CREATIVE ECONOMY OUTLOOK 2024
Introduction
The Creative Economy Outlook 2024, developed by the United Nations Conference on Trade and Development (UNCTAD), analyzes global trends in the creative economy, providing crucial insights into its economic contributions and international trade patterns. The creative economy, encompassing industries like advertising, architecture, music, films, books, video games, and visual arts, contributes significantly to the global economy. The 2024 report emphasizes the role of digitalization and artificial intelligence (AI) in shaping this sector, highlighting both opportunities and challenges, particularly in terms of market concentration and sustainability.
The creative economy plays a pivotal role in driving global growth and employment. According to UNCTAD, the creative economy contributes between 0.5% to 7.3% of GDP in various countries, employing between 0.5% and 12.5% of the workforce. This report also shows that creative services exports reached a record $1.4 trillion in 2022, almost double that of creative goods exports, which amounted to $713 billion. Digital platforms, streaming services, cross-industry collaborations, and the rapid expansion of video games are some of the key trends shaping this sector.
However, while digitalization and artificial intelligence open new avenues for growth, they also raise concerns related to copyright, privacy, content monopolization, and quality control. A recurring issue is the growing market concentration, particularly in digital sectors like streaming and audiovisual services, which leads to unfair competition.
This report contributes to global efforts, aligning with the Bridgetown Covenant and the General Assembly resolution 78/133, which task UNCTAD with analyzing the impact of the creative economy on sustainable development. The 2024 report is divided into five chapters, each dealing with global trends, international trade in creative goods and services, the role of digitalization and AI, market competition, and sustainable business practices.
Global Trends in the Creative Economy
The creative economy encompasses a broad range of activities that rely on creativity and intellectual capital. These include sectors like advertising, architecture, audiovisual content, books, music, video games, and visual arts. The creative economy’s diverse scope means that it varies widely in terms of operational models, value chains, and revenue generation globally. Despite this, the creative economy has become a significant driver of economic growth and job creation in both developed and developing economies.
Contribution to the Global Economy and Employment
The creative economy is recognized as a significant contributor to global GDP and employment. UNESCO estimates that cultural and creative industries account for 6.2% of global employment, contributing 3.1% of the world’s GDP. In countries like the United States, cultural and creative industries make up 3% of the total value-added, while in Mexico, they contribute 0.7%. However, the report highlights regional disparities, with countries like South Africa and Indonesia witnessing significant contributions from the creative sector to their national economies.
UNCTAD’s 2024 survey reveals that the creative economy contributes between 0.5% to 7.3% of GDP in 36 surveyed developing economies, employing 0.5% to 12.5% of the workforce. These figures underline the creative economy’s potential to generate cultural and societal value in addition to supporting economic growth.
Key Industry Trends
The creative economy is influenced by several trends, including:
- Digitalization: There is a growing shift from physical creative goods to digital content (e.g., streaming services replacing CDs or DVDs). This shift is supported by emerging business models like subscription services and digital platforms.
- Cross-Industry Collaborations: Video game companies, musicians, and film studios are collaborating, blurring the lines between sectors. Video games, for instance, are increasingly being used to promote music or movies, while gamification is emerging as a new trend across multiple sectors.
- Demographic Shifts: Younger generations in developing economies are increasingly consuming digital content, which drives the growth of creative industries in these regions.
Industry-Specific Developments
- Advertising: Advertising revenues reached $806 billion globally in 2023, with digital advertising accounting for 57.7% of the total. Digital advertising, particularly through video games, is projected to grow further, reaching over 60% by 2026.
- Architecture: The architecture sector has seen significant shifts, with interior design, urban planning, and project management adopting new technologies like AI and virtual reality. Developing countries, such as China, Philippines, and India, are making strides in the architectural market, with many firms entering global rankings.
- Audiovisual Industry: Streaming services have grown rapidly, with subscription video-on-demand (SVoD) leading the recovery of the sector after the pandemic. Box office revenues are expected to reach $48.4 billion by 2027, though traditional television is seeing a decline in revenue due to the popularity of over-the-top (OTT) services.
- Books and Publishing: The global publishing industry is seeing growth in both physical and digital markets, driven by platforms like TikTok’s BookTok and the increasing popularity of digital manga. Countries like India, Brazil, and Turkey are emerging as significant players in this market.
- Music: Streaming dominates the music industry, accounting for 67.3% of global recorded music revenues. Developing regions, particularly Sub-Saharan Africa, are experiencing rapid growth, with streaming revenues contributing significantly to the rise in music industry revenues.
- Video Games: The video game industry surpassed the film and music industries combined, reaching an estimated $227 billion in 2023. With e-sports and cloud gaming growing exponentially, video games are now at the forefront of global entertainment.
- Visual Arts: The global art market has recovered since the pandemic, with sales estimated at $65 billion in 2023. China and the United States dominate the art market, accounting for 61% of global sales.
International Trade in Creative Goods and Services
Growth of International Trade
International trade in creative goods and services has grown significantly over the past two decades. Exports of creative goods grew by 3.5-fold, while creative services exports have expanded by 2.8-fold. By 2022, the value of creative services exports reached $1.4 trillion, nearly double the $713 billion in creative goods exports. This indicates that creative services are driving global trade in the creative economy.
