public investments in culture and communication a key challenge for europe by flavia barca dir....

Public investments in culture and

communicationA key challenge for Europe

by Flavia BarcaDir. Institute for Media Economics

Fondazione Rossellii

Bruxelles,22nd November 2011

Topics

Fondazione Rosselli: mission and activities

Approach to the Study, methodology, goals

Main results

Key data of the Study

A brief conclusion

FR: mission and activitiesFondazione Rosselli (FR) was created in Turin in 1988, inspired by Carlo and Nello Rosselli's values and their attempt to shape public policies based on individual freedom and social justice.

FR: projects and activities

FR’s main objective is research applied to the economic, social and political fields, dealing with public policy at both the national and European levels.

FR: research institutesThe research is carried out in several research institutes, of which the main ones are located in Turin, Milan and Rome.Research results are divulgated in periodical reports, other forms of published material and meetings such as conferences and seminars.

Thematica Areas Research Seminars Publishing Training

Communications & Media

Cultural Heritage

Governament & Public Services

National law systems and European legislation

Politcal & Costitutional systems

Research, Innovation and Competitiveness

Social And Economic Behaviour and Complexity

Financial models & Education

Institute for Media Economics - IEM

Since 1991, IEM mission is to promote efficient and sustainable policy measures in the fields of media, communication, culture and creativity.

The Institute carries out qualitative and quantitative research, strategic consultancy, support for public policies, observatories, studies and publications.

Its main fields of enquiry include: the perimeter and dimensions of the media market; the impact of the media and communications industry on the social and economic fabric of the country: from production to training, from culture to the guarantee of pluralism; technological development and the processes of technological and economic convergence; business strategies of media groups; the concept of public service and its reshaping in a new digital habitat; legislation and regulations on the new products and services; changes in business model in the communication industry; the economics of culture and creative industries.

All the phenomena are interpreted, analysed and forecast on a global scale.

The Communications Industry in Italy

Il mercato dei video on-line (della web video-sfera)

OffertaBroadcaster

Contenutinativi on-line

(prime Web TV)

YouTube

Video on-line

Catch- up TV payCatch- up TV free

Catch- up TV free +live streaming

Internet to tv(Over-the-top Tvo Open Iptv

The Institute regularly produces a Report on the Communications Industry in Italy, which examines the weight of single media markets (from TV to press and tlc), analysing resources, penetration and users, as well as the most significant trends, paying special attention to the theme of innovation and Italian competitiveness

The decision to focus on this issue seemed particularly relevant at a time when the whole concept of culture and its boundaries are being redefined , as are its funding sources.

Measuring public investment in culture and communications has, therefore, 3 main aims:1.To give public policies the transparency needed to identify and monitor public strategies (open data);

Each year the IEM Report also contains an in depth analysis of a topic based on original data: the 13th edition focuses on Public investment in culture and Public investment in culture and communicationscommunications. .


We are convinced that the nature of these financial resources,and the strategies behind the allocation of resources, inform, define and condition culture itself - the creative, production and distribution processes that shape it and give it visibility with audiences – and, as a result, economic and social development.

2. To analyze how very scarce resources are administrated, and compare strategies through sectors and markets, and identify possible indicators to evaluate the efficiency of those strategies on the economic (direct and indirect effects and, in particular, through the effects on innovation and creativity) and social development;

3. To assess public investments and strategies at European level, as far as culture and creativity can be considered today a key asset of the European Union towards other economies.


In this context we believe that Italy, with its great tradition of cultural and creative production, could be an interesting laboratory for monitoring public policies on culture and creativity. And with this aim our research institute is working, with the support of ISTAT (Italian National Statistical Institute), MIBAC (Ministry of Cultural Heritage and Activities, General Secretariat, Service I - Coordination and Studies) and UVAL (Public Investment Evaluation Unit – responsible of Regional Public Account).

The study: goals, methodology, key data

The study we are presenting today is, therefore, the first step of an Observatory on culture and creativity that Rosselli Foundation is carrying on, and that will be developed through following editions, in collaboration with other Italian institutions and in the future - we hope - also in collaboration with institutions based in other European countries.

The Study: main goalThe main goal is to analyze and measure the amount of public expenditure in culture and communications, using a broad definition of “culture” that includes 8 sectors:

Radio

Cinema

TLC

Publishing Perfoming arts

Culture & Communications

TV

Next to those sectors we decided to analyze investments in communications infrastructures. This choice is dictated by the desire to reflect on culture as a point of interaction between various interconnected sectors within the same industry, where creation is upstream on one end of the chain and distribution lies downstream on the other end.

