The Comprehensive infrastructures Strategy

After establishing cooperative governance, the MCT concentrated on providing the necessary infrastructures for Korean CI. It is important to remember here that without the former the latter can only be a house of cards. For example, even though establishing CI infrastructures had also been a key strategy under the YS government, it was never achieved. According to Lee Jung-Hyun (September, 2009), former secretary general of the KGPC and later of KOCCA,

I had also worked closely with civil servants during YS’s presidency. However, at that time the civil servants [at the Ministry of Information] had treated civilian experts as their subordinates. It was like a relationship in the Army. However embarrassed, we thought to ourselves that the indignity must be endured for the nation’s development. At that moment of frustration, disappointment and betrayal when we were also struggling to survive, the financial crisis occurred and DJ became the President. He stressed the importance of the cultural industries heavily and suddenly everything changed. Even before his inauguration, there was surely a similar move toward it. However, despite many discussions, that movement did not produce core groups that had power to drive the agenda with subjecthood, nor the required infrastructures for the development. Only when a historical backdrop, core groups, and infrastructures are combined, can the explosive growth of an industry become possible, as was the case of Korean CI under the DJ government.

As seen in the evolution of the policy framework, infrastructure here refers not only to environment infrastructure but also input infrastructure. While the former is closely engaged in the governance over the policy community, the latter is more related to the

153 value chain of the industries. Put another way, the strategy of nurturing infrastructures was the linkage between the cooperative governance strategy and the symbolic intervention strategy.

Firstly, it should be noted that the policy community, transformed into the control tower for CI promotion, closely worked together to build a new type of policy environment in favour of the industries. The underlying aim was to form a ‘creative environment for CI by replacing old institutions of regulation with new ones of promotion’ (Lim Byoung-Soo, October 2009). For this, first of all, the continuous reform of the legal system needs to be stressed. For Kwak Young-Jin (2000: 54), then Director of the CI Policy Division, after the legislation of the ‘Framework Act’, the MCT could modify ‘72.8% of the regulations and rules that were harmful to the advancement of Korea’s cultural industry in the interest of creative activities in the cultural and artistic arenas’. Furthermore, the ‘Framework Act’ was fully revised in 2002 in order to more actively ‘respond to rapid changes in the CI environment, such as advanced digital technology’. It was then partially revised four times under the Roh government, driving the establishment and revision of many other acts concerning the sub-sectors of CI.

Under Roh’s presidency, the taxation system and copyright system were also significantly upgraded in many aspects. In April 2006, for instance, Roh’s government succeeded in introducing a whole new taxation system for CI by revising three acts; the

‘Framework Act’ to introduce Special Purpose Companies (SPC) for CI, the ‘Corporation Tax Law’ to help SPC avoid double taxation, and the ‘Local Tax Law’ to help them acquire reductions and exemptions from acquisition and registration taxes (MCST, 2008a:

188). Meanwhile, in order to protect and promote copyright, Korea fully accepted all the duties prescribed by the WIPO in 2003. Then in 2005 and 2006 the ‘Copyright Act’

was heavily revised to clarify the legal relationship between the copyright holder and the user, and to promote fair use of intellectual property, while the CI Bureau first set aside a budget for copyright issues in 2006 (ibid.: 3).

Finally, strengthening policy research also played a pivotal role in establishing the environment infrastructure. Because policy research deals with how to continue improving the above-mentioned systems, the quangos such as KOCCA, KOFIC, KGPC/KOGIA all expanded their policy research teams under DJ’s presidencies. As a result, both the quantity and quality of Korean CI policy research were significantly enhanced by the time President Roh took office, and were further improved under his administration (Yang Hyun-Mee, September 2009).

154 Having detailed improvements in the environment infrastructure, I shall now turn to the five kinds of input infrastructure that directly impact the CI value chain (cf. Figure 6.2).

