THE ECONOMY OF CULTURE IN EUROPE

With the support of:

MKW

THE ECONOMY OF CULTURE IN EUROPE

Study prepared for the European Commission (Directorate-General for Education and Culture)

October 2006

E U R O P E A N A F FA I R S

Executive Summary

Context

In March 2000, the EU Heads of State and Government meeting at the European Council in Lisbon agreed on an ambitious goal: making the EU by 2010 "the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion".

Lisbon is pushing to boost R&D spending by governments, universities and corporations. The belief is that growth and employment will be achieved by investing in ICT industries – the flagship industries of the digital economy –, and boosting innovation, in particular in the “knowledge economy”.

The role of the cultural and creative sector within this context is still largely ignored. Indeed, the move to measure the socio-economic performance of the sector is a relatively recent trend. Moreover, the exercise is a contentious one. For many, the arts are a matter of enlightenment or entertainment. That leads to the perception that the arts and culture are marginal in terms of economic contribution and should therefore be confined to the realms of public intervention. This may explain to a large extent the lack of statistical tools available to measure the contribution of the cultural sector to the economy whether at national or international level, in particular compared to other industry sectors.

The present study aims to remedy this situation. It is a first attempt to capture the direct and indirect socio-economic impact of the cultural sector in Europe, thereby assessing its contribution to the Lisbon agenda, and in particular in terms of realising growth, competitiveness, more and better jobs, sustainable development, and innovation.

It shows how culture drives economic and social development, as well as innovation and cohesion. The cultural and creative sector is a growing sector, developing at a higher pace than the rest of the economy. The same applies to employment. Indeed this sector provides many different and often highly skilled possibilities, and again the sector’s growth in terms of jobs out-performs the rest of the economy. It also drives many other sectors of the European economy, and in particular innovation and ICT sectors.

The study also illustrates how culture promotes European integration and is a key tool to integrate the components of European societies in all their diversity, to forge a sense of belonging as well as to spread democratic and social values. Culture can contribute to “seduce” European citizens to the idea of European integration.

The Cultural & Creative Sector

The first step in assessing the economy of culture in Europe is the need to define corresponding sectors and activities.

This is no easy task given the divergence of national and international approaches to date.

Because of the study’s objectives, its scope goes beyond the traditional cultural industries such as cinema, music and publishing. It also includes the media (press, radio and television), the creative sectors (such as fashion, interior and product design), cultural tourism, as well as the traditional arts fields (performing arts, visual arts, and heritage). The study also touches upon the impact of the cultural sector on the development of related industries, such as cultural tourism and, perhaps more importantly, ICT industries, and explores the links between culture, creativity and innovation in this respect.

Therefore the scope of the assessment includes:

• The “cultural sector”

- Non-industrial sectors producing non-reproducible goods and services aimed at being "consumed" on the spot (a concert, an art fair, an exhibition). These are the arts field (visual arts including paintings, sculpture, craft, photography;

the arts and antique markets; performing arts including opera, orchestra, theatre, dance, circus; and heritage including museums, heritage sites, archaeological sites, libraries and archives).

- Industrial sectors producing cultural products aimed at mass reproduction, mass-dissemination and exports (for example, a book, a film, a sound recording). These are “cultural industries” including film and video, video-games, broadcasting, music, book and press publishing.

•••• The “creative sector”

In the “creative sector”, culture becomes a “creative” input in the production of non-cultural goods. It includes activities such as design (fashion design, interior design, and product design), architecture, and advertising. Creativity is understood in the study as the use of cultural resources as an intermediate consumption in the production process of non-cultural sectors, and thereby as a source of innovation.

Consequently the study’s scope of investigation is the “cultural & creative sector”. This approach enables us to measure more accurately the economic and social, direct and indirect impact of culture and creativity. This is mapped out in the following table:

Delineation of the cultural & creative sector

CIRCLES SECTORS SUB- SECTORS CHARACTERISTICS

Visual arts Crafts

Paintings – Sculpture – Photography

Performing arts Theatre - Dance – Circus - Festivals.

CORE ARTS FIELD Heritage Museums – Libraries - Archaeological sites - Archives.

Non industrial activities.

Output are prototypes and “potentially copyrighted works” (i.e.

these works have a high density of creation that would be eligible to copyright but they are however not systematically copyrighted, as it is the case for most craft works, some performing arts productions and visual arts, etc).

Film and Video Television and radio

Video games

Music Recorded music market – Live music performances – revenues of collecting societies in the music sector

CIRCLE 1: CULTURAL INDUSTRIES

Books and press Book publishing - Magazine and press publishing

Industrial activities aimed at massive reproduction.

Outputs are based on copyright.

Design Fashion design, graphic design, interior design, product design Architecture

CIRCLE 2: CREATIVE INDUSTRIES AND ACTIVITIES

Advertising

Activities are not necessarily industrial, and may be prototypes.

Although outputs are based on copyright, they may include other intellectual property inputs (trademark for instance).

The use of creativity (creative skills and creative people originating in the arts fieldand in the field of cultural industries) is essential to the performances of these non cultural sectors.

CIRCLE 3: RELATED INDUSTRIES PC manufacturers, MP3 player

manufacturers, mobile industry, etc…

This category is loose and impossible to circumscribe on the basis of clear criteria.

It involves many other economic sectors that are dependent on the previous “circles”, such as the ICT sector.

: “the cultural sector”

: “the creative sector”

Development of specific methodological tools

In relation to direct impact, existing statistical tools are not appropriate and available statistics are scarce.

Statistical tools do not enable the cultural & creative sector to be captured properly. At European and national level, statistical categorisations are often too broad. Data are rarely comparable. A considerable amount of cultural activity takes place in establishments whose primary classification is non cultural and therefore not recorded within existing classifications. Self-employed cannot be identified. Electronic commerce, which represents a growing share of the economy of culture, is not taken into account. And it is not possible to properly assess the public economy of culture at pan-European level.

Consequently, the study has required the development of specific definitions, statistical tools, and data collection processes.

In relation to industrial data, in the absence of standardised data categorisations and in order to take into consideration considerable gaps in existing databases, a specific methodology was developed:

- It uses to the extent possible existing statistical categorisations (four-digit NACE) that embrace the sector, and collects the Eurostat data corresponding to these categorisations.

- To complete data gaps due to the absence of harmonised data gathering related to the sector in Europe, the Amadeus database was used. It is the most comprehensive pan-European database containing financial information on approximately 8 million public and private companies from 38 European countries, developed by the Bureau van Dijk Electronic Publishing.

