Digitalized markets

Introduction

From its original association with fingers and numerical representation (Cochoy, Hagberg, and Kjellberg 2019), to the proliferation and integration of computers and associated technologies into various spheres of everyday life, digitalization has increasingly come to affect society at large. Accordingly, the consequences of digitalization for marketing and consumption are now receiving considerable scholarly attention. Examples include its implications for consumption (Lehdonvirta 2012; Cochoy et al. 2017), consumer practices (Denegri-Knott and Molesworth 2010), market communication (Yadav and Pavlou 2013), channel integration (Verhoef, Kannan, and Inman 2015), retailer-consumer interfaces (Hagberg, Sundstrom, and Egels-Zanden 2016), consumer conceptions (Cova and Cova 2012; Belk 2014; Cluley and Brown 2015), business models (e.g. Zott and Amit 2017; Bouwman et al. 2018; Rachinger et al. 2019) as well as the blurring of boundaries between consumption and production (Cova and Dalli 2009; Cochoy 2015).

To date, however, the question of how digitalization influences markets in a broader sense has not received the same kind of attention. Indeed the situation mirrors the observation made by Geiger, Kjellberg, and Spencer (2012) about the relative lack of attention to Markets compared to Consumption and Culture in this journal. While the general theme of markets has been strengthened in recent years, research on digitalization has still focused more on its consequences for consumption and culture. This special issue is an attempt to redress this balance by putting digitalized markets center-stage.

To be sure, all markets are to some extent digitalized as they involve economized exchanges, which require the translation of values into some form of price (Simmel [1907] 2004, 79–101). Besides this principal observation, early attempts to address digital markets primarily sought to theorize the effects of contemporary, IT-related digitalization for the realization of idealized, textbook markets. These include studies simulating the role of digitalization in improving market performance (Yang, Hu, and Zhang 2007), assessing the likely effects on price formation of increasingly transparent supply and demand (Bakos 1997), and assessing the effect of direct contacts between buyers and sellers (Alba et al. 1997). We question whether this kind of speculative theorizing focused on the realization of ideal markets accurately captures the market effects of digitalization. First, it fails to recognize the centrality of selling the digital as a “B2B2C” process (cf. Cochoy 2016) that involves the formation of markets for digital market devices alongside any changes those devices may have on existing markets. Second, it fails to recognize the variation in market forms that may emerge as a consequence of digitalization. As digitalization becomes increasingly important and prevalent in a wide range of markets, there are opportunities to investigate “really existing digitalized markets,” to paraphrase Boyer (1997).

Against this backdrop, the call for this special issue encouraged empirically-based theorizing on the consequences of digitalization for mundane markets. Admittedly, the process of digitalization has been going on for quite some time. Even if we disregard the digitization implied in making prices available to customers and focus on the more recent digitalization, we are still talking about a development stretching over more than 50 years, from the introduction of the first machine-readable codes in supermarkets and elsewhere (Kjellberg, Hagberg, and Cochoy 2019). Still, Castells’ (1996) prophecy that the main thrust of “the new economy” would be confined to the fields of information technology and financial markets for some time yet, proved largely correct. Gradually, however, digitalization has started to seep into more and more areas of everyday life, making it relevant to question how the current wave of digitalization contributes to change the workings of mundane markets. The five contributions that ended up in this issue (see below for an overview of the articles) reflect this interest in the effects of digitalization on mundane consumer markets, covering markets for personal transportation, temporary accommodation, fashion clothing, concert tickets, and web shopping.

There are three general starting points for these explorations of digitalized markets. First, markets are seen as plastic phenomena (Nenonen et al. 2015); they can change/be changed but can also retain their (new) form/function, at least for some time. From this vantage point, the far-reaching societal changes ushered by digitalization represents a possible engine also of market change. Second, digitalization is approached as an ongoing transformation, which serves to highlight the processual aspect of digitalization rather than view digitalized markets as a (single) steady-state (cf. Hagberg, Sundstrom, and Egels-Zanden 2016; Cochoy et al. 2017). Third, the process of market digitalization is considered to be open-ended rather than predetermined, producing uncertain and unexpected outcomes that further underscore the importance of empirical exploration.

