The Cultural industries have been identified as engines of economic growth. With the advent of new communication technologies, the cultural industries have become more sophisticated in terms of their quality and the quantum of reach. Especially broadcasting in the age of satellite and cable technologies has attained a wider reach and thus is transcending the national boundaries. Realising their potential for wealth creation and employment generation, and subsequent contribution to the global economy, the European Commission encouraged the integration of cultural industries in Europe. Keeping in view of the complexities involved in integration, this paper discusses the viability of this integration.
Globalisation of cultural industries is not a new phenomenon. International trade in films and television programs dates back to the early twentieth century much before the trade agreements through GATT emerged when half of the revenues of Hollywood were achieved through foreign markets (Wildman & Siwek, 1988).
EUROVISION network dates back to 1954 when production was expensive and so sharing the resources was a necessity. EUROVISION emerged an activity of the European Broadcasting Union (EBU) linking twenty five national TV broadcasting services in Western Europe, North Africa and Middle East (Kressley, 1978). Participation in those days was on voluntary basis which meant that the international network was a non commercial clearing house for bi and multi lateral programme exchanges.
Of late, the nature of global exchange of cultural industries had changed. Despite their long standing in the international market, cultural industries, particularly the audio-visual sector is the most controversial in the regional integration process. Free trade agreements also combine tensions concerning the cultural products or services and as a result also include annexes and side agreements in their package. Galperin (1999) observes that the reason for controversies in audio-visual industries is because the trade in cultural goods highlights different conceptions of economic development, cultural artefacts and the issues of collective identity. Thus the international trade in cultural industries is clogged in a web of multiple intellectual and policy cleavages. The issues revolve around whether free trade principles to be extended to film, publishing and broadcasting sectors or whether the cultural industries are given special treatment in trade agreements. Also the issues are about the legality or illegality of the cultural trade and how do the regional and national governments protect or subsidize the cultural industries through policies.
Galperin (ibid) points out three factors that are reconciled in the trade agreements concerning the audio-visual industries viz., industrial profile, domestic communication policies and ‘cultural distance’. Industrial profile refers to the distribution of economic and political resources among the trading partners’ audio-visual industries. The second is about the domestic regulatory framework for communication industries within each country that comprises audio-visual, telecommunications and cultural policies. The third concerns the barriers in language, viewing habits and genre preferences that inhibit the free flow of cultural products between nations. As Hoskins et al (1996, p68) observe, given the equal quality, audiences tend to prefer those programmes that are rooted in their own culture that help them in identifying themselves with the styles, values, beliefs and the behavioural patterns. The cultural distances need not coincide with the national borders. As Collins (1991, p231) observes, audiences are constituted horizontally across the national boundaries and vertically within the boundaries. The cultural barriers are also historically dependent on a number of socio economic factors like the industry structure; demographic changes etc that influence the choices of the audiences. Thus Galperin (1999) observes that cultural distance refers not to the essential traits of people but to a set of cultural practices that relate to the audiences within and across national boundaries.
Audio-visual products / services
The basic problem with respect to the cultural industries and free trade, as Galperin (ibid) observes, is due to the non extendability of these to what is called the ‘commodity fiction’ (Polanyi, as quoted in Galperin , ibid) i.e., subjection of all production activities to the supply and demand mechanism by which the production and consumption of symbols takes place in capitalist societies. Galperin (ibid) points out the main characteristics of audio visual industries that justify trade integration across the boundaries. Firstly, he says, the audio visual production cannot be serialised. Films and television programmes need a proper mixture of novelty and repetition within the established genres. Even then, demand is unpredictable. Thus the audio-visual products carry high R & D costs, the cultural commodities have high first copy costs and minimal reproduction costs. In these situations, maximisation of audience is the best strategy for the producers to achieve profits. This justifies the marketing of cultural products across the boundaries to maximise the audiences.
Secondly the audio visual products inherit the public good characteristics in terms of non-depletability in consumption and difficulty in excluding consumers. Thus the trade with these products demands a number of arrangements like control of access, built-in obsolescence, and creation of property through copy right laws in order to realise the exchange value. Galperin (ibid) points out that this public good character coupled with the increased availability of reproduction technologies causes concern for international enforcement of copy right laws.
