Overview

What is the situation of the creative industries in Estonia?

Estonia is the only country in Europe, where the current state of creative industries has been mapped every fourth year (2005, 2009, 2013, 2017, 2021) on the basis of statistical data from 2003, 2007, 2011, 2015 and 2019 respectively.

Table 1. Key characteristics of Estonian creative industries on the basis of four surveys

Creative Industries in Estonia 2019

The main economic-statistical indicators of the creative economy sector have improved in the period 2015–2019. Total revenue has increased, and the number of enterprises has grown. Internationalization and exports have developed. Although the sector lags behind the average indicators of Estonian entrepreneurship, this is typical for the creative economy, as not all sectors within it pursue commercial goals and are therefore not comparable to commercial fields.

In 2019, the sector’s total revenue was 1.863 billion euros, and over the course of 4 years, revenue increased by 26%. The highest revenue was in the advertising sector.

From 2015 to 2019, the number of enterprises/institutions in the creative economy sector increased by 25%, but the growth rate has slowed. In 2019, there were over ten thousand enterprises/institutions.

The number of employees has been on a declining trend, partially due to a methodological update where companies that did not show employees but had income were counted by the EKI as having one employee if the income was at least the minimum wage + labour taxes. This change mainly affected the music sector. In 2019, there were over 28 thousand employees. The publishing sector (including printing as a related activity) had the highest number of employees.

On average, in 2019, 2.7 people worked in a creative enterprise/institution, and the trend of decreasing company size over the past 20 years continued (3.4 people in 2015, 8.6 people in 2003). The revenue per employee was 71 thousand euros per year. The average revenue per enterprise/institution was 174 thousand euros.

In 2019, the creative economy sector employed 4.2% of Estonia’s working population, and the number of enterprises and institutions accounted for 11.2% of the total number of Estonian enterprises, with the revenue and subsidies received by companies and institutions from the state contributing 2.6% to the total revenue of Estonian enterprises.

The sector’s export has significantly increased over the last 4 years (40%) and was 411 million euros in 2019 (293 million euros in 2015). The main target markets for exports were neighbouring countries (the Nordic countries, Latvia, Lithuania).

The growth of the creative economy sector was slower than the overall development of the Estonian economy, and the added value created in the creative economy decreased to 2.2% of GDP in 2019 (compared to 2.9% in 2015).

The sector has become increasingly global and interdisciplinary, making it increasingly challenging to define specific areas and the sectoral belonging of enterprises/institutions. Often, companies and creative individuals operate in multiple areas.

In 2019, the public sector supported the support structures and companies of the creative economy with 262 million euros (193 million euros in 2015). Thus, 14% of the total revenue of the creative economy came from subsidies, with the main funders being the Ministry of Culture, the Estonian Cultural Endowment, and Enterprise Estonia (EAS), and in the case of libraries, the Ministry of Education and Research. An overview of the funds for supporting culture in the public sector could be improved. It is particularly challenging to obtain information about funding from local governments.

Entrepreneurial awareness has grown, business models have been streamlined, and the entire creative sector has become more organized. Reporting to the Business Register has improved (especially for non-profit associations).

One-third of enterprises have changed their business models in the last 5 years. Business models increasingly use digital solutions, sell through e-channels, and collaborate more with companies in other sectors.

National support for creative enterprises/institutions has primarily had an impact on entrepreneurial and export-related competencies (knowledge, skills, experience). The competitiveness of enterprises has also increased to better cope in the market. With state support, it was also possible to improve the quality of products/services, which is an important stepping stone for the further development of enterprises.

Besides economic aspects, the creative economy sector plays an even more important role in preserving and promoting Estonian culture, and regional development, creating an attractive living environment, promoting tourism, and shaping Estonia’s reputation in foreign markets. The economic impact of the creative economy is indirect—through increased tourism revenue, higher exports, foreign investments, and offering products/services with higher added value.

In the coming years, in the context of strained budgets, additional funds necessary to significantly increase the incomes of creative individuals are expected to come more from the free market, and therefore the ability of creative economy enterprises to independently generate income must increase. The ability of support structures to self-sustain must also increase; so far, this has not happened.

If the trend of the last decades has been the emergence of many small enterprises, there is now a need for better cooperation with other companies. To increase the sector’s competitiveness both domestically and internationally, existing companies need to strengthen. A larger number of employees, higher sales volume per enterprise, profitability, and investment capacity provide the basis for entering foreign markets.

Business models of enterprises could move towards business entities typical of entrepreneurship. NGOs could remain for those operators who truly operate for non-profit purposes (societies, associations, hobby groups, etc.). Even for creative individuals wishing to generate income, training could be conducted on how to easily create, for example, a private limited company (OÜ). This would streamline reporting and accounting for both creative individuals and others.

