The Australian Bureau of Statistics (ABS) published its first “experimental” set of satellite accounts on cultural and creative activity on 10 February 2014. Satellite accounts were invented to describe economic activities that extend across a number of conventional industry groups in the national accounts. Annual tourism satellite accounts in Australia go back to 1997-98.
This new ABS initiative represents something of a milestone in Australian cultural statistics, but it is of limited use in the music sector as this article will explain. First, it doesn’t cover the whole of the music sector because it was not its intention to go beyond industries that were defined as directly "cultural" or "creative". Secondly, music is not specified as an ingredient of those industries that are represented in the new statistics, though we can make a guess about its economic importance there.
It is important to have a statistical framework for what it was set up to do, which for the new satellite accounts is to relate the economic value of cultural activities to the total GDP. But it doesn't include industries and activities that support particular artforms, such as music education or associations dedicated to assist the music sector.
The tourism satellite accounts differ from the conventional national accounts which are based on production, by being derived from consumer demand. In other words, estimating “tourism GDP” is best done by starting from the demands of visitors to a nation and its regions, rather than from the production of the industries that supply that demand. This doesn’t mean that the economic value is entirely in terms of the demand for tourism-related products — the tourism satellite accounts have to contain fully integrated production accounts for industries adding up to total tourism-related value-added and GDP, as well as physical measures such as tourism employment and hours worked.
Music and other artforms would benefit from a similar approach. The cultural and creative statistics are part of an existing system of 1,284 “input-output product groups”, of which 26 were defined as cultural and creative, nine as cultural only, and eight as creative only. There are also 111 “input-output industry groups” which are aggregates of detailed Australian and New Zealand Standard Industrial Classification (ANZSIC) classes.
The main advantage of tourism is a wealth of comprehensive data, including regular statistics of international and domestic visitors and other demand-related indicators. A full “music GDP” isn’t a real possibility for the time being. The new statistics are very helpful in defining the direct contribution of cultural and creative activities as they are currently defined, and do give some indication of a minimum, incomplete, contribution of music to these GDP-related activities. They show that the industries defined as cultural are economically “important”, but they say nothing about industries that support these activities.
The timing of the new data happens to coincide with the launch of a major project on the Knowledge Base, which has the following objectives:
Two papers had been published on the Knowledge Base as part of the project at the time this article was being prepared (the present article is counted as the third paper):
It will be plain from the discussion to this point that the new statistics are important for the assessment of how far conventional GDP data can take us, and hence with the limitations of such data.
The framework is broad — all identified cultural and creative activities, represented by the concentric circles in Figure 1, which is based on a model published by Professor David Throsby. The model shows that music, performing arts, literature and visual arts are central, and that activities have decreasing shares of cultural and creative content in goods and services the further away they are from the centre.
The ABS prefaced its new statistics as follows: “In Australia and internationally, there is strong interest in the role of 'cultural' and 'creative' activity in the economy, such as highlighted by Australia's National Cultural Policy Creative Australia. These terms are often used to describe activities connected with the arts, media, heritage, design, fashion and information technology.” Before embarking on the project in 2013, the ABS completed a comprehensive research phase, including:
The statistics are envisaged within the national accounting framework, so the major objectives were to estimate Gross Value Added by cultural and creative activities, and the contribution to GDP. The satellite accounts for other countries are also intended to be part of the national accounts.
There are four new components. Two of these components are part of the existing national accounting framework, though they have only become explicit now:
This is based on ABS definitions described in the section entitled “Cultural Occupations and Cultural Industries” of the Knowledge Base article on Employment and Voluntary Work.
The components going beyond the existing national accounting framework are:
Assuming their economic value as non-market activities can actually be captured, these are important concepts. We are dealing with the value of goods and services supplied by non-profit institutions for free, or at prices supported by charitable contributions and other transfer payments, rather than determined by the economy. These components are an extension to the existing national accounting framework which provide, in the words of the ABS, a more complete picture of the value of these activities to society than would be evident in the [conventional] national accounts.
These activities are overlapping (Figure 2, again taken from the ABS release). Cultural activities in 2008-09 contributed $50.1 billion to Australia’s Gross Domestic Product, and creative activities $78.3 billion, but $42.4 billion of the total was defined as both cultural and creative activities. The total finding is that $86 billion, or 6.9% of Australia’s GDP measured on a national accounting basic, was due to these activities. This is an interesting result, justifying the research that led to the new statistics. However, are all the activities really cultural and creative?
This Australian finding of 6.9% of GDP must be put into proper perspective. Statistics for Canada, Finland, Spain, the UK and US generally show lower GDP shares (Table 1). The ABS notes that this mainly reflects scope and coverage differences:
Naturally, all these differences are open to criticism, and this is explicitly an “experimental” set of data. The ABS notes that if cultural occupations in industries defined as non-cultural are excluded, cultural activities as a share of GDP drops from 4.0% to 3.0%, which is similar to or below the estimates for Canada, Finland, Spain and the US, which all include cultural activities only.
