Rebuilding The cultural and creative economy before and after the COVID-19 crisis

January 2021 About the partners and supporters GESAC’s partners for the study of the report Contents AEPO-ARTIS The European Grouping of Societies of Authors and Composers Association of European Performers Organisations (GESAC) commissioned EY teams to produce a report on the EUROCINEMA About the partners and supporters of the report 02 state of the cultural and creative industries (CCIs) in Europe. Association of European Producers What was their economic situation before the COVID-19 crisis? EUROCOPYA Executive summary 04 What impact has the crisis had on activity and employment? European Federation of Joint Management Societies of Producers for Private Audiovisual Copying And what are the main priorities for the sector to protect itself from the most serious consequences, to recover growth and EVA Editorials 08 enhance its value in the European economy? This study follows European Visual Artists a report of the same type, entitled Creating Growth, published FIAPF in December 2014. Before COVID-19 International Federation of Film Producers Associations 12 The full power of culture and creation GESAC has brought together numerous partners IMPALA 1 representing the CCIs, in order to reflect the diversity and Independent Music Companies Association collective strength of this economy. IVF International Video Federation The EY team would like to thank GESAC’s team, GESAC's Because of COVID-19 28 partners and the experts interviewed across Europe. GESAC SAA The sharp fall and EY would also like to thank ADAGP, BUMA, GEMA, SACEM, Society of Audiovisual Authors 2 SCAM, SIAE and SOZA for their contributions. Everyone's SROC contribution has been essential to the study. Sports Rights Owners Coalition After COVID-19 42 3 Rebuilding Europe About GESAC Supportive organizations Detailed methodology and main sources 50

GESAC comprises 32 authors’ societies from all over Europe, AER which together represent over one million creators and rights Association of European Radios holders – from musicians to writers, visual artists to film CEPIC directors and many more, in the areas of musical, audiovisual Coordination of European Picture Agencies and visual arts, and literary and dramatic works. Stock, Press and Heritage web: www.authorsocieties.eu EACA email: [email protected] European Association of Communications Agencies twitter: @authorsocieties ECSA European Composer and Songwriter Alliance EGDF European Games Developer Federation About the study’s team EPC European Publishers Council The study was carried out by EY Consulting, under the FEP supervision of Marc Lhermitte, with the participation of Hugo Federation of European Publishers Alvarez, Clémence Marcout, Quentin Nam and Enzo Sauze. FERA Federation of European Film Directors FSE/SCRIPT Federation of Screenwriters in Europe IFRRO Marc Hugo Quentin International Federation of Reproduction Lhermitte Alvarez Nam Rights Organisations IMPF Independent Music Publishers International Forum

Clémence Enzo Marcout Sauze

2 Rebuilding Europe – The cultural and creative economy before and after the COVID-19 crisis 3 Executive summary Rebuilding Europe : the cultural and creative economy before and after the COVID-19 crisis Employment by sector in 2019 (in million jobs; EU-28) Sources: Eurostat – Business Sector Profile; EY modeling and analysis 2020. EY 2021 Chemicals Construction 1.2

1. Before COVID-19 The full power of culture and creation Cultural and creative industries 7.6 12.1

At the end of 2019, the cultural and creative economy Turnover and added value in 2013 was a European heavyweight and 2019, and share of GDP Telecommunications 0.9 (in € billion and %, EU-28) • With a turnover of €643 billion and • Between 2013 and 2019, the 10 2.6 Automotive a total added value of €253 billion CCI sectors experienced varied but in 2019, the core activities of the constant growth rates: more than 4% +17% cultural and creative industries per year for video games, advertising, 643 Tourism (CCIs) represented 4.4% of EU GDP architecture and music; and between (4.4%) 10.7 in terms of total turnover. 0.5% and 3% for audiovisual (AV), 550 10.3 radio, visual arts, performing arts and (4.2%) • Therefore, the economic contribution books. Only the press suffered (-1.7%) of CCIs is greater than that of due to the difficult transition between telecommunications, high technology, print and online revenues. 1.3 pharmaceuticals or the automotive Utilities Transportation and logistics industry. • All the players point to a period of intense innovation – not only the • Since 2013, total CCI revenues have search for greater live or physical 213 253 increased by €93 billion and by experiences by spectators, readers, (1.6%) (1.7%) almost 17%. players or visitors but also the Digital experiences and online/offline distribution explosion in demand for online combinations have fueled the growth, but the market • At the end of 2019, CCIs employed content: 81% of internet users in the 2013 2019 8.4× continues to evolve more than 7.6 million people in EU used the internet for music, videos Added value Turnover more jobs than in the the EU-28, and they have added and games in 2018 – more than for telecommunications industry • In the last six years, the turnover invested heavily in innovation Sources: Eurostat; GESAC; professional generated by online cultural and digitization, both from a approximately 700,000 (+10%) jobs, shopping or social networking. organizations; EY modeling and analysis 2020. including authors, performers and content, services and works business perspective and in terms other creative workers, since 2013. grew by 11.5% per year. of production and customer 81% • Cultural enterprises have experience. of internet users in the EU used the historically been one of the first • Yet unbalanced relationships internet for music, videos and games to experiment and adopt digital with global platforms and CCIs in Europe have become more international and entrepreneurial technologies (digital photos, intermediaries on the internet digital carriers such as DVD and may compromise the financial • In 2019, the five largest EU-28 countries (, , • Over 90% of CCI companies are small- and medium-sized €8.6b Blu-ray, CDs, shooting digitally, viability, employment, innovation , and the UK) accounted for 69% of CCI total enterprises, and 33% of the workforce are self-employed – EU’s total trade balance in cultural streaming, virtual reality and and investments in the sector. revenue in the EU, but the strongest growth came from more than twice as many as in the European economy as a goods in 2019 online platforms). Cultural • For the stakeholders of the CCIs, Central and Eastern Europe. whole (14%). content have fueled the growth the challenges are numerous, and the development of the including the remuneration • In 2017, the EU exported €28.1 billion worth of cultural • Revenues originating from the public sector accounted for internet from the very beginning, of rights holders, the proper goods. The EU’s trade balance in cultural goods is in surplus only 10.8% of revenues in 2018, compared with 11.5% in 90% and still represent a high share of of CCI businesses are small functioning of the markets for (+€8.6 billion), and the share of CCI exports in total EU 2013. and medium sized broadband consumption. cultural and creative content, and exports was 1.5% – about the same as the surplus in trade • Since 2013, CCI companies the fight against illicit access to in food, drinks and tobacco (€9.1b in 2018). Sources: Digital Economy and Society Index (DESI); Business and organizations have protected works. Sector Profile, Eurostat; Cultural Statistics, Eurostat

4 Rebuilding Europe – The cultural and creative economy before and after the COVID-19 crisis 5 Executive summary Rebuilding Europe : the cultural and creative economy before and after the COVID-19 crisis

EY 2021 3. After COVID-19 How to rebuild Europe

As a result of in-depth research and interviews conducted by EY teams, and based on the 2. Because of COVID-19 The sharp fall opinions of experts and organizations representing the CCIs, the following challenges have been identified as priorities for the recovery and growth of the creative economy: In 2020, the cultural and and music (-76%) are the most Total turnover generated by CCIs in creative economy lost impacted; visual arts, architecture, the EU-28 (in € billion) advertising, books, press and approximately 31% of its Challenge 1 – “Finance” Challenge 2 – “Empower” Challenge 3 – “Leverage” AV activities fell by 20% to 40% -31% revenues compared with 2019. The video Provide massive public funding Promote the EU's diversified Use the CCIs – and the multiplied games industry seems to be the only and promote private investment in cultural offering by ensuring a power of their millions of individual • The total turnover of CCIs in the EU- one to hold up (+9%). cultural and creative businesses, solid legal framework to allow and collective talents – as a major 28 is reduced to €444 billion in 2020, organizations, entrepreneurs and for the development of private accelerator of social, societal a net drop of €199 billion from 2019. • The crisis has hit Central and 643 creators – two indispensable levers investment in production and and environmental transitions in Eastern Europe the hardest (from to support and accelerate their distribution, providing the Europe. • With a loss of 31% of its turnover, the -36% in Lithuania to -44% in 444 recovery and transformation. necessary conditions for an cultural and creative economy is and Estonia). adequate return on investment one of the most affected in Europe, for businesses and guaranteeing slightly less than air transport • All sectors are affected: even those appropriate income for creators . but more than the tourism and that seemed to be protected by 2019 2020 (estimate automotive industries (-27% and -25% home consumption faced a sharp with the impact of respectively). drop in income, given the central role the COVID-19 crisis) of physical experiences and sales Sources: Eurostat; GESAC; professional • The shockwaves of the COVID-19 in their business models, as well organizations; Oxford Economics – Global Industry, Second Wave Scenario, as of 7 September crisis are felt in all CCIs: performing as uncontrollable production and 2020; EY modeling and analysis 2020. arts (-90% between 2019 and 2020) distribution costs.

Estimated change in turnover 2019-20 by CCI sector (in % of total 2019 turnover and in € billion; EU-28) The COVID-19 crisis will have a massive and lasting impact on the entire CCI value chain

Newspapers Performing Visual % +2 • The financial viability of individuals – whether creative or sales (CDs and vinyls) will be down 35%, while digital Advertising Architecture Audiovisual Books Music and magazines arts Radio +9 arts business – and CCI companies in the private and public revenues for the recorded music industry are expected to Video games sectors is compromised by rising costs, successive delays, grow by only 8%. The same trends apply for film with a drop -9 -2 industry tight cash flow due to interruption of activities, and the of revenues generated by European cinemas estimated so -17 -18 -20 -20% uncertain return of acceptable economic and health far at -75% in 2020. -22% % -25% -23 conditions. -28% -26 % • In the absence of a significant resumption of offline -32 % -31 • The seriousness of the crisis is illustrated, for example, by production, distribution and promotion operations in 2021, -36 -37 -38% Average change the fall of around 35% in royalties collected by collective the ability of CCIs to maintain and increase investment in turnover management organisations (CMOs) for authors and in new projects, creation and innovation will be seriously -53 performers, whose revenues will be sharply reduced in compromised. 2021 and 2022. • In a recent EY Future Consumer Index, 46% of respondents • On the other hand, consumer spend on digital models said they would not feel comfortable going to a concert does not compensate for the loss of revenues generated for several months, and 21% said they would not feel Change in turnover (in %) -76 % in physical sales (of books, video games, newspapers, etc.) comfortable going for several years. Change in turnover (in € billion) and events in most sectors. In the music sector, physical Sources: Eurostat; GESAC; professional organizations; -90% Oxford Economics; EY modeling and analysis 2020.