The state can provide social guarantees to creative individuals (health insurance, pension) when creative individuals also contribute to tax revenue. Therefore, it would be reasonable to show the effort spent on earning income and paying labour taxes when generating income. From the state’s side, it must consider how to adapt the tax system to the fluctuating project-based income associated with the creative economy.

For future success, it is crucial for the creative economy sector to collaborate more effectively with various industries. Tourism development through offering additional cultural services to foreign tourists (exhibitions, concerts, festivals, museums, etc.) can be mentioned here. One organic part of industrial enterprises’ product development and innovation should be product design (the creative economy sectors can contribute the highest added value growth to Estonia’s real economy through design). Better recognition of the country in the world, where culture can be an important introducer of the country, contributes to the export of Estonian products and services. Museums, art, entertainment software, and the film sector can collaborate much more closely with the education sector, especially in the context of the rapid development of digital learning due to the pandemic.

Developing export capacity and exploring export opportunities are crucial. The often small size of companies (insufficient volume, small cost base, resulting in low marketing capability, etc.) is a hindrance to export. Successful activities in foreign markets would be facilitated by closer collaboration among creative economy enterprises.

Digital development has brought significant changes to the creative economy in recent years. Supply chains are changing, and creative individuals find it easier to realize and sell their art both domestically and internationally through digital solutions. However, this makes it challenging to obtain an overview of economic indicators because income earned in the international market may not be reflected in Estonian reporting. Moreover, foreign companies registered in Estonia may operate only abroad.

In the following assessments, it may be worth considering the analysis of some less distinguishable fields by combining them (e.g., art and design). For certain areas, it would be worth considering whether to include them in the mapping because they primarily act as intermediaries for other fields (e.g., broadcasting), and areas that largely operate on public sector funding (libraries, museums) could be separated from commercial fields.

Large media houses have emerged, covering various fields. They publish newspapers, produce radio and television, sell advertising, and organize seminars. These could form a separate sector.

The telecom sector has become a major intermediary for films, music, and television shows, and sometimes resembles broadcasting. However, distinguishing revenue related to artistic services from revenue related to calling and data services in these companies is challenging.

Overall, the creative sector has acquired the rules of entrepreneurship. By being transparent and accurate in economic indicators and reporting, it becomes easier to seek support from both the public and private sectors.

What is the situation of the creative industries in Estonia?

Estonia is the only country in Europe, where the current state of creative industries has already been mapped three times (2005, 2009, 2013, 2017) on the basis of statistical data from 2003, 2007, 2011 and 2015 respectively.

Table 1. Key characteristics of Estonian creative industries on the basis of four surveys

Creative Industries in Estonia 2019

The main economic-statistical indicators of the creative economy sector have improved in the period 2015–2019. Total revenue has increased, and the number of enterprises has grown. Internationalization and exports have developed. Although the sector lags behind the average indicators of Estonian entrepreneurship, this is typical for the creative economy, as not all sectors within it pursue commercial goals and are therefore not comparable to commercial fields.

In 2019, the sector’s total revenue was 1.863 billion euros, and over the course of 4 years, revenue increased by 26%. The highest revenue was in the advertising sector.

From 2015 to 2019, the number of enterprises/institutions in the creative economy sector increased by 25%, but the growth rate has slowed. In 2019, there were over ten thousand enterprises/institutions.

The number of employees has been on a declining trend, partially due to a methodological update where companies that did not show employees but had income were counted by the EKI as having one employee if the income was at least the minimum wage + labour taxes. This change mainly affected the music sector. In 2019, there were over 28 thousand employees. The publishing sector (including printing as a related activity) had the highest number of employees.

On average, in 2019, 2.7 people worked in a creative enterprise/institution, and the trend of decreasing company size over the past 20 years continued (3.4 people in 2015, 8.6 people in 2003). The revenue per employee was 71 thousand euros per year. The average revenue per enterprise/institution was 174 thousand euros.

In 2019, the creative economy sector employed 4.2% of Estonia’s working population, and the number of enterprises and institutions accounted for 11.2% of the total number of Estonian enterprises, with the revenue and subsidies received by companies and institutions from the state contributing 2.6% to the total revenue of Estonian enterprises.

The sector’s export has significantly increased over the last 4 years (40%) and was 411 million euros in 2019 (293 million euros in 2015). The main target markets for exports were neighbouring countries (the Nordic countries, Latvia, Lithuania).

The growth of the creative economy sector was slower than the overall development of the Estonian economy, and the added value created in the creative economy decreased to 2.2% of GDP in 2019 (compared to 2.9% in 2015).

