1. Why is demand surrounding culturally impactful or creative endeavors uncertain?
2. Is there a way to knock the edge of the risks of uncertainty?
I. Creative endeavors for entrepreneurial gain are high risk.
Producing and delivering cultural impact/high creative concepts to market is largely distinct from many traditional concepts like: finance, health, hospitality, and manufacturing. The distinction being, the risks are very high. This is a result of the uncertainty surrounding if the outside world will value the creative or cultural work. Plainly, ” Will people covet or want to buy it”. There can be very little indication of transactional demand.
Critical thinking: When a first-time movie is produced, how does the studio know they will make a return on their investment?
II. 2 Economist Observations
#1. In general economic theory, the potential for “information failure” is high for cultural/creative entrepreneurs. Information failure or asymmetric information is an imbalance of awareness. It occurs when the creator (or seller) has a greater knowledge of the production value than the audience, which often leads to inconsistencies in valuation.
There are all sorts of ethos around what is actually a product for sell or what is not. However, if a presentation is being made to an audience (mass market, investors, partners, advertisers, ect) you’re selling something— a new way of thinking, belonging, community, a product, a process, ect.
#2. When a creative project has commercial success it can rarely be properly explained; which makes duplicating the success and planning again harder.
Critical thinking: Can anyone, with a great amount of certainty, explain why Beyonce’s 2013 surprise album release of ‘Beyonce’ performed the way it did? Can that model be relatively duplicated with relatively the same results?
III. 4 Approaches For Creatives To Confront the Uncertainty
1. Allocate or share risks.
Collaboration, partnerships, pooling, ect can be an under-appreciated tactic to confront uncertainty. When able, ask for help. Build a tribe, team, or contractor outsource that can agree to the creative vision, or will accept lesser input in the execution to share in the production to reduce the market risks.
Note: It is very important to know your autonomy limits as a creative. Some creatives desire autonomy over their parts in a vision, and some won’t. Know where you are flexible and know where you are not, so roles and responsibilities can be clearly discussed.
2. Research, pre-testing, and validation.
These tools can be used to merit/gauge interest only. These tools shouldn’t be used to gauge the extent to which an audience will value or purchase the offering; or to predict the success of the project.
3. Create in stages.
If the production of an idea is complex, plan production phases around the resources that you have. Consolidate, simplify, execute well and release parts where it makes sense and does not compromise the integrity of the concept.
4. Option contracting
Option contracting is an agreement based on ‘If this, than that’. When a creative output requires complex moving parts, contract or make agreements in a way that will allow options and places for pivots when new information or direction occurs.
Reference: Caves, Richard E. "Creative Industries: Contracts between Art and Commerce. Cambridge", Mass: Harvard University Press, 2000. Print.