6 Rebuilding Europe – The cultural and creative economy before and after the COVID-19 crisis 7 Editorial Editorial Culture, the social cement CCIs are essential for of the post-COVID-19 world maintaining our cultural

Europe’s diverse and rich cultural heritage and culture is the diversity, social cohesion and cement that fosters our common European sense of belonging. Not only does it contribute to our society’s social cohesion, to our Europe’s attractiveness democracy and to our economy, but it also reflects our European diversity, values, history and way of life. As such, it must be cherished and supported. The EU’s cultural and creative sectors instruments, such as Erasmus+, with an David Sassoli are an important pillar of our society envelope of €26bn, as well as Horizon President and economy. They are essential for Europe and, in particular, its Cluster European Parliament We are facing challenging times. The We must think of culture as not only a our cultural diversity, strengthening 2 on Culture, Creativity and Inclusive European Parliament recognized from pivot for recovery but also the social social cohesion and increasing Europe’s Society (worth €2.3bn), will also the outset the dramatic effects of the cement of a post-COVID-19 world that COVID-19 pandemic on the cultural and needs to be rebuilt, in which interpersonal attractiveness internationally. They support the sector. Our work will focus creation sector, and on the many culture links will have to be reconnected. are also one of our most dynamic on enhancing synergies among these professionals, authors, composers, Mariya Gabriel sectors, with positive spill-over effects initiatives, as well as with other funding musicians, writers and more, men and At a time when darkness seemed to have European Commissioner on other sectors of the economy, possibilities available through Digital women whose present and future have taken over our private lives, cultural for Innovation, Research, such as the take-up of technology or Europe, REACT-EU or cohesion policy become seriously uncertain. venues, concerts, cinemas and theaters, Culture, Education cultural tourism. The contribution to our instruments, to help the sector recover Europeans took to their instruments and and Youth sang on their balconies. economy is enormous, with as much and tackle future challenges. as 4% of our GDP and more than seven million jobs, more than the automotive Over the past months since the Art has a cathartic power that can accompany a sector in the EU! beginning of the crisis, I have received all the representatives of the sector to “post-pandemic society on the road to resilience. Yet the COVID-19 crisis has had a hear their concerns and gather data devastating impact on cultural and about losses due to restrictive measures From the very start, we called on EU Art has a cathartic power that can institutions and Member States to accompany a post-pandemic society creative sectors across all Member throughout Europe. However, it is fair to recognize the need for massive support on the road to resilience. Art is not an States. We have seen, on the one hand, say that the full impact of the ongoing for culture. For several months, the accessory; it is a viaticum. Art is not the sector’s extraordinary capacity to COVID-19 crisis on the cultural sectors Parliament fought tooth and nail to “political”; it is “poetic” – a creative force mobilize and be creative at all levels, but has not yet been assessed, due to the increase the budget allocated to culture that animates us and allows us to live on the other, the need for resources, severe lack of data. Specific data is in the multi-annual financial framework. together, to survive, individually and targeted investment and greater support extremely important to respond rapidly The Creative Europe program was collectively. substantially enhanced, and this victory in such critical moments. and identify the best possible tools to is the testament to our commitment to support the sector. The findings of this respond to the needs of citizens and to On our side, we reacted very quickly study will be instrumental to define the cultural and creative sector. We also using the flexibility of our existing suitable responses to this unprecedented called strongly upon every Member State instruments. But more importantly, we crisis, and make sure that the measures to ensure that the fundamental place that worked hard for the future. As a result, a are targeted and efficient. culture deserves in the economic recovery few weeks ago, we managed to increase plan is preserved. the budget for the new Creative Europe I encourage you to read this very programme 2021-2027 to €2.2bn, a interesting study that shows, once more, 50% increase compared with the current the importance of this sector for our programme. Moreover, other important societies and economies.

8 Rebuilding Europe – The cultural and creative economy before and after the COVID-19 crisis 9 Editorial Editorial CCIs could become the N°1 ally The full power of culture of the European recovery After a first report published with GESAC in 2014, EY Consulting took up the challenge of producing this second edition at the end The study presented in this document But culture is one of the most impacted of a dramatic year for the cultural and creative industries (CCIs), was commissioned by GESAC, which economic sectors in Europe, with a represents over one million creators massive drop of 31% of its revenues both in Europe and around the world. and rightsholders in Europe, and carried in 2020 due to the COVID-19 crisis out by EY Consulting. It serves two and full recovery not expected before The analysis shows that the European €643 billion in 2019 (more than the purposes. First, it provides accurate 2022. This situation might weaken the Marc Lhermitte cultural and creative economy lost telecommunications, pharmaceutical data on the massive economic impact of entire CCI value chain for a very long Partner, EY almost a third of its activity in 2020. or automotive sectors), the value of the COVID-19 crisis on the cultural and time: artists, producers, publishers, Culture was the first to suspend most the creative ecosystem, diversified Jean-Noël Tronc creative industries in Europe. But it also technicians and, of course, authors, who of its live and retail activity – and it will and innovative by nature, lies above all President GESAC asserts that this sector, an economic are the fundamental but also the most probably be the last to resume without in the 7.6 million people who create, CEO SACEM heavyweight at the heart of Europe’s threatened link in the sector. constraint. Only air transport can produce and disseminate the artistic act social fabric, could become the number challenge culture for the unenviable – 700,000 more than six years ago. And one ally of the European economic Fortunately, it’s not too late to take position of the most affected sector. Yet the balance of trade in culture posted a action. If specific measures and recovery it is undeniable that other industries net surplus of €8.6 billion in 2019. plans are put in place, CCIs could be have been able to better explain their much more than “one of the problems to value and potential, and channel public The EY team would like to extend its be solved” following the crisis, becoming support. warmest thanks to GESAC and its CCIs contribute to a significant part of Europe’s solution. partners for their incredible support “Europe’s identity, Our report also shows the power and collaboration, and to the dozens of That is why we, the European authors’ of culture, its dynamism and its professionals, experts and creators who diversity and right societies, suggest to the authorities contribution to the EU’s global influence. provided insights and convictions so that that they implement concrete solutions Based on a massive turnover of Europe can use the full power of culture. regeneration. to tackle three main challenges:

recovery. • Financing the cultural recovery by promoting massive public and private Indeed, the current crisis is all the funding for cultural and creative Scope more serious as it affects a sector as businesses, non-profit organizations, dynamic as it is vulnerable; as essential entrepreneurs and creators This study covers the 10 core For the sake of rigor and gastronomy, which are sometimes as it is diverse. CCIs are a world of • Empowering CCIs to reinforce their cultural and creative sectors that consistency, we have decided to included in CCI statistics, such as small businesses and freelancers (who positive impact by ensuring a solid legal represent one-third of workers in the framework, allowing an adequate return have already served as the scope of stay close to the UNESCO definition those of Eurostat. the first report on CCIs in Europe, of CCIs as activities “whose creative economy) as well as large firms, on investment and guaranteeing fair The geographical scope of the sometimes leaders at the international published in 2014 by EY and principal purpose is production remuneration for creators study is the (EU) level. They contribute to Europe’s GESAC: or reproduction, promotion, • Preparing for the future by using the and the (UK), identity, diversity and regeneration, with distribution or commercialization cultural and creative industries – and • Advertising known as the EU-28. Unless a proportion of women in employment of goods, services and activities the multiplied power of their millions • Architecture otherwise stated, all references higher than in the European economy of individual and collective, private and of a cultural, artistic or heritage- (48%) and a creative workforce younger • Audiovisual to the EU in this study refer to the public talents – as a major accelerator related nature.” Therefore, the than the average in 21 of the 27 Member • Books scope of the EU-28. of social, societal and environmental main data shown in this report does States. And cultural activities – including • Music transitions in Europe. not include certain other “creative Unless otherwise stated, all music, literature, visual arts, cinema, • Newspapers and magazines activities,” such as fashion, jewelry references to creators refer to museums, theatres, architecture • Performing arts or industrial design – nor sectors authors, performers and other and video games – are vectors of • Radio where creativity plays a central artists. communication, inclusion and social • Video games role, such as luxury goods or cohesion. • Visual arts

10 Rebuilding Europe – The cultural and creative economy before and after the COVID-19 crisis 11 The cultural and creative economy Before COVID-19 is now a European heavyweight

At the end of 2019, the core The contribution of CCIs to the Turnover and added value in 2013 activities of the cultural and creative European economy is greater than that The full power of and 2019, and share of GDP industries (even without including of other sectors, which are generally (in € billion and %, EU-28) other industries or adjacent activities, considered to be landmarks of the culture and creation such as industrial design, fashion or EU economy: for example, the CCI gastronomy) represented a total added GDP is 1.4 times greater than that of +17% value of €253 billion,1 or 1.7% of EU telecommunications and 2.3 times 643 GDP, up 5% on 2013. greater than that of the automotive (4.4%) industry. 550 In terms of turnover, creative (4.2%) businesses, organizations, freelancers And its growth between 2013 and and creators generated €643 billion 2019 (2.6% per year) exceeded that – €93 billion more than in 2013. of the construction and automotive When total revenues are measured sectors (2.5% and 1.6% respectively). in relation to EU GDP, the sector accounts for about 4.4% of the The sector also stimulates the growth 01 European economy. of several other industries – such 213 253 as tourism, high technology, digital (1.6%) (1.7%) Before the start of the COVID-19 crisis, industries, transportation and the cultural and creative economy was telecommunications – that are both growing steadily in the EU. From 2013 suppliers and customers of CCIs. The to 2019, it grew by 2.6% per year, overall spillover when these impacts 2013 2019 while the EU average GDP growth was are included confirms CCIs as a Added value Turnover 2.0%. key driver of growth for the whole Sources: Eurostat; GESAC; professional European economy. organizations; EY modeling and analysis 2020.

Added value by sector in 2019 (in € billion; EU-28)

Business services 3,082 Construction 737 Financial services 691 Transportation and logistics 668 Accommodation and catering 379 Utilities 376 Cultural and creative industries 253 Agriculture, forestry and fisheries 201 Telecommunications 187 Chemicals 176 High-tech goods 140 Pharmaceuticals 122 Automotive 107 Textiles, leather and clothing 59 Aerospace 44 Oil and gas extraction 31

Sources: Oxford Economics – Global Industry Scenarios; EY modeling and analysis 2020.

1 Without double counts.

12 Rebuilding Europe – The cultural and creative economy before and after the COVID-19 crisis 13 In 2019, CCIs employed more than 7.6 million people in the EU Across Europe and across all sectors, the mosaic

In 2019, the core activities of the cultural and creative could reach 8.7 million people,3 the difference being sectors employed 7.6 million people in the EU. in occupations outside the cultural sector (e.g., of creative industries is showing its diversity industrial design). If fashion and high-end industries Within the CCIs, four sectors provide employment for more (e.g., luxury goods and services) are included, the total than one million people. Together, they accounted for 68% “creative” workforce reaches 12 million people.4 Overview of creative sectors of the total (7.6 million): visual arts (1.9 million), music (1.2 million), AV (1.1 million) and performing arts (1.0 million). In terms of turnover, the three main areas of activity are to the strong growth of online advertising (+12.3% over Employment by sector in 2019 the visual arts (€138 billion), advertising (€129 billion) the period) and the economic development of Central and Employment in the creative and cultural sectors grew (in million jobs; EU-28) and AV (€119 billion) sectors, which together account for Eastern Europe (+8.1% per year). steadily between 2013 and 2019, from 6.9 million to Sources: Eurostat – Business Sector Profile; EY modeling and analysis 2020. almost 60% of the CCIs’ total revenue. But growth rates show 7.6 million people,2 a slightly higher growth rate (1.9%) variations between sectors. After the difficult times that followed the economic crisis than the European average (1.3%). In six years, creative Construction 12.1 of 2008, architecture was able to grow by 5.3% between businesses and organizations, producers, developers, Tourism 10.7 The video games sector experienced the strongest growth 2013 and 2019, mainly due to strong real estate activity distributors, creative agencies, editors, broadcasters and Transportation and logistics 10.3 (+5.8% per year) between 2013 and 2019, more than in general and in the area of sustainable renovation in museums created around 700,000 new jobs in Europe. Cultural and creative industries 7.6 doubling its turnover in six years. The sector relied on the particular, as well as increased demand for integrated strong growth of its online activity, particularly in the main service offerings, from design to construction. Automotive 2.6 At the end of 2019, CCIs had a much larger workforce European markets (+155% in France, the UK, Germany than other leading sectors of the European economy: Utilities 1.3 and Spain combined), thanks to intense innovation and the Music also experienced sustained growth (+4%), half of for example, 2.9 times more than the automotive Chemicals 1.2 search for a greater experience for players (new types of which was due to live performance (+4.8%), while the industry and 6.3 times more than chemical industries. Telecommunications 0.9 consoles, better quality of visual effects, etc.) and the move performing arts (+2.9%) and visual arts (+2.2%) experienced toward free game models, which rely on in-game sales rather a strong development in some countries. Performing arts According to reports based on a much broader definition than charging to join the game. also grew by 33% in the Czech Republic and 53% in . of the creative industries, the total “creative” workforce The visual arts market grew by 50% in Denmark, reflecting The advertising sector grew faster than the European the “golden age” that the country entered 15 years ago, average (+5.5% per year between 2013 and 2019), thanks according to art critics.