Similar problems were faced in relation to employment data. The study uses the only methodology able to picture employment in the cultural sector to date – a methodology developed by Eurostat Task Force on cultural employment.

It is based on a more restricted delimitation of the economy of culture than the delimitation used for the purpose of extracting industrial data.

To address identified loopholes in data collection, the study provides sectors’ profiles and case studies to cover specific aspects of the economy of culture, not rendered by current official data collection (notably on the value of collective rights management, and the value of e-commerce).

For these problems to be remedied in the future, more work needs to be done at national and European level to adopt appropriate standards and definitions as well as to prioritise the collection of statistically sound data right across the cultural & creative sector.

Socio-economic results: Quantifiable contribution to the Lisbon targets

“Not everything that counts can be measured, and not everything that can be measured counts”,

Albert Einstein.

The main direct quantifiable socio-economic impacts of the cultural & creative sector are presented below. Despite shortcomings in data availability leading to a blatant under-estimation of the real weight of the sector, the figures show that the cultural & creative sector plays an important economic and social role in Europe: the sector is performing well, increasing its trend share of economic activity.

EMPLOYMENT

The overall growth of the sector’s value added was 19.7 % in 1999-2003.

The sector’s growth in 1999-2003 was 12.3% higher than the growth of the general economy.

The sector contributed to 2.6% of EU GDP in 2003.

The same year:

• Real estate activities accounted for 2.1% of contribution 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 (3)

In 2004 5.8 million people worked in the sector, equivalent to 3.1% of total employed population in EU25.

Whereas total employment in the EU decreased in 2002- 2004, employment in the sector increased (+1.85%)

• 46.8% of workers have at least a university degree (against 25.7% in total employment)

• The share of independents is more than twice as in 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).

The sector turned over more than € 654 billion in 2003.

The turnover of the car manufacturing industry (1) was € 271 billion in 2001 and the turnover generated by ICT

manufacturers was € 541 billion in 2003 (EU-15 figures) (2).

CONTRIBUTION TO EU GROWTH

TURNOVER

VALUE ADDED TO EU GDP

Quantifiable socio-economic impact of the cultural & creative sector (EU30)

(1) “The European Motor Vehicle Industry, Key Figures 2005”, a report from the ACEA (Association des Constructeurs Européens d’Automobiles – European Automobile Manufacturers Association), Brussels, March 2006.

(2) “Restoring European economic and social progress: unleashing the potential of ICT”, a report for the Brussels Round Table (BRT) by Indepen, Brussels, January 2006.

(3) Eurostat Structural Business Statistics

Indirect socio-economic impact: The non-quantifiable contribution to Lisbon

The contribution of the cultural & creative sector to the European economy is not limited to its direct and quantifiable impact.

The sector also generates important economic performance in other non-cultural sectors, thereby indirectly contributing to economic activity and development, and in particular in the ICT sector as well as in relation to local development.

•••• The interdependence between the cultural & creative sector and ICT

Broadband penetration has grown exponentially over the last years and broadband uptake is continuing. The diffusion of wireless Internet connections and the mass adoption of 3G mobile phones have turned into a reality the promise of being connected “anywhere, anytime”. The switch-over from analogue to digital broadcasting has already happened (for radio) or is foreseen for the years to come (for TV).

The EU totalled 52,624,403 broadband fixed access lines in October 2005 (from 10,298,139 in October 2002).

Broadband penetration rates stand at an average 11% in the EU (from 10% in Greece to 23% in Denmark and 24% in Finland). By way of comparison, average broadband penetration at the end of 2005 was 15% in the US and 16% in Japan. The ICT industry will supposedly drive 25 % of the overall European growth in the years to come.

The growth of creative content and the expansion of the ICT sector are the two sides of a same coin.

Technology and in particular the growing diffusion and importance of the Internet is the major driver for growth in the creative media and Internet industry (provided the issue of piracy is properly addressed). The impact on media consumption has been huge in recent years and it will be the major factor for the sector in the future. At the same time creative content is a key driver for ICT uptake. The consultancy firm PriceWaterhouseCoopers estimates that spending on ICT-related content will account for 12% of total increase in global entertainment and media spending until 2009.

Indeed, the development of new technology depends to a large extent on the attractiveness of content:

- Sales of DVDs, recordable devices, MP3 devices, home cinema systems, set-top boxes and flat screen TVs are dependent on the availability of attractive content (games, films, music).

- The development of mobile telephony and networks is based on the availability of attractive value-added services that will incorporate creative content.

Music has experienced a true business revolution which has not been painless for the industry. Video games are heavily dependent on transformations in technology. Film and video as well as the publishing industry are currently undergoing similar radical business changes. Even traditional arts sectors such as heritage, visual arts and performing arts cannot escape significant adaptations to the new technological environment.

•••• Creative hubs and the contribution of culture and creativity to local development

Firstly, the characteristics of cultural and creative goods are that they cater essentially for a local audience, its languages and cultures. This makes it difficult for the production of cultural goods and services to shift to other continents. Therefore off-shoring is less developed than in other sectors of the economy (even at manufacturing level). Job losses in the cultural & creative sector tend to be the result of restructuring, for example due to new forms of distribution and the emergence of new business models. Because of this characteristic (non-delocalisation), and given that Europe is a major producer of intellectual property assets in the world, it would be well advised to try and make the most out of this potential to boost its economy.

Secondly, there is a competitive race to attract talent and creators (“the creative class”) to localised environments supporting the clustering of creativity and innovation skills. Europe risks experiencing a talent drain in sectors such as video games and cinema attracted abroad by better conditions, essentially financial.

Moreover, culture and innovation play a crucial role in helping regions attract investment, creative talents and tourism. Paradoxically, whereas we are living at a time where information technologies have abolished distance and time constraints, “physical location” and the “socialisation” factor remain decisive for economic success. The “location market” is a reality. Cities and regions are competing to attract foreign direct investment and creative talents. In order to succeed they need to attach several new strings to their bows: diversified cultural offerings, quality of life and life style.

Culture has become an important soft location factor and a key factor for boosting local and regional attractiveness.

Thirdly, culture is a main driving force for tourism, one of Europe’s most successful industries representing 5.5% of the EU GDP and where Europe holds a 55% of the global market share. Europe is the most-visited destination in the world. In 2005, the continent recorded 443.9 million international arrivals.¹

1 United Nations World Tourism Organization (UNWTO)

Contributing to Lisbon’s social objectives

Another more pervasive effect of culture on local socio-economic context is that it serves as a tool of social integration and territorial cohesion.

