Cultural and creative industries on the political agenda taking the economy to the next stage
20.09.2009 Features
The
concept of the Creative Economy is vast. In this feature, reprinted from Issue 14 of DESIGN>, Rasmus Wiinstedt Tscherning explores the multi-disciplinary nature of
the design fields, as well as their dynamic and unpredictable
developments.
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Image: Tivoli Park, photo: Ulrik Jantzen
Governments in Europe have started to realise the importance of the cultural and creative industries. Cultural and creative industries have gone from 'nice-to-have' to 'need-to-have' and cultural policies have increasingly become an instrument for driving growth and creating jobs.
Looking at the Danish perspective, The Royal Danish Ballet and local theatres still need public subsidies but the cultural and creative sectors are now seen as businesses in their own right. They also now deal with issues such as trade disputes, international intellectual property rights enforcement, media ownership, and more.
In 2006 the European Commission published a study titled The Economy of Culture in Europe which shows that the cultural and creative industries drive economic growth and job creation – jobs that are difficult to outsource to foreign markets. Although the data need to be updated and statistics may be difficult to compare from one country to another, it clearly shows the importance of the sector. Following are some of the findings of the study:
Value added to GDP: The sector contributed to 2.6% of EU GDP in 2003. In the same year real estate activities contributed 2.1% to EU GDP. The food, beverage and tobacco manufacturing sector accounted for 1.9% of contribution to EU GDP. The textile industry accounted for 0.5% of contribution to EU GDP. The chemicals, rubber and plastic products industry accounted for 2.3% of contribution to EU GDP.
Contribution of EU growth: The overall growth of the sector's value add was 19.7% in 1999-2003. 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 EU. Whereas total employment in the EU decreased in 2002-2004, employment in the sector increased by +1.85%. A total of 46.8% of workers in this sector have at least a university degree (compared to 25.7% in total employment). The share of independents is more than twice that of the total employment (28.8% against 14.1%). The sector records 17% of temporary workers (13.3% in total employment). The share of part-time workers is higher (one worker out of four, against 17.6% in total employment).
Source: The Economy of Culture in Europe, European Commission, 2006.
In this article, Pine and Gilmore, founders of the management consulting firm Strategic Horizons, preview the likely characteristics of the experience economy and the kinds of changes it will force companies to make. “First there was agriculture, then manufactured goods, and eventually services. Each change represented a step up in economic value – a way for producers to distinguish their products from increasingly undifferentiated competitive offerings. Now, as services are in their turn becoming commoditised, companies are looking for the next higher value in an economic offering. Leading edge companies are finding that it lies in staging experiences. An experience occurs when a company uses services as the stage – and goods as props – for engaging individuals in a way that creates a memorable event. And while experiences have always been at the heart of the entertainment business, any company stages an experience when it engages customers in a personal, memorable way.” Source: Harvard Business Online, 2009
It is not easy to precisely define the experience economy, as there are now many perceptions, angles and perspectives relating to the term. Consequently, there has been various political initiatives and the business sector has approached it with some scepticism. The approach to the experience economy will necessarily vary, depending on standpoint and intention.
There is great potential for providing experiences where the combination of culture and business opens up for a whole new economy. A company can set itself apart from its competition by offering customers a unique and staged experience: Is the legendary restaurant El Bulli (Best Restaurant in the World, 2006 and 2007 – Restaurant Magazine) north of Barcelona offering a meal or a unique, themed experience involving all senses? The fact that over half a million people try to book one of the only 8 000 available seats, points to the fact that there is more to it than great cooking of celebrated chef, Fernando Adri? Acosta, who has often been hailed as the Salvador Dali of the kitchen. This approach creates a new economy where Function + Quality + Experience = Market Value.
The experience economy helps cultural businesses, institutions, cities and regions, as well as traditional businesses to integrate culture and business, in order to create new products and develop existing ones.
In 2007 a political agreement involving both the government and opposition parties in the parliament, launched two new initiatives. The first was establishing a Center for Culture & Experience Economy to support collaboration between the business and cultural sectors and innovation through experience-based business development. The second initiative was creating four sector-specific experience zones, grouping together stakeholders on all levels in the four areas of gaming, music, fashion and food.
