How the Culture Economy Works

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In 1976 the designer Milton Glaser sketched an I, a red heart and the letters NY for a campaign to bring tourists to New York State, and he did the work without a fee. The state owns the trademark and licenses it for merchandise. The image itself has travelled much further than any licence, onto souvenirs, shop signs and many imitations of its formula. Glaser gained lasting renown and the state gained a symbol and a licensing income, while hotels and shops have benefited from New York’s image without paying for the design. A fee, a licence and a change in how people see a place are different kinds of result, and they ended up in different hands.

In The Anatomy of the Culture Economy we asked why people take part in culture. This essay asks how the culture economy works once they do, through three connected questions. They concern what value cultural products create, what makes their economics distinctive, and who benefits from their effects or receives their economic returns. The people who create a cultural product, those who benefit from it and those who receive its economic returns are often different.

Few of the features that make the culture economy distinctive are unique to culture when taken one by one. What sets it apart is how they combine with one another and with the social and expressive character of cultural products. For works that can be copied, these features form a chain. The wish to create keeps new work coming, while social influence and limited attention make commercial success concentrated and hard to predict. Copying and distribution then carry the few successes very far, and rights, channels and contracts decide who gets the return from that reach. Live performances and original works follow a different logic, in which capacity, labour, authenticity and scarcity matter more than reach. In both cases the effects of a work can also travel well beyond the form and the transaction in which it was first sold.

Three angles on value

It helps to look at a cultural product from three angles (Table 1). The economic angle looks at what the product does in markets, including sales, licences, investment and the future revenue that a brand or a catalogue may support. The social angle looks at what it does for other people, through the regard of peers, the associations people form, the actions it prompts and the use people make of it. The expressive angle looks at what the work means to those who create it, alone or together. These are angles on one product rather than separate kinds of value, so a song can be a source of income, a memory shared by a generation and something its writer needed to say.

Table 1. Three angles on the value of a cultural product

Angle	What it looks at	Examples
Economic	What the product does in markets, now and later	Ticket sales, a commission, a catalogue sold years later, a licensing fee for a logo
Social	What it does for other people	A prize, the associations of a brand, fans who give to a cause, a public’s knowledge of its history
Expressive	What the work means to those who create it	A glaze refined over years, a poem written for a few dozen readers, a choir that sings for its own members

What happens under one angle can feed another, but not reliably. Praise from critics can lead to the next commission, or it can stay within a small circle of peers. In June 2020 BTS and their label gave $1 million to Black Lives Matter causes, and their fans raised a further $1 million in little more than a day. Attention gathered by music became action for causes outside it. What a work achieves socially or expressively can also be complete when the work is done, without ever becoming income.

Why people keep creating

When prices stay low, producers usually supply less over time, because the work no longer pays. The supply of cultural products responds more weakly, because many people create them for recognition or for the work itself. Richard Caves called this the “art for art’s sake” property of the creative industries. Hans Abbing argued in Why Are Artists Poor? that this willingness to work for little helps keep incomes in the arts low. More people want to do the work than the market can pay well. A steady supply of new work therefore does not mean that those who create it have found a living. When creators have few other ways to reach an audience, their wish to be seen can weaken them in a negotiation. Someone who does not depend on sales, on the other hand, may find it easier to say no.

Supply is also shaped by timing. A book, a game or a series usually has to be paid for before anyone knows whether people will want it, a condition Caves summed up as “nobody knows”. Publishers, labels and studios respond by funding many projects, so that a few successes can carry the rest. They pay advances, commission work and write contracts that settle in advance how a success or a failure will be shared. An advance is paid whether or not the book sells, which moves part of the risk from the author to the publisher. In a 2022 antitrust trial, executives of large American publishers acknowledged that most books never earn out their advances. For those books, the royalties credited to the author never exceed the advance, so no further royalties become due under that contract.

Squid Game shows how such terms can play out. Hwang Dong-hyuk wrote the script around 2009 and spent about a decade unable to get it made, until Netflix took it on. The series was viewed for 1.65 billion hours in its first 28 days. In October 2021, about five weeks after its release, Hwang said that the show had not made him rich, since Netflix had paid him according to his original contract. A fixed fee made his pay independent of how the series performed, which would have protected him if it had failed. It did not change the time and income he had already given up while trying to get it made. The terms for sharing an unexpected hit had been settled before anyone knew it would come.

