Draft Report 21 (Arab Copyright: MOROCCO)

Copyright Industries in Morocco

(Report to the WIPO)

by

∗∗∗∗Khalid SEKKAT

and

∗∗∗∗Lahcen ACHY

March 2, 2002

∗ The opinions and views expressed herein are solely those of the author and should not be attributed to WIPO and their employers.

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Copyright Industries in Morocco

(Report to the WIPO)

by

Khalid SEKKATand

Lahcen ACHY

25/01/2002

Executive summary

This report analyzes the situation of four copyright industries in Morocco (Book, Music, Film

and Software) taking account of their specific nature. It contains three main parts. The first

part uses available data on production, demand and trade to examine the performance of the

four industries. The second part presents and analyzes the results of interviews conducted

with representatives (individuals or institutions) of each industry. The third part summarizes

the main finding and draws policy implications.

The main results are the following:

- The book industry has very low performance associated with very low (domestic and

foreign) demand and high difficulties of getting credit from banks. In contrast, the availability

of adequate labor has a positive impact on the performance of the industry. The relationships

with related industries and the quality of intermediate goods are disappointing while the

intensity of (foreign and domestic competition) does not seem to be an issue. Public policy

regarding human resources, technology, infrastructure and investment has a positive impact

on the performance of the industry while the lack of a policy toward demand stimulation and

the low level of IRP enforcement impact performance. Expectations are optimistic.

- The film industry has low performance associated with very low (domestic and foreign)

demand and high difficulties of getting credit from banks. In contrast, the availability of the

adequate labor has a positive impact on the performance of the industry. Regarding the related

industries, producers complain about the quality of distribution. The high concentrations of

ownership and location downstream as well as foreign and domestic competition are

important obstacles to the development of the industry. Public policy regarding human

resources, technology, infrastructure and investment has a positive impact on the performance

of the industry while the policy toward demand stimulation and IRP enforcement does not

seem to be an issue. Expectations are optimistic.

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- The software industry is well performing with sustained (domestic and foreign) demand.

While the industry has an easy access to bank funding it suffers form shortage in terms of

skilled workers. It benefits from good performance downstream and from the settlement of

related activities (e.g. Internet applications and Tele-services) in the country. Firms in the

industry are presently not in a position to compete with foreigners but are setting strategies to

improve their competitive advantages. Public policy is still insufficient to provide the industry

with the adequate human resources but it has a positive impact on the performance of the

industry in term of infrastructure. The low level of IRP enforcement by authorities impacts

performance. Expectations are very optimistic.

- The music industry has very low performance associated with very low (domestic and

foreign) demand, high difficulties of getting credit form banks and shortage in term of skilled

labor. Upstream (the creation stage), there is a wealthy supply of various kinds of music

which are appreciated in the country and abroad. However, downstream the quality of

distribution is disappointing. Instead of domestic competition, foreign competition seems to

be a major problem for the industry. Public policy regarding human resources, technology,

infrastructure, investment and IRP enforcement has a negative impact on the performance of

the industry. Expectations are very pessimistic.

Overall, three industries (book, film and music) have bad performance and one (software) has

good performance. The three industries share five factors which have negative impacts on

their performance: a difficult access to bank’s credit, low domestic and foreign demands, a

non-performing distribution stage and the lack of IRP enforcement. The later is also a major

issue for the well performing industry which also suffers from shortage in skilled labor.

Beside the problem of demand which is related to more structural characteristics of the

country (e.g. income, poverty and literacy), some suggestions can be put forward to deal with

the other factors.

The problem of access to credit comes from the perceived high uncertainty facing the activity

of the three industries. This may be tackled through the creation of a “guarantee fund” similar

to the one set up by many countries to foster their foreign trade. The objective of the fund is to

share the risk among partners. It should be managed by representative from banks, the

industry and the government.

The issue of the distribution stage is more complex because it is related to concentration of

ownership and location, to the seemingly preference for foreign goods by distributors and to

the lack of coordination between producers and distributors. These problems can be addressed

by existing or forthcoming professional associations. The associations should emphasize the

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win/win aspect of cooperation and may be even able to find some solutions to the

concentration and foreign goods problems.

The enforcement of IPR is a major obstacle to improving performance in the four industries.

It calls for a more active policy by the government and also for a more intense collaboration

among firms and with the government. While it is impossible for a single firm to set up a

specific department in charge of IRP enforcement, pooling firms’ resources together may

allow them to investigate and chase IRP violations.

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1. Introduction

This report analyzes the situation of four copyright industries in Morocco (Book, Music, Film

and Software). Beside the traditional determinants of firms' performance (competition, inputs

cost and so forth), one should takes account of the specific nature of cultural industries. For

instance, under budget constraint, food, shoes or clothes have much more priority than

cultural goods when economic agents decide on the composition of their consumption basket.

Moreover, some cultural goods call for a given level of skill to be used: one must be literate to

read a book. Hence additional indicators such as per capita income or the rate of literacy will

also be considered to explain the performance the industries under study. The report contains

three main parts.

The first part uses available data on production, demand and trade to examine the

performance of the four industries. Like in many emerging countries, economic statistics in

Morocco are not always readily available. This is even more problematic for the industries

under consideration: data are either imprecise or discontinuous in time or some times simply

non-existent. To overcome such problems, we rely on different sources (national and

international) and proceed in two ways. Depending on the time coverage, we either look at

the evolution of the relevant indicators over time or proceed in a comparative perspective. To

assure a consistent analysis (abstracting from country size, wealth or culture) we consider

comparable countries in terms of language, history and religion (e.g. Algeria, Tunisia and

Egypt) and use per capita indicators instead of absolute indicators.

The second part of the report presents and analyzes the results of interviews conducted with

representatives (individuals or institutions) of each industry. The interviews are based on

questionnaires set up by the whole team (from the five countries involved into the project) in

order to assure comparability among countries. Five versions of the questionnaire were set

up. Each version is targeted toward a specific category of partners: four for professionals in

the book, film, music and software industries and one for experts not directly working in the

industry (see the appendix). The later are expected to provide more global and, may be more,

objective picture of the industries.

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The questionnaire is based on the vision that a final good is the outcome of successive

operations i.e. a chain value. A simplified picture involves designers such as authors, writers,

composers or directors, producers such as manufacturers, recorders or editors, distributors

such as libraries, cinemas or stores, and final consumers. The outcome in each industry is

dependent on 3 categories of factors: the characteristics and the environment of each

operation, the interaction among operations and the final demand. The environment includes

taxes, labor market and price regulations, the degree of competition and the availability of

inputs. The interaction concerns the way the performance of one stage of production is

positively or negatively affected by other stages.1 Finally, the demand may limit the

production. The purpose of the interviews is to determine the perceived importance of each of

these factors for the production of the good under consideration.

The third part summarizes the main finding and draws policy implications.

2. Copyright industries and the Moroccan Economy: An

Aggregate Perspective

This section tries to draw an overall picture of copyright industries in Morocco. It first

presents an assessment of the share of these industries, as a whole, in final demand and

production and analyzes each of them in turn.

2.1. Shares of the four industries in the economy

The national account system in Morocco neither permits to disentangle the importance of

each industry separately nor it allows a precise assessment of the share of the four industries,

as a whole, in GDP, income or consumption. One possible source for assessing the

importance of the four industries in the economy could be the Ministry of Culture. However,

it seems that none of the Ministry’s staff is in charge of collecting and processing data on

cultural industries. Their main tasks are budget management and activity planning. Hence, in

order to assess the contribution of the four industries to the economy we rely on the results of

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two surveys conducted by the Ministry of Commerce and Industry (firms’ survey) and by the

Institute of Statistics (households’ survey).

Before going further, one should note that the industries under consideration involve a non-

negligible share of informal activities. For instance, a number of workers does not have a

formal employment contract and works intermittently without a long-term perspective of

employment. Moreover, many of them have another activity which is considered as their

principal occupation. Hence official statistics may underestimate the importance of these

industries in the economy.

Table 1 presents the estimated contribution of the four industries to GDP in 1999. The

estimate for the book industry draws on the results of firms’ survey. For music, the estimate

is based on the results of the households’ survey concerning the purchases of disks, tapes and

CDs. The estimate for film is provided by the Centre Cinematographique Marocain (CCM).

Finally, the software contribution is the one published by the Association des Professionnels

des Technologies de l’Information (APEBI).

Table 1: An assessment of the share or copyright industries in GDP

Industry Contribution in millions of dollars Share in GDPBook 100 0.299Music 54 0.161Film 15 0.045Software 10 0.030Total 179 0.534Source: Ministry of Commerce and Industry, Institute of Statistics, CCM, APEBI (Morocco)and authors’ calculations

The estimates show that the four industries account, together, for about 0.5% of GDP.

Following various experts in Morocco, this percentage seems realistic. More than 80% of this

contribution is driven by the Book and the Music industries. The contribution of the Film and

the Software industries is very negligible. As a mater of comparison, in France the Software

industry alone represented, in 1991, a share similar to the one of the four industries in

Morocco (i.e. 0.5%). In the same year, the share of the Film industry in France was about

1 For instance, a good author (or director) may have difficulties to reach the final consumer if the distribution stage has low performance. Alternatively, the production and distribution stages need good inputs (from authors or directors) in order to survive in the market.