In this editorial, we first present and discuss three aspects of digitalized markets on the basis of the contributions to the special issue: elements, processes and forms. We then introduce the individual articles and summarize their empirical, theoretical and methodological contributions. Finally, we outline some suggestions for future research.

Digitalization and the transformation of markets: elements, processes and forms

Broadly, the digitalization of markets can be conceived as comprising transformation of three main aspects of markets. First, it changes the elements of markets, such as the actors, devices, objects and places that constitute “the stuff that markets are made of” (Roscoe 2019). Examples include the hybridization of market actors (e.g. Ritzer and Jurgenson 2010; Belk 2014), digitalization of products (e.g. Magaudda 2011; Watkins, Denegri-Knott, and Molesworth 2016; Mardon and Belk 2018) and the creation of virtual market settings (e.g. Crewe 2013). Second, digitalization alters market processes, or developmental event sequences (Van de Ven 1992), by changing the activities that perform the market and thus how markets develop and take form, e.g. exchanging, pricing, transacting, valuing, representing (Callon, Méadel, and Rabeharisoa 2002; Hagberg and Kjellberg 2015; Zwick and Denegri Knott 2009). Third, digitalization has implications for the overall forms that markets assume in terms of how market elements and processes are linked and organized. Such changes may give rise to novel market structures, orders, logics, governance modes and institutional arrangements (Araujo, Kjellberg, and Spencer 2008; Vargo and Lusch 2016), including how markets are related to other markets and to society at large. This third aspect also relates to current discussions about what markets are and about differences between types of markets (e.g. Aspers 2011; Geiger, Kjellberg, and Spencer 2012; Mele, Pels, and Storbacka 2015; Nenonen et al. 2015; Callon 2016). Ultimately, it raises questions about “digital markets” as something distinct from other types of markets.

Digitalized market elements

In terms of how digitalization transforms the elements of markets, the contributions exemplify both transformation of traditional market elements and the formation of new elements and combinations.

First, and perhaps most obviously, digitalization has agential consequences in markets. It affords new abilities to some entities while it renders other entities less capable. In relative terms, it causes a redistribution of influence over market outcomes both between incumbent actor groups and between such incumbents and new groups of actors. In some cases, the redistribution of agency has emancipatory and empowering effects, making it possible for previously disadvantaged actor groups to have a palpable influence on the markets they engage in. In other cases, the process quickly restores power asymmetry via the formation of new centers of power (e.g. Cusumano, Gawer, and Yoffie 2019). Market digitalization involves the transformation of traditional market actors, like consumers, who become differently equipped and empowered. For instance, smartphones and social media afford consumers with new abilities to interact allowing them to take on new roles as shown by Schöps, Kogler, and Hemetsberger (2019). Digitalization has also brought entirely new market agents into being, such as the ticket-buying bots studied by Duffy, Reid, and Finch (2019) and the http cookies studied by Mellet and Beauvisage (2019). Furthermore, digitalization has allowed new and sometimes unexpected actors to compete against traditional providers in some markets. The most frequently discussed example of this is probably the rise of consumer-producers engaging in peer-to-peer exchange (Ravenelle 2019). Other examples include start-up tech companies challenging incumbents in established markets, e.g. Uber becoming a competitor to taxi operators (Chimenti 2019).