Thirdly the audio visual industries carry several socio-political implications as, cultural products are the main tools through which the social and political identities are reproduced and cultural bonds are extended. Even in the political sense, the type of media access, ownership, diversity and content regulation determine the nature of the public sphere in existence in a particular region. Thus Galperin (ibid) points out that the economic characteristics make it imperative for the producers to maximise audience and thus reach trans-national boundaries for the audience to their products to gain profits, and on the other hand, the social and political implications raise various controversies that inhibit their trans national trade. Thus the international free trade agreements with respect to the cultural products and services become delicate issues for policy matters.
Changing scenario of audio visual trade
In addition to the above, the technological innovations, industry realignments and regulatory changes result in creating new trade patterns and scenarios in the audio visual trade. Galperin (1999) points out that the technological developments in audio visual production and the telecommunications work in two directions. On one hand, due to the innovations in distribution and digital compression technologies, there is a phenomenal increase in the number of outlets for distribution of audio visual products. According to Hoskins et al (1996) the arena of multiple channels through cable television etc has shifted the market from a situation of spectrum scarcity to the content scarcity. On the other hand, the costs of low-budget productions have fallen rapidly because of the use of video technologies thus giving way to a number of small producers to compete in highly fragmented markets of programming for specialised channels. Thus the nature of production and distribution in audio-visual products are determined by the cultural diversity.
The technological innovations caused and resulted in changes in the media regulation policies world wide. Major changes are driven through policies of deregulation and diminishing public intervention in audio visual markets. This has manifested in wide variety of policy instruments across the countries thus juxtaposing the differences in the existing regulatory frameworks around the audio visual markets. In Western Europe, deregulation resulted in breaking up the public monopolies through privatisation of public networks and the entry of new competitors like cable television and Direct Broadcasting Satellite.
Galperin (1999) observes new organisational structures erected in the audio visual markets as a result of industrial realignments. These structures are characterised by three inter related phenomena viz., internationalisation, concentration and convergence of sectors. The realignments have resulted in consolidation of multimedia conglomerates that have interests in multiple countries and industries. These corporations have become the most powerful players in influencing the communication policies often involving hand in glove with the governments and lobbying for curbing or enforcing particular regulations in the audio visual trade. Thus in the international free trade agreements conflicts over media policies result in no less than corporate wars involving the international media tycoons targeting the governments. Positively, the emergence of the media conglomerates has increased the existing trade and investment flows and created new ways in the cultural industry market.
The case of European Union In the case of European Union trade liberalisation also aimed at full monetary and partial political and cultural integration. As a result the interaction between the economic integration and the local cultural consumption patterns turned out to be more complex thus affecting many of the audio visual policy goals. The Masstricht Treaty (1992) that had the guidelines for the audio visual policies in EU vouchsafed in its Article 128 that ” The community shall contribute to the flowering of the cultures of the Member States, while respecting their national and regional diversity and at the same time bringing the common cultural heritage to the fore”. The economic objectives of the audio visual policies highlighted in the treaty are , to protect and develop European audio visual industries through the so-called ‘Fortress Europe’ formula which suggests open frontiers within, protectionism from outside. According to the European Commission Green Paper ‘Television without frontiers'(Commission of the European Communities, 1984), economic integration and cultural diversity would be easily balanced because the trade liberalisation of audio visual services would automatically bring the common European heritage to the front. This is hoped to create a common European Audio visual Space in which the European and pro-European broadcasters would compete for the attention of the regional audience. The unified market is also expected to equip the European audio visual industries to compete with the US based media conglomerates in the international markets.
These ideas were put forth in the 1989 Directive on Broadcasting (Commission of the European Communities, 1984) which was one of the key documents in the EU’s audiovisual policy. This Directive identified two important goals: (a) to abolish restrictions to the free flow of broadcasting services within the EU and (b) to harmonise national regulatory frameworks. Thus, Galperin (1999) observes that, it basically liberalises the broadcasting services and encourages commercialisation of the national broad casting systems. It also encourages the formation of multimedia conglomerates within the community, without imposing public service obligations on broadcasters. Thus the Directive by integrating the markets aims to enhance the global competitiveness of the European audio visual producers in the international market.
