Where Corporate Culture and Local Markets Meet: Music and Film Majors in the Netherlands, 1990-2005



Multinational cross-media companies serve consumers cultural products worldwide and play an important role in what people see and hear. People living in Tokyo, London or Amsterdam are able to listen to the same pop stars and watch the same movies. The music and film industry are prominent international cultural industries and their products are easily released in different countries unlike in other cultural industries. In the late 1980s and 1990s, intensive global competition and new technologies led to mergers of national and continental companies into global media corporations so as to benefit from economies of scale and scope. The production and distribution of cultural and media products is characterized by high and sunk investments costs. Economies of scale are perceived as the best way to recover these costs if the product is successful. To gain economies of scale, transnational media firms aim at serving the global market with global media and entertainment products. Therefore, one would not expect international media companies to play a role in the production and distribution of local culture, especially not in relatively small countries with a small language market such as the Netherlands. Nevertheless, some international music and film companies did invest in the production, distribution and marketing of Dutch music and film products. During the mid 1990s, there was a renewed interest for domestic cultural products and services in European countries. As a consequence, the market share for domestic music and films in the Netherlands rose. This book examines how and why subsidiaries of international media and entertainment corporations operate in a local market in a climate of both globalization and an increasing interest in local culture. The Dutch music and film industry between 1990 and 2005 serve as cases. Although there has been a growing academic interest in the structure, strategy and operation of transnational media firms (e.g. Gershon, 1997; Chan-Olmsted & Chang, 2003), little research has been conducted into how they operate in particular local markets and how this is influenced by changing market conditions. This research will investigate how international music and film companies operate in this local market by analyzing the strategies of three companies (Sony, Universal and Warner) for developing, producing and/or distributing, promoting and marketing local and international music and film repertoire. A case study method is used to examine these companies but will not be used in a traditional way, which is to explore a particular issue among a small number of the total population. These three majors all operate in the Dutch market and all have a music and film division.1 Therefore, the case study method is used to describe their policy when dealing with a local market and how their operation is affected by local market conditions. This book aims to offer new theoretical insights in how companies in the international cultural industries operate in a local market. These insights are derived through a multidisciplinary and comparative research approach that addresses the concepts and perceptions that underlie the decisions and processes in the cultural industries. This research distinguishes itself from earlier academic work on the cultural industries in that it compares both the music and the film industries instead of addressing just one of the industries. Furthermore, it focuses on the decision making process within international music and film companies and how this affects their operation in local markets. It does not solely address the economic aspects as is usually done in media economics research on transnational media corporations. (Hollifield, 2001: 141) Therefore, another distinctive feature of this research is that it also widely explores local market conditions and the context in which the subsidiary operates.
The Business History Seminar has been made possible by financial support from the Erasmus Research Institute of Management (ERIM) and the Vereniging Trustfonds Erasmus Universiteit Rotterdam.
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