Asia emerges as leader in creative industries

INTELLECTUAL PROPERTY has become more
central to the economies of developing countries as creative industries emerge in increasing numbers. They sell access, which is copyright, and regulators are struggling to define how the digital value chain
works . . .

Asia has emerged as the leading producer of the global creative industry, with 34 per cent of global production in 2015 originating from the region. North America and Europe each produced 31 per cent of global production in that year.
Francis Gurry, Director General of the World Intellectual Property Organisation (WIPO), told ATI that China not only has a huge film industry, it is also a huge market for publications and music. South Korea is another big market.
Korean productions and its music, known colloquially as K-pop, have evolved into large markets with audiences in Japan and China.
Then there is Bollywood, which is far bigger than Hollywood in terms of the number of feature films produced.
“Asia has the biggest share of the world’s creative industry, and that is a big change, due, I would say, to the technology era and a focussed strategy in Japan, China and Korea,” Gurry says.
As he sees it, one of the drivers of creative industry is the rising middle class across Asia, Generally, this group has more disposable income and leisure time.
“So we are seeing creative content as a major contributor to the world economy. The global creative industry in 2015 was worth US$2.25 trillion and accounted for 23.9 million jobs worldwide, according to a study by the international accounting house, Ernst & Young.
“Of course, in the area of technology, we see heightened competition because there are more players, and with the rise of Asia in particular, intellectual property is often the battleground,” says Gurry.
“In creative industry, intellectual property and copyright are the things that make the market, and that is what you are selling. You are selling access, which is copyright. So intellectual property has become more central to the economies of developing countries.”
Piracy is a big problem worldwide, and in this respect, Gurry does not exclude any country. “It is easy in a digital environment to reproduce and distribute (pirated) materials,” he told ATI. However, he believes new business models can stem losses to piracy.
For the first time in 20 years, the music industry grew last year by three per cent. “I think this is due to a better business model — streaming has been a big success,” he says.
He recalls a conference on the global digital content market which looked at developments in the market since 1995, when commercial activities were first allowed on the Internet.
“In 1995, the dominant way a consumer purchased music was a CD, which cost about $25 or $30 for 15 songs,” he says.
“Now a consumer can get access to all of the world’s music for $10 to $15 a month, an extraordinarily good deal for customers. Compare that to a football ticket. In 1995, it cost £12.50 to watch Arsenal (the British football team) play; this season the ticket costs £47.
“The new business models have also helped compliance. People are prepared to pay for access when it is a good deal. Of course, the internet makes lower prices possible because of the larger audience.”
Therefore, he says, the first answer to piracy is a better business model. “We have more legal purchasers and the market is growing for the first time,” he says, cautioning that this reflects only one year’s result, so it cannot be called a trend.
“As well as the business model, you need support with legal measures,” says Gurry. “Like the injunction on ISP providers for providing access to overseas private sites. The law is now in place in 29 countries, including Australia.
“The third thing is education. Having people appreciate that downloading music, films or books illegally is not victimless — that is why there is copyright law, providing payment to support sustainable creative industry.
“Who is going to pay the musicians? They are entitled to a decent living. We educate people to understand that if they want good music, they should be contributing to it.”
Hopefully, with the rapid take-up of services like Netflix (an American global provider of streaming, films and television series), consumers will pay for watching films online, he says.
Gurry believes publishing comes from a different business model. But even there, he notes, “some good things are happening”.
It is technology that has enabled the development of e-commerce in China, Korea, Europe, the UK and elsewhere, he says. Sooner or later, these markets will need greater interconnection, which raises the question of data standards and territorial system linkages.
Plenty of experimentation is under way. Much of the work is being done by the private sector because it creates the market – but it is the public sector that has to support the market, with competition laws and certain legal standards, to ensure good market operation.
Gurry says these developments are still at an early stage, but are evolving extremely rapidly.
A big emerging legal issue is around safe harbour rules. Gurry says that in the early stages of the digital market, internet service providers enjoyed safe harbour provisions, meaning that they were not liable for illegal content until such time that they were notified.
 In Europe, there are challenges to the definition of internet service providers. The argument is that services such as YouTube should not be entitled to safe harbour because, in the view of some, YouTube is a content distributor, not an internet service provider.
This has created what the music industry sees as a “value gap” issue, because providers are losing the value of their products when they appear on YouTube.
The dispute is playing out in the European Union and the US. “Performers don’t want safe harbour to apply to such companies because they say they are not getting value (from the distribution of their work),” Gurry says.
Another emerging big issue in his view is in understanding the new value chain. “In the analogue world,” he says, “you have a writer, a publisher, a bookshop and a consumer. So we understood the value chain and where the
distribution of value is. This is not so clear in the digital world. Bookshops are disappearing, online retailers are coming into their place. The value chain is under evolution and one of the big issues is to understand what is happening in the digital value chain.
“Some people say the value is going to the distributor like YouTube and so on. This is not my view, but it is a view that is out there.
“We don’t necessarily have full information on how the digital value chain works. The deals done by the (music) labels with the streaming services, for example, are not published and not public. So we need more information on the value chain.” This is an area he believes
requires serious work and analysis.