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From Cultural to Creative Industries: the Specific Characteristics of the Creative Industries

David Throsby*

1.

Introduction The term creative economy to describe that sector of the macroeconomy

that produces goods and services whose production requires a significant input of creativity is now well established, yet there remains confusion and disagreement about this sectors industrial composition. Does it comprise the creative industries or the cultural industries? Is there a difference between these two concepts and, if so, what is its basis? Let us consider first some practical examples of how these terms are deployed. Perhaps the best-known usage of the term creative industries derives from the UKs Department of Culture, Media and Sport (DCMS), which began developing its creative industries strategies as far back as 1997 (Smith, 1998). In the UK approach, the creative industries are those requiring creativity and talent, with potential for wealth and job creation through exploitation of their intellectual property (DCMS, 2001). There is no mention of the word culture in the British definition, even though there is undeniable cultural content in the output of most of the 13 industries included under the creative industry classification. In most continental European countries, on the other hand, there is an inclination towards * Paper presented at Troisime Journes dEconomie de la Culture: Nouvelles Frontires de lEconomie de la Culture, conference held at Muse du quai Branly, Paris, 23 October 2008.

greater stress on the cultural content of creative production. A French definition, for example, joins the functions of conception, creation and production of cultural content with industrial modes of production exploiting economies of scale and of commercialisation (Dpartement des tudes, de la Prospective et Statistiques, 2006). At the international level, usage also varies. UNESCO, not surprisingly, is concerned with cultural aspects, emphasising the production and distribution of intangible cultural content,1 while the World Intellectual Property Organisation, again not surprisingly, sees the creative sector as built around the copyright industries, which have strong commercial prospects (WIPO, 2003). The United Nations Conference on Trade and Development (UNCTAD), in turn, looks particularly to trade as a driver of the creative economy, with particular reference to the potential for growth in the creative sectors of developing countries (UNCTAD, 2008). Notwithstanding the diversity of these conceptualisations of the creative economy, it is remarkable that all the various definitions lead to much the same collection of industries making up the creative sector.2 Thus, regardless of their location or their disciplinary origins, when most analysts or policy-makers speak of the creative or the cultural industries, they mean all or most of the following specific industries: the creative arts; cultural heritage; all the audiovisual media (film, music, television, video and computer games, etc.); print media and publishing; and a number of smaller industries ancillary to these activities such as musical instrument making, retail bookselling, commercial art dealers, etc. In many cases the list of creative industries also extends to embracing design, advertising, fashion and architecture. Some classifications may include industries like sport (presumably on account of its cultural connotations) or software (because writing any sort of computer program requires creativity). But by and large the various conglomerations of industries described as creative or cultural in different parts of the world look very similar.

So do we need to worry about terminology? I return to this question at the end of this paper. For now let us take the broad list of industries identified above as definitive, and ask: what are the characteristics of these industries that make them interesting? For the purposes of this discussion I shall use the cultural industries nomenclature. 2. Characteristics of the cultural industries Four aspects of the cultural industries can be considered that differentiate them from other industries in the economy: the nature of output produced; the range of firm types; behavioural characteristics of firms; and employment aspects. (i) Output Cultural industries are notable because they produce both private and public goods. The private-good component of output is readily observed in the artworks purchased, the admissions to performances of music and theatre, the consumption of newspapers and television programs, and so on. Conventional markets exist to coordinate supply and demand for these goods and services. Additionally, some cultural industry outputs can be regarded as pure public goods; for example, musical compositions or works of literature take on the non-rival and nonexcludable characteristics of a public good once they have been performed or published. In these cases the encapsulation of the public good in a privatelytradeable form such as a compact disc or a book, and/or the identification and enforcement of intellectual property rights, is necessary to enable market exchange to occur. But there is another aspect to the public-good nature of cultural goods and services. They can also be regarded as so-called mixed goods in that they may simultaneously exhibit both private-good and public-good characteristics, the latter

derived from the diffused community benefits that the arts and culture are supposed to yield. These benefits relate to such attributes as the civilising functions of the arts, the significance of cultural production for national or local identity, the value placed on cultural diversity, and so on. If these public-good benefits do indeed exist, they are argued to provide a prima facie case for government intervention to correct for market failure, assuming the community is willing to pay and assuming the benefits of intervention outweigh the costs. Thus the output of the cultural production sector is more complex than that of most industries in the economy, in particular because of its non-market attributes that present challenges not just to the decision-making of firms in the cultural industries but also to public policy formation and implementation. (ii) Industry structure In addition to the characteristics of output described above, the cultural industries are also unusual in the mix of firms they contain. In common with some service sectors such as education and health, the cultural industries contain significant numbers of not-for-profit enterprises as well as commercial firms, and are also characterised by an important public-sector presence alongside conventional private-sector operations. Taking these characteristics into account, and classifying firms roughly according to size, we can group cultural sector business undertakings under four headings:

Small-to-medium enterprises (SMEs). The predominant firm type in terms of size are creative SMEs. At the smallest level, this group includes individual artists acting as sole traders; some of these may sell direct to consumers, but most will be engaged in supplying goods and services as intermediate inputs to other firms, such as a writer providing scripts to television companies, or an actor working under contract on a film. This group of firms also includes small artistic ensembles such as rock bands, artists cooperatives, etc. as well

as small providers of creative services such as architectural practices, design consultancies, independent publishers, literary agents, and so on.

