Creative Industries and the Economy

The recent emergence of creative industries as a distinct area of interest for economists, statisticians, cultural specialists and policymakers reflects a growing awareness of the economic potential and role of this sector. Creative industries refer to a range of economic activities, which are concerned with the generation and circulation of knowledge and information. Creative industries comprise advertisement, architecture, art, craft, design, fashion, music, performing arts, publishing, research and development,   software, toys and games, films, radio and television, video games etc. These industries are also a major employer averaging between 4 to 6 per cent of the total workforce of an economy.[1]

Within the creative sector, designing, publishing, and television and radio account for about 75% of revenue and 50% of employment. In 2010, the value added to the US GDP by the total copyright industries was $1.627 trillion, or 11.10 per cent of the GDP.[2] Creative industries in Europe contribute about 3 per cent of EU GDP—corresponding to an annual market value of €500 billion—and employing about 6 million people. Creative industries in the UK are proportionately the largest in the world, comprising 7.3% of the economy.[3] A recent study by FICCI-KPMG estimated that the media and entertainment industry in India is expected to grow at a GAGR of 15% over the next 5 years to touch INR 1.4 trillion by 2016.[4]

Any accurate measurement of the economic activity of this sector in India poses considerable obstacles. Absolute quantum of exports sometimes bears little relation to the volume distributed. For example, Indian films are typically exported to markets with considerable Indian population, but still the country is not considered among the top exporters, based on custom statistics.[5] This is because a single master copy is usually exported to destination markets for producing multiple copies of the movie. The case of the publishing industry is even more complicated as we do not have any reliable estimate of the industry’s contribution to GDP. This becomes more complicated with the coming of the internet age.

Another serious problem with this sector is online piracy and copyright infringement that threatens its growth and survival. Copyright infringement not only has a direct bearing on revenues, but also impacts employment in the sector, decreases sales volume, impacts production, and sidelines true creative talents. A study by US-India Business Council (2008) estimated the total losses to the creative industry due to piracy and lack of effective legal framework to be US $ 4 billion and over 800,000 jobs.[6]

During the last decade a number of governments around the world have taken measures to support this sector through promotional policies and stringent copyright infringement laws. The EU Creative Europe programme is an important case in this regard. The government needs to create policy framework that will help the sector meet global challenges, link the product of the creative industries to domestic and international markets, ensure proper legal protection against infringements, and create general awareness on issue of copyright, piracy and IP.

In the West WIPO Copyright Treaty or WCT provides protection for copyright deemed necessary due to advances within the creative sector. In India the Indian Copyright Act 1957 protects IP owners in a traditional infringement context which has been extended to digital and online infringing activities, for example, through provisions in the Information Technology Act 2000. The much awaited Copyright Amendment Bill, 2010 has recently been approved by the Rajya Sabha. The Bill is expected to remove operational difficulties in implementing intellectual copyrights, and will address new issues concerning the digital world and the internet. This is an important step to boost creative industries in the country. Given the amount of intellectual capital that we possess such laws will go a long way in boosting creative industries, which will in turn enhance economic growth.

FICCI in collaboration with the Association of Publishers in India organised the seminar on ‘Curbing Digital and Online Piracy in Publishing Industry’, at the Federation House, FICCI, on February 24, 2012. The seminar emphasised the need for developing a better mechanism for curbing digital and online piracy in the publishing industry. The industry experts advocated for a more stringent copyright law that will prevent third party profiteers from stealing intellectual property and making a living from the hard work of others.