1,890 Employment by CCI sector in 2019

(in ‘000 persons employed, EU-28) % Sources: Eurostat; GESAC; professional organizations; EY modeling and analysis 2020. +14 Turnover by CCI sector in 2013 and 2019 and 2013-19 growth rate 138 +38% (in € billion, EU-28) Sources: Eurostat; GESAC; professional organizations; EY modeling and analysis 2020. 129 % +11 Turnover in 2013 Turnover in 2019 122 119

1,192 107 -10% 1,122 97 94 1,001 88 903

670 619 608 +36% 52 +24% +1% 41 +26% 39 37 37 % 33 31 +152 81 56 24 24 % Visual arts Music Audiovisual Performing Advertising Architecture Books Newspapers Video games Radio +7 arts and magazines industry 9 10 10

2 Without double counts. 3 Cultural statistics – 2019 edition, Eurostat, 2019. Visual arts Advertising Audiovisual Newspapers Architecture Performing Books Music Video games Radio 4 Boosting the competitiveness of cultural and creative industries for growth and employment, European Commission, 2016. and magazines arts industry

14 Rebuilding Europe – The cultural and creative economy before and after the COVID-19 crisis 15 In the AV sector (+1.8%), the increase in European feature sectors experienced less dynamic trends. Notable examples The growth of CCIs is based film production (+2% per year since 2014), the dense include the book industry (+0.5%) and the newspaper and network of broadcasters, producers and distribution magazine industry (-1.7%). The press sector has, of course, networks, and the emergence of video-on-demand (VOD) been facing a myriad of challenges for years, with a decline on long-lasting trends platforms (+383%) contributed to the growth of the sector. in print advertising revenues (the “paper” medium still The radio sector (+2%) benefited from the emergence of accounts for around 86% of the sector’s revenues). The book Offer and demand for culture are dynamic throughout Europe podcasts, a small but growing market (€39 million: +69% sector has been fairly stable due to a decline in physical between 2018 and 2019), but a decline in advertising sales, despite the increased support of e-book sales. The CCI economy in Europe can rely on structural dynamics revenues was beginning to have an effect. However, other that have been present for years and will not disappear with Number of feature films production the current crisis. and cinema attendance (in millions; EU-28) Sources: European Audiovisual Observatory, February 2020. First of all, European citizens’ demand for cultural content While the largest CCI markets are in the largest EU countries, and services has increased in recent years. Household Central and Eastern Europe is the fastest-growing creative economy spending on cultural goods and services increased by 12% 1,847 N.A. 1,706 1,748 1,737 between 2010 and 2015, an annual growth rate of 2.2%. 1,615 In total, the five largest CCI markets (France, Germany, Italy, This appetite is reflected in most cultural sectors. Spain and the UK) account for 69% of total CCI turnover in For example, European cinemas recorded 100 million more the EU. However, the strongest growth is mainly recorded admissions in 2019 than in 2014. From 1,615 in 2014, the in Central and Eastern Europe. In countries such as Czech 978 992 985 954 1,007 number of films produced in the EU rose to 1,847 in 2018, 911 Republic and Romania, three specific sectors experienced an increase of 14%. dynamic growth, such as advertising, architecture and video games. The number of new books published in the EU rose from 2014 2015 2016 2017 2018 2019 CCIs contribute to the national economy of all Member 545,000 in 2014 to 585,000 in 2018, with a record high of 610,000 in 2017.6 In the book industry, the number of States, from 0.9% in Greece to 3.0% in Estonia. In four >2% printed titles (active catalogue) reached an all-time high Feature films produced Attendance countries, the cultural and creative economy accounts for 1.5% - 2% of 11.25 million in 2018, compared with 9.7 million in more than 2% of national GDP. Among them, in Estonia, the 1% - 1.5% 2014 (+16%). 6 European Book Publishing Statistics 2018, Federation of European Publishers, 2018. Government has implemented a proactive cultural policy, <1% and public spending on culture is twice as high as the EU average. In Portugal, UNESCO highlighted the work of the non-profit organization ADDICT,5 which strives to create a favorable environment for local CCIs by creating a platform for a real industrial and artistic strategy.

At the time of , in 2019, UK CCIs accounted for 20% of the turnover of EU-28 CCIs (€128.6b) and nearly 17% of employment (1.275 million jobs). In addition to a significant weight in European CCIs, the UK is a European hub for many CCI sectors. In particular, the UK participated in 42% of the Share of CCIs' value added in total country value added cooperation programs within Creative Europe (making it the (in % of national GDP; EU-28) second-largest European partner in the program). Sources: Eurostat; GESAC; professional organizations; EY modeling and analysis 2020.

5 ADDICT, Creative Industries Agency Portal, UNESCO, 2020.

Share of the UK in EU CCIs in 2019 (EU-28) Sources: Eurostat; GESAC; professional organizations; EY modeling and analysis 2020.

EU-27 UK

Turnover 80% 20%

Jobs 83% 17%

16 Rebuilding Europe – The cultural and creative economy before and after the COVID-19 crisis 17 A unique production The new mix of online and offline activities and distribution capacity raises new challenges and opportunities

The growth of CCIs in the EU in recent years has also In the past few years, digitization of the sector undeniably On the other hand, technology giants and purely digital been supported by a large interlinked and interdependent fueled the growth of online platform-based services players raise fundamental challenges for CCIs, including: production and distribution capacity underpinning providing access to cultural and creative works. In 2018, • Finding the real market value for creative works in the entire value chain, from small enterprises to large 81% of Europeans used the internet for music, videos and an online environment: digital consumption, given the multinationals, public and non-profit institutions. The offline games – more than for shopping or social networking. attractive price of streaming subscriptions to combat music distribution network is an essential link in the CCI value piracy, for example, should be paying more. In the music chain, as it allows the public to discover works outside the The main online players provide access to cultural and sector, on a streaming platform, an author, for example, classics. Cinemas, bookshops, concert halls and festivals creative works as a central part of their offer. Intermediaries, only earns between about €0.004 and €0.007 per stream. are also guarantors of social links in the territories. with far greater financial resources than businesses and This means that an artist has to make between 2.5 and 4.4 creators in CCIs, authors and other creators, have built million streams per year to earn €17,819, the EU median From 2014 to 2018, 5 of the top 10 global markets for up vast catalogues and increasingly monetized them. wage in 2019. For a German artist, it would take between feature film production were EU countries: France, Germany, 3.3 and 5.9 million streams to earn the equivalent German Italy, Spain and the UK. While production increased (+14% And some of the major online services have median income (€23,515). between 2014 and 2018), the number of physical screens become very influential producers and publishers, increased by 10% in the EU to 33,112 in 2018 together and, at the same time, distributors of works. • The challenge of online distribution: the conversion of with a sharp increase of in-territory online offer – both independent cultural retailers to online services while in terms of content availability and online services. dominant international players are gaining traction further Internet users having carried out the following activities challenged the opportunities for local works and their at least once in 2018 (in % of total internet users; EU-28) domestic distribution opportunities during the pandemic Sources: Digital Economy and Society Index, European Commission, 2020. (for example, the number of bookstores contracted (from 2011 to 2018, the number of companies registered as Digitization has accelerated bookstores in Europe decreased by 15%, from 30,856 to 26,060)). Similar challenges arose for specialty film and AV Music, videos and games 81% Culture and creative works now occupy a central place in the retailers and, to a certain extent, cinemas and distributors. digital economy, increasing the visibility of the entire value • Intermediary platforms: these benefit quite widely from chain of authors, performers and business partners, and the partial or total gratuity they can offer. Recent European embracing new ways to enlarge audiences. Between 2013 News 72% directives may help ensure a better functioning of the and 2019, the turnover generated by online cultural content, market but, until then, the revenue potential that CCIs services and works increased by 92% (+12% per year). can derive from digital access has, so far, been largely Shopping 71% untapped. CCIs have also embraced digital technologies from a • Piracy: despite the explosion of legal online offerings, illegal marketing standpoint. In the performing arts, the use consumption remains a major problem for CCIs. Every year, of data and the development of innovative performance counterfeiting and piracy lead to a loss of direct sales of Banking 66% management methods have, for example, further €50 billion and the loss of 416,000 direct jobs in the EU.8 streamlined the filling of theaters or museums.7 Small and medium enterprises (SMEs), which account for 84% to 99% of CCI companies depending on the country, are New production and distribution channels, made possible Social networks 65% particularly exposed. by technology, have emerged, such as print-on-demand, digitization of archive catalogues and self-publishing. Yet the physical experience remains an essential part of the creative economy. In the AV repertoire, collections Video calls 60% And let’s not forget that CCIs have always been pioneers from digital sources represent only 3.7% of the world's in the adoption of new technologies: virtual reality, total collections – a drop in the ocean considering that augmented reality, blockchain and artificial intelligence Europeans consumed about 100 million hours of online have been deployed and experimented with by creative Video-on-demand 31% video every day in 2016. According to GESAC, in Europe, organizations and creators over the last decade. with all repertoires combined, the annual digital income of creators amounts to 17% of the sums collected. Selling online 23%