Music Videogames

Cultural Heritage

The Study: methodologyThe research has been conducted at two levels:

MACRO LEVEL: RPA

general overview provided by the Regional Public Accounts (RPA) database. For each subject belonging to the Enlarged Public Sector, the RPA database reconstructs the aggregation of revenue and expenditure flows at regional level on the basis of the balance sheets of the entity itself

MICRO LEVEL: BY SECTOR

investigating the individual items of State investment in culture and communications, sector by sector, along with the relevant regulations

The two levels are not comparable as, at macro-level, according to RPA methodology, the category “culture and recreation services” is very large and includes segments (like sporting activities or gaming halls) that go beyond the wider definition of “culture” being used in our analysis. At micro-level only the following sectors are analyzed: radio, television, publishing, cinema and live entertainment, telecommunications. Whereas videogames and music are not considered as in Italy they do not get public funds and cultural heritage will be monitored from following edition of the Observatory.

The study: key data

The future of Europe as a union is not about economy but identification (Gerald Bast)

There is a need for a public cultural policy acting as a navigator through the transition to a full-digital world

10.669

9.930

9.400 9.600 9.800 10.000 10.200 10.400 10.600 10.800

Culture and recreationservices

Communications

Key data (macro-level)

“EPS Spending in culture and communications, 2000-2008

Note: figures in millions of euros. Source: IEM elaboration of RPA figures.

In the last available year spending in the enlarged public sector for culture and communications was 20,5 bil € - 2% of the total (1.3% only for culture).

0

5.000

10.000

15.000

20.000

25.000

2000 2001 2002 2003 2004 2005 2006 2007 2008

Culture and recreation services Communications

11.259 11.793 10.6277.772 8.359 8.546 8.499 8.669 8.843 9.020

2.1862.178

2.460 1.553 1.331 1.430 1.600 1.791 2.003

2.309

0

4.000

8.000

12.000

16.000

20.000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Current account Capital account

Drastic reduction in spending since 2004- 2005 !

“Total spending the “enlarged” public sector markets, 2002-2011

Note: figures in millions of euros. Source: IEM elaboration of RPA figures. 2009-2011: estimates

Communications

Culture

Key data (macro-level)

10.490 10.789

15.93913.535

11.103 11.2557.452 7.039 6.648 6.280

2.278 2.703

3.322

2.994

2.482 2.965

3.217 3.319 3.425 3.534

0

4.000

8.000

12.000

16.000

20.000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Current account Capital account

“Contributions to the communications industry and live entertainment, 2008

Note: figures in millions of euros. Source: IEM

76,9

15,1

15,3

40,0

124,5

6,9

9,6

63,4

84,2

269,7

220,0

182,0

1,1

21,7

14,1

2,2

95,4

30,9

68,8

1630,0

0 200 400 600 800 1000 1200 1400 1600 1800

Telecommunications (State-Regions-EU)

Regional audiovisual funds

Lottery funding

ARCUS funding

Cinema (General Entertainment Fund and extra funds)

Circuses and travelling shows

Dance

Musical activities

Theatre

Opera-symphonic foundations

Publishing (postage refunds)

Publishing (direct contributions and others)

Local radio stations' electoral expenses

Local radio stations under Law 448

Local TV and Radio stations DIE refunds

Local TV stations' electoral refunds

Local TV stations under Law 448

Total DTT set aside funds

RAI contracts

RAI licence fee

Key data (micro-level)

The overall quantification relating to the latest year where figures are available from various sources (almost all relating to 2009) is 2.9 billion euro in favour of the culture and communications industry. There has been little increase compared with 2003 (+2.1% in nominal terms).

Public resources for the culture and communications industry, 2003 and 2009 (%)

Note: figures in millions of euros. Source: IEM elaboration and estimates from various sources.

90,70

761,8

544,4

1514,5

RAI - licence feeand contractsLocal radio andTV stationsDTT funding

Publishing

Cinema andentertainmentTelecommunications

Total: 2,911 M€

1698,8

134,5

30,9

402

628,7

76,9Total: 2,972 M€


Rai licence fee revenue trends, 2002-2010

Note: figures in millions of euros. Source: IEM elaboration of Rai figures 2010 revenue is an estimate.

13821432 1474 1483 1491

1567 1603 1630 1649

1.200

1.300

1.400

1.500

1.600

1.700

2002 2003 2004 2005 2006 2007 2008 2009 201085

90

95

100

105

110

115Revenue from the licence fee (M€) Annual licence fee (€)

Television and Radio

Even though the various items are misaligned in terms of timescale, the overall sum can be quantified as 1.9 billion euro, of which 1.6 relating to the compulsory TV and radio licence fee. The latest adjustment for the year 2010 fixed the license fee at 109 euro. From 2002 the growth rate has been 19%.


