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Lecture delivered at conference on Culture and Innovation: New Ways of Capturing Value, organised by the Temple Bar Cultural Trust and held in Dublin on 9 May 2012.

Valuation and the cultural sector: current issues and future directions

David ThrosbyProfessor of Economics

Macquarie University Sydney

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The valuation issue:

• macro level: how to value the contribution of the cultural sector to the economy?

• micro level: how to value the local, regional and national impacts of cultural organisations?

• how to value the work of individual artists?

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• creative industries are those industries in which creativity is an identifiable and significant input

• cultural industries are those industries providing specifically cultural goods and services

Creative or cultural industries?

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Cultural goods and services

• they require creativity in their manufacture

• they convey some form of symbolic meaning or message through their cultural content

• they embody at least potentially some element of intellectual property

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Where do the creative arts fit in the economy of culture?

• imagine the creative industries as a series of concentric circles

• artists and arts organisations at the centre

• the circles represent increasingly commercial industries

• creative ideas, skills and talents originate in the core

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Core creative arts

LiteratureMusicPerforming artsVisual arts

Other core cultural industries

FilmMuseums, galleries, librariesPhotography

Wider cultural industries

Heritage services Publishing and print mediaTelevision and radioSound recordingVideo and computer games

Related industries

AdvertisingArchitectureDesignFashion

The concentric circles model of the cultural industries

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Public value

• The value that society as a whole derives from public expenditure

• It poses a challenge to conventional cost-benefit analysis which considers only those impacts measurable in financial terms

• It suggests a broadening of value measures, e.g. towards indicators of social well-being, etc.

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Cultural Value Economic value

Public value of the arts and culture

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• market value of output of cultural goods and services

• non-market value of public goods produced reflecting:

existence demand for arts and culture

option demand for arts and culture

bequest demand for arts and culture

• flow-through effects to innovation processes in other industries via:

diffusion of creative ideas

skills transfers

movement of creative labour from the core

The cultural industries create economic value via:

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• aesthetic value• spiritual value• social value• historical value• symbolic value• authenticity value

Cultural value

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Measurement of value:

economic value can be measured in money terms

cultural value is multi-faceted and has no single unit of account

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Measurement of economic value

• market value measured as observable financial flows (gross value of output, value added, etc.)

• non-market value measured by revealed or stated preference methods (e.g. hedonic methods, contingent valuation, choice modelling)

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Measurement of cultural value

• cultural indicators

• expert appraisal

• attitudinal analysis of public preferences

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Impacts of new technologies

• understanding the effects on demand for cultural products arising from the adoption of new consumption technologies

• potential for the application of new technologies in cultural organisations (e.g. museums, theatres, etc.)

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New business models for arts and cultural enterprises

• anticipation of demand shifts

• diversification of revenue streams

• online market development

• clearer articulation of value creation to funding sources

• more flexible governance structures

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Future directions for cultural policy

• comprehend the economic benefits (market and non-market) of the arts and culture;

• recognise the fundamental importance of cultural value as a component of the public value created by the cultural sector;

• foster a positive climate for private sector engagement with the arts;

• promote cultural policy as a core government function involving a wide range of ministries including culture, heritage, education, social welfare, trade, urban and regional development, etc.

Effective cultural policy in the future will need to