EGRG PhD Prize 2007

The Internet gift economy: a study of socio-technological change in the US film industry

Andrew Currah (University of Cambridge)

In this thesis, I critically examine the impact of a ‘disruptive’ technology on a mature and concentrated industry; that is, an assemblage of technologies, which, through their social development and application, have facilitated a new mode of economic reproduction, thereby changing the kinds of products that are sold and in turn, the way firms generate revenues. Specifically, I construct an economic geography of this ‘sociotechnological’ disruption; and therefore assess where it came from, how it evolved, and how it is being incorporated into the economic geography of the industry. In doing so, I focus on the response of key individuals and firms in the industry. My analysis rests on two general assumptions: first, I contend that behaviour must be understood in relation to incentives; and second, I also contend that behaviour and incentives are shaped and rationalized by the broader geographic and organizational context in which decision-making takes place. Using these pointers, my aim in this thesis is to construct an active, contextually sensitive and agent-specific account of a technological disruption.

I approach these issues through the lens of a specific case study, based on an extended period of fieldwork in Los Angeles: the development of the Internet gift economy in the context of the US film industry. Although specific in its focus, this geographically bounded case study sheds light on a broader theoretical picture, concerning the changing shape of the ‘media and entertainment industries’ in a digital and networked economic environment. The Internet lies at the heart of a rapidly evolving sociotechnological architecture, which is bringing about profound changes to the production, distribution and consumption of information-based commodities, such as books, music, film and television programming. Specifically, the Internet represents a type of ‘gift economy’ in which substantively new forms of collaboration, participation and sharing are beginning to blossom. Crucially, the Internet gift economy facilitates a new mode of economic reproduction, built around file sharing in a peer-to-peer architecture, which has considerable benefits both for copyright owners and consumers in the media and entertainment industries.

The thesis addresses three research questions, which evaluate the response of three groups in the US film industry: consumers, producers and innovators. The first concerns the socio-cultural origins and nature of the technological disruption: to what extent has the Internet gift economy refigured consumer behaviour, and thereby destabilized the economic reproduction of the US film industry, namely its leading oligopolistic producers, the studios? The second concerns the oligopolistic response to the disruption: in what way has the studio oligopoly responded to the Internet gift economy, and to what extent has its behaviour been limited by the prevailing organizational and institutional structure of the film industry? And finally, the third question concerns the commercial development of the disruption: namely, what is the relative role of the film industry’s lead producers and other innovators in the exploration and commercial exploitation of this new market; and in what ways does the development of the Internet gift economy affect the competitive structure of the industry?

Throughout the thesis, I develop a central argument, which rests on two points: first, that file sharing in the Internet gift economy can be given a legal and flexible structure; and second, that in this form file sharing has the potential to strengthen the economic reproduction of the media and entertainment industries, including the dominant oligopoly. However, I argue that the Internet gift economy has elicited very different responses from producers and innovators in the film industry, because of differences in incentives and the context in which decision-making takes place. I contend that the studios are institutionally unable to explore the commercial potential of the Internet gift economy; but that they will ultimately be essential to the longterm exploitation of this new outlet for films. Going forward, I suggest that the studio oligopoly will retain its dominant position in the industry, but will also face heightened levels of competition in niche markets as a direct result of the Internet gift economy, which facilitates the accurate matching of supply and demand and therefore enables consumers to access a much wider array of relevant, engaging and otherwise invisible creative work.