Firstly, although the MCT had concentrated on the ‘quantitative expansion’ of human capital in the early days, from the middle of Roh’s presidency onwards, it started to place far greater stress on human infrastructure; and especially on ‘nurturing core talent’, in response to criticism that a ‘select-and-focus’ strategy was required (MCST, 2008a: 8). In this direction, Roh’s MCT provided intensive support for nearly 90 educational institutions; 5 high schools, 30 colleges, 44 universities and 10 graduate schools. In addition, the Graduate School of Culture Technology was established at KAIST, one of the top universities in Korea, in 2005. It planned to turn out about 100 skilled culture technologists annually. On top of this, the ‘Cyber Cultural Contents Academy’ project, which was co-managed by KOCCA and the MCT, developed 115 courses concerning cultural contents development that were available on-line and also accepted for credit as regular academic courses at 20 universities.

Technology infrastructure was also increasingly stressed under the Roh government. In February 2005, the MCT opened the ‘Centre for CT strategy’ within KOCCA, with the aim of becoming a hub for the Korean CI field by furnishing integrated policy support to research and development on CT. This enabled the MCT to publish the CT Vision and Roadmap (MCT, 2006b) and The Five-Year Plan for CT Development (MCT, 2006c).

Meanwhile, the ‘Cultural Contents Technology Development’ programme launched by the DJ government in 2002 had evolved into three sub-programmes: the ‘Core Technology Development’, ‘Customized Technology Development’ and ‘CT research Centre support’ programme. These schemes had supported a total of 105 technology development projects by 2007, 54 of which succeeded in applying for and registering patents (MCST, 2008a: 9).

Thirdly, along with taxation reform, the MCT initiated several initiatives to ensure stable financing for Korean CI. Under DJ’s presidency, the MCT and its quangos created and expanded a variety of funds to stimulate the early development of CI, such as the CI Promotion Fund, the Film Promotion Fund, the Publishing Fund, and the Broadcasting Development Fund (MCT, 2003a: 23). These funds were mainly used either to supply loans to help small companies plan and produce cultural contents, or to support contents with high potential for success with the necessary investments. For example, 197.4 billion won was channelled through the CI Promotion Fund in the period up to 2006, which was indeed a large sum for the Korean CI field at that time. After a

155 comprehensive reform of the government-supported funding system under Roh’s presidency, many of the existing funds were transferred to the ‘Fund of Funds for Investing SMEs’, and in turn the concept of SPC (Special Purpose Company) for CI was newly introduced. This reform is held to have enabled the private sector to save both time and money in organizing large-scale funds and thus to expand its investment into CI in a more stable environment (MCST, 2008a: 11).

According to Creative Korea (MCT, 2004b: 359), Korean CI policy for physical infrastructure was to focus on increasing the efficiency and efficacy with which the existing infrastructure was managed, rather than on constructing additional facilities.

The primary reason for this decision was that most of the key quangos had already been established under the DJ government along with facilities which provided the ‘necessary office space’, while also offering ‘prestigious equipment and studios for pre-production and post-production’ that the CI sectors could utilize (Lim Byung-Soo, October 2009). As both the industries and the policy community became more mature, the need to develop such physical infrastructure continued to decrease under the Roh government.

One exception was the Cultural Contents Centre built in a high-profile digital quarter called ‘Digital Media City’ in Seoul. The centre was planned in 2002 and completed in March 2007. As a symbolic cultural complex, this high-tech building came to host major cultural quangos (KOCCA, KGDPI, Korean Film Archive, etc), education and entertainment facilities, production studios, and numerous contents companies (KOCCA, 2009: 43-44).

Last but not least, the MCT also cultivated the information infrastructure intensively.

Above all, the importance of the statistics and White Papers published annually needs to be reiterated (cf. 5.3.3). These diverse sources of information regularly provided comprehensive and up-to-date information about relevant industries and policies. This was ‘a great advance’ compared with the previous chronic unavailability of valid data about CI (Park Sea-Young, September 2009). Equally significant is that under Roh’s presidency the MCT established various digital archives and information systems in order to systematically provide the industries with key information that was accessible at all times. The ‘Media Education Archive’, the ‘Games Industry Total Information Service System’, the ‘Content Export Information System’, the ‘Media Production Information System’ are core examples (MCT, 2007; MCST, 2008a).

156 6.2.3 The Symbolic Intervention Strategy

Nurturing input infrastructures might be regarded as part of the intervention in the CI value chain. Without nurturing stable systems for providing talent, finance, information, and so on, the value chain cannot be developed or even sustained in the long run. In this light, the civil servants at the MCT planned to build up ‘a sort of incubator’ for a variety of inputs and capital (Lim, October 2009). Nonetheless, the third strategy which entailed symbolic intervention in the value chain was different from the input infrastructure strategy in that, rather than engaging the value chain as a whole, it always dealt with specific stages of the chain and thus with concrete contents and enterprises. Then, what did the symbolic in the ‘symbolic intervention’ signify?

