China’s Creative Industries

Dr. Lucy Montgomery

Vice Chancellor’s Research Fellow, QUT

Research Director, Knowledge Unlatched

Who am I? Why am I here?

• Vice Chancellor’s Research Fellow, QUT

• Research Director, Knowledge Unlatched

• Research: Interdisciplinary? Media and Cultural Studies. China. Intellectual Property. Innovation. Creative industries.

THIS PRESENTATION

• China’s Creative Industries (Context)

• China’s Creative Industries (The Book)

• State-Driven to Consumer Led Cultural Production

• The role of intellectual property

• Film, Music and Fashion

• China as a source of insight into disrupted markets and industries elsewhere?

Part 1: China’s Creative Industries

Context

‘The creative industries are those that are based on individual creativity, skill and talent. They also have the potential to create wealth and jobs through developing and exploiting intellectual property.' www.culture.gov.uk

• Advertising• Architecture • Arts and antique

markets• Crafts• Design• Designer fashion

• Film• Interactive leisure

software• Music, television

and radio, performing arts, publishing and software.

• Developed in the UK in 1998 by a Creative Industries Taskforce, set up by the incoming Blair government

• Inclusion of the Arts and Culture in an economic policy agenda

• Attempt to bridge divides between ‘high’ and ‘low’ culture, publicly funded and commercially driven

Where did the term come from?

• Further aim: to emphasise the existing strengths of advanced economies: in 1998 CI already a major component of GDP, exports and jobs in UK, US and Western-Europe

• Creative Industries were growing at twice the rate of other sectors of the UK economy

Where did the term come from?

Criticisms of Creative Industries

• Debate about the role of ‘culture’

• Appropriation of cultural agendas for commercial gain?

• Concern that social and community emphasis of Media, Culture and the Arts would be lost in the race to generate profit

• Emphasis of Intellectual Property

‘How do we begin to envision a parallel discussion of something like creative industries in a country where creative imagination and content are subjugated to active state surveillance?‘ Jing Wang, 2004

Are ‘Creative Industries’ Appropriate for China?

• UK: 7.3% of GVA of the UK economy: Compatible in size to the financial services industry

• China: less than 1% of economy

• CI in Hong Kong: 2.5% of GDP

• CI in Singapore: 2.8 – 3.2% of GDP

• High Growth• Dynamic• ‘Bottom up’ characteristics of creative industries growth:

small and medium sized enterprises, opportunities for individual innovation

• ‘Clean’• Ability to absorb educated/skilled workforce• Ability to help propel developing countries from low-cost

production to high-value innovation?

Benefits of Creative Industries

Difficulties for ‘Creative Industries’ in China

• ‘Cookie Cutter’ Approach?• Can investments in ‘Creative Clusters’ ‘Creative

Parks’ stimulate genuine innovation or creativity?• Cultural entrepreneurship prevented by policy

environment and institutional legacies?• Can creative industries form without strong IP?

‘In the present era culture has become a more important source of national cohesion and creativity and a factor of growing significance in the competition for overall national strength …we must stimulate the cultural creativity of the whole nation and enhance culture as part of the soft power of our country . . .’ Hu Jintao, 2007

Why might ‘Creative Industries’ be useful for China?

• Driver of overall economic growth

• High value, clean

• Need to develop a consumer-driven economy

• Import substitution

• Soft-power

• Domestic control of culture

Part 2: Creative Industries in China

The Book

• Began with a PhD – evolved during a post-doc at QUT

• John Hartley: MATE and ‘Uses of Digital Media’

• China: An opportunity to interrogate copyright’s ‘negative spaces’

• An examination of changing dynamics of power between state and consumers

• Part of a body of work attempting to understand the CIs

The Rise of IP…

...the growth of the creative economy has meant IP laws, especially copyrights and patents, have moved centre stage of the global economy. In the 1980s, IP was a marginal factor in most economies and of little concern to most policy-makers. Twenty years later it is a central and important factor in almost all economic activity.’ (Howkins 2005, p.35)

The Creative Industries Challenge

• New technologies for copying, sharing and distributing creative products

• Networked creativity• Read/Write Affordance• Challenge to ‘copyright industry’ business

models • What role does intellectual property play in the

growth of the ‘creative industries’?

