4. The criteria for culture products

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• What are goods and services?

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The purpose of the Canadian Framework for Culture Statistics (CFCS) is to provide the conceptual model to support the measurement of culture products and the industries and occupations that produce them. Possible approaches to measuring culture are varied. They include defining culture according to a traditional fine arts approach, which identifies culture products narrowly according to their artistic, aesthetic or symbolic values. At the other end of the spectrum is a broad anthropological approach, which characterizes culture as including most creative human activity, including language and religion.

The CFCS finds its own path, defining a culture product as originating from the creative artistic activities of its creators and their output. It does not evaluate culture according to intellectual, moral, or artistic values. Rather, to be within the scope of culture (in scope), a good or service must comply with the CFCS definition of culture and satisfy at least one of the following six criteria:

1. It has the potential of being protected by copyright legislation, or in other words, be 'copyrightable'. Examples include a magazine article, script, manuscript, drawing, choreography, book, newspaper column, sculpture, radio program, film, videogame, etc.;
2. It supports the creation, production, dissemination or preservation of culture products, e.g. recording, manufacturing, printing, broadcasting, podcasting, etc.;
3. It adds to, or alters, the content of a culture product (content services), e.g. editorial services, translation, illustration, layout and design, music, etc.;
4. It preserves, exhibits, or interprets human or natural heritage, e.g. historic sites and buildings, archives, museums, art galleries, libraries, botanical gardens, zoos, etc.;
5. It provides training or educational services aimed at individuals who create, produce or preserve culture products; or
6. It governs, finances, or supports directly culture creation, production or dissemination, e.g. services provided by government, unions, associations, copyright societies, etc.

What are goods and services?

The definitions of goods and services have been updated using concepts described in the North American Product Classification System (NAPCS).¹ The definitions are built upon a new taxonomy for products, which expands the traditional division of products between goods and services to a new breakdown of tangible goods, intangible goods and services (Hill 1999).

Goods

Goods, whether tangible or intangible, are entities over which ownership rights can be established, which can be traded, and which can be stored. The following characteristics define goods (Hill 1999, p. 438):

• the entire output is owned by the producer;
• it exists independently of its owner and preserves its identity through time;
• it can be transferred from one economic unit to another;
• it may be transported, or transmitted, from one location to another;
• it may be produced and stored for use at a later time;
• it provides a role for specialized distributors to operate between original producers and eventual users; and
• its use or disposal by its producer is separate from its production and takes place afterwards.

Intangible goods consist of originals (e.g. a master), created by persons or groups of individuals, such as authors, composers, architects, designers, film studios, orchestras, etc. who are engaged in creative or innovative activities of a literary, scientific, engineering, artistic or entertainment nature (Hill 1999, p. 438-439). They are separate entities over which ownership may be established and traded, and copies produced, which can result in significant economic return for the owner.

As defined in the North American Product Classification System (NAPCS):

Tangible goods are those with a physical presence that can be seen and measured. Examples include newspapers, books, CDs, DVDs, paintings, or ceramics. Often, a tangible good is the physical expression (or a copy) of an intangible good, and can be sold or distributed separately by its owner or by others. A tangible good may also be an 'original', if it is one of a kind, such as a sculpture. In Canada, most tangible goods are classified according to a provisional list of NAPCS goods - referred to as the Annual Survey of Manufacturers List of Goods (ASM).² This list classifies goods according to their industries of primary production, based on NAICS.

Services

Unlike goods, services are not separate entities over which ownership rights can be established and they cannot be traded separately from their production or use. Services involve relationships between producers and consumers, in that a service must be provided to another economic unit (Hill 1999, p. 441).

A service can be one of a wide and complex variety of transactions that often involves some kind of alteration or improvement to an existing product. For example, producing a book requires the publisher to provide the creative services such as editing, proofreading, cover and book design, and a manufacturer that provides the printing and bookbinding services. The services themselves could not be performed without the existence of the original intangible good (the manuscript), while the final product is the tangible good (printed book).

Services are transactions between buyer and seller that benefit the buyer by improving the buyer's state, but cannot be stored or transferred to third parties (Statistics Canada 2007b, Introduction). Often the transactions are at the intermediary level that change the condition or status of the output (e.g. adding a music score to a film), rather than at the stage of final demand. By the time that their production is completed, the consumer must have received the service (Statistics Canada 2000, p. 41).

Two essential characteristics of services are that:

• services cannot be produced without the agreement, co-operation and possibly active participation of the consuming unit(s); and
• the outputs produced are not separate entities that exist independently of the producers or consumers. Service outputs must impinge in some way on the condition or status of the consuming unit(s) and are not separable from the latter (Hill 1999, p. 428).

Notes:

1. NAPCS will eventually become an economy-wide classification covering both goods and services for Canada, the United States and Mexico. This provisional version includes products that are characteristic outputs of a range of service-producing industries, a classification that organizes goods and services throughout the economy in a systematic fashion. (Statistics Canada 2007b)
2. The ASM List of Goods builds upon the work of the United States Census Bureau's Numerical List of Manufactured and Mineral Products. (Statistics Canada 2010a)