Creative Economy: A Feasible Development Option

created content; online computer and video games; film,video and music; and online advertising. An increasing shareof revenues for the content industry derives from productsdelivered via the Internet, but with marked differences acrosssectors. Advertising is the largest online market, with revenuesof more than $30 billion in 2007 and annual growthof 30 per cent. Online revenues are around one-sixth of thetotal for computer and video games and music, and they aregrowing fastest for films, albeit from low levels (see figure 7.6).The development of user-created content has been rapid.Video and social networking sites are leading the development,and virtual worlds have become a major hub of activity.7.5 Digitization7Technology, connectivity and the creative economyUntil recently, the mode of transmission and storageof information on the creative economy was analogue. ICTs,however, allow a new form of recording of information: digitization.Digitization is significantly different in two ways.First, previously separate forms (sound, images, texts) nowhave the same basic format and are thus readily integratedinto one medium, often using the same editing techniquesand similar software. Additionally, integration, when basedon the same platform, enables a field of convergent media.This has both artistic business possibilities and represents asignificant field of potential innovation. Second, thecommon digital basis of information allows it to be easilycommunicated and transferred with no degradation of theoriginal in subsequent copies. This has huge implications forthe distribution and copying of digital works (as well as digitaltransformation of analogue works). The digital formatmeans that new ways of editing and integrating media, previouslyunimagined, can be achieved. Again, this has openedup the possibility of altogether new art forms as well as thetransformation of existing ones.The economic implications of ICTs generally havebeen discussed in the context of debates about the “neweconomy”. It is claimed that cost-free reproduction anddistribution, and perfect copies, create a new mode ofeconomics that differs from the old one based on physicaldistribution and manufacture. Second, as indicated earlier,there is the possibility of novel products. Some authors havehypothesized that the use of ICTs will remove the need forface-to-face interactions, and the co-location that followsmight minimize transport costs. This has been referred to as“the death of distance”. These totally new spatial implicationshave been challenged on the basis that the productionof intellectual property still involves labour and the transformationof intellectual property. As such there may still bespecific co-location effects associated with embodied skilland expertise in labour markets and in physically embodiedknowledge exchange. In fact, evidence points to a renewedimportance of place in the digital age (namely, creative clusters).12 While there is potential for the developing world,there is also the threat that divisions of opportunity may befurther hardened. To answer this question fully, we need moreanalysis of the nature of changes in creative-economy productionand the particular character of the transformation ofproduction and value chains.7.6 Convergence and new business modelsBecause much of the output of the creative economycan potentially be digitized, we are likely to see an evengreater impact and transformation in business transactions.This transformation is also producing new business models,market structures and governance. New business models aremade possible at the simplest level by the closer integration ofseparate product lines (books, films and music, for example).Of course, the media already display a striking concentrationof ownership and power. Most major media organizationsaspire to be “convergent organizations” 13 that trade and use12 Pratt (2004). “Creative Clusters: Towards the Governance of the Creative Industries Production System”. Pratt (2000).13 The merger of Time Warner and AOL was the first and best publicized of these mergers.198 CREATIVE ECONOMY REPORT 2010