The sector has become increasingly global and interdisciplinary, making it increasingly challenging to define specific areas and the sectoral belonging of enterprises/institutions. Often, companies and creative individuals operate in multiple areas.

In 2019, the public sector supported the support structures and companies of the creative economy with 262 million euros (193 million euros in 2015). Thus, 14% of the total revenue of the creative economy came from subsidies, with the main funders being the Ministry of Culture, the Estonian Cultural Endowment, and Enterprise Estonia (EAS), and in the case of libraries, the Ministry of Education and Research. An overview of the funds for supporting culture in the public sector could be improved. It is particularly challenging to obtain information about funding from local governments.

Entrepreneurial awareness has grown, business models have been streamlined, and the entire creative sector has become more organized. Reporting to the Business Register has improved (especially for non-profit associations).

One-third of enterprises have changed their business models in the last 5 years. Business models increasingly use digital solutions, sell through e-channels, and collaborate more with companies in other sectors.

National support for creative enterprises/institutions has primarily had an impact on entrepreneurial and export-related competencies (knowledge, skills, experience). The competitiveness of enterprises has also increased to better cope in the market. With state support, it was also possible to improve the quality of products/services, which is an important stepping stone for the further development of enterprises.

Besides economic aspects, the creative economy sector plays an even more important role in preserving and promoting Estonian culture, and regional development, creating an attractive living environment, promoting tourism, and shaping Estonia’s reputation in foreign markets. The economic impact of the creative economy is indirect—through increased tourism revenue, higher exports, foreign investments, and offering products/services with higher added value.

In the coming years, in the context of strained budgets, additional funds necessary to significantly increase the incomes of creative individuals are expected to come more from the free market, and therefore the ability of creative economy enterprises to independently generate income must increase. The ability of support structures to self-sustain must also increase; so far, this has not happened.

If the trend of the last decades has been the emergence of many small enterprises, there is now a need for better cooperation with other companies. To increase the sector’s competitiveness both domestically and internationally, existing companies need to strengthen. A larger number of employees, higher sales volume per enterprise, profitability, and investment capacity provide the basis for entering foreign markets.

Business models of enterprises could move towards business entities typical of entrepreneurship. NGOs could remain for those operators who truly operate for non-profit purposes (societies, associations, hobby groups, etc.). Even for creative individuals wishing to generate income, training could be conducted on how to easily create, for example, a private limited company (OÜ). This would streamline reporting and accounting for both creative individuals and others.

The state can provide social guarantees to creative individuals (health insurance, pension) when creative individuals also contribute to tax revenue. Therefore, it would be reasonable to show the effort spent on earning income and paying labour taxes when generating income. From the state’s side, it must consider how to adapt the tax system to the fluctuating project-based income associated with the creative economy.

For future success, it is crucial for the creative economy sector to collaborate more effectively with various industries. Tourism development through offering additional cultural services to foreign tourists (exhibitions, concerts, festivals, museums, etc.) can be mentioned here. One organic part of industrial enterprises’ product development and innovation should be product design (the creative economy sectors can contribute the highest added value growth to Estonia’s real economy through design). Better recognition of the country in the world, where culture can be an important introducer of the country, contributes to the export of Estonian products and services. Museums, art, entertainment software, and the film sector can collaborate much more closely with the education sector, especially in the context of the rapid development of digital learning due to the pandemic.

Developing export capacity and exploring export opportunities are crucial. The often small size of companies (insufficient volume, small cost base, resulting in low marketing capability, etc.) is a hindrance to export. Successful activities in foreign markets would be facilitated by closer collaboration among creative economy enterprises.

Digital development has brought significant changes to the creative economy in recent years. Supply chains are changing, and creative individuals find it easier to realize and sell their art both domestically and internationally through digital solutions. However, this makes it challenging to obtain an overview of economic indicators because income earned in the international market may not be reflected in Estonian reporting. Moreover, foreign companies registered in Estonia may operate only abroad.

In the following assessments, it may be worth considering the analysis of some less distinguishable fields by combining them (e.g., art and design). For certain areas, it would be worth considering whether to include them in the mapping because they primarily act as intermediaries for other fields (e.g., broadcasting), and areas that largely operate on public sector funding (libraries, museums) could be separated from commercial fields.

Large media houses have emerged, covering various fields. They publish newspapers, produce radio and television, sell advertising, and organize seminars. These could form a separate sector.

The telecom sector has become a major intermediary for films, music, and television shows, and sometimes resembles broadcasting. However, distinguishing revenue related to artistic services from revenue related to calling and data services in these companies is challenging.

Overall, the creative sector has acquired the rules of entrepreneurship. By being transparent and accurate in economic indicators and reporting, it becomes easier to seek support from both the public and private sectors.

