Version classiqueVersion mobile
OpenEdition Books

Accounting for Culture

 | 
Caroline Andrew
, 
Monica Gattinger
, 
M. Sharon Jeannotte
, 
et al.

Part III. New Approaches in a Changing Cultural Environment

8. From “Culture” to “Knowledge”

An Innovation Systems Approach to the Content Industries

Stuart Cunningham, Terry Cutler, Greg Hearn, Mark David Ryan et Michael Keane

Texte intégral

1Culture is very much the home patch of us content proselytizers—where many of us grew up intellectually and feel most comfortable. It has been around as a fundamental rationale for government’s interest in regulation and subsidy for decades. The “cultural industries” was a term invented to embrace the commercial industry sectors—principally film, television, book publishing, and music—which also delivered fundamental, popular culture to a national population. This led to a cultural industries policy “heyday” around the 1980s and 1990s, as the domain of culture expanded. (In some places it is still expanding, but is not carrying much heft in the way of public dollars with it, and this expansion has elements trending towards the—perfectly reasonable—social policy end of the policy space, with its emphasis on culture for community development ends.)

  • 1 Marion Jacka, Broadband Media in Australia: Tales from the Frontier (Sydney: Australian Film Commi (...)
  • 2 John Howkins, The Creative Economy: How People Make Money From Ideas (London: Allen Lane, 2001).
  • 3 Stuart Cunningham, “From Cultural to Creative Industries: Theory, Industry, and Policy Implication (...)

2Meanwhile, cultural policy fundamentals are being squeezed. They are nation-state specific in a time of wto and globalization. Cultural nationalism is no longer in the ascendancy socially and culturally. Policy rationales for the defense of national culture are less effective in the convergence space of new media. Marion Jacka’s1 recent study shows that broadband content needs industry development strategies, not so much cultural strategies, as broadband content is not the sort of higher-end content that has typically attracted regulatory or subsidy support. The sheer size of the content industries and the relatively minute size of the arts, crafts, and performing arts sub-sectors within them underline the need for clarity about the strategic direction of cultural policy (John Howkins2 estimates the total at $US 2.2 trillion in 1999, with the arts at two percent of this). Perhaps most interestingly, and ironically, cultural industries policy was a “victim of its own success”: cultural industry arguments have indeed been taken seriously, often leading to the agenda being taken over by other, more powerful, industry and innovation departments.3

3The core concept of cultural citizenship has come to the fore even as, and perhaps even because of, the need to negotiate such “squeezing” of cultural policy fundamentals. It is this chapter’s perspective, and its distinctive contribution to the debate on cultural citizenship, that culture is best grasped through propagation into the future—its active insertion into both mainstream and cutting-edge public policy—rather than only preservation. A renewed focus on genuine production diversity (beyond the charmed circle of professionalized production enclaves), the fundamental role of cultural consumption in driving innovation, and the responsibility of government and thought leaders to take culture into the mainstream of public policy are some of the perspectives derived from this approach. The themes of the colloquium from which this volume has come included “rebuilding the case for culture” and “new public interest discourses in cultural policy.” The colloquium sought—and this volume seeks—to address “the changed context for cultural policy.” By advancing an industry development and innovation approach to cultural production, we contribute to these aims.

And Services…

  • 4 Scott Lash and John Urry, Economies of Signs and Space (London: Sage, 1994).
  • 5 Shalini Venturelli, “From the Information Economy to the Creative Economy: Moving Culture to the C (...)

4This doesn’t get talked about much in the cultural/audiovisual industries “family,” but it’s sine qua non in telecommunications and in, well really, pretty much the rest of the economy. Many of the content and entertainment industries—especially the bigger ones such as publishing, broadcasting, and music—can be and are classified as service industries. But the broader and larger service industries, such as health, telecommunications, finance, education, and government services are needing more creativity through increased intermediate inputs, and it is here that much of the growth opportunities for content creation is occurring. Just as it has been received wisdom for two decades that society and economy are becoming more information-intensive through ICT uptake and embedding, so it is now increasingly clear that the trend is toward “creativity-intensive” industry sectors. This is what Lash and Urry4 refer to as the “culturalization of everyday life” and why Venturelli5 calls for “moving culture to the center of international public policy.”

5It is not surprising that this is where the growth opportunities are, as all Organization for Economic and Cultural Development (oecd) countries display service sectors which are by far the biggest sectors of their respective economies (the services sector is in the seventy-eighty percent range for total businesses; total gross value added; and employment across almost all oecd economies), and that relative size has generally been growing steadily for decades.

To Knowledge and Innovation

  • 6 Brian Arthur, “Increasing Returns and the New World of Business,” in John Seely Brown, ed., Seeing (...)

6How and why might content industries qualify as high value added, knowledge-based industry sectors, and from where has this new macro-focus emerged? In part, it’s been around for some time, with notional sub-divisions of the service or tertiary industry sector into quaternary and quinary sectors based on information management (fourth sector) and knowledge generation (fifth sector). But the shorter term influence is traceable to new growth theory in economics which has pointed to the limitations for wealth creation of only micro-economic efficiency gains and liberalization strategies.6 These have been the classic service industries strategies.

7Governments are now attempting to advance knowledge-based economy models, which imply a renewed interventionist role for the state in setting twenty-first-century industry policies, prioritization of innovation and r&d-driven industries, intensive re-skilling and education of the population, and a focus on universalizing the benefits of connectivity through mass ict literacy upgrades. Every oecd economy, large or small, or even emerging economies (e.g., Malaysia) can try to play this game, because a knowledge-based economy is not based on old-style comparative factor advantages, but on competitive advantage, namely what can be constructed out of an integrated labour force, education, technology, and investment strategies.

8The content and entertainment industries don’t, as a rule, figure in knowledge and innovation strategies, dominated as they are by the science, engineering, and technology sectors. But they should. Creative production and cultural consumption are an integral part of most contemporary economies, and the structure of those economies are being challenged by new paradigms that creativity and culture bring to them.