How demand forms

A finished work has not yet found its audience. The supply of new work can grow almost without limit, but the time people have for it cannot, so attention is scarce and unevenly shared. People also watch what others are watching, and their choices are shaped by recommendations, reviews, charts and what a work means to the groups they belong to. In an experiment published in 2006, Matthew Salganik, Peter Dodds and Duncan Watts recruited more than 14,000 people, most of them from a website for teenagers. They asked them to listen to 48 songs by unknown bands and download the ones they liked. Some participants could see how often each song had been downloaded, and they were divided into eight separate “worlds” that developed on their own. Where people could see the counts, success became more unequal and harder to predict, and the same song could do well in one world and poorly in another. Quality still mattered, but it decided success only in part.

Concentration also comes from scale. Sherwin Rosen showed in 1981 that when a performer can reach a whole market at once, small differences in talent can produce very large differences in income. A recording or a stream reaches a listener anywhere at almost no extra cost, so the most popular performers can serve almost the whole market.

Some attention passes quickly, while some becomes attachment to a particular person, work or community. As we noted in the first essay, Luminate counts about one in five American music listeners as superfans, who spend around 80 per cent more on music each month than the average listener. An audience attached in this way returns for new releases and is slow to switch to alternatives, which makes it valuable to whoever it is attached to.

Demand for cultural products can also revive long after their first release. Kate Bush’s “Running Up That Hill” reached number three in the UK when it came out in 1985 and number one in 2022, after it featured in the Netflix series Stranger Things. In fashion, a style that looked dated a decade ago can return as the look of the moment. A product’s first run is therefore not necessarily its last, and its first sales do not exhaust what it can do.

How cultural products become businesses

A cultural product can be run as a business in three broad ways, and each faces a different economic problem (Figure 1). Most organizations combine them. A band sells recordings and concerts, and a museum sells admission, prints in its shop and sometimes the loan of originals.

Figure 1. Three ways of running a cultural business

What is sold	Buyers per work	The central economic problem	Examples
Copies	Millions	Recovering a large first cost, since one work is reused in every copy	Books, recordings, digital games, streamed video, mass-produced collectibles
Experiences in person	The size of the room	Capacity, since staff, space and time limit how many people can take part	Concerts, theatre, restaurants, festivals, travel
Originals	One owner, or a few	Provenance, authenticity and recognition, which shape demand and price	Original paintings, handmade pieces, limited editions

Copies are where the chain described at the start runs most strongly, because the work is made once and reused in every copy. Digital copies can reach more people at almost no extra cost, while physical copies still have to be manufactured, stored and shipped, and unsold books can come back as returns. Experiences in person cannot scale in the same way. William Baumol and William Bowen observed in the 1960s that a Schubert quartet needs as many players and as much time as when it was written. A live performance cannot easily become more productive. Because wages rise across the economy, the cost of such performances tends to rise faster than other prices, which is one reason many of them depend on subsidy or high ticket prices. Originals face the opposite problem from copies, since their value depends on there being only one, or only a few.

How value travels beyond the first product

The effects of a cultural product often reach further than the product itself and the sale that first brought it to someone. They can pass into other forms and industries, into other cultures, and outside any transaction at all.

Into other forms

Someone might first meet Harry Potter in a film, read the books afterwards and, years later, visit a theme park or buy a wand. Each purchase supports a different business, from publishers and a film studio to theme-park operators and makers of licensed products. A story that began as a book, which can be copied without limit, has become an experience people travel to take part in.

Into other cultures

A phone does the same job in every country, but a comedy does not travel in the same way. Colin Hoskins and Rolf Mirus observed in 1988 that a programme rooted in one culture loses appeal elsewhere, because viewers find its style and values harder to identify with. They called this loss a cultural discount. Bienvenue chez les Ch’tis, Dany Boon’s 2008 film about a post-office manager sent from Provence to the far north of France, sold about 20.5 million tickets in France, second only to Titanic. Much of its humour turns on Ch’ti, the local dialect, and on French prejudices about the north. In Belgium, where much of the audience shares the language, it sold about 1.1 million tickets, equal to about a tenth of the population. In Germany it sold 2.3 million, a respectable result, but France’s admissions were equal to about a third of its population and Germany’s to about 3 per cent. In Britain and Ireland it sold about 30,000. Distribution, marketing and release dates differed between these markets, so the figures cannot isolate the discount on their own, but the film travelled best where its language did.