Not-for-profit organisations (NPOs). Voluntary NPOs in the cultural sector include performing arts companies presenting drama, dance, opera, music, circus, etc., as well as industry organisations, unions, and similar enterprises.

Public cultural institutions. A particular type of NPO found in the cultural industries is the publicly-owned or publicly-financed institution with a significant national, regional, or urban presence. This group includes museums of various sorts; public art galleries; heritage sites; symphony orchestras; nationally- or locally-recognised opera, ballet and theatre companies; public broadcasting organisations; and so on.

Large commercial corporations. When the size level for an SME is exceeded (the threshold in terms of turnover or number of employees varies between jurisdictions), we move into the category of large corporations; in the cultural industries these corporate enterprises are typically found in the media, publishing, production and distribution of audiovisual product, and so on. Such firms are frequently transnational in scale.

The overall industry structure is thus one which demonstrates a version of the longtail hypothesis, where a small number of large firms account for a significant proportion of industry output and employment, and the rest of the industry is made up of large numbers of smaller enterprises, which, despite their size, are important for other reasons and are of particular interest to policy-makers. (iii) Behaviour of firms The third characteristic that is interesting about the cultural industries from an economic point of view is the objectives and incentive structures under which firms

in these industries operate. Firms producing cultural goods and services typically pursue objectives that are not simply economic, but are conditioned by the cultural content of the output they are generating. If a distinction is made between the economic value and the cultural value of this output,3 the objective function of the typical firm in the cultural industries can be portrayed as a function of the yield of these two types of value. In other words, firm utility can be represented as a weighted sum of the output of economic and cultural value, to be maximised subject to resource constraints. The weights in such a model would reflect the relative preferences of the firm for achieving profitability on the one hand, and artistic or cultural success on the other. The specification of weights will differ between firms depending on the nature of the firm and the objectives of its managers. Although generalisations are difficult, it could at least be hypothesised that the weights are likely to vary systematically with the size of firm; at the smallest end, the behaviour of individual artists and arts groups can be expected to be strongly influenced by non-pecuniary motives relating to their artistic ideals, whereas at the other end of the scale larger corporations producing cultural products of various sorts are likely to be primarily if not entirely driven by commercial imperatives. (iv) Employment Similar remarks relate to the final distinguishing characteristic of the cultural industries, namely the nature of the workforce. The term creative worker has emerged in recent years to describe a person whose occupation involves a significant input of creativity.4 If the interpretation of creativity is extended widely enough, as for example in Richard Floridas much-criticised definition of the creative class (Florida, 2002), the creative-worker classification grows so large as to become almost meaningless. If however it is restricted to the cultural industries as enumerated above, it is possible to identify a collection of occupations with distinctively cultural/creative characteristics.

In most areas of cultural production it is a relatively straightforward matter to distinguish between creative and non-creative occupations. In the theatre industry, for example, actors, playwrights, directors and designers are examples of creative occupations, whereas stagehands, ushers, ticket-sellers and accountants can be labelled non-creative.5 Similar distinctions can be made in other cultural industries such that overall a set of occupations can be identified which together comprise the creative workforce. The employment pattern of the creative labour force can be mapped against the structural characteristics of the cultural industries discussed above. For example, the proportion of creative workers to total employment within a given firm varies between types of firm, with stronger concentrations of creative inputs likely to be observed in SMEs than in larger enterprises. Moreover, such a tendency can be demonstrated not just in firms but also across the various industries that go to make up the cultural sector. For example, if the structural features of the sector are interpreted according to the concentric circles modelwhere the cultural industries are depicted as a series of circles or layers from the core creative arts at the centre through the wider cultural industries to the more commercial industries in the outer circleit can be shown that the cultural content of output, measured from the input side as the proportion of creative workers to total employment, declines as one moves outwards through the layers of the model (Throsby 2008). The focus on creative workers as a characteristic of the cultural sector is important for a number of reasons. In particular, job creation is seen to be a significant rationale for policy interest in the creative sector, given the relatively high labour intensity of the cultural industries. Furthermore significant numbers of creative workers are employed outside the cultural industries (Higgs et al., 2008); these are people who have mostly gained their initial training and experience in the cultural sector but whose creative work happens elsewhere. For both of these reasons a governments labour market policy can usefully engage the cultural sector