Second, digitalization contributes to transform the objects of exchange, i.e. the products and services that are subject to market exchange, in several ways. First, it affords the merger of previously distinct exchange objects, perfectly illustrated by the ubiquitous smartphone competing in the music, photography, media, and payment markets, all at once. Second, it affords the full or partial transformation of physical products into digital files that can be downloaded or streamed, like concert tickets (Duffy, Reid, and Finch 2019) and music (e.g. Magaudda 2011; Fuentes, Hagberg, and Kjellberg 2019). Third, digitalization may transform the way in which such objects are exchanged, e.g. from paying for single items to paying for access, as well as enabling new configurations of ownership and possession (Watkins, Denegri-Knott, and Molesworth 2016). Finally, digitalization produces entirely new exchange objects, such as when data about online behavior becomes an object of exchange in itself in the market for online advertising (Mellet and Beauvisage 2019).

Third, digitalization contributes to change market settings. As with the other elements, this includes both the transformation of existing settings and the emergence of entirely new ones. In terms of changes to existing settings, consequences in terms of scale and reach dominate. Several contributions illustrate how digitalization has enabled marketplaces to operate at larger scale and with more global reach than before, including second-hand items (Duffy, Reid, and Finch 2019), temporary accommodation (Ravenelle 2019) and transport services (Chimenti 2019). There are also examples of the formation of entirely new market settings. The most obvious example in the current issue is the formation of online advertising exchanges based on the http cookie (Mellet and Beauvisage 2019). More commonly, digitalization has led to the addition of new settings to existing markets, e.g. social media platforms. This is illustrated by Schöps, Kogler, and Hemetsberger (2019) in their study of how a focal brand and its consumers use Instagram as a market setting in the fashion market.

Since these changes in market elements brought about by digitalization are neither instantaneous nor uniform, they direct attention to the process aspect of digitalization.

Digitalization of market processes

The digitalization of market processes refers both to a transformation of specific market activities (e.g. exchanging, pricing, advertising, reviewing, representing) and to the overall processes through which markets form and change (e.g. via some form of aggregation effect, via explicit change efforts, or via gradual adjustments over time; see Kjellberg and Helgesson 2007b).

On the one hand, digitalization of market processes implies an altering of “traditional” market activities and processes such as pricing (Duffy, Reid, and Finch 2019), market exchange (Ravenelle 2019; and Duffy, Reid, and Finch 2019), and how markets are represented (Chimenti 2019). All articles provide examples of markets in which exchange processes have been altered due to digitalization, including transportation (Chimenti), tickets (Duffy, Reid, and Finch), accommodation (Ravenelle 2019), advertisements (Mellet and Beuvisage 2019), and fashion shopping (Schöps, Kogler, and Hemetsberger 2019). Digitalization also provides new conditions for agencing in the sense that digital tools can transform some actors’ capacities to act in markets. Related to such changes, digitalization may also trigger concerns among market actors who become disadvantaged (Duffy, Reid, and Finch 2019).

On the other hand, digitalization of market processes brings “new” activities and processes into play. Examples include the ongoing “datafication” that is central to several of the studied processes of market digitalization and the specific “cookification” of online advertising analysed by Mellet and Beuvisage (2019). The way that markets take form through such activities may differ significantly and range from explicit and highly publicized efforts to realize particular versions of the ridesharing market (Chimenti 2019) to the relatively silent arrangement of “a myriad of entities” into a cookie-based market infrastructure for online advertising (Mellet and Beuavisage 2019). In the latter case, the http cookie developed into a dramatically different entity than the original invention. This underscores that market digitalization is inherently uncertain and dynamic, and depends on the actions of multiple actors who contribute to, adjust and modify its course.

As noted above, a central aspect of digitalization in several of the studied markets is that of scaling, usually operating via the combination of previously local markets into large-scale global ones. A key aspect of this process is how digitalization can contribute to mitigate or remove classic obstacles to market expansion. In the case of Airbnb (Ravenelle 2019), for example, digital payments, reviews, ratings, and online protection mechanisms have reduced obstacles against exchanging with strangers (see also Chimenti 2019). Generally speaking, the process of scaling has been central to the emergence of digital market platforms and ecosystems (Constantinides, Henfridsson, and Parker 2018), which in turn has affected the resulting market forms.