9What, in outline form, is a conceptual frame that may begin to see the content industries in the context of a knowledge and innovation agenda? This is important for two reasons: it opens up dynamic and central policy territory which has been the preserve of science, engineering, and technology (set) worldwide; and it asks new questions, outside the domain of cultural support, which may precipitate a more holistic approach to the content industries.

The Nature of the Innovation System

10The nature of r&d and innovation within the creative and content industries generally has not been closely examined. This largely reflects the sorry fact that these industries have tended to be, at best, at the fringes of national discussions about science and innovation policy, and of related funding and industry programs. A further complication is that there is little systematic data about the extent and nature of r&d activity and funding in the content industries in general and for digital content production in particular.

11In part, this is a result of “category confusion” which has given rise to numerous ways of approaching this sector around the world.

Figure 1: The Category Confusion with Content Industries

Figure 1: The Category Confusion with Content Industries

12This category confusion means that it is extremely difficult to gather accurate, authoritative, and timely data about the sector and that it is subject to unfocused analysis and intervention. Having said this, it is a problem generic to much of the service sector. Despite the problems, it is important to establish why digital content should be an important area of focus within a national innovation system. There are several reasons why the content industries in general and digital content in particular are important.

  • This industry cluster is economically significant. In 2000, sector turnover in Australia represented nineteen billion dollars, or 3.3 per cent of gdp. Comparison with the U.K. and U.S., where gdp shares are five per cent and 7.8 per cent respectively, shows that the potential significance of the sector in Australia is even greater.
  • The creative industry is a high growth sector. A survey of a cross-section of countries (see Figure 2) shows that the content industries have been growing faster than the rest of the economy. In the U.K. and U.S., average annual growth rates for the creative industries have consistently been more than twice that of the economy at large. This translates directly into jobs and economic growth.
  • The content industries and digital technology are becoming important enablers as intermediate inputs to other industry sectors. Digital content is becoming an important enabler across the economy, and especially in the services sector. This translates directly into the competitive advantage and innovation capability of other sectors of the economy.
  • The creative industries fuel the creative capital and creative workers which are increasingly being recognized as key drivers within national innovation systems.

13All these reasons support the contention that digital content and creative industries sector clusters matter, both in their own right and within the context of national innovation capabilities.

Figure 2: Cross-Country Comparisons of the Economic Value of Content Industries

Figure 2: Cross-Country Comparisons of the Economic Value of Content Industries

Source: Singapore, Creative Industries Development Strategy, 2002
Note: Treatment of industry statistics varies slightly across countries

  • 7 Catherine Livingstone, “Managing the Innovative Global Enterprise” (Warren Centre Innovation Lectu (...)

14Innovation and innovation systems approaches are a relatively new public policy framework, which means that general definitions of innovation are subject to contest and reformulation. “Business innovation is the process whereby ideas are transformed, through economic activity, into sustainable value-creating outcomes or a measurable change in output” is a working definition of innovation which has gained currency.7

  • 8 Organization for Economic and Cultural Development Oslo Manual (Paris, 1997).
  • 9 Louis Lengrand & Associés, prest and anrt, “Innovation Tomorrow: Innovation Policy and the Regulat (...)
  • 10 Roy Rothwell, “Towards the Fifth-Generation Innovation Process,” International Marketing Review 11 (...)

15The conventional wisdom (and normative framework) for policy on innovation resides in the oecd’s Oslo Manual.8 What matters within such a framework is how we understand the dynamic processes giving rise to systemic effects and industry outcomes. Despite the difficulties in shoehorning content and entertainment industries into innovation frameworks—designed as they are fundamentally for the manufacturing sector—it is beginning to occur, as innovation and r&d policies evolve. Lengrand and others9 talk of “third generation” innovation policy, while Rothwell10 contemplates five generations of innovation. The trend is the same, however. Earlier models are based on the idea of a linear process for the development of innovations. This process begins with basic knowledge breakthroughs, courtesy of laboratory science and public funding of pure/basic research, and moves through successive stages—seeding, pre-commercial, testing, prototyping—until the new knowledge is built into commercial applications that diffuse through widespread consumer and business adoption. Contemporary models take account of the complex, iterative and often non-linear nature of innovation, with many feedback loops, and seek to bolster the process by emphasizing the importance of the systems and infrastructures that support innovation. This model can be cross-referenced well enough, without too much mutilation either way, with industry models like Michael Porter’s representations of industry and cluster competitiveness. Both attempt to chart non-linear and multi-causal systems.

  • 11 Cf., Bo Carlson, Staffan Jacobsson, Magnus Holmén, and Annika Rickne, Innovation Systems: Analytic (...)

Figure 3: The Elements of a Digital Content Innovation System11

16While this migration is from a simplistic “technology push” model of innovation driven by upstream r&d to the more real-world characterization of industry markets as complex systems, old paradigms die hard. This is because science and research institutions change slowly. This has also been compounded by the false dichotomy between “hard” science and manufacturing policy on the one hand, and the “soft” research of the social sciences and the relative neglect of the services sector—within industry policy—on the other. Digital content production falls within this gap.

17One of the shortcomings of most embedded models of innovation and their related policy programs is that many of these were established within the context of stable, relatively mature industries, primarily in the primary production and manufacturing sectors. The challenge is how to adapt and extend thinking about innovation systems to the services sector and to emerging, technology-based firms in service industries. Addressing this challenge has shifted the focus to the dynamics of industry change and structural adjustment within a globally turbulent environment and shifted attention to new levels of granularity in seeking to understand innovation processes in terms of dynamic feedback loops, non-linear change processes, and the learning processes associated with organizational and institutional adaptiveness.

18Any system is defined by the relationships between the component elements. The nature and calibre of those linkages will be determined, inter alia, by various organizational attributes.

Analyzing the Innovation System

19Having regard to the limits and criticisms of innovation system thinking just canvassed, the key for conceptualizing such a system for digital content is to marry innovation frameworks with proven industry development paradigms.

20Michael Porter’s work in progress on assessing key parameters to cluster competitiveness provides an industry lens for identifying potential requirements of an innovation system as well as linking this to what successful innovation outcomes might involve. It should be noted that linking a situation analysis with possible outcomes is about optimizing identified prerequisites for industry competitiveness and success. As an aside, it is noteworthy that the role of government and of chance (for which we can read externalities) features increasingly strongly as Porter has concentrated more and more on applying his industry diagnostics to the issue of industry clusters. In the context of innovation systems, the arrows representing interactions and linkages in this model are as important as the component building blocks. The analysis of industry innovation involves the examination of both the component building blocks and the network processes—the links.

