2. Culture and media and the Dutch economy

How do culture and media contribute to key macroeconomic figures regarding the Dutch economy? Table 2.1 shows this contribution for 2015 and 2018, as well as for 2015 before the revision. The national accounts are periodically revised, with revisions introducing new sources and methods, and sometimes new national and international definitions, to ensure that they are up to date and use good data. This can lead to differences between the estimates of a range of figures for 2015 before and after revision. The first culture and media satellite account was based on the pre-revision national accounts for 2015. To make sure 2018 is still comparable to 2015, the 2015 satellite account for culture and media has been re-compiled using the post-revision national accounts for 2015.
The box in this chapter concerns the main consequences of the 2015 revision of the national accounts, especially from the perspective of culture and media.

3.4 percent of GDP

The share of culture and media in Dutch GDP in 2018 was 3.4 percent; the share in 2015 was 3.5 percent. In 2018, this contribution to GDP was associated with employment at 330,000 labour years, or 4.3 percent of total employment in the Netherlands (this percentage was the same in 2015). To put that into perspective: in the 2015 satellite account for sports, the share of sports in GDP was estimated at 1 percent (CBS, 2019), while the share of tourism in 2018 came to 4.4 percent (CBS, StatLine).
The fact that the share of culture and media in employment is higher than in GDP implies that labour productivity in the culture and media sector is somewhat lower than in the economy as a whole. The value added per labour year in the culture and media sector came to EUR 73,000 in 2018, compared with EUR 92,000 for the economy as a whole. In itself, this is not surprising, as industries such as manufacturing are much more capital intensive than the culture and media sector (see Table 5 in the table set).

140,000 self-employed persons

Expressed in labour years, employment in the culture and media sector increased from 300,000 to 330,000. In both 2015 and 2018, this constituted 4.3 percent of total employment. Self-employed persons (other employed persons) make up approximately one-third of employment in the culture and media sector: twice as high as for the economy as a whole. In 2018, the share of the culture and media sector in the labour volume of self-employed persons was 8.3 percent, as opposed to a share of 3.5 percent in the labour volume of employees. The proportion of self-employed persons in 2018 ranged from more than half in Design, photography and translation (69 percent) and Art (67 percent) to under 10 percent in the Publishing activities (6 percent). For these details, see Tables 1a and 1b in the table set.

2.1 Macro totals for culture and media and the Dutch economy¹⁾
	Culture and media			Share of culture and media
	2015, Pre-revision (mln euros)	2015, Post-revision (mln euros)	2018 (mln euros)	2015, Pre-revision (%)	2015, Post-revision (%)	2018 (%)
SUPPLY OF GOODS AND SERVICES
Total domestic production (basic prices)	48,260	47,810	58,320	3.7	3.6	3.9
Imports	15,200	20,110	26,720	3.1	3.9	4.7
Total supply (basic prices)	63,470	67,920	85,040	3.5	3.7	4.1
Taxes and subsidies on products	2,310	2,280	2,540	0.3	0.3	0.2
Total supply (purchase prices)	65,780	70,200	87,580	3.5	3.6	4.0
USE OF GOODS AND SERVICES
Intermediate consumption	31,420	33,650	44,390	4.6	4.7	5.4
Consumer spending	17,480	15,630	16,420	3.7	3.2	3.1
Consumption by households (incl. NPIs)	14,140	11,780	12,320	4.7	3.8	3.6
Consumption by government	3,340	3,850	4,100	1.9	2.2	2.2
Gross fixed capital formation	2,670	2,640	3,200	2.0	1.7	2.0
Stock changes²⁾	450	350	310	12.2	13.6	7.6
Exports	13,760	17,930	23,250	2.4	3.1	3.5
Exports of domestic production	7,070	11,520	17,180	2.1	3.2	4.2
Re-exports	6,690	6,420	6,080	2.8	3.1	2.5
Total use (purchase prices)	65,780	70,200	87,580	3.5	3.6	4.0
VALUE ADDED
Total domestic production (basic prices)	48,260	47,810	58,320	3.7	3.6	3.9
Intermediate consumption (-)	25,060	26,170	34,380	3.7	3.6	4.2
Gross value added (basic prices)	23,200	21,640	23,940	3.8	3.5	3.5
Taxes on products	2,470	2,280	2,540	0.3	0.3	0.2
Product-related subsidies (-)	-160	0	0	5.2	0.0	0.0
Gross value added (purchase prices) (GDP)	25,520	23,920	26,480	3.7	3.5	3.4
EMPLOYMENT
Number of employees (x 1,000)	270	260	270	3.6	3.5	3.5
Labour years: employees (x 1,000)	210	210	220	3.6	3.6	3.5
Number of other employed persons (x 1,000)	140	130	140	9.6	9.0	9.0
Labour years: other employed persons (x 1,000)	110	100	110	8.7	8.1	8.3
Total number of employed persons (x 1,000)	410	390	410	4.7	4.5	4.4
Total labour years: all employed persons (x 1,000)	320	300	330	4.5	4.3	4.3
¹⁾ For culture and media, amounts in this table have been rounded to the nearest ten million euros or the nearest ten thousand in numbers. As a result, underlying figures do not always add up to the total. ²⁾ Includes the balance of the purchase and sale of valuables.