The Italian distributor Medusa bought the remake rights and in 2010 released Benvenuti al Sud, in which a post-office manager from near Milan is sent to a village south of Naples. The new version replaced France’s prejudices about its north with Italy’s about its south, and it sold about 4.9 million tickets in Italy, nearly ten times as many as the original had. The same idea had found a second way into the market, as a story rebuilt around local references, and this created new opportunities in production, distribution and licensing.

The discount is not fixed. When Parasite won at the Golden Globes in January 2020, its director Bong Joon-ho, speaking through an interpreter, urged audiences to overcome “the one-inch tall barrier of subtitles”. Translators, subtitlers, local distributors and critics lower that barrier for a living, and part of the value of a work abroad depends on their work.

Outside the transaction

A child who meets Paris on a cinema screen may carry that picture of it for years before going there. When the visit comes, the money goes to airlines, hotels and restaurants, and none of it goes to the film. Economists call such effects on people outside a transaction externalities. They can also be negative. Tourism that supports a city’s museums and restaurants can crowd its streets and raise what residents pay to live there. In 2024 Venice began charging day-trippers a €5 fee to enter the city on its busiest days.

Some value is held by people who never use the product at all. They may be glad that a cathedral or a museum exists, glad that others can enjoy it or keen that it should be kept for future generations. Britain’s culture department calls these non-use values. When Notre-Dame de Paris burned in April 2019, about 340,000 donors in more than 150 countries gave some €845 million towards its restoration.

It helps to keep three things apart here. An economic return is money that someone has received. A business asset, such as a brand or a catalogue, is an accumulation that may support returns later. Social and expressive outcomes, such as a public’s knowledge of its history or a creator’s satisfaction in the work, have reasons of their own. Calling them assets not yet turned into money would misdescribe them.

Who receives the returns

The previous section showed that many of those who benefit from a cultural product never pay for it. This section turns to the economic returns and to who receives them. Creative contribution matters, but on its own it does not decide the return, which depends on several conditions that work across all three kinds of business. They are the rights to the work, the channels to the audience, the audience’s attachment and the contracts that share risk, which we met in the section on supply.

Rights

Owning an object and owning the right to copy it are different things. Vivian Maier, a nanny who photographed for decades, left more than 100,000 negatives and became known only after her belongings were sold at auction in 2007. The copyright is held by her estate, which a county official administers because no heir has been found. A collector, John Maloof, owns the negatives he bought and licenses the images under an agreement with the estate. Recognition attached to Maier herself, while ownership of the negatives and control over their reproduction rested with others.

The law also protects cultural products unevenly. Copyright in a book or a song usually lasts for the author’s life and seventy years after it. The earliest Mickey Mouse, from the 1928 film Steamboat Willie, entered the US public domain only on 1 January 2024, after 95 years of protection. Later versions of the character remain protected. In the United States, by contrast, copyright largely does not protect garment designs, because the cut and shape of clothing count as useful features. Nor does US copyright protect a mere list of ingredients in a recipe. Kal Raustiala and Christopher Sprigman argued in 2006 that this “piracy paradox” helps fashion, since copies spread a design quickly, make it common and send fashionable buyers looking for the next one. Where copying is legal, businesses seem to compete more through brand, speed and presence, although this is an observation from a few industries rather than a rule.

Where a product can be copied, it can also be copied without permission. Global recorded-music revenue, as the industry body IFPI counts it, fell from $22.3bn in 1999, the year Napster launched, to $13.1bn in 2014. It has grown every year since, reaching $31.7bn in 2025, with streaming now its largest source.

Legal rights answer a narrower question than who contributed. Designs drawn from a community’s tradition may have no individual author for copyright to protect. In 2019 Mexico’s culture secretary, Alejandra Frausto, wrote to the fashion house Carolina Herrera about dresses in its Resort 2020 collection. The dresses drew on embroidery from Tenango de Doria in Hidalgo, and she asked how the community would benefit. Who holds a right, who did the work that made a design valuable and how any revenue should be shared are three separate questions. Establishing legal ownership does not by itself settle the second or the third.