Digitalized market forms

The third aspect of digitalized markets concerns the overall forms that these markets assume and raises questions about the extent to which they are distinct from other types of markets. Digital(ized) markets are obviously both similar and different to their analogue counterparts. Broadly speaking, both digital and analogue markets co-ordinate economized exchanges between actors who are ascribed accountability for the exchanges that they enter into (Callon and Muniesa 2005; Nenonen et al. 2015). That said, and as discussed above, the actors that engage in these exchanges are differentially equipped, the objects of exchange differ, the way in which exchanges are realized differ, etc. But this is hardly new; real markets have always been heterogeneous, a fact that is often forgotten in the presence of powerful ideal models of what markets should be like. In this sense, digital markets are no different from other markets; they also vary in character.

However, a particular type of competition marks many digital markets. Rather than disintermediation, digital markets come with new forms of intermediation and new intermediaries, such as digital platforms (e.g. Gawer 2014; Kenney and Zysman 2016; Ramaswamy and Ozcan 2018; see also the contributions by Chimenti 2019; and Ravenelle 2019). In many cases, this results in competition between platforms rather than, or in addition to, competition between sellers of individual goods. This is not a new phenomenon, the distributive trades have always included a measure of this, sometimes referred to as “intertype competition” (Palamountain 1955), but it may have intensified. Partly, this is fueled by venture capital and the strategy of “acquiring monopoly positions” (Mellet and Beuavisage 2019). Intertype competition makes “assortments” a central facet of digital markets. On the supply side, platform providers must on the one hand offer the same as everybody else to be attractive, but on the other, seek to differentiate themselves (e.g. through their own content production). On the demand side, platforms need to “deliver” key customer groups in order to be attractive to content providers.

If we restrict ourselves to contemporary phenomena that are typically associated with digital markets, such as the above-mentioned platforms and various forms of e-commerce, there is little support for arguing that they are being organized in ways that differ fundamentally from analogue markets (Kjellberg and Helgesson 2007b). Bringing digital markets into existence requires market-making investments in infrastructures that support standardized economic exchanges (e.g. Constantinides, Henfridsson, and Parker 2018; Mellet and Beauvisage 2019). So do analogue markets (Burr 2014; Kjellberg and Helgesson 2007a). Bringing digital markets into existence requires establishment of certain norms and rules concerning how those exchanges are to take place (e.g. Jacobides, Cennamo, and Gawer 2018; Ravenelle 2019). So do analogue markets (Christophers 2015; Kjellberg and Olson 2017). Bringing digital markets into existence requires the collection, compilation and dissemination of images that depict certain exchanges as taking place on a particular market (e.g, Chimenti 2019). So do analogue markets (Bjerrisgaard and Kjeldgaard 2012; Pollock and Williams 2009).

Nonetheless, some of the changes associated with digital markets do seem to influence how these things play out, and thus alter the dynamics. First, while several of the characteristics of the digitalized markets analyzed in the articles can be found in traditional markets as well, some features are of particular importance when it comes to understanding and analyzing digitalized markets. This includes their fluid and networked character, which enables scaling and promotes certain dynamics (Schöps, Kogler, and Hemetsberger 2019). There is also a measure of hybridity in many digitalized markets, either emanating from their dual status as formal organizations and marketplaces (like Airbnb, Ravenelle 2019), or their combination and blurring of platforms, infrastructures and markets (e.g. Kornberger, Pflueger, and Mouritsen 2017; Plantin et al. 2018). Further, digitalized markets are characterized by multiplicity. They are multiple and overlapping with other markets (Chimenti 2019), including other digital markets as well as more traditional markets that they are likely to affect and become affected by (Duffy, Reid, and Finch 2019). Digitalized markets are also often multisided (e.g. Rochet and Tirole 2003; Boudreau and Hagiu 2008; Gawer and Cusumano 2014). While there are several examples of traditional markets that are two-sided in the sense of attracting distinctly different customer groups, for example the newspaper, credit card, and gaming console markets, this becomes a key feature for digital platform markets that combine multiple user groups including buyers, sellers, advertisers, and so on.

