Economics / Policy / Technology

Some links to some work on creative industries

Just a quick post to share some of the work I did while at the ARC Centre of Excellence for Creative Industries and Innovation in the last year or so.

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I worked on three projects; first, putting together a Cultural Consumption Price Index:

Abstract: We propose a method to construct a price index of cultural consumption in geographic space. The index — the CCPI — is calculated from a standardised cultural consumption basket purchased by a representative consumer over 30 locations in Australia, using 2010 price data. We use a full cost method (direct plus indirect cost) to estimate the index value of the cultural consumption basket; highlighting the extent that price differences by Australian location are accounted for by larger indirect costs (particularly travel) in consumption. The CCPI thus offers an empirical estimate of variation in the real cost of cultural consumption throughout Australia, based on existing investments and technologies with uniform preference. We find that the smaller cities of Perth and Adelaide have the lowest index value, with the larger cities of Sydney and Melbourne next. Regional centres have index values that range between 20 percent and 100 percent higher, and remote towns scored considerably higher again. We then recalculate the index based on non-linear per capita scaling, which shifts the index away from major cities and toward evidently productive smaller cultural centres including Byron Bay and Fremantle.

Keywords: cultural consumption, price index, creative industries, urban studies.

Then working with head of the CCI John Hartley and Jason Potts, to create the CCI-Creative City Index:

The CCI-Creative City Index was commissioned in 2010 by the Beijing Academy of Science & Technology’s Beijing Research Center for the Science of Science. John Hartley was asked to develop a new creative global city index. The brief was to improve on the existing indexes with a specific focus on creative industries and the sources of creative development.

This report, by John Hartley, Jason Potts, Trent MacDonald, with Chris Erkunt and Carl Kufleitner, sets out the new model we have developed, which we call the CCI Creative City Index (CCI-CCI). It presents the results of a pilot application of the index to six cities: London, Cardiff, Berlin, Bremen, Melbourne and Brisbane.

The index incorporates many elements from other global and creative city indexes, but also adds several new dimensions relating to creative industries scope, micro-productivity, and the economy of attention.

I then had the chance to spin off a working paper from my UQ economics honours thesis, titled ‘Do Price Dynamics Drive Musical Evolution?’

Abstract: Do lower input prices to creative production reduce output prices or do they increase product variety? We propose an evolutionary model connecting price dynamics in input markets to innovation and variety generation in output markets. Lower input prices may be competed away in market share dynamics, but they may also induce a fall in the opportunity cost of entrepreneurial experimentation, leading to increased variety in output markets. Increased variety in creative output markets (i.e. niche creation through conceptual revolution) is explained here as a consequence of the entrepreneurial opportunities due to falling input prices. This falling-input-price-induced niche proliferation mechanism is examined with price and genre data from the music industry. We find that falls in input prices do seem to correlate with music genre proliferation.

Keywords: niches, creative industries, music industry, innovation, variety, input prices.

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