Making the economic case for culture

EY study 2021

The impact of the COVID-19 pandemic on culture has been, and still is, devastating. While many policymakers understand the consequences of the crisis on our health, social life and wellbeing, few are aware of the important role that the cultural sector can play for the recovery of the European economy. 

This is why GESAC, in partnership with the SAA and other organisations from the sector, commissioned to EY a study on the cultural and creative economy before and after the COVID-19 crisis. The audiovisual sector is one of ten core sectors covered.

Overall, the cultural and creative industries (CCIs) contribute to the European economy a lot more than many other sectors. In 2019, they represented 4.4% of EU GDP in terms of total turnover, which is 1.4 times greater than that of telecommunications and 2.3 times greater than that of the automotive industry. The sector also stimulates the growth of several other industries, such as tourism, high technology, digital industries, transportation and telecommunications, that are both suppliers and customers of CCIs. 

Up until the COVID-19 outbreak, the audiovisual sector contributed with a growth rate of 11% between 2013 and 2019 (€119 billion of turnover). European feature film production increased +2% per year since 2014, the dense network of broadcasters, producers and distributors, as well as the emergence of video-on-demand platforms (+383%) contributed to the growth of the sector. Demand for cultural content and services has also increased in recent years. Household spending on cultural goods and services increased by 12% between 2010 and 2015, an annual growth rate of 2.2%. Furthermore, in 2018, 81% of Europeans used the internet for music, videos and games – more than for shopping or social networking.

Due to COVID-19, the European cultural and creative economy lost almost a third of its activity in 2020 (-31%). The CCI sector is one of the most affected in Europe, slightly less than air transport (-31%) but more than the tourism (-27%) and automotive industries (-25%). The crisis has been devastating for the entire cultural sector; from the venues to the creators themselves, no one has been spared.  Some of the difficult problems faced by the audiovisual production and distribution value chain are the sharp slowdown in filming, higher financial and legal risks when resuming production (the costs rose 10%-30% after the first lockdown), and the closure of cinemas. Even though the increase in online distribution services (a rise in subscriptions in Europe of 40%-75%) is expected to continue, revenues generated by these services are not compensating the losses from the lack of physical distribution and exhibition options. Furthermore, bringing audiences back to theatres will be another challenge.

Collective Management Organisations have done much to protect the creators, the most essential and vulnerable link in the creative chain: they have adapted their structure, reduced their fixed costs, accelerated their distribution of royalties and mobilised financial support to audiovisual authors. Collective management has proven itself a resilient and indispensable model for culture in general and for creators in particular. CMOs’ support has been a safety net to many authors who have fallen through the cracks of governments’ support, because they do not fit the categories of self-employed and SMEs. The social and economic protection offered to freelancers, including authors and performers, still prevents many of them from benefiting from the full social and economic protection schemes of full- time employees. 

CMOs – and the creators they represent – therefore have high and urgent expectations of the European institutions. 

Among the recommendations of the study are:

Earmark at least 2% of the Recovery and Resilience Facility for the cultural and creative industries, as proposed by the European Parliament, both in the EU legal framework and in national strategies. Together with many authors and organisations, the SAA has been calling for the 2% earmarking. This is an even more important message to repeat, as the European Commission unfortunately did not provide the recommendation in its guidance to Member States’ recovery and resilience plans

Ensure that the precarious working conditions of freelancers and the situation of creators are taken into account through specific funding programs or in the framework of the support to the cultural and creative industries at European, national and local levels. Recent studies suggests that an EU framework for working conditions of artists and creative workers could be a way to come to terms with the specific issues faced by the sector. This is a proposal that the European Parliament is starting to look further into. Together with Culture Action Europe and others, the SAA is contributing to this work.

Ensure a rapid and effective implementation of the recently adopted Directives on Copyright in order to enable creators and the wider rightsholder community, as well as cultural enterprises, to better harvest the value of the online market and new modes of exploitation. The implementation of the Copyright Directive’s Article 18, for fair and proportionate remuneration of authors, is a top priority for the SAA. Fair remuneration and sustainable conditions for creators and adequate return on investment for businesses and their partners is also one of the recommendations of the EY-study. Last year, the SAA started its campaign for the implementation of Article 18 and held its first online event about how to make the most for the next generation authors. During 2021, we will continue our discussions with the Member States representatives, the European Parliament, experts and authors, to make Article 18 a reality.


Read the full EY study here

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