Industrial policy prioritizes strategic sectors of their economy, like manufacturing. However the domestic output of the creative arts, such as music and film, fashion, beauty, and fandom are increasingly significant. Cultural exports are not a new phenomenon: think Hollywood, rock music, Coke, and blue jeans. However, digitization and the internet have supercharged the trend; America’s internet content is the nation’s its third largest export. The market cap of its Big Tech platforms overshadows the gross domestic product of all but the biggest five national economies in the world.
Pop culture is the real thing
Many nations think Big Tech platforms are railroading their local culture and content. They had once imagined that the internet would allow the development of their domestic content and applications. Few countries have been able to develop platforms to compete with the likes of Google, Facebook, Apple etc. South Korea is one rare, possibly even precious, exception.
Why? Just as South Korea implemented industrial policy for manufacture and export appliances, semiconductors, electronics, cars, and chemicals, it applied a policy approach to develop its creative industries. As Euny Hong explains in the best-selling Birth of Korean Cool: How One Nation Is Conquering the World Through Pop Culture, in less than a generation, South Korea transformed from a third world country to an industrial powerhouse.
Leveraging industrial models for creative industries
Back in the 1990s, Korean policymakers opted to export a new type of custom, in addition to its supremely crafted goods – its cultural content. They did not envisage demand being driven from North America or Europe initially but markets emerging in the developing countries of Asia, Africa, and the Middle East. Korean consumer products have blanketed Asia for some years, and Korean entrepreneurs have mastered emerging country business models. After all, if people would buy a Korean smartphone, why not fill it with Korean content?
More crucially, Korean policymakers capitalized on this period of digital transformation to drive massive social and technological change. Korea has 2.6 percent of the global market share of what the Organisation for Economic Cooperation and Development (OECD) calls the Cultural and Creative Sectors (CCS). This makes this small, previously impoverished country, with a mid-sized population of 50 million, the world’s seventh-largest creative culture player, with its CCS making USD$ 114 billion in sales, USD$ 10.3 billion in exports and 680,000 jobs, reported OECD in 2021.
South Korea’s comic book industry, which collapsed in the late 1990s, is a case in point. Such was the furious growth of the new webtoon industry that grew up in its wake that one of the phoenixes that arose from those ashes, Piccoma, a digital manga subscription service, pulled in more revenue in 2021 than any other non-gaming app except TikTok and YouTube, according to market intelligence company Sensor Tower. It has risen so quickly and with such characteristic Korean modesty that the world’s third-highest earning app is one of which hardly anyone knows the name.
The ballyhoo over Hallyu
Today Hallyu or Korean Wave (K-wave), the global boom of Korean pop culture, generates at least 125 trillion won annually. World leaders danced “Gangam Style” at the United Nations; the dark comedy “Parasite” won both the Palme d’Or and the Best Picture Oscar; and trendsetters who want to demonstrate independence from Apple’s walled garden choose the Samsung Galaxy smartphone.
Korea’s creative and industrial coming of age and the associated art forms are celebrated at a new exhibit at London’s Victoria & Albert Museum. There are over 200 Korean icons on display, including the world's first commercial MP3 player, Nam June Paik’s Mirage State (the 1986 sculpture comprising 33 TV monitors); sets, costumes, and posters from popular K-drama and film; digital cartoons designed for mobile devices; touchstones from K-pop stars G-Dragon, BLACKPINK and BIGBANG, BTS, and NCT; and a showcase of the millennia of Korean beauty with cosmetics packaging, porcelain pots, and face wrappings and skin care which today comprise some $13. billion industry globally.
Founder and executive Director of the Center for Music Ecosystems in UK, Shain Shapiro, PhD says K-pop has emboldened Thailand, Mexico, Zimbabwe, Belize, Zimbabwe, and Philippines to launch a national music strategy focused on the people, enterprises and locations where music can be monetized. In fact UNESCO has a template focused on actioning human capital, business models, and financing. He cautions that at this stage there are still more failures than successes, however the practice has been finessed as nations learn from one another. Sain says South Korea’s strategy took several decades to bear fruit and had to endure financial crises.
While convergence in both North America and Europe, and the fusion of content, communications and computing, may have taken decades to transpire, it seems to have happened overnight in South Korea. So expedited was the process that policymakers recognized, in the dawn of the internet, that policy, strategy and business models needed to support the entire ecosystem and not inherently favor one part of the ecosystem over another.
Getting the policy right
While South Korea created overall policy and made strategic subsidies, it did not micromanage the marketplace. For example in the year 2000 it allowed the consolidation of the mobile market, from 5 to 3 mobile operators, in order to improve the scale for investment. Today South Korea has the most advanced mobile technology in the world, including the highest rate of rollout, adoption, and speed of 5G, with a whopping 47 percent of the population having a 5G subscription. These policies have been critical to ensure that communications networks are available to support the vibrant content industry.
The world is watching South Korea
To their immense credit, South Koreans invented their own versions of email, ecommerce, virtual worlds, gaming and social networks. Whether they are messaging with Naver or mapping with Kakao, more than 80 percent of Koreans use native platforms and create local competition with Big Tech.
South Korea’s success in creating domestic content and applications, in the face of internet giants from the US and China, is no small feat. Few nations have succeeded. Indeed, that’s why South Korea’s next policy steps are so important.
South Korean lawmakers have recognized that all the players in the ecosystem need to cover their costs and that broadband networks continue to upgrade. Notably there have been rules in place for some years to ensure that broadband network usage costs are recovered from Korean content and application providers. Recently lawmakers have sought to extend this regime to foreign providers. Notably Google, Facebook, and Netflix account for most of Korea’s traffic. To enable this content to be delivered, broadband providers must invest in a set of equipment and services separate from those activities that provide broadband to end users. Big Tech has long enjoyed this provision essentially for free, but it is no longer tenable. As such, South Korea’s lawmakers are rightly moving to end Big Tech’s free ride and ensure the vibrancy of the K-wave.
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The Rise Of The National Creative Industries Strategy - Forbes
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