21Modelling the drivers of competitiveness and innovation specific to digital content production against the wider industry systems of either creative or content industry descriptors provides a comprehensive—albeit complex—picture of the mapping required to elaborate a policy framework for innovation systems affecting digital content production.

  • 12 The Australian Government’s Creative Industries Cluster Study (http://www.cultureandrecreation.gov (...)

22We will exemplify this model of an innovation system by treating Australia as a case study.12 (In this chapter, it will only be possible to focus on a few key elements of the system. In particular, we have chosen to focus on weaknesses in certain key components of the system as this is where most research has taken place.)

Figure 4: Porter’s Determinants of Industry Cluster Competitiveness

Figure 4: Porter’s Determinants of Industry Cluster Competitiveness

Figure 5: Overview of Elements in Cluster Competitiveness in Digital Content Production

Figure 5: Overview of Elements in Cluster Competitiveness in Digital Content Production

Components: Organizations

Firms

23The market is characterized by few large players—usually deriving their market position from strong incumbency in established traditional content industries or related markets, and a large, fragmented base of small enterprises. Few companies occupy the middle ground.

  • 13 Keith Hackett, Peter Ramsden, Danyal Sattar, and Chrisptophe Guene, Banking on Culture: New Financ (...)
  • 14 Ibid., 1.

24The distinctive economics of creative industries makes for unusual organizational forms and a viral form of growth and activity that is often hard for industrial age statistics and strategies to accommodate. A recent study13 of the shape and trends in European businesses in the sector points to high levels of employment volatility (apart from the echelon of senior executives and managers), concentration of power amongst a small number of large multinational companies at the distribution and aggregation end of the value chain, and an “hourglass effect” (see the diagram below) in the distribution of employment, with much smaller employment in medium sized businesses than is normal for industry sectors in general, which exhibit a pyramidal rather than hourglass shape. “The difference between [the creative industries] and other industries is the result of public support inflating the number of larger organizations and the difficulty and lack of propensity of small scale enterprises to grow into medium sized ones.”14

25A major issue is the undeveloped linkages between large and established firms and smes, as is the issue of linkages across related markets (supplying or using inputs). The industry fragmentation, production specialization, and the small domestic market all act to reinforce weaknesses in collaboration, clustering, and resource pooling. Remoteness from international deal-making centres and time-zone factors contribute to marginalization within the global value chain.

26The market focus of firms varies widely. Games is a “born global” business with a strong focus on the youth market, whilst many multimedia Web services are more domestically focused as input services in areas such as education, advertising, and marketing. An export orientation appears to foster firm collaboration, and clustering influences the “mindset” and development of firm capabilities. The question is how strategies can be developed that enhance the capacity and propensity of firms to compete in global markets. The following figure gives a sense of the content industry’s participation in Australia’s major sme export facilitation scheme, Austrade’s Export Market Development Grants. (Austrade is the Australian Government’s statutory trade promotion body.)

Figure 6: Firm Size in the Content Industries

Figure 6: Firm Size in the Content Industries

(Sources: Hackett et at., 2000)

27While the industry’s share of export support funding is roughly commensurate with its share of gdp, the base is soberingly low for a sector characterized by high growth and increasing trade deficits in intellectual property. In addition, the bulk of sector applications comes from one segment, the export oriented games industry. If the contribution of games companies is discounted, it is clear that most digital content activity pursued in conjunction with Austrade is incremental to domestic market turnover.

28The domestic market focus in most segments of the industry creates barriers to collaboration because firms are competing for share within a small market. There is little sharing of infrastructural resources, reflecting a lack of maturity, or trust, in inter-firm relationships and transactions. Emerging firms are commonly staying in one niche rather than venturing into related fields (such as digital content producers moving into education and e-learning). There are widespread weaknesses in vertical and horizontal linkages. In particular, technology spinoffs or technology by-products often risk becoming stranded assets because of the lack of horizontal market linkages or paths to technology diffusion.

Universities and R&D

29The creative industries appear to be marginal within university-based research. University research strategies do not embrace content readily (in contrast to their emphasis on ict and biotechnology). The many different research fields involved with creative industries do not relate to each other well and the potential linkages are seldom articulated into an r&d strategy involving the linkages between ict, creative content, and educational and services industry content. University research assessment systems rarely specifically reward industry collaboration or inter-disciplinary and multi-institutional activity.

  • 15 The arc is the Australian Governments statutory research funding body. This finding is based on es (...)

30Digital content and applications appear underweight in national competitive research funding under the Australian Research Council’s (arc’s) industry “Linkage” program,15 receiving funding of only five per cent of projects funded under the Humanities and Creative Arts category (nine out of 172 projects) for the period 1998 to 2003.

Figure 7: Digital Content Share of Austrade’s Export Grants Scheme

Figure 7: Digital Content Share of Austrade’s Export Grants Scheme

Source: Austrade; QUT and Cutler & Company analysis

31Australia’s National Research Priorities, announced first in December 2002, included “[f]rontier technologies for building and transforming Australian industries.” In this priority area there are key statements such as “research is needed to exploit the huge potential of the digital media industry,” and a number of examples of content applications such as e-commerce, multimedia, content generation, and imaging are mentioned for priority research and development. This has been strengthened by the more recent inclusion of a related priority goal of “maximizing Australia’s creative and technological capability by understanding the factors conducive to innovation and its acceptance.” We must wait and trust that these new priority areas will be “cashed in,” as the research culture and administration frameworks continue to marginalize research into content and related interdisciplinary research.

  • 16 Tony Bennett, Michael Emmison, and John Frow, Accounting for Taste (Cambridge: Cambridge Universit (...)
  • 17 Australia Council, Australians and the Arts: What Do the Arts Mean to Australians? (report prepare (...)