In many European territories today a growing polarisation is seen between “resource-strong” and “resource weak”

communities, groups and individuals such as ethnic minorities, immigrants, youth in difficulty, or long-term unemployed, as well as difficult territories such as mega-poles’ suburbs, industrial areas in decay, isolated and declining agricultural areas, etc.

Strategies for “empowerment” aim at giving marginalised citizens and deprived neighbourhoods possibilities to develop those resources. Culture is a useful tool in this regard.

Relevant cultural activities in this context include:

Fostering grass-roots initiatives aimed at achieving social and socio-economic empowerment (social cultural projects, cultural associations, amateur theatre or dance companies, volunteers launching a festival),

Top-down projects initiated from administrations and institutions (for example local policies aimed at recycling brownfield sites to socio-economically improve an abandoned area).

Although these strategies do not have as a main purpose economic performance, they are beneficial to the economic environment as they:

Participate in reinforcing social integration and in building an « inclusive Europe ».

Contribute to fostering territorial cohesion.

Participate in providing skills that are transferable in other fields of activity and contribute to strengthening the

“employability” of their beneficiaries. They contribute to reinforcing self-confidence of individuals and communities.

Participate to the expression of cultural diversity.

Culture and creativity used with a social purpose contribute to sustainable development and societies.

Recommendations: Strategy for a creative Europe to achieve Lisbon

The “Lisbon potential” of the cultural & creative sector is very important and a specific strategy is required to unleash this potential.

In recent years national strategies have shown considerable interest in integrating cultural and economic policies more closely. However efforts of coordination remain scarce and the sector is still marginalised from a policy point of view, in particular at European level.

The proposal is to create in Europe a market that stimulates and encourages creativity. The report presents a strategy with concrete steps to establish a creative Europe which realises the culture & creative sector’s Lisbon potential and boosts Europe’s performance in economic and social terms.

The main recommendations to realise the creative Lisbon potential are the following:

1. Intelligence gathering

• Establish a strong quantitative evidence base for policy makers

A strategic approach to the sector needs to be informed by the development of appropriate statistical tools and indicators at both national and European level. In analogy with tools developed to measure the degree of innovation, an index to measure and monitor “creativity” should be developed (“the EU creativity scoreboard”).

2. The Lisbon agenda

The creative & cultural sector needs to be integrated into the Lisbon agenda. The Lisbon agenda should include as part of its objectives:

• Increasing and improving investment in creativity.

• Improving creation, production, distribution, promotion of, and access to, cultural activities and content.

Priority actions should be:

• Use and make the most of existing EU support programmes.

The 7^th Framework Programme, EU structural funds and support to SMEs should be used to foster creativity and engage with the creative sector and its SMEs. The EU budget should focus as much on creation as on innovation.

It should support as a matter of priority the digital shift – to make the most of opportunities fuelled by technological innovation.

• Reinforce the Internal Market for creative people, products and services.

Encourage artists’ mobility, overcome fiscal and social barriers, adapt accounting standards to promote the valuation of intangible assets.

This includes support to the testing and development of business models adapted to the constraints of the European market (with its localised markets due to languages and cultures) as well as the support to the digital shift, notably in distribution.

• Promote creativity and business education from school through to professional levels.

• Promote links between creators and technology by clustering the various competences in creativity platforms.

The i2010 initiative, structural funds and the 7^th FP are insufficiently engaging with the cultural and creative sector.

•••• Maximise the use of financial instruments of the EIB and the EIF, in line with the EIB i2010 Initiative. It is proposed to establish a creative industries bank specialised in financing (or in supporting the financing of) projects based on investment in intangible assets.

• Integrate the cultural dimension in cooperation and trade agreements between the EU and third countries with a view to develop exchanges, promote cultural diversity and implement the UNESCO convention.

3. Structural reform

• Reinforce coordination of activities and policies impacting on the cultural & creative sector within the European Commission.

• Promote better interaction between European institutions and the cultural & creative sector to ensure proper representation and consultation with such an important sector of the European economy. The focus should be on the maximisation of the sector’s economic and social contribution to the European project.

• Ensure a comprehensive and coherent implementation of article 151.4. of the EC Treaty to take into account the specificities of the sector when implementing notably internal market, competition and trade policies.

A strategy for a creative Europe

Main recommendations to realise the creative Lisbon potential

INTELLIGENCE GATHERING

• Establish a strong quantitative evidence base for policy makers.

STRUCTURAL REFORM • Reinforce coordination of activities and policies impacting on the cultural & creative sector within the European Commission.

THE LISBON AGENDA

• Use and make the most of existing EU support programmes (7thFP- structural funds - support to SMEs).

• Reinforce the Internal Market for creative people, products and services.

• Promote creativity and business education from school through to professional levels.

• Promote links between creators and technology by clustering the various competences in creativity platforms.

• Maximise the use of financial instruments of the EIB, and the EIF, in line with the EIB i2010 Initiative.

• Integrate the cultural dimension in cooperation and trade agreements between the EU and third countries with a view to develop exchanges and promote cultural diversity.

TABLE OF CONTENT

Executive summary……… p.1 Table of

content………

p.13

Foreword……… p.21 Introduction……….. p.23 Chapter I.

Introduction. The economy of culture in Europe – Background and

context……… p.27 SECTION I. THE POLITICAL, ECONOMIC AND SOCIAL DIMENSIONS OF CULTURE……… p.29 I. The political dimension………... p.29 II. The economic and social dimension(s) of culture……… p.30 III. The economy of culture: A sector of growth……… p.35 III.1. The economy of cultural goods and services……….. p.35 III.2. The ICT revolution: Increased growth opportunities for the cultural & creative sector…..… p.35 SECTION II. FROM CULTURE TO CREATIVITY ………... p.36 I. Grasping creativity ………. p.36 II. Realising the Lisbon strategy: understanding the competitive advantage of creativity in the

global economy……….. p.38 II.1. The creative imperative in a post-industrialised economy to foster innovation……… p.38 II.2. The territorial dimension of culture and creativity – “glocality”……… p.38

Chapter II.