31 percent imports

The total supply (basic prices) of culture and media was valued at EUR 85.0 billion in 2018. This total supply consists of goods and services produced in the Netherlands plus imports. In 2018, 31 percent of this culture and media supply was generated by imports, slightly more than for the economy as a whole (27 percent). The main imported cultural and media products in 2018 were advertising services, licences and royalties and audiovisual equipment. The share of culture and media in total imports was 4.7 percent in 2018 (3.9 percent in 2015).
Meaning that almost 70 percent of the supply of culture and media was generated by domestic production. Again, the main product groups are advertising services and licences and royalties, followed by publishing services. The share of culture and media in total domestic production was 3.9 percent in 2018 (3.6 percent in 2015).

Half is intermediate consumption

In 2018, half (51 percent) of culture and media was used as input for the production of other goods and services (intermediate consumption). As the same figure for the economy as a whole was considerably lower (38 percent), the share of culture and media in the total intermediate consumption of the Dutch economy is high, at 5.4 percent (4.7 percent in 2015). The main goods and services within intermediate consumption are advertising services, licences and royalties and publishing services.
The ‘traditional’ art and culture sector also involves an economic division of labour which results in cultural productions being partly categorised as intermediate consumption. A writer, musician or programme maker produces little or nothing directly for the consumer; rather, they produce material for a publisher or producer who will ultimately take the economic risk in actually bringing the cultural expression to the audience.

EUR 1,500 per household

Household consumption of culture and media in 2018 amounted to EUR 12.3 billion, accounting for 3.6 percent of total household consumption (3.8 percent in 2015). This translates to over EUR 1,500 per household. The main goods and services within household consumption were publishing services, telecommunication services and audiovisual equipment.
Culture and media accounted for 2.2 percent of government consumption in 2018, the same percentage as in 2015. Subsidised cultural education made up almost half this government consumption. Subsidised education is largely financed from collective funds and consumed by the government ‘on behalf of’ households. In reality, of course, the recipients of this education are ordinary people.

Investments and stockholding

The share of culture and media in investments was 2.0 percent in 2018 (1.7 percent in 2015). In part, culture and media investments are cultural and media products that are counted as investments, such as audiovisual equipment, printing and book-binding machines and architectural services. ‘Own account’ investments also contributed to this total; this category includes original artworks which are considered to be capital goods and which, in the form of licences and royalties, generate income for the artists concerned. Investments in buildings (including cultural buildings) and similar investments made by the industries of Art and Libraries, museums and nature conservation as well as Public administration are also counted as culture and media investments. Buildings are not generally designated as cultural or media products, but investments in buildings in the culture and media sector are considered to be made largely in the service of culture and media, and are therefore categorised as culture and media sector investments.

The share of culture and media in stock changes was 7.6 percent in 2018 (13.6 percent in 2015). This is partly due to the fact that this item also includes purchases of museum pieces, which range from paintings to dinosaur bones. These goods are not considered to be investments, because they are primarily seen not as a production tool but rather as an object or art object that retains its value over multiple years.

27 percent exports

The share of culture and media in total exports was 3.5 percent in 2018 (3.1 percent in 2015). In 2018, 27 percent of all cultural and media products were exported, compared with 30 percent of all products in the economy as a whole. Three-quarters (74 percent) of all cultural and media products exported came from domestic production. The same figure for the economy as a whole was 63 percent. In comparison with the economy as a whole, exports of cultural and media products rely a little more on exports from domestic production and less on re-exports.
The most important item under exports from domestic production was the yield from licences and royalties. In principle, these serve as remuneration for the use of cultural expressions produced in the Netherlands (a book, music, film or television programme format, etc.). However, licences and royalties are also ‘imported’ by foreign companies based in the Netherlands, which purchase (import) these rights from their parent company and then sell (export) them to foreign customers. This does not include cultural expressions produced in the Netherlands. These money flows arise from the fact that such companies do not have to pay withholding tax on their licences and royalties in the Netherlands.³⁾ Productions by Dutch artists or artistic companies overseas also count as exports.
Almost three-quarters (72 percent) of the re-exports of culture and media in 2018 were accounted for by audiovisual equipment. Re-exports are goods which, although they are exported by companies in the Netherlands, were not produced in the Netherlands. The main branch of industry that gains financially from this practice is the trade and transport sector.

Taxes and subsidies on products

Taxes and subsidies on products are taxes and subsidies that are levied or granted per unit produced. Examples include excise duties on gasoline and alcohol, but the most important example is Value Added Tax (VAT). The government artificially raises the price at which the producer may offer products by levying taxes on products. On the other hand, product-related subsidies are also available and are intended to reduce the sales price. However, because taxes on products are much higher than product subsidies in the Dutch economy as a whole, on balance this has the effect of raising prices.
In 2018, the balance of taxes and subsidies on cultural and media products amounted to EUR 2.5 billion or 3.1 percent of the balance of the economy as a whole (3.4 percent in 2015). This amount consists almost entirely of VAT. When product-related subsidies are transferred to non-product-related subsidies, almost nothing remains of the product-related subsidies (see also the box discussing the revision of the national accounts).
Incidentally, subsidies on products are not the only subsidies the government awards to the culture and media sector. The sum the government extends to the culture and media sector in the form of non-product-related subsidies and income transfers is many times greater (see Chapter 4).