The Directive lays down through Article 4 certain obligations in the aspect of content quotas for European works. This became a subject of controversy for the European policy makers. The Directive finally concluded that ” Member States shall ensure, where practicable and by appropriate means, that broadcasters reserve for European works a majority of proportion of their transmission time”. This minor provision was unacceptable to some of the protectionist countries like France and the European Parliament which fought for modification in the provision. Another minor obligation included a 10% quota for independent production and a number of provisions for regulating time and content of the television advertising.
Galperin ( 1999) observes that the Directive has substantially changed the competitive environment of European audio visual markets. Firstly, it has enhanced the interest of the pan – European media conglomerates to enter various industries across the national borders. Many of the media conglomerates that emerged in the European Union are competing with the tycoons of the US. Thus, as Galperin (1999) observes, by increasing the competition within the national markets, the Directive has eroded the dominant position of the public service broadcasters and thus created new trade dynamics in the industry. According to the EC report (European Commission ,1996), this break up of public monopolies and the emergence of new distribution channels apparently has also resulted in increasing the broadcast volume in Western Europe from 205,000 hours in 1985 to 720,000 in 1993 and also in the number of national stations from 40 in 1981 to 205 in 1995. On the contrary, available European programme supply had increased only 60%.
The ineffectiveness of the EU policies
However the EU’s audio visual policy apparently has been ineffective in overcoming the fragmentation of audiovisual markets in Western Europe. Though the 1989 Directive has changed the scenario of competitive environments within the national boundaries, it has apparently failed to achieve a unified market with economies of scale compared to those available to the US based producers of audio visual products / services. Overtly a single European market seemed equivalent in volume to that of US. But the idea of free flow of cultural products to bring out the common European identity and thus creating pan-European audience could not be worked out properly. This is acknowledged by the European Commission itself in its report that said
” the impact of the single market has not caused major changes in the television industry. Even though there has been a boost in demand for TV programmes, supply of truly European products has been puny due to national markets’ fragmentation: the main focus has been placed on satisfying the national audiences rather than increasing the circulation of European films” (EC, 1996, p27).
The technological determinism assumes that social and cultural relationships are shaped by the technological change and thus the satellite television would change the culture of the trans-national public (Collins (1995). But it is forgotten that the European audiences are fundamentally separated by their cultural distances. Europe is a diverse community of public with different languages, viewing habits and genre tastes. According to Moeglin (1992), there were 13 national or regional broadcast languages in the EU in 1991, out of which two languages, French and English prevailed. Films are rated the highest in France, while dramas in UK and sports and variety shows in Italy. It was observed that European audiences prefer either home made programmes or US programmes but not other European shows.
Even the figures of the audio visual trade within EU are depressing. According to an estimate by the European Commission (1996) , the intra-EU trade in films and video in 1992 were at ECU 150 million. This was abysmal compared to the staggering US $ 5 million in the same year from US to the EU. Even the share of the market of European films varies from 22% in France and Spain to 3 % in U.K. while it is observed that 80% of the films produced in the EU never leave their country of origin (EC, 1997a).
Thus it can be said that the idea of a single European audiovisual market turned out to be a myth due to the cultural diversity within the region. The 1989 Directive to that effect has been proved to be ineffective in overcoming the fragmentation of national markets. The MEDIA ( Measures to Encourage the Development of the European Audiovisual Industry) programme was launched as the other side of the EU audio visual policies with the support of the protectionist groups led by France and the European Parliament by the European Commission in 1987. Its main objectives were to (1) create trans national synergies to develop the European audiovisual industry (2) sustain small and medium-size producers through financial and technical support and (3) promote linguistic and cultural pluralism in the audio visual offer. Though this programme was launched its success had been only moderate and this can be seen in the above table (Table 2) which shows that the trade deficits of EU against US in audio visual industries grew exponentially in 1988-95. Even in the film industry, the share of European productions declined rapidly in the same decade only with a 7.8% growth in 1996. Even this could be attributed to the co-production agreements between European producers and the Hollywood majors and increased presence of television companies in film business rather to the EU policies. Thus the MEDIA programme has only succeeded in expending its resources on the market with very little impact achieved in the audiovisual sector.
