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Soft power: the media industries in Britain since 1870

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  • Bakker, Gerben

Abstract

This paper discusses the emergence and growth of various media industries in Britain. It shows how a rise in real wages and leisure time, rapid urbanisation and the development of fast urban transport networks, and a rapid growth of the market’s size let to a sharp rise in the demand for media and entertainment products and services, which was met by ever-new technologies coming from constantly emerging new industries, such as recorded music, film, radio, television, cable, videogames, internet, and social media. The paper argued these industries contributed to a sharp productivity rise by industrialising traditional media and entertainment, and to a sharp welfare growth as consumers valued them so highly that they were willing to incur ever-higher opportunity costs to consume them. It also discusses how four factors quality races, marginal revenues equalling marginal profits, the superstar effect and agglomeration benefits shaped the evolution of individual industries, and it assesses the success or failure of British industrial policy towards media industries. The paper observes media’s impact on the aggregate economy through opportunity costs, expectations and aspirations, the functioning of the market, education, and, finally, through shaping the means of institutional change. In addition, the paper makes new decennial benchmark estimates for British consumer expenditure on books between 1870 and 1900, on recorded music between 1900 and 1930 and on cinema between 1910 and 1930, for which previously no estimates were available

Suggested Citation

  • Bakker, Gerben, 2014. "Soft power: the media industries in Britain since 1870," Economic History Working Papers 56333, London School of Economics and Political Science, Department of Economic History.
  • Handle: RePEc:ehl:wpaper:56333
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    File URL: http://eprints.lse.ac.uk/56333/
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    References listed on IDEAS

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    1. Gordon Dahl & Stefano DellaVigna, 2009. "Does Movie Violence Increase Violent Crime?," The Quarterly Journal of Economics, Oxford University Press, vol. 124(2), pages 677-734.
    2. Campbell, Gareth & Turner, John D. & Walker, Clive B., 2012. "The role of the media in a bubble," Explorations in Economic History, Elsevier, vol. 49(4), pages 461-481.
    3. Bakker, Gerben, 2013. "Money for nothing: How firms have financed R&D-projects since the Industrial Revolution," Research Policy, Elsevier, vol. 42(10), pages 1793-1814.
    4. Jeremiah E. Dittmar, 2011. "Information Technology and Economic Change: The Impact of The Printing Press," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1133-1172.
    5. Bakker, Gerben, 2014. "How they made news pay: news traders’ quest for crisis-resistant business models," Economic History Working Papers 59304, London School of Economics and Political Science, Department of Economic History.
    6. Austan Goolsbee & Peter J. Klenow, 2006. "Valuing Consumer Products by the Time Spent Using Them: An Application to the Internet," American Economic Review, American Economic Association, vol. 96(2), pages 108-113, May.
    7. Diego García, 2013. "Sentiment during Recessions," Journal of Finance, American Finance Association, vol. 68(3), pages 1267-1300, June.
    8. Temin, Peter, 1997. "Two Views of the British Industrial Revolution," The Journal of Economic History, Cambridge University Press, vol. 57(01), pages 63-82, March.
    9. Bakker, Gerben, 2010. "The evolution of the British entertainment business: film, music and videogames," Economic History Working Papers 37336, London School of Economics and Political Science, Department of Economic History.
    10. Joseph E. Engelberg & Christopher A. Parsons, 2011. "The Causal Impact of Media in Financial Markets," Journal of Finance, American Finance Association, vol. 66(1), pages 67-97, February.
    11. Bhattacharya, Utpal & Galpin, Neal & Ray, Rina & Yu, Xiaoyun, 2009. "The Role of the Media in the Internet IPO Bubble," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 44(03), pages 657-682, June.
    12. Bakker, Gerben, 2012. "How Motion Pictures Industrialized Entertainment," The Journal of Economic History, Cambridge University Press, vol. 72(04), pages 1036-1063, December.
    13. Bakker, Gerben, 2001. "Stars and Stories: How Films Became Branded Products," Enterprise & Society, Cambridge University Press, vol. 2(03), pages 461-502, September.
    14. Gerben Bakker, 2003. "Building Knowledge about the Consumer: The Emergence of Market Research in the Motion Picture Industry," Business History, Taylor & Francis Journals, vol. 45(1), pages 101-127.
    15. Bakker, Gerben, 2012. "Sunk costs and the dynamics of creative industries," Economic History Working Papers 49081, London School of Economics and Political Science, Department of Economic History.
    16. Bakker, Gerben, 2004. "Selling French Films on Foreign Markets: The International Strategy of a Medium-Sized Film Company," Enterprise & Society, Cambridge University Press, vol. 5(01), pages 45-76, March.
    17. Bakker, Gerben, 2009. "Time and productivity growth in services: how motion pictures industrialized entertainment," Economic History Working Papers 27866, London School of Economics and Political Science, Department of Economic History.
    18. Paul C. Tetlock, 2007. "Giving Content to Investor Sentiment: The Role of Media in the Stock Market," Journal of Finance, American Finance Association, vol. 62(3), pages 1139-1168, June.
    19. Bakker, Gerben, 2007. "Trading facts: Arrow's fundamental paradox and the emergence of global news networks, 1750-1900," Economic History Working Papers 22519, London School of Economics and Political Science, Department of Economic History.
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    More about this item

    Keywords

    media industries—economic history; consumer expenditure; revealed comparative advantage; Britain; 1870-2010; industrialisation of services; sunk costs; quality races; toll goods; superstars; agglomeration benefits; media policy; ‘happiness’; advertising; news agencies; books; publishing; theatre; recorded music; film industry; broadcasting; radio; television; videogame;

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • N73 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Europe: Pre-1913
    • N74 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Europe: 1913-
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature

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