Global Policy Forum

Economy and Culture : Looking for Public Regulation Issues


By Pierre-Jean Benghozi*

July 2003

What is at stake in culture cannot be merely reduced to identity expressions (national, geographical, religious, communities). Economic dimension of culture has more and more to be taken in consideration if one wish to understand arguments and debates developed at national and international level on this topic.

Today, issues related to culture are often dealt with in relation with cultural diversity, a concept that has only recently replaced the notion of "cultural exception", which itself surfaced during the Uruguay Round in 1993. The shift from one term to another is not merely semantic. It reflects the emergence of a broadened concept of cultural stakes in the context of globalization. These stakes are no longer strictly reduced to the need to maintain an international balance in the production and exchange of cultural goods; they rather convey a growing concern to defend identities (national, geographic, religious, historical, etc.) in a globalized world where culture quite naturally has its place.

A country's desire to protect the specificity of its cultural industries is not new. From time immemorial, culture has fed on exchanges between neighbours, or even between colonizers and colonized, without going as far back as ancient Greece, which by and large appropriated Egyptian culture before being "plundered" itself by the Romans. More recently, David Putnam (1) noted that, in the film industry, defending a national industry in a context of international trade competition between Europe and the United States has consistently been a concern, both for the Americans (before the First World War) and for the Europeans (since then).

Yet there is no gain saying that the intensification of trade and the existence, at the world level, of multimedia groups integrated into production and distribution pose the national question in the cultural field in new terms: cultural goods indeed tend to be viewed straightaway from a supranational perspective, thus erasing all specificity with regard to forms of production and appropriation of culture.

Issues at stakes are not only about identity. Culture is one of the leading sources of content and economic wealth; it is one of the leading US and several other countries' export sectors. There is a clear oligopolistic tendency as a few globalized firms have come to control up to 85% of the dissemination of works, in both the film and record industries.

This high degree of concentration stems from a growing cultural industrialization that entails its own limits. By its very nature, the production of a cultural good is grounded in an original artistic and cultural contribution. Systematically streamlining this production could gradually erase all originality and risk-taking in the creative process, leading ipso facto to a trivialization of cultural products that could lead the public to lose interest. Cultural industries do more than just meet functional needs. The symbolic value of cultural products is much greater than their user value: the price attached to an interpretation of the sonatas of Domenico Scarlatti by Vladimir Horowitz, for example, is not only defined by the musical listening time it provides (2). This is why cultural industries appeal so much to consumers and are used by more traditional sectors to "enrich" their product offerings.

Accordingly, the potential effects of economic domination (oligopolistic production, control of distribution, entry barriers for independents or other countries, etc.) not only raise questions relating to pricing, access prices, or even consumer freedom or diversity of supply, as in other industrial sectors. They impact directly on the very life, identity and integrity of individuals, in their most private spheres. Given this dual specificity, regulating cultural exchanges at the world level is a particularly sensitive and difficult job. From this standpoint, it could be rather reassuring to note that the issues of "cultural exception", and subsequently "cultural diversity", were raised and developed in conjunction with trade and the negotiations conducted in such international bodies as the GATT (General Agreement on Trade in Services), the WTO (World Trade Organization) or UNESCO (United Nations Educational, Scientific and Cultural Organization). Nevertheless, this optimistic vision is rapidly tempered by the often conventional nature of the discussions held in these bodies and by the fact that the discussion about cultural diversity is going on mainly in France.

Specific economic dynamics

The question of cultural diversity - and more generally that of the relationship between economy and culture - arises spontaneously with regard to production. It is easy to see (all it takes is a look at cinema and TV programmes or musical and literary hits) that economic and industrial production modes impact directly on the nature, quality and richness of the works produced. Yet circulation and distribution as well as production structures are now experiencing the same phenomena of convergence, concentration and massification and become the main factors of cultural homogeneization. For example, statistics can readily demonstrate that the ever closer partnerships between music producers and the audiovisual media have led to a drastic reduction in the diversity of works to the benefit of the biggest hits (3). The constraints of mass distribution lead to the trivialization and homogeneization of content, even if, at the same time, production requirements needs, to ensure the renewal of works and find new hits, a diversity of artists, cultures and creative resources. But this diversity is relative and reinterpreted in a universal world of production and consumption (cf. the phenomenon of world music). In his last months as Chairman of Vivendi Universal, Jean-Marie Messier explicitly asserted his group's claim to safeguarding cultural diversity with many artists approving his comments. His remarks, however paradoxical as they may have seemed, are not astonishing and are quite defendable since, from the standpoint of a major like Vivendi, the central issue is not diversity as such, but rather the nature of such diversity.

