Austrian Institute for SME Research and VVA Europe has conducted this study on behalf of the Executive Agency for Small and Medium-sized Enterprises (EASME) of the European Commission. Here are some interesting things; all details are available in full report.
Cultural and creative industries (CCIs) play an important role in fostering economic growth, job creation and innovation and have been identified by the European Commission as a high growth sector generating added value as well as a resilient sector in times of economic crises.
Cultural and creative sectors mean all sectors whose activities are based on cultural values and/or artistic and other creative expressions. As specified in the 2012 Communication of the European Commission cultural and creative sectors cover in particular architecture, archives and libraries, artistic crafts, audio-visual (including film, television, video games and multimedia), cultural heritage, design (including fashion design), festivals, music, performing and visual arts, publishing and radio. They can also include other sectors, which rely on a strong cultural and creative input, such as advertising, software, as well as fashion and high-end industries.
Furthermore, it has been demonstrated that CCIs initiate spillover effects to other industries and are thus in a position to act as catalysts for innovation in the overall economy. Enterprises in the creative industries support their customers in a variety of innovation activities: from developing new ideas, research and development, product design to market launch and marketing concepts.
In the European Union (EU 28), in 2013, Cultural and Creative industries (CCIs) (excluding high-end industries) constituted 11.2 % of all private enterprises and 7.5 % of all persons employed in the total economy. In terms of value added, core CCIs and the fashion industry generate 5.3 % of the total European GVA. All in all, more than three million enterprises can be assigned to CCIs (excluding high-end industries). They employ over 12 million persons. The turnover amounts to € 1,500 billion, while the value added is approx. € 509 billion.
The largest sectors within the core CCIs in the European Union are books & press, software & games as well as advertising. In contrast, cultural education, music as well as radio & TV can be counted among the smaller CCIs.
With regard to music – a small, but heterogeneous sector -, despite a decrease of persons employed and turnover, the number of enterprises grew and the value added increased by 38 %. Due to the different importance of the sub-branches with regard to the number of enterprises, employment, turnover and value-added, there is an inhomogeneous development in this field. The decrease of employment and turnover can be mostly attributed to the sharp decline in the retail sale of music and video recordings in specialised stores. In contrast, the – on average – small companies in the field of sound recording and music publishing activities are responsible for the growth of the number of companies and also for the value-added in the music sector: the share of sound recording and music publishing activities in the value-added of the music sector is about 80%. Furthermore, intermediate inputs are much lower in sound recording and music publishing activities than in the retail sale of music and video recordings in specialised stores. These developments are mainly influenced by the technological changes due to digitalisation, which profoundly changes the offer and the consumption of music and thus the structure of the music sector.
Factors that hamper access to finance for CCIs can also be found on the supply side. Banks are the major external source for financing in the SME-sector. Alternative financial means such as equity finance, angel investment, venture capital or guarantees are used only rarely compared to credit financing. However, banks often do not have the necessary expertise to evaluate business models of the cultural and creative industries and, therefore, they are not in a position to assess their intangible assets adequately. The asymmetry of information between banks and CCIs is considered to be high. As a consequence, financial institutions need increased general awareness of the economic potential of CCIs and expertise in evaluating business models based on intangible assets need.
The workforce of the CCIs is characterised by a high level of education (including a higher share of academics), and by a high level of flexibility as well as mobility. The cultural and creative sectors are an important employer for young people: in 2013, almost one fifth of persons employed were between 15 and 29 years old – the highest share of all sectors. Another characteristic of the industry is the high percentage of self-employed persons, “One-Person-Enterprises” (OPEs) and freelancers.
Creative industries require a highly specialised work force. Skills needed include business knowledge and creative entrepreneurship, technical and traditional skills and crafts, as well as e-skills. This means that required skills combine “old” and “new” job profiles as well as “cross-disciplinary curricula” not necessarily being taught together in training facilities. To promote creative skills it is stressed that the aim should be on stronger partnerships between cultural and creative sectors, social partners and education and training providers. Also, the respective skills should be learnt from an early age on.
The main customer group of CCIs are other enterprises. Business-to-business (B2B) is thus the typical relationship between clients and customers in the creative industries. Other enterprises generate almost two thirds of the sector’s total sales while end consumers (private households) account for about a sixth of total sales. Public organisations contribute to one out of seven Euros in sales. Another, albeit minor customer, is the non-profit sector. The majority of private enterprises regularly acquire creative work. Clients from the private sector can be found in almost all branches of the economy as creative inputs are a decisive part of many value chains in manufacturing as well as services. Even if the client does not come from the creative industries, it has been observed that demand for creative services is often driven by creative capacities within the client’s enterprise, while companies with no creative capacities (e. g. creative employees, or departments) acquire creative works less frequently. Creative employees can therefore act as “door openers” for the creative industries.
Analysis shows that the large majority of CCI enterprises cooperate with other companies in order to offer creative goods and services. Most of the time, creative enterprises cooperate with enterprises from the same creative industry to complement their services with competences of other creatives. Cooperation is most of the time project based. A large part of enterprises also uses (long-term) cooperation to develop new products and services. The personal nature of cooperation relationships is important and this has led to people-centred strategies for networking being very relevant for the sector. Besides cooperation with other businesses to provide goods and services together, the specific nature of the creative industry’s products often requires close relationships and cooperation also with their customers. Creative industries often develop new and unconventional solutions specifically adapted to their customer’s needs. Studies results show that the vast majority of creative enterprises individually adapt products and services for each customer and also work together with their customers on projects.