Second, these characteristics of digitalized markets give rise to numerous controversies and regulatory concerns (e.g. Cusumano, Gawer, and Yoffie 2019). This includes controversies concerning particular versions of digital markets (Chimenti 2019) as well as the relationships between markets, for example between the primary and secondary ticket markets analyzed by Duffy, Reid, and Finch (2019). Furthermore, while regulatory change has always been reactive, the scale and reach of digital markets exposes the limits of current jurisdictions to a greater extent. Digital markets create a need to establish normalizing processes at other levels so that they correspond to how market-shaping entrepreneurs envisage their markets. (Of course, these challenges multiply if we also consider the various illegal digital markets that have formed in the past decade.)

Third, the above-mentioned characteristics of digitalized markets and the controversies that surround them produces situations where competition between markets is more important than competition in markets. Rather than the gradual, meandering process of market formation that has often been recorded in analogue markets (with exceptions, of course), we now see indications of a quicker process essentially funded by spectacular amounts of venture capital with the clear aim of forming and “buying up”/monopolizing the market at the same time (Mellet and Beuvisage 2019). The shifting powers and new asymmetries created in digital markets may reduce customer/buyer influence, despite the alleged freedom and in principle access that these markets offer. In the short term, this is unfortunate and may require regulatory action to safeguard the interests of certain groups. In the long term, it could be detrimental to the primary economic role of markets: that of generating development.

The individual articles

This special issue includes five original empirical studies into the processes and consequences of market digitalization. The empirical contexts vary: one article deals with a market for business-to-business exchange, that of online advertising (Mellet and Beauvisage 2019), one deals with a market for business-to-consumer exchange, that of fashion clothing (Schöps, Kogler, and Hemetsberger 2019), while the final three deal with markets that mix business-to-consumer and peer-to-peer exchanges, the markets for temporary accommodation (Ravenelle 2019), ridesharing (Chimenti 2019) and secondary ticket sales (Duffy, Reid, and Finch 2019).

All articles employ quite specific concepts to address particular facets of market digitalization. Three of the articles adopt and develop concepts that seek to capture the connected/structured/networked character that is typical of meso-level phenomena like markets. Mellet and Beauvisage employ the notion of market infrastructure (Kjellberg, Hagberg, and Cochoy 2019) as a way of illuminating the often hidden or opaque socio-technical structures on top of which new digital markets form. In a similar vein, Schöps, Kogler, and Hemetsberger use the notion of socio-material assemblages (DeLanda 2016) to pinpoint how actors engage in normalization efforts in digitalized markets. Finally, Ravenelle plays on Zelizer’s (2010) notion of circuits of commerce by proposing the formation of social circuitry as a corollary to and way of compensating for the thin market interface offered by digital platforms. The remaining two articles instead focus on the processual aspect of market digitalization. Duffy, Reid, and Finch employ the notions of agencing (Cochoy, Trompette, and Araujo 2016) and concerning (Mallard 2016) to denote key processes of market development that are triggered and/or affected by digitalization. Chimenti, finally, employs Callon’s (2007) notion of performation struggles as a way of understanding the process through which multiple versions of digitalized markets proliferate.

While the issue focuses on the consequences of digitalization for our conceptualization of mundane markets, the five articles also provide insights into how such markets can be productively studied. Most importantly, taken together, they offer a compelling argument in favor of methodological pluralism. That is to say: there is no one best way in which to approach the complex changes caused by the digitalization of markets. Instead, the articles show there are several ways in which such changes can be productively interrogated in order to illuminate specific aspects and consequences of digitalization. Mellet and Beauvisage exploit methodological insights gained from social studies of science and technology (STS) to assist in unpacking the complex market infrastructure formed around the http cookie. Ravenelle makes use of the classic sociological in-depth interview to unearth the institutional work that Airbnb hosts engage in. The remaining three articles in various ways exploit the opportunities offered by digitalization itself. Schöps, Kogler, and Hemetsberger exploit new forms of visual, textual and networked data (hashtagged consumer and brand posts and related comments on Instagram) as a resource for quantitatively studying the discursive dynamics that digitalization gives rise to. Chimenti and Duffy, Reid, and Finch instead use the controversies that both follow from and fuel the process of market digitalization as a methodological resource in their articles. Finally, it is worth noting that several of the studies use mixed methods and combine a variety of data sources in their efforts to shed light on market digitalization and its consequences.

