Make, Buy or Borrow? Creative industry business models from public domain inputs

Author: Kris Erickson (University of Glasgow)

Abstract
This paper explores the mechanisms by which creative firms generate and capture value from the public domain. Given the non-excludable qualities of public domain materials, motivations for firms to appropriate and develop them remains under-explored, as do the strategic options available to firms seeking to generate and capture value from open public domain inputs. Management research has explored the ‘make or buy’ decision in the context of creative businesses. Among creative SMEs, employee motivations and creative orientation are primary concerns for managers. Original projects are preferred, compared with work-for-hire contracts which offer few opportunities for creative freedom. This paper explores a third option in the make or buy decision, which is to ‘borrow’ from the public domain. Findings from 23 firms involved in this study suggest 4 distinct business models with different approaches to value creation and capture, and with emphasis at different stages in the value chain. Overall, non-excludability of inputs was not a limiting factor in uptake by any of the firm types. Firms relied on creative core capabilities, speed to market, and audience co-production enabled by non-exclusivity to sustain competitive advantage. Creative managers reported use of both licensed and public domain IP across the board. I propose that a ‘private-collective’ model of innovation describes these creative firms’ strategic decisions concerning IP protection.

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