Only one nation in Table 1 concentrates on creative, as distinct from cultural, activities — the United Kingdom. The ABS notes that if estimates for creative occupations in non-creative industries are excluded, as well as all activities in the fashion and IT industries, the share of cultural and creative activities drops from 6.3% to 2.8%, which is slightly below the estimate for the UK in Table 1. In fact, all activities classified as creative but not cultural are eliminated.
The international comparison in the previous section reveals a range of possible choices, from the wide proposed definition by the Australian Bureau of Statistics to narrower definitions concentrating on either “culture” or “creative” activities. Appendix 1 in the ABS publication defines which is which. Table 2 shows the list classified into activities that are both culture and creative, and those that are one of these only.
Our position is that it is misleading to include so-called creative occupations in non-creative industries because is highly uncertain that their existence leads to major creative activities in these industries. Even more important in relation to total GDP, the design of fashion clothing and other items is creative, but it is a very small part of the total manufacturing, wholesale and retail activities in the clothing and footwear industries which are all included as "creative". There may be more justification in including computer systems design, but from an arts viewpoint it is preferable to concentrate on “culture”, rather than “creativity” which is not also classified as cultural. Sticking to “cultural” as the criterion would also be in accordance with the definition in four of the countries in Table 1.
Table 2 highlights activities that would contain some music. Most of the industries included as “both culture and creative” contain music to various undefined extents. Music is also a feature of some industries classified as “culture” only, but not in any industry in the “creative only” group.
From the point of view of the music sector, this is why we conclude that the general definition adopted by four of the five countries in Table 1 is the appropriate one (the UK seems to be the “odd man out” in the definition of culture and creative industries). The whole clothing and footwear industry should be excluded, according to this. So should computer systems design. So we end up with cultural and cultural/creative industries only.
Table 3 sorts the industries into three groups — those with some estimated music content, other cultural industries which would have little or no music, and the fashion industry which is defined as creative only, with no music.
The industries that are defined as creative only are fashion ($11.8 billion), $18.5 billion of computer systems design, and a smallish component of $231 million of literature and print ("other publishing", mainly printing support services). These three segments accounted for $30.6 billion of the total of $65.8 billion of cultural and creative activities in 2008-09.
This leaves 53.6% of the original estimate as “cultural” ($35.2 billion). $27.3 billion was “culture and creative”, and $7.9 billion “culture” only. Most of the “non-creative” cultural activity is literature and print media. Printing dominated ($38.6 billion), with book and magazine wholesale accounting for $494 million and newspaper and book retailing for $767 million. Arts education (“supporting activities”) was also defined as non-creative ($767 million) as were zoos, botanical gardens, nature reserves and conservation parks in the environmental heritage area, reproduction of recorded media and entertainment media retailing in “other cultural activities”, and electronic media rental and hiring in the broadcasting and film category.
Of these industries, broadcasting and film, other cultural goods, and supporting activities are estimated to have some music content. This leaves the culture and creative categories in Table 3, totalling $27.3 billion with industries with some estimated music content accounting for $12 billion (44%), mainly broadcasting and film ($7.2 billion) followed by advertising services ($2.6 billion) and performing arts ($1.3 billion), and trailed by libraries and archives ($739 million) and music composition and publishing with a tiny $105 million.
It is tempting, and we have fallen for the temptation, to put a tentative figure on the estimated music content of industries included in these statistics. The estimates are plainly “guesstimates” to be followed by more rigorous analysis. With this qualification, it is interesting that the average music content guess in GDP terms amounts to an average of about 20% for the seven industry groups in Table 4. It seems plausible that the GDP-related value of these industries included between $2.5 billion and $3 billion in 2008-09.
We cannot emphasise enough that this is an estimate. On one hand, each of the seven estimates needs to be refined. But on the other hand, Table 4 — and the ABS data generally — leaves out a large variety of music sector activities that supports the core performance-related part of it. There appears to be no reference in the statistics to music education from early childhood to K-12 school and post-secondary teaching; to the variety of organisations that support the sector; to bands playing in pubs and clubs; to the digital revolution and technology support generally; to purchases of musical instruments; and many other activities without which the music sector would not be where it is.
The purpose of this article is not to define these requirements for a full analysis of the role of the music sector in detail, but to point a way that the problem can be tackled within the major project we have undertaken — fully respecting that a formal GDP-related approach is always a core element but also recognising that this does not fully account for the real value of the music sector even in economic terms, not to mention its long-term cultural value.
Hans Hoegh-Guldberg, 15 April 2014.