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Excerpts from some reports, lectures, talks and interviews— About the adverse selection in culture
— About the quality of personal time
— About the problem of navigation of customer in the cultural markets
— About the phenomena of sacrifice and gift
— About the prices in culture (signaling function of money in non- utilitarian realm)
— About the institutional outlook on the cultural markets
About the adverse selection in culture
Little stones in rice
In seventies, merchants from India threw little stones into the rice, which were indistinguishable from the rice itself, in order to increase the weight of the product and therefore the income. Hindi then had to sort out the rice and spend a lot on dentists. Approximately the same is now happening on the culture markets. Just instead of little stones, consumers of cultural goods are often presented simply with a poor quality product but in a nice rap. Economists call this “adverse selection”.
Culture markets are insidious: the risks associated with the uncertainty of quality are paid for by the consumers. The price includes the costs of choice and unjustified trials. This is how the tendency towards the unfavorable or “adverse selection” in culture appears: the seller cannot signal the quality of the goods by the means of pricing, therefore the consumer pays for all the goods like for the low-quality product. This harms the market: deceived buyer takes venges on him indifference. And there are losses, related to the ousting of the fair business, which transactions are always higher then of the unfair.
Spectators are tolerant to the deception also because they are willing to buy inferior. As they say “there is small choice in rotten apples”, and you have to keep yourself occupied. And spectators “forgive” and declass art – were going to see one thing, but got another. Not a problem, they will find something else. It is a response: they are offered lesser quality – they accept, but just start to think of you less. They are still willing to pay for it, but now only the lowers price. Of cause, everybody has different tastes. Hack-work, until the time comes, gets an audience, but mostly accidental and ignorant. Taste degrades imperceptibly and this process is not instant, like CRT tube slowly dies, but not in the television set, but in your own eyes.
Since the quality of a “cultural product” is impossible to determine before the consumption, then the part of the payment should be taken when the consumer is able to react to it knowledgeably. Within the schema of the deal there should be a right to pay not at the moment of access to the work, as it happens now, but after the contact with that work. The moment at which the payment occurs is the central point of the schema. If the payment is “before” – it is better for the seller, if “after” – it is better for the consumer. Now the fight against uncertainty is completely lost by the consumer, and in order to balance the chances, one of the sides has to sacrifice it informational advantage by to lending credence to the other side.
On both sides we see the obvious waste of the most precious resources of the information society – attention, free time and symbolic capital, and in order to stop this process, the rules should be reformed. The problem can be solved if the consumer is involved in grading the product, which is an impulse post payment, born as a result of consumption.
About the quality of personal time
Time market
Works of art are valuable because they open for an individual ways to manage the quality of personal time. If the play lasted 3 hours, it does not mean that all that time was of high quality, meaning it was interesting to you. But if the art is “genuine” — it “forces” the spectator into its inner circle, into its story. By living “someone else’s” story we extend our own life, not the outer (astronomic), but its inner plain. Therefor, art is a tool for managing the quality of time, which means that it should be measured according to the way it affects the time. Art markets should be understood as time markets.
But it what form should the experience be expressed that it would make it possible to decode and would make sense to adopt? For the purpose of exchange, the experience of artistic interaction can and should be summarized in a number – most condense, but informative system. Importantly, what should be summarized is exactly the quality of time.
The task of collective grading of the time quality does not differ from the task of ranking any other goods. The later is most often is solved by money and price – which is nothing but the will of a number of subjects as an equivalent to the number of goods and energy spent. Nobody ever knows exactly how the other perceives quality; nevertheless in a course of many transactions goods acquire a steady rating which normalizes it according to its value. Like with the artistic sphere this does not mean that everyone is guaranteed to “extract” the value in the same quantity. The price just expresses the potential value, but realization of it is in the hands of the individual.
About the problem of navigation of customer in the cultural markets
A stranger among strangers
I am a total cultural failure. I give culture “F” for the navigation system. I cannot, for example, get inside the world of the contemporary music. At the music store “Souz”, surrounded by tens of thousands of CDs (all priced the same, having the same message on the cover) I am petrified. The journals, of cause give reviews but for the advanced music lovers, for the fans. But I still have no clue; I barely can distinguish the genres. How would one get into all this? One should not present a beginner sommelier with a thousand dollar bottle of wine — he will not be able to understand it — he did not develop the taste yet.
In this situation it is makes sense to whish for one thing – to see oneself before hand among the addressees of the particular music or outside of this circle. There should be a warning system that will steer you away from “strange” compositions. But it seems the professional players on the cultural field are not interested in developing such a system — mass appeal is more important. Therefore it is pointless to wait for help from that end. The solution might come from the outside, from the nonprofessionals of the cultural society. The only thing – we have to find a way to combine the efforts. After all, each of us makes this extensive hard information analysis work for ourselves in order to recognize the quality. Is there a way to split this work among the consumers? The rules of payment in culture should give its customers a way to signal their impressions of the cultural product consumed, and those signals should be understood by the other potential listeners or spectators and served as a consumer navigation compass in culture. The only way to achieve this is to suggest a modern high technology mechanism, build into the very heart of the market. It is impossible to find anything better for this role than money. Indeed, money, the universal indicator of preferences and tastes, are destined for informational mission in culture.