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0.25% while the Book industry represented about 1.03%2. Hence, the three industries in

France had a total share more than three times higher than the total share of the four industries

in Morocco. However, given the different levels of development of the two countries the

comparison should be mitigated. When comparison in conducted with respect to Greece

(more comparable to Morocco than France in term of development), the difference is less

pronounced. Both the Film and the Book industries in Greece have similar shares (0.04% and

0.34% respectively) to the ones of Morocco. This confirms economic findings that spending

in leisure and entertainment is increasing with the level of development.

The level of development has an impact on the demand for cultural goods through various

social, economic and demographic factors. To shed light on the impact of these factors, Table

2 summarizes the main results of a regression of households' spending in leisure, culture and

entertainment on various explanatory variables. The regression was conducted by the Institute

of Statistics using households survey 90/91.

Table 2. The estimated impact of social, economic and demographic factors on households' spending in leisure, entertainment and culture in Morocco

Explanatory variables Coefficients t-statisticsLogarithm of per capita total spending 0.93* 9.93Number of children under 6 years 0.12* 2.80Household leaving in the south -0.39** -1.74Rural household -0.67* -5.01Education level of parents:

Primary -0.29** -1.81Secondary 0.34** 1.68

Tertiary 1.97* 4.94Other schooling levels 0.38* 2.61

R2 0.342F-Statistic 13.58**, **=Significant at 5%, 10%Source: Institute of Statistics, Morocco

The results highlight the important impact of the standard of leaving and literacy on the

demand for cultural goods. Per capita spending, which proxies per capita income, has a

significant and positive impact on demand. Higher level of education, proxied by the

education degree of a household’s parents, also appears conductive to higher spending on

cultural goods. While households with only a primary degree education spends less than the

2 It was not possible to obtain accurate figures for the Music industry.

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average, households with higher degree have higher spending. Moreover, the level of the

coefficient is increasing with the level of education: tertiary level households spend more than

secondary level households do. The results also suggest a significantly lower spending by

rural households than the average. Given that rural households still represent an important

share of population in Morocco, their low spending in culture will influence the aggregate

demand for the industries.

The subsequent analysis will consider each industry separately. Each sub-section starts with a

description of the industry's performance and then tries to explain the performance.

2.2. The Book industry

The Book industry in Morocco includes around 367 firms which are concentrated in Rabat

and Casablanca: around two thirds of the total number of firms are located in the two cities.

The total production was around 170 millions dollars in 1999 and has decreased by around

2% with respect to 1998. The industry occupies 7600 workers and is mainly oriented toward

the Moroccan market i.e. its total export is less than one million dollars. Around 40% of the

total output concern schoolbooks.

As pointed out before, the performance of the Book industry is limited by the low levels of

income and literacy. For instance, spending in non-school books represents only 1.5 dollar per

capita and per year and is seen as a luxury by Moroccan households. Moreover, estimates by

the Institute of Statistics show that the price elasticity of this category of book is around 2.4.

Hence, an increase of the price by 1% reduces purchases by 2.4%, which is very high.

The low levels of income and literacy are not the only factors explaining the apparently poor

performance of the industry in Morocco. In order to highlight the role of other potential

factors, we analyze how the Moroccan situation compares with other countries which are

similar in terms of culture, language, income etc. Figure 1 presents the production of book in

Algeria, Egypt, Morocco and Tunisia. To abstract from countries’ size the data were

converted into production per million of inhabitants per year. The data were also taken as the

average over a three years period in order to abstract from cyclical fluctuations. However, it

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was not possible to get data for the same years across countries. Years as close as possible

were taken and are presented in parentheses.

Source: UNESCO, Yearbook statistics 1999

The figure shows that, except for Algeria which faces a specific situation due to political

tension, Morocco scores the lowest level of book production. Tunisia has the highest level of

production far ahead of Egypt which was always considered as the first provider of literature

in the Arab World. The production in Tunisia is more than two times higher than that of

Morocco. Associating these figures with the per capita income and the secondary and tertiary

school enrollment (see Table 3), suggests that income and literacy are not the sole

determinants of the industry's performance. While Morocco has a significantly higher per

capita income than Egypt, it is producing significantly fewer books. Moreover, the difference

between book production in Morocco and Tunisia is much more pronounced than the

difference in their per capita income. The comparison of school enrollment figures also tends

to give mixed conclusions. With respect to secondary enrollment, Morocco has the lowest

level which fits with its lowest level of book production. In contrast Tunisia has a lower

enrollment than Egypt which contrasts with its highest level of production of book.

Regarding tertiary enrollment the main result is that the difference between Morocco and

Tunisia does not fit with their difference in terms of book production.

Figure 1: Book production (number of titles)

0

10

20

30

40

50

60

70

80

Algeria(92,94,963)

Egypt (91,93,95) Morocco(94,95,96)

Tunisia (94,95,96)

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Table 3: Production of books, income and education

School enrollment

School enrollment

Country Name Production of books(number of titles)

Per capita Income ($)

Secondary TertiaryAlgeria 18 2614 62 12Egypt 47 1983 76 19Morocco 29 2218 37 11Tunisia 71 3222 55 12Source: UNESCO, Yearbook statistics 1999 and IBRD, World development indicators 2000.Note: Income and School enrollment are averages the 1990s

Overall, the above discussion suggests that the industry performance is not only driven by

income and literacy though their impact on demand is important. To shed further light on this

issue, figures 2 and 3 present imports and exports of books in the four countries. Both figures

present data in constant dollar (1995) per million of inhabitants in order to abstract from

dollar fluctuation and countries size.

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Figure 2: Imports of books in constant dollar (1995) per million of inhabitants

Figure 3: Exports of books in constant dollar (1995) per million of inhabitants

Source: UNESCO, Yearbook statistics 1999 and authors calculations

0

200

400

600

800

1000

1200

1400

1600

1800

2000

1970.00 1975.00 1980.00 1985.00 1990.00 1995.00 1997.00

Import Algeria

Import Egypt

Import Morocco

Import Tunisia

0

50

100

150

200

250

1970.00 1975.00 1980.00 1985.00 1990.00 1995.00 1997.00

Export Algeria

Export Egypt

Export Morocco

Export Tunisia

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Looking at imports, a rough hypothesis is that if the national demand is the main determinant

of production, the pattern of production and imports across countries should be similar. The

country producing lesser should also import lesser once the effect of size has been removed.

Otherwise additional explanations should be found in the supply and environmental factors.

Figure 2 shows a steadily increase of import of book in all countries over the past thirty years.

The increase is much more pronounced in Tunisia and Morocco than in the two other

countries. Tunisia is again the country which is importing the most and which records the

highest increase of its imports. This fits with its ranking in term of production. However,

Morocco is a second in terms of both imports level and increase. It is importing more than

Egypt over the whole period which does not fit with the production ranking. Moreover,

imports by Morocco and Tunisia in the early 90’s (90, 95) are closer than their production for

the same period (see Figure 1).

Looking at exports abstracts from the effect of the national demand. If supply is well

performing, one should observe good performance in terms of exports despite a weak local

demand. Given that the four countries under consideration are similar in terms of culture and

language, they have equal chance in terms of foreign demand. In other words, if a country is

exporting less (abstracting form size) one can suspect a less performing supply. Figures 3

shows that Tunisia is again the first performer both in terms of exports level and growth while

Egypt is the second. Morocco is now behind Tunisia and Egypt in term of exports which is

also growing slower than in these two countries.

Taken together, imports and exports data both suggest that the national demand is not the sole

determinants of book production. Some supply and environmental effects may have an

impact as important as demand. The Moroccan authorities seem to be aware of this situation.

The Directorate of Books and Libraries of the Ministry of Culture offer some grants for book

publishing (around 0.2 millions dollars a year). However, the budget of the Ministry

represents only 0.3% of the total Moroccan budget despite an important increase over the last

ten years (from 7 millions dollars in 1990 to 22 in 2000). The expected budget for 2001 is 24

millions dollars with a targeted share of 1% of the total budget in a near future. However,

following experts, it seems unlikely that such an increase will really boost the industry's

performance.

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2.3. The Film industry

The Centre Cinematographique Marocain (CCM) is in charge of almost all film’s related

activities and constitutes the main source of the data in this sub-section. The production of

films in Morocco is reported in Figure 4. The Figure gives the average number of films per

year for three periods (70-79, 80-89 and 90-96). Distinction is made between Moroccan films

(i.e. produced by Moroccan firms or individuals) and films produced by foreigners in

Morocco.

Figure 4: Average number of films produced per year in Morocco

Source: The CCM

The average number of Moroccan films has more than doubled after 1980 (from 1.5 during

70-79 to 3.8 during 80-96). However, there was no increase in the third period as compared

to the second period. The significant increase in the production of Moroccan films after 1980

is clearly associated with the creation of a fund supporting the industry. The average number

of films produced by foreigners in Morocco exhibits a spectacular increase since 1980.

