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favourite music from Napster-like sites. The quality is very good. CD's are rapidly changing from rival
(private) to non-rival (public) goods. Music companies find it tougher to make profits and may invest less
in CD's. Extra income from concerts, books, interviews, merchandise and other related activities will
become more important. Technological advances but also the Internet, globalisation of the arts market
and Baumol’s cost disease all contribute to a shift from unique, autographic art to reproductive,
allographic art. The trend towards specialisation and division of labour implies that artists make designs
and others produce, reproduce and distribute the art object to the public at large. Examples are books,
CD's, records, lithographs, posters, photographs, DVD’s, CD-ROMS and pay-per-view TV. This shift
has lowered prices and increased accessibility of classical and contemporary art for large sections of
society. This even true for expositions of unique art objects (think of the international Vermeer and Van
Gogh expositions). Similarly, there has been a shift from physical cultural experiences to the Internet,
witness the growing number of websites of libraries, museums, archives and performing arts companies.
The latter can be reproduced at any time and any place in the world at almost no cost. Just like the extra
demand for DVD's has not undermined demand for cinema, and free virtual cultural expressions on
Internet do not seem to erode demand for seeing physical displays of culture. Finally, there has been a
shift from autonomous, more subsidised to applied, more commercial arts such as fashion or design.
Applied artists typically prefer empowerment to income support, so credit for tools or risk capital.
Some culture is produced under increasing returns to scale and winner-takes-all markets. Harris
and Vickers (1985) show that there is over-investment in new technologies if different firms race to be
the first to get the patent. This happens if firms race to set a common standard. For example, Phillips lost
the race for a new DVD standard. If patent markets work badly, there is under-production of cultural
goods. In the Internet age it is harder to protect property rights on creative expressions and this may
discourage artists to produce. Rengers and Plug (2001) build on Throsby (1996) and estimate a joint
model of the choice of visual artists to opt for subsidies (43 per cent) or market funding (57 per cent of
total market value) and the related earnings. They show that subsidising the visual arts through grants and
commissions enhances the winner-takes-all tendency for the market at large. They find that financial
success on private and public markets depends more on personal characteristics, government recognition
and (unobserved) talents than human capital. The winner-takes-all feature implies that subsidies reinforce
market preferences, so some artists do well in both public and private markets.
High culture differs from instant entertainment. First, culture is an acquired taste. To understand
and appreciate Oedipus Rex by Stravinsky requires musical knowledge and experience of more
traditional symphony music and opera's. Surveys suggest that young persons who go to opera are more
receptive to radical or modern performances of Peter Sellars, Pierre Audi or José Marfa Cano than older
audiences. Still, Heilbrun (1993) suggests that programming of operas is more conservative than of