The industries have been asking us [civil servants at the MCT] for only two things:

firstly, let them be and then give support when and where they are in desperate need. … I believe this shows the essence of the arm’s length principle. When I was the CI Bureau chief, the bureau made a lot of plans and then interventions because there was a direct threat to the industries due to the then Asian financial crisis. In addition, at that time many genres of the industries were still in their infancy.

However, the situation has changed significantly. Now the government must be more aware of the danger of unnecessary intervention, while providing active support when the industries demand it. (Oh Jee-Chul, October 2009)

As Oh confirms, the shifting mode of government intervention is noteworthy. As Korean CI grew, the kind of support that the industries needed and demanded also changed.

In the early stage KOCCA distributed a large amount of seed money to sustain and further promote the then infant content industries, which undoubtedly helped them substantially. However, the ‘symbolic function’ of the support that the MCT and KOCCA gave the industries is of greater importance. Korea is now a society where an idea can attract hundreds of million pounds in a moment. In this context, ‘direct support’ including the distribution of funds to enterprises has become increasingly less important. That kind of activity now only matters as a result of its symbolic function. That is, distributing money is still important insofar as it signifies the government’s will to nurture the industries and care for the individual firms endeavouring to grow. When I was at the MCT, I asked my staff to learn this point by heart. (Yoo Jin-Ryong, November 2009)

This shift away from ‘direct support’ went hand in hand with the increasing stress placed on the principle of ‘select-and-focus’. As noted earlier (cf. 6.1.1), this was one of the core strategies suggested in the New Policy (MCT, 1998). The MCT chose key genres of CI to promote intensively, the games industry for example, and thus establish

‘best practice’ for other genres to benchmark (MCT, 1999a). In relation to intervention in the value chain of particular genres, this strategy was understood to ‘support star contents which had high potential’ for commercial success in both the domestic and overseas markets (Suh, November 2009). Instead of ‘distributing subsidies to the

157 businesses according to the law of inertia’, as had been the case in the Korean culture and the arts sector at that time, the CI Bureau was eager to produce high profile examples of excellence in each CI genre (Oh, October 2009). This is the second aspect of the ‘symbolic’ intervention. The overall symbolic intervention strategy can be broken down into several categories that correspond to stages in the CI value chain (cf. Figure 6.2).

As the CIPPS model clearly suggests, Korean CI policymakers believed that the value chain comprised four stages from creation to overseas markets. Three policy objectives were repeatedly stressed in most CIWPs in relation to the first stage of creation or production. The first was to increase the industrial capacity for planning—since the production capacity had already been built up through OEM (original equipment manufacturing) arrangements—by reforming the finance and education systems. The second was to foster synergetic effects between CI genres in the age of OSMU (one source multi-use) by developing and accumulating various materials for content creation.

The third was to discover excellent contents as early as possible and to motivate production companies to create high-quality contents by providing intensive support.

Thus, in mobilizing all kinds of input infrastructure for promoting the activity of creation, the CI policymakers initiated quite a few promotion initiatives to stimulate individual companies and achieve CI policy objectives.

Table 6.3 The Number of Contents Supported by the ‘Excellent Pilot Production’ Programme

Source: MCST (2008a: 12)

Two important examples of these programmes should be mentioned (MCST, 2008a: 12-13). Firstly, the ‘Excellent Pilot Production’ programme supported the production of 572 contents between 2002 and 2006 (cf. Table 6.3). Under this scheme, some products were designated as a ‘Star Project’ and became international hits. The animations Pororo (2002) and Pucca (2004) are good examples. In a similar vein, the ‘Cultural Heritage’ programme, which involved the development of digital story-material for

158 content creation, supported 280 institutions, enabling them to complete some 160 projects between 2002 and 2006. With a budget of 50.4 billion won from the MCT, about 3,500 workers participated in the 160 projects and produced more than 600,000 digital items which have been utilized in many hit films, TV dramas and on-line games.