Starting from a lower level than that of Moroccan films (0.8 per year) it becomes more than

twice the number of Moroccan films during the last period. Moreover the average number of

foreign films produced in Morocco is more than 7 times higher during the second and third

0

1

2

3

4

5

6

7

8

9

70-79 80-89 90-96

Moroccan Films

Foreign Films

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periods than during the first period. Hence, it seems that despite the low record of Moroccan

films, Morocco owns some factor endowment which attracts foreign producers. Following

professionals, the combination of a large geographical variety in Morocco and the availability

of skilled and cheap human resources contribute greatly to the attractiveness of Morocco.3 It

remains, however, that Moroccan producers did not take advantage of such endowment as it is

reflected in their low production.

The main problems facing Moroccan producers seem to be financial constraints and the low

performance of support activities such as distribution. To meet the financial constraints, the

Moroccan authorities have set up in 1980 a support fund aiming at promoting films

production. The fund is financed through a tax on various show activities. While this has

increased the average number of Moroccan films since 1980, it does not succeed in increasing

this number to a level comparable to films produced by foreigners. One reason may be the

low performance of distribution which is characterized by a high level of concentration both

in terms of ownership and geography. First, out of 50 distribution firms, 24 are owned by 8

large groups which have control over 75% of the distribution activities and 25% of the

cinemas. The cinemas controlled by the groups are the most profitable because located in the

most important cities (Casablanca, Rabat, Agadir, Marrakech and Meknes). Moroccan

producers, who are in general individuals with low resources, complain that they have less

easy access to the distribution by the large groups than large foreign producers do. They

consider this problem as a major reason for the low performance of their industry. Second, out

of the 205 urban districts in Morocco, only 86 have cinemas and only 33 have more than one

cinema. The city of Casablanca represents about 25% of the total number of cinemas in

Morocco. Such a geographical concentration of cinemas in Morocco, excludes a significant

proportion of Moroccan from attending films and may be one factor of the low attendance per

inhabitant.

To analyze the demand for films in Morocco, Table 4 presents various indicators over a large

period of time (70-97). The figures are very instructive. Over the thirty years period, the

number of cinemas has decreased by around 25% (from 242 in 1970 to 184 in 1997). The

decline is continuous over the period and also shows up in the seating capacity and the annual

attendance. The later has declined even faster than the number of cinemas (i.e. around 40%).

3 Some famous films such as Platoon, Harem, 1492 or Highlander were produced in Morocco

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Such an evolution is much more impressive when one remembers that Moroccan population

has increased markedly during the same period. As a result, the annual attendance per

inhabitant became three times lower in 1997 than in 1970. At the same time the average price

of a seat has increased in a similar proportion i.e. from around 2 DH in 1970 to 6 DH in 1997.

However, this does not seem a valid explanation to the decline in attendance since the per

capita income has increased in a similar proportion and hence the price of a seat represents the

same proportion of income in 1970 than in 1997. An alternative, although partial, explanation

may be found in the development of the video use by households.

Table 4: Selected indicators of the demand for films

Year Number ofCinemas

SeatingCapacity (1000)

AnnualAttendance (1000000)

Seats per1,000

inhabitants

Annualattendance

per inhabitant

Grossbox officereceipts

(1000000)1970 242 146.9 23 9.6 1.5 431975 201 128.4 36.3 7.4 2.1 1101985 242 164 32.3 7.6 1.5 1351989 252 166.1 30.2 7.1 1.3 1431992 210 141 22.7 5.7 0.9 NA1993 203 138 20.4 5.5 0.8 NA1994 190 134 19.2 5.2 0.7 1071995 185 131 17.3 5 0.7 1031996 184 130 16.2 5 0.6 NA1997 184 127 14.3 4 0.5 NA

Source: UNESCO, Yearbook statistics 1999 and the CCM.Note: Receipts are in local currency NA= Not available.

The combination of a sharp decline in attendance and the modest increase in Moroccan film

production is at first sight encouraging for Moroccan producers. A priori condition to this is

that these evolutions translate into a higher market share for Moroccan films. Otherwise the

increased production turns to be useless because not reaching the consumers. Table 5 sheds

light on this issue by presenting market shares of films presented in Morocco according to

their country of origin. The steadily decrease in the cinema activity is confirmed i.e. the total

number of films presented in Morocco has decreased by more than 40% between 1980 and

1998. As far as market shares are concerned, one notices the sharp decline for France (from

19.02 in 1980 to 4.26 in 1998) which, due to its historical ties with Morocco, was a major

provider of films for the country. Egypt also shows a decrease of its market share. This

contrasts with the high penetration of Egyptian films and series in the Moroccan television

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program. The winners are the USA and India whose market shares are two times higher in

1998 than in 1980. The market share of Moroccan films also increased substantially but

remains very low.

Table 5: Total number of long films presented in Morocco and breakdown by country of origin

1980 1985 1990 1994 1995 1996 1997 1998Total 410 364 430 327 407 324 337 235Share of:

USA 22.68 36.81 28.37 44.95 49.14 47.84 41.25 47.66India 17.32 17.03 10.47 17.43 19.16 25.62 32.94 29.79

China 13.41 14.29 6.98 7.34 8.11 3.09 4.75 3.83Italy 6.59 8.52 10.93 10.09 5.65 1.85 6.23 5.53

France 19.02 12.91 22.09 9.79 6.14 10.19 4.75 4.26Egypt 6.83 0.82 0.47 4.89 3.19 5.56 2.37 0.00

Morocco 0.98 1.10 0.70 0.31 0.74 1.23 1.78 1.70Others 13.17 8.52 20.00 5.20 7.86 4.63 5.93 7.23

Source: UNESCO, Yearbook statistics 1999 and the CCM.

2.4. The Software industry

A large majority of the firms concerned with the Software industry in Morocco is simply

selling microcomputers and office equipment. Following the Association des Professionnels

de Technologie de l’Information (APEBI), the market for information technology in Morocco

represents 300 to 500 millions dollars including software, service support and hardware.

However, the share of software (creation and sells) is very low and does not exceed 3% of the

total market. The APEBI officials argue that the main obstacle to the development of

software in Morocco is hacking. The argument is supported by a Price Waterhouse study

which shows that about 90% of software in the Maghreb are illegal copies. Hacking activity

is not only detrimental to production, creation and employment but also reduces various tax

revenues of the government. The same study suggests that the loss for the government is

around 6 millions dollars. It seems, however, that hacking in Morocco is not only due to

criminal activities but also to the ignorance by many firms and individuals of copyright

legislation.

2.5. The Music industry

Measuring the Music industry performance in Morocco is even more difficult than for the

Software industry. The Moroccan music is very rich and covers a very large spectrum:

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Arabo-andalouse, Malhoune, Chaabi, Classic, Berber, Rifi and Soussi musics to only mention

the most important. Each type of music is very popular and has potentially an important

market. A typical Moroccan “consumes” at least three or four types of this music. However,

the organization of the music activities in Morocco is very informal and far from structured.

For instance, it was only ten years ago that some initiatives were taken to record, store and

make available to public (CD, tapes…) the Arabo-Andalouse and Malhoune music which

constitutes an important part of the Moroccan cultural patrimony. The main motivation came

from the observation that most of this music is not written and may disappear with the death

of the artists. The same initiative is still not implemented for all the other types of music. For

instance, it is still not possible to find some classic songs (by famous Moroccan artists) on CD

or tapes although they represent another important part of the Moroccan cultural patrimony.

Until recently (15 years ago), the Moroccan television (Radio et Television Marocaine, RTM)

had had a quasi-monopoly on music recording and distribution. Hence, the artist has to go to

Rabat and convince television officials. Such an approach was not convenient for many

artists who are far from Rabat or not familiar with the RTM bureaucracy. However, in recent

years some decentralization and competition took place and induced a visible (although not

measurable) development of creation, recording and distribution activities.

Like for the Software industry, the piracy is an important problem for the Music industry. It

is a common and not a hidden practice to illegally copy and sell CD or tapes. This makes it

impossible to measure the exact turnover of the industry although it seems very low: some

estimates by the Ministry of Culture suggest that on average each Moroccan buys two music

tapes a year which is very low. Households’ survey seems to confirm the estimates since

spending in music is around 2 dollars per household and per year. This gives a rough estimate

of 54 millions dollars turnover per year.

3. Copyright industries in Morocco: A firm level analysis

This section presents the results of interviews conducted with professionals and experts in

each industry based on the questionnaire in the appendix. The target was to get 15 filled

questionnaires for each industry. However, it was not always possible to fulfil the target and

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we ended up with 16 questionnaires for the Book industry, 9 for the Music industry, 6 for the

Film industry and 6 for the Software industry. Each sub-section deals with a separate industry

and analyzes the results of the interviews following six dimensions: supply conditions,

demand conditions, the role of supporting industries, market structure and firms’ strategies,

public policy towards the industry and expectations about future performance.

3.1. The Book industry

The official statistics show that in 1999 the printing and publishing industry in Morocco

included 370 firms with a high concentration in Rabat and Casablanca. Interviews were

conducted with 16 firms whose main activity is book publishing. The sample encompasses a

variety of profiles with respect to every dimension and allows us to draw some relevant

conclusions for the industry as a whole.

