THE ECONOMICS OF MEDIA CLUSTERS: Localities of media activities in a globalized world

Globalization has become a key term in the debate on the economic changes taking place in modern society. In only a few other cases can globalization be experienced so directly today as in the global circulation of media content. Marshall McLuhan provided already in the 1960s the well-known concept of the “global village” showing that media is influenced by the development of new ICTs and the on-going globalization process. But despite these trends, we can observe that media activities tend to cluster around the globe. Media clusters are defined as local agglomerations of media activities. But some cities and regions do better than others. Successful examples of media clusters are Hollywood, New York, London, Berlin, Bollywood and Tokyo.
In scholarly work, the oftentimes globally acting media industry has been broadly acknowledged as a key driver of regional economic growth. This has attracted governments to foster the development of media industries at local and regional levels. Cities and regions are nowadays competing internationally to attract media firms and create media clusters. Based on this, different policy initiatives arose that aim to attract media activities on local levels. One example is the Brussels Regional Government trying to establish successful media clusters in the capital city. Where clustering of the media industry takes place and why media agglomerates are critical questions for policy makers. The location of media firms can have an immense impact on the attractiveness of a region to be competitive and media managers have to make decisions where to locate their business. Paradoxically, whereas we are living in a time where information technologies have abolished distance and time constraints, “physical location” remains decisive for the economic success of media companies.
The main research question of this paper is: Why does media agglomerate? In order to answer this question, 50 interviews with media firms within Brussels’ media industry have been conducted. The results show, that there are different rationales, the “economics of media clusters”, that are making media clusters attractive and successful: (1) the dynamics of agglomeration economies, (2) and urbanization economies, (3) supportive media policies, and (4) local conditions. Additionally, a new field is explored, the influence of (5) “perception economies”. The perception economies approach explores the influence of the branding and perception of a certain place on the value of media companies. The author has found that the so-called “coolness factor” as part of the “perception economies” of a location can determine the choice of location of media managers and impact the economic success of these companies.