Contributions to local television under Law 488/98, 1999-2009

Note: figures in millions of euros. Source: IEM elaboration of FRT data.

Currently, the Communications Department in the Ministry of Economic Development assigns non recoverable grants to local television broadcasters.

Over the years, the grants have progressively increased in the various Financial Acts, assuming more and more importance for company’s financial sustainability and contributing to a significant rise in employment, above all in the journalism profession. The positive trend came to a halt in 2009: when considerable cuts in public contributions occurred (-41%). Funding for the year 2010 is estimated to be around 130 million euro .

12,4 20,742,3

56,1 65,1 77,290,3 85,8

106,5

161,8

95,4

0

50

100

150

200

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


Note: figures in millions of euros. Source: IEM elaboration of figures from Governmental offices.

Local radio stations

Over the years, funding has seen considerable growth, going from 6.2 million euro in 2002 to 21.8 million euro in 2009. There was a particularly high upsurge in 2007, when the resources doubled compared with the previous year.

6,2 7,2 7,79,0 9,9

19,321,6 21,8

0

5

10

15

20

25

2002 2003 2004 2005 2006 2007 2008 2009

Contributions to local broadcasters under Laws 448/01, 2002-2009

Local broadcasters also receive further public support on a national level thanks to the annual provisions from the Department of Information and Publishing within the Prime Minister’s Office. In 5 years the resources have increased from 13 to 21.5 million euros (+65%).


Budget lines in the Government provisional accounts, 2003-2010

Note: figures in millions of euros. Source: IEM elaboration on the provisional accounts from Prime Minister’s Office.

Publishing

contributions to publishing are handled by the Department of Information and Publishing within the Prime Minister’s Office, with various kinds of interventions in the budget which has increased until 2007. For 2008 the figures stood at 140 million, before dropping to 50 million in 2009 and rising again to 170 million for 2010. The largest area of spending relates to subsidized postal tariffs.

Currently there is an attempt to reorganize criteria for access to direct contributions.

186,2 158,9 173,6247,0 214,0

140,0 50,0 170,0

346,2308,3 234,4

182,5 243,7

149,5

45,5

59,8

121,199,0

100,3 94,5 106,9

58,0

64,5

68,1

108,4

102,425,1 79,7

126,5

11,3

23,4

0,0

100,0

200,0

300,0

400,0

500,0

600,0

700,0

800,0

2003 2004 2005 2006 2007 2008 2009 2010Contributions to newspaper and magazine publishing companiesRefunds and contributions to postage costsOther current account spending Capital account contributions

761,8

668,5

533,3 603,6

691,1

358,8

183,4 297,9


Share of FUS, 2010

Note: figures in millions of euros. Source: IEM elaboration on Ministry of Culture data.

Cinema and performing arts

The General Entertainment Fund (FUS) remains the main public funding mechanism for the sector today. Public intervention is not merely restricted to “direct contributions” from the various state entities, it also intervenes indirectly through tax credits and tax relief or donations. In this area, the most innovative scheme, widely welcomed by people in the industry, was the introduction of the “tax credit.

Opera Foundations

47,50%Cinema18,50

Theatre16,27%

Music13,74%

Dance2,25%

Circuses and travelling shows1,52%

Observatory0,18%

Committees0,03%

Evolution of FUS, 1985-2010

35

7,5

45

9,4

43

9 49

9,4

53

0,3

49

9,8

51

7,9

49

9,4

46

4,5

42

7,3

44

1,3

47

1,3

45

8

41

8

0

100

200

300

400

500

600

1985

1990

1995

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010


Main results, key issues at stake and a brief conclusion

REGIONAL ADMINISTRATION INVESTMENTS COMPENSATE THE DECREASE IN PUBLIC SPENDING ALLOCATED BY THE STATEIn 2000 public spending allocated by the State (predominantly the Ministry of Culture), represented 47% of the total cultural expenditure, while in 2007 that proportion dropped to 35.7%, the same as the financial weight born by Municipalities. Meanwhile there has been an increase in the proportion of funding by the Regional authorities (12.3%), in line with the increasing weight of this subject in the support of cultural activities in Italy

“EPS spending in culture by tier of government, 2000-2007 (%)

Source: IEM elaboration of RPA figures.

