problems of measuring the business of family, religion, sex and drugs are of a different kind. Family is a non-market activity, although it is based on household income and investment in housing, etc. So what is the economic added value of caring, love, household and other family values? This is probably the most difficult value to measure. But you have to include it in the experience economy, if you want to measure all the cultural values of a society. That is the case with religion, too. What is the value of belief? You can measure the activities of religions to a certain degree, but measuring the life value added by way of belief is a hard nut to break. More measurable are sex and drugs, each having markets of their own, although mostly illegal, except for tobacco. And what is included in the term drugs? Does it also include for example alcohol? Alcoholic drinks are left out, however, because they are considered natural parts of the daily products of the beverage industries. Of course, this is arguable, especially when compared to tobacco. Unlike tobacco alcohol is not necessarily addictive, which is admittedly no strong argument, however.
Finally, there is the problem of illegal economic activities in relationship to subsectors of entertainment (films, music, etc.) and sex and drugs, in addition to the informal economic activities not included in the world Gross Domestic Product (GDP). I have chosen to include all these illicit economic activities, because they are a real part of the experience economy, and some of them may eventually be made legitimate.
Sources of the Experience Industries
Academic research on the experience industries is hard to come by. Although you have specialized academic disciplines in virtually all fields such as tourism, sport, media and design in most advanced countries of the world and many aspects are dealt with, little is done in researching their business activities. As a consequence, you often have to rely on market research produced by trade organizations, for example the World Travel and Tourism Council (WTTC), and commercial market research companies, for example PricewaterhouseCoopers (PWC) in media. Having identified the leading companies of various industries, their Internet sites contain much valuable information, including annual reports and historical outlines. In addition to ‘official’ encyclopedias on social sciences, media, etc., the updated articles of Wikipedia are other useful sources on subjects and firms.8 Widespread illicit trade in experience goods does not make life easier for an analyst, however. In most cases, trade organizations and world agencies of, for instance, the United Nations, report on the extent and value of such illegal activities, including films, music, sex, and drugs. The informal and non-market economy of family households constitute another analytical problem to be dealt with.
In this publication, a variety of sources dealing with the many industries of the experience economy are structured on the basis of a holistic view of global developments. Accordingly, the analysis of the experience industries is a matter of encircling and stating the trends and facts of rather complex economic activities and putting them in a wider perspective, based on the global megatrends.
1 B. Joseph Pine II & James H. Gilmore (1999). The Experience Economy. Boston, Mass.: Harvard Business School Press.
2 A similar well known approach as that of Pine & Gilmore is taken by Rolf Jensen in his book (1999). The Dream Society. New York: MacGraw-Hill. According to Rolf Jensen, consumers are increasingly guided by emotions such as identity, care, peace, convictions, and togetherness, rather than functional needs.
3 Creative London: www.creative.london.uk.org. Hartley, John (Ed.)(2005). Creative Industries. MA, USA: Blackwell Publishing.
4 Howkins, John (2001). The Creative Economy. London: Penguin Books. See also: Markusen, Ann, Wassall, Gregory H., deNatale, Douglas, and Cohen, Randy (2008). ‘Defining the Creative Economy: Industry and Occupational Approaches’. Economic Development Quarterly, vol. 22, 24-45.
5 For example in PricewaterhouseCoopers (2006). Global Media and Entertainment Outlook 2006-2010. New York: PriceWaterhouseCoopers.
6 KK-Stiftelsen (2003). Upplevelsesindustrien (The Experience Industry)(Sweden).
7 The problem of separating content from its physical device is discussed in: UNESCO (2005). International Flows of Selected Cultural Goods and Services, 1994-2003. The problem is more stated than solved, however.
8 www.wikipedia.org. Schement, Jorge Reina (Ed.)(2002). Encyclopedia of Communication and Information, vol. 1-3. New York: Macmillan. Johnston, Donald H. (Ed.)(2003). Encyclopedia of International Media and Communications, vol. 1-4. San Diego, CA.: Academic Press. Smelser, Neil J. and Baltes, Paul B. (Eds.) (2001). International Encyclopedia of the Social & Behavioral Sciences, vol. 1-26. Amsterdam: Elesevier. Khosrowpour, Mehdi (Ed.)(2005). Encyclopedia of Information Science and Technology, vol. 1-5. Hershey, PA: Idea Group Reference.
2. Megatrends
Megatrends
Just like other sectors, the experience industries are driven by overall global drivers, including economic, technological, political, social and cultural developments. Developments are of two kinds. One is the cyclical ups and downs that are important to current business and conditions of life. Cycles are short-term changes at surface level, constituting so to speak the top of the iceberg. Underwater, there is a structural level of society but unlike icebergs, the worldwide structures of nations are not the same. From a structural point of view, the world may be divided into two different groups of societies, the developed countries and the developing countries. Developing countries fall into two subgroups, emerging societies in dynamic growth and countries stuck in poverty and stagnation. In real life, structural differences are crucial. You cannot easily move from one kind of structure to another and in particular, there is a gulf between developed and developing countries that is very difficult for the latter to bridge. Being historically developed and capable of continuous upgrading according to changes in the outside world, a developed nation is a system of interlinked subsystems at high levels in all matters of economy, politics, technology, and social and cultural affairs.
As a consequence of these dynamic capabilities, the developed countries are those that drive the drivers of the world, increasingly assisted by the emerging nations, whereas the poor countries are mainly left behind. Firms not nations, however, create values and compete in global markets, however, and since the great industrial breakthrough a hundred years ago, large corporations tend to dominate most developed economies and the international economy. This is even more the case today. Therefore, the real drivers of the world economy are numerous leading companies and business environments in developed countries each doing business in a huge number of industries. Increasingly, this Western-based economy is joined by emerging countries in Asia, Eastern Europe and Latin America. As a consequence, a growing global middle class of some 2 billion people form the dynamic core of a changing world economy. Developing countries are always part of the global economy, however, so things may change and are changing in some parts of the world. Furthermore, the mere existence of 4 billion poor people makes them a source of labor and purchasing power, although small, that is of some importance. Perhaps, their importance is greater than is generally believed, because much economic activity among the poor is part of the illegal or informal economy.
Globalization
The impact of these drivers is increasingly felt all over the world and simultaneously. That is the reason why we refer to globalization as a universal megatrend. By globalization is meant a worldwide growing integration of nations at all levels of society, affecting all dimensions. Not all levels are of equal importance in this globalization process, however. It all starts with the economy. What does that mean?
We are all part of an economic system called capitalism. Capitalism is a very dynamic system that is fueled by continuous growth and expansion. During the past two centuries, capitalism has ousted other systems of society, including those based on self-sufficiency and, recently, communist societies too.1 Capitalism grows in scope by expanding throughout the world and in scale by turning more