Doing an online course 11%

6 L’économie mosaïque, EY, 2019. 7 L’économie mosaïque, EY, 2019. 8 IP Action Plan, EU Commission, 2020.

18 Rebuilding Europe – The cultural and creative economy before and after the COVID-19 crisis 19 Focus 20 developed by CMOs. To name afew, address musicusers’ needshave been to promote creative works andto All over Europe, specific campaigns Digital SingleMarket. such asDirective onCopyright inthe authors into policy recommendations, translate thecomplex issues facing the mediaorpublic;andto including politiciansbutalso bankers, awareness amongallstakeholders, are increasingly used online); to raise (especially atatimewhentheirworks to defend theirfair remuneration authors whoneedthepower of aCMO of creators remains essential for direct andstructured representation etc.) isproperly distributed. This million dedicated to clubs, festivals, spent oncultural infrastructure (€30 in ensuringthatthepublicmoney ofpartner theFederal Government German CMOhasalso beenanactive creators asearly asMarch 2020.The and advances to thousands of the front lineandprovided grants organizations, GEMAhasbeenon comes from collective management 77% of musical authors' income In Germany, for example, where creators throughout Europe. made available anddistributed to Hundreds of millionsof euros were and advance payment of royalties. holders, through grants, loans vulnerable creators andrights delivered first aid to themost organizations (CMOs) inallsectors Immediately, collective management culture ingeneral andfor creators inparticular. proven itself asaresilient andindispensable modelfor spared. Andcollective management hasonce again the creators themselves, nooneinthesector hasbeen cultural sector. From thevenues to therights holders to The COVID-19 crisishasbeendevastating for theentire creators intimes of crisis protecting andempowering Collective management organizations: FocusEurope andthe European institutions. high andurgent expectations of the creators they represent –have from thisdramatic period.They –and they have emerged extremely fragile structure and reduce their fixed costs, everything possible to adapt their crisis. Even thoughthey have done have suffered greatly from the But these organizations themselves vulnerable linkinthecreative chain. the creators, themost essential and CMOs have donemuchto protect the public.” the benefit of theirright holders and cultural andeducational services for repertoires andby providing social, access for smallerandless popular expression, both by providing market in promoting thediversity of cultural continue to play, animportant role organizations play, andshould that “collective management EU policy documents have noted the fundingof cultural activities. generations of creators through and thedevelopment of new promote cultural diversity And let’s not forget thatCMOs venues. the concerns of clubs andother public been taken to address andmitigate have to operate. Joint efforts have less-than-ideal situation inwhichthey creators to make themost of the broadcast licensing systems to enable canceled events whiledeveloping live they encouraged thestreaming of Rebuilding Europe –The cultural andcreative economy before andafter theCOVID-19 crisis authors, performers andartists. freelancers, whether creative orcommercial, including gaps inthesocial andeconomic protection offered to Indeed, theCOVID-19 crisishasalso highlighted existing vulnerability. career path, butitisalso accompanied by greater status gives workers more flexibility intheirprofessional CCIs could even becalled aprototype economy. Freelance organized onaproject-by-project basis –theeconomy of (14%). This highrate reflects the fact that CCI activities are a rate twice ashighintheEUeconomy asawhole of employment inCCIs. One-third of workers are freelancers, Furthermore, freelance work appears asastructural feature in thissector. exception: large companies account for 66%of theworkforce activities. Programming anddissemination activities are an 83% of jobs inthephotography sector and75%indesign enterprises isenormousinsome sectors: they account for as employment isconcerned, theimportance of micro- they represent 29%of employment intheEU. Asfar of employment inSMEsCCIs rises upto 83%,while micro-enterprises. Dependingonthesector, theshare Most of thecompanies intheCCIs are SMEsoreven 9 A world of smallenterprises andfreelancers but itisanet exporter The cultural ecosystem remains fragile, support aresupport threatened. This isallthemore difficult as years of orderly government and entrepreneurship required throughout CCI value chains. competitiveness andtheability to maintain thelevel of skills this context, cultural diversity inCCIs isessential to ensure CCI operators have beenweakened duringthepandemic. In – are now lookingfor work outside CCIs, whilethousands of performers, aswell astechnicians andadministrative staff As aresult, many creative workers –authors and run sustainable businesses. of theCCI workforce andorganizations to make alivingand operations have arisen, particularly withregard to theability revenues generated by different forms of onlineandoffline distribution models, issues related to thedisparity of As thecrisishasaccelerated theimplementation of digital time employees. the same social andeconomic protection schemes asfull- employment still prevents peoplefrom fullybenefiting from Culture incrisis:Policy guidefor aresilient creative sector, UNESCO, 2020. 9 Inmany countries, self- Total EU-28 creative industries Cultural and in 2016(in%of total employment; EU-28) Share of employment inmicroenterprises by sector Sources: Freelance employment inCCIs in2019(EU-28) Sources: Programming and broadcasting activities Whole economy (non-financial business economy) Printing andreproduction of recorded media Audiovisual andmusicproduction activities Specialized design activities Photographic activities Cultural Statistics, Eurostat, 2019. Cultural Statistics, Eurostat, 2019.

Freelancers 14 33 % % Employees 67 86 % % 31 75 37 83 29 9 21 % % % % % % Focus Until now, creative and cultural entrepreneurs have been financially resilient Culture in the city: and less supported by governments the role of flagship In 2018, CCI companies had a higher three-year Average 3 and 5-year survival rate of businesses survival rate than companies in the EU economy in the EU-28, in 2019 museums in Europe as a whole (61.3% compared with 58.0%). Sources: Eurostat Structural Business Statistics; EY modeling and analysis 2019.

Total EU-28 (except holding activities) The creative industries, culture and entertainment are After five years, 48.3% of CCI companies are still active Cultural and creative industries compared with 44.6% of companies in the entire economy. increasingly strong value drivers, placing branding and The gap between CCI companies and the business economy economic development at the heart of European cities therefore widens slightly, from 3.3% three years after 61.3% and communities. Between 1985 and 2019, 60 cities the creation of a company to 3.7% five years later. % 58.0 were designated as European Capitals of Culture. Resources from the public sector represented 10.8% of % total CCI turnover in 2018 in Europe, 0.7 percentage point 48.3 Museums play an important role in structuring and % less than five years earlier (11.5% in 2013). The share 44.6 promoting the values and visions of Europe and its of CCIs in total public expenditure has decreased slightly cities. The EU-28 has more than 28,000 museums, from 0.96% in 2013 to 0.95% in 2018. This is partly due making it one of the richest museum regions: 30% of the to cuts in local government budgets, which represented world's museums are located on a continent with only 54% of public spending on culture in the EU in 2018.10 7% of the world's population.16

Entrepreneurs in the creative industries across Europe And flagship museums have played a considerable role generally do not see culture and creation as a priority for in urban regeneration strategies, particularly those national governments. Indeed, 46% of respondents to the aimed at the revitalization of public spaces and the Cultural Climate Barometer ranked the low priority of cultural rehabilitation of declining industrial areas. In recent sectors in government budgets as the number one issue.11 Average 3-year survival rate Average 5-year survival rate decades, urban planners and politicians have tried to replicate the “Bilbao effect,” using leading architects to build museums, libraries or congress centers, and to try to revive the economies of cities: from the Centre Pompidou-Metz to the Louvre-Lens, from the Mucem Europe has increasingly exported its soft power globally in Marseille to the Kunsthaus Graz, from the Phæno Museum for the Popularization of Science in Wolfsburg share of European exports, this increased slightly between to the Centre for Culture and Congress in Lucerne. 2012 and 2017, from 1.4% to 1.5%, thanks in particular to the increase in exports of AV and musical works. In a 2018 article for the Journal of Urban Design, urban planning researchers noted positive effects in However, these figures do not fully reflect the role of CCIs in terms of the cultural and tourist dynamics of cities. The European “soft power.” The European music scene remains authors of the study highlighted other consequences: very dynamic: in the UK, music industry exports increased the realization of the Phæno in Wolfsburg, for example, by 9% between 2018 and 2019,12 and by 7% in France.13 And has strengthened the confidence of politicians and local European architects have won 19 awards since the Pritzker administrations in their own ability to make their cities Architecture Prize was launched 42 years ago. more vibrant. In any case, these exceptional buildings have helped to open up previously isolated and less More generally, 62% of Europeans surveyed in the 2017 dynamic urban areas. Beyond the economic impact, it Eurobarometer on cultural heritage believe that European is these structural changes that seem to be the most culture will become more dynamic and widespread in the tangible long-term positive effects of the “museum world, thanks to globalization (compared with 58% in 2007).14 strategy” for the development of cities. The EU’s trade balance in cultural goods has been in surplus: in 2017, it exported €28.1 billion worth of cultural goods According to Reporters Without Borders, the majority of EU compared with €19.5 billion worth of imports. A total of countries lead the world in terms of media freedom, despite 67% of exports concern jewelry and works of art, while 17% the growing difficulties in some Member States: of 47 concern books and physical support for musical and AV countries classified as “good” or “satisfactory” in terms of works. Although cultural goods represent a relatively small press freedom in the world in 2020, 21 are in the EU-28.15

10 Government expenditure by function – COFOG, Eurostat, 2020. 11 Cultural Climate Barometer, Budapest Observatory, 2018. 12 Music by Numbers 2020, UK Music, 2020. 13 Bilan économique 2019, Le Bureau Export, 2020. 16 Museums around the world in the face of Covid-19, UNESCO, 2020. 14 Special Eurobarometer 466, European Commission, 2017. 15 2020 World Press Freedom Index, Reporters Without Borders, 2020.

22 Rebuilding Europe – The cultural and creative economy before and after the COVID-19 crisis 23 Focus However, Europe's role on the global stage of cultural and creative industries may change over the next decade

Europe is an important player in online marketplace. Indeed, there is to a unique and leading practice of the field of culture, thanks to the increasing competition from dominant regional and global cooperation in creativity and success of its authors non-European international online funding, the mix could put European and performers and the success service platforms with their own works under pressure outside Europe of CCI businesses. Preserving and programs and production capacities, in terms of prominence and visibility. encouraging offline distribution and by the increasing concentration The lack of technological leadership channels outside Europe will remain of companies in this field. in Europe could reduce the market essential for the economic health share and visibility of European of European players, as well as If Europe is among the leaders in content on the world stage. for adapting to the ever-changing content creativity, notably thanks

Cultural and creative professionals are at the heart of Europe’s social fabric, its diversity and regeneration

Gender and diversity balance is underway

In 2019, 48% of jobs in CCIs were held by women in the EU- representation at management level. In the music industry, Creative jobs tend to be held by younger and higher-educated people than the average 27, compared with 46% in the European economy as a whole. IMPALA recently published a Diversity and Inclusion Charter that sets out a road map to stimulate diversity in the In 2019, 43% of jobs in CCIs were held by people under Share of people under 39 working in CCIs Looking at full-time employment, 83% of men employed independent music sector through annual surveys, sharing the age of 39 in the EU-27, compared with 41% in the by country in the EU-27 in 2019 in this sector worked full time – seven percentage points of best practice, production of advice on prejudice, and the EU-27 economy. The creative workforce is younger than less than in the whole EU economy (90%). By contrast, 67% creation of European awards for diversity and inclusion. the overall workforce in 21 of the 27 Member States. of women worked full time, which is in line with the entire Employment by sex in the EU-27, in 2019 economy (68%). In addition to the attractiveness of culture and Sources: Cultural employment by sex, Eurostat, 2020. creation, the sector draws younger generations The proportion of women working in CCIs is higher than the who, according to multiple studies, are increasingly proportion of women working in the entire economy in 23 >48% looking for a “meaningful” working life.17 out of 27 Member States. While women represent more than 45%–48% 50% of the total labor force in only two countries, this is the 40%–45% By 2019, almost 60% of the CCI workforce in the EU-27 case in 12 Member States for jobs in CCIs. In the three Baltic <40% will have a higher level of education, which is considerably states and , women represent more than 55% of 48% 46% higher than the average (34%) for the entire economy. the creative workforce.

The challenge is, of course, far from over: for example, the share of films directed by women in Europe grew slowly between 2003 and 2017, from 17% to 22%. Women employed Women employed Cultural and creative Total EU-27 Prior to the onset of the COVID-19 crisis, European CCI industries stakeholders were aware of the need to protect and promote their diversity in all sectors – whether on stage, off stage or on screen. Trade unions and professional organizations in the CCIs are pushing for diversity through a number of European films produced by female directors incentives. A Good Practice Handbook for achieving gender in 2003 and 2017 equality and promoting diversity in the European AV sector 2003 has recently been published by professional organizations, 17% listing dozens of initiatives carried out by CMOs, professional 2017 organizations and public authorities. For example, the 22% members of UK Directors (the CMO representing the AV Source: Cultural employment by age, Eurostat 2020. sector in the UK) have taken proactive steps to improve Sources: Female directors in European cinema, European Audiovisual Observatory, 2019.