The following year, the Ministry of Economics and Business Affairs published the study Growth Through Experiences (available at www.ebst.dk/publikationer/innovation/Growth_through_Experiences/index.htm), presenting a number of projects where the cultural sector and the traditional business sectors collaborate and together develop new experiences in products and services. The cultural sector contributes with creative competencies and sees its own business competencies strengthened in the process. The report analyses the methods and presents cases of experience-based business development creating commercial results for the companies.
Some EUR 67 million has been set aside for the Center for Culture & Experience Economy and EUR 5,4 million for the experience zones. Both the Ministry of Culture and the Ministry of Economic and Business Affairs provide the funding which shows the cross-sectoral nature of the field.
The Centre for Culture & Experience Economy will promote and support collaboration between the business and cultural sectors. The aim is to make businesses more competitive internationally through experience based business development – or innovation driven by the creative competencies in the cultural and creative industries. For designers, architects and many others their work is business.
The CCEE's aim is to promote growth through better cooperation between businesses and the cultural and creative sectors – and to strengthen the business competencies of actors in the cultural sector.
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Rasmus Wiinstedt Tscherning is managing director of Center for Culture & Experience Economy. He has 15 years of broad international experience in areas such as the cultural and creative industries, media, and European Union public affairs. He has substantial expertise in strategic consultancy and business development. He has been official speaker for the European Commission on issues related to media and culture for over ten years and is lecturer for the university-level course 'Creative Industries: Business, Innovation, Politics & Culture'. He is board member of the Danish Cultural Institute and Scandinavia's leading concert hall, VEGA.
Image: Tivoli Park, photo: Ulrik Jantzen
Governments in Europe have started to realise the importance of the cultural and creative industries. Cultural and creative industries have gone from 'nice-to-have' to 'need-to-have' and cultural policies have increasingly become an instrument for driving growth and creating jobs.
Looking at the Danish perspective, The Royal Danish Ballet and local theatres still need public subsidies but the cultural and creative sectors are now seen as businesses in their own right. They also now deal with issues such as trade disputes, international intellectual property rights enforcement, media ownership, and more.
In 2006 the European Commission published a study titled The Economy of Culture in Europe which shows that the cultural and creative industries drive economic growth and job creation – jobs that are difficult to outsource to foreign markets. Although the data need to be updated and statistics may be difficult to compare from one country to another, it clearly shows the importance of the sector. Following are some of the findings of the study:
Importance of cultural and creative industries in Europe
Turnover: The sector had a turnover of more than EUR 654 billion in 2003. The turnover of the car manufacturing industry was EUR 271 billion in 2001 and the turnover generated by ICT manufacturers was EUR 541 billion in 2003 (EU-15 figures).Value added to GDP: The sector contributed to 2.6% of EU GDP in 2003. In the same year real estate activities contributed 2.1% to EU GDP. The food, beverage and tobacco manufacturing sector accounted for 1.9% of contribution to EU GDP. The textile industry accounted for 0.5% of contribution to EU GDP. The chemicals, rubber and plastic products industry accounted for 2.3% of contribution to EU GDP.
Contribution of EU growth: The overall growth of the sector's value add was 19.7% in 1999-2003. 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 EU. Whereas total employment in the EU decreased in 2002-2004, employment in the sector increased by +1.85%. A total of 46.8% of workers in this sector have at least a university degree (compared to 25.7% in total employment). The share of independents is more than twice that of the total employment (28.8% against 14.1%). The sector records 17% of temporary workers (13.3% in total employment). The share of part-time workers is higher (one worker out of four, against 17.6% in total employment).
Source: The Economy of Culture in Europe, European Commission, 2006.
Above: ScandinaviaÂ’s leading concert hall, VEGA, Photo: Jacob Dinesen
Provide an experience and earn more
The term 'experience economy' was coined by the American thinkers, Joseph Pine II and James Gilmore, in a article published in Harvard Business Review in 1998. They developed the concept further in another article titled Welcome to the Experience Economy – Work is theater & every business a stage, which was published in 1999.In this article, Pine and Gilmore, founders of the management consulting firm Strategic Horizons, preview the likely characteristics of the experience economy and the kinds of changes it will force companies to make. “First there was agriculture, then manufactured goods, and eventually services. Each change represented a step up in economic value – a way for producers to distinguish their products from increasingly undifferentiated competitive offerings. Now, as services are in their turn becoming commoditised, companies are looking for the next higher value in an economic offering. Leading edge companies are finding that it lies in staging experiences. An experience occurs when a company uses services as the stage – and goods as props – for engaging individuals in a way that creates a memorable event. And while experiences have always been at the heart of the entertainment business, any company stages an experience when it engages customers in a personal, memorable way.” Source: Harvard Business Online, 2009
It is not easy to precisely define the experience economy, as there are now many perceptions, angles and perspectives relating to the term. Consequently, there has been various political initiatives and the business sector has approached it with some scepticism. The approach to the experience economy will necessarily vary, depending on standpoint and intention.
