7 High Income and Low Income Countries’ Share of World Tourism in $bn, 2005 and 2015
9 The Tourism Industry Value Chain
10 Regional Revenues of the Global Airlines Industry in $bn, 2005
11 Europe’s Top Eight Tour Operators’ Revenues in $bn, 2007
12 The TUI Tourism Value Chain
13 The Global Sports Market in $bn, 2001-2010
14 The Global Sports Market in Regions and Revenue Sources in $bn, 2005
15 The US TV Rights Fees Market in $bn, 2001-2010
16 The West European Sports Market in $bn, 2001-2010
17 Revenue Sources of the West European Sports Market in $bn, 2001-2010
18 Revenues of European Top 20 Football Clubs, Top Five Leagues and All European Leagues in $bn, 1996-2006
19 Nike’s Revenues in $bn, 1997/98-2007/08
20 Nike’s Regional Markets in $bn, 2000/01-2007/08
21 The Adidas Group’s Revenues in $bn, 1997-2007
22 Adidas’ Regional Markets in $bn, 2001 and 2007
23 Adidas’ Product Segments in %, 2001 and 2007
24 Puma’s Revenues in $bn, 1993-2006
25 Puma’s Regional Markets in $bn, 1998-2006
26 Amer Sports’ Revenues in $bn, 1998-2007
27 Amer Sports’ Regional Markets in $bn, 1998-2006
28 Amer Sports Brand Segments in $bn, 2006
29 The US Book Publishing Industry’s Revenues in $bn, 2005
30 The Global Broader Music Sector in $bn, 2006
32 The Experience Economy Sector in $bn, 2005
1. Experience Industries
The Experience Economy
According to Pine and Gilmore, the experience economy is a fourth economic field different from commodities, goods and services.1 Experiences are an economic value added to a product or identical with the product. When you buy an experience, you pay to spend time enjoying a series of memorable events that a company stages to engage the customer in a personal way. Entertainment is based on such experiences. But entertainment is just one aspect of an experience. Experienced values arise whenever companies engage customers in a personal, memorable way. So, experiences are staged, just as in theaters. Companies offer experiences to customers when they use services as the stage and goods as props to engage an individual. “While commodities are fungible, goods tangible, and services intangible, experiences are memorable”.
The value creation of commodities, goods, services, and experiences may be viewed as historical steps of modern capitalism. While the former three values are connected with the functional dimensions that alternately dominated during the 20th century as societies changed from industrial to knowledge societies, the experience dimension has moved into a predominant place since the 1990s.2 In developed countries people get richer, and having fulfilled all basic materiel needs, they focus increasingly on personal development and self realization. Demand for experience-based products increases, such as tourism and sports as well as film, music and other contents of media and modern interactive technologies. Furthermore, the demand for experience values is extended to include any product and dimension of modern societies, such as design and advertising. Love, sex, belief, family and the meaning of life may be considered universal experience values that have always been vital to human beings. What is new is the fact that capitalism is invading more and more fields of experiences connected with feelings and emotions and the extension of life proportions. It is in this sense we will use the term experience economy, meaning a series of industries that strive to supply the market with experience oriented goods and consumers who spend money on buying experience goods.
There is no internationally recognized definition of the experience economy. Some focus on the so-called ‘creative industries’, including music, film, television, radio, publishing, games, amusement, architecture, advertising, art and cultural institutions.3 Even intellectual properties may be included in creative industries.4 Other definitions include sports and tourism as well.5 In some cases, sports are excluded.6
In this book, the experience economy will include all industries that do business by creating primarily experience-based values on the one hand and, on the other hand, the experience creating dimension of any other industries. It is the intention to picture the business world driven by an expanding demand for experience-based values.
The Experience Industries
Accurate estimates of the global business of experience economy are hard to get at. In general, you have the problem of defining the content and limits of the experience economy and each of its inherent sub-sectors. It is also difficult to define the reach of the individual industries. Cultural like products of the experience economy are not only content, but also dependent on physical devices and materials to carry out and enjoy this content. Do we include the physical products in the experience economy or is it restricted to content only? The position taken here is that you have to include the physical products when the two aspects cannot be separated in a meaningful way. Otherwise physical merchandises are excluded and experience considered a value adding dimension, such as for example is the case with design. No clear line can be drawn, however.7
The demarcation of experience industries from other sectors of the economy also includes the problem of the value chain and value system enforced to create physical and intangible products. Every company is adding value to the processing of a final good within a long line of a value creating system. While it is mostly clear that consumer products are included in the definition of the experience economy, it is much harder to draw the line backwards in the value system. Many manufacturing and service industries are needed to reach the final product. The criterion chosen is that unlike the proper experience industries the sub-supplying industries of the experience producing companies are mostly considered part of the wider experience economy. Providers of tangible and intangible supporting products are considered related industries of the primary experience sector. Together they form the wider experience economy, including the core experience industries and the multiplying effects of these industries throughout the general economy.
The relationship between content and its physical device carrier is a tricky one. Tourism would be worth nothing without transportation and hospitality; sports have to include sporting equipment; media must include physical books, newspapers, magazines, television and radio sets; films, music and performing arts include their physical formats and stages; whilst games also include their physical formats. Design, including architecture, industrial and graphic design, and fashion, are probably the only subsectors that may be separated in a meaningful way from their physical dimension. If, for example, industrial design included the physical output of designs it would cover virtually all kinds of manufacturing industries, just as fashion would embrace the large textile and clothing industries. Here a divide is made between what are mostly experience based industries and industries where experience is an added value.
The