Channels

The part of a cultural business that people come for is not always the part that earns the most. Live Nation, the world’s largest concert promoter and the owner of Ticketmaster, reported revenue of $25.2bn in 2025 and adjusted operating income (AOI), a measure the company defines itself, of $2.4bn (Table 2). Its concerts business produced most of the revenue at a margin of 3.3 per cent, partly because much of the money from ticket sales goes to artists. Ticketing produced about 12 per cent of revenue but almost half of the company’s AOI.

Table 2. Live Nation’s concerts and ticketing businesses, 2025

Business	Revenue	Adjusted operating income	Margin
Concerts	$20.9bn	$0.69bn	3.3%
Ticketing	$3.1bn	$1.13bn	36.8%
Whole company	$25.2bn	$2.37bn	9.4%

The company total also includes sponsorship and advertising, other businesses and corporate costs, so the two rows do not add up to it.

The two businesses are not counted alike. Live Nation records ticketing revenue net of the face value of the tickets, because it generally acts as the venue’s agent, while concerts revenue includes ticket money that is later paid to artists. Even so, in this market ticketing is the harder business to replace. An artist can choose among promoters, but a fan who wants a seat at a particular venue usually has to buy from the one company that holds its ticketing contract, often for several years. In April 2026, in an antitrust case brought by a group of US states, a jury found that Ticketmaster had monopolized ticketing at major concert venues, a verdict Live Nation is contesting. Distribution is real work, and a fee for it can be fair payment for a service and for the risk it carries.

A channel to the audience also depends on those who hold the rights. Spotify stands between the record labels and hundreds of millions of listeners, yet it pays out about two-thirds of what it earns from music to the owners of recordings and songs. In 2025 that came to more than $11bn. The money then passes through a second set of contracts, between the rights holders and the artists and songwriters they represent, so what a musician receives depends on two sets of terms. The platform still sets many of the rules. Since 2024, for example, a track has needed 1,000 streams a year before it earns any recording royalties.

Attachment

The rights to a work and the audience’s attachment to it can belong to different parties. In 2019 the record label that owned the master recordings of Taylor Swift’s first six albums was sold, and the masters went with it. Swift responded by recording the albums again. The first, Fearless (Taylor’s Version), went straight to number one in the United States in April 2021, which showed that many fans would follow her to the new recordings. The owners of the old masters kept the rights, while much of the audience’s attachment stayed with the artist. The masters changed hands again in 2020, and in 2025 she bought them back.

Attachment strengthens a position, but the return it brings still depends on the rights and arrangements through which the audience is served. Artists who hold their own rights or sell to their audience directly can keep a larger share of the revenue. They also take on more of the cost and risk that a label, publisher or platform would otherwise carry, so a larger share does not guarantee a larger profit.

Taken together, these conditions explain why the people who benefit from a cultural product, those who collect its revenue and those who created it are so often different.

Why one ledger is not enough

I ♥ NY brings the three questions together. A single design, made without a fee, left the state a licensing income and gave millions of people a symbol they recognize and use. It also helped spread an image of New York far beyond the campaign it was made for. Those outcomes went to different hands. The state has collected the licensing income, hotels and shops have benefited from New York’s image without paying for the design, and much of the renown has gone to Glaser. No single organization’s accounts capture all of these outcomes. Making sense of them means looking together at what the work achieved, the mechanisms through which it spread and the arrangements that decided who received what.

A cultural business can ask the same of its own work. For works that can be copied, much depends on how reach is built and who holds the rights and channels through which it pays. For performances and originals, more depends on how capacity, labour and scarcity are managed and who bears their cost. A business also needs to ask whether the work can be sustained. The third essay, Measuring the Culture Economy, proposes indicators for these questions.

Questions we keep coming back to

1. What has the work achieved, seen from each of the three angles, and how far have its effects travelled?
2. What has extended or limited its reach, whether copying, capacity, attention or attachment?
3. Who has benefited from it, and who has received a return?
4. What does the business hold that others cannot easily replace, whether a right, a channel or an audience’s attachment?
5. Who carried the risk, and on what terms is success shared?