Creative Industries in Estonia 2015

Creative industries’ support structures and companies were supported with EUR 193 million in 2015 (164 in 2011)  million). Thus, 13% of the total revenue of the creative sector came mainly from the state, less from the local municipalities and other sources (16% in 2011). The most important contributors to the creative sector are:
Ministry of Culture, Estonian Cultural Endowment, Enterprise Estonia, Gambling Tax Council, in the case of libraries also the Ministry of Education and Research.

The ratios of the creative industries enable companies in the sector to compare with the Estonian average company. The average creative enterprise/institution revenue in 2015 was 162.8 thousand euros (2011: 147.3 thousand euros). Creative industries are significantly less profitable than Estonia enterprises on average (according to Statistics Estonia, EUR 673.7 thousand per company in 2015).
Companies in different sectors of the creative industries have very different sizes and productivity. Entertainment software companies generated more revenue than the Estonian average (on average 2,089.6 thousand euros) per company) and broadcasting companies and agencies (average 1 871.4 thousand euros) company/institution). The smallest average-income enterprise/institution was craft enterprises and libraries.

Between 2011 and 2015, 2,175 companies/institutions were added to the creative industries sector and compared in previous periods, the growth rate of the number of new companies has slowed down. The number of businesses and institutions in creative industries has grown slightly faster in the last four years than in Estonian business as a whole – 31% in creative industries and 27% in Estonian business respectively.

In 2015, as in 2003, 2007 and 2011, the creative industries sector
about 3% of the Estonian economy.

In the next five years, Estonia’s economic development can be expected to continue (according to the economic forecast of the Estonian Economy Institute) at an average of 3% per year). The share of cultural subsidies in the public sector is growing in line with budget growth.
In order to significantly increase the income of the creative people,  additional resources can come more from the free market and thus, the ability of creative industries to generate their own revenue must increase. It also has to increase the self-sufficiency of support structures. Where the trend of the last decade has been for many the emergence of small businesses, now would require the merger of companies and better cooperation with other companies. Better cooperation between the creative industries is crucial for future success in different industries.

Tourism in Estonia can be developed through additional cultural services for foreign tourists. One of the organic parts of industrial product development and innovation should be product design.

Better promotion of Estonia in the world is definitely supporting the export of Estonian products and services.  Museums, exhibitions, the IT and film sectors could do much closer cooperation with the education sector, etc.

Creative Industries in Estonia 2015

Creative industries’ support structures and companies were supported with EUR 193 million in 2015 (164 in 2011)  million). Thus, 13% of the total revenue of the creative sector came mainly from the state, less from the local municipalities and other sources (16% in 2011). The most important contributors to the creative sector are:
Ministry of Culture, Estonian Cultural Endowment, Enterprise Estonia, Gambling Tax Council, in the case of libraries also the Ministry of Education and Research.

The ratios of the creative industries enable companies in the sector to compare with the Estonian average company. The average creative enterprise/institution revenue in 2015 was 162.8 thousand euros (2011: 147.3 thousand euros). Creative industries are significantly less profitable than Estonia enterprises on average (according to Statistics Estonia, EUR 673.7 thousand per company in 2015).
Companies in different sectors of the creative industries have very different sizes and productivity. Entertainment software companies generated more revenue than the Estonian average (on average 2,089.6 thousand euros) per company) and broadcasting companies and agencies (average 1 871.4 thousand euros) company/institution). The smallest average-income enterprise/institution was craft enterprises and libraries.

Between 2011 and 2015, 2,175 companies/institutions were added to the creative industries sector and compared in previous periods, the growth rate of the number of new companies has slowed down. The number of businesses and institutions in creative industries has grown slightly faster in the last four years than in Estonian business as a whole – 31% in creative industries and 27% in Estonian business respectively.

In 2015, as in 2003, 2007 and 2011, the creative industries sector
about 3% of the Estonian economy.

In the next five years, Estonia’s economic development can be expected to continue (according to the economic forecast of the Estonian Economy Institute) at an average of 3% per year). The share of cultural subsidies in the public sector is growing in line with budget growth.
In order to significantly increase the income of the creative people,  additional resources can come more from the free market and thus, the ability of creative industries to generate their own revenue must increase. It also has to increase the self-sufficiency of support structures. Where the trend of the last decade has been for many the emergence of small businesses, now would require the merger of companies and better cooperation with other companies. Better cooperation between the creative industries is crucial for future success in different industries.

Tourism in Estonia can be developed through additional cultural services for foreign tourists. One of the organic parts of industrial product development and innovation should be product design.

Better promotion of Estonia in the world is definitely supporting the export of Estonian products and services.  Museums, exhibitions, the IT and film sectors could do much closer cooperation with the education sector, etc.