Delineating the cultural & creative

sector……….. p. 43 SECTION I. OBJECTIVES………... p.45

SECTION II.DELINEATING THE CULTURAL & CREATIVE SECTOR IN EUROPE……... p.46 I. Reviewing the multiple methodologies and definitions to determine the economy of culture… p.46 I.1 National definitions………... p.46 I.1.1.The UK approach -“creative industries”………. p.46 I.1.2.The French approach - “cultural industries”………. p.47 I.1.3.The Nordic approach - “the experience economy”……….. p.48 I.2. International definitions………... p.49 I.2.1. UNESCO Framework on cultural statistics………. p.49 I.2.2.The Eurostat LEG-Culture definition………... p.50 I.2.3.The WIPO approach - “copyright industries”……… p.50 I.2.4.The OECD approach to “content industries”……… p.51

II. The proposed definition……… p.53 II.1. The framework……… p.53 II.1.1.Cultural and creative sectors………. p.53 II.1.2. Examining the “borderline” sectors………... p.54 II.2. Conclusions……….………… p.56

Chapter III.

Mapping out the economy of culture in figures……….. p.59 SECTION I. CONTRIBUTION TO EUROPEAN GDP, GROWTH AND EMPLOYMENT……….. p.61 I. Contribution to the European economy and growth……….. p.62 I.1. Measuring the economy of culture……… p.63 I.2. A well-performing economic sector……….. p.65 I.3. Comparison with the performance of other sectors of the economy………. p.67 I.4. A dynamic sector………. p.69

II. Cultural consumption at a glance ……….. p.70.

III. Cultural employment ………... p.73 III.1. Introduction………. p.73 III.1.1. Measuring cultural employment……….. p.73 III.1.2.Cultural employment in Europe: A snapshot………... p.78 III.2. Characteristics of cultural employment in Europe ……….. p.83 III.2.1.Cultural employment in the EU25 by gender……….. p.83 III.2.2.Cultural employment in the EU25 by age……… p.85 III.2.3.Cultural employment in the EU25 by education level……… p.87 III.2.4.Cultural employment in the EU25 by employment status………. p.90 III.2.5.Cultural employment in the EU25 by job stability……….. p.92 III.2.6.Cultural employment in the EU25 by work duration……….. p.94 III.2.7.Cultural employment in the EU25 by side-job……… p.96 III.3. Identifying the main features of cultural employment in Europe……… p.98

SECTION II. CONTRIBUTION TO EUROPEAN COMPETITIVENESS………... p.102 I. The unrecognised competitiveness of the sector……….…... p.103 II. A comparative insight……… p.105 III. Investing in intellectual capital: The sector’s importance in the context of innovation in the

knowledge society……….. p.107 III.1. The importance of intellectual capital: Turning ideas into business……….. p.107 III.2. Assessing “intangible assets” in the cultural & creative sector……….. p.108

SECTION III. THE SECTOR’S OUTLOOK……… p.112 I. ICT: The potential for the cultural & creative sector………. p.113 II. Focus on the European outlook……….. p.114 II.1. Trends in countries………. p.114 II.2. Trends in sectors……… p.114

SECTION IV.THE ROLE OF PUBLIC SUPPORT AND SPONSORSHIP……… p.118 I. The role played by the “public economy of culture”……….. p.119 I.1.The need for public support to realise public value………. p.121 I.2.The economic value of public funding for culture……… p.123

II. The role of sponsorship and patronage ……… p.126 II.1. An assessment of the value of sponsorship to the cultural sector ……… p.126 II.2.Recipient sectors………. p.126 II.3.National overview……… p.127 II.4.Conclusions……….. p.128

Chapter IV.

The indirect and non-quantifiable contribution to the Lisbon Agenda …… p.133 INTRODUCTION……… p.135 SECTION I. THE INTERDEPEDENCE BETWEEN THE CULTURAL & CREATIVE SECTOR AND ICT………... p.136 I. Increased growth prospects for ICTs……….. p.136 II. Growth prospects for the cultural & creative sector……… p.140 II.1. Digital technology is radically transforming the production, circulation and consumption of content, leading to new supports, applications and content offerings……….. p.140 II.2.The key challenge: Finding appropriate new business models………. p.140 III. Conclusion: Content is a main driver for ICT development ………. p.144

SECTION II. CULTURE AS AN ENGINE FOR THE EMERGENCE OF CREATIVE HUBS AND LOCAL DEVELOPMENT……….. p.145 I. Introduction………... p.145 I.1.Culture and local sustainable development………. p.145 I.2. Measuring the socio-economic impacts of culture on local development……….. p.146

II. Culture as an engine for tourism………. p.147 II.1. An overview of the economic impact of tourism activities in Europe………. p.147 II.2. The multiple ways culture contributes to tourism……….……. p.149 II.2.1.Heritage………. p.149 II.2.2.Arts Fairs………... p.150 II.2.3.Museums and exhibitions ………. p.152 Case Study: Bilbao Guggenheim museum……… p.156 II.2.4.Festivals and trade fairs………. p.158 Case Study: The socio-economic impact of festivals – selected examples………. p.160 II.2.5.The performing arts………. p.163 II.2.6.Film tourism……….. p.163 II.3.Conclusion: Assessing the added-value of cultural tourism………. p.165

III. Creative cities……… p.166 III.1.The territorial dimension of creativity……… p.166

III.2.Examples of cultural and creativity clusters………... p.167 III.2.1.Fostering creative hubs……….. p.167 Case study: Creative cities………... p.169 III.2.2. European capitals of culture………. p.173 Case study: European capitals of culture: Lille and Graz……… p.175

IV. The role of culture in urban and regional organisation ………. p.178 IV.1.Fostering territorial cohesion……… p.179 IV.1.1. Recycling brownfield sites into cultural attractions……….………. p.179 IV.1.2. Social cohesion within regional policy……….……….. p.181 IV.2. Fostering the social integration of individuals and communities……….…. p.184

Chapter V.