Mellet and Beauvisage: the cookie-based market for online advertising

This article looks “under the hood” of the digital commercial system in which consumers increasingly engage on a daily basis. Specifically, the authors investigate how the market for online advertising works. The focus is on the ubiquitous http cookie, a small and innocuous piece of code that in fact serves as the basic brick for an entire market infrastructure. Indeed, the concept of market infrastructure is at the heart of the article. The authors trace how a cookie-based market infrastructure gradually developed and transformed the market for online advertising due to the ability of the cookie to turn behavioral information into data assets and attach these to advertising products. This market infrastructure is shown to perform three functions: (1) it produces limited yet extensive knowledge about individual consumers’ properties and behaviors; (2) it allows this knowledge to be aggregated and capitalized by actors in the online advertising industry; and (3) it provides marketers with a sophisticated means of targeting their advertising efforts to specific consumers, thus directly supporting market coordination.

The article details step-by-step how the original cookie from 1994 became the foundation upon which a highly complex market eco-system for online advertising formed. Each successive step in this process of “cookification,” from first-party cookies, via third-party cookies and ad networks, to full-blown ad exchanges, is associated with a particular market arrangement. While the resulting cookie-based infrastructure is still in place and still exerts considerable influence, the authors also trace more recent developments that threaten its continued dominance, notably the growth of cookie-less mobile devices, regulatory changes (like the EU GDPR regulation), and competing, platform-based infrastructures (Facebook and Google). In line with previous work on market infrastructure (Kjellberg, Hagberg, and Cochoy 2019), they show how some of these challenges become adjusted to the extant infrastructure so that even when the cookie itself is made redundant, the infrastructure it helped produce is reinforced. In contrast to this, the challenge from platform-based advertising sales instead amounts to the construction of alternative market infrastructures that support monopolistic alternatives to the open cookie-based market for online advertising.

Chimenti: conceptual controversies in the sharing economy

Using a familiar trope from STS, Chimenti turns the often-noted conceptual confusion that surrounds the sharing economy into a topic in its own right. Specifically, he investigates how alternative conceptions of ride-sharing matter for the formation and change of the Swedish ride-sharing market. In ride-sharing, digitalization leads to a convergence of the previously quite distinct offerings of taxi services and ride-sharing. Incumbent actors in both these sectors, as well as new entrants, use the same kinds of digital tools (apps, platforms, etc), making their offerings more similar.

It is quite clear that digitalized ride-sharing is very different from previous, analogue versions. The digital tools allow for a more idealized market form of economic co-ordination. Platforms, apps, peer reviews, etc. make it possible to match strangers relatively safely and quickly. Despite this, Chimenti notes that the market-shaping process that creates this new and different market is very similar to other market-shaping processes. One central aspect of this process concerns the establishment of market boundaries – what offers and actors are (to be) included in or excluded from the market? This gives rise to controversies, enrollment efforts, attempts to reduce ambiguity, etc. The resulting boundary work thus essentially revolves around how to interpret the concept of “sharing” when applied to markets.