Four firms are located in Rabat and twelve in Casablanca. These firms were created between

1954 and 1995 leading to an average age of 23 years. However, a majority of them (9 out of

16) was created during the 1970s. The 16 firms are of medium size i.e. their number of

workers ranges from 4 to 110. Four firms have more than 100 workers, 6 between 40 and 100

and 6 less than 40 workers. This gives an average size of 70 workers. Over the past two

years, only three firms have reduced their employment. The remaining firms have increased

their employment. The capital of the interviewed firms ranges from 50 000 dollars to 800 000

dollars; the average is 300 000 dollars.

The turnover in 2000 is on average of 2 millions dollars but varies highly across firms. The

2000 turnover's standard deviation is 1.6 and out of the 16 firms 8 has a turnover lower than 1

million dollar. The difference among these firms is also reflected in their growth

performance. The growth rate of turnover (in real terms) over the past five years was negative

(between –6% and –11%) for 4 firms. Three firms recorded a substantial growth exceeding

10% while the remaining firms had a stagnant or slightly increasing turnover. Over the past

two years, two firms experienced an increase in their market share, four experienced a

decrease and the remaining had a stable market share. Similar picture emerges for profit and

cash flows.

20

3.1.1. Supply conditions

On average, 60% of the employment in the industry concerns low skilled workers who are in

general seasonal workers. The remaining 40% of employment split in equal shares between

technical staff and employees. There is however a significant difference among firms: the

share of high skilled workers varies between 22% and 60%. Two third of the interviewed

firms assert that there is a shortage in terms of skilled workers. In spite of this, the on-job

training is not a common practice; only two firms have allowed their technical staff to pursue

such training. The cost of training does not seem to be the main obstacle since it is subsidized

by a public institution (Office de la Formation Professionnelle et de la Promotion du Travail).

Firms rely on various sources of financing: own capital, bank loans and suppliers credit. The

later is preferred to bank loans because it involves much easier procedures and conditions.

Overall, the ratio of external financing to capital is on average of 34% and ranges from 13%

to 85% depending of the firm. There seems to be a consensus among the interviewed firms

on the impact of external financing on their performance. They find that the procedures and

conditions are very constraining, very complicated and do not meet their own needs. It

follows that long-term external financing, which is necessary for their activity, is very rare.

As far as other determinants of performance are concerned, firms do not have the same

opinion. About 65% of them find the price to the quality ratio unsatisfactory for international

transport, 56% find the ratio unsatisfactory for airport and 44% find it unsatisfactory for the

mail. Electricity and telephone are the services which have the best records with respectively

31% and 38% of firms being non satisfied.

3.1.2. Demand conditions

There is a consensus among firms regarding the impact of demand on their performance.

They almost all find that the demand for their products is low in comparison to both actual

and potential production. Hence, they do not plan to invest more and expand capacity of

production. The low demand in the country is crucial since almost all firms are oriented

toward the Moroccan market. Only two firms out of the 16 sell on foreign markets. Exports

represent, however, only 10% of their total output. The reasons for the low penetration of

21

foreign markets by Moroccan producers seem to be the intense competition on these markets

and the fact that Moroccan books are mainly targeted toward the national market.

Regarding the reasons for the low demand inside Morocco, almost no firm considers cultural

tastes or low quality of book as an issue. A majority of firms considers the low level of

literacy and income (respectively 70% and 60% of firms) as major reasons and 40% of firms

consider the price of book as another reason. This third factor (the high price of book) seems

due to the inability of firms to fully exploit scale economies (due to low demand) and to the

high cost of raw materials (i.e. paper). The industry receives no specific fiscal treatment and

hence producers have to bear all the inconvenience of the specific nature of their product.

They call for an integrated literacy policy in Morocco which take into account the specificity

of their industry.

3.1.3. Supporting industries

Around 30% of publishers are disappointed with the quality of their suppliers and about 20%

of publishers complained about the quality of intermediate goods. Regarding the contribution

of other players to the performance of the industry, less than one third of the firms consider

that insurance, legal and financial institutions have a positive contribution. Around 40% of

firms consider that professionals associations have a positive (or very positive) impact on

their performance. The most important association is the Association Marocaine des

Professionnels du Livre which is composed of authors, publishers and distributors and allows

the industry to have some power when negotiating with public institutions4. Advertisement,

marketing and public relations are considered as more important in determining

performances.

The results of the interviews reveal that coordination is almost non-existent among the

various stages of the production chain. Around 90% of publishers assert that they have never

collaborated with suppliers to develop new goods. Collaboration among firms at the same

stage of the chain is slightly more frequent i.e. 25% of publishers have adopted such

collaboration in the past. Exploiting synergies among various stages of the chain, although not

22

a frequent phenomena, is seen by all producers as a mean to improve the quality of output and

the competitiveness of the industry. In addition, the role of scientists, researchers and other

academic resources is considered as crucial in this respect but in practice their relationship

with the industry are still weak.

3.1.4. Market structure and firms’ strategies

The book market is very segmented: in general publishers specialize in terms of type of book

and of language. There is only few publishers producing books both in French and Arabic

and covering various type of literature. Hence, firms are in general operating only on a small

segment of the whole market where they also face competition from some public sector

publishers. For instance, almost each Moroccan University has its own publishing

department. Given that the industry is demanding in term of physical capital, such

segmentation prevents from fully exploiting scale economies.

Around 75% of the interviewed firms consider that the book market is mainly an oligopoly

with a limited number of large firms setting the rules. Such a situation may be positive in

term of scale economies' exhaustion but it may be negative in term of monopoly power. The

oligopoly situation is not the result of any regulatory of legal barriers to entry into the book

market. There is a consensus that such “legal” barriers to entry are non-existent and that entry

is free for any investor. The absence of barriers to entry holds both for Moroccan and foreign

investors.

Concerning strategy, out of the 16 firms 10 have a strategic plan while 6 do not. The later

consider that the uncertainty they are facing is so important that a medium to long-run plan is

useless. They prefer to adapt and respond to the specific situation they are facing. The 10

firms with a strategic plan have different targets however. The target concerns turnover in 5

cases, market share in 3 cases and profit in 2 cases.

Only 4 firms out of the 16 were able to clearly identify their forces and weakness. These

firms identify themselves as a leader on their market segment (e.g. the scientific book, the

book for children or history book). They consider that their major forces are the knowledge

4 Not all professionals are members of this association.

23

of their business, their reputation and their control over distribution networks. The

weaknesses concern mainly competition from producers who do not respect wages standards,

social legislation and tax requirements. Moreover, the fluctuations of inputs prices (mainly

paper), exchange rate (the DH against the dollar) and the free trade agreements (a reduction in

import tariffs from 28.5 in 1999 to 10.9 in 2004) with the EU are seen as major problems for

the future.

Almost all the 16 firms had made efforts to adapt to the evolution of demand in terms of

product range and quality. Improvement of organizational structures is constantly pursued by

more than two third of the firms. Effort in term of technology improvement are however still

low. Only 6 out of 16 firms consider that their technology incorporates recent development.

This low score seems to be due to the very high cost of investment in new technologies.

All the firms seem to be very concerned with copyright issues. They clearly indicate on books

the prohibition of copying for commercial purposes. However, illegal copying of books is still

a common practice. Public authorities seem unable to enforce copyright law and an

individual firm has not enough resources to set up its own department to enforce copyright

requirements. A strong collaboration among publishing firms and with public authorities is

seen as the only solution to the problem.

3.1.5. Public policy

Publishers argued that, despite the specific nature of their industry, they do not benefit from

any specific public policy. While other cultural activities receive subsidies from the

government, the book industry operates under the free market rules and receives no subsidy.

Publishers acknowledge, however, that the government has made the necessary effort to

provide them with skilled technicians. This category of workers is crucial to the performance

of the industry but more effort is needed in the field of R & D relevant to the book industry.

The improvement in transport infrastructure had a positive impact on industry's performance

through the decrease in transportation costs.

Other aspects of public policy are still unsatisfactory for publishers. They include public

support to investment, to the demand of books, to exports and copyright enforcement.

24

Publishers also find that the government should limit access to the industry by foreign

investors given the role of the Book industry in building citizen’s cultural identity.

3.1.6. Expectations

In general publishers are optimistic regarding the future of their industry. More than two third

of the 16 firms expect on improvement in the performance of the industry, around 25% expect

a stagnation and less than 10% expect a deterioration. Major expected improvements concern

products range, turnover and export (especially to other Arab countries). Publishers worry

mainly about the potential increase in competition in their market.

3.2. The Film industry

In addition to authors, actors and other artists the Film industry involves three categories of

participants: producers, distributors and cinemas. Producers raise funds and hire various

artists and technicians to produce a film. Once the film is produced, a distributor is granted

the right to diffuse it in the country or abroad. The distributor can therefore allow cinemas to

present the film.

The results in this section draw on interviews with three producers, one distributor, one artist

and an official from the Centre Cinematographique Marocain (CCM). The CCM is presently

the most important public institutions dealing with films in Morocco.