17 Freelancing in America 2019, Upwork and Freelancers Union, 2019.

24 Rebuilding Europe – The cultural and creative economy before and after the COVID-19 crisis 25 conceived by all for the good of all. conceived byallforthegoodofall. “ Here, creativityiseverywhere, Interview 26 conceived by allfor thegoodof all. kinds. Here, creativity iseverywhere, artists andcreative peopleof all together. Nantes loves andencourages of solidarity andsustainable transition to helpinhabitants meet thechallenges elsewhere, to beasource of inspiration industries are proving, inNantes as crisis, thecultural andcreative In thecurrent context of thehealth economic sector? What are thechallenges facing this particular. in culture, architecture anddesign in 13,700 purely creative jobs inNantes: city of tomorrow. The sector represents cross paths to imagine, together, the some 5,000creative peoplewillsoon education andeconomic activities, area, whichbringssynergy to higher new de laCréation. Quartier Inthis housed theshipyards, now house the the former Halles Alstom, whichonce western tipof theislandof Nantes, culture andhistory of thecity. Onthe finds its sources of inspiration inthe Great Elephant today, creative audacity to theMachines del'île withthe industries. From Royal deLuxe inthe that blows onthecultural andcreative In Nantes, itisthespiritof Jules Verne Nantes? represent inametropolis suchas What doculture andcreative industries of solidarity andsustainability inspiration to meet thechallenges CCIs are proving to beasource of industries. prospects for cultural andcreative major projects andopensupinteresting this ability to involve allcitizens in Innovation Award 2019,whichrewards was granted theEuropean Capital of help themaccelerate andgrow. The city to showcase its creative initiatives, to The EUhasalready enabledNantes Is there anexpectation of Europe? President of France Johanna Rolland Mayor of Nantes, Interviewurbaine Rebuilding Europe –The cultural andcreative economy before andafter theCOVID-19 crisis Viewpoint disruption, butoffice construction projects continued withalmost no Planning procedures andresidential several weeks. disruptions to complete shutdowns for and businesses: from no virtually between municipal governments flexibility anddigital preparedness there were great differences in administrative processes. However, more difficult andslowed down communication withourcustomers work. The strict local lockdown made effects in our different areas of The pandemic hashadvery different additional ITinvestment. travel costs, offset whichpartly the resulting insignificant savings on days, can now bemadeinoneday, previously scheduled over several gains. Appointments indifferent cities, travel hasledto significant efficiency the other hand,theeliminationof meaningful, informal exchanges. On to attract new clients andto conduct effect. Ithasbecome very difficult technologies hashadanambivalent The widespread use of new reorganizing thework. Nevertheless, we have succeeded in processes thanonstandardized work. has agreater influence oncreative and clients. This way of working with authorities, planningpartners and therestrictions oncontact intensive use of thehomeoffice changes to date have beenthe Internally, themost significant clients. of 2020for themselves and their had to navigate theturbulent waters of thevast creative ecosystem, have Architects, proud andactive members AS+P Albert Speer+PartnerAS+P Albert GmbH(architects andplanners) by problems of ourtime Solving (some of) theurgent Axel Bienhaus andJoachim Schares, ManagingDirectors, our capacity andfreedom to create. However, we must protect anddefend its creative economy ...iscreative. is particularly fortunate because our timeandprofession. Europe to solving alltheurgent problems of The creative industries can contribute from onecountry to another. so thattalent can move more flexibly would beanimportant improvement, regulating. Tackling thisproblem should beintroduced, withoutover- to another. More common regulations very different from oneMemberState of architects andurban planners are exist because theworking methods market of architecture does not yet Europe inthelongterm. The common sustainable platform of prosperity for robots. They can therefore create a replaced by intelligence artificial or which humanintelligence cannot be CCIs are oneof thefew industries in spatial planningandtransportation. demand intheareas of urbanization, mobility patterns. This willgenerate an impact ontheuse of real estate and labor andclimate challenges willhave opportunities inother areas. Future These declines are offset by andairlines.airports infrastructure, andprobably also for office construction, and sports event we expect adeclineindemandfor efficiency in2020.Inthelong term, we have lost about10%of our Taking allof these effects together, the aerospace industry asawhole. projects were heavily affected, aswas aaig Director Managing aaig Director Managing Joachim Schares ViewpointAxel Bienhaus

27 Because of COVID-19 The sharp fall In 2020, the economy of culture and creation will lose approximately €200 billion in revenues

According to EY’s analysis, the total Before the start of the COVID-19 -31% turnover generated by CCIs in the crisis, most professionals surveyed by EU will decrease from €643 billion in EY expected this trend to continue, 2019 to €444 billion in 2020. This potentially leading to a turnover of represents a net decrease of €199 €660 billion in 2020. 643 billion or 31% of total revenues in 2019. 444 The comparison is even more negative Total turnover generated by CCIs when looking at the trend for 2013–19. in the EU-28 (in € billion) During this period, the creative Sources: Eurostat; GESAC; professional 2019 2020 (estimate and cultural sectors experienced organizations; Global Industry, Second Wave with the impact of average annual growth of 2.6%. Scenario, Oxford Economics, as of 7th September 02 2020; EY modeling and analysis 2020. the COVID-19 crisis)

CCIs will be more affected than most other industries

With an estimated loss of 31% of its 2019 turnover, the CCI Estimated change in turnover 2019-20 by sector sector is one of the most affected in Europe, slightly less (in % of total 2019 turnover; EU-28) than air transport (-31%) but more than the tourism (-27%) and automotive industries (-25%). Air transport -31% Cultural and creative industries -31% In addition to the impact of lockdowns and other restrictions, Tourism -27% the relationship between culture and tourism is one of the Consumer electronics % main impact factors. Cultural tourism accounted for 40% of -26 tourism in the EU, according to the European Commission. Automotive -25% As of October 2020, the World Tourism Organization Aerospace -22% recorded a 68% reduction in international arrivals in Europe. Textile, clothing and leather -17% Transportation and logistics -16% When cultural activities were not canceled, travel restrictions Manufacturing % resulted in a very sharp drop of attendance. For instance, -12 % the Rijksmuseum in Amsterdam now welcomes about 800 Research and development -11 visitors a day, down from 10,000 daily visitors in 2019 (a Telecommunications -9% 92% drop), well below the 2,500 visitors allowed with strict Utility supply -8% 1 social distancing. The Rembrandt House Museum, with Business services -7% 80% of visitors being international, expects to be back to its Chemicals -6% normal affluence in 2024. Agri-food business -4% Finance -2% Pharmaceuticals +4% Total economy -9.4%

1 Europe’s Museums Are Open, but the Public Isn’t Coming, Sources: Global Industry, Second Wave Scenario, Oxford Economics, New York Times, 19 October 2020. as of 7th September 2020; EY modeling and analysis 2020.

28 Rebuilding Europe – The cultural and creative economy before and after the COVID-19 crisis 29 The shock wave will be felt in all cultural and creative Viewpoint sectors, and full resumption of activities will not mean Culture feeds our souls every day the end of the crisis by Angélique Kidjo

Music and performing arts will be most impacted

Total performing arts revenues may fall by 90% and music decline in revenues could continue in the coming months, For many artists in Europe, the only a fairer and more equitable world, revenues by 76% due to massive restrictions on concerts, due to the general economic situation. Given the way thing that keeps us afloat is our where every artist has the right to plays and performances for most of 2020. Indeed, live royalties are distributed, these will be lost in 2021, and authors’ societies. They are practically exist through their work and to be paid performances were among the first activities to be severely creators' revenues will be affected until at least 2022, with a second home for us. They pay us, fairly. Without creators, there are no restricted and will likely be among the last to resume without no one really able to say when and how live performances keep us off the streets, allow us to platforms, so this imbalance must be restrictions. And the near impossibility of maintaining and events will recover from the fear of infection. continue to create, go back on stage addressed if the sector is to rebound. rehearsals will further impede the release of future and hope for a better future. performances. All cultural and creative sectors have been hard hit by Culture and creativity will help Europe the crisis, and the revenue trends below reflect only part Even though lockdowns are coming to in the months and years to come. It is In addition, for the music sector, the restrictions imposed of the impact felt, as they do not take into account the an end and countries are starting to not just food that feeds us every day. on venues such as stores, bars and restaurants will also halt in production during the lockdown, which will only be open up, the payment of royalties is Each one of us listens to music. When seriously affect copyright (-35% for performing rights). The measurable in 2021 and beyond. delayed and based on the collections you get in your car, you listen to music, of the previous months and years. This when you go home, you listen to music, means that artists will suffer more in on your wall there are paintings. We all Estimated change in turnover 2019-20 by CCI sector 2021 than in 2020. need our soul to be nourished by art, (in % of total 2019 turnover and in € billion; EU-28) and if we don't protect this art, there will be serious consequences for our Newspapers Performing +9% +2 Visual societies. Advertising Architecture Audiovisual Books Music and magazines arts Radio arts Video games And Europe is the place to which -2 industry The pandemic has -9 everyone turns when it comes to “led us artists to think protecting human rights, democracy -17 -18 % and art. This is a very important % -20 -20 -22 % more deeply about % -23 moment. The pandemic has led us -26 -25 -28% how we are going artists to think more deeply about how -32% -31% we are going to make a living. Europe -36 Average change must continue to set the standard -37 -38% to make a living. in turnover for copyright protection and commit Indeed, there has been a transition itself to supporting the creative sector to live events and a renewed interest financially, so that writers, performers -53 in streaming platforms as the main and all those who decide to create can outlet for music and audiovisual works. flourish when that better future arrives. As the industry builds around these platforms, producing artworks that are better suited to them, they will be well positioned to stay after the crisis. -76 % Change in turnover (in %) Change in turnover (in € billion) Yet online platforms cannot continue to make so much money without us, the Sources: Eurostat; GESAC; professional organizations; -90% Oxford Economics; EY modeling and analysis 2020. creators, being paid fairly. Technology must be a weapon that helps us create

30 Rebuilding Europe – The cultural and creative economy before and after the COVID-19 crisis 31 Viewpoint estimate thatone-third of galleries may art not reopen. visibility of artists. InFrance, professional organizations exhibitions willhave alasting impact ontheemergence and Baselas Art andhundreds of other events) andgallery resources severely shrink.The cancellation of fairs art (such between 40%and75%)isexpected to continue, distribution services (a rise insubscriptions inEurope of in operating. Andeven thoughtheincrease inonline the festivals and markets experienced severe challenges distribution andproduction value chaininparticular when of cinemas;hence thehighvulnerability for theentire risks whenresuming production activities, andthe closure a sharpslowdown infilming,higherfinancial andlegal The AVsector isalready facing majorproblems, suchas of buildingpermits. real estate projects atastandstill anddelays intheissuance restrictions have also affected theactivity of architects, with 32 5 4 3 2 the world may not reopen atall, According to UNESCO, oneoutof every eight museums in affected revenues sector. inthevisualarts as theabsence of international tourists, have seriously Closures of galleries, auctionhouses andmuseums, aswell Visual arts, books andAVactivities are hard hitby lockdowns andtravel restrictions priority. being arecord year interms of admissions –willbeatop theaters –quicklyandasmassively asbefore, with2019 Furthermore, thechallengeto bringaudiences back to from lackof physical exhibition anddistribution options. generated by these services are not compensating thelosses

The impact of thepandemic onpublishinginEurope, International Publishers Association, October 2020. TV Viewing Trends, CISAC-Futuresource, November 2020. Résultat del’étude d’impact delacrise sanitaire Covid-19 surl’économie des galleries d’art, Comité Professionnel des Galeries d’Art, April2020. UNESCO andICOM concerned aboutthesituation faced by theworld’s museums, 2 andothers willsee their

4 revenues UNESCO, May 2020. 3 The The lockdown. in bookshops have fallen by 75%–95%wherever there was a Fair, for example, hasgonecompletely online. However, sales e-commerce inbooks hasdeveloped, and theFrankfurt Book The same applies to thepublishingsector. Ofcourse, after theCOVID-19 crisis Number of museums worldwide atriskof never reopening Source:

Museums around theWorld intheface of COVID-19, UNESCO, 2020. 5 1 outof 8museums may never reopen 12.5