4735,8 37,4 36,8 39,9 37,2 35,7 35,7

8,7

12,4 11,2 15,1 9,5 11,2 13,35 12,3

32,137,4 37,2 35 36,8 37,5 37,15 35,7

2,9 3,6 3,6 3,5 3,7 3,9 4,95 5,2

9,3 10,7 10,6 9,6 10 10,1 8,85 11,2

0

10

20

30

40

50

60

70

80

90

100

2000 2001 2002 2003 2004 2005 2006 2007

State Regions Municipalities Provinces and metropolitan cities Others

Main results

Case study

Case Study: Apulia

Financial support for the audiovisual industry in Apulia

(an analysis of the impact of the Apulia Film Fund) A big challenge for a more exhaustive framework is analysing the increasing volume

of resources coming from the regional spending level.

Since 2005 after the reform of V Title of the Constitution and a sentence of the Court

that introduced a process of anti-trust legislation in this matter, a number of regions

have set up regulatory, fund-granting (Film Fund) and organizational (Film

Commission) bodies.

In only a few years, a number of excellent local examples have become models of

inspiration both nationally and abroad.

Over 4 years, from 2006-09, these resources increased fivefold. In 2009, the budget was

close to €30m.

Apulia Film Fund objectives

to attract direct and indirect investment to the Apulian audiovisual sector;

to enable professional development for regional artistic and technical staff;

to provide opportunities for international culture, art and business;

to publicise Apulian audiovisual culture through comparisons with other productions in the field;

to encourage contact between local public and private institutions with the best international expertise;

to contribute to the promotion and sharing of Apulian cultural identity.

Case Study: Apulia

At the beginning of 2011 IEM carried out an in depth study for Apulia Film

Commission aimed at:

a) Analyzing actions of AFC between 2007 and 2010 in support of AV productions;

b) Measuring economic and social returns for the local area.

Apulia Film Fund: trend of available resources Resources made available to the AFC between 2007 and 2010 totalled approx €4.1m,

of which €2.8 was allocated to the FF for the 3 public tenders hold annually.

In 4 years from the outset of the fund resources increased fivefold, showing constant growth. Since 2008, the AFC has also benefitted from further resources (ERDF) for hospitality costs up to a maximum of €612,000 in 2010.

4881.085 1.000

2.798

463

234 612

1.309

225

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

2007 2008 2009 2010 Totale

Film Fund Extra Film Fund

951,6

1.319 1.612

4.109

Source: IEM from AFC data. € in thousands.

Case Study: Apulia

Considering only FF-provided funding between 2007 and 2010 (€1.9m), beneficiary production companies spent a total of €11.4m in the region (ratio of 1:6)

This expenditure led to a multiplying effect on the local economy, generating an estimated twofold impact (Kelly multiplier) totalling €22.5m.

212.500 340.111830.955 480.000

1.533.590 1.057.014

3.826.181

4.962.4813.067.180

2.114.028

7.652.362

9.924.962

0

2.000.000

4.000.000

6.000.000

8.000.000

10.000.000

12.000.000

14.000.000

16.000.000

18.000.000

2007 2008 2009 2010

Dotazione Film Fund Spesa diretta Indotto economico complessivo (1:2)

Source: IEM from AFC. Data FF grant Direct expenditure Total economic impact for related activities

22,5M€

11,4M€

1,9M€

Total 35,8M€

Case Study: Apulia

INVESTMENTS IMPACT MANY LEVELS OF THE VALUE CHAIN

The public resources analysed here are used for a variety of many different kinds of activities, not only from the point of view of different sectors but also within the various industry segments: from the production of content (movies, television programmes, shows, journalistic reports) to distribution, from operational costs to refunds for specific items of spending to the building of infrastructures.

THE MAJORITY OF RESOURCES GO TO DIRECT CONTRIBUTIONS

The majority of these resources are in the form of direct contributions and only a minimal part come from indirect contributions (through mechanisms like tax credits and tax shelters, indirect funding for film production or funds for subsidized credit and postage refunds for publishing companies).

Main results

INVESTMENTS ARE MAINLY ADRESSED TO INSTITUTIONS

A very limited portion of these funds is for “projects”, with resources being used, in many cases, to cover:

a) operational costs (public service concessionaries, publishing companies, local broadcasters, opera-symphonic foundations and permanent theatres),

b) fixed costs,

c) and in just a few cases (RAI, opera institutions and theatres) on the basis of a “planned programme” (which translates, according to different cases, into a percentage of public service broadcasts, or a certain number of concerts or theatre shows, or even in the evaluation of initiatives organized by film clubs).

The majority of resources is directed to “istitutions” (Opera, Cinecittà-Luce, Centro Sperimentale) and their personnel.