3.2.1 Supply conditions

The activity of the producers is not continuous in time. It depends on the planned films. It is

a frequent situation that the producer works for few months and then stops his activity

awaiting for the next film. The output of the industry (a film) is indivisible and both the

investment and the production process can not be reversed or split. In addition to the

uncertainty regarding the demand, this is one reason why investors are very cautious and

prefer not to be involved in the industry. Hence, the necessary financial resources to film

creation are in general provided by one or more artists and by the subsidy from the CCM.

3.2.2 Demand conditions

25

Over the past thirty years, attendance has decreased sharply i.e. by around 25%. The decline

took place despite a continuous growth of the Moroccan population. It does not seem to be

due to the increase in the price of seats (i.e. from around 2 DH in 1970 to 6 DH in 1997) since

the per capita income has increased in a similar proportion over the same period.

An explanation to the decline in demand may be found in the development of the video use by

households. Cinemas are in competition for attendance with videos and television. Moreover,

the fast development of satellite programs, which are often robbed, also contributes to lower

the attendance for cinemas. However, following professionals, cinema attendance is also

suffering from quality of services: old showing and sounding apparels, uncomfortable seats

and insecurity. Taxation is also considered as excessive (36% of gross revenues)

Professionals also found that mass media are not talking and writing on films. For instance,

over the whole country only films presented in Casablanca and Rabat are announced in

newspapers. The information given in the newspapers is limited to the title of the film and the

name of actors. There is a lack of articles presenting and analyzing films.

3.2.3 Supporting industries

Producers feel that distributors do not support Moroccan films. The distributors play an

important role in the value chain. They act not only as an intermediary between producers

and cinemas but also as editors of films. They are in charge of making copies of the film,

renting the film, and collecting revenues. Their role is crucial in bringing revenues from

cinemas to producers.

The high concentration of ownership at their stage gives the distributors a high degree of

power regarding the choice of films to be presented in cinemas. Like in many other countries

their choice is mainly based on profitability. A large share of their activity concerns foreign

films and proceeds in two different ways. They either buy the right to present the film in

Morocco (this is in general a lump sum covering 3 to 7 years) or distribute the film and

receive a percentage of revenues. A part from visa requirements, import of films is not

submitted to any barrier to entry in Morocco.

26

Regarding the low share of Moroccan films presented in cinemas, producers and distributors

have opposite views. The formers argue that distributors are only concerned with profitability

and hence exclude Moroccan films from cinemas. It seems that presently seven Moroccan

films are ready for presentation but are not distributed. Hence producers ask for quotas

regarding films presented in Morocco: distributors and cinemas should be obliged to market a

number of Moroccan films proportional to the number of foreign films. They also consider

that taxes, which do not presently discriminate between Moroccan and foreign films, should

be reformed. They assert that the present situation is a threat to Moroccan culture and

identity.

Distributors argue that they have to manage an economic entity and hence to care about

profitability. They find that Moroccan films are not enough market-oriented. Demand is

itself much more oriented toward foreign films because the Moroccan public is very aware of

quality standards. Distributors feel that Moroccan films do not fit with such quality standards.

Hence it is not possible for them to distribute a film with the only characteristic is being

Moroccan.

3.2.4 Market structure and firms’ strategies

While film production is mainly the outcome of individuals with low resources, the

distribution is characterized by a high level of concentration both in terms of ownership and

geography. First, out of 50 distribution firms, 24 are owned by 8 large groups which have

control over 75% of the distribution activities and 25% of cinemas. The cinemas controlled

by the groups are the most profitable because located in the most important cities

(Casablanca, Rabat, Agadir, Marrakech and Meknes). Second, out of the 205 urban districts in

Morocco, only 86 have cinemas and only 33 have more than one cinema. The city of

Casablanca represents about 25% of the total number of cinemas in Morocco. Such a

geographical concentration of cinemas in Morocco, exclude a significant proportion of

Moroccan from attending films and may be one factor of the low attendance per inhabitant.

3.2.5 Public policy

In the early 1970’s the Moroccan Film industry was lacking financial and professional

structures. In general a film was the result of efforts by a separate individual who tried to

27

accomplish various task i.e. seeking finance, writing scenarios, hiring artists, supervising or

building scenery and sometimes playing in the film. Since then, governments become aware

that the Film industry is very demanding in terms of human and financial resources which,

given the small national market, is not bearable by the sole private sector. They confer to the

CCM the duty of co-producing films with the private sector in order to develop a national

Film industry. In 1987, the industry became well structured and the various participants were

encouraged to organize themselves in associations, societies or corporations.

The CCM grants financial support provided that the producer shows a business plan and a

well-organized structure. The grants come from a support fund set up in 1980 and financed

trough a special tax on various public shows. A commission including civil servants is in

charge of the decision. The subsidy is composed of two parts: an ordinary grant of 180 000

DH and an additional grant which can not exceed 300 000 DH. The later concerns films

which are considered of high quality by the commission.

Although the number of films produced has increased markedly after the creation of the fund,

officials were not completely satisfied with the results. The main reason was that

professionals found that the average quality of films is below the one of the 1970s. The fact

that during the first decade of the fund, grants were almost automatic does not incite

producers to also care about quality. Hence in 1990, the CCM reformed the procedure for

obtaining subsidy. Grants became no longer automatic and the procedure gave more

importance to the financial contribution by the producer and to the technical and artistic

quality of the film. The amount of the grant was also limited to 2/3 of the total cost of the

film.

An important concern of professionals regarding public policy toward the industry is

censorship. There is a commission in charge of giving visas to the presentation of films.

Professionals feel that the criteria following which visas are given are not transparent. They

are based on some vague principles of public order and decency. In addition to visas,

censorship seems also to be exerted through grants by the CCM. Films dealing with social or

political issues can be particularly exposed to such censorship. Hence, in general

professionals adopt a self-censorship before asking for subsidy.

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3.2.6 Expectations

Although the present situation is worrying, professionals are not too pessimistic. They

acknowledge that the situation is changing thanks to the emergence of a new generation of

Moroccan artists who are producing competitive films both on the Moroccan and foreign

markets.

3.3. The Software industry

Software goods can be grouped into two categories: operating and network systems and

utilities. In Morocco the software market is dominated by well-known multinationals like

Microsoft or Oracle. A large majority of Moroccan firms are specialized in

commercialization of computers and other office machines and sometimes install imported

software. There are few firms which create and develop software tailored to specific needs of

public institutions and large corporations.

The interviews were conducted with four firms creating software, with the president of the

Association des Professionnels des Technologies de l’Information (APEDI) and with an

expert. Two of the interviewed firms were created before 1996 and the others after 1996.

The largest firm has 160 employees with a large majority of engineers (80%) specialized in

computer sciences. It reports a turnover of 7 millions dollars for 2000. The smallest firms

has around 10 employees and a turnover of 200 000 dollars. Two firms export a share their

production (mainly to Algeria, Tunisia and Sub-Saharan Africa). They expect an increase of

their export in forthcoming years. The four firms have recorded over the five past years a

growth rate of turnover between 11% and 30% and are very satisfied with their performance.

3.3.1. Supply conditions

The industry is very demanding in term of skilled human capital. The workers are engineer

and graduate scientists from high schools and universities. However, despite the important

effort made by the government in creating number of computer sciences curricula in

universities and high schools, there is still a shortage. The shortage is made more severe by

foreign firms which hire Moroccan scientists for their activity outside Morocco. Beside the

29

higher wages there are offered, Moroccan scientists are motivated by the better working

conditions and the possibility of improving their competence inside foreign firms.

Professionals do not see the financing issue as an important obstacle to the development of

their activities. They seem to have no difficulty of getting fund from banks. They are also

very satisfied with telecommunication infrastructure in Morocco.

3.3.2. Demand conditions

Following the results of interviews, the Moroccan market is still very tight and unable to

absorb all the potential supply. Only few households are presently equipped with a personal

computer and a large number of firms has never used information technology (IT). A survey

conducted by the Ministry of Commerce and Industry concerning the use of IT by firms

shows that out of 4 400 firms only 2 505 (57%) have been using IT. Among the 57% of the

firms, 31% use basic IT and only 11% rely on more sophisticated IT. Another problem which

reduces the demand for software is hacking. It also reduces tax and social security revenues.

The Moroccan government evaluate such a loss to around 6 millions dollars.

3.3.3. Supporting industries

Synergies are well exploited among firms in the industry and with other related industries.

Software firms collaborate on a regular basis with firms dealing with Internet application or

with Tele-services. The later includes a variety of activities: Call and Tele-marketing centers,

management of firms accounting and wage payment, on line translation, data processing, and

Tele-training. Professionals consider that the development of the Tele-services sector confers

to Morocco a comparative advantage. It provides further attractiveness to Morocco in term of

Foreign Direct Investment especially given the good telecommunication infrastructure in the

country. For instance important European firms (like Alcatel, Ubisoft, Informatica El Corte

Ingles) are now initiating various projects of software creation with Moroccan firms.

Vivendi, Telephonica and 2A are planning to set up call centers in Morocco and Considata

plans to create a data processing center for French books.

Firms in the industry have cooperated in many instances to create, implement, and develop

software for public institutions. They also pursue an active collaboration with universities

30

and other research centers. The objective is to create in Morocco a regional “hub” supplying

high quality software and other IT good and services. All professionals seem optimistic about

the chance of success of this project.