Secondly, the most important objective for the intervention in distribution was the

‘modernization of the distribution system’ (Oh Jee-Chul, October 2009). To achieve this objective, the MCT concentrated on introducing a new kind of (digital) information system which was not only ‘considerably more transparent than the previous one’, but which could ‘cover the whole country’. For example, with independent cinemas selling their own tickets, there was no system for measuring the nationwide audience for any film. Consequently, it was very difficult for Korean film companies to analyze their domestic market share in order to establish meticulous strategies for distribution and marketing. To address this issue the MCT and KOFIC set up an ‘Integrated Computer Network for Cinema Tickets’ in 1999, so as to provide the industry with accurate information about ticket sales and thus enhance the transparency of film distribution, while also cutting distribution costs. Although only 40% of Korean cinemas had joined the computer network by 2004, the percentage rose to 92% by 2006 (KOFIC, 2007b: 63).

The distribution systems for other genres such as the publishing and the game industries were enhanced in similar ways.

It is also noteworthy that the MCT’s interventions related to expanding distribution channels. The internet superhighway was established rapidly under DJ’s presidency, so the illegal download of cultural contents had become both very easy and highly popular in Korea. To tackle this problem, the MCT enhanced the level of copyright protection and promotion (as part of nurturing environment infrastructure), and also initiated various projects and programmes to make the most of the technological revolution and the convergence between CI genres. The establishment of the ‘OSMU Centre for Cultural Contents’ in 2007 was the result of the policymakers’ long interest in the growing digital market. The mobile contents industry and the music industry were regarded as being at the vanguard of this kind of intervention, because of the newly emergent market for wireless communication (MCST, 2008a).

Thirdly, the intervention in the domestic market can be boiled down to managing promotion activities to change the public’s perception of CI on the one hand, and expanding consumers’ capacity and opportunities to enjoy cultural contents on the other. A senior civil servant, Lee (October 2009) asserted, ‘the best thing that DJ’s MCT

159 did was to change the public’s negative perception of CI’. By stressing time and again that CI are one of the new strategic industries which would drive the national growth in the future, DJ and Roh’s MCT succeeded in slowly changing perceptions at the other Ministries first, and in turn changed the Korean public’s perception of the industries.

Although the promotion activities implemented by the MCT were not the only factor which contributed to this perception change, some of them were quite effective. For example, the Culture Ministry initiated and actively promoted the WCG (World Cyber Games) and G-Star (Game Show & Trade, All-Round), while supporting many e-sport leagues such as ‘Nationwide Amateur E-sport Competition’ or ‘E-sports Festival for the Disabled Students’ (MCST, 2008a: 250).⁴¹ Given that before the DJ government the games and comics industries were often linked to juvenile delinquency, it might be argued that these activities officially supported by the government must have helped Korean public change their prejudice toward certain CI genres.

The MCT also attempted to expand the Korean public’s opportunities to enjoy cultural contents by directly supporting those who, for reasons of low income and/or regional inequalities in the development of cultural infrastructure, formed a culturally

‘alienated’ class. This support comprised the provision of education courses concerning media literacy. This was expected to strengthen the domestic consumption base at first and then the domestic production base by ‘converting the vast majority of the people from mere consumers to cultural creators’ (MCT, 2004b: 362). These activities seem to have been highly desirable in that they were not only directed to serve economic rationales, but were also designed to contribute to the enhancement of cultural welfare, despite the difficulties inherent in measuring the impact of the latter kind of intervention.

The final stage of the CI value chain to which intervention was applied was overseas markets. Exports of Korean cultural contents surged significantly during DJ and Roh’s presidencies (see Table 8.5). Nevertheless, according to the first CEO of KOCCA, Suh Byung-Moon (November 2009), even if ‘export expansion’ was the most important objective in his mind throughout his term time (2001-07), it was also the objective about which he entertained ‘most regrets for not having produced a more aggressive performance’. While enhancing cooperation between various quangos across ministries such as KOTRA (Korea Trade-Investment Promotion Agency), Korean Culture Centres in

41 WCG is one of the biggest game festivals in the world, has been held since 2001 and attracts more than 20,000 participants annually from 50 to 70 countries. G-Star is an international game exhibition which has been held in every November since 2005. It attracts many game companies and promotes trade between them.