% and innovativethroughoutthecrisis... “ The musicindustryhasbeenextremelyresilient Rebuilding Europe –The cultural andcreative economy before andafter theCOVID-19 crisis Viewpoint such aslive streams, are here to stay. available. Some of these innovations, ways to produce musicandmake it throughout thecrisis, finding new extremely resilient andinnovative The musicindustry hasbeen Challenges ahead should not beunderestimated. of artists and music professionals issue, theimpact onthemental health recover. Inadditionto therevenue if therest of theeconomy beginsto revenues for 2021andbeyond, even the following year, whichmeans lower are generally paid to rights holders revenues from publicperformances that play recorded music.These concert hallsandother businesses other restrictions imposed oncafes, are decliningdueto the closure and performing rights revenues in2020 has affected revenues. Inaddition, been completely disrupted, which revenues. Release schedules have from adrop inphysical sales andother and therecording industry suffered halt intheearly days of thecrisis, come. Live musiccame to asudden on revenues willbefelt for years to for decline. afurther The impact severely affected andispreparing The musicindustry hasalready been your business andsector The impact of theCOVID-19 crisison association of independent musiccompanies by now helpculture in 2020,Europe must Culture helpedEuropeans Francesca Trainini, Chairof IMPALA, theEuropean a sustained industrial policy. industry inthelongterm anddevelop think strategically aboutits cultural missed theEUmust now allocate to it This isanopportunity not to be proportion of stimulus measures. must now allocate to itaspecific as apriority ecosystem, theEU Having already recognized culture Europe can dofor culture. clear –thequestion now iswhat What culture does for Europe isvery cope withthechallenges of 2020. that culture hashelpedmany of us Europeans isenormous. We have seen contribution to thewell-being of also muchmore thanthat. Their In economic terms of course, but are oneof Europe's main assets. The cultural andcreative industries The role of culture inEurope other budgets to culture. percentage of theirrecovery plansand in needandallocating asignificant schemes quicklyreach those most behind us, ensuringthatsupport measures until thecrisisisreally thesector,support by extending key and nationalgovernments must also and promote new music.But theEU bypart continuing to create, invest the broader value chainwilldotheir not discouraged. Artists, labelsand The industry isseverely affected, but Viewpoint 33 Digital income does not compensate for the loss of physical flows The COVID-19 crisis has hit European

With the succession of lockdown, reported that they will be affected by curfews and other restrictions, the the COVID-19 crisis due to the decline Estimated change 2019-20 countries in various ways share of citizens using the internet in revenues from the sale of advertising in advertising revenues (from the sale jumped from 81% on average to 94% in space. Traditional media would be the of advertising space) by type of media Our analysis shows that CCIs have been severely affected reach, and the correlation with the tourism industry. As a Europe,6 ranging from 99% in most affected (-21.3% between 2019 (EU-28) by the COVID-19 crisis throughout Europe. Culture plays result, the crisis has affected the cultural economy in an (from 88% before the COVID-19 crisis) and 2020), but advertising revenues a different role in the economies of countries, depending extremely varied manner in the Member States, regardless Sources: Interactive Advertising to 89% in Romania (from 64% before from digital media could also decrease Bureau (IAB), May 2020. on factors such as the dynamics and weight of production of the quality and impact of the general economic measures the COVID-19 crisis). However, it is by 5.5% year on year. This drop in activities, the role of the media and their international they have designed. widely considered in the sector that revenues will affect their financing physical sales and experiences are a capacities for new works. % crucial pivot of our cultural diversity -21.3 Central and Eastern Europe is hit the hardest … and an essential economic factor in The video games industry seems to be Traditional media estimated change the sustainability of the sectors. They the only one to hold up, with revenues provide an opportunity to discover not expected to increase by 9% in 2020, Central and Eastern European countries are among the Estimated change 2019-20 in CCI turnover by country only new authors and their works but partly due to the increased appetite for most affected, with year-on-year revenue trends ranging revenues (in % of 2019 turnover; EU-28) also vital distribution channels in terms digital entertainment during lockdowns % from -36% in Lithuania to -44% in Bulgaria and Estonia. Sources: Eurostat; GESAC; professional organizations; EY modeling and analysis 2020. of generation of revenues. in various European countries and the -5.5 , Latvia, and Romania are also part of this advanced digitization of the market. group. In all these countries, the performing and visual arts Digital media estimated change Advertising agencies revenues are But even this sector is suffering a side represent a larger share of the national creative economy expected to decline by 28% between effect: the slowdown in international than in the rest of the EU. For example, in Hungary, the 2019 and 2020, due to reduced hiring is exacerbating the industry’s performing arts (with a market expected to shrink by 90%) 40% – 44% decrease media purchases by companies in skills shortage. In 2019, 76% of UK account for around 10% of the total CCI market, while the EU 36% – 40% decrease most sectors. As a result, television, gaming companies reported difficulties average is around 4%. In some of these economies, there are % % radio and internet broadcasters have in finding qualified staff.7 aggravating factors such as more difficult access to finance 32 – 36 decrease % % for SMEs, a lack of social and economic protection for the 27 – 32 decrease 6 Europe’s digital migration during COVID-19: Getting past the broad trends and averages, McKinsey, July 2020. self-employed, and pressure on cultural budgets at local and 7 UK Game Industry Census, UKIE, 2019. national levels.

… as well as countries where live cultural experiences account for a bigger chunk of the total CCI market

In these countries (such as , Belgium, the Czech Republic, France, the and Slovenia), CCIs are still facing a significant decline in turnover (between -30% and -35% compared with 2019), but slightly lower than we have seen in Central and Eastern Europe.

The importance of live events and heritage activities has been an aggravating factor in several of these economies. The closure of museums, theaters and cinemas; the cancellation of performances, concerts and festivals; and restrictions on the physical distribution of cultural goods for bookshops, record shops, galleries, etc., have strongly affected the entire creative value chain.

34 Rebuilding Europe – The cultural and creative economy before and after the COVID-19 crisis 35 to date. The economic situation for culture willlargely However, these figures andillustrations are onlyasnapshot greater thanintheaerospace industry (-26%),for example. However, theimpact of thecrisisinthese countries iseven (games, AVandmusic) may have beenamitigatingfactor. In others, thewidespread adoption of legal online offers industries inlocal CCI markets contributed to thisdifference. In some of these countries, thesmallershare of hardest-hit less spectacular reduction inturnover (a maximumof -30%). Finland, Germany, Spain andSweden) experienced aslightly A group of Western andNordic European countries (such as In other EUcountries, thelimitations were less severe, anddigitization was more important 36 of CMOs. They are of attheheart system thesupport for Another direct consequence may bethefinancialhealth at least. closures andother health restrictions willbelost in2021, were not collected duringthecrisisin2020dueto curfews, This means thatallcopyright-dependent revenues that rights exploitation. films andnon-feature productions ona territory-by-territory intellectual property (IPs) andtheability to finance feature the AVsector, thebusiness modelisbased onleveraging months after theworks have beenused andenjoyed. In well asbars, restaurants andshops) withadelay of several and places of publicperformance (concerts andfestivals, as broadcasters (television, radio, streaming services, etc.) royalties duringtheyear. Royalties are paid by allsorts of members of GESAC intheEU–of which621,421received In 2019,there were 1,145,589rights holders thatwere of themhadasecondary occupation to sustain theirneeds. authors andperformers in2019–bearing inmindthat67% average, royalties accounted for 25%of theincome of sometime after theiruse andexploitation. InFrance, on must be collected by CMOsfirst, before they are paid, because royalties oncreative works used inpublicplaces model isdifferent from any other modelof value creation For instance, inthemusicsector, theauthors’ remuneration The business model of creation depends to alarge extent on IP rights impact ontheentire CCI value chain The COVID-19 crisiswillhave amassive andlasting addressed. cultural venues orto local support creation willneedto be and thewillingness of thegeneral publicto return to access to insurance solutions for resumption of activities, short- andlong-term financing capacity of smallbusinesses, and nonewillemerge from thecrisisintact. Inparticular, the measures. Inany case, allcountries willbeseverely affected, by adopting earmarked budgets andtargeted support specificities of thecreative economy intheir recovery plans, depend ontheability of governments to consider the any prospect of restarting. – hasabruptly interrupted some projects, sometimes without crisis, asthecrisis–sometimes representing months of work receive payment for theirwork, are strongly affected by the who work onaproject-by-project basis, butwhodonot contributors, suchastechnicians, companies oremployees the EUcountries, aswell asEurope’s cultural diversity. Other affected, thiswould jeopardize theentire CMOvalue chainin If thebusiness modelof CMOswere to bepermanently part-time creators dependingontheirfinancialviability. authors andperformers, withmillionsof permanent and Source: Estimated changeinroyalties collected worldwide in2020 Global Collections Report 2020 , CISAC, asof 28October 2020. collected in2020globally of royalties were not 35 % creativity will help Europe. creativity willhelpEurope. our economy. Becauseculture and must intensifytheirsupportfor “ European countriesandinstitutions Rebuilding Europe –The cultural andcreative economy before andafter theCOVID-19 crisis Viewpoint have beendeveloped andvaccines are Treatment options are better, tests in theearly periodsof thepandemic. about COVID-19 today thanwe did constantly changing.But we know more world isdifferent, andthesituation is 2021. Itwillbedifferent because the events to take place inthesummerof We expect some of Europe’s biggest youth. proceeds to projects for children and fundraising goal, whichisto donate all Society hasnot beenableto fulfilits addition, theRoskilde Festival Charity connections andrelationships. In only income butalso, temporarily, and production capacity have lost not organizations thatprovide content The partners, suppliers andcultural developments dependonus. festival. Many of theiractivities and stands orprovide services duringthe and organizations thatorganize for thehundreds of associations it also hadenormousconsequences artists andtheirteams, above all.But in 2020hashadanimpact onthe The cancellation of Roskilde Festival by by to come together The fundamental need Signe Lopdrup, CEOof Roskilde Festival large communities. live cultural experiences together in come together, create together, and a fundamental humanneed:we must creativity willhelpEurope. They are our economy. Because culture and must intensify for theirsupport European countries andinstitutions single event. audiences, rather thanfocusing ona throughout theyear to reach diverse to diversify andspread its activities Roskilde Festival was taking steps together again.Even before thecrisis, opportunities to bringlarge crowds the cultural sector willface new vaccine becomes more widelyavailable, When infection rates drop anda can betogether again. that solutions can befound so thatwe being rolled out. This gives ushope Viewpoint 37 Focus The financial viability of creators, entrepreneurs, companies Culture and sport: and even public organizations is jeopardized by rising costs, delays and an uncertain economic outlook creative talents in the face of the crisis Production costs have already producers and publishers have delayed Increase in production costs in the risen to ensure compliance with releases originally planned for 2020. AV sector due to the COVID-19 crisis Sport, on the one hand, contributes enormously to health measures. In the AV sector, The pressure on marketing costs has in 2020 (in the EU-28) production costs rose between 10% forced several producers to abandon the economy of the CCIs and, on the other hand, has and 30%8 after the first lockdown. the promotion of emerging talent in fascinating parallels with them in terms of business model This could compromise the balance order to ensure the immediate visibility and social functions. Creativity fulfills both activities on of ongoing activities where financial of well-known performers. viability is already precarious. By way many occasions, whether it is to create social interaction, +30% of illustration, in 2017, the average In addition, it is likely that funding to share emotions, or to move crowds with a word from net margin for live music in France from the private sector may decrease a song on stage or the talent of a player on the field. +10% was 1.5%, compared with 7.4% for significantly over the next few years. the entire economy.9 With the lack of In Europe, 60% of foundations have Lower Higher income, and the inability to recover supported arts and culture projects in Born in Europe, national football Many factors impacting the sport estimate estimate expenses lost on production stopped the past, according to the OECD. With leagues and the UEFA European sector affect CCIs and vice versa. range range by the pandemic, companies and the economic crisis, many foundations Championship, Roland-Garros and Firstly, the cancellation or restriction individuals may no longer be able and non-profit organizations will face Wimbledon, the Tour de France and of events has led to a sharp drop in to invest in the development of new a difficult choice between the most the Six Nations Tournament are revenue and directly weakened the Source: Interview with industry experts (FIAPF and IVF). projects, creation and innovation as affected communities, sustainability among the most popular sports financial situation of SMEs, events, they have done until this year. and continued support from sectors contents in the world. In 2019, the facilities and tourism stakeholders. such as CCIs. European football market was worth On the corporate side, sponsorship In this context, with the absence of €28.4 billion – equivalent to the music budgets have already decreased, as revenues and consequent inability The highly competitive environment industry. have media purchases. In addition, to recoup investments added to lost of CCI companies can also act as a the reduction in government and investments in production stopped by brake on the global competitiveness It is clear today that sport and culture household spending will have an the pandemic, businesses’ ability to of European creative businesses. are the two pillars of the creative and impact on the amounts invested invest in development of new projects, With vulnerable financial health and entertainment economy. According in sport and culture, and in the creation and innovation – including inherent business uncertainty, SMEs to studies by EY and the European infrastructure they often share. from a creative standpoint – will may challenge balanced relationships Commission on the economies of be severely challenged or simply between creative businesses and culture and sport respectively, the The decline in revenue could continue impossible. those involved in wider dissemination GDP of both combined amounts to in the coming months, due to the of content. In 2020, the market €616 billion in terms of value added general economic situation, until The limitations on production in 2020 capitalization of the largest technology and they employ 14.1 million people, the return to a healthy situation (e.g. a theatrical performance for companies (Alphabet, Apple, Amazon, representing 4% of the European acceptable to the majority. which production cannot resume) Facebook and Microsoft) jumped 46% economy and 6% of its working will have a negative domino effect to US$7.1 trillion, while the turnover population. Long before and probably Sport and culture are linked by the on revenues from performances, of CCIs declined by 31%. well after the COVID-19 crisis, this fact that they are the two main productions and releases in 2021 and is more than telecommunications, sources of entertainment in Europe 2022. Music, performing arts and According to most of our interviewees, high technology, pharmaceuticals, and the world. They play many AV will be the most affected. French legislation in many EU countries automotive and aerospace combined. similar roles in education, social AV distributors are already expecting does not adequately cover the inclusion and diversity. Both are being a 10% drop in revenues in 2021 characteristics of CCIs, such as the The economic similarities are also completely transformed by digital and (compared with anticipated turnover in high proportion of freelancers (33% striking, and so – unfortunately – are green transitions. 2020) due to interrupted productions compared with 14% in the EU economy the consequences of the COVID-19 that could not be resumed in 2020. as a whole), irregular income flows crisis. Sports industries will have Finally, they share a common The production costs of these non- or multi-employment, which makes experienced a 15.7% drop in 2020: interest in the various initiatives produced – and therefore unreleased creative workers ineligible for some clubs, media rights, travel activities, and measures taken by the EU and – films will not be reimbursed. of the national stimulus or protection retail outlets and sports facilities Member States. Together, they will programs and thus more affected by have been considerably affected, with play a key role in restoring positivity Then, there is a clear bottleneck effect. the crisis. some losing more than 50% of their in our communities and contribute In the music and book sectors, many revenues from one year to the next. to the recovery of the European economy.

