The spatial organization of the news industry: questioning assumptions about knowledge externalities for clustering of creative industries.

SUMMARY

The importance ascribed to knowledge externalities for understanding the spatial organization of industries (i.e. clustering) is increasingly being exposed to critical theoretical and empirical scrutiny. This research has not yet spilled over into studies of creative industries. This paper is concerned with reducing this omission by making an empirically based assessment of the importance of respectively knowledge internalities and externalities for the spatial organization of the news industry. The paper documents how the identified spatial organization can complement the existing literature on the importance of knowledge externalities for clustering of creative industries.

KEYWORDS

cluster; economic geography; cultural industries; creative industries; governance structures; newspapers; news firm; news industry

INTRODUCTION

As an explicit commercial activity creative industries have lived a neglected life in social science, and for decades politicians mainly considered creative industries to be a costly activity related to people's spare time. Today creative industries--not as fine arts but as commercial products--dominate the political agenda in the developed world and are considered the 'new' source of wealth and prosperity. Economic geographers have also 'adopted' the creative industries and are increasingly starting to unpack what determines their spatial organization. Hence, recent years have seen a surge of research on this topic. (Storper & Christopherson 1987; Scott 1999, 2000, 2002, 2004; Pratt 2002a,b; Florida 2002; Grabher 2001, 2002a,b,c, 2004; Coe 2000, 2001; Power 2002; Power & Hallencreutz 2005; Power & Scott 2004; Bathelt 2002, 2005; Gibson & Klocker 2004). As is the case within economic geography in general, this literature has highlighted clusters or clustering processes as central drivers in explaining the development, growth and competitiveness of creative industries. This literature mainly emphasizes the importance of knowledge externalities for explaining the spatial organization. The importance ascribed to localized knowledge externalities for understanding the spatial organization of industries (i.e. clustering) is increasingly being exposed to critical theoretical and empirical scrutiny in studies focusing on manufacturing (Malmberg & Power 2005, Malmberg & Maskell 2006). This research, however, has not yet spilled over into studies of creative industries apart from in novel exceptions (see Power & Hallencreutz 2002, Pratt 2004a, Norcliffe & Rendace 2003). This paper is concerned with reducing this omission by making an empirically based assessment of the importance of respectively knowledge internalities and externalities for the spatial organization of the news industry. This paper thus questions some of the central insights in this stream of literature; concerning the knowledge externalities special attention is paid to the specificities normally considered to be of pivotal importance, namely the role of big cities, buzz and projects.

Creative industries consist of those sectors that serve consumer demands for amusement, ornamentation, social display, info-tainment, and so forth (Scott 1999, Caves 2000). The industries include production of theater, newspapers, film, music, toys and games, and similar industries (Caves 2000, Scott 2000 1999, Pratt 2004a). Good reasons exist as to why the commercial aspects of creative industries receive an increasing amount of attention. Most other studies guess that those working in the creative industries constitute between 5-10% of the work force (Pratt 2004a). Additionally, the creative industries are increasing its economic importance (Scott 2000).

This paper argues that there is a need to pay attention to creative industries displaying other organizational features or contrasts, as they are called by Laudan (1977), compared to those that have dominated the research until now. Since '... most scientific activity means solving the puzzles implied by those contrasts (Foss & Pedersen 2004). The news industry's locational patterns provide clear contrasts to the findings dominating most of the studies on the clustering of creative industries and are determined by a need for physical proximity to specific events and political organizations and production is based on a non-project organizational form (Vang & Nielsen 2006). Thus, the aim of this paper is to identify and analyze the locational pattern of the news industry and explain how these contrasts with findings for other creative industries, and use these contrasts to ignite a more general discussion on the importance of respectively knowledge externalities and internalities for understanding the spatial organization of the creative industries. The findings suggest that the organization features and locational patterns identified in previous studies mainly reflect the spatial organization (i.e. clustering) of industries like film and advertising, where physical proximity to particular knowledge externalities is the determining factor in explaining their urban bias. This paper suggests that the literature on the clustering of creative industries:

(a) needs to pay more attention to industry specific characteristics of contrasting industries, especially to industries relying on non-project based creative industries dominated by in-housing and different knowledge externalities than film and advertising;

(b) needs to unpack and rethink the importance of face-to-face communication and buzz; and finally

(c) needs to stress when and why 'in-housing' is important and link this to locational patterns as this has been neglected in previous studies.

In-housing refers to knowledge-based activities that rely on being produced by employees (Williamson 1985 1996, Mahnke et al. 2005, Vang & Overby 2006, Prahalad & Hamel 1990 1994, Richardson 1972), as opposed to being acquired on the market or developed in an inter-organizational joint effort. The type of study helps identifying the limits to the currently dominating research 'paradigm' and suggests ways ahead for unexplored but increasingly important questions if the promising field is to maintain its momentum. The aim of the paper is thus positive in the sense that it does not write off the importance of knowledge externalities for other creative industries but suggests to include variables representing knowledge internalities in studies of these industries and argues in favor of an approach that takes industry specificities, particularities and contingencies as the point of departure.

The structure of the paper is as follows. The paper is opened with a short summary of the creative cluster-literature. Then it turns to the spatial organization of the newspaper industry. As the paper is inductive in nature the majority of the paper focuses on the analysis the spatial organization of the news industry. This section is based on original quantitative and qualitative data collected by the authors from 2001-2006. (1) This case study provides the foundation for the following section where the contrasts between the news industry and other creative industries are discussed. The paper is rounded of with a conclusion that suggests ways ahead for assessing the importance of knowledge internalities and externalities for the spatial organization of creative industries in general.

CURRENT RESEARCH ON CLUSTERING OF CREATIVE INDUSTRIES

The centrality to economic prosperity of the creative industries has triggered an intensive research on the spatial organization and clustering of creative industries (Storper & Venables 2004, Florida 2000; Pratt 2002a 2004a, Scott 2000, Grabher 2002a 2002b 2002c 2004). This is no doubt a creative field, blossoming with ideas and activities. While there is some uncertainty as to the explanatory status of this stream of research--whether the cases studied should be seen as merely a collection of cases or building blocks in a larger theory--certain shared emerging patterns can be detected in the cluster studies (for a discussion of the production and value chain-oriented studies, see Vang & Lucas 2006; Pratt 2004b). Across different theoretical schools the bulk of papers emphasize that knowledge externalities are crucial for explaining the spatial organization of creative industries. In the vein the research suggest that creative industries tend to locate in the largest metropolitan areas. This location, it is argued, constitutes an arena allowing for accessing face-to-face based buzz on new industry trends and for utilizing the presence of a diverse portfolio of creative competencies (Gibson & Kong 2005, Kong 2005). The locational choice reflects that creative industries tend to be organized around inter- or intra-firm collaborative projects (Graber 2004, Scott 2004, Pratt 2002a 2002b). Projects 'constitute a temporary organizational arena in which knowledge is combined from a variety of sources to accomplish a specific task' (Graber 2004: 104) where emphasis is put on the institutionalization of their termination (Lundin & Soderholm 1995). Projects, it is argued, as an inter-organizational form then allow to flexibly source and deploy the competencies needed for making creative products, i.e. requirements that differ from project to project due to new trends, fashions or simply the need for experimenting. A flexible and innovation-oriented organizational form is a precondition for remaining competitive in these industries (DeFillippi & Arthur 1998, Grabher 2002, see also Christopherson 2002).