Thursday, March 27, 2014

Stockholm's music cluster

MR points to this fascinating article highlighting Sweden's remarkable success in the field of pop music. Since the seventies, starting with ABBA, Swedes have dominated pop music scene with music bands, singers, song-writers, and producers. Song writers and producers from Stockholm have been behind the success of a long line of singers that include Katy Perry, Lady Gaga, Madonna, Usher, Avril Lavigne, Britney Spears, The Backstreet Boys, Pitbull, Taylor Swift, One Direction, Maroon 5, Kelly Clarkson, and many others. It writes,
Sweden, and in particular Stockholm, is home to what business scholars and economic geographers call an “industry cluster”—an agglomeration of talent, business infrastructure, and competing firms all swirling around one industry, in one place. What Hollywood is to movies, what Nashville is to country music, and what Silicon Valley is to computing, Stockholm is to the production of pop. In fact, Sweden is the largest exporter of pop music, per capita, in the world, and the third largest exporter of pop overall. And in recent years, the country has seized not just the message, but the medium as well: As the industry moves toward a distribution model that relies on streaming music services, the Stockholm-born Spotify is a dominant player, with 24 million users per month.
The article highlights that this success was the unintended result of a concerted arts-education campaign by Swedish authorities, supported by Church and Conservatives, initiated in 1940s to stamp out the growing influence of degenerate music from America and encourage more uplifting classical music. It writes,
Municipal schools of music spread across the country... Many of the schools, which were often free to attend, allowed students to borrow instruments, as if from a public library, for a nominal fee... municipal music schools increased the odds that Swedes would discover their talents, while also giving the country an unusually music-literate domestic audience. Other knock-on effects were less obvious. The municipal schools provided an indirect subsidy to the music industry itself, for instance, by offering a steady supply of flexible teaching jobs to musicians... Outside the classroom, the government also encouraged young musicians with subsidies for practice space and even practice itself... 
And perhaps most importantly, Sweden’s municipal schools gave rise to social networks of musically inclined youth—networks that ultimately formed the basis for the Swedish capital’s music industry cluster. So much information is transferred in bars, informal institutional settings, in social networks, and in the movement of people between firms... Sweden’s capital city was especially conducive to this kind of transfer. The size of Stockholm is probably perfect... Everyone knows everyone. If you go into a music store to buy strings, you know the clerk because you played with him when you were little. If you go to a record label, you know the people there.
This is yet another addition to the literature on the emergence of talent cluster and regional comparative advantage. The larger message I carry from this are two-fold.

1. Such outcomes are largely serendipitous. Post-facto one can point to the series of government interventions as elements of a consciously designed plan. However, as is evident from this story (and from all others), the emergent dynamics of such processes are unpredictable. Even when they produce the intended result, its takes a long period of incubation, with several ebbs and flows.

2. Agglomeration advantages are as important to knowledge-based industries as to traditional brick and mortar ones. The bits and bytes of pop music industry reside in the brains of human beings and is therefore, theoretically atleast, amenable to diffused and dis-aggregated growth. But, as the example of Stockholm highlights, direct human interaction plays a central role in the process of creation and transfer of ideas that drive even this industry. 

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