6. Economic Overview of the Cultural Sector

This chapter presents an economic overview of the cultural sector, using the most recent economic and financial data available. This information is important for understanding the cultural labour market, as the economic and financial health of the sector directly affects the current and future supply and demand for labour, as well as the availability of cultural goods and services. In addition, the units of measurement reported are those that government, business, and other financially affiliated entities rely on to make investment decisions based on comparable metrics.

The chapter begins with a discussion of the economic indicators that have the largest influence on the economic performance of the cultural sector: the sector’s real value-added output (that is, gross domestic product, or GDP), Canadian household spending on cultural goods and services, Canadian exports of cultural goods and services, and government support of the cultural sector. Real gross domestic product (GDP) is a standard measure of industry output and is equal to the total value that the industry creates. As such, it is a measure of the industry’s contribution to economic growth. Specifically, value-added or net output is the difference between total revenues generated and the sum of expenses on parts, materials, and services used in the production process.

The chapter then continues with a discussion of the financial performance of the six core domains that make up the cultural sector, according to the definition and scope of the sector outlined in Chapter 2. It centres on the recent financial performance of each domain. The section also identifies some of the opportunities and challenges that establishments in these domains are expected to face over the near term.

For a list of the types of establishments and industries included in each cultural domain, please see Appendix A.

6.1 Real Value-Added Output (or GDP) of the Cultural Sector

Overall, real value-added output of Canada’s cultural sector expanded 5 per cent between 2013 and 2017 (that is, an annual rate of 1 per cent). Given that the cultural sector consists of many heterogeneous industries, the growth of each domain differs. Among the core cultural domains, the sound recording domain delivered the strongest growth over the five-year period, clocking in a 6.6 per cent annual growth rate. This was followed by heritage and libraries and by live performance domains, expanding at annual rates of 4.3 per cent and 3.2 per cent respectively. On the flip side, GDP in the written and published works domain was 13.3 per cent lower in 2017 than in 2013 (for an annual drop of 2.8 per cent), underscoring the significant challenges resulting from shifts in consumption patterns and the downfall of physical publications.

Table 6.1: Cultural Sector Real Value-Added Output (GDP), Industry Perspective, 2013–2017

($ millions)

Domains	Subdomains	2013	2014	2015	2016	2017
Heritage and libraries	Total	492	514	561	602	608
	Archives	7	7	8	9	9
	Libraries	27	30	36	40	40
	Cultural heritage	296	314	345	372	371
	Natural heritage	162	163	172	182	188
Live performance	Total	1,915	2,009	2,128	2,206	2,241
	Performing arts	1,790	1,878	1,988	2,060	2,094
	Festivals and celebrations	125	130	140	145	147
Visual and applied arts	Total	6,773	7,282	7,552	7,671	7,903
	Original visual art	180	187	194	202	208
	Art reproductions	38	39	38	39	42
	Photography	529	580	610	622	641
	Crafts	251	242	257	262	247
	Advertising	1,617	1,749	1,876	1,856	1,871
	Architecture	1,365	1,472	1,444	1,443	1,496
	Design	2,792	3,013	3,132	3,246	3,398
Written and published works	Total	8,679	8,300	7,972	7,709	7,521
	Books	852	810	745	689	642
	Periodicals	1,093	1,029	959	905	855
	Newspapers	2,342	2,139	1,958	1,776	1,602
	Other published works	116	109	102	96	92
	Collected Information	226	210	197	186	177
	Multi-subdomain	4,050	4,003	4,011	4,056	4,154
Audio-visual and interactive media	Total	12,400	13,350	12,361	12,485	12,723
	Film and video	3,545	4,387	3,258	3,397	3,503
	Broadcasting	6,455	6,310	6,442	6,362	6,308
	Interactive media	2,400	2,652	2,661	2,727	2,911
Sound recording	Total	396	441	471	506	543
	Sound recording	68	76	82	87	90
	Music publishing	328	365	388	419	453
Education and training		3,378	3,494	3,602	3,696	3,826
Governance, funding, and professional support		7,517	7,825	7,866	7,910	8,191
Multidomain*		638	658	697	716	723
Total cultural products		42,189	43,872	43,209	43,501	44,279
All other products**		12,269	13,174	13,556	13,979	14,570
Total cultural industries		54,458	57,045	56,765	57,480	58,849
Statistics Canada, Culture Satellite Account. *Multidomain refers to the cases where one industry produces goods and services that cannot be readily allocated to a single domain, e.g., book, periodical, and music stores (NAICS 4512). ** All other products includes all non-cultural products that are produced in the cultural industries.

