WEEK 1
ANALYSING THE CREATIVE AND CULTURAL INDUSTRIES
Why are some organisations or entrepreneurs active in the cultural or creative industries - such
as media, entertainment, music, fashion, and the arts - more successful than others?
Talent, skill, ability (= quality) or luck?
Have you ever wondered why consumers are willing to pay 150€ for a white t-shirt ? (Balenciaga
vs lidl).
Tensions:
- Art versus commerce
- Creativity versus management
- Craft versus technology
- Individual inspiration versus creative systems
- Differentiation versus innovation
Defining feature of CCI: It is the practice of consumption (in a symbolic realm) and not
the production or the material characteristics of the products.
Self reinforcing feedback mechanisms → since cultural and creative industries are based on a
subjective value rather than objective utilities of products, these industries and the demand side
of them can be explained through feedback mechanisms.
- Herd behaviour → Herd behaviour is the behaviour of individuals in a group acting
collectively without centralised direction. Herd behaviour occurs in animals in herds,
packs, bird flocks, fish schools and so on, as well as in humans. Voting, demonstrations,
riots, general strikes,sporting events, religious gatherings, everyday decision-making,
judgement and opinion-forming, are all forms of human-based herd behaviour.
- The bandwagon effect is the tendency for people to adopt certain behaviours, styles, or
attitudes simply because others are doing so.
- An informational cascade is a phenomenon described in behavioural economics and
network theory in which a number of people make the same decision in a sequential
fashion.
Market characteristics of CCI
- Unpredictability of subjective experiences
- “Objective” quality measures for evaluation are largely lacking
- Consumers can respect “quality” in CCI, but attach different meaning to the term
- Agreement on high (or low) quality means that there are major differences of opinion as
to why this is the case.
,Modelling the cultural industries (Throsby, 2008)
The article discusses the definition of cultural industries (and which firms are included in that
definition), the boundaries of cultural industries, and examines six tools for economic analysis
that can be applied to cultural industries. This paper begins by discussing the way in which an
economic approach to interpreting the scope of the creative and cultural industries can
lead to a reasonable basis for defining them.
The main question of this article is: Is it possible to find a common group of industries on which
all of the models agree? Addressing this question requires an understanding why and how a
cultural product is valued by a particular stakeholder (expert, another cultural producer or even
a consumer).
Cultural goods and services characteristics
- Require some input of human creativity in their production → Original ideas and novel
ways of interpreting the world, expressed in text, sound and image.
- Vehicles for symbolic messages to those who consume them → Cultural goods and
services are more than simply utilitarian and serve a larger communicative purpose.
- Contain, at least potentially, intellectual property → Attributable to the individual or
group producing it.
The article is trying to define this type of industry (and understanding it) by paying attention to
the boundary conditions and 6 different economic approaches.
- 1st definition - UNESCO: Cultural industries are those industries that combine the
creation, production and commercialization of contents which are intangible or cultural
in nature. Characteristics: Human creativity, transmission of symbolic messages,
intellectual property
- 2nd definition - DCMS 2001 (department for digital cultural media and sports ): Those
industries which have their origin in individual creativity, skill and talent and which have a
potential for wealth and job creation through the generation and exploitation of
intellectual property. Characteristics: Human creativity, goods & services, commercial
use.
Following the UNESCO definition, we can make a distinction between cultural goods and
creative goods.
- Cultural goods are valued by those who make them and by those who consume them
because of social and cultural reasons (cultural value) and not for their utilitarian or
materialistic functionality. This cultural or social valuation at least complement or even
go beyond any other form of economic valuation.
- Creative goods do not need to satisfy all of the other criteria that would enable them to
be cultural, with the exemption that they require some level of creativity in their
production and manufacture.(such as advertising or software, since they involve some
level of creativity in their production).
,Why do we care about making a distinction between the 2?
If simply an economic perspective is used as an estimate of contribution to define cultural
industries, then only those industries with high growth rates and employment, output, exports,
etc. will be included. But if an artistic or a cultural perspective is taken, then a completely
different group of industries will be included.
This of course will have a vastly different policy implication, depending upon the kind of
economic analysis that is used.
EXAMPLE: In 2015, Ernst & Young completed the first global map of the cultural and the creative
industries and found that these industries generated US$2.2 trillion in revenue which translates
to about 3% of the world's GDP in 2013. To put this a little bit more into perspective this was
substantially greater than the global telecommunications industry revenue that same year of the
US$1.57 trillion. The study also found that worldwide the cultural and creative industries employ
29 million people.
Linking the Throsby article to this EY study based on the kinds of cultural and creative industries
which are included in the study. It seems that the WIPO model, which is discussed in the Throsby
article, was used to measure the economic impact.
But if for example, the Concentric Circles model was used instead of the WIPO what would have
happened? The economic impact of the EY study would drastically be reduced, and this is
because instead of including all cultural industries that are involved directly or indirectly in
creating, manufacturing, producing, broadcasting and distributing copyright works (which is at
the foundation of the WIPO model), the Concentric Circles model would include only those
industries that are at the core of the cultural industries. This means that those located outside of
the concentric circles are deemed to be commercial, and hence have a lower cultural value.
Using the assumptions of the concentric circle model and including only certain core cultural
industries, such as only the visual arts, books, performing arts, movies, and the music, would
mean that the estimates by the EY study would be off by almost US$700 billion.
6 models of the cultural industries
- Uk-DCMS Model → definition of CCI from before
- Symbolic texts model → differentiates between high and popular culture on the grounds
of their different power dynamics in regard to social class,gender and race/ethnicity. It
places greatest emphasis on those industries that define popular culture and that have
the strongest orientation towards industrial modes of production; these industries form
the core of this model and the creative or ‘high’ arts are relegated to peripheral status.
- Concentric Circles Model → it is the cultural value of cultural goods that gives these
industries their most distinguishing characteristic. The model asserts that creative ideas
originate in the core creative arts in the form of sound, text and image, and that these
ideas and influences diffuse outwards through a series of layers or ‘concentric circles’,
with the proportion of cultural to commercial content declining as one moves further
outwards from the centre.
, - WIPO Copyright Model → copyrighted works are considered cultural.
- UNESCO INstitute of Statistics Model → In its application to the cultural industries,
the model identifies five ‘core cultural domains’: cultural and natural heritage;
performance and celebration; visual arts, crafts and design; books and press; and
audiovisual and digital media. It also extends to the ‘related domains’ of tourism, sport
and leisure.
- Americans for the Arts Model → This model is based on identifying businesses
involved with the production and distribution of the arts, labelled as ‘arts-centric
businesses’
6 ECONOMIC APPROACHES TO ANALYSING THE CULTURAL INDUSTRIES
1. Industrial organisation theory → focuses on standard economic variables
a. Market concentration
b. Barriers to entry and exit
c. Degree of competition
Relevant primarily to those models oriented towards the commercial production of cultural
goods and services, like the WIPO model although it can also be useful to not-for-profit arts in
certain conditions like non-price competition.
2. Value chain analysis → Production chain with value adding stages from initial idea, the
production of goods or services, their marketing and distribution, until consumption
Example → high end fashion firms
Used by firms to analyse performance in different stages of the production cycle.
3. Inter-industry analysis
a. Input-output analysis: Output from one industrial sector as input to another
sector (spillovers)
b. Social accounting matrices: Similar tool requiring less data for analysing the
impact of industries
It focuses on the way that output is produced and distributed in the economy, and it offers a
better understanding on the direct and indirect effects on an industry, on consumers or even on
the governments. This economic approach is often used to evaluate the economic impact of
cultural policy.