Effective navigation in culture allows having a bridge to the management of the free time liquidity and then to the self-organization of a person.
About the phenomena of sacrifice and gift
“Gift” – does not mean “giving for free”
We give presents more often then we think. And this is not about the tips to waiters, charity or gift cards and flowers. All those Christmas trees and decorations that do not make any sense in the rest of the year, all those tinsels and figurines – and we are spending on all this rubbish and pure symbolism that has no other purpose then to signal the start of the worldwide elevation of the mood. It seems that this spending is irrational. But its deep meaning is to mark the tiny island of the “useless” in our consciousness, a place that is not yet captured by the material benefit. It is the place from which the restoration of culture will start its parade.
When people exchange money for the little elegant knickknacks and trinkets, some very expensive and some not so much they, without realization they follow an old tradition. And not only are the trinkets in use, big industries are also drawn to the beauty. When an old woman buys let say an electric kettle at a convenience store, whether she wants it or not she gives a charitable contribution – not to the church but to the designer group of, for example, Matsushito company. Now the aesthetics is the new religion.
Customers size up the talent with the monetary slide gauge, and measure themselves as well. This is why ratings, grads, magniloquent opinions are useless, only money works. Money is the guarantee of responsibility. You paid — you measured yourself. Want to rate something – pay for it. And the payment for the aesthetic pleasure is not a sacrifice but a thanksgiving.
About the prices in culture (signaling function of money in non- utilitarian realm)
Values in the kingdom of value mirrors.
What the prices in culture tell us? What are the rules of their formation? In what line do the products of the high aesthetic multiplier align?
Consumption effects, even if comparable are hard to understand. A book for $10 – is too expensive, while a dinner for $50 is just fine. A show with a celebrity for $200 is fine, but a play for 200 rubles ($7). Markets do not feel the need to adjust the price differentiation of the products. Entrepreneurs using their own methods achieve the efficiency (profitability) but they ignore the needs of cultural society. This has quite a few entangled reasons but the fact is: the price does not signal the quality which implies high transactional costs – search, trials, disappointments, all that is put on the shoulders of the consumer.
Conditionally, on an average people give positive ratings to every third film so the payment for the other two could have been transferred to the first one which would have tripled its price. But if we take into consideration all the transactional costs then the price would yet double. So here is the question do we really want to buy for less something we don’t really want? Doesn’t our hunt for the lower prices fires right back at us? The answer depends on the one’s subjective perception of the quality of free time, which further depends on the public directive.
Money is omnivorous, but not omnipotent. There are areas where it is powerless. Nevertheless we, once became firm believers in reliability of the market mechanism of prices, extend our trust to all the areas where money is involved. As a result the cause-and-effect relation gets reversed: where the quality should determine the price – the price determines the quality. In order to return the situation upside up, the prices should become the derivatives of the ultimate values and not vice versa.
When I suggest a new system of paying in culture, I want to “teach” money to work in a way it is not accustomed to. This is forced by the specific character of the cultural sphere, which in many ways is an antipode to the environment that begot it and where it is more appropriate.
About the institutional outlook on the cultural markets
Electronic expert exchange
Today the question of the efficiency of the spending “on culture”, of what is “good” and what is “bad”, is lacking not only any objective criteria but even some solid value basis. The strategy of non-profit investments is unclear neither to single individuals nor to organizations and governments. This implies innumerable transaction costs, both material and moral. It is hard for people to find bearings in a flow of new market offers, producers do not know what the customers are looking for and experts in their recommendations are often not objective.
In the future, the system of grading of the “cultural goods” could be transferred to the Internet platform, where it is possible to gather tens and thousands of totally independent experts-consumers. This opens up new opportunities. Internet will allow making those grades informative with the help of a new tool, which we can call a “symbolic capital”.
Imagine that consumer requests only the rating of those consumers, whose previous “opinions” coincide with his own. The client sets forth some indicators for the search system. For example, he chooses 2, 3, 10 cultural products and ask to give him the ratings of those people who graded “Terminator 3” as minus 50 and book by Akunin as plus 20, and “Coming Back” as plus 30. With high quality statistics and participation of high number of people this will allow to choose from all those people providing their opinions only those that match the criteria of the client.
Initially a pool of participants is formed, for them an account is opened in an internet system. Each user, after seeing a movie and expressing the opinion on the quality of the spent time can instruct to subtract or add a certain amount of money from his/hers account. This can become a commercial product, an instrument for navigating in culture. If we assume that the information about consumer rating will be in demand then the proposed system can no longer be an experiment, but a real business process of forming and paying for informational added value.
Then it is reasonable to forward some of the profit with the initial providers of the information
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