32r&d in content involves a shift in research focus from the supply to the demand side environment, consistent with the feedback systems characterizing an effective innovation system. Within a consumption-driven, innovation-led new economy, r&d into the contexts, meanings, and effects of cultural consumption could be as important as creative production. Major international content growth areas, such as on-line education, interactive television, multi-platform entertainment, computer games, Web design for business-to-consumer applications, or virtual tourism and heritage, need research that seeks to understand how complex systems involving entertainment, information, education, technological literacy, integrated marketing, lifestyle and aspirational psychographics, and cultural capital interrelate. They also need development through trialing and prototyping supported by test beds and infrastructure provision in r&d-style laboratories. They need these in the context of ever shortening innovation cycles and greater competition in rapidly expanding global markets. The centrality of consumption is one of the realities of the new economy that brings the research traditions of cultural and communication studies into mainstream and sharp relief. An innovation agenda would seek to facilitate hallmark work such as Bennett, Emmison, and Frow’s Accounting for Tastes: Australian Everyday Cultures16 and in-depth industry intelligence such as Saatchi & Saatchi’s report to the Australia Council (the Australian Government’s statutory arts funding body), Australians and the Arts: What Do the Arts Mean to Australians)17 being regularly updated.

33The creative industries are supported by a mix of fields of study based in the arc discipline cluster of Humanities and Creative Arts, but crossing over to the Information Sciences discipline cluster as well as into the business disciplines in the Social Sciences. Many of these are typically young academic disciplines with marginal to negligible profiles within the wider research community. The arc could more actively support the creative arts disciplinary array at the intersection of the information sciences and the creative arts through new incentives for cross-disciplinary activity and strategic investment in emerging industry innovation.

34A clear example of how current models penalize digital content and creative industry outputs in university research is the Higher Education Research Data Collection (herdc) process administered by the Department of Education, Science, and Training (dest) which measures—and rewards—research outputs. Research output data is collected in only four “proxy” categories out of more than two dozen recognized research output categories. These four are authored research monographs, book chapters, refereed journal articles, and refereed conference proceedings. Designs, patents, major creative works, and contributions to professional communication are not included and are thus subject to informal discounting as academic behaviour “follows the framework” of recognition. An innovation system more supportive of the creative industries would seek to weight these discounted outputs differently.

Universities and Post-graduate Research

35Current higher education research policy, administered by dest, discriminates against digital content in terms of the Research Training Scheme (rts) which awards funding for research and funded places for research training based on the dollar value for grants won (rather than, for instance, valuing them on the basis of numbers of grants won or weighting them to take account of the much higher dollar amounts required to conduct research in traditional science and technology areas), and thus creates significant differences between high cost and low cost higher degrees in terms of the dollar value for their completion to the university from which the student graduates. This formula produces a regressive outcome whereby it is impossible for digital content and the wider humanities, creative arts, and social sciences disciplines to advance their funding base no matter how hard they try and, indeed, succeed in their own terms. Universities may be constrained to focus rts places into areas which perform well in terms of the dest formula, none of which are digital content areas. Unfortunately, this is not necessarily into areas that will, in turn, drive innovation.

36The Cooperative Multimedia Centre (cmc) scheme from the mid-1990s was one initiative aimed specifically at a development and training focus on digital content. Six centres were funded at $1,375 million per annum over the period 1996-1998, and this funding was extended in 1998 to 2002. This scheme notably failed to achieve sustainable linkages between the higher education sector and industry. Instead of paralleling Cooperative Research Centre (crc) processes, which enjoy significant public funding triggered by industry involvement, the scheme became in effect a localized vocational education and training service for those few cmcs that remain standing.

37The arc, through its Networks, Centres, and Projects programs could seek to address key lacunae in the innovation system for dca by connecting early career researchers with industry skill sets to the research and development system through cross-disciplinary initiatives and encouraging research mentorship whereby a major advance in the r&d credibility and competence of next generation emerging talent in the digital content supporting disciplines is achieved.

Universities and Careers

  • 18 for a good international literature survey, see, e.g., the National Advisory Committee on Creative (...)
  • 19 See, e.g., http://www.ifacca.org/files/040527/ResearchingArtists.pdf.grep.

38Placement and role of creative industry graduates in “out of field” jobs tends not to be captured by higher education employment surveys, thus discounting the market value attributable to career paths outside the sectors which creatives are traditionally employed in. There appears to be real data gaps about the career and vocational choices increasingly available to creative workers and talent in the broader service industries as creative solutions are now increasingly sought in domains such as government and financial services, education, tourism, and health. Some jurisdictions, notably the U.K., have implemented national initiatives to promote the wide and innovative career options arising from a background in the creative industries.18 Of course, much excellent research is done to track the career prospects and actualities of creatives.19 However, it tends to focus on employment in the creative sectors as such. There is evidence that there are at least as many (and, given the problematic status of much of the data, probably many more) “creatively skilled” people outside the actual sectors recognized as creative industries as inside them.

Co-operative Research Centres

39The key university-industry-research agency linkage program, the Co-operative Research Centres (crc) program, has been running for over a decade and more than seventy crcs have been awarded. Despite this program being a lynchpin of r&d linkages between university and industry sectors, it has programmatically excluded from its purview the dca and related sectors, permitting only science, engineering, and technology disciplines and related industry sectors to apply. While a few crcs (Smart Internet, Sustainable Tourism) have contained slivers of the social sciences, and Interaction Design was funded in the last round, it remains the case that crc support for digital content and applications is extremely limited. In addition, the focus of crcs does not appear conducive to the three way linkage between universities, industry, and cultural institutions that appears highly desirable in the field of digital content and the creative industries.

Industry Associations

40There has been an untoward balkanization of collective association within the content industries. The digital content industry is specifically addressed in two industry associations: the Australian Interactive Media Industry Association (aimia) and the Games Developers Association of Australia (gdaa). The ict industry is variously represented by the Australian Information Industry Association, Internet Industry Association, the Australian Computer Society, and numerous professional bodies. There is little connection between the content and technology bodies. The potential role of aimia is limited by the lack, of participation by large players and the parochial interests of its small enterprise membership base. It tends to be a meeting place for emerging smes and a platform for entrepreneurial individuals. The gdaa on the other hand has been an effective and tightly-knit group with a strong focus on industry development activities, reflecting its strong state (or provincial) government funding and support base.

