!constant!valorisation!of!know=hows!‚made!in!Châtelet’.!An!American!in!Paris!

has!just!been!rewarded!of!4!Tony!Awards!last!June.!It!is!a!telling!example.’!

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• ‚Stakeholders’!Cultural! industry!cannot!say! they!did!not!know.!The! impact!of!digital!on!music!has!

lasted!for!more!than!15!years.!Emmanuel!Durand!called!for!an!awareness!of!stakeholders!in!culture:!

the!economic!history!teaches!us!that!one!has!to!get!ahead!of!new!entrants!and!not!to!try!to!throw!

discredit! on! their! new!models.! It! is! therefore! imperative! to! foster! cultural! entrepreneurship!with!

artists.!The!giants!of!tomorrow!are!not!necessary!American.’!

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• Adrien!Aumont=!KissKissBankBank,!HelloMerci!and!Lendopolis’s!co=founder=!insisted!on!the!

sustainable!feature!of!these!new!hybrid!financing!models.!For!instance!the!KissKissBankBank!

crowdfunding!platform!recently!enable!to!finance!the!film!‚Demain’!up!to!EUR500,000!–produced!by!

the!colibri!movement=!but!it!also!guaranteed!its!success!since!each!donor!is!also!a!future!spectator.!!

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• Eventually,!Steven!Hearn=!Scintillo!group’s!President=!evoked!the!necessary!renewal!oft!he!contract!

between!the!public!power!and!the!culture!stakeholders,!in!particular!by!reasserting!the!value!of!the!

role!of!mediators!–!those!who!make!the!link!between!the!cultural!offer!and!demand;!between!the!

financing!beforehand!and!the!durability!of!the!revenue!streams!models!afterwards:!‚The!most!

difficult!thing!for!a!cultural!entrepreneur!is!often!to!find!a!bank!truly!happy!to!help!him!or!her!and!to!

assist!the!beginning!of!its!activity!–I!experienced!it!myself=.!It!is!to!answer!to!this!lack!that!we!

created!the!idea!of!a!risk=capital!fund!for!cultural!entrepreneur.!The!greeting!was!mitigated!by!the!

time.!We!also!launched!Créatis,!a!militant!incubator!to!help!cultural!entrepreneurs!to!be!more!

visible!and!understandable!for!financors!and!other!economic!stakeholders.!It!is!now!necessary!to!

make!more!attractive!a!logic!of!investment!in!culture–!and!not!only!of!great!works!but!also!of!

durable!and!useful!economic!projects.!The!state!subsidizes!for!sure!helps!still!too!many!sectors!in!

decline,!which!paradoxically!enough!slows!down!their!mutation.!!

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3rd!assessment:!The'impact'of'hybrid'business'models'on'cultural'diversity'is'still'ambiguous.'!

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Basically!the!distribution!of!value–!perhaps!contrary!to!some!prejudicesP!is!more!favourable!to!artists,!they!

capture!more!value!on!these!new!revenue!streams!models.!!

Yet!prices!are!generally!lower!on!digital!models!and!the!volume!effect!on!new!models!must!be!significant!

so!that!the!distribution!of!value!is!favourable!to!artistsP!popular!or!very!renowned!artists!are!the!ones!who!

generate!large!volume!effects.!!

It!is!necessary!to!distinguish!produced!cultural!diversity!from!consumed!cultural!diversity.!!

The! access! to! culture! triggered! by! digital! indeed! diversifies! cultural! supply,! yet! cultural! habits! seem! to!

focus! on! restricted! goods! and! cultural! services.! Digital! and! the! hybridization! of! models! speeds! up! the!

‘production’!of!diversity!but!has!no!grip!on!the!way!this!diversity!is!consumed.!Some!examples!are!edifying!

about!this!idea:!

• About!diversity:!‘40%!of!ePbooks!revenues!in!Amazon!are!captured!by!autoPpublished!authors.’'• About!concentration:!‘20%!of!the!Spotify’s!catalogue!has!never!been!listened.’'

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The!speakers’!point!of!views:!

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• ‘!Emmanuel!Durand!reminds!us!that!the!hyper=choice!domination!leads!for!all!stakeholders!to!recreate!

their!margins! on! volumes.! The! link! between! digitalisation! and! hybridization! need! be! nuanced! for! it! is!

generally! admitted! that! digital! cultural! supply! should! not! be! absorbed! by! the!whole! cultural! tangible!

supply.! Another! consequence! is! that! the! trend! value! of! content! decreases! in! favour! of! curation! via!

personal! data! and! algorithms.! Companies! which! best!make! use! of! them! always!more! incorporate! an!

human/mechanical!hybridization!to!foster!diversity.’!

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• By! claiming! that! ‘culture! must! find! again! the! head! start,! which! would! enable! itself! to! signpost!

society’,!Adrien! Aumont!entrusts! to! culture! and! its! stakeholders! with! a! true! responsibility! in! social!

innovation.!As! such,! provided! that! the!durability! of! funding! is! resolved,! the! temporary! show!business!

workers’!status! is!a!model!and!an! interesting!experience!to!elaborate!and!finance!always!more!hybrid!

professional!sectors,!all!sectors!taken!together.!!

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• Steven!Hearn!invites!public!powers! to! reinvent! their!model! to! fund!culture:! ‘in!particular! the!subsidy!

status!should!be!rethink!so!that!the! latter!truly!correspond!to!an! investment!–and!not!a!mere!support,!

apart! from!a!support! to!artistic!creation=!which!encourage!the!conditions! leading!to!a!durable!system.!

The! dynamic! of! public/private! partnership–! in! the! meaning! of! contracts=! must! foster! future! cultural!

projects!and!help!the!cultural!sector!to!make!is!entrepreneurship!revolution.’!

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Next%steps:%%The! analysis! of! several! practices! and! the! 2015! Kurt! Salmon’s! study! for! the! Forum! d’Avignon! will! be!

presented!exclusively!during!the!last!2015!quarter.!!!

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