Last week, consultants Oliver & Ohlbaum published a study for Google looking at the question of how to define and measure the creative industries. Its diagnosis of the problems in the metrics is in many ways correct. But it misunderstands the methodological advances made by our Dynamic Mapping research and consequently underappreciates the significance of the changes DCMS is proposing to make to the creative industries economic estimates for the UK.

The problems that O&O correctly identifies and which have been discussed extensively by previous work are as follows:

1. Estimates of the Gross Value Added contribution of the creative 'industries' understate the economic importance of creative activity by ignoring creative activity in other sectors.

2. The contributions of sole traders, which are important in the creative industries, are not well captured by (most) official data sources.

3. The absence of internationally-comparable creative industry statistics impedes our understanding of today's economy and the development of effective policymaking.

4. The internationally-agreed classifications from which all countries' occupation and industry codes are derived are not timely and are insufficiently granular to satisfactorily identify creative jobs and industries from others.

5. Gross Value Added estimates are not the same thing as the overall 'value' of the creative industries, for example they do not capture the economic value of goods, experiences and services that are not mediated in markets, nor do they capture 'cultural' value.

A good deal of research has been done in recent years, led by UK and Australian researchers, to address these shortcomings.

Nesta's Dynamic Mapping methodology addresses the first problem by defining and producing estimates of the economic contribution of the wider 'creative economy' - where all creative people work, regardless of industry - and of the 'creative industries', those industries within the creative economy which specialise in creative activity.

By working off data sources such as the Labour Force Survey and the Household Census - which survey individuals rather than organisations - the Dynamic Mapping also captures sole traders and freelancers, thus addressing the second problem.

An additional advantage of these data sources is that most countries have a Household Census or some version of the Labour Force Survey (in Europe the survey is standardised), making internationally comparable estimates a real possibility. The methodology has already been applied on Australian data, for example, and we'll be rolling out the method in other countries in the coming year.

I've written separately about how different methodologies need to be used to estimate the economic contribution of non-market creative activity, including the public economics techniques used in the British Library study cited by O&O.

Oliver & Ohlbaum's report makes recommendations for improving the state of the creative industries statistics, such as that industry bodies should work with their members and the ONS to ensure they are correctly classified in the administrative data. This is something that the Creative Industries Council’s Technical Working Group, which I chair with Jeremy Silver, has been working on for the past 18 months. Bodies like UK Music have already engaged in a productive dialogue with the Office for National Statistics to address shortcomings in the official data for the music industry. The sector skills bodies, Creative Skillset and Creative & Cultural Skills, have this year led a major review of the SOC and SIC codes, collating UK industry proposals for how these need to change.

The report also suggests that individual industries could usefully standardise their data collection to plug some of the gaps in the official economic contributions, something again that the Technical Working Group is working on.

The report's biggest omission is in not appreciating the significance of recent methodological developments. Which is that with the Dynamic Mapping we have for the first time a transparent methodology for classifying which industries should be identified as 'creative' and others as not, which also recognises the economic importance of creative activity in the wider economy, and which leaves genuinely internationally-comparable statistics - the holy grail - within our sights. The methodology can be applied to official data sources and industrial classifications which, with all their limitations, means that the contributions of the creative industries can be compared with other industries on a rigorous basis, as befits a sector which we estimate in the UK is now bigger than financial services and advanced manufacturing.