41Traditional content industries are represented by numerous associations, usually representing fields of practice and including the Australian Society of Authors, the Screen Producers Association, the Federations of Commercial Television and Radio Broadcasters, the collection agencies which act as industry organizers, as well as the industry trade union, the Media and Entertainment and Arts Alliance. These bodies are paralleled by numerous special interest (for example Arts Law) or guild-like organizations.

42There is little integration of digital content activities in established content industry associations, limiting the impact and agenda on both sides. There is a general fragmentation along lines of special interests, and a lack of national co-ordination.

Government Support Agencies

43There are numerous government agencies with specific industry support and funding charters involving digital content at national, state, and local levels. Apart from main agencies with specific charters relating to content industries sectors, a range of other government programs could be relevant to support of the sector. These include various “Sustainable Regions” programs (2001); the already-mentioned Austrade; the federal Department of Foreign Affairs and Trade (through bilateral cultural exchanges); the main national industry development agency, AusIndustry. As a general observation, available data appear to support the finding that digital content is systematically under represented in generic industry support schemes run by such bodies—that is, industry support not specifically targeted at a particular sector. We have already cited the example of Austrade’s emdg scheme; Figure 8 shows that it is also the case with the key tax concession scheme for r&d as well.

Government Support Funding

44There is evidence of a variety of support for digital content over the past decade by government agencies administering funding programs. However, it should be noted that, apart from specific programs (such as the Co-operative Multimedia Centres, the Australian Multimedia Enterprise, and the Learning Federation) which have delivered one-off surges of funding into the sector, the base level funding remains extremely low when compared to the funding allocated to so-called “critical infrastructure” (telecommunications infrastructure, digital television conversion) and mainstream r&d like biotechnology.

Government Procurement

  • 20 “The Future Management of Crown Copyright” (HMSO White Paper, March 1999).

45A fundamental issue for innovation systems is that of government and agency approaches to the administration of intellectual property (IP) and Crown Copyright. Unlike the U.K. and Australia, the U.S. Copyright Act explicitly excludes coverage of works produced by government. In the U.K. there were detailed reviews of Crown Copyright in 1998, resulting in a White Paper20 which sets out a new policy to open up access to government content and to streamline administrative processes for access. A good Australian example of how treating government content as a public domain resource supports digital content development is in the area of legal resources. Following the shaky beginnings of digital legal databases in the early 1980s, subsequent relaxation of access and re-use rules applying to statutes and case law across Australian jurisdictions has led to a very successful online service called austlii. In other areas, digital content producers continue to complain that policies on Crown copyright within government procurement practices create barriers to the commercialization of sector innovation.

Figure 8: Registrants fir R&D Tax Concession

Figure 8: Registrants fir R&D Tax Concession

Source: Auslndustry, IRCD Board Annual Reports
Note: Reporting by industry code is in aggregated categories. Separate and specific tax concessions apply in the film industry

Customers and Users: Intermediate Use

  • 21 Australian Bureau of Statistics, Australian National Accounts: Input-Output Tables 1996/1997 (docu (...)

46Preliminary analysis of national industry input/output tables21 suggests that there is increasing use of digital content and applications as intermediate inputs by traditional content and creative industries and especially by the wider service sector industries. Lags in statistical publications limit dynamic trend analysis. For example, the latest published input/output tables are for 1996/97, with the following year’s data released only in mid-2004. Against this several-year lag in the relevant data, it is hypothesized that the emerging trends identified will have strengthened significantly in the subsequent period of major development for the content industries.

47Intermediate industry use of content industry outputs outweighs final consumption in each broad segment of the content industries—as captured by anzsic statistical codes—except in the case of the more traditional arts and cultural institutions.

  • 22 Singapore Ministry of Trade and Industry, Economic Contributions of Singapore’s Creative Industrie (...)

48The following tables (Figures 9 and 10) highlight the main industry sectors reliant on content industry outputs. The Australian data is consistent with findings in other jurisdictions.22

49In addition, the intra-sectoral patterns of intermediate use within the creative industries themselves reinforces observations about the importance of cluster development for the creative industries and digital content. The emerging statistical evidence of growing intermediate use, supported by qualitative evidence, should put an increased spotlight on the way digital content is becoming an important enabler across the economy, and especially in the services sector. This observation highlights the growing importance of digital content within the wider context of national innovation systems.

Figure 9: Use of Sector Outputs (1996-97)

Figure 9: Use of Sector Outputs (1996-97)

Source: ABS Input Output Tables, 1996/7 (ABS 2003)

Figure 10: Utilization of Creative Products by Major Industry Users

Figure 10: Utilization of Creative Products by Major Industry Users

Source: ABS Input Output Tables, 1996/7 (abs 2003)

Components: Assets

Technologies

50The chronic lack of venture capital for commercialization in the content sector restricts invention. The finance sector’s wariness of content investment is compounded, in Australia, by the smallness of the domestic market and the lack of a critical industry mass to justify investor attention. Other impediments include the high cost of access to broadband and other equipment inputs, which limit the capacity to nurture r&d at the sme level where it is most productive.

  • 23 HM Treasury, Department of Trade and Industry and Inland Revenue, “Defining Innovation: A Consulta (...)

51Digital content firms are underweighed in government industry r&d support. Analysis of Industry Research and Development Board Annual Reports show that they represented two per cent of the main federal scheme, the r&d Start Grant, in 2000-01 and one per cent in 2001-02, and received three per cent and 0.5 per cent respectively of total funding for each year. This situation largely results from the fact that standard definitions of r&d used in grant guidelines and for tax concessions discriminate against “soft” technologies, and this has been raised as an issue to be addressed in several jurisdictions, including the U.K. and New Zealand.23

Intellectual Property

52Intellectual property issues go to the heart of the sector’s business models and value chains, and the hody contested issue of which parties capture disproportionate shares of the value added. It is often bundled—unnecessarily or inappropriately—with the matter of the protection of corporate or commercial information. The Australian government has shown an awareness of copyright and digital-rights issues (as evidenced in copyright reviews and the Department of Communications, Information Technology and the Arts’ release of a Digital Rights Management Guide). There remains an inherent risk that established interests—not innovators—will capture the agenda in reviews of IP regimes. There continues to be a lack of robust policy debate around this crucial topic.

