National Endowment for Science Technology and the Arts
Understanding the rationale for publicly-backed investment funds in the creative content industries. An economic analysis.
The creative content industries are special. They are special for all sorts of reasons, not least for the central part they play in our cultural lives. But their economics are also special, and these drive their structure, conduct and performance and set them apart from many other industries.
In this document we argue that the special,interesting economics of the creative industries account for many of their more intriguing features. From the relationship between small creative content producers and the large distributors, to the kinds of contracts negotiated between stars and their employers, to the number of hits relative to flops that typifi es much of their output, the economics of information production can help to enlighten us.
In particular we suggest that these special economic features have interesting implications for the supply of funding to all firms operating in the sector, but especially for funds available to the smaller creative content producers. We suggest that the creative industries operate in an environment characterised by what economists call ‘market failure’. And that these market failures affect all aspects of the industry.
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