❀ vina@bmtv ❀

“Wealth creation is dependent upon the capacity of a nation to continually create content.

In short, a nation without a vibrant creative labor force of artists, writers, designers, scriptwriters, playwrights, painters, musicians, film producers, directors, actors, dancers, choreographers, not to mention engineers, scientists, researchers and intellectuals does not possess the knowledge base to succeed in the Information Economy, and must depend on ideas produced elsewhere.” (Shalini Venturelli, 2000)

“People with ideas – people who own ideas – have become more powerful than people who work machines and, in many cases, more powerful than people who own machines …” therefore, “the creative economy will be the dominant economic form in the twenty-first century.” (John Howkins, 2002, ix)

_{Creative Assets and the Changing Economy, The Journal of Arts Management, Law, and Society, Steven Jay Tepper, Summer 2002}

In my last entry I quoted a book on Strategy Maps which generally discusses how to manage “intangible assets” and how investments in people, technology, and organizational capital can be directed for the greatest impact and return. As I’ve been trying for the last few years now to educate a handful of people on the importance of the Cultural and Creative Industries and the value of creative products as “intangible assets”, I’ve thought to bring the knowlege now to the general public so everyone can benefit from what I previously kept to a selective few. This is also in line with the training on marketing and sales because it’s very important to know just what products and services are offered from one sector of the Cultural and Creative Industries – and how valuable they are when they are viewed as “intangible assets”.

The definition of “Intangible Assets” is clearly explained in the following excerpt:

Intangible assets are defined as identifiable non-monetary assets that cannot be seen, touched or physically measured, which are created through time and/or effort and that are identifiable as a separate asset. There are two primary forms of intangibles – legal intangibles (such as trade secrets (e.g., customer lists), copyrights, patents, trademarks, and goodwill) and competitive intangibles (such as knowledge activities (know-how, knowledge), collaboration activities, leverage activities, and structural activities). Legal intangibles generate legal property rights defensible in a court of law. Competitive intangibles, whilst legally non-ownable, directly impact effectiveness, productivity, wastage, and opportunity costs within an organization – and therefore costs, revenues, customer service, satisfaction, market value, and share price. Human capital is the primary source of competitive intangibles for organizations today. Competitive intangibles are the source from which competitive advantage flows, or is destroyed. The area of finance that deals with intangible assets is known as Intangible Asset Finance.

The Uniform Commercial Code (Section 9-102(a)(42)) defines “general intangibles” as

“any personal property…other than accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods, instruments, investment property, letter of credit rights, letters of credit, money, and oil, gas, or other minerals before extraction. The term includes payment intangibles and software.”

To understand “intangible assets” in the context of the Cultural and Creative Industries which are generally the industries I’m interested in using as an example as that will be the buzzword for the next decades, we have to first understand what exactly are these “industries” that make up the Creative Industries?

Here again we have the definition through the following excerpt:

The phrase creative industries (or sometimes creative economy) refers to a set of interlocking industry sectors, and are often cited as being a growing part of the global economy. The creative industries are often defined as those that focus on creating and exploiting intellectual property products; such as music, books, film, and games, or providing business-to-business creative services such as advertising, public relations and direct marketing. Aesthetic live performance experiences are also generally included, contributing to an overlap with definitions of art and culture, and sometimes extending to include aspects of tourism and sport. Economic activities focussed on designing, making and selling objects or works of art such as jewellery, haute couture, books of poetry or other creative writing, or fine art also often feature in definitions of the sector because the value of such objects derives from a high degree of aesthetic originality.

The Cultural and Creative Industries cover the following 11-sectors although with some governments, their categorization would be 13-sectors with Antique, Art and Craft separated, Crafts as one sector; and Design and Designer Fashion separated.

_{Just to clarify, at this point, the use of the terminology Creative Industries versus Cultural and Creative Industries – I am adopting the European Union’s use of the Cultural and Creative Industries (CCI) as the culture element is accepted as an “adjunct-sector of the creative industries“.}

The 11-sectors are:

1. Advertising
2. Architecture
3. Art, Antiques and Crafts
4. Design
5. Film and Video
6. Interactive Leisure Software
7. Music
8. Performing Arts
9. Software and Computer Service
10. Publishing
11. Television and Radio

How the 11-sectors interact with each other is best illustrated by the following diagram:

_{Reformatted by Vina from the original chart by the Montana Business Case Study}

Awareness of the Cultural and Creative Industries’ significant contribution to a country’s economy can be initially tracked through surveys and reports conducted within the EU and other countries as early as the mid-1980s (the following listing is not at all conclusive and there are several more current and significant reports I have excluded as the intention, for now, is to indicate the awareness time-frame and when it started):

• 1986 – UNESCO: “Framework for Cultural Statistics” (FCS), the first comprehensive attempt to develop common methodologies to capture information about cultural activities.
• 1998 & 2001 – U.K.: The Department of Culture, Media and Sport (DCMS) released in 1998 its “Creative Industries Mapping Study” and in 2001, “Creative Industries Mapping Document 2001″
• 1998 – European Commission: “Culture, the Cultural Industries and Employment”, Commission Staff Working Paper (1998).
• 1994-2003, UNESCO UIS: UNESCO’s Institute for Statistics (UIS) report on “International Flows of Selected Cultural Goods and Services, 1994-2003″ that analyses cross-border trade data from about 120 countries on selected products, such as books, CDs, videogames and sculptures.
• 2003 & 2004 – Hong Kong: Hong Kong Creative Industries Baseline Study (Centre for Cultural Policy Research 2003) and A Study on Creativity Index.

Thereafter, subsequent studies commissioned by governments at the national, regional and even city level were conducted in Taiwan (Survey and Estimate of the Productive Value of the Cultural and Creative Industry, 2003), New Zealand (Creative Industries in New Zealand, March 2002), Japan (The Status of Creative Industries in Japan and Policy Recommendations for Their Promotion, 2003), Singapore (Economic Contributions of Singapore’s Creative Industries, 2003) and Australia (Creative Industries Cluster Study, 2004).

The basic result from the report findings indicate that the economic impact of the Cultural and Creative Industries (CCI) and growth rate between 1999 to 2006 for Australia, the UK and the EU is increasing at a faster pace than the aggregate economy.

Between 2000-5 the Australian creative industries grew at twice the rate of the aggregate economy. The European Commission found that the growth of the cultural and creative sector proceeded in Europe at 8%. In New Zealand, it was found that the creative industries value added has been recently growing at 8% per year. In the UK, where the most comprehensive data exists, the creative industries have been recorded as growing at 5% as compared to real aggregate GDP growth of 3%. CI growth ratios are everywhere greather than 1.0.

_{Four Models of the Creative Industries, Cultural Science, Jason Potts and Stuart Cunningham}

Next topic: ROI in the Cultural and Creative Industries from an SME perspective …