Figure 11: The Access Lockout of Inactive Copyrights

Figure 11: The Access Lockout of Inactive Copyrights

Source: Author’s (Cutler & Company) analysis, 2003

53At the heart of this debate is the imbalance of market power between distributors and publishers on the one hand, and content creators and users—and re-users—on the other. The fundamental debate is over the balance of private and public rights and interests in the control of copyright content, particularly that ninety-eight per cent of copyright content estimated to be not under active commercialization or use.

54The availability of “source content” is a powerful innovation and industry driver; its lack, a major inhibitor. There has been but limited attention to the issue of possible licensing regimes for more open content repositories. Whatever the licensing models, there needs to be a system of digital rights management that is flexible, transparent, secure, and allows user customization and micro-management of content. In general, the lack of clear and certain IP parameters adds to transaction costs and discourages innovation and development.

Human and Creative Capital

  • 24 Richard Florida, The Rise of the Creative Class (USA: Basic Books, 2002).
  • 25 National Economics, State of the Regions Report 2002 (Canberra: Australian Local Government Associ (...)

55Richard Florida’s24 work on creative workers has recently highlighted the wider economic significance of creative capital, especially in under-pinning high technology industry development. An overall creativity index comparing Australia and the United States on the parameters of population diversity, high-tech output, innovation, and human capital was prepared by National Economics,25 with the following results, see Figure 12.

56Thus, ranked against U.S. cities, Sydney and Melbourne would have come in at seventh and eighth places.

57As a percentage of the population, Australia’s “super creative” are outranked by the U.S. by about two percentage points, but the reverse holds for the second-tier creative professionals in business services, health, and education. Australia also out-performs the U.S. on the “Bohemian” Index of arts workers as a proportion of population, and also on the Diversity Index. Where we lag significantly in this comparative study is in Innovation (patents per capita), human capital talent (percentage of population with a higher degree), and high technology production.

Figure 12: Creativity Index: Top Ten Regions—U.S. and Australia

Figure 12: Creativity Index: Top Ten Regions—U.S. and Australia

58Whilst the Australian survey confirms and replicates Florida’s U.S. findings about the correlation between concentrations of creative populations and the location of high tech industries, it is also apparent that Australia is not successfully leveraging its creative capital into economic outcomes as successfully as the US. This suggests there are significant points of failure in Australia’s national innovation system.

Skills

59Most of the people working in the sector are highly skilled with a high proportion of youthful energy. It has been observed at an industry level that university graduates often lack industry readiness, indicating a lack of career preparation pathways. A widespread industry view is that universities cannot structure research and teaching around a multidisciplinary focus, limiting the competencies of graduates.

60The skills requirement in this sector is not straightforward. The skills typically needed in digital content sectors include creativity, a risk taking and innovative mindset, integrative problem solving abilities, high levels of technical knowledge and applications ability, and entrepreneurial business acumen. The split between higher and further education, between mass undergraduate, boutique coursework post-graduate, and r&d post-graduate, and the deep silos representing the discipline clusters from which these skill sets might be nurtured (ict, creative arts, and social science disciplines) makes planning for skills development for the digital content sector a particularly difficult feat. This inherent challenge is compounded by the embryonic nature of some of the sector, and its inherently volatile nature.

  • 26 Charles Leadbeater and Kate Oakley, Surfing the Long Wave: Knowledge Entrepreneurship in Britain ( (...)

61Despite a somewhat negative public image of entrepreneurial activity in mainstream business culture, the “creative entrepreneur” is a different class of actor than the corporate buccaneer. As Leadbeater and Oakley26 point out in their study of knowledge entrepreneurship in Britain, the knowledge entrepreneur acts collectively and is data-and evidence-driven in order to sense new opportunities in extremely volatile emerging fields based on new knowledge.

62The lack of critical linkages between the education and training sector and the digital content industry sector needs means that skills development is not yet fully co-ordinated for maximum value. There is but patchy support for a suite of suitable and widely accepted credentials in the industry analogous to the situation with nursing prior to the development of a nationally accepted and co-ordinated credentialing system.

Conclusion: Improving the System

63The preceding gives some sense of the components of a content industry innovation system. There are many elements of such an innovation system in place. There is a very large education and training sector providing skilled graduates and trainees into the sector. There are large market organizers and industry players, both in the public sector (broadcasters, funding agencies, and cultural institutions such as museums and galleries) and in the private sector (commercial broadcasters, publishing houses, telecommunications firms, and advertising). There is strong and growing demand, both in retail consumer demand and in the role of digital content as an enabler across a growing range of industries, particularly in the services sector.

64However, the quality of linkages and the lack of clear public policy signals and frameworks, together with a number of other critical issues mark the innovation system as embryonic at best. Public policy needs to address the significant framework shifts required to capture the innovation potential of digital content industries by moving, for example, from a situation of unrelated cultural policy and higher education policy to a more fluid, dynamic but more challenging mix of more co-ordinated program initiatives.

65In particular, the scale of investment in innovation in and through digital content appears significantly underweighed relative to the funding of other industries. Given the growing economic importance of the creative industries, increased investment in innovation through digital content initiatives is key to capturing future national benefits.

  • 27 Creative Industries Research and Applications Center and Cutler & Company, “Research and Innovatio (...)

66There are several possible strategies for improving the innovation system for content industries.27 There is clearly a need to develop an industry action agenda to establish a framework for the alignment of existing policy regimes with digital content industries and an emerging agenda. A primary focus of the innovation agenda is better to align cultural policies with industry development and r&d policies. Nationally-funded centres of research designed to promote university and industry linkages need to encompass tripartite interfaces between cultural institutions, universities, and content industries. This initiative would create incentives for, and legitimize the role of, cultural institutions in research collaborations. Such an r&d initiative might invite participating industry sectors to pay levies to fund innovation, which would then trigger government funding. The industry levy could be limited to content industry firms with turnover above a floor level, to exempt emerging smes. The levy might apply to broadcasters, publishers, and distributors. Levy contributions could offset, or replace some or all of existing broadcasting licence, and other imposts. The scheme could be extended in the event of any major changes to cross-media or ownership rules, off-setting any windback of existing local production requirements which might become obsolescent. An essential element of such a centre (or r&d corporation) would be a national information and resource brokerage centre for the sector addressing the serious and endemic information asymmetries and structural weakness in the innovation system.

