Abstract

A major economic feature of all the creative and cultural industries is their riskiness. Typically, the initial cost of making the content is large whereas the marginal cost of reproducing a unit of copy is minimal. When the product is popular among a large number of consumers, investment is recouped and beyond that threshold what comes in is net profits. However, as the economist Caves (2002) has extensively argued, ‘nobody knows’ is the character of these industries; consumers have diverse interests and tastes, which are hard to predict and can change over time. Producers of the cultural and creative industries need to invest in production under such uncertain demands. Among all the creative industries, film is an exemplar. It is exceptionally expensive to make, whereas consumers buy cinema tickets without really knowing what to expect as the values of the film in question are revealed only when it is watched.