Main results

THERE IS A LUCK OF TRANSPARENT INSTRUMENTS TO MONITOR PUBLIC INVSTMENTS AND EVALUATE THEIR IMPACT

Increasingly in Italy an external audit of the administrative and financial management of the State administrations obliges Ministers and other public institutions to a transparent and proper use of public funds in terms of effectiveness, efficiency and economicity.

The qualitative criteria are usually based on a points system that assesses circulation capacity, technical-managerial capacity, the training of the staff and the “cultural impact” of the project.

In the other sectors, quality is not a criteria for the attribution of funds: it does not apply for public broadcasting service (even if the service contract foresaw the introduction of a Qualitel index for public service programming) or for funds to local broadcasters (many people are calling for the introduction of qualitative appraisals, which are not as yet required under the law) or for contributions to publishing (which are based on the sum of costs and the print run/circulation).

We need to identify new indicators to evaluate investments in culture and creativity.

Main results

IN SOME SECTORS INVESTMENTS GO TO VERY FEW INSTITUTIONS, IN OTHER BENEFICIARIES ARE VERY FRAGMENTED

If we measure the degree of apportionment of public funds, that is the number of direct beneficiaries in relation to the amount of funding allocated, we see that the indicator is extremely variable depending on the market under consideration. It is very high for the Opera foundations.

Public funds and beneficiaries, 2009

Note: figures in millions of euros. Source: IEM elaboration from various sources.

70,4

240,3

56,772,1

95,4

9,321,6

140,0

1376

1088

628

14155

413500

261

0

50

100

150

200

250

300

Cinema (Fus) Opera (Fus) Music (Fus) Dance (Fus) Theatre (Fus) Local TV stations(under Law448/98)

Local radio stations(under Law448/98)

Publishing (Law250/90 and

388/00)

0

200

400

600

800

1000

1200

1400

1600Contributions (M€) Beneficiaries

Main results

THE RATIO OF PUBLIC RESOURCES COMPARED TO MARKET VALUE VARIES FROM SECTOR TO SECTOR

Note: figures in millions of euros, latest year available. Source: IEM elaboration and estimations form various sources.

RAI licence fee 1630

Contributions Contribution

s

Contributions

National TV market 8111

Turnover

Turnover

Newspaper and Magazine market 6407

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

National television Local television Local radio Publishing

140

270

84

1063

664

95

231

30 44

0

100

200

300

400

500

600

700

Cinema Opera Theatre Dance Classical music

Contributions Box Office

Cinema and performing arts

Tv, radio, publishing

Main results

One element of assessment used in the segments that receive public resources is the relationship between the segment and the importance of its downstream market, with the aim of quantifying the weight of the public intervention on the market and the allocated funds’ capacity to generate a market.

For television and radio, the incidence upon the various segments varies from 10 to 20%, while for publishing it stands at around 6%.

Vice versa, when the same comparison is made for cinema and live entertainment, in various cases State support is actually greater than the money generated at the box office (excluding the other “windows”).

Main results

A brief conclusion

We hope that this work can be a useful starting point to think about the logic that underpins the spending strategies, and thus open the way for a broader debate on public policies with regard to culture.

A lot of attention is paid to public spending trends in Italy, especially now that the country has to meet commitments and respect European obligations regarding the stability of public accounts.

On the one hand, the budget decrease illustrates the need to make public spending more efficient and productive, but on the other hand there are parts of the economy (above all culture) that need considerable support from public investment because they are subject to market failures.

But support must follow specific, transparent and coherent policies.

The presentation of the report in Brussels fits into this context and intends to become an annual appointment on the issue of investments in culture to share information, methodologies, policy indices with other European Institutions and to identify the most effective strategies for promoting European cultural production.

Key issues at stake

• Sustain public investments in culture and creativity as a key driver of knowledge, welfare, social inclusion, innovation;

• Adopt transparent and coherent instruments to monitor public investment in culture and to evaluate related strategies and their impact;

• Identify new strategies to involve private sector in supporting culture;

• Insert Cultural Literacy at the core of public policies addressed to culture.

Thanks for your Attention

Contact us atFondazione Rosselli

Institute for Media Economics - IEM

IEM Director:

[email protected]

Senior Analyst:

[email protected] Office: Corso Giulio Cesare 4 bis/B 10152 Torino

tel. +39 011 19520111

Istituto di Economia dei Media Office: Palazzo Corsini, Via della Lungara 10, 00165 Roma

tel. +39 06 6869502www.fondazionerosselli.it

Corporate Communications and Media

Relations:

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