6.2 Household Consumption on Cultural Goods and Services

Canadian household spending on cultural goods and services decreased by 3.4 per cent between 2016 and 2017. In the same year, total current household spending (less taxes, savings, and gifts/contributions) grew by 2.5 per cent. The same trend persisted over a longer time span: Canadians spent over 10 per cent less on cultural goods and services in 2017 than they did in 2013. In comparison, total current household spending rose 8.8 per cent over those five years.

Spending among the core cultural domains followed a similar trend, except for visual and applied arts, which saw a 5.2 per cent increase over five years. The largest drop was seen in the sound recording domain: Canadian households spent well less than half of what they spent five years before on sound recording products and services in 2017 (down 59 per cent compared with 2013). This coincides with the rise in recent years of online streaming services, whose “freemium” business model (offering basic services for free, while additional features such as removing advertisement are provided via paid subscriptions) offers Canadians a more cost-effective way of listening to music.

Table 6.2: Canadian Consumer Spending, 2013–2017
($ millions)

Domains	2013	2014	2015	2016	2017
Heritage and libraries	1,194	636	969	1,148	972
Live performance	1,763	1,627	1,858	2,238	1,451
Visual and applied arts	2,220	2,034	1,858	1,865	2,336
Written and published works	5,024	3,998	4,610	4,419	4,483
Audio-visual and interactive media	10,728	10,520	10,396	10,229	10,142
Sound recording	1,207	828	780	674	493

Source: Statistics Canada, Survey of Household Spending, compiled by The Conference Board of Canada.

6.3 Exports of Cultural Products

Exports of Canadian cultural products registered solid growth between 2012 and 2016, expanding at 6.8 per cent annually. All of the domains saw strong expansion in product exports, with visual and applied arts and heritage and libraries growing at an annual pace of more than 9 per cent over the five-year period.

Table 6.3.1: Exports of cultural products, 2002–2016 
($ millions)

Domains	Subdomains	2012	2013	2014	2015	2016
Heritage and libraries	Total	114	140	134	159	178
	Archives	1	1	2	2	2
	Libraries	2	4	5	9	10
	Cultural heritage	91	107	99	113	125
	Natural heritage	20	28	29	34	41
Live performance	Total	652	833	716	861	978
	Performing arts	625	805	686	825	937
	Festivals and celebrations	26	29	31	36	42
Visual and applied arts	Total	4,574	6,392	5,955	7,039	7,182
	Original visual art	54	67	69	86	95
	Art reproductions	-	-	-	-	-
	Photography	7	4	4	5	6
	Crafts	2,871	4,386	3,948	4,967	5,054
	Advertising	367	383	357	502	506
	Architecture	590	682	662	626	623
	Design	685	870	917	852	899
Written and published works	Total	1,297	1,342	1,538	1,778	1,701
	Books	336	320	399	431	437
	Periodicals	134	125	151	164	153
	Newspapers	119	89	122	158	151
	Other published works	70	70	71	84	59
	Collected Information	86	70	67	78	54
	Multi-subdomain	553	668	729	864	847
Audio-visual and interactive media	Total	2,651	2,905	2,983	3,336	3,287
	Film and video	1,868	1,877	1,945	2,344	2,087
	Broadcasting	141	94	101	104	108
	Interactive media	642	934	937	888	1,092
Sound recording	Total	387	409	389	492	469
	Sound recording	129	143	132	149	125
	Music publishing	257	267	257	343	343
Education and training		313	332	402	443	458
Governance, funding, and professional support		1,121	1,164	1,174	1,210	1,250
Multidomain*		419	466	410	478	504
Total cultural sector		11,527	13,983	13,702	15,797	16,007