67A suite of reforms to research and higher education policies to accommodate digital content and the creative industries is necessary; as are educational and PR campaigns targeting school-age young people with the message that knowledge entrepreneurship—a “creative career”—is a viable and attractive option. Supporting and promoting an export orientation is important as the only way the sector can scale to realize sustainable growth. Equally important, only evidence of sustainability and scalability will make the sector investable over the long term, breaking the vicious cycle of under-investment.

68Broadcasting and broadband’s role in the innovation system is crucial, as the gateway between established and emergent content creation (major popular entertainment and informational formats transmigration to interactivity and mass customization) and industry structure (highly centralized distributional models to more networked and distributed models). Understanding the interaction between the potent legacy of broadcasting and the potential of convergent broadband media is the key to positioning innovative opportunities in content creation if they are to remain close to the mainstream of popular cultural consumption rather than being siphoned off into science or art alone.

69Major technology-related reforms such as national investment in content and metadata standards and supporting systems (thus limiting the huge transaction costs for both producers and users created by the current “bottom-up” approach to standards) and tax credits for r&d investment in technology infrastructure in emerging content areas, are crucial pieces in the innovation jigsaw.

70Open content repositories, or public domain digital content, are the content industries equivalent of open source software. They selectively addresses barriers to production and unintended cultural outcomes of prevailing copyright and IP regimes through an alternative opt in model which can operate in parallel with existing regimes. As such it can be a powerful structural mechanism to support a rich “digital sand pit” for creative content producers. The measure facilitates the active re-purposing and re-use of digital content assets. Misuse of this public domain material would be protected under the provisions of a general non-exclusive public licence scheme.

71An innovation systems approach to the content industries is important for two reasons: such an approach opens up dynamic and central policy territory which has been the preserve of science, engineering, and technology worldwide; and it asks new questions, complementary to contemporary notions of cultural citizenship and cultural capital, which may precipitate a more holistic approach to these industries. Both a cultural citizenship approach and an innovation systems approach seek to move culture into mainstream policy calculation—the former by emphasizing the central role that cultural literacy and diversity play in undergirding inclusive participation in contemporary society, the latter by connecting culture to the most trenchant current rationale for active government involvement in industry shaping.

Notes

1 Marion Jacka, Broadband Media in Australia: Tales from the Frontier (Sydney: Australian Film Commission, 2001).

2 John Howkins, The Creative Economy: How People Make Money From Ideas (London: Allen Lane, 2001).

3 Stuart Cunningham, “From Cultural to Creative Industries: Theory, Industry, and Policy Implications,” Media Information Australia Incorporating Culture & Policy, no. 102 (February 2001): 54-65; T. O’Regan, Cultural Policy: Rejuvenate or Wither? (Griffith University lecture given in 2001), http://www.gu.edu.au/centre/cmp/mcrlpublications.html#tom (site now discontinued).

4 Scott Lash and John Urry, Economies of Signs and Space (London: Sage, 1994).

5 Shalini Venturelli, “From the Information Economy to the Creative Economy: Moving Culture to the Center of International Public Policy” (Washington, DC: Center for Arts and Culture, 2002), available athttp://www.culturalpolicy.org.

6 Brian Arthur, “Increasing Returns and the New World of Business,” in John Seely Brown, ed., Seeing Differently: Insights on Innovation (Boston: Harvard Business Review Books, 1997), 3-18; Paul Romer, “Interview with Peter Robinson,” Forbes 155, issue 12 (1995): 66-70; Paul Romer, “The Origins of Endogenous Growth,” Journal of Economic Perspectives 8, no. 1 (Winter 1994): 3-22.

7 Catherine Livingstone, “Managing the Innovative Global Enterprise” (Warren Centre Innovation Lecture, given to the Commonwealth Scientific and Industrial Research Organization, 2000), 3.

8 Organization for Economic and Cultural Development Oslo Manual (Paris, 1997).

9 Louis Lengrand & Associés, prest and anrt, “Innovation Tomorrow: Innovation Policy and the Regulatory Framework—Making Innovation an Integral Part of the Broader Structural Agenda” (innovation paper no. 28 prepared for the Directorate-General for Enterprise, Innovation Directorate, eur report no.17052, European Community, 2002).

10 Roy Rothwell, “Towards the Fifth-Generation Innovation Process,” International Marketing Review 11, no. 1 (1994): 7-31.

11 Cf., Bo Carlson, Staffan Jacobsson, Magnus Holmén, and Annika Rickne, Innovation Systems: Analytical and Methodological Issues (1999).

12 The Australian Government’s Creative Industries Cluster Study (http://www.cultureandrecreation.gov.au/cics) conducted through the Department of Communications, Information Technology and the Arts and the National Office for the Information Economy in 2001-2003, resulted in the announcement of a Digital Content Industry Action Plan in February 2004. This case study is drawn from the authors’ “Research and Innovation Systems in the Production of Digital Content and Applications,” one of the reports within the Creative Industries Cluster Study.

13 Keith Hackett, Peter Ramsden, Danyal Sattar, and Chrisptophe Guene, Banking on Culture: New Financial Instruments fir Expanding the Cultural Sector in Europe (Manchester: North West Arts Board, September 2000).

14 Ibid., 1.

15 The arc is the Australian Governments statutory research funding body. This finding is based on estimates derived from data supplied by the arc to the arc Learned Academies Special Projects grant “Partnerships in the Humanities,” based at the University of Western Sydney. For a general orientation to Humanities and Creative Arts arc Linkage outcomes, see Ien Ang and Elizabeth Cassity, Attraction of Strangers: Partnerships in Humanities Research (report prepared for the Australian Academy of the Humanities, 2004), available at http://www.humanities.org.au/Final%20full%20report.pdf.

