A Paradigm Shift

Keith Nurse, Ph.D.The term ?cultural? or ?creative? industries describes the economic activities of artists, arts enterprises and cultural entrepreneurs, for-profit as well as not-for-profit, in the production, distribution and consumption of film, television, literature, music, theater, dance, visual arts, masquerade, broadcasting, advertising, multimedia, animation, fashion and so on. In most developed market economies the cultural industries account for 2 percent to 5 percent of gross domestic product and have generated consistent and stable growth above world average in the last decade. Creative industries are also a key driver of the digital economy. Consumer demand for creative content is driving the new sales (30 percent to 50 percent) in computers, broadband, cellphones, and e-commerce. Similar trends are observed in some large developing countries, such as India, Mexico and Brazil, that have strong capabilities in the audiovisual sector and large home and diasporic markets.

Increased personal, recreational and audiovisual services have also contributed to the economic growth. The sector also has strong synergies and linkages with sectors like tourism. In some major cities and tourism destinations, cultural tourism is estimated to be as high as 40 percent of the annual visitor arrivals. In addition, cultural tourists tend to spend more on local goods and services than the average visitor.

The new digital technologies have revolutionized the creative industries in terms of production processes and consumption channels. Low-cost digital recording technologies have facilitated the diffusion of sound, text and image production by small entrepreneurs without any appreciable compromise in quality. Mass production technologies have been replaced by niche production and mass customization (e.g. ringtones, print-on-demand services, movies-on-demand, interactive TV).

The convergence of telecoms, telephony, the Internet and cultural content has revolutionized product sales and marketing, changed the nature of piracy and royalties collections, as well as upset the balance between the major content distribution/marketing companies and the independents, thus giving the consumer greater choice. However, these gains are dependent on wider access to Internet services internationally, the growth of broadband and wireless access and the expansion of interoperability between content providers/creators, digital distribution channels (e.g. online subscription services like iTunes) and consumption devices (e.g. mobile phones, iPods). All of this would not be possible without digital rights management, which facilitates consumer usage rights while protecting the works of creators from unauthorized distribution and unfair use.

The challenges facing the creative industries are different from those posed to the traditional goods sector. First, intellectual property protection must become a priority. The creative industries cannot survive in the marketplace without adequate protection from copyright infringement. For example, music is one of the easiest forms of art to pirate as a result of the wide diffusion of reproduction technologies such as recordable compact discs and Internet based file-sharing and peer-to-peer formats like My.Mp3.com, Gnutella, Napster and Grokster. These have helped to expand the demand for music but have also led to declining sales to the tune of 5 percent year on year since the late 1990s.

Secondly, research and development must be placed higher on the agenda. In the cultural industries, R&D means investment in human and creative capital… Investing in creative capabilities calls for the establishment of professional training institutions, as well as business support mechanisms for young artists and cultural entrepreneurs. Lastly, marketing and branding are crucial because audience loyalty is difficult to build and predict. With the rise of the digital and Internet economy, there is a tendency to underestimate the level of the challenge of introducing new and alternative genres into the world market for creative goods and services. Ultimately, the issue that arises for developing country regions like the Caribbean is whether they will be able to develop the expertise along with the distribution infrastructure and marketing savvy to tap into the growth potential of the rising creative sector.

Keith Nurse, Ph.D., is director of the Shridath Ramphal Centre for International Trade Law, Policy and Services, at the University of the West Indies, Barbados. The above is an edited excerpt of his article first published in The Sunday Guardian.?