The 1989 Directive and the MEDIA programme witnessed the difficulties in balancing the economic integration and cultural diversity in regional audio visual policies. The 1989 Directive aimed at consolidating the global competitiveness of European producers, while the MEDIA programme tried to foster diversity within the media landscape. Both the programmes failed to achieve their targets. As Galperin (1999) points out, the EU’s audio visual policy has been more obsessed with strengthening the audio visual producers in the face of rapid structural changes in the media markets rather than promoting a culturally diverse audio visual offer to its citizens. This, as Galperin (ibid) observes, is exemplified in their lack of attention to the issues of media concentration, a trend promoted by the 1989 Directive itself. Though apparently agreed that the industry realignments negatively impact diversity in the audiovisual offer, the European Commission asserted that ” safeguarding the pluralism of the media is neither a Community objective nor is it in the Community’s jurisdiction as laid down by the Treaty of Rome and the Treaty of the European Union” (as quoted in Galperin, 1999).
The audio visual policy of EU had taken a new turn as a result of the failure of the unified audiovisual market. With the emergence of the age of the information highway and interactive audio visual services, the once handicap of Europe’s linguistic and cultural diversity could turn out to be an advantage for the future audio visual environment. The new technological innovations are expected to change the nature of the industry from broadcasting to narrowcasting or customised television. In that scenario, it is argued that, the audience diversity might turn to be an advantage in the competitive markets rather than the economies of scale that worked through audience maximisation in the broadcasting era. This might turn out to be an advantage for the European cultural industries to gear up for customised markets.
But this argument too is not without its fallacies as it is based on a premise that cultural practices are to a large extent shaped by the technological change. Though the multitude of channels has resulted in audience fragmentation, the demand for the mass oriented entertainment products remains still high. Thus economies of scale through audience maximization and distribution still bear relevance in achieving the profit targets. Thus the EU audio visual policy has remained to be debatable in balancing between the economic integration and cultural diversity while following the changing trends in the communication technologies.
Globalisation of communication technologies has not been a new phenomenon and existed for long between the nations sharing the resources. But it has changed its nature through trade liberalisation that gave way to more possibilities for democratisation of communication technologies. In this scenario, cultural industries have a wider possibility of integration across the boundaries. But in many regions this has not resulted as a result of the regional dynamics.
The attempt of the European Commission in balancing between the economic integration and cultural diversity has been commendable in addressing the variety of issues. But the cultural industries are clogged in a web of complex social, political and global forces. Fundamentally the issues of cultural distance are central to the implementation of regional media policies. Audiences need not be coincided with national and regional borders. Secondly the disparities in the strength of the cultural industries between the member states in trade agreements are determinative. In these circumstances, striking a balance between cultural diversity and economic integration through international trade regime has been a policy conundrum for the European Commission. The other facet of this argument is whether to give special treatment to the cultural industries in trade agreements. This is highly disputable given the wide variety of regional integration policies. As Galperin (1999) observes, by giving cultural artefacts a special treatment in trade agreements, the cultural commodities would carry socio-political implications beyond the economic realm.
Yet another facet of this argument is the cultural protectionism spearheaded by France and the European Parliament. The lessons learnt show that the free trade agreements had a great impact on the structure of the ownership than on the content of the local audio visual markets. This is exemplified in the local television industries in Western Europe, Mexico etc where local consumption patterns still dominate the audio visual markets. This shows the inertia of the cultural practices against the fast progressing internationalisation of capital. On the other hand, it is also argued that, the term ‘national culture’ has an underlying ideological construct that works, more than the ethnic, gender and class differences, to protect the private economic interests or the exclusionary conception of culture. The case of EU is cited as the best example. While defending the Europe’s cultural identity by excluding cultural industries from free trade agreements, the Europe’s audio visual policy fostered industrial concentration and has increased the social inequalities in accessing the audio visual offer.
Primarily cultural consumption is to be seen not just as a leisure activity but to be having a consequential social practice. Hence it implies shifting the focus from the choices of consumers to the rights of citizens to cultural development. In that sense trade liberalisation in cultural industries can be seen not as an evil but a feather in the cap for enhancement of cultures and cultural integration through economic integration. The cultural development is obstructed not by the liberalised cultural markets but by the institutional arrangements that favour large media corporations. Thus cultural development needs those policies that aim not at protecting the producers but at democratising the communication resources that help in creating more inclusionary cultural spaces within and across the nations.