3.3.4. Market structure

Following professionals, the market is still evolving and offers many opportunities. Many

public institutions, small and medium enterprises and households are still not using IT

equipment and hence represent an important potential market. Competition seems to be very

severe among firms especially for public procurements. However, in general firms

differentiate their good and services and specialize in different segments of the market. At the

same time the industry is facing a restructuring wave through various mergers and

acquisitions which aims at making firms reach the threshold size. This should enable them to

compete and obtain important contracts from large financial, insurance or public institutions.

3.3.5. Public policy

The APEBI feels that Morocco is not offering enough specialists in the field of information

technology. The average number of graduated student in the field is 2634 per year which

represents only 4.5% of the total. Moreover, these students are graduated from different

public and private schools and universities and do not always have an adequate and up to date

qualifications. The professionals call for a global and coordinated training policy in order to

provide them with the necessary skilled workers.

There seems to be a lack of policy aimed at fostering research and development in the

industry. Professionals call for a “tax exemption system” to encourage and enable firms to

engage in research and development. They also ask for the creation of a national agency in

charge of supporting and coordinating research.

In general, firms find that infrastructure in Morocco is satisfactory. They, however, complain

about the limited number of available high-speed connections (2Mbs) and about the high

price of international connections. The legal framework in which firms are operating also

poses problem. It concerns mainly copyright issues as well as digital certification and

electronic commerce.

31

3.3.6. Expectations

Participants in the software activities are all optimistic about the future of the industry. The

market is expanding, and many users still need specialized support. As far as the international

market is concerned, opportunities seem to be limited for Moroccan firms given their small

size. There are, however, some specific segments of the international market where

Moroccan firms think to be able to compete. Sub-contracting and other forms of cooperation

with large multinationals are also seen as opportunities to operate on the international

markets.

3.4. The Music industry

Until recently almost the whole formal music activities in Morocco was under the control of

the Moroccan Television (RTM). The RTM was managing both the recording and the

distribution of music. Artists perceived their fees from the RTM according to the diffusion of

their works on the Moroccan Radio and Television. Since 1980, however, the music industry

has developed significantly both in terms of type of music (Chaabi, Malhoune, Classic, etc…)

and of demand. This created opportunities for investors and a number of small enterprises

was launched.

This section is based on the results of interviews conducted with four recording firms, two

artists (a singer and an author) a director of an academy of music and two experts (the head of

the music unit in the Ministry of Culture and a journalist). The four firms in the sample are

the largest in the industry. They were created between 1980 and 1985 and have, on average,

15 employees. Two of them are located in Rabat and two in Casablanca. Their capital ranges

from 10 000 to 50 000 dollars with an average of 32 000 dollars.

The 2000 turnover ranges from 35 000 to 80 000 dollars. Over the five past years their

turnover has grown at an average of 4%. The growth is higher for firms located in

Casablanca i.e. 6%. The growth of turnover is boosted by the growth of demand. Out of the

four firms, three have increased their market share and one has had a constant market share.

The degree of firms’ satisfaction regarding performance fits of course with the evolution of

32

market shares (3 satisfied and 1unsatisfied). Two firms think, however, that their performance

would have been better if the industry was better structured and piracy better fight.

3.4.1. Supply conditions

The music industry appears as very capital intensive and relying mainly on skilled workers.

The later includes sound and electronic technicians and specialized musicians. Their share in

total employment is around 85%. Around 60% of the total employment concern permanent

jobs and 40% are seasonal jobs. The demand for skilled workers is very high in comparison to

supply and thus some of them work for more than one firm. Training of these skilled workers

is not provided by firms. The workers take care of their own training.

Recording firms seem to have difficulty in raising funds. Their own resources are low and

banks are reluctant to provide financing. This is due to a perceived high uncertainty

concerning demand and profitability and is again related to the piracy issue. Therefore,

recording firms rely sometimes on cash in advance by distributors of even by artists to meet

financing constraints. As a result firms recognize that they avoid gambling on unknown

although possibly very good artists.

3.4.2. Demand conditions

Demand for music has grown markedly during the past decade. Households have become

well equipped on music recorder and Hi-fi apparels, opened to a wider variety of music types

and are spending more on tape and CD purchases. Such a trend seems to hold for all

categories of the population. However, this does not benefit the Moroccan industry for two

reasons. First, a share of the demand is oriented toward foreign music. Second, another share

of the demand is met by the informal sector which copies and sells (at lower prices) various

type of music as soon as they are launched by the formal sector. Low per capita income and

high prices of “formal” goods are factors which encourage piracy.

Following music professionals, the survival of the industry depends on its capacity to

penetrate foreign markets. Morocco has a very large spectrum of types of music which is

valued both by Moroccan and foreign customers. The success of festivals like the Marrakech

Festival of ethnic art and music, which attract a high number of tourists, is encouraging in this

33

respect. However, to fully exploit the potential of foreign markets for Moroccan music a

coordinated strategy among professionals and with the government is still needed.

3.4.3. Supporting industries

The value chain for music involves a variety of participants: authors, composer, singer,

recording firms, distributor and dealers. The music activity is also dependent on radio and

television programs, concert organization and festivals. However, it seems that coordination

and synergies among the various participants are poorly exploited. Coordination and

synergies can be fostered by creating a professional association which can act as a spokesman

for the industry. This initiative is however handicapped by the absence of a clear and formal

status for artists.

The financial sector is very reluctant to participate to the development of the music industry

given its perceived uncertainty. Finally, the interviewed firms feel that radio and television

do not fully accomplish their role of encouraging creativity and performance of the industry.

3.4.4. Market structure

Like the Book industry, the Music industry appears as segmented. The various participants

are in general specialized in term of type of music or even deal with specific artists only. The

informal sector occupies a non-negligible share of the market. The RTM is still controlling a

significant part of recording and diffusion activities. It seems that there is no legal barrier to

entry into the industry. Numbers of professionals find that the absence of barriers to entry is a

weakness given the role of the industry in building a national identity.

None of the firms in the sample has a strategic plan. They all find it irrelevant to work

following a predetermined strategy given their legal, industrial and uncertain environment.

They are also all concerned with the impact of the new technologies on their business. The

possibility of downloading music through Internet is considered as a major threat for the

survival of the recording and distribution activities. Overall, firms are pessimistic about their

future and disappointed with the weak enforcement of copyright provisions.

3.4.5. Public policy

34

The contribution of public policy to the development of the industry is very weak and falls

short of professionals’ expectations. The participants are disappointed by the absence of a

global strategy aiming at the promotion of their industry either in Morocco or abroad. They

suffer from foreign goods competition and do not benefit from support to present their

creation on international markets. Moreover, they feel to be not sufficiently protected against

piracy and unfair competition. The Bureau Marocain des Droits d’Auteurs which is in charge

of these problems has low human and financial resources and is not able to enforce the law.

3.4.6. Expectations

Expectations about the future of the industry are pessimistic and the interviewed firms are not

ready to gamble on the future. They fear that if a global development strategy is not shortly

set up in collaboration with the government, most talent artists may abandon the fight.

4. Synthesis and policy implications

Table 6 summarizes the main results of the analysis:

- The Book industry has very low performance associated with very low (domestic and

foreign) demand and high difficulties of getting credit from banks. In contrast, the availability

of adequate labor has a positive impact on the performance of the industry. The relationships

with related industries and the quality of intermediate goods are disappointing while the

intensity of (foreign and domestic competition) does not seem to be an issue. Public policy

regarding human resources, technology, infrastructure and investment has a positive impact

on the performance of the industry while the lack of a policy toward demand stimulation and

the low level of IRP enforcement impact performance. Expectations are optimistic.

- The Film industry has low performance associated with very low (domestic and foreign)

demand and high difficulties of getting credit from banks. In contrast, the availability of the

adequate labor has a positive impact on the performance of the industry. Regarding the related

industries, producers complain about the quality of distribution. The high concentrations of

ownership and location downstream as well as foreign and domestic competition are

important obstacles to the development of the industry. Public policy regarding human

35

resources, technology, infrastructure and investment has a positive impact on the performance

of the industry while the policy toward demand stimulation and IRP enforcement does not

seem to be an issue. Expectations are optimistic.

- The Software industry is well performing with sustained (domestic and foreign) demand.

While the industry has an easy access to bank funding it suffers form shortage in terms of

skilled workers. It benefits from good performance downstream and from the settlement of

related activities (e.g. Internet applications and Tele-services) in the country. Firms in the

industry are presently not in a position to compete with foreigners but are setting up strategies

to improve their competitive advantages. Public policy is still insufficient to provide the

industry with the adequate human resources but it has a positive impact on the performance of

the industry in term of infrastructure. The low level of IRP enforcement by authorities

impacts performance. Expectations are very optimistic.

- The Music industry has very low performance associated with very low (domestic and

foreign) demand, high difficulties of getting credit form banks and shortage in term of skilled

labor. Upstream (the creation stage), there is a wealthy supply of various kinds of music

which are appreciated in the country and abroad. However, downstream the quality of

distribution is disappointing. Instead of domestic competition, foreign competition seems to

be a major problem for the industry. Public policy regarding human resources, technology,

infrastructure, investment and IRP enforcement has a negative impact on the performance of

the industry. Expectations are very pessimistic.