There is great potential for providing experiences where the combination of culture and business opens up for a whole new economy. A company can set itself apart from its competition by offering customers a unique and staged experience: Is the legendary restaurant El Bulli (Best Restaurant in the World, 2006 and 2007 – Restaurant Magazine) north of Barcelona offering a meal or a unique, themed experience involving all senses? The fact that over half a million people try to book one of the only 8 000 available seats, points to the fact that there is more to it than great cooking of celebrated chef, Fernando Adri? Acosta, who has often been hailed as the Salvador Dali of the kitchen. This approach creates a new economy where Function + Quality + Experience = Market Value.
The experience economy helps cultural businesses, institutions, cities and regions, as well as traditional businesses to integrate culture and business, in order to create new products and develop existing ones.
Experience Economy in a value chain perspective
What is experience economy?
Source: Ramboll Management Consulting, 2006.
Governments have recognised the potential of the cultural and creative industries, but are struggling to find the right policy mix and strategy. Some examples include:
- Light tower strategy, as in the Guggenheim Bilbao in Bilbao.
- Specialisation strategy, trying to create the next creative cluster such as Hollywood.
- Neighbourhood strategy, as the Chaoyang business district in Beijing.
- Entrepreneur strategy, focusing on the many small and medium-sized companies in the sector.
- Knowledge strategy, all levels of education, from music in schools to life-long learning – which might explain Sweden's success in the music business.
- Event strategy, attracting the next MTV Award or creating cultural festivals.
- Framework strategy, supporting the cultural and creative sector with the business-oriented policies.
In 2007 a political agreement involving both the government and opposition parties in the parliament, launched two new initiatives. The first was establishing a Center for Culture & Experience Economy to support collaboration between the business and cultural sectors and innovation through experience-based business development. The second initiative was creating four sector-specific experience zones, grouping together stakeholders on all levels in the four areas of gaming, music, fashion and food.
The following year, the Ministry of Economics and Business Affairs published the study Growth Through Experiences (available at www.ebst.dk/publikationer/innovation/Growth_through_Experiences/index.htm), presenting a number of projects where the cultural sector and the traditional business sectors collaborate and together develop new experiences in products and services. The cultural sector contributes with creative competencies and sees its own business competencies strengthened in the process. The report analyses the methods and presents cases of experience-based business development creating commercial results for the companies.
Some EUR 67 million has been set aside for the Center for Culture & Experience Economy and EUR 5,4 million for the experience zones. Both the Ministry of Culture and the Ministry of Economic and Business Affairs provide the funding which shows the cross-sectoral nature of the field.
The Centre for Culture & Experience Economy will promote and support collaboration between the business and cultural sectors. The aim is to make businesses more competitive internationally through experience based business development – or innovation driven by the creative competencies in the cultural and creative industries. For designers, architects and many others their work is business.
About the Center for Culture and Experience Economy
The Center for Culture and Experience Economy (CCEE) is a public independent institution, established in 2008 by the Danish Ministry of Economics and Business Affairs and The Ministry of Culture.The CCEE's aim is to promote growth through better cooperation between businesses and the cultural and creative sectors – and to strengthen the business competencies of actors in the cultural sector.
About the author
Rasmus Wiinstedt Tscherning is managing director of Center for Culture & Experience Economy. He has 15 years of broad international experience in areas such as the cultural and creative industries, media, and European Union public affairs. He has substantial expertise in strategic consultancy and business development. He has been official speaker for the European Commission on issues related to media and culture for over ten years and is lecturer for the university-level course 'Creative Industries: Business, Innovation, Politics & Culture'. He is board member of the Danish Cultural Institute and Scandinavia's leading concert hall, VEGA.
About DESIGN >
is an electronic magazine that seeks to present and serve designers, the design conscious and the design curious in South Africa and beyond. It is a participant in the International Design Media Network (IDMN). The current issue explores the concept of the Creative Economy and the multi-disciplinary nature of the design fields, as well as their dynamic and unpredictable developments.
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