A strategy for a creative Europe to achieve Lisbon goals……… p.185 SECTION I. EUROPE’S COMPETITIVENESS RESTS IN CULTURE &

CREATIVITY……….. p.187 I. The competitive challenge of the cultural & creative sector………….……… p.188 II.The Lisbon process and creativity ………. p.193 II.1. Lisbon’s ICT focus………. p.193 II.2.The complex market structure of the content industry is perceived as a bottleneck for the emergence of a competitive ICT industry ……….… p.194

SECTION II. THE MAIN CHALLENGES FOR A CREATIVE EUROPE……….. p.197 I. Challenge 1. Making culture and creativity an EU priority ……….………... p.198 II. Challenge 2. Harnessing the digital shift ………..………. p.200 III. Challenge 3. Fostering a creative education………... p.202 IV. Challenge 4. Supporting creative territories: Winning the global competition to attract talents and investments………. p.203 V. Challenge 5. Ensuring consistency between EU internal and external actions………. p.204

SECTION III. RECOMMENDATIONS FOR A CREATIVE EUROPE TO PUSH LISBON FORWARD………. p.207 I. Establish a stronger quantitative evidence base for policy-makers……….. p.208 I.1. An accurate and comprehensive statistical system………. p.208 I.2. Establish an index to measure and monitor “creativity”……….. p.210 II. Integrating the cultural & creative sector into the Lisbon Agenda ………... p.212 III. Support the digital shift ……… p.213 IV. Address the chronic under funding of cultural & creative industries………. p.214 V. EU Regional policy to boost creativity……… p.216 VI. Support cultural diversity in Europe and internationally………. p.217 VII. Key steps to create coherence and engage with the sector………. p.218

Annexes……….. p.219 Annex 1. Selected Sector Profiles……….. p.221

Film……….. p.222 Music……….. p.234 Press and publishing……… p.254 Television……… p.262 Video games……….. p.270 Advertising………. p.280 Design………. p.285 The art market……… p.291 The performing arts……… p.299 Heritage……….. p.303

Annex 2. Statistical Matrix………..…….. p.307

Annex 3. Contribution of the cultural & creative sector and of other industry sectors to the European economy……… p.312 Annex 4. The development of GDP in European countries 1999-2003……… p.314

Annex 5. Delimitation of the cultural field in view of extracting employment data………... p.315

Annex 6. Method of calculation – extraction of employment data……….. p.317

Annex 7. Employment – Tables of computation……… p.318

Annex 8. ICT Glossary……….. p.326

Annex 9. List of cultural ministries contacted………..…. p.327

Annex 10.List of professional organisations, industry professionals and academics contacted.. p.329

Annex 11. List of attendees – EC working session of 19.07.2006……… p.332

Annex 12.Bibliography………. p.334

LIST OF TABLES AND FIGURES

List of tables

Table1: Proposed delineation of the cultural & creative sector………. p. 56 Table 2: Comparison of the proposed delineation with sector delimitation retained by Eurostat, WIPO and the UK DCMS………. p.57 Table 3: Contribution of the European cultural & creative sector to the European and national economies……… p.66 Table 4: Contribution of the cultural & creative sector and of other industries to the European economy……… p.68 Table 5: Contribution of the European cultural & creative sector to the European growth………. p.69 Table 6: “Cultural employment”, “Cultural and cultural tourism employment”, “Total

employment”, in the EU25………. p.79 Table 7: Evolution of the “Cultural employment”, “Cultural and tourism employment” and “Total employment” in the EU25 from 2002 to 2004………. p.79 Table 8. The cultural & creative sector in Europe: a comparison with other sectors (2002)…….. p.100 Table 9: Assessing the competitiveness of the European cultural & creative sector ……….. p.104 Table 10: The productivity of the European cultural & creative sector……….. p.106 Table 11: The profitability of the European cultural & creative sector……… p.107 Table 12: Level of knowledge and creativity investments within the cultural & creative sector…. p.109 Table 13: Direct public expenditures on culture ……… p.126 Table 14: Top 20 exhibitions having recorded most admissions in the world, 1998……… p.153 Table 15: Top 20 exhibitions having recorded most admissions in the world, 2005……… p.153 Table 16: The three ages of museums……… p.154 Table 17. The 20 leading audiovisual companies worldwide by audiovisual turnover in 2004 …. p.188 Table 18: EU innovation scoreboard……… p.210 Tables in Annexes:

Table 19: European film sector at retail level………. p.223 Table 20: Operating revenues – European producers, distributors and exhibitors 2000-2003… p.224 Table 21: Revenues on the VOD market: 2005 and estimates for 2010……… p.225 Table 22: Estimated losses in the film sector due to piracy………. p.227 Table 23: World box office top 20 - 2005 (USD million)……… p.229 Table 24: Top 20 leading film companies in Europe according to operating revenues……….. p.231 Table 25: The 20 leading independent film production companies in the European Union …….. p.232 Table 26: Recorded music sales in Europe 2000-2004……… p.235 Table 27: Worldwide revenues from digital music sales………... p.236 Table 28: Singles & Albums downloads in the US and in Europe 2004-2005……….. p.237 Table 29: Music sales at national levels in Europe……… p.239 Table 30: Top-20 albums of 2005 by worldwide sales……….. p.240 Table 31: Contribution of UK music composers, publishing and live performance to national

balance of payments (2000)……….. p.250 Table 32: Turnover of majors and main independent music companies in Europe ……… p.252

Table 33: Combined turnover of the publishing industry in Europe (2001)……… p.256 Table 34: Number of published titles in Europe i.e. newspapers, magazines, books -2001…….. p.257 Table 35: The evolution of US and European trade in publishing (1994-2002)………. p.259 Table 36: Total number of employees in publishing industries by country (2001)……… p.260 Table 37: Employees in European publishing industries by sector (2001)……… p.260 Table 38: The 20 leading audiovisual companies worldwide according to their 2004 turnover…. p.266 Table 39: Top-20 video game publishing companies in the world in 2004 ………... p.272 Table 40: Financial situation of European video game publishers (€ million) 1999-2003………. p.273 Table 41: Financial situation of European video game developers (€ million) 1999-2003……… p.273 Table 42: Advertising expenditures in selected European countries 2005……… p.283 Table 43: Revenues of leading European fashion groups 2005………. p.286 Table 44: Global Competitiveness Report 2001-2002/ ranking of countries on the basis of their competitiveness and use of design ………. p.289 Table 45: The European art market 2002: turnover, number of enterprises and jobs………. p.295 Table 46: The rise in price for works of art ………. p.296 Table 47: The European art market 2002 – number of employees, salary, % of part-time and % women……….. p.297 Table 48: The European art market indirect economic impact ……….. p.297 Table 49: Number of employed directly linked to cultural heritage………. p.303 Table 50: Comparison of public spending on conservation, restoration and rehabilitation of cultural heritage (PSH) (2001)………. p.304