Interestingly, Chimenti shows that this work is not primarily a debate concerning the interpretation of what is or is not “sharing.” Instead, actors engage in various activities to make market reality more like their preferred version or interpretation of sharing. He argues that this can best be described in terms of a performation struggle between different conceptual versions (Callon 2007). In terms of specific performative effects that this struggle gives rise to, Chimenti shows that the conceptual controversies concerning what sharing is or is not are productive in shaping the market for ride-sharing in several ways. They affect who gets involved in the process (e.g. incumbents, challengers, regulators), what issues are addressed (e.g. safety, legality, taxation), and how these issues are tackled (e.g. via public debate, market competition, legal actions, and expert inquiries).

Ravenelle: market hybridization in the sharing economy

Continuing the theme of sharing, Ravenelle studies how Airbnb hosts in New York City seek to mitigate the various risks associated with their participation in the market for temporary accommodation. The crux of the issue is that most forms of short-term rental are illegal in New York. Thus, despite being active on a legitimate market platform, the hosts often breach local regulations.

Ravenelle focuses on the work that hosts engage in to create a social circuitry “on top of” the formalized and thin exchange system provided by Airnb. This circuitry consists of the wider community of hosts and serves as a point of reference concerning norms, practices, etc. However, it is not a classic social network since the hosts rarely meet or know each other personally. Moreover, its formation reverses classic sociological insights in that the desire to consummate economic transactions leads actors to form the circuit, rather than the other way around. The resulting circuitry is also a bleak copy of the rich social web that Zelizer (2010) associates with circuits of commerce; what is formed is the guise of personal relationships between hosts and guests, not actual relationships.

Airbnb contributes to this by prompting hosts and guests to supply information about themselves that is typically not available to third parties. The profiles, listings and the message exchanges that take place prior to the economic transaction all serve to build this facsimile relationship. The reciprocal reviewing system further serves to create social pressure to conform, since there is always a risk of “retaliation.” In this sense, one may even speak of two-sided panoptic effect that disciplines the reviewers in addition to the reviewed (Foucault 1991). The result is on the one hand rating inflation and on the other the development of more subtle cues that hosts share under the guise of favorable reviews.

In contrast to previous work highlighting the role of distinction in sharing markets, the hosts regard the monetary component of the Airbnb transaction favorably compared to a classic sharing arrangement. First, without monetary exchange other forms of compensation may be expected, notably payments in kind. Second, damages may create problems under classic sharing, but is dealt with via deposits in Airbnb. Finally, the relatively high cost of an Airbnb rental serves as a filtering device and risk reducer with respect to theft, etc.

Duffy, Reid, and Finch: the digitalization of primary and secondary ticket markets

This article explores the controversial digitalization of ticket sales in the UK. Concert tickets have long been sold via a primary and a secondary market. The latter results from both a need and an opportunity. First, consumers who have bought tickets to an event but find themselves unable to attend want to resell their tickets. Second, the fixed price policy for tickets offers an arbitrage opportunity for speculators to resell tickets at higher prices closer to the event. Duffy et al. show how the introduction of digital technologies has significantly changed these markets.

Digitalization has contributed to re-agence actors in ways that have created significant market asymmetries. In the primary market, there are essentially two types of buyers competing for the tickets: individual consumers wanting to see their favorite artists live and professional ticket resellers who acquire large quantities of tickets to resell in the secondary market. With digitalization the former group has been severely disadvantaged; today, professional ticket touters use digital bots who are much better at buying tickets in a digital environment than individual humans, quite similar to the rise of HFT in financial markets (MacKenzie 2018).

This has contributed to shift focus from the primary to the secondary market, where the bulk of concert tickets now find their ultimate buyers. The prices at which tickets resell in the secondary market may be twice as high as in the primary market. One key aspect of the development is thus that the market object – the ticket – loses one of its key qualities when moving from the primary to the secondary market: its preset price. In the secondary market, prices fluctuate as do supply of tickets. Since the resellers can stock up large quantities of tickets (to the extent that the primary market is “sold out”) they are able to control supply and create a situation of scarcity in the secondary market.

