Transcript The Economy of Culture in Europe

THE ECONOMY OF CULTURE IN EUROPE
Study prepared for the European Commission
(Directorate General for Education and Culture)
October 2006
With the support of:
MKW Wirtschaftsforschung
Saarbrücken, Innsbruck, München
The Ambition
• Put a figure on creative value
• Consider Europe’s competitiveness in the
creative sector
• Provide evidence that the cultural and creative
sector deserves support from policy makers
• Present a strategy for a creative Europe
• The context: the Lisbon Strategy
The Methodology and its limits
• Scarcity of available statistics
• No standardised data categorisation at EU level
Developed own Methodology:
• Eurostat/Amadeus/Unesco/EAO databases
• Inventories of existing studies
• Industry profiles
• Case Studies
Excludes: Self-employed, small companies, large
parts of the public economy, electronic commerce
(“new economy”)
Results are a conservative estimate
Delineation of the cultural & creative sector
CIRCLES
SECTORS
SUB- SECTORS
CORE ARTS
FIELD
Visual arts
Crafts
Paintings – Sculpture – Photography
Performing arts
Theatre - Dance – Circus - Festivals.
Heritage
Museums – Libraries - Archaeological sites Archives.
CIRCLE 1:
CULTURAL
INDUSTRIES
CIRCLE 2: CREATIVE
INDUSTRIES AND
ACTIVITIES
CIRCLE 3: RELATED
INDUSTRIES
Film and Video
Television and radio
Video games
Music
Recorded music market – Live music performances –
revenues of collecting societies in the music sector
Books and press
Book publishing - Magazine and newspapers
publishing
Design
Fashion design, graphic design, interior design, product
design
Architecture
Advertising
ICT manufacturers
Cultural Tourism
Quantifiable socio-economic impact of
the cultural and creative sector
TURNOVER

The sector turned over more than €654 billion in 2003
• Car manufacturing industry was € 271 billion in 2001.
• ICT manufacturers was € 541 billion in 2003 (EU-15 figures)
VALUE ADDED
TO EU GDP

The sector contributed to 2.6% of EU GDP in 2003
 Real estate activities accounted for 2.1%
 The food, beverage and tobacco manufacturing sector accounted for
1.9%
 The textile industry accounted for 0.5%
 The chemicals, rubber and plastic products industry accounted for 2.3%
CONTRIBUTION
TO EU GROWTH

The sector’s growth in 1999-2003 was 12.3% higher than the growth of the
general economy.
EMPLOYMENT

