CREATe is happy to present the eleventh entry in our series of working papers released in 2023, ‘Do we need a new economic approach to the creative economy in the digital era?’ by Ruth Towse, Professor of Economics of Creative Industries, Centre for Intellectual Property Policy and Management, Bournemouth University.
Ruth Towse writes:
For the last 30 or so years, I have worked on cultural economics – the application of economic theories and empirical research to the arts and creative industries. Part of that enquiry involves understanding labour markets in those industries and I conducted one of the first surveys of professional earnings in the 1990s (my first book was Singers in the Marketplace, 1993). During that research, some of the people I interviewed asked if I wished to include copyright payments in the evidence. At the time, I knew nothing about it at all and said no! The question continued to nag, however, and I then set out to understand how authors and performers can earn from copyright. That lead to my work on economics of copyright and joining the small group of economists who work in this field.
Interest in copyright and the economics of the industries in which it plays a significant role has increased very considerably over the period, with CREATe a witness to that. Economics has two contributions to make. One, and the most widely understood, is to gather relevant data but the second is to me the more important, which is to understand the underlying economic organisation of the creative industries and incentives copyright offers to participants. Without that, data cannot be interpreted. That is what this Working Paper is about: given the huge impact of digitisation, can existing economic theories cope with the changes in the economics of these industries? Government policy and law-making requires economic input so it is important to assess how reliable it is.
I do not claim to have the answers but it is worth asking the question and finding out what others in the profession have contributed to it. What I believe the analysis of the impact of digitisation shows is that we can understand the impact of the changes in the production and consumption of the arts and culture using adaptations of existing theories. But I also think that, while digitisation has not fundamentally altered the economics of creating by professionals, it has put them under greater stress. Of course, this should also be testable but I don’t think the research has yet been done on it, so that is a project for future work.
The economics of creative industries is at the confluence of two streams of change: one due to the widespread adoption of digital technologies and the other in the theories needed to understand their effects. I discuss these changes in terms of paradigmatic shifts and conclude that while digitisation has transformed the distribution and consumption patterns of the arts and culture, the cost of creation of new work has been essentially unchanged. Moreover, industrial economics has made the adaptations needed to understand these changes.
Full paper can be downloaded here.