The report highlights that developing countries are leading the growth in creative goods exports, while developed countries dominate creative services exports. Despite the concentration of trade in a few countries, creative goods and services are key contributors to global economic diversification and development.
Trade in Creative Services
Creative services, which include advertising, architecture, software, audiovisual, and research and development, are more challenging to measure than creative goods due to the intangible nature of services. Nonetheless, creative services have shown remarkable growth, with software and research and development leading the way, contributing 41.3% and 30.7%, respectively, to the total creative services exports.
Regional data shows that Europe is the largest exporter of creative services, followed by Asia and North America. However, there is a growing contribution from developing economies, particularly in Asia. For instance, China and Singapore are among the largest exporters of creative services, highlighting the rising influence of developing economies in this domain.
Barriers to Trade
Despite the growth in creative trade, there are several barriers, including:
- Lack of infrastructure: Many developing countries face difficulties in exporting creative services due to limited digital infrastructure and skilled labor.
- Non-tariff measures: Policies that restrict access to digital platforms or impose complex regulatory requirements hamper the trade of creative services.
- Trade restrictions: The General Agreement on Trade in Services (GATS) and other international frameworks play a role in addressing some barriers, but progress is slow.
Export Promotion Strategies
Several countries have implemented strategies to promote the export of creative goods and services. For instance, South Africa is investing in infrastructure for the film industry, while China is promoting cultural exports through policy reforms.
Digitalization and Artificial Intelligence in the Creative Economy
Digitalization is transforming the creative economy, with artificial intelligence (AI) playing a critical role in sectors like film, music, design, and publishing. AI offers numerous opportunities for efficiency and creativity, but it also presents challenges, including ethical concerns about content ownership, the monopolization of data, and the potential for job displacement.
AI in Creative Industries
- Music and Film: AI is used to create personalized recommendations, automate content generation, and enhance user experiences on streaming platforms. AI tools like machine learning are used to edit videos, generate soundtracks, and even script stories.
- Video Games: AI is enhancing gameplay by enabling real-time decision-making in characters, improving game environments, and allowing personalized user experiences.
- Books and Publishing: AI has made its mark on the publishing industry by recommending books based on user preferences, automating the translation of content, and enabling digital marketing strategies.
Challenges and Risks
The report highlights several concerns related to AI’s impact on the creative economy:
- Copyright and Intellectual Property: AI-generated content challenges existing frameworks for copyright protection, as ownership of content created by machines remains a grey area.
- Quality and Creativity: There is concern that reliance on AI may stifle creativity, leading to homogenized content across various platforms.
- Monopolization: Digital platforms, particularly in audiovisual services, are concentrated in the hands of a few corporations, leading to limited competition and reduced opportunities for smaller creators.
Policy Recommendations
Governments are urged to create regulatory frameworks that promote the fair use of AI while protecting the rights of creators. Policies should focus on improving access to digital infrastructure, enhancing competition laws, and ensuring privacy protection.
Market Concentration and Competition in the Creative Economy
Market Structure and Challenges
Market concentration in the creative economy is a growing concern, particularly in digital creative industries like streaming, music, and video games. A few large corporations dominate these sectors, creating entry barriers for smaller players. The multi-sided nature of digital platforms, where companies control content production, distribution, and monetization, makes it difficult for new competitors to enter the market.
The report identifies three main challenges related to market concentration:
- Barriers to Market Entry: High costs and limited access to digital platforms create obstacles for small companies to compete with established players.
- Non-Market Dimensions: Issues like data privacy, internet regulation, and intellectual property rights influence market competition, especially in digital services.
- Impact on Consumers: Market concentration can lead to reduced content diversity, higher prices, and limited access to creative goods and services.
Policy Recommendations
Governments must strengthen competition laws and enforcement mechanisms to reduce market concentration. Additionally, policies should focus on promoting innovation, supporting start-ups, and ensuring equitable access to digital platforms.
Sustainable Business Practices for Decarbonization and Inclusion
Inclusion in the Creative Economy
The creative economy offers numerous opportunities to promote inclusion, particularly for marginalized groups. Inclusive business practices in the creative sector are essential to fostering diversity in content creation, promoting cultural representation, and providing economic opportunities for underrepresented groups.
For example, the report highlights the role of female entrepreneurs in the creative economy and the importance of creating an environment where they can thrive. Additionally, the inclusion of LGBTQI+ individuals, people with disabilities, and those from marginalized communities is crucial for a vibrant and diverse creative economy.
Environmental Sustainability
Creative industries are increasingly adopting sustainable business practices that reduce their environmental impact. The report highlights efforts to decarbonize industries like fashion, film, and visual arts, where carbon emissions and waste have traditionally been high.
Key areas for improvement include:
Responsible Consumption: Consumers are encouraged to make environmentally conscious choices when purchasing creative goods and services.
Reducing Carbon Emissions: Businesses are adopting green technologies and reducing their reliance on non-renewable resources.
Sustainable Production Practices: The fashion industry, in particular, is transitioning towards eco-friendly materials and sustainable manufacturing processes.
Conclusion
The “Creative Economy Outlook 2024” presents a positive yet complex picture of the creative economy. It highlights the sector’s potential for growth and its role in fostering economic and societal development. However, challenges related to digitalization, market concentration, and sustainability must be addressed through well-crafted policies and international cooperation.