Read next

• The Anatomy of the Culture Economy: the forms culture takes, and the five drives that bring people to it.
• Measuring the Culture Economy (forthcoming): a short set of indicators that apply across cultural products.

Appendix

A1. Method

The three angles and the conditions in this essay are a working framework drawn from cases, not a statistical classification, and we expect to revise them. The angles are close to earlier distinctions, such as David Throsby’s between the economic and the cultural value of a cultural good and John Holden’s between the intrinsic, instrumental and institutional value of culture. We use them as ways of looking at a product rather than as a new theory of value. The examples show how a mechanism works, not how common it is. Most come from the United States and Europe and concern well-known works, so the position of the many less prominent creators is described only in general terms. We do not discuss the policies that also shape who gets a return, such as copyright terms, collective licensing and the resale right.

Company figures are as the companies report them. Live Nation’s adjusted operating income is a measure it defines itself, and the margins of its businesses reflect different functions and costs, so they do not show how much value each business adds or what artists finally receive. Spotify’s payout figures are what recordings and songs generated for rights holders, not what artists and songwriters received. Admissions count tickets, not people, and box-office figures differ in coverage between markets; they do not separate the effect of culture from that of distribution, marketing and timing. Figures are as published by October 2026.

A2. How to cite

JFS Insights, “How the Culture Economy Works”, 2026, https://jfs.enterprises/insights/how-the-culture-economy-works/. Tables and figures are published under a CC BY 4.0 licence: you may reuse them with attribution to JFS Insights and a link to this article.