From this standpoint, and in many respects, the globalization of the cultural industries appears to pose less of a threat to diversity than the massification of consumption and the "star-system" described by Franí§oise Benhamou (4). This massification takes the form of the concentration of tickets sold or cultural consumption on an ever-diminishing number of works, regardless of the sector in question. Thus, a paradoxical movement characterizes the world of culture: inflation in the number of works produced (a trend visible in the film, radio, book and recording industries); a concomitant reduction in their dissemination and their exposure to the public; and the concentration of promotional efforts on some productions. In such a context, it may seem that cultural diversity has been safeguarded owing to the very high volume of works produced, while in reality it is jeopardized by the reduction in the number of works that are actually made available to the public.

The impact of the distribution and massification of culture on content is heightened by the fact that cultural goods come under an economy of the immaterial that can form the subject of what economists call growing yields. To sum up, the bulk of the investments required by culture is traditionally taken up by the production of "works". Accordingly, it is all the more interesting to stimulate massive dissemination in view of the fact that distribution costs do not increase by the same proportions: once a film has been made, it hardly costs more to increase the number of movie theatres or let the film run a few weeks longer. This is one of the reasons why the US is in a favourable position: as it already has, in general, the means to recoup its production costs on a large domestic market, it can afford to take a more offensive tack on export markets, particularly with regard to prices (often lower than those for films produced nationally (5) ) and promotional campaigns (recouping its costs in advance lets it free up funds which local producers cannot match). Owing to these economic characteristics, culture is caught up in a vicious circle: economies of scale and the massification of distribution encourage the development of promotional and commercial campaigns that favour the most well-heeled producers and products that target the broadest markets, further reinforcing the trivialization and standardization of products, even when they are grounded in a specific cultural mould (as is the case with Harry Potter, the original idea for which was British).

The convergence of cultural enterprises and products and the growing integration of markets are also reflected by the increasingly important role of technology providers in the cultural sector. Today, telecommunications and network operators, software designers (Microsoft) and hardware manufacturers (Sony) have considerably greater means than the majors in the cultural field and are even able to directly influence the direction and development of cultural branches. The economic constraints to which culture is now subject are no longer merely those of the "economy of culture", they are also those of a broader economy within which culture is but one element among others and thus not in a position to influence strategy.

When viewed from this angle, the problems posed at the national or infra-national level, the conflicts between integrated and independent groups and those spawned by the spread of Hollywood production practices favouring niches and specific sets of themes (teenage markets, etc.), modes of value enhancement and marketing that favour a focus on stars and the massification of consumption … deserve as much attention (on the same level) as the problem of international exchanges.

What form should public intervention take?

Efforts to design public policy in the cultural field run into a twofold difficulty. The first, a traditional one, is related to the debatable nature of the economic underpinnings (6) of cultural policies and the legitimacy of State intervention in the more specific field of the cultural industries, namely, a sector that falls entirely within the trade-related economy. In the context of globalization, public policy encounters a second difficulty: that is, identifying the sphere of relevant intervention, since the national policies have been relatively unsuccessful. Wouldn't the fact that they have constantly to be redefined indicate that public intervention is probably not the most effective approach?

The problem of choosing the proper level for State intervention is not specific to culture. However, the cultural field features several characteristics which accentuate the difficulties.

First of all, culture is expressed in different ways due to the fact that individuals have several different types of cultural affiliation: culture is simultaneously national, regional and supranational when linked to a language, religion or origin; it is attached to social characteristics (gender, education, centre of interests, social class, etc.). This multiplicity as regards forms of cultural affiliation and expression was no doubt behind the recent development of the Internet: initially, the strong growth of sites and networks was driven by the sharp increase in spontaneous virtual communities reflecting labile and evolutive forms of aggregation and social structuring, relying on common centres of interest and cultures but not necessarily dovetailing with national boundaries. Although culture comes under the different membership aids or different forms of structuring, each of them conveys a particular economic dimension and can help to stimulate extranational exchanges: cultural exchanges Spain/Mercosur (Mercado Commun del Sur) on the basis of a shared history and language; a zone for the circulation of Egyptian and Indian films in the Middle East and Asia; francophone exchanges in certain countries (Switzerland, Belgium, Canada), etc.

Under these conditions, determining the proper tools and bodies for the regulation of the cultural industries is a key issue. Flows of exchanges at world level between bodies (particularly national ones) are characterized by imbalances and monopolies that societies find increasingly intolerable as, for example, the five Majors' control over 85% of world distribution of records. Likewise, the major US film-making studios control an equivalent share of the distribution of films in movie theatres in most countries. This trend is further exacerbated by the fact that these imbalances only concern already "industrialized" cultural productions and do not even take into account the quasi-total absence of certain traditional forms on the cultural production market.