in its employment planning, especially if it takes a broad view of the contribution of the cultural industries to the economy at large. 3. Terminology We can now return to the question posed in the first paragraph of this paper, namely is there a difference between the creative and the cultural industries? If industries can be identified in terms of the goods and services they produce, the question can be answered by defining creative and cultural productsif there is a difference between them, it will enable us to separate the terms creative and cultural industries. The adjectives creative and cultural are derived from their corresponding nouns, creativity and culture, and these are indeed different concepts. Reference back to the underlying concept of creativity, an observable characteristic of individuals, suggests that a creative good can be defined simply as one where some input of creativity is required in its production. A cultural good, on the other hand, is more complex since culture itself is a more wide-ranging phenomenon. Thus, as well as requiring creativity, a cultural good must also have some cultural content, where culture relates either specifically to the arts or more generally to ideas of identity, shared values, ways of living, etc. In a definition of cultural goods, cultural content is usually interpreted as a property of conveying some sort of symbolic message or meaning. If this line of argument is accepted, it implies that creative goods fall into an extensive class of which cultural goods are a subset, and correspondingly the creative industries will be an extensive class of which the cultural industries are a subset. Thus, for example, the performing arts would be regarded as both a creative and a cultural industry, whereas the production of utilitarian software would be classified simply as a creative industry. The definitional logic of this approach may appear unarguable. Despite this, however, usage in practice can be expected to

remain as varied as it has always been. Such an outcome may simply reflect habit, but it may also arise because of differences in the interpretation of what comprises cultural contentobservers and analysts from different disciplines, for example, are likely to have widely differing interpretations of the cultural significance of products such as advertising or fashion, and will apply different labels accordingly. 4. Conclusions Does the difference in terminology matter? It may matter if the use of different definitions of creative and cultural industries leads to differences in the interpretation of cultural policy. For example it can be suggested that a policy strategy directed explicitly at the creative industries would be likely to focus primarily on the economic value produced by their industries, whereas if the idea of the cultural industries were admitted, the focus would need to be widened to acknowledge the cultural objectives that policy is expected to pursue. This is what makes the cultural industries interesting from a policy point of view. The public interest is concerned not just with the economic contribution of these industries but also with the way in which they serve the governments cultural objectives indeed pursuing cultural goals could be seen as the primary purpose of cultural policy. In practice, whatever terminology is adopted, the policy challenge is to find the right balance between the creation of economic and cultural value in the management of this sector of the economy. The word balance indicates that in most policy contexts this is not an either/or choice but one of examining trade-offs as a means towards an optimal mix.

Notes References

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Australian Bureau of Statistics (2001), Australian Culture and Leisure Classifications, (Cat. 4902.0), August 2001. Caves, Richard E., (2000), Creative Industries: Contracts between Art and Commerce, Cambridge MA: Harvard University Press. Dpartement des Etudes, de la Prospective, et des Statistiques (2006), Aperu statistique des industries culturelles No. 6. Paris: Ministry of Culture and Communication. DCMS (Department of Culture Media and Sport UK) (2001), Creative Industries Mapping Document 2001. London: DCMS. Florida, Richard (2002), The Rise of the Creative Class: and How it's Transforming Work, Leisure, Community and Everyday Life, New York: Basic Books. Higgs, Peter, Stuart Cunningham and Hasan Bakhshi (2008), Beyond the Creative Industries: Mapping the Creative Economy in the United Kingdom. London: National Endowment for Science, Technology & the Arts (NESTA). Hutter, Michael and David Throsby (eds.) (2008), Beyond Price: Value in Culture, Economics, and the Arts, New York: Cambridge University Press. Smith, Chris (1998), Creative Britain. London: Faber and Faber. Throsby, David (2001), Economics and Culture, Cambridge: Cambridge University Press. Throsby, David (2008), The concentric circles model of the cultural industries, Cultural Trends, 17(3): 147164. UNCTAD (United Nations Conference on Trade and Development) (2008). Creative Economy Report 2008. Geneva: UNCTAD. World Intellectual Property Organisation (WIPO) (2003), Guide on Surveying the Economic Copyright-based Industries. Geneva: WIPO.

For details see www.unesco.org/culture. The exception is the WIPO definition, which includes industries involved in the distribution and

reproduction of copyright material such as audiovisual hardware, photocopiers, etc.


3

For further on this distinction and its implications, see Throsby (2001, Ch. 2); Hutter and Throsby

(2008).
4

The term cultural worker or cultural occupation is also seen occasionally, indicating jobs which are

peculiar to the cultural industries but which may or may not be creative; see for example Australian Bureau of Statistics (2001).
5

Caves (2000) calls the non-creative workers humdrum inputs.