Sources

1. MoMA, Milton Glaser, I ♥ NY (concept sketch, 1976; the campaign began in 1977); Associated Press obituary of Glaser, 27 June 2020 (designed free of charge); New York State Department of Economic Development, I LOVE NY licensing and its 2023 trademark licensing tender.
2. Variety, 6 June 2020 (BTS and Big Hit’s $1 million donation); Billboard (fans pass $1 million, 7 June 2020, through One In An ARMY).
3. R. E. Caves, Creative Industries: Contracts between Art and Commerce (Harvard University Press, 2000): the properties “nobody knows” and “art for art’s sake”.
4. H. Abbing, Why Are Artists Poor? The Exceptional Economy of the Arts (Amsterdam University Press, 2002).
5. United States v. Bertelsmann SE & Co. KGaA, Penguin Random House LLC, et al., D.D.C. 1:21-cv-02886, trial of August 2022, as reported by the Associated Press and by Jane Friedman: publishing executives acknowledged that most books do not earn out their advances.
6. Netflix, announcement of Round Six (2 September 2019, later retitled Squid Game) and announcement of 14 June 2022 (1.65 billion hours viewed in the first 28 days); Hwang Dong-hyuk interviewed by Stuart Jeffries, The Guardian, 26 October 2021 (“Netflix paid me according to the original contract”).
7. M. J. Salganik, P. S. Dodds and D. J. Watts, “Experimental Study of Inequality and Unpredictability in an Artificial Cultural Market”, Science 311(5762), 2006, pp. 854–856 (14,341 participants; 48 songs; eight social-influence worlds and one independent world).
8. S. Rosen, “The Economics of Superstars”, American Economic Review 71(5), 1981, pp. 845–858.
9. Luminate, 2023 Midyear Music Report (July 2023), summarized in “Why Are Super Fans So Valuable?” (8 August 2023): 19 per cent of US music listeners, spending 80 per cent more on music each month than the average listener.
10. Official Charts Company, Kate Bush, “Running Up That Hill”: first released in 1985 (peak number 3), number one on the Official UK Singles Chart from 17 June 2022.
11. W. J. Baumol and W. G. Bowen, “On the Performing Arts: The Anatomy of Their Economic Problems”, American Economic Review 55(1/2), 1965, pp. 495–502; Performing Arts: The Economic Dilemma (Twentieth Century Fund, 1966).
12. The Wizarding World of Harry Potter at Universal Orlando (licence from Warner Bros. announced 31 May 2007; opened 18 June 2010); Warner Bros. Studio Tour London – The Making of Harry Potter (opened 31 March 2012).
13. C. Hoskins and R. Mirus, “Reasons for the US Dominance of the International Trade in Television Programmes”, Media, Culture & Society 10(4), 1988, pp. 499–515 (doi:10.1177/016344388010004006).
14. European Audiovisual Observatory, LUMIERE database: Bienvenue chez les Ch’tis (France 20,490,881 admissions; Belgium 1,076,755; Germany 2,345,158; UK and Ireland 29,837, estimated; Italy 525,804) and Benvenuti al Sud (Italy 4,927,479); Titanic, 21.8 million admissions in France; Screen Daily, Medusa to remake Welcome to the Sticks for Italy, 22 October 2008.
15. Bong Joon-ho, acceptance speech for Parasite, Golden Globe Award for Best Foreign Language Film, 5 January 2020, in Korean with English interpretation by Sharon Choi; wording as reported by Deadline.
16. Venice access fee for day-trippers, introduced 25 April 2024 (NPR).
17. DCMS, Culture and Heritage Capital: Applications of Non-Use Values: existence, altruistic and bequest values.
18. Rebâtir Notre-Dame de Paris, Donors: €845m from 340,000 donors in more than 150 countries.
19. Vivian Maier (1926–2009): vivianmaier.com (more than 100,000 negatives; the 2007 auction); estate opened by the Cook County probate court in 2014, settlement with John Maloof approved in 2016; Estate of Vivian Maier v. Bulger, 2024 FC 1267 (Federal Court of Canada, 15 August 2024), para. 21, on the estate’s copyright and the absence of an identified heir.
20. Duke Center for the Study of the Public Domain, Public Domain Day 2024 (Steamboat Willie); 17 U.S.C. §302(a) (life of the author plus 70 years).
21. US Copyright Office, Circular 33, Works Not Protected by Copyright, p. 2 (a mere listing of ingredients).
22. K. Raustiala and C. Sprigman, “The Piracy Paradox: Innovation and Intellectual Property in Fashion Design”, Virginia Law Review 92, 2006, pp. 1687–1777; Star Athletica, L.L.C. v. Varsity Brands, Inc., 580 U.S. 405 (2017), on the limits of protection for garment designs.
23. IFPI, Global Music Report 2026 (revenue series 1999–2025: $22.3bn in 1999, $13.1bn in 2014, $31.7bn in 2025).
24. Mexico’s culture secretary on Carolina Herrera’s Resort 2020 collection (Remezcla; The Jakarta Post/AFP).
25. Live Nation Entertainment, full-year 2025 results (revenue $25,201.4m; concerts revenue $20,860.7m and AOI $687.1m; ticketing revenue $3,081.2m and AOI $1,134.4m; consolidated AOI $2,366.4m) and Form 10-K for 2025 (ticketing revenue “is recorded net of the face value of the ticket”).
26. United States et al. v. Live Nation Entertainment Inc. and Ticketmaster LLC, S.D.N.Y. 1:24-cv-03973, complaint of 23 May 2024, ¶¶ 33 and 98 (exclusive ticketing contracts with major venues for many years, sometimes as long as 14); New York Attorney General, press release on the jury verdict of 15 April 2026. The Department of Justice settled its own claims in March 2026.
27. Spotify, Loud & Clear (“roughly two-thirds of every dollar Spotify generates from music”), 2026 edition covering 2025 (more than $11bn paid); Modernizing our royalty system (21 November 2023; the 1,000-stream threshold, in force from 1 April 2024).
28. Taylor Swift’s masters: Ithaca Holdings’ acquisition of Big Machine Label Group (30 June 2019); the sale of the masters to Shamrock Capital (November 2020); Fearless (Taylor’s Version), released 9 April 2021, number one on the Billboard 200 dated 24 April 2021; Swift’s repurchase of the masters from Shamrock Capital, announced 30 May 2025.
29. D. Throsby, Economics and Culture (Cambridge University Press, 2001): economic and cultural value, the latter including aesthetic, spiritual, social, historical, symbolic and authenticity value.
30. J. Holden, Capturing Cultural Value (Demos, 2004) and Cultural Value and the Crisis of Legitimacy: Why Culture Needs a Democratic Mandate (Demos, 2006): intrinsic, instrumental and institutional value.