In 2004 5.8 million people worked in the sector, equivalent to 3.1% of
total employed population in EU25. Total employment in the EU decreased
in 2002-2004, employment in the sector increased (+1.85%).
Contribution of the European cultural and creative sector to
the national economies
Turnover 2003, all sectors included (€ million)
140.000
132.682
126.060
120.000
100.000
84.359
79.424
80.000
61.333
60.000
40.000
33.372
22.174
20.000 14.603
18.155
10.677
10.111
5.577
612
318
6.875
6.922
4.066
6.235
508 759 673 23
6.358
1.771
2.498
14.841
884 2.205
212
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Source: Eurostat and AMADEUS
Data elaborated by Media Group
“Not everything that counts can be
measured, and not everything that can be
measured counts”
Albert Einstein
Contribution to European competitiveness
The unrecognised competitiveness of the sector
• The cultural & creative sector suffers from stereotypes
when it comes to assessing its economic performance
• Culture often perceived as a non-economic activity
• Common perceptions:
– Individual artists
– Heavily subsidised public organisations
– “Cottage industry”
Assessing the competitiveness of the sector
Productivity: ratio between value added and employment costs
• Average productivity level was 1.57 in 2003; similar to
productivity level in other service sectors (typical productivity
level of service industries included between 1.2 and 1.9)
Profitability: operating margin of companies
• Average European level is 9% in 2003 (profit margin of 5% up
to 10% considered as an indication of a healthy level of
profitability for service industries)
Intangible assets: ratio on turnover
• EU25 Average is 4.2% (by comparison, the average ratio for
the Finnish ICT sector is 4.8%)
Cultural Employment – Main Findings
• A total of 5.8 million people worked in the cultural & creative
sector, equivalent to 3.1% of total employed population in the
EU25
• Evolution 2002-2004: +1.85% (General trend = -0.04%)
• Cultural employment is characterised by an inherent “flexibility”
requirement and “mobility” constraint
• The sector is overwhelmingly made up of small/micro
businesses and self-employed
• The level of qualifications is higher in the cultural and creative
sector than in most of the sectors of the economy
Cultural employment is of an “atypical” nature →
frontrunner of tomorrow’s job market
The role of public support
• Different levels of intervention
– Financial (cinema – heritage – performing arts)
– Regulatory (books, TV)
• Estimates for European public budgets devoted to culture (EU30) in
2000: €55billion
• Estimates of licence fees for public broadcasters in 2000: €16 billion
• Public support to culture as a share of national GDPs is between
0.5% and 1% of national GDPs
• Justification: democratic empowerment, education, promote values,
reinforcement of identity, social cohesion, factor of economic
progress
The indirect contribution of the cultural &
creative sector to the Lisbon Agenda
Indirect contributions of the cultural &
creative sector to Lisbon
• The cultural & creative sector is crucial for the take off of
ICTs
• The cultural & creative sector has a multiple role to play in
local development
– powerful catalyst for the tourism industry
– strategic importance for growth and employment in cities
and regions (“creative cities”)
– significant social impact (culture as a tool for urban and
regional regeneration)
The interdependence between the cultural and
creative sector and ICT
INCREASED GROWTH PROSPECTS FOR ICTs
Media content → key driver for ICT uptake
Examples: broadband penetration, 3G mobile phones, digital
TV, MP3 players (Apple’s iPod and iTunes music store)
GROWTH PROSPECTS FOR THE CREATIVE SECTOR
Digital technology is radically transforming the production,
circulation and consumption of content, leading to new
supports, applications and content offerings (the Long Tail)
NEED TO FIND APPROPRIATE MODELS
Digital Shift in € million (EU25)
Market size in terms of revenues
2005
2010
VOD Market
30
1,269
Digital Music (online – mobile)
196.3
1,794
Games (online, mobile)
699
2,302
Publishing (online)
849
2,001
Radio
15
250
Source: European Commission, Study on Interactive content and
convergence: Implications for the information society – Final
Report, Screen Digest, Goldmedia, Rightscom, CMS Hasche Sigle
London, 2006.
Culture as an engine for the emergence of
creative hubs and local development
Three distinct roles for culture in local development:
1. Cultural activities attract tourists
2. Culture goods and services produced at a local level and
benefiting from “cultural clusters”
3. Cultural activities have significant social impacts
Tourism: one of the most important
industries in Europe
• Tourism sector generates 5.5% of EU GDP (3 to 8% in
individual member states) and up to 11.5% when
integrating indirect impacts
• 2 million enterprises employing more than 9 million
people across Europe
• Europe: most visited destination in the world (443.9
million international arrivals in 2005)
• Europe: 55% market share of the global tourism industry
Culture as an engine for tourism
• Heritage
• Arts fairs
• Museums and exhibitions
• Festivals and trade fairs
• The performing arts
• Film tourism
Creative cities and clusters
THE TERRITORIAL DIMENSION OF CREATIVITY
Cultural activity characterised by constantly shifting production
(“industry of prototypes”) and increased uncertainty
→ Geographical concentration and clustering as a way to reduce
these risks
Idea of “creative class” (Prof. Florida)
Successful strategies (1)
London & the creative industries:
• 6% annual growth between 1997 and 2002 (3% for the
whole economy)
• 40% of the UK’s creative capital
• Second largest business sector (29 billion GBP annual
turnover) and third largest sector of employment
Montréal:
• The “video games industry’s Hollywood”
• A broad range of tax credits and local support measures
• Multimedia companies provide 3,500 jobs (2005)
Successful strategies (2)
Bilbao:
• Direct and indirect revenue €26+€139=€165 million (2005)
• 1 million average visitors each year since its opening in 1997
(60% foreign)
• Creation of 4,361 employments since its opening
• The museum covered 18 times the investment made for the
construction of the building
Irish music industry:
• Irish artists sold 56 million albums in 2001
• 55 million albums sold abroad
• Net income generated by music artists: €224 million
The role of culture in urban and regional
organisation
Culture is a major tool for territorial and social cohesion
Main objectives:
•
•
•
•
Cultural diversity
Inclusiveness
Territorial cohesion
Community identity
A STRATEGY FOR A CREATIVE EUROPE
Challenges for a Creative Europe
• Making culture and creativity a EU priority
– In EC law implementation (Art. 151.4)
– Getting creativity on the EU Agenda
• Harnessing the digital shift
– Regulatory challenges
– The challenge of consumer behaviour and
expectations
– The challenge of new business models
• Fostering a creative education
• Supporting creative territories
• Ensuring consistency between EU internal
and external actions
The European cultural and creative sector Strengths and weaknesses
Plenty of individual talent
but with limited business skills and attracted
to the USA (creativity drain)
Some of the largest competitive
players at global level
but they lack same power and leverage than
the US-based creative industries on
governments
A myriad of creative SMEs with
strong local presence
market access and undercapitalisation
problems
Importance of the public sector
but a resistance in taking stock of
international challenges
Sustained consumer demand
(growth in demand for content)
but poor understanding of consumers’
demand in relation to the digital economy
Strong IP laws in the EU
but poor enforcement in some countries
(piracy levels) and subsidising broadband
rollout.
A strategy for a Creative Europe
Main recommendations for EU action
INTELLEGENCE
GATHERING

•Establish a strong quantitative evidence base for policy
makers.
•Creativity scoreboard
THE LISBON AGENDA

•Use existing EU support programmes (structural funds)
•Internal market and competition policies
•Promote creativity and business education
•Promote links between creators and technology to support
the digital shift (FP7)
• Address chronic under-funding of creative industries and
maximise use of financial instruments (EIB,EIF)
•Integrate the cultural dimension in cooperation and trade
agreements (UNESCO Convention)
STRUCTURAL REFORM

•Reinforce coordination of activities and policies impacting
on the cultural & creative sector within the European
Commission .
European Agenda for Culture in a Globalised world
• Spring European Council (8-9 March 2007): Need
to review the Single Market […] and give particular attention
to the potential of creative industries’ SMEs
• European Commission’s Communication on
Culture (May 2007): Call to put culture and the creative
industries at the heart of the Lisbon strategy – new “EU
Agenda for Culture”.
• Conclusions of the Council of the European
Union: point in the same direction (24-25 May 2007)
• European Cultural Forum under Portuguese
Presidency
• 2009 European Year of Creativity
THANK YOU!
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