Artistic Originals as a Capital Asset

Abstract

N KEEPING with international guidelines on na­ tional economic accounting, the Bureau of Eco­ nomic Analysis (BEA) has announced that it is planning to adopt a new treatment of long-lived art­ work in the national income and product accounts (NIPAs). The new treatment will be part of the 2013 comprehensive revision. Under the new treatment, long-lived artwork produced by artists, studios, and publishers will be capitalized; that is, production of long-lived artwork will be treated as an investment, thus adding to the capital stock. Currently, the NIPAs treat all production of artwork as a current expense. As a first step toward treating artistic originals as in­ vestment and determining how such investment might affect gross domestic product (GDP) over time, BEA has initiated a research effort to estimate the value of theatrical movies, original songs and recordings, origi­ nal books, long-lived television programming, and miscellaneous artwork. The value of investment in such artistic originals totaled $51.6 billion in 2007 (the featured year for this research). Copies of these artistic originals will be sold on DVD, replayed on the radio, reprinted in paperback, and broadcast on television for decades to come. The estimates of investment in artis­ tic originals presented in this paper are preliminary and may differ from the values that will ultimately be recorded in the NIPAs. The research discussed in this article is part of a long-term bureauwide effort aimed at capitalizing a complete set of intangible assets. In the 1990s, BEA re­ classified computer software from a current expense to a capital investment and revised the NIPAs accordingly (Parker and Grimm 2000). Other researchers at the BEA have developed satellite accounts measuring in­ vestment and capital stock of research and develop­ ment (RD estimates of current-dollar investment for theatrical movies, music, books, television programs, and miscellaneous artwork from 1929 to 2009; estimates of price indexes and real production for each category from 1929 to 2009; and estimates of depreciation schedules for each art category and the capital stock of each art category.1