Source: Statistics Canada, Provincial and Territorial Gross Domestic Product by Income and by Expenditure Accounts.

6.4 Government Support of the Cultural Sector

Direct financial support of the cultural sector from federal, provincial, territorial, and municipal governments increased steadily between the fiscal years of 2005–06 and 2009–10, at an annual growth rate of 4.1 per cent. In the fiscal year ending in 2010, spending by all three levels of government totalled over $9.6 billion. This included operational and capital spending, as well as grants, contributions, and transfers, but excluded tax credits.

It should be noted that tax credits are a key component of government support, in particular for businesses falling under the subdomain of film and TV. These credits are available from the federal and all provincial and territorial governments, but the degree of support varies from year to year, depending on the number of cultural establishments and programs that qualify for the credits.

The federal government provided a total of $4.1 billion to the cultural sector in 2009–10 fiscal year. More than one-half of federal support (55 per cent) went to broadcasting (primarily to the Canadian Broadcasting Corporation), while 35 per cent was allocated to heritage (e.g., museums, parks, and historic sites) and national libraries.

That same fiscal year, provincial and territorial government support of culture totalled $2.9 billion, while municipal governments also provided $2.9 billion. Provincial and territorial governments allocated the biggest share of their cultural spending to libraries (32 per cent), followed by the heritage sector (22 per cent). At the municipal level, the vast majority of spending in the cultural sector was for libraries.

To provide a perspective on the degree to which the operation of Canada’s cultural sector relies on various levels of government funding, data on government expenditures were used to calculate the proportion of cultural business revenues attributed to government funding. While this level of government spending data from Statistics Canada is dated (2009–2010 was the most recent release), it still helps to present a picture of the role that various levels of government play in the operation of the sector. In aggregate, government funding contributed an estimated 16.8 per cent of the total revenues of the cultural sector in Canada. (See Table 5.4.1.)

The most recent Government Expenditures on Culture report, which was used to gather the data in this section, does not reflect government support of recently expanded segments of the cultural sector, including interactive digital media. In addition, as the heritage and libraries domain under Culture Satellite Account framework includes only private institutions, the Conference Board created a separate category for public heritage and libraries, in order to report government support of public institutions. Given that the revenues of public heritage, archive, and library institutions are not available in the Culture Satellite Account, their overall reliance on government support is not available.

Table 6.4.1: Dependency of Canada’s Cultural Sector on Government Support, 2009–10
($ millions)

Domains	Federal government	Provincial government	Municipal government	Total government	Overall reliance (as a % of total revenues)
Heritage and libraries*	3	5	12	19	2.2%
Live performance	264	244	154	662	20.8%
Visual and applied arts	57	118	154	328	2.9%
Written and published works	203	137	258	597	3.1%
Audio-visual and interactive media	2,345	457	310	3,111	13.5%
Sound recording	30	12	14	56	5.3%
Public heritage and libraries**	1,226	1,885	2,036	5,147	n.a.
Multidomain	16	31	13	60	6.4%
Total cultural sector	4,142	2,889	2,950	9,981	16.8%
Source: Statistics Canada, Culture Satellite Account; Survey of Provincial/Territorial Government Expenditures on Culture; Survey of Federal Government Expenditures on Culture. * In conformity with the Culture Satellite Account, the heritage and libraries domain includes only private institutions. ** The public heritage and libraries domain includes government operated libraries, culture/natural heritage, and public archives.