Overall, three industries (Book, Film and Music) have bad performance and one (Software)

has good performance. The three industries share five factors which have negative impacts on

their performance: a difficult access to bank’s credit, low domestic and foreign demands, a

non-performing distribution stage and the lack of IRP enforcement. The later is also a major

issue for the well performing industry which also suffers from shortage in skilled labor.

Beside the problem of demand which is related to more structural characteristics of the

country (e.g. income, poverty and literacy), some suggestions can be put forward to deal with

the other factors.

The problem of access to credit comes from the perceived high uncertainty facing the activity

of the three industries. This may be tackled through the creation of a “guarantee fund” similar

36

to the one set up by many countries to foster their foreign trade. The objective of the fund is to

share the risk among partners. It should be managed by representative from banks, the

industry and the government.

The issue of the distribution stage is more complex because it is related to concentration of

ownership and location, to the seemingly preference for foreign goods by distributors and to

the lack of coordination between producers and distributors. The concentration of ownership

is a competition policy issue and the geographical concentration is a public good (should

every body have access to cultural goods irrespective of his ability to pay?) and territories

management (how should cultural activities widespread over the country?) issues. Both are

beyond the scope of the present study and should be dealt with by the competent authority.

The solution to the preference for foreign cultural goods is very difficult. For instance, the

debate is still ongoing in Europe among economists and policy makers about “The Cultural

Exception” clause aimed at protecting European cultural industries against American

competition. On the one hand, limiting or prohibiting imports of such goods is harmful

because domestic producers have less incentive to improve their products and because

domestic consumers do not benefit from the richness of other cultures. On the other hand,

because of scale economies and learning by doing a full and immediate opening of a market

to foreign goods might handicap future competitiveness of the industry. The lack of

coordination and communication between producers and distributors should be addressed by

existing or forthcoming professional associations. The associations should emphasize the

win/win aspect of cooperation and may be even able to find some solutions to the

concentration and foreign goods problems.

The enforcement of IPR is a major obstacle to improving performance in the four industries.

It calls for a more active policy by the government and also for a more intense collaboration

among firms and with the government. While it is impossible for a single firm to set up a

specific department in charge of IRP enforcement, pooling firms’ resources together may

allow them to investigate and chase IRP violations.

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Table 6: Synthesis of the results

IndustriesIndicatorsBook Film Software Music

Overall performance - - - + -

Role of Supply Labor + + - -Capital - - - - + + -

Role of Demand Domestic demand - - - - + -Export market - - - - + -

Role of Related IndustriesUpstream - 0 0 +Downstream - - - + -Other Firms - 0 ++ 0

Role of Market Structure Domestic Competition and strategies

0 0 + 0

Foreign Competition 0 - - - -

Role of Public PolicyDevelopment of human resources and technology

+ + - -

Infrastructure and investment + + + -Stimulation of the demand - 0 0 0Enforcement of IPR - - - - - - -

Firms’ Expectations + + + + - -Note: 0= None

-= Negative- -= Very negative

+= Positive + += Very positive

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Appendix A: Questionnaires

Questionnaire A (Firms)

I General Questions about the firmII Questions about the performance of firms (growth of sales; of employees, of profits etc.)III Questions about supply conditionsIV Questions about demand conditionsV Questions about related and supporting industriesVI Questions about market structure and firm strategyVII Questions about government policiesVIII Concluding questions: future expectations (sales, profits, employment, market etc.)

I General Questions about the firm

1. Firm name2. Field (s) of firm activity (music, software, book publishing, audiovisual etc.)3. Where in the value chain are you active in your industry: supplier of inputs (author of book, software

etc.), production, distribution etc. 4. Position of person being interviewed5. Date of firm foundation6. Number of firm employees in 2000/017. Firm capital in 2000/018. Volume of firm physical output 2000/019. Volume of firm sales 2000/01 (in national currency)10. Past evolution (growth rate) of sales over the past five years

II Questions about the economic performance of firms

1 Please indicate for each of the following indicators of economic performance of your firm whether it has increased; decreased or stayed constant in the last two years.

Indicators of Performance

Increased In the last 2 years

DecreasedIn the last 2 years

ConstantIn the last 2 years

Sales

Market Share

Number of Employees

Profits (after taxes)

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Cash flow

Others (specify)

2. Are you satisfied with the overall economic performance of your firm in the last two years?very satisfied yes Nosatisfied yes nounsatisfied yes novery unsatisfied yes no

III Questions about supply conditions

1. How many people are employed in your firm (Give an approx. number in fulltime equivalents)?

2. What type of labor does your firm require and in what Percentage:Low skilled labor %Medium skilled labor %High skilled labor %Medium management %Top management %

3. Do you encounter problems in finding such labor?Low skilled labor Yes NoMedium skilled labor Yes NoHigh skilled labor Yes NoMedium management Yes NoTop management Yes No

4. Do personal in your firm receive any kind of continuos training? Low skilled labor Yes NoMedium skilled labor Yes NoHigh skilled labor Yes NoMedium management Yes NoTop management Yes No

5. If yes, is that training financed byyour firm, Yes Noprivate sector’s initiatives Yes NoGovernment Yes Noothers (specify)? Yes No

6. How does labor affect the performance (growth of sales, profits etc.) of your firm?Strong Positive effect ( ++)Positive effect (+)Negative effect (-)

No effect 7. Is finance for your firm available in adequate terms? Yes No8. What is the debt/equity ratio in your firm? In %9. What are your sources of finance?

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- own capital Yes No- loans from the bank Yes No- loans from family, friends Yes No- loans from international organization Yes No- joint financing (joint venture) with other firms Yes No- others (specify)

10. Does that choice of the form of finance have a certain reason?- Foreign investors are not interested in that sector- Terms of getting loans from banks are not convened- The form of finance is affected by the legal form of companies- Others (specify)

11. How does your financial situation affect the economic performance of your firm (growth of sales, profits etc.)?Strong Positive effect Yes NoPositive effect Yes NoNegative effect Yes NoNo effect Yes No

12. How do you evaluate the price quality ratio of the following items pertaining to infrastructure/services and utilities?

High moderate lowprice quality ratio of electricityprice quality ratio of postal servicesprice quality ratio of telephonesprice quality ratio of domestic transportprice quality ratio of port servicesprice quality ratio of airport servicesprice quality ratio of shipment

13. How do all the items listed in the previous question affect the performance of your firm (growth of sales, profits etc.)?Strong Positive effect Yes NoPositive effect Yes NoNegative effect Yes NoNo effect Yes No

IV Questions about demand conditions

1. Do you consider the size of domestic demand as sufficient in absorbing your entire production? Yes No

2. If No, why? Please indicate the reason(s)- Price Yes No- Income Yes No- Quality Yes No- technological superiority Yes No- Literacy Yes No- cultural taste Yes No- all of the above Yes No

3. If yes, who is your targeted consumer?- Persons with very high income Yes No- Persons with high income Yes No- Persons with average income Yes No

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- Persons with low income Yes No- Persons with very low income Yes No- all of the above Yes No

4. Do you see your customers as demanding customers? - very demanding Yes No- moderately demanding Yes No- Not demanding at all Yes No

5. Do you see your domestic customers so sophisticated that they are able to anticipate foreign needs and demand? Yes No

6. Do you export your product: Yes No If yes, how much: in %

7. If the answer is yes, then why?- more profitable Yes No- targeting foreign consumer Yes No- utilizing economies of scale Yes No

8. If the answer is No, then why?- Markets abroad are closed Yes No- Not profitable or more profitable to sell in the domestic market Yes No- Competition is too tough to enter foreign market Yes No- The quality of my product does not fit the consumer abroad Yes No- My product is domestic specific Yes No

9. What is the main factor that affects demand for your product?- Price Yes No- Income Yes No- Quality Yes No- technological superiority Yes No- Literacy Yes No- cultural taste Yes No- all of the above Yes No- others

9. How do demand conditions in general affect the performance of your firm (growth of sales, profits etc.)?

Strong Positive effect Yes NoPositive effect Yes NoNegative effect Yes NoNo effect Yes No

V QUESTIONS ABOUT RELATED AND SUPPORTING INDUSTRIES

1. Does your firm have strong local suppliers? Yes No If yes; how many?

2. Do you develop products with your suppliers? Yes No If yes; how many?

3. Do you develop products with other firms? Yes No If yes; how many?

4. What is the availability of specialized inputs (experts in a specific field; special machinery; software or hardware etc.) for your firm?Good Yes NoJust okay Yes NoPoor Yes NoOther (specify)

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5. Does your firm share common suppliers with other firms in your industry?Yes No Other (specify)

6. Does your firm share talents with others? Yes No Other (specify)

7. How would you describe the contribution of other firms in related and supporting industries to the economic performance of your firm?Non-existent Yes NoExisting but irrelevant to my firm Yes NoRelevant to my firm (specify how and how much) Yes No

8. How would you describe supporting the contribution of institutions in the fields of insurance, legal services, banking etc to the economic performance of your firm?Providing strong support to my firm Yes NoProviding little support to my firm Yes NoOther (specify)

9. How would you describe the contribution of supporting institutions such as universities or others with R&D capabilities to the economic performance of your firm? Providing strong support to my firm Yes NoProviding little support to my firm Yes NoOther (specify)

10. How would you describe the contribution of local or other associations collecting and making available data about the industry to the economic performance of your firm?Non-existent Yes NoExisting but irrelevant to my firm Yes NoRelevant to my firm (specify how and how much) Yes No

11. How would you describe the contribution of local or other specialized trade journals, newsletters, magazines and mass media (TV, radio etc.) to the economic performance of your firm ?Non-existent Yes NoExisting but irrelevant to my firm Yes NoRelevant to my firm (specify how and how much) Yes No

12. How would you describe the contribution of advertising, marketing, and public relations companies to the economic performance of your firm ?Providing strong support to your firm Yes NoProviding little support to your firm Yes NoOther (specify)

13: How do firms in related and supporting industries in general affect the economic performance of your firm (growth of sales, profits etc.)?

