THE ECONOMY OF CULTURE IN EUROPE

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THE ECONOMY OF CULTURE IN EUROPE Study prepared
for the European Commission (Directorate General
for Education and Culture)
October 2006
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The Ambition

• Put a figure on creative value
• Consider Europes 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

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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

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Delineation of the cultural creative sector
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Quantifiable socio-economic impact of the
cultural and creative sector
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Contribution of the European cultural and
creative sector to the national economies
Source Eurostat and AMADEUS Data elaborated by
Media Group
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Not everything that counts can be measured, and
not everything that can be measured
countsAlbert Einstein
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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

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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)

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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 tomorrows job market

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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

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The indirect contribution of the cultural
creative sector to the Lisbon Agenda
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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)

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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 (Apples 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

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Digital Shift in million (EU25)
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.
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Culture as an engine for the emergence of
creative hubs and local development

• Three distinct roles for culture in local
  development
• Cultural activities attract tourists
• Culture goods and services produced at a local
  level and benefiting from cultural clusters
• Cultural activities have significant social
  impacts

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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

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Culture as an engine for tourism

• Heritage
• Arts fairs
• Museums and exhibitions
• Festivals and trade fairs
• The performing arts
• Film tourism

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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)

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Successful strategies (1)

• London the creative industries
• 6 annual growth between 1997 and 2002 (3 for
  the whole economy)
• 40 of the UKs creative capital
• Second largest business sector (29 billion GBP
  annual turnover) and third largest sector of
  employment
• Montréal
• The video games industrys Hollywood
• A broad range of tax credits and local support
  measures
• Multimedia companies provide 3,500 jobs (2005)

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Successful strategies (2)

• Bilbao
• Direct and indirect revenue 26139165 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

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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

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A STRATEGY FOR A CREATIVE EUROPE
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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

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The European cultural and creative sector -
Strengths and weaknesses
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A strategy for a Creative EuropeMain
recommendations for EU action

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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 Commissions 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

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THANK YOU!

• Download the PDF file of our study
• The Economy of Culture in Europe
• from the welcome page at www.keanet.eu