The Cambridge Economic History of Modern Britain

INTRODUCTION

The Olympic Games in London in the summer of 2012 stood at the end of a long twentieth century in which the British economy changed from a manufacturing stalwart into a major exporter of services. The opening and closing ceremonies stood in remarkable contrast. The former related a story in which the Industrial Revolution and the welfare state figured heavily, the latter focused exclusively on music, Britain's foremost cultural export. In public perception, then, the British comparative advantage had little to do any more with manufacturing. Instead, the ceremony closed a twentieth century in which Britain benefited from a distinctive capability in media and entertainment. In the public mind the music industry's importance was far larger than its limited GDP share suggested.

Media can be seen as an infrastructure industry such as electricity or transport. Through information transmission, they helped markets exist and function; through the conditioning of morals and empathy they reduced transaction costs; through advertising they revolutionised the market structure of consumer goods industries; through educational materials they increased human capital; through the formation of expectations they increased citizens' aspirations; and, finally, they facilitated knowledge exchange and collective action that could kickstart institutional change, as has become evident so recently in the Arab spring. A contemporary economic historian might exclaim that media are everywhere except in the economic history literature, not unlike Briggs's (1960) remark that ‘The provision of entertainment has never been a subject of great interest either to economists or economic historians – at least in their working hours.’

This chapter examines three questions. First, we investigate how new media industries have arisen in Britain since 1870 and how we can conceptualise their emergence. Second, we explore what tendencies influenced the long-run evolution of each of these industries. Third, we assess the impact they had on the rest of the economy.

These questions are worthwhile because it is likely that Britain traditionally had a comparative advantage in entertainment production that it could never fully exploit internationally.