Strong Positive effect Yes NoPositive effect Yes NoNegative effect Yes NoNo effect Yes No

VI QUESTIONS ABOUT MARKET STRUCTURES AND FIRM STRATEGIES

1. How would you describe market structure in your industry?

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Many firms, with none dominant (over 10) Yes NoMany firms, with one or a few dominant (over 10) Yes No Few firms, with none dominant (less than 9) Yes NoFew firms, with one or two dominant (less than 9) Yes NoOther (specify)

2. How would you describe competition in your industry?Very intense Yes NoIntense Yes NoModerate Yes NoNot existing Yes No

3. How would you describe market access in your industry?Easy Yes NoNormal Yes NoDifficult Yes NoOther (specify)

4. Are there any restrictions in your industry new entry? Yes No Other (specify)

5. If yes, what is the reason?Legal (restrictions; strong regulations; IPR etc.) Yes Notechnological (very high R&D, special technological knowledge etc.) Yes NoHigh entry costs (high fix costs, advertising etc:) Yes NoInformal barriers (corruption etc..) Yes NoOther (specify):

5. Are there any restrictions in your industry on foreign firms entering the market?Yes No Other (specify)

6. What is the market share of foreign owned firms?Large Yes NoAverage Yes NoSmall Yes NoOther (Specify number)

7. Do restrictions on commercial presence by foreign firms distinguish between entry through acquisition and entry through direct investment? Yes No Other (specify)

8. How does competition in general affect the performance of your firm (growth of sales, profits etc.)?

Strong Positive effect Yes NoPositive effect Yes NoNegative effect Yes NoNo effect Yes No

9. Does your firm have an explicit business strategy? Yes No Other (specify)

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10. If so, how is it formulated? Yes No By one person (e.g. owner, general manager) Yes NoBy a corporate team Yes NoBy outside consultants Yes NoA mixture of all Yes NoOther (specify)

11 What are the goals of your firm?

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12. What in your opinion are the strengths of your firm?

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13. What in your opinion are the weaknesses of your firm?

---------------------------------------------------------------------------------------------------------------------------------------

14. How do you think competitors view your firm?

15. How do you think customers view your firm?

16. Would you say that your firm has engaged in the past two years inaggressive investment Yes Noaggressive marketing, Yes Noflexible pricing policy, Yes Notargeted advertising, Yes No

17. What do you take into account mostly: local, regional, and or/ international competition?

Local Yes NoRegional Yes NoInternational Yes NoOther (specify) Yes No

18. Would you say that you are constantly upgrading your firm's

Production Technology Yes NoOrganization Yes NoProduct mix ? Yes Noothers (specify) Yes No

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19 Do you have an explicit (written) IPR strategy? Yes NoDo you have a specific IPR department or a person in charge? Yes NoDo you consult an external IPR consultant? Yes NoDid you have IPR enforcement problems (in courts or otherwise)? Yes NoIf yes; how often:How does IPR affect the economic performance of your firm?

Strong Positive effect Yes NoPositive effect Yes NoNegative effect Yes NoNo effect Yes No

20. How did your firm strategy in general affect the economic performance of your firm (growth of sales, profits etc.)?

Strong Positive effect Yes No)Positive effect Yes NoNegative effect Yes NoNo effect Yes No

VII Questions about government policies

1. Did government develop human resources (education; training and health) specifically in your industry ? Yes No. If yes, how did this policy affect the economic performance of your firm (growth of sales, profits etc.)?

a. Strong Positive effect Yes No)b. Positive effect Yes Noc. Negative effect Yes Nod. No effect Yes No

2. Did government promote science and technology (promotion of science in general; R&D programs; technological infrastructure etc) specifically in your industry ? Yes No. If yes, how did this policy affect the economic performance of your firm (growth of sales, profits etc.)?

a. Strong Positive effect Yes No)b. Positive effect Yes Noc. Negative effect Yes Nod. No effect Yes No

3. Did government support the building and maintaining of physical infrastructure (transport; shipment.; utilities etc.) specifically in your industry ? Yes No. If yes, how did this policy affect the economic performance of your firm (growth of sales, profits etc.)?

a. Strong Positive effect Yes No)b. Positive effect Yes Noc. Negative effect Yes Nod. No effect Yes No

4. Did government stimulate the demand for the products of your industry (government as a buyer of your products; state subsidy for your products etc.) ? Yes No. If yes, how did this policy affect the economic performance of your firm (growth of sales, profits etc.)?

a. Strong Positive effect Yes No)

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b. Positive effect Yes Noc. Negative effect Yes Nod. No effect Yes No

5. Did government policy facilitate the development of strong clusters in your industry? Yes No 5a) If yes, how did this policy affect the economic performance of your firm (growth of sales, profits etc.)?

a. Strong Positive effect Yes No)b. Positive effect Yes Noc. Negative effect Yes Nod. No effect Yes No

6. Did government promote investment specifically in your industry ? Yes No. If yes, how did this policy affect your own investment and therefore the economic performance of your firm (growth of sales, profits etc.)?

a. Strong Positive effect Yes No)b. Positive effect Yes Noc. Negative effect Yes Nod. No effect Yes No

7. Is the current government protection of IPR in your industry sufficient ? Yes No. How did this policy affect the economic performance of your firm (growth of sales, profits etc.)?

a. Strong Positive effect Yes No)b. Positive effect Yes Noc. Negative effect Yes Nod. No effect Yes No

8. Did government promote competition in your industry? Yes No; If yes, how did this policy affect the economic performance of your firm (growth of sales, profits etc.)?

a. Strong Positive effect Yes No)b. Positive effect Yes Noc. Negative effect Yes Nod. No effect Yes No

9. Did government deregulate your industry? Yes No If yes, how did this policy affect the economic performance of your firm (growth of sales, profits etc.)?

a. Strong Positive effect Yes No)b. Positive effect Yes Noc. Negative effect Yes Nod. No effect Yes No

10. Did government control prices in your industry? Yes No 5a) If yes, how did this policy affect the economic performance of your firm (growth of sales, profits etc.)?

a. Strong Positive effect Yes No)b. Positive effect Yes Noc. Negative effect Yes Nod. No effect Yes No

11. Did government open markets to imports in your industry? Yes No If yes, how did this policy affect the economic performance of your firm (growth of sales, profits etc.)?

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a. Strong Positive effect Yes No)b. Positive effect Yes Noc. Negative effect Yes Nod. No effect Yes No

12. Did government encourage exports in your industry? Yes No If yes, how did this policy affect the economic performance of your firm (growth of sales, profits etc.)?

a. Strong Positive effect Yes No)b. Positive effect Yes Noc. Negative effect Yes Nod. No effect Yes No

13. Did government attract foreign investments in your industry? Yes No If yes, how did this policy affect the economic performance of your firm (growth of sales, profits etc.)?

a. Strong Positive effect Yes No)b. Positive effect Yes Noc. Negative effect Yes Nod. No effect Yes No

VIII Firm Expectations

1. What are your expectations of your firm’s sales over the next 2 years?Rising (how much) Yes NoFalling (how much) Yes NoStaying constant Yes No

2. What are your expectations of your market share over the next 2 years?Rising (how much) Yes NoFalling (how much) Yes NoStaying constant Yes No

3. What are your expectations of your firm’s profits over the next 2 years?Rising (how much) Yes NoFalling (how much Yes NoStaying constant Yes No

4. What are your expectations of your firm’s product mix over the next 2 years?Rising (how much) Yes NoFalling (how much) Yes NoStaying constant Yes No

5. What are your expectations of the number of people employed by your firm over the next -2 years?Rising (how much) Yes NoFalling (how much) Yes NoStaying constant Yes No

6. What are your expectations of expanding in foreign markets in general over the next 2 years?

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Expanding (how much) Yes NoContracting (how much) Yes NoStaying constant Yes No

7 What are your expectations of expanding in other Arab markets in general over the next 2 years?Expanding (how much) Yes NoContracting (how much) Yes NoStaying constant Yes No

8. What is your general long-term outlook for your firm (six years and beyond)?Good Yes NoBad Yes NoOther (specify)