Account.

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

July.10th.2015

www.forum(avignon.org.

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

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Philippe!Pestanes!and!Vronique!Pellet!of!Kurt!Salmon!opened!the!10!June!debate!organized!by!the!Forum!
dAvignon!with!an!executive!summary!and!key!figures!of!the!2015!study!for!the!Forum!dAvignon.!!
!
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:!
Adrien'Aumont,'!
' '
KissKissBankBank,!HelloMerci!and!Lendopoliss!coP
founder.!!
Emmanuel'Durand,!!
! !
VicePPresident,!Marketing!at!Warner!Bros.!!
Steven'Hearn,!!
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Scintillo!Groups!President.!!
Laurence'Marchand,'!
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Production!and!artistic!coordination!Manager!at!the!
Thtre!du!Chtelet.!!!

!Kurt!Salmons!team:!!

!
For!the!Forum!dAvignon:!!Laure'Kaltenbach'
!

!
!

Phillipe'Pestanes'

Vronique'Pellet'

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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.!!!
!
Emmanuel!Durands!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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2 !assessment:!Business'models'hybridization'creates'growth'dynamics'if'it'happens'as'habits'are'more'
digital'
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nd

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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:!
!
Laurence! MarchandP! production! and! artistic! coordination! manager! of! the! Thtre! du! ChteletP! precisely!
described!the!Thtre!du!Chtelets!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!Chtelet.!An!American!in!Paris!
has!just!been!rewarded!of!4!Tony!Awards!last!June.!It!is!a!telling!example.!

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.!
Adrien!Aumont=!KissKissBankBank,!HelloMerci!and!Lendopoliss!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.!!
Eventually,!Steven!Hearn=!Scintillo!groups!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!Cratis,!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!Spotifys!catalogue!has!never!been!listened.'

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The!speakers!point!of!views:!
!
! 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.!
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.!!

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:%
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The! analysis! of! several! practices! and! the! 2015! Kurt! Salmons! study! for! the! Forum! dAvignon! will! be!
presented!exclusively!during!the!last!2015!quarter.!!!
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