physical devices and materials to carry out and enjoy this content. Do we include the physical products in the experience economy or is it restricted to content only? The position taken here is that you have to include the physical products when the two aspects cannot be separated in a meaningful way. Otherwise physical merchandises are excluded and experience considered a value adding dimension, such as for example is the case with design. No clear line can be drawn, however.7
The demarcation of experience industries from other sectors of the economy also includes the problem of the value chain and value system enforced to create physical and intangible products. Every company is adding value to the processing of a final good within a long line of a value creating system. While it is mostly clear that consumer products are included in the definition of the experience economy, it is much harder to draw the line backwards in the value system. Many manufacturing and service industries are needed to reach the final product. The criterion chosen is that unlike the proper experience industries the sub-supplying industries of the experience producing companies are mostly considered part of the wider experience economy. Providers of tangible and intangible supporting products are considered related industries of the primary experience sector. Together they form the wider experience economy, including the core experience industries and the multiplying effects of these industries throughout the general economy.
The relationship between content and its physical device carrier is a tricky one. Tourism would be worth nothing without transportation and hospitality; sports have to include sporting equipment; media must include physical books, newspapers, magazines, television and radio sets; films, music and performing arts include their physical formats and stages; whilst games also include their physical formats. Design, including architecture, industrial and graphic design, and fashion, are probably the only subsectors that may be separated in a meaningful way from their physical dimension. If, for example, industrial design included the physical output of designs it would cover virtually all kinds of manufacturing industries, just as fashion would embrace the large textile and clothing industries. Here a divide is made between what are mostly experience based industries and industries where experience is an added value.
The 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