List of figures

Figure 1. Household expenditure in the UK between 1990-2004, five largest categories……… p.71 Figure 2. Evolution of French household’s consumption 1960-2004………. p.72 Figure 3. Consumption of cultural-industries related products in value – 1995-2004………. p.72 Figure 4. Cultural & cultural tourism employment in the EU25 ………. p.78 Figure 5. Total employment in the EU 25 ………. p.79 Figure 6. Cultural employment in the EU 25 - 2004 ……… p.80 Figure 7. Cultural & cultural tourism employment in the EU 25 - 2004 (in thousands)………….. p.81 Figure 8. Cultural & cultural tourism employment in the EU 25 in % of total employment………. p.82 Figure 9. Cultural employment in the EU 25 by gender ………...……….. p.83 Figure 10. Share of women employed in the EU25 ……… p.84 Figure 11. Cultural employment in the EU 25 by age……….. p.85 Figure 12. Share of 25-49 age group employed in the EU25……… p.86 Figure 13. Cultural employment in the EU 25 by education level – 2004………. p.88 Figure 14. Share of tertiary education employed in the EU25……… p.88 Figure 15. Cultural employment in the EU 25 by employment status ………. p.90 Figure 16. Share of independent workers employed in the EU25………. p.90 Figure 17. Cultural employment in the EU 25 by job stability ……… p.92 Figure 18. Share of temporary workers employed in the EU25………. p.93 Figure 19. Cultural employment in the EU25 by work duration ………. p.94 Figure 20. Share of part-time workers employed in the EU25……… p.94 Figure 21. Cultural employment in the EU 25 by side-job ………. p.96 Figure 22. Share of workers with a side-job employed in the EU25……….. p.96

Figure 23. Creative Industries in the EU25 sorted in accordance with the number of

enterprises ………. p.99 Figure 24. EU broadband fixed access-lines 2002-2005………. p.137 Figure 25. EU broadband penetration rate……… p.137 Figure 26. Penetration of mobile telephones in Europe……….. p.138 Figures in Annexes:

Figure 27. Film export in the UK 1995-2004……… p.226 Figure 28. Digital Music Revenues 2005 / by region……… p.237 Figure 29. Market share of music publishers, 2006………. p.242 Figure 30. EU-30 Collecting societies’ revenues……….. p.246 Figure 31. Authors and publishers collecting societies’ revenues………. p.247 Figure 32. Producers collected revenues……….. p.247 Figure 33. Performers collected revenues………. p.248 Figure 34. Authors and publishers collecting societies members……….. p.248 Figure 35. Performers societies members………. p.249 Figure 36. World leading publishers……… p.255 Figure 37. Trade in TV programmes between the EU and North America………... p.268 Figure 38. Share of world leisure software sales……….. p.274 Figure 39. Ubisoft's turnover growth………... p.278 Figure 40. Turnover in advertising in the EU-25, share by Member State……… p.280 Figure 41. EU15 total display advertising spending in 2003………... p.281 Figure 42. Top six marketing and advertising companies in the world based on 2005 revenue.. p.284 Figure 43. Auction houses sales turnover and sales volume by country……….. p.292

Foreword

This Study on the economy of culture in Europe was prepared for the European Commission (Directorate-General for Education and Culture). It is a first for Europe. Never before has there been an attempt to assess the economic and social value of the cultural and creative sectors. The report is intended to help the EU harness the economic and social power of the cultural and creative sectors.

The assignment lasted 10 months between November 2005 and September 2006. It was managed by KEA European Affairs (KEA), a Brussels based consultancy which specialises in the cultural, media and entertainment industries sectors. Its research department is experienced in conducting a wide range of studies related to copyright, rights management, trade in cultural goods, regulatory impact assessment and Europe wide comparative analysis.

For this assignment KEA set up and managed a consortium composed of Media Group and MKW Wirtschaftsforschung GMbH.

Media Group is part of the Turku School of Economic and Business Administration in Finland. It specialises in media business and economics, conducting research on a wide range of topics.

MKW Wirtschaftsforschung GMbH is a German consultancy based in Munich with subsidiaries in Sarrebruck and Innsbruck.

Their research and consulting focus lies in the field of labour market and employment policy, labour mobility and migration as well as regional economics. MKW Wirtschaftsforschung GMbH is an external expert for the DG of Employment and Social Affairs of the European Commission for the Evaluation Working group of EURES.

Media Group‘s main task was to advise on the definition and implementation concerning the methodology used to collect statistical data enabling the economic assessment of the cultural & creative sector. Media Group worked mainly on a combination of Eurostat information and data from the Amadeus database. It provided the analysis of the results obtained from this data collection covering 30 European countries and gathered evidence of performances in other industry sectors as well.

The task of MKW Wirtschaftsforschung GMbH was to determine a method that would enable to assess the impact of the culture & creative sector at the employment level. It collected data in relation to employment mainly from Eurostat databases, provided elements of analysis and completed some case studies in relation to tourism, employment and education.

KEA responsibilities included managing the research, defining the analytical framework of the study, defining the scope of the economic and social assessment (Chapter II), completing the sector profiles (Annex 1), carrying out the research in relation to local development (Chapter IV) and policy strategy (Chapter V), preparing the bibliography, managing the contacts with trade bodies and ministries for information gathering, as well as the relationship with the European Commission and the coordination with the members of the consortium, and finally drafting the study.

Trade organisations, industry experts, public bodies and artists that were consulted in the framework of this study are listed in Annex 10. We would like to thank them for their interest, input and encouragements throughout this assignment. A

“working session” was organised at the initiative of the European Commission on 19 July 2006 in Brussels with a view to completing stakeholders’ consultation (the list of attendees is available in Annex 11).

National Culture Ministries in the 30 countries surveyed were all formally contacted – a few of them informally (list available in Annex 9). KEA had the opportunity to present its work at the interim stage to ministerial delegations at the CAC (Cultural Affairs Committee) meeting held on April 5-7 in Rust, Austria.

Representatives of international Organisations (such as OECD, WIPO, UNCTAD, UNESCO, Council of Europe) as well as academic experts in the field of the economy of culture were also consulted in the course of the assignment. We also made use of their numerous written contributions and we thank them for providing us with such valuable input.

Finally we would like to thank the European Council and Commission for taking the initiative of this study which, for the first time, will provide an assessment of the economic and social value of the cultural & creative sector in Europe.

Introduction

This study considers the contribution of the creative & cultural sector to European growth and cohesion.

In 2004 the European Council identified the need to map this sector in the context of Lisbon when it foresaw a study on “the ways in which creativity, creative industries, and public-private partnerships in the cultural sector already contribute to European economic, social and cultural potential and thereby to the achievement of Lisbon targets¹”.

The Commission’s Terms of Reference confirmed that the objective of this study is to “allow the European Commission to better understand how the cultural sector can contribute to achieving the Lisbon Strategy targets and thus provide a response to the request from the Council of European Union in the plan of work included in its conclusions of 15 and 16 November 2004”².