8 Interview with industry experts (FIAPF and IVF). 9 Le PRODISS en chiffres, PRODISS, 2019, p. 21.

38 Rebuilding Europe – The cultural and creative economy before and after the COVID-19 crisis 39 Focus Finally, the crisis could lead to an unrecoverable loss of talent, consumer and business confidence

The economic and social impacts felt in 2020 may only be From a broader perspective, the promotion of cultural the most visible part of the crisis for CCIs, as the knock-on diversity by fostering diversity of creation, as well as effects could be felt until 2025, according to industry diversity in the range of distribution opportunities – whether experts. Here are a few illustrations. online or offline – is essential to ensure competitiveness and maintain the required level of skills and entrepreneurship in The appetite for careers in culture could diminish CCI value chains. This is all the more difficult because part of considerably. According to a survey by UK Music, 34% of the government support, which is essential for CCIs, is under musicians are considering giving up their careers in the threat. In the EU, 54% of public spending on culture, leisure UK as a result of the COVID-19 crisis. In the Netherlands, and religion comes from local authorities, whose finances live performance unions estimate that around 40% of their will be hard hit by pressure on spending and reduced members are looking for work outside of CCIs.10 If it is not – revenues, according to the Organisation for Economic Co- strictly speaking – a career change, there is a good chance operation and Development (OECD). that, because of the duration of the crisis, what was supposed to be temporary for some people may become permanent. If a specific strategy is not put in place at European and national levels, and if legislation does not protect free trade, This long-term crisis will weaken businesses and test their encourage private investment and set conditions for its ability to restore public confidence. The link between the recovery, particularly with regard to Intellectual Property performing arts, theaters, operas, shows and cinemas and Rights (IPR) violations, Europe’s cultural diversity is at risk of their audiences could be questioned for years to come and being impoverished. will depend on the conditions for emerging from the current crisis and confidence in a return to a new normal life. The So far, those who face the greatest financial difficulties are figures show that this is a collective challenge – also for far from assured of survival. For those facing less financial policymakers – since the perception in October 2020 was difficulty, a still fragile financial health may foster risk that going to shows, theaters and cinemas made people mitigation among cultural entrepreneurs, thus limiting as apprehensive as taking a plane trip. Indeed, 46% of investment in the emergence of new talent in the coming respondents said they would be uncomfortable going to a years. Consequently, the ability of CCI sectors to contribute concert for several months, and 21% said they would be fully to the EU economy and employment recovery will slow uncomfortable going for several years. The challenge for the down. coming months is to restore confidence. 10 Survey on Stage, Kunsten ‘92, June 2020.

How long it will take for consumers to feel comfortable

% % Shopping in a % % % grocery store 58 21 15 4 2

Going to a theater/ 14% 18% 46% 16% 6% cinema

Going to entertainment/ % % % % % spectator events 12 15 46 21 6 (e.g., concerts)

Travelling % % % % % by plane 11 12 43 29 5

Going on % % % % % a cruise 8 10 29 34 19

Days Weeks Months Years Never Source: EY Future Consumer Index Survey, October 2020 (total respondents: 14,445 respondents).

40 Rebuilding Europe – The cultural and creative economy before and after the COVID-19 crisis 41 As a result of in-depth research and interviews After COVID-19 conducted by EY and based on the opinions of experts and organizations representing the CCIs, the following Rebuilding Europe challenges have been identified as priorities for the recovery and growth of the creative economy.

Challenge one: finance

Provide massive public funding and promote private investment in cultural and creative businesses, non-profit organizations, entrepreneurs and creators: two 03 indispensable levers to support and accelerate their recovery and transformation Proposals:

• Earmark at least 2% of the the Digital Europe Programme; Recovery and Resilience Facility encourage European cultural for CCIs, as proposed by the enterprises to start up and European Parliament, both in develop through specific the EU legal framework and in support schemes; national strategies; • Support European commercial • Ensure that sufficient structural collaborations between funds and cohesion policy operators at the development support instruments — such and financing stage, in as the Coronavirus Response all sectors and activities Investment Initiative (CRII), where such cross-border the Coronavirus Response collaborations are possible and Investment Initiative Plus efficient; (CRII+) and REACT-EU — are used for the recovery and • Examine how complementary reconstruction of CCIs, and specific insurance schemes identified by the European for cultural activities (events, Commission as one of the production, performance, etc.) strategic industrial ecosystems could compensate for sudden essential for Europe's recovery; and long-lasting lockdowns or curfews; • Increase funding for the guarantee facility for the • Ensure that the precarious cultural and creative sector in working conditions of order to widen SMEs' access to freelancers and the situation loans; of creators are also taken into account through specific • Increase funding for funding programs or in the cultural infrastructure from framework of support to CCI the European Regional enterprises at European, Development Fund and national and local levels. Cohesion Fund 2021-2027 and

42 Rebuilding Europe – The cultural and creative economy before and after the COVID-19 crisis 43 Challenge two: empower Challenge three: leverage

Promote the EU's diversified cultural offering by ensuring a solid legal Use the CCIs – and the multiplied power of their millions of individual framework, allowing for the development of private investment in production and collective talents – as a major accelerator of social, societal and and distribution, providing the necessary conditions for an adequate return on environmental transitions in Europe investment for businesses and guaranteeing adequate income for creators

Proposals: Proposals:

• Ensure a rapid and effective by supporting commercial • Use the “power of culture” to implementation of the recently freedom to build tailor-made educate, influence, promote and adopted directives on copyright financing and distribution plans demonstrate to the public the and related rights in order to for different types of content; values and ease of sustainable enable creators and the wider guarantee cultural diversity in living in the context of the rights holder community, as the production and distribution European Green Deal; well as cultural enterprises, to phases; better harvest the value of the • Leverage broader cross-sectoral online market and new modes • Ensure that platforms based links, especially with tourism, of exploitation; outside the EU also comply research and innovation, energy, with EU rules that provide for transport and active mobility, • Ensure strong protection and these conditions; in particular, and construction, to reduce the effective enforcement of IP, on regarding the acquisition of IP carbon footprint of CCI activities which the viability of cultural rights; wherever possible; and creative activities depends to a large extent; in particular, • Promote cultural • Promote and strengthen the during the forthcoming EU entrepreneurship for future European model of a social actions on online responsibility; generations by incentivizing economy, where key players in mandatory courses on cultural cultural and creative sectors, and • Encourage investment in entrepreneurship, sustainable non-profit grass-roots entities European content and ensure management, legal training and associations, can help shape more presence and visibility for and European programs the EU’s economy and welfare European works are provided in arts schools; incentivize through sustainable, inclusive, in the online distribution partnerships between democratic and cooperative environment; engineering schools and art programs; schools to foster tech and • Provide fair remuneration cultural entrepreneurship. • Promote freedom of creation and sustainable conditions for and reaffirm the implementation creators and their business of EU treaties with regard to the partners; allow for the diversity promotion of cultural diversity; of works and distribution opportunities to flourish; • Promote efforts carried out by ensure that current and the CCIs in reaching gender and future legal and regulatory diversity balance, off and on frameworks preserve the stage and screen. variety of business models deployed by the CCI ecosystem