CREATIVE INDUSTRIES AND CHINA

• New technologies and new possibilities• One of the fastest social and economic

transformations in history• Market-based reforms• Cultural transformations• Changing power relationships• WTO entry and formalisation of copyright law

THE RESEARCH

• Interviews conducted between 2004 and 2009• Beijing, Shanghai and Hong Kong• Directors, producers, record label executives,

distributors, mobile operators, musicians, fashion editors and designers, collection agencies, lawyers and judges

• The role of IP in cultural and creative industries

FILM

• 1950: Chinese Film Bureau established – responsible for pre-production censorship

• 1952: Film production nationalized

“…cinema was no longer a matter of business or art, but rather a serious political operation subject to strict censorship from start to finish.”

Zhang, 2004

FILM

• 1966-1976: Great Proletarian Cultural Revolution

• Film schools closed

• No films made between 1966 and 1972

• 1973 – 1976: Films reflected radical political agenda

FILM

• Until 1980s no relationship between income of a film studio and popularity of a film

• By 1990s economic reform agenda forcing studios to compete for audiences

• Competition from other forms of entertainment

• Early 2000s: private investment in films encouraged

FILM: 2009

• Restricted access to commercially valuable mass distribution (cinema)

• Pre and post production censorship• Foreign film import quotas

But…

• ‘Pirated’ DVDs

• Internet, P2P, streaming, downloading

• Consumer creativity and distribution

CINEMA DISTRIBUTION

• A coordinated system of mass distribution

• Capable of converting popularity into scalable profit for commercial distribution

• Commercial incentives for operating within state-controlled spaces

MUSIC: Before the 1980s

• Conditions that gave rise to a recorded music industry in other markets absent

•Live, recorded and broadcast music were dominated by state-funded Cultural Troupes

• A limited repertoire of propaganda songs

MUSIC

“Illegal sales of music in China are valued by [the] IFPI at around US$400 million, with around 90 percent of all recordings being illegal. No creative or knowledge-based industry can hope to survive in such an environment” John Kennedy, IFPI: 2006

DIGITAL LEAPFROG

• Digital outperforming physical copies

• Digital sales: 3.6 billion RMB in 2005

• Best year of physical copies: 2.7 billion RMB

• Mobile the most significant source of music related revenue

MOBILE MUSIC

• Closed distribution networks

• Publisher managed censorship

• Distribution licensing

• Commercially focused innovators

• Rapid growth in commercial activity

ENTREPRENEURIAL CONSUMERS

… to be an entrepreneur is to have entrepreneurial governmentality that makes it thinkable and practicable to relate to different aspects of the world — people, relations, institutions, the state, laws, etc. -- in terms of symbolic commodities, risks, capital, profits, costs, needs and demands (Yurchak, 2002)

Social Network MarketsA market within which choices are determined by the choices of others.

FASHION

• Classic ‘social network market’

• Consumer innovation

• Risk (is this hat silly, or will I start a trend?)

• Reward: Status, fun, identity

IP in Fashion

• Trademark, rather than copyright• Copyright: Emphasizes an author’s investment

in an individual creative work• Trademark: Protection for investments in

reputation and image of a maker• Trademark helps to maintain a connection

between a product and its source

Conclusions

• IP and the Creative Industries: One size unlikely to fit all

• No longer a case of telling China what an IP regime should look like

• Innovative approaches to IP and business models are just as necessary in other markets

Co-Evolution

• Co-evolution of law, technology and business models.

• Firms most likely to succeed in global markets are firms whose business models have evolved with weak IP.

• Challenges of enforcing copyright protection in distant markets.

Early Days of the Record Industry

• Expensive, specialised equipment.• Copying hardware not widely available.• Neighbouring rights.• Technological innovation + creative innovation

+ developments in law = new commercial opportunities.

Emerging Commercial Music Models

• Technology for mass reproduction and consumption available before copyright law.

• High demand + no legitimate distribution channels = a thriving market in unauthorised products.

• Internet, PCs and cheap MP3 players.

Making Money in the Chinese Music Business

• Cross platform promotion – ‘Supergirl’.• Merchandising, concerts, personal appearances, product

endorsements.• Mobile as the largest (and fastest growing) source of

music related revenue. • Is China’s music industry adopting strategies familiar to

the fashion industry?

Conclusions

• IP and the Creative Industries: One size unlikely to fit all.

• No longer a case of telling China what an IP regime should look like.

• Innovative approaches to IP and business models are just as necessary in other markets.

• Evolutionary approaches to understanding IP’s role in creative innovation (stay tuned).

What Next?

• Are any of the patterns I observed in China generalisable to other markets?

• Design as a global industry… • Publishing and scholarly communication…• Less emphasis on copyright?• The need for coordinating mechanisms capable

of enabling global markets

Thank You!