Sunday, May 31, 2020

The Worth of Jamaica's Entertainment Industry

On May 5, 2020 I was asked by a journalist to answer some questions regarding the entertainment industry in Jamaica, his interest was getting some idea of the value of the industry, and my view on the impact COVID-19 may have across the industry. 

Source: The Sunday Gleaner
It's a very interesting question, one that concerns many people, and it was definitely worth working through. He presented me with four questions to which I provided the answers below:

1. How important would you say the entertainment industry is to the economy? 

I think the entertainment industry is important to the Jamaican economy, and by entertainment industry I mean sectors such as the visual and performing arts, music, events and festivals, audio-visual (radio, film and television), Internet and online gaming, publishing, sports, tourism and travel, amusement and theme parks, gaming and wagering, and toys and games. So when you take these sectors combined they contribute a significant amount of revenue to the Jamaican economy.  I know these are very different from what Jamaicans narrowly conceive as entertainment - radio, tv, film, music, dances and parties, carnival, or maybe a traditional cultural event. The reality is that in the global context the entertainment is considered way more that how we see it locally. 

2. Are you aware of any research done that would give some indication of the industry’s worth? 

So the trouble with ascribing value to the entertainment industry in Jamaica is that this sectors that I mentioned above are not measured in that context by the Jamaican statistical institute, STATIN. So if you really want to get accurate numbers you will have to go do some primary research.  Nevertheless, a few economists such as Vanus James, and Michael Witter have been able to give us some estimates for some segments of the entertainment industry, for example, Witter argued some years ago that Jamaica’s music was worth US$2.5billion, which doesn’t necessarily mean that that is what it is worth to Jamaica itself, since the truth is that most of Jamaica’s, music forms, ska, dub, reggae, dancehall and our sound system culture, have taken on a life of their own outside of Jamaica, living very vibrant lives, devoid of any Jamaican involvement in many cases, so none of us is earning from those Jamaican music related activities. 

Source: Vanus James, Mona School of Business

Vanus James in his 2007 study, The Economic Contribution of Copyright-Based Industries in Jamaica, using data from STATIN found that the copyright based industries, which sectors parallel the entertainment industry, contributed an estimated 4.8 percent (in the neighborhood of US$464.7 million) to the GDP of Jamaica back in 2005. James noted then that these estimates essentially represent just the floor and that the actual numbers are likely to be higher when more data can be gathered.  James points out that these numbers are also reflecting a context where there is far from adequate enabling environment, where it has been shown that greater success and greater profits can be had with the right policy support from government, including direct government investment, targeted education and training, and other types of preferential tax benefits. 

3. If you were to put a dollar value on the entertainment industry, what are some of the things to take into consideration and what would that figure look like? 

These are the sectors I’d take into account if I’m trying to measure what entertainment contributes to the Jamaica economy - the visual and performing arts, music, events and festivals, audio-visual (radio, film and television), Internet and online gaming, publishing, sports, tourism and travel, amusement and theme parks, gaming and wagering, and toys and games.  The dollar value I’d assign here would probably be conservatively at least one and a half times the numbers Vanus James arrived at, but it could easily be double. There are a number of entertainment sectors that were out of the scope of Vanus James’ work and so were not counted.  It is my view that any act of figuring out what Jamaica’s entertainment industry is worth to us should also account for the opportunities we have not been able to capitalize on because of our unpreparedness from the perspective of business. 

4. How do you see the sector recovering from COVID-19? 

My guess is that all these sectors will recover from Covid-19, I can’t say how well, but I expect like all other sectors they will remain profitable. There is no question in my mind that the growth of online and media based experiences will grow in response to people’s need to have their entertainment but also be distant.  To the extent that suppliers of Jamaica entertainment can capitalize on these opportunities I think they should go for it.

Source: The Jamaica Star
The journalist's article was published on May 15 titled, How much is entertainment worth? - Industry insiders believe figure is still not known. Perhaps the fact that figures aren't truly known in detail are an indictment, and it speaks to a big gap that hinders growth, since investors will favor conditions where more of the variables that impact success are known rather than not. However, this fact could also be representative of big opportunities for those who want to come in early and go big fast. 

Source: The Jamaica Star

Since the publication of my article two other newspaper publications have touched on this.  The first contained an interview with Howard McIntosh, chairman of the Entertainment Advisory Board (EAB), titled, Data Is King, published on May 17, 2020.  In it McIntosh argues a similar point to that which I have made:
"There is some reluctance, among practitioners in Jamaica, to share their real numbers... But think about it, how can policy and regulations be made to protect the industries if there is no base information? That is, if we don’t know how many, how much, as well as the what’s, where’s, and whens of their economic activity, how can protections be crafted?
Critical is the need for the Statistical Institute of Jamaica, the Planning Institute of Jamaica, the Bank of Jamaica and central government to properly understand the value of entertainment in terms of direct contribution and indirect impact."
On the journey towards Jamaica the cultural superstate what gets named and measured is what gets investment and support, so we've got to name and measure them all, going much wider that the traditional sectors Jamaicans consider the entertainment sector.

Source: The Sunday Gleaner
In the second article, Entertainment suffers $26-billion COVID hit, where the newspaper reports reduced earnings due to COVID-19 Minister Grange of the Ministry of Culture, Gender, Entertainment and Sport shared some estimate figures:  
“When extrapolated to the relative size of the industry, this represents loss to the arts and entertainment sector as, conservatively, J$19.2 billion for micro and small creative businesses and individuals. Coupled with losses from medium and large events such as Calabash Literary Arts Festival, Carnival in Jamaica, Dream, and Reggae Sumfest, the lost revenue increases to in excess of $26.182 billion,” [the Minister] said.

There is little doubt from all these points of view that the Jamaican entertainment sectors are worth more than Vanus James's 4.8% of GDP, but it doesn't mean that's the value we have for it.  If we think it is valued more, we're going to have to do more to show it.