44 Rebuilding Europe – The cultural and creative economy before and after the COVID-19 crisis 45 46 by social,politicalandeconomicmeasures to rebuildasectorthatiscurrentlyovershadowed “ Without adequatesupport,itislikelytotakeyears Rebuilding Europe –The cultural andcreative economy before andafter theCOVID-19 crisis Interview adequate support, itislikely to take governments to invest. Without activities andthewillingness of local we can resume our pre-pandemic in 2021dependsonhow quickly the creative sector willbeaffected less diverse content thisyear. How specializing inevents brought much Photographers andphotojournalists months? the COVID-19 crisisinthecoming How willyour sector beaffected by has beenabigpositive. extra timespent withtheirfamilies audience, butthey also say thatthe emotional connection withtheir confessed to having lost their economic situation, alltheartists of publicevents. Inadditionto the decrease dueto thecancellation their personal projects andrevenues Dreamstime contributors have seen from onlinebusinesses. However, thanks to theincrease indemand not experienced asignificant decline, The stock photography sector has your life, your activity, your sector? How hasthecrisisalready affected An interview withSerban Enache,CEOof Dreamstime cultural andartisticunity CCIs maintain Europe’s artists livingfrom theirart. time creating aflexible framework for cultural projects, whileatthesame countries to develop andexchange endorse aviableframework for The EUshouldcreate, and support divide it. when there are so many reasons to Europe's cultural andartistic unity of individuals. They can maintain otherwise incompatible groups being universal andbringingtogether have theparticular characteristic of The cultural andcreative industries cultural economy? What can Europe doto helpthe remain alevel playing field. internet andsocial mediaplatforms sell theirwork, itisessential thatthe a strong online presence to market and forced to focus exclusively onbuilding As artists andphotographers are political andeconomic measures. currently overshadowed by social, years to rebuild asector thatis Interview 47 Interview 48 to start seeing new experiences in new category. So, Ithinkwe're going going to accelerate thatandcreate a the experience of agigonline. They’re SC: People are essentially recreating and creative industries inEurope? What are your expectations for cultural everything else. competences andestablish alliances for companies to focus ontheircore We believe thefuture willrequire for better services andbetter prices. much more thanany timepreviously, Stakeholders willpileonthepressure, expect thiscrisisto accelerate it. concerns allsectors of activity. We AL: Disintermediation isaforce that experience inthewake of thecrisis? What transformations willyour activity resilient thanothers. and customer types, makes usmore BMAT, interms of numberof services what, we believe thecomplexity of royalty processing cycles. Nomatter second wave in2021,mainlydueto the the impact thisyear, butwe expect a as digital. We’ve managedto absorb been ableto pivot into others, such tracking musicinclubs, butwe’ve have basically disappeared, suchas There are cells inthismatrixthat television, clubs anddigital platforms. and data services across radio, providers, andwe provide identification broadcasters anddigital service work withCMOs, publishers, labels, AL: BMAThasbeenableto resist. We your activity? How hasthecrisisalready impacted An interview withAlex Loscos andScott Cohen world in thevirtual New cultural experiences for thefuture of the(digital) economy. creativity thatwould make thechange of infrastructure, technology and digital divide. Itisthecombination hands. We don’t want to expand the connections, into everybody’s and hardware, andfaster 5Ginternet We also needto get more software there’s musiceducation inschool. in mathandscience, thenmake sure want apopulationthatiscutting edge do better inmathandscience. Ifyou learn to play musical instruments, they in theworld shows thatwhenchildren From another perspective, every study superstars outof Europe. – thatyou can grow thenext global the schemes to ensure thatithappens will. You have to putmoney behind but ifyou turn ablindeye, itnever that kindof creativity, itcan happen, restaurants andmuseums. Ifyou foster world show upthere to goto hotels, Liverpool. Tourists from allover the SC: Think whatThe Beatles dofor economy of culture? What can Europe doto helpthe changing behavior for allCCIs. festival. There isalot to gainfrom this when they goto concert avirtual or experience ordoother thingsonline cultural works of aspart theonline the COVID-19 crisis. People willuse a way, thishasbecome clearer with will exist onlineinadigital form. In reality,virtual augmented reality, that world,the virtual whichcould be Orchard, Founder Officer, Recorded Chief Innovation Music atWarner Founder of The of CyborgNest Music Group, Scott Cohen Alex Loscos InterviewCEO BMAT

Rebuilding Europe –The cultural andcreative economy before andafter theCOVID-19 crisis Interview to bemore sustainable. of ourdigital traffic. And we willhave of selling tickets, more monetization new programming methods, new ways in thecontext of drastic budget cuts: models of ourinstitutions, especially We needto reinvent thebusiness public. and examine theexpectations of the role of events andcultural destinations and events. We needto rethink the quickly, mixdifferent artistic genres have to produce works muchmore producers andtechnical partners. We formats, work locally withartists, We have to invent new exhibition or accelerated? What changes hasthecrisiscreated limitations. than before because of airfreight exhibitions costs usfive times more for theevening. Similarly, shipping Rotterdam andgoto theParis Opera Petersburg, arrive atnoonto work in conduct anopera at9:00p.m. in For example, Valery Gergiev cannot There are also logistical problems. experiences inthefuture. We may see more hybrid cultural doing muchmore inthedigital world. that theyounger generations are probably inadifferent way. We know who willcome back, butslowly and Louvre for local visitors andtourists, We have builtinstitutions suchasthe used to consuming culture differently. or amuseum. Today, we have become We used to buytickets, goto ashow your business? How hasthecrisisalready affected Réunion des Musées Nationaux–Grand Palais An interview withChrisDercon, President of the New rituals for the rituals. Noway, José! times. Digital is not theplace of must invent another place for modern cathedral was for theMiddleAges, we place of ritual for Greek culture, ifthe century. Ifancient theatre was the to invent new rituals for the21st animistic. It'saritual. We have I amdoingsomething humanistic, pieces of paint andshoutingonstage, to represent theclimate crisiswith animistic behavior. When Idecide be seen asaform of humanistic and economic perspective, culture should And instead of usingastrictly Amsterdam. flock to , Berlin, Rome or cities” instead of having everyone cities. We shouldpromote “secondary common problems, suchasshrinking common themes thatrespond to the past. The solution isto identify guilty of conceptual approaches in European projects may have been Let usbeEuropean andlocal. such anunbalanced cultural scene. stimulate collaboration. Let usavoid should make inculture. Let us investments thatEuropean countries Let usdefine theminimum about nationalidentities. but atthesame time, we are talking On onehand,there isglobalization, a kindof renationalization of culture. borders hasledto tighter budgets and doing something different. Closing European level, buteach country is there was acommon actionplanat The situation would not beso bad if culture helpEurope? cultural economy, andhow can What can Europe doto helpthe Interview 49 Detailed methodology Evaluation of the impact of the COVID-19 crisis on CCIs

The analysis of the COVID-19 crisis' impact on CCIs is based music sector, we have made different estimates for digital Evaluation of CCI market and employment in 2019 on four principles: sales, synchronization revenues, live music and physical sales. • We based our analysis on the entire year of 2020, taking Objectives Indicators into account the two waves of COVID-19 in Europe and the • We have made the most accurate estimates possible, at restrictions applicable to the 10 sectors within the scope. national level, by groups of countries or, at European level, The main objective of this study is to produce a set of • Turnover: the study adopted an approach based on final according to the information available for each subsector. comparative and qualitative studies to give a snapshot of consumer markets, primarily taken at retail prices. The • Our main sources are the impact surveys conducted by the economic role of CCIs in Europe, and to show how, and approach takes revenue at the end of the value chain, professional organizations, interviews with industry experts • Our hypotheses and recovery perspectives were tested with to what extent, they may be a driving force for European rather than adding up revenue from all stakeholders and additional market research. industry professionals in each sector over the course of 25 interviews. economic growth. involved in individual parts of the value chain. For instance, • We have assessed the impact for each subsector separately, to measure the economic value of the performing arts, Definition and scope as well as for each market segment. For instance, in the equipment rental and catering have been excluded, as CCIs comprise industries producing or distributing cultural they can be considered intermediate costs of venue and creative goods and services, defined in 2005 by management and are already included in revenues from UNESCO as “activities, goods and services, which … ticket sales. embody or convey cultural expressions, irrespective of • Gross value added: our evaluation relies on turnover/gross the commercial value they may have.” Beyond this broad value-added ratios for each sector. We compute those Main sources definition, we have adopted a sector-based approach in ratios based on Eurostat Structural Business Statistics and order to consider the specifics of each industry. Our report professional organization reports, when available. covers 10 sectors. “TV and movie” were merged under AV, to best reflect sector changes. • Jobs – permanent, temporary and part-time workers, • Bilan économique 2019, Le Bureau • Facing disruption: the cinema value • Structural Business Statistics including self-employed: employment is expressed in Export, 2020. chain in the digital age, Elisa Salvador (indicator sbs_na_dt_r2), Eurostat, For the sake of rigor and consistency, we have restricted numbers of jobs, not in full-time equivalents (FTEs). • Boosting the competitiveness of and Jean-Paul Simon, Pierre-Jean 2020. our analysis to a scope that does not include certain other This is explained, to a large extent, by the lack of data cultural and creative industries Benghozi, International Journal of • Special Eurobarometer 466, “creative activities,” such as fashion, jewelry or industrial on employment in CCI-related EU NACE (Nomenclature for growth and jobs, European Art Management, 2019. European Commission, 2017. design – nor sectors where creativity plays a central role, statistique des Activités économiques de la Communauté Commission, 2020. • General government expenditure by • The Architectural Profession in such as luxury goods or gastronomy, which are sometimes Européenne) codes, which sometimes fail to count • Cultural Climate Barometer, function (COFOG, indicator gov_10a_ Europe 2018 – ACE Sector Study, included in CCI statistics, such as those of Eurostat. We performers and other creative works owners. Employment Budapest Observatory, 2018. exp), Eurostat, 2020. Architects’ Council of Europe, 2018. decided to stay close to the UNESCO definition of CCIs figures include jobs in both public and private sectors. • Culture: Urban Future, UNESCO, • Global Collections Report, CISAC, • The Digital Economy and Society as activities “whose principal purpose is production or 2019. 2020. Index, European Commission, 2020. reproduction, promotion, distribution or commercialization To ensure consistency, the study mainly used data recorded • Culture in crisis: Policy guide for a • Global Collections Report, CISAC, • The Economic Impact of Music in of goods, services and activities of a cultural, artistic or in 2013, 2018 and 2019. However, when reliable data was resilient creative sector, UNESCO, 2019. Europe, IFPI, 2020. heritage-related nature.” missing, the study provided estimates based on annual 2020. • Global Games Market Report, • The International Communications growth forecasts or data analysis from the main European The geographical scope of the study is the EU and the UK, • Culture Shock: COVID-19 and the Newzoo, 2019. Market Report 2017, Ofcom, 2018. markets. known as EU-28. Unless otherwise stated, all references to cultural and creative sectors, OECD, • Global Music Report, IFPI, 2020. • The impact of the pandemic on the EU in this study refer to the scope of the EU-28. 2020. • ISFE Key Facts, Interactive Software publishing in Europe, Federation of The study's ten cultural and creative sectors • Culture Statistics, Eurostat, 2019. Federation of Europe (IFSE), 2020. European Publishers, 2020. This study is based solely upon revenues of the cultural • En Scène, PRODISS-EY, 2017. • Key Numbers – COVID-19 Impact on • The Rise of Digital Audio Advertising, industries themselves. It takes no account of indirect impacts Advertising • Résultat de l’etude d’impact de 2,600 venues & clubs in Europe, Live International Advertising Bureau upon related economic activities such as tourism. la crise sanitaire COVID-19 sur DMA, 2020. Europe, 2019. Architecture Data collection l’économie des galeries d’art, Comité • L’économie mosaïque, EY, 2019. • World Film Market Trends, European Professionnel des Galeries d’Art, • Les investissements de l’UE dans les Audiovisual Observatory, 2019. The study has adopted a “bottom-up” approach. Audiovisual 2020. sites culturels gagneraient à être • World Press Trends 2019, World Where aggregated data does not exist, the study has • Europe’s digital migration during mieux ciblés et coordonnés, Cour des Association of News Publishers, constructed reliable estimates based on interviews with key Books COVID-19: Getting past the broad Comptes Européenne, 2020. 2020. organizations, sector publications and ad hoc statistical Music trends and averages, McKinsey, • Modelling audiovisual sector revenue materials, as well as verified market assumptions. Data 2020. flows in the EU and test case on collection relies primarily on reliable industry sources at Newspapers and magazines • European Book Publishing Statistics impact of COVID-19 on industry national, European and global levels. The main databases 2018, Federation of European revenues, European Audiovisual used include Eurostat Structural Business Statistics, the Performing arts Publishers, 2018. Observatory, 2020. Eurostat Labor Force Survey, IFPI Global Music Report 2020 • Film production in Europe 2016, • Museums around the World in the and national statistical bureaus. Radio European Audiovisual Observatory, face of COVID-19, UNESCO, 2020. A total of 25 interviews and 2 workshops were conducted, Visual arts 2016. • Music by Numbers 2020, UK Music, with organizations covering the 10 sectors of this report to 2020. validate and corroborate EY’s data modeling and analysis. Video games industry • 2020 World Press Freedom Index, Reporters Without Borders, 2020.

50 Rebuilding Europe – The cultural and creative economy before and after the COVID-19 crisis 51 EY | Building a better working world

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