In particular, the study is expected to:

- Refine the definition of the “cultural sector”

- Submit an analysis giving an overview of the cultural sector in Europe from a socio-economic standpoint - Back-up this analysis with statistical data and case studies

- Analyse the development prospects of the cultural sector in Europe in socio-economic terms against a background of globalisation and relentless spread of new information technology

- Analyse how the cultural sector contributes to the economic and social potential of Europe and thus to the attainment of the Lisbon targets.

Culture is an integral part of the European project. The EC Treaty enshrines the EC’s cultural action around the following principles:

- Bringing Europe’s common cultural heritage to the fore while respecting the national and regional diversity of the Member States

- Encouraging co-operation between Member States and supporting their action in this field - Fostering cooperation with third countries and with relevant international organisations

- Taking into account the cultural dimension of all the actions the EC carries out under all the provisions of the EC Treaty.

As a result, several EU programmes (such as Media or Culture 2000) promote trans-national cultural exchanges. At an international level, the EU initiated the discussions which led to the signing of the Convention on the Protection and the Promotion of the Diversity of Cultural Expressions under the auspices of UNESCO.

Policy makers recognise that Europe’s true identity is made up of different heritages, multiple languages and diverse artistic traditions. They recognise the importance of culture to forge a “common destiny” and to reconcile identity and openness, dialogue and respect.

Though, while Europe prides in its intellectual and creative past, it has failed to assess the economic value of its cultural heritage and artistic creativity. Today Europe knows the importance of scientific innovation and is able to measure its investment in support of research and innovation. It is, however, unable to gauge the contribution culture and creativity has

1 In the work plan adopted as part of the European Council’s conclusions of 15 and 16 November 2004, under the topic “Lisbon strategy - Contribution of creativity and cultural industries to European growth and cohesion”.

2 Invitation N°EAC/03/05, Annex I, Terms of References

on the Lisbon goal to make Europe "the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion.”

Europe’s indexes measuring its economic performances and competitiveness include figures on R&D investments, patents, IT spending and the number of science graduates. Yet they fail to measure investment in creativity and copyright, as well as the importance of the cultural & creative industries.

The study aims to address the lack of economic visibility in the cultural & creative sector of the EU. It is divided into five chapters.

1. Background and context of the economic and social assessment

This chapter provides some insight on the political, economic and social dimensions of culture. It looks at the reasons for a new interest in assessing the economy of culture in Europe. It considers how the contribution of culture to the economy has recently been acknowledged at both national and international levels and evaluates the constraints of such an assessment. It puts this exercise in the context of the ICT revolution which triggers increased demand for

“content”. Finally it describes the interaction between culture and creativity to demonstrate the added value of creativity to economic development as this study attempts to gauge the degree in which both culture and creativity have had an impact on the economy of culture.

2. The scope of the economy of culture – delineation of the cultural and creative sector

Chapter II aims at delineating the cultural & creative sector which is subject to the impact assessment. It reviews the various definitions given at international and national levels to circumscribe the sector for evaluation purposes. The study provides its own method to collect the data on the various sectors and activities to measure the economy of culture in Europe.

3. Mapping out the economy of culture in figures Chapter III is divided into four sections that analyse:

- The contribution of the cultural & creative sector to European GDP, growth and employment.

- The contribution of the cultural & creative sector to European competitiveness - The sector’s outlook

- The role of public support and sponsorship in the European economy of culture.

This chapter considers the methodology used to measure the economic and social contribution in the absence of statistical standardisation in the field. It evaluates the evolution of cultural consumption and the prospect of the sectors particularly in relation to digital technology development.

The specificity of the sector in relation to its funding is considered through the influence of public bodies and/or private foundations. The chapter contributes to mapping out the culture & creative sector in Europe to the largest extent possible.

4. The indirect and non quantifiable contribution to the Lisbon Agenda

Chapter IV considers the indirect and non quantifiable impact of the cultural & creative sector to the Lisbon Agenda.

Fist it looks at the close interdependence between the content and ICT sectors, resulting in huge development prospects for both sectors.

Then it looks at the impact of culture at local level on the tourism industry, the development of cities and the role of the cultural & creative sector in urban regeneration. It emphasises the role of culture in promoting local development and describes strategies adopted at local levels to attract the “creative class”. This chapter also examines the contribution of culture as a tool for social integration and cohesion.

5. A strategy for a creative Europe

The study concludes that the establishment of Europe as a creative hub is essential for the Union’s competitiveness in the context of the Lisbon Strategy. It highlights the weaknesses and strengths of Europe’s creative industries and considers the challenges that Europe needs to address if it wants to make the most of its creative potential. The chapter shows the important interaction between the promotion of innovation, a Lisbon priority, and the fostering of creativity.

Finally it recommends a few action points that should stimulate the establishment at the EU level of an environment conducive to creativity. In the end, it should put culture and creation at the heart of the European project for the benefits of the European economy and its growth.

Chapter I.

The economy of culture in Europe - Background and Context

The questions of what Europe can do for culture, and what culture can do for Europe are not new. But in this context they have acquired a new sense of

urgency”.

José Manuel Barroso, President of the European Commission¹

SECTION I. THE POLITICAL, ECONOMIC AND SOCIAL DIMENSIONS OF CULTURE

I. THE POLITICAL DIMENSION

“On ne tombe pasamoureux dumarché unique ».

Jacques Delors quoted by J.C Juncker in his speech pronounced within the Rencontres pour l’Europe de la Culture, Paris, 3 May 2005.

Europe is a political project and not simply an economic market. Culture is ideally positioned on the cusp between the economy and the political sphere. Compared to other sectors of the economy, culture has an additional dimension – it not only creates wealth but it also contributes to social inclusion, better education, self-confidence and the pride of belonging to an historic community. Culture is also a powerful tool to communicate values and to promote objectives of public interest that are broader than wealth creation.

Culture has traditionally been considered from the point of view of “enlightenment”. Following an “art for art’s sake”

approach, one could say a work of art is important because it enriches its beneficiaries, offering them the pleasure of admiring an embodiment of “beauty”, broadening their “horizons” and/or providing them with a better insight on the complexity of the human being.

Culture performs multiple social and political functions. These have often served as justifications for cultural policies at national levels which have gained an increased relevance in a globalised and multicultural world.

Indeed, culture can be regarded as an “ambassador” and as a vehicle for European “values” (tolerance, democracy, diversity and pluralism, etc.) and its “way-of-life”. For example, from antiquity to the present, from Sophocles to Brecht and Beckett, European theatre has been linked to democracy, providing a place for free-expression. Goya’s caricatures or Picasso’s Guernica have marked the minds of generations because of the powerful social and political messages they encompass.

