Lecture 6. Adapting to digital change
One of the greatest disruptions which is happening with value creation in creative economy, in creative industries is ‘digitation’ or influence of the online culture and, in general, digital culture on the creative industries. Why? Because there are multiple ways how digital change affects the whole value chain.

Let’s start with the consumer, with the customer. Now, with so many screens that we are looking at, such a variety of the content that we’re receiving, we, the consumers, are changing the ways how we consume cultural products. And it affects the whole value chains across different segments, across different markets.

There is no need to tell about different tablets or phones, iPhones or other smartphones that we are using, and we are using them in different ways and different timings and different situations. So, it’s the customer behaviour [that] is affected.

Then the next impact of the digital change on the creative industries’ value chain is the access to information. Where and how we access information? What are the platforms out there, repositories, that people, consumers, are actually tapping into? So, it also affects how and where a cultural project should be available for consumers. It’s not only about the behaviour, it’s also about the information recourses where these newly changed customers are going for their cultural products.

The third digital change is the change in the culture of consuming cultural products. If previously it would be quite straightforward that we would read a book or we would go to the cinema to consume cultural product as movie, now it’s not that obvious. We might go to the cinema theatre to consume opera performance. And it’s quite normal to go to see online stream from the great venues for new ballet or opera. And it’s quite fine. Or we are fine in watching, let’s say, TEDx. You go, you see some people live but some you watch from online, which is streamed in the audience. So, it’s a new culture of consuming cultural content.

You might read a book but alongside you are flipping through the notes on your gadget, on your phone, where you want to see something you don’t understand from the book. So you have a printed book alongside your phone, smartphone, and it creates a different culture. Also that the bus rides etc. now became available suddenly for consuming cultural products.

And so, the fourth change that affects the value chain and the creative economy is, in fact, promotion: how the operators, how the players along the value chain are outreaching to these new customers, which have different information sources and repositories, and who change their culture, and how they consume these products. So, the promotional strategies should also be adapted to this digital change which is happening along us.

So, if we look again, coming back to our original idea of the value chain, the customers are changing, then the distribution is also changing, then the industrialists have to adapt because their end of the value chain is changing so fast, and the players along the value chain are changing, so the value chain is disrupted (think about different platforms; we’ll come to that in a minute). And then also the artists, they also should also adapt, and they are adaptingsome of them are just bypassing all the publishers, all the distributors, and going straight to their consumers because they have self-publishing tools, they have all the social media to promote their work. So, how does it affect your business, your model of operation of your cultural organisation or creative enterprise? That’s an interesting question you need to think about it.

One of the major or the most evident manifestations of the digital change in the value chain in the creative economy is emergence of platforms. Platforms are all over us. If you think about how customers… where customers are engagedFacebook or other social media, Twitterwe are all there. And in fact, it’s multibillion companies which control the right to access to the audiences and, in fact, who sees what to a large extent. So, they are in control of this segment.

If you think about distributionwhere would you put your book most likely these days?, if you want to reach this audience. So, it means that controls and can, in fact, dictate what are the terms and conditions how your cultural product would reach your desired audiences, customers.

Same concerns videogames: there are just a number of platforms where distribution is happening. Or think about even mobile apps. You would again… Google Play, App Storethese are the ones that you have to be [on], because otherwise, well, there are no other ways how you can reach your audiences if your cultural product is actually a certain app.

So, platforms dominate the market, and it means that your business model also has to both embrace and, in fact, compete with platforms. Why embrace? Because the audiences like the platforms, they are there. The audience is there, and it means it’s a self-fulfilling prophecymore and more people come there, we are getting smarter in using this platforms and platforms actually also become smarter in how they interact with users. So, you have to be there.

But on the other hand, you need to compete because your most valuable customers are those whom you can communicate directly. So, it’s your newsletter subscribers, it’s customers of your own app, it’s audiences who you can interact [with] physically, who know you by the first name.

So, don’t dwell only on the platforms because platforms then control your value chain. In fact, do think how you can create, in a smart way, your own audience that you control, and not platforms.

Digital change also affects business processes. We were talking about this when we were referring to product-based companies. Because when you are a product-based company, you have different business processes: production of a cultural product, then marketing it, selling it, and then dealing with the customers after sales process, so-called.

And digital change affects all of those processes. Marketingobviously, you need to deal with the platforms (just earlier mentioned). Engaging audiences on those platforms, outreaching new interesting formats, putting out the videos, interactive formats, various multimedia experiments in order to attract audience to your cultural product.

But then if you’re talking about even the most ‘cultural’, in a way, business processes, let’s say, preservation or museumfication or even analysis or digitation of art collectionswell, the digital is also there because the processes are now digitized; there are certain techniques, certain platforms and software that you have to use, and then it has to be linked with the same marketing efforts. So, it has to be compatible, the business processes should link up, and analogue business processes should be converted to digital ones because that’s what customers want, that’s what they are looking for.

Then whole operations also have to adapt to changes. It’s not enough anymore just to come to the festival to hear the music. People are also interested in having an app in order to know what they are listening. It has to be interactive and interesting, not just an appit has to be the app that is engaging, interesting and people want to use. If there is a book festival, for example, it’s also not enough just to have some list of venues; you want to interact online while you’re being physically with books, at the event, interacting with authors, with artists, with publishing houses but you also want to do something in your gadget while you’re there, and the organisers have to provide this experience. It means that all their back-end operations have to be online too to make it easier, to put it in different formats, in different gadgets to their customers.

And, of course, the distribution is now also online. Even if you are not on the platform or you have your own distribution channels. So, how is your customer relations management (CRM) system interacting with CRM systems of your bookstore partners, let’s say, if we are talking about book industry. That’s important. Are there interoperability issues? It’s essential that you know how you adapt to this digital change that you have to adapt to.

And then, of course, it’s business models. Because now people pay online. Maybe they can pay online to you too, for your products that you offer there. Maybe they want to put money via crowdfunding platformsthere are multiple models and ways how crowdfunding can work. You will find some links below that you can refer to and get more information on it. There are plenty different platforms and different modes for crowdfunding that you can use these days. And you can amend your business model, maybe, perhaps, with some of the crowdfunding activities out there.

So, again, business processes of cultural organisations and creative enterprises are greatly affected by digital change, all of them. And there should be a master plan how you adapt to digital change in your organisation.

Thank you for watching this course! I hope that you enjoyed it and you learnt something new and useful for the work. Please note that there is some additional informationcases, materials and useful links that you can check just below this video. Thank you and bye!

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