These changes have triggered outrage and considerable debate over what is just and how to organize the primary market to produce justice. Concerned groups include fans, government, as well as artists. Similar to the article by Schöps, Kogler, and Hemetsberger (see below), the authors show how a coalition of actors (fans, regulators, and artists) is formed to influence the market. This is done both via public regulation and via self-imposed measures on behalf of the event organizers to counteract the success of bots.

Schöps, Kogler, and Hemetsberger: digital dynamics in the fashion market

This final article focuses on one specific aspect of the digital transformation of the fashion market: the spread of hashtagged visual and textual brand and consumer conversations on Instagram. Specifically, the authors study how the brand American Apparel and some of its consumers develop a common visual rhetoric in opposition to mainstream fashion discourse. Based on their study, they argue that Instagram has become a new marketplace/market site in the fashion market where consumers engage in conversations with each other and with preferred brands, relying primarily on visuals and discursive links. As part of this practice, hashtags become devices to build new market assemblages, for instance to establish standards or shared understandings concerning body aesthetics and beauty – taste regimes (Arsel and Bean 2013).

The authors specifically study the market dynamics induced by American Apparel and some of its consumers, who collectively frame a visual rhetoric that seeks to infiltrate the aesthetic ideologies of the mainstream fashion market, contesting the mainstream aesthetic ideal for human (female) bodies. As part of these efforts, the authors point to the practice of citation – the forging of discursive links between disparate textual and visual entities. These citations to other entities are used to form points of reference and can either be straight and direct, demonstrating compliance with certain ideals, or inverted, indicating irony, sarcasm, disbelief, questioning etc. The ease with which one can form such discursive assemblages makes some digital marketplaces hotbeds for cultural production.

In line with previous work on the fashion market (e.g. Scaraboto and Fischer 2013), the authors show that digitalization allows a more diversified set of market actors to engage with, shape and change the market. Notably, it has an empowering or agencing effect on consumers who post content that (potentially) influences market-level understandings of fashion. There are two specific ways in which this plays out in the studied case: First, the brand provides a digital megaphone by citing consumer-generated content. Second, consumers use hashtags associated with the mainstream fashion market to link their alternative, body-positive discourse to that market and hence influence its discourse.

Future research on digitalized markets

Altogether, the five articles in this issue make important contributions to our understanding of digitalized markets both through their rich empirical accounts of a variety of market contexts and through conceptual developments that improve our ability to analytically deal with the market consequences of digitalization. Nonetheless, the topic of digitalized markets will undoubtedly continue to be among the most important ones for years to come, not least due to new issues that arise in this on-going transformation. One example of this is the rapid developments in the area of artificial intelligence, which are likely to raise a number of challenging market-related issues that to some extent mirror but also go beyond the ones addressed in this special issue.

To engage with such future challenges, the methodological plurality represented by the articles in this special issue, both as a totality and article-by-article, will continue to be an important ingredient. In particular, it is important that future research efforts continue to combine the novel opportunities offered by digital methods with more traditional social science methods to ensure knowledge production that is both technologically and culturally sensitive.

Finally, while several of the articles touch upon the consequences of digitalized markets, the continued process of digitalization will require further research into both its short-term and long-term consequences for consumers, markets and society. The long-term implications of market digitalization are particularly challenging to assess and address given that any political/regulatory intervention will necessarily coincide with a constant stream of new technologies and market applications. In this respect, it is worth recalling Callon’s (2009, 541) assertion that a market that functions well is one that “organizes the discussion of the matters of concern produced by its functioning and the framings/overflowings that it entails.” Identifying ways in which digitalized markets can be organized to ensure such reflexive ability represents a key area for future research.

Acknowledgements

We would like to thank the authors of the individual papers and all the reviewers for their contributions. We also express our gratitude to Dannie Kjeldgaard for his support of the Special Issue and Luis Araujo for commenting on an earlier version of this editorial.

Additional information

Funding

This Special Issue is an initiative resulting from the research program Digcon: Digitalizing consumer culture supported by The Swedish Research Council [grant number 2012-5736].