Today the films of directors such as Pedro Almodovar, Lars Van Trier, Aki Kaurismaki or Roman Polanski play the same role and are expressions of European creativity.

Europe has succeeded in establishing the principle of cultural diversity as a tenet of international law and in establishing that cultural products are not mere merchandises, but deserve specific treatment.

1 Berlin Speech 26 November 2004, Conference “A Soul for Europe”.

But culture is more than a banner for European “values”. It acts as a catalyst for intercultural dialogue within Europe, as well as with the rest of the world. Distributors of films, books or sound recordings give citizens the opportunity to experience the culture of others. Great artists are best positioned to deliver powerful messages. For example, Rostropovitch played the cello to celebrate the fall of the Berlin Wall, Daniel Barenboïm conducts an orchestra composed of Israelis and Palestinians.

In a multicultural world culture has a role to play in exemplifying the peaceful and enriching dimensions of exchanges between populations. As expressed by Yehudi Menuhin: “It is only culture, by uniting diversity that will give us a true European conscience”².

Culture is also a lever for territorial and social integration. The Bilbao Guggenheim museum opened up the Basque country to the world and reintroduced Bilbao into modernity. Brownfield sites, when they are vested with cultural activities, bring a new economic and social life to our cities. Culture is powerful tool to re-integrating the socially excluded, providing them with the opportunity to set up and fulfil their own project, acquire new skills that can be transferred into other sectors of activities and recover self-confidence .

“It is art that can structure the personalities of young people with a view to open their minds, to instillate the respect of others and the desire of peace” Yehudi Menuhin.³

II. THE ECONOMIC AND SOCIAL DIMENSION(S) OF CULTURE

By themselves the above arguments justify the interests of policy makers in the field of culture. However, the European Union has historically been built through market forces and the economy. This has enabled Europe to create minimal economic solidarity amongst the European nations upon which they could build. The market prism remains prevalent in the valuation of activities and the attribution of EU competences. In this context it is particularly important to assess the value of culture and creative industries to Europe’s economy.

For example, is cultural diversity a competitive asset for Europe? Are European creators and industries well positioned for global competition? Do they contribute to Europe’s influence in the world? Is this influence measurable? What are the strengths and weaknesses of the European “cultural sector”? How does the sector compare with other industries? Does it create employment? Does it create wealth or is it a drag on public spending – a bottomless pit for public expenditure with limited returns on investment? Does the sector deserve its place as a priority sector in the Lisbon strategy?

The assessment of the economy of culture at a European level has never been done before and the task is formidable.

The constraints are numerous:

• At statistical levels, the only pan-European source, Eurostat, relies on data provided by national States. Apart from the fact that the majority of the latter have an insufficient system to monitor the cultural sector and do not collect comprehensive data, they use different statistical systems, resulting in a lack of data harmonisation in this field. In addition, the statistical frameworks used at European and national levels are not tailored for the cultural sector.

Relevant sub-sectors are scattered around within different categories, or they find themselves lost within categories

2 Yehudi Menuhin – Letter to the European Council on 17.02.1999 – Le Monde 14 March 1999, page 25.

3 Yehudi Menuhin, Letter to the European Council, ibid.

that are too broad to permit the cultural dimension to be assessed. As a result Europe knows how much it invests in science and innovation, but it is unable to figure out the economic value of art and creation⁴ .

• Cultural organisations are sometimes reluctant to participate in an exercise aimed at giving an economic value to the world of art and culture. For these organisations, art has no price and investment in art does not require economic justification. A cultural activity should be disconnected from market reality so as to avoid economic pollution on the artistic minds. The act of creation should be independent from any lucrative thoughts. Moreover, the market may reject some artistic activities on the grounds that they are unprofitable – hence the need for public support to redress market inefficiencies in the world of art.

• Some trade organisations express reluctance in being considered as part of the cultural sector, preferring to be granted the status of industry. This is also driven by a fear of not being taken seriously by decision makers and of being excluded from EU programmes not focused on culture (the fear of the “cultural ghetto”).

• So far the focus of the Lisbon Strategy has been on ICT uptake and network development as well as on research in technology. Technology has been given prominence over other factors that stimulate economic and social growth in Europe. Culture and creativity suffer from an image problem and their economic role needs to be articulated if the sector is to gain better exposure amongst decision makers.

• Analyses of the possible “returns on investment”, in the form of solid and reliable ex-post impact studies and monitoring, are scarce in the sector. Culture has traditionally been looked upon by public authorities (whether local or national) as a cost issue (often as part of the communication budget) and not as an investment justified to tax payers by a proper business plan. In terms of private finance, cultural and creative projects, and businesses, often suffer from financial problems.

However, the situation of marginalisation in the cultural sector is changing. It has been triggered by the following factors:

The contribution of culture to the economy has gradually been acknowledged, in particular with the development of the cultural industries. Culture contributes directly to the economy as it provides products for consumption, namely the cultural goods and services embodied in books, films, music sound recordings, concerts, etc.

In addition, long-term structural changes in our societies give more importance to culture as a product of consumption. The demand for an ever greater number of diverse cultural products is indicative of post-modern consumer behaviour: consumers seek to differentiate themselves by appropriating the signs and values that mark specific products. These behaviours stem from long-term socio-economic structural trends observed in Western societies. Indeed our societies are becoming increasingly “individualised”. Research in human and social sciences stress the rising importance of “the individual” increasingly “free” from traditional loyalties (family, church, social class, etc.). This trend is being reinforced by the average level of education: as it increases, so does the demand for culture. Considering income availability, the richer our societies become, the more immaterial our consumption patterns become. When basic needs are covered and satisfied, consumption is increasingly a cultural statement.

This trend is reinforced by the increase in availability of leisure time that can be devoted to cultural activities. All

4 In a speech pronounced at the Delft University in The Netherlands on 13 January 2006, European Commission’s President José Manuel Barroso insists that culture and science “are the legs on which Europe stands” and that “constant innovation in art and science has helped Europe to enjoy both rapid development and unparalleled wealth”. And yet, whereas the importance of science and technology is backed up by figures (“a third of the top 25 R&D investing companies in the world are from the EU”, “the investment deficit affecting higher education is now so huge that to close the funding gap with the US, for example, Europe would need to spend an additional €10,000 per student per year”) there is no single figure on culture and creativity.