16 Tony Bennett, Michael Emmison, and John Frow, Accounting for Taste (Cambridge: Cambridge University Press, 1999).

17 Australia Council, Australians and the Arts: What Do the Arts Mean to Australians? (report prepared for the Australia Council, Saatchi & Saatchi, Surry Hills, N.S.W, 2000).

18 for a good international literature survey, see, e.g., the National Advisory Committee on Creative and Cultural Education’s report, All Our Futures, published in 1999, and the U.K. Goverment’s statement of progress made following the original recommendations of the naccce Report, in January 2000, available at http://www.dfes.gov.uk/naccce/).

19 See, e.g., http://www.ifacca.org/files/040527/ResearchingArtists.pdf.grep.

20 “The Future Management of Crown Copyright” (HMSO White Paper, March 1999).

21 Australian Bureau of Statistics, Australian National Accounts: Input-Output Tables 1996/1997 (document 5215.0, 2003), available at http://www.abs.gov.au/Ausstats/abs@nsf/Lookup E3B034F5DBFCE899CA256888001F4C26.

22 Singapore Ministry of Trade and Industry, Economic Contributions of Singapore’s Creative Industries (2003), available at http://www.mti.gov.sg/public/PDF/CMT/NWS_2003 Q1_Creative.pdf?sid=40&cid=1630.

23 HM Treasury, Department of Trade and Industry and Inland Revenue, “Defining Innovation: A Consultation on the Definition of R&D for Tax Purposes” (U.K., July 2003); “R&D Strategy for Creative Industries—a Discussion Paper” (discussion paper prepared for the Foundation for Research, Science, and Technology, New Zealand, 2003).

24 Richard Florida, The Rise of the Creative Class (USA: Basic Books, 2002).

25 National Economics, State of the Regions Report 2002 (Canberra: Australian Local Government Association, 2002), Table 6.21. Chapter six of this report has an extensive analysis of creative capital.

26 Charles Leadbeater and Kate Oakley, Surfing the Long Wave: Knowledge Entrepreneurship in Britain (London: Demos, 2001).

27 Creative Industries Research and Applications Center and Cutler & Company, “Research and Innovation Systems in the Production of Digital Content” (report prepared for National Office for the Information Economy, September 2003), available at http://www.cul tureandcreation.gov/au/cics/Research and innovation systems in production of digital

Table des illustrations

Titre Figure 1: The Category Confusion with Content Industries
URL http://books.openedition.org/uop/docannexe/image/2409/img-1.jpg
Fichier image/jpeg, 195k
Titre Figure 2: Cross-Country Comparisons of the Economic Value of Content Industries
Légende Source: Singapore, Creative Industries Development Strategy, 2002Note: Treatment of industry statistics varies slightly across countries
URL http://books.openedition.org/uop/docannexe/image/2409/img-2.jpg
Fichier image/jpeg, 122k
URL http://books.openedition.org/uop/docannexe/image/2409/img-3.jpg
Fichier image/jpeg, 152k
Titre Figure 4: Porter’s Determinants of Industry Cluster Competitiveness
URL http://books.openedition.org/uop/docannexe/image/2409/img-4.jpg
Fichier image/jpeg, 137k
Titre Figure 5: Overview of Elements in Cluster Competitiveness in Digital Content Production
URL http://books.openedition.org/uop/docannexe/image/2409/img-5.jpg
Fichier image/jpeg, 143k
Titre Figure 6: Firm Size in the Content Industries
Légende (Sources: Hackett et at., 2000)
URL http://books.openedition.org/uop/docannexe/image/2409/img-6.jpg
Fichier image/jpeg, 75k
Titre Figure 7: Digital Content Share of Austrade’s Export Grants Scheme
Légende Source: Austrade; QUT and Cutler & Company analysis
URL http://books.openedition.org/uop/docannexe/image/2409/img-7.jpg
Fichier image/jpeg, 76k
Titre Figure 8: Registrants fir R&D Tax Concession
Légende Source: Auslndustry, IRCD Board Annual ReportsNote: Reporting by industry code is in aggregated categories. Separate and specific tax concessions apply in the film industry
URL http://books.openedition.org/uop/docannexe/image/2409/img-8.jpg
Fichier image/jpeg, 84k
Titre Figure 9: Use of Sector Outputs (1996-97)
Légende Source: ABS Input Output Tables, 1996/7 (ABS 2003)
URL http://books.openedition.org/uop/docannexe/image/2409/img-9.jpg
Fichier image/jpeg, 70k
Titre Figure 10: Utilization of Creative Products by Major Industry Users
Légende Source: ABS Input Output Tables, 1996/7 (abs 2003)
URL http://books.openedition.org/uop/docannexe/image/2409/img-10.jpg
Fichier image/jpeg, 80k
Titre Figure 11: The Access Lockout of Inactive Copyrights
Légende Source: Author’s (Cutler & Company) analysis, 2003
URL http://books.openedition.org/uop/docannexe/image/2409/img-11.jpg
Fichier image/jpeg, 55k
Titre Figure 12: Creativity Index: Top Ten Regions—U.S. and Australia
URL http://books.openedition.org/uop/docannexe/image/2409/img-12.jpg
Fichier image/jpeg, 110k

Auteurs

Professor at the Queensland University of Technology in Brisbane, Australia and the director of the University’s Creative Industries Research and Applications Centre. He is an experienced researcher and research manager in the fields of media, communications, cultural policy, higher education and in what is now called the “creative industries.” He is known for his policy critique of cultural studies, Framing Culture (1992), and for the co-edited New Patterns in Global Television (1996) and the co-authored Australian Television and International Mediascapes (1996). Others who worked with him on the chapter within this volume include

The principal of Cutler and Company, a high-level communications consultancy based in Melbourne

Professor and a research and development coordinator

Doctoral candidate

Australian Research Council postdoctoral fellow in the Creative Industries Research and Applications Centre at the Queensland University of Technology

© Les Presses de l’Université d’Ottawa | University of Ottawa Press, 2005

Conditions d’utilisation : http://www.openedition.org/6540