Development of culture and media

As two years of the satellite account for culture and media are now available, it is now possible to discuss the nominal development of the various macroeconomic figures. The nominal value of practically all macroeconomic figures increased between 2015 and 2018. The nominal development of the different figures for culture and media is therefore compared with the nominal development of the same figures for the economy as a whole. For culture and media, the following figures have increased more than the total economy: domestic production, imports, intermediate consumption and exports. Compared with 2015, the consumption of cultural and media products in 2018 came out slightly below total consumption.
All these factors resulted in a slight reduction in the share of culture and media in GDP, from 3.5 percent in 2015 to 3.4 percent in 2018. Although in absolute numbers employment increased in the culture and media sector, its share in total employment remained the same at 4.3 percent.

Revision of the 2015 national accounts

The statistical information used to compile the national accounts changes constantly. Although many of these changes are of course incorporated in the national accounts immediately when changes arise in the economy, this is not always possible. Reliable information may become available too late for the regular estimates, additional research may be required or new sources may not be fully compatible with previously available information. If this new source information is directly incorporated into the regular estimates, this has an undesirable distorting effect on factors such as economic growth estimates. Such sources are therefore not used to the full until the revision takes place, and the new data is incorporated fully at the time of the revision. Revisions can also be used to implement methodological changes. Existing methods and international guidelines can be further refined during revisions, and in some cases entirely new national and international guidelines may also be implemented.

The main changes that also affected the satellite account for culture and media are as follows:

Product-related versus non-product-related subsidies
In the recording of subsidies a distinction is drawn between product-related subsidies linked to the volume or value of goods and services sold and non-product-related subsidies that are usually linked to the use of production resources. Due to new insights into the basis on which subsidies are granted by the state and local authorities, this revision moved most product-related subsidies to non-product-related subsidies and social benefits in kind. This change leads to a lower volume of production and value added (at basic prices) in the respective sectors. The effect on GDP (at market prices) is zero.

Elimination of the VAT difference
The VAT definition in the supply and use table was previously based on the ‘theoretically’ calculated VAT: the VAT calculated on all taxed transactions, regardless of the actual VAT payment. This theoretical VAT is generally higher than the VAT receipts of the Tax and Customs Administration. This is partly because the theoretical VAT was also calculated on activities in the informal circuit, with no VAT being paid by mutual agreement. The difference between the theoretical VAT and the collected VAT was shown separately in the national accounts under the heading ‘Difference in imputed and paid VAT’. The theoretical VAT definition can lead to an overestimate of the level of GDP. The question of whether to include the theoretical VAT in the national accounts has also been discussed internationally. Partly on this basis the European Commission asked the Netherlands to stop including this VAT difference in the national accounts. In this revision, the difference between the theoretical VAT and the VAT on a transaction basis is no longer visible, and VAT is now accounted for as a product-related tax per product group. Before the revision, the theoretical VAT payment was offset in one go against the macroeconomic figures – at least in the publications of the national accounts.

Art, culture and gambling
The value added in art, culture and gambling was adjusted downwards by EUR 1.1 billion. A new analysis of the sources (annual reports, VAT returns and policy records) revealed that the expenditure on art and culture had been overestimated. The increased use of the annual museum pass (museumjaarkaart), for example, had a larger depressive effect on prices than had previously been assumed on the basis of the available sources.
Among others, a EUR 2.2 billion downward adjustment was made to expenditure on recreational and cultural services. Expenditure on organised travel in particular was lower than before the revision (-EUR 1 billion). This is partly due to the fact that consumers are increasingly arranging their own travel and booking online. The pre-revision results were found to have underestimated this shift. Expenditure on cultural services (libraries, museums) was also adjusted downwards. A new source analysis showed that this expenditure had been overestimated, partly due to an underestimate of the use of the annual museum pass (see above).

Improved estimates
Finally, the revision caused the level of several goods and services to be adjusted upwards or downwards. In terms of goods and services that are relevant to culture and media, licences and royalties and advertising services have been adjusted upwards. This is particularly reflected in the import and export of these product groups. The main goods and services for which estimates have been revised downwards are audiovisual equipment, book printing and binding machines, architectural services, radio and TV broadcasting and museum and library services. The latter is particularly reflected in the consumption of museum and library services by households and the value added of that branch of industry (see above).

For more background on the revision, please see: National accounts – 2015 Revision (cbs.nl)

³⁾ When interest, royalties or dividends are received from another country, tax is often withheld on the payment. This is known as withholding tax. If the Netherlands has a treaty with the country where the income originates, there may be a right to full or partial exemption or refund of the tax which has been or will be withheld. This tax rule changed on 1 January 2021, and withholding tax is now levied on licences and royalties in the Netherlands. See: https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/belastingdienst/zakelijk/winst/bronbelasting-rente-en-royalty/ (page in Dutch).