Efforts to correct these imbalances have come up against the limits of public regulation in a globalized context, as has been the case in the financial sphere. To date, the management of cultural policies has essentially been conceived of at the level of nation-States (posing an implicit issue: culture = nation, which corresponds less and less to reality) or within the framework of international bodies (e.g. UNESCO) relying on the principle of interstate diplomatic regulation viewed as the prolongation of States and leaving their influence on the management and definition of their cultural policies intact. Yet the industrial logic of cultural production facilitates the formation of huge transnational groups which generate and consolidate extranational markets, thus bypassing national realities and policies.

This is a crucial question which cannot be satisfactorily answered by existing regulatory mechanisms. On the contrary, it urges us to design, define and implement innovative solutions in this field.

The homogeneization of the globalized, not only American, economy of culture (7), along with the development of standardized cultural products, must not lead to forget the fact that that these products do not come from a single model. In particular, there are different national cultures of the economy, different ways of producing and distributing works: the case of the film industry shows in particular that Indian, Egyptian, European and American productions differ at least as much with regard to product structures and forms as the nature of the films made.

In the present configuration, for want of suitable public regulatory structures, the only level of supranational integration and action is that of private structures (formation of multimedia groups) in the face of which national tools of intervention have proven unsuitable for use (cf. the French debate on the cultural exception). Consequently, the changes confronting the cultural industries (concentration of production and distribution, convergence between telecommunication/culture/audiovisual/computers) are only a matter for economic and financial regulation (WTO) that disregards objectives of a cultural nature.

Whereas the initial problem is related to the absence of regulatory structures and tools, a second one, still more important, pertains to the difficulty of establishing principles for action and a cultural model to be defended jointly. The equation culture = nation makes it easy to speak in favour of cultural defence: it has the merit of simplicity but unfortunately boils down to simplism and reductionism. An illustration of this can be seen in the contradictions in which countries like France can find themselves when they endeavour at world level to promote "national champions" among the multimedia groups while protecting independent productions at the local level. The debates to which the takeover of Vivendi Universal Publishing led in France in 2002 are fully characteristic in this respect. Should be defended the takeover of VUP's publishing component by a French operator? In this case, there was a risk of fostering a concentration of the publishing industry that can be viewed as unbearable and harmful, given that the new group, VUP-Hachette, accounts for nearly half of publishing turnover and 80% of all textbooks and paperbacks brought out. Would it not have been preferable, on the contrary, to facilitate the sale of this component to a foreign group?


The fact that the different cultural areas overlap makes it particularly difficult to identify goals and principles for action. Today, it raises the question of the effectiveness of national policies and measures in the field, but also that of the definition of tools making it possible to weigh and measure flows of cultural exchanges and diversity. Hence the importance of establishing forums for debate and discussion sites to draw up such principles.

This should be the main thrust of the public debates focussing on diversity: promoting practical solutions that make it possible to reconcile the needs of the economic dimension of cultural exchanges with the needs of their identify-related dimension. When viewed from this angle, cultural policies are probably today at the stage of environmental policy some 20 years ago, prior to the 1992 Earth Summit in Rio.

The guiding principles of such solutions, mentioned in the preceding lines and in the first chapters of this Forum, should be the following: reciprocity of exchanges, safeguarding the diversity of productions and access to diversified works, accountability for cultural policies, and the precautionary principle with regard to the maintenance of local cultural productions.

Much remains to be done, at the conceptual and political levels, to prepare operating measures on the basis of these principles and define the body in which they could be discussed and agreed.


* This paper has been published in a similar version in Mondialisation et diversité culturelle : le cas de la France, printed by the IFRI (French Institute of International Relations), 2003. I would like to thank Jean Tardif for his feedback and his suggestions.
1 - D. Putnam, The Undeclared War: Struggle for Control of the World's Film Industry, London, Harpers Collins Publishers, 1997.
2 - "Not only" but in part nonetheless: distribution structures indeed end up by homogeneizing the prices of cultural goods. They are to a large extent established independently of the quality and cost of production but according to the "format" of consumption: this is the case for seats for a film viewing, CDs, DVDs, videocassettes and even books.
3 - This concentration on an ever shrinking number of works can be seen in the cinema, literature and music: in each of these cases, whereas the volume of the works created and produced is tending to rise, the number of works contributing to tickets purchased, music listened to or turnover is diminishing at the same time.
4 - F. Benhamou, L'í‰conomie du star system, Paris, Odile Jacob, 2002.
5 - A practice that can go as far as dumping.
6 - J. Farchy and D. Sagot-Duvauroux, Economie des politiques culturelles (The economics of cultural policies), Paris, PUF, 1994.
7 - B. Kogur (dir.), The Global Internet Economy, Cambridge, MIT Press, 2003.

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FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.