Where are the AHRC Creative Clusters?

Over a year ago the AHRC launched its call for a Creative Clusters programme designed to help the creative industries develop new research and development projects. In response over 40 proposals were submitted. Early this summer these were shortlisted and eventually nine proposals  have been chosen to help improve the productivity and growth of the creative sector in the UK, as part of the government’s Industrial Strategy.

Interestingly, UK Universities have formed their own clusters to participate in this programme. In total, over 25 Universities are included within the final nine projects.  Their partners range from the BBC and Burberry to Codebase and Duck Soup Films.

The proposals are dominated by programmes in which Universities, with the resources of over 180 staff, students, spin-offs, and Lab facilities will undertake research on behalf of:

Public bodies are also part of the mix with Digital Catapult, the V&A, Creative Scotland, the Welsh Government all contributing to the match financing required to unlock the government-backed Creative Clusters’ money.

The nine proposals can be grouped into five distinct areas of creative activity.

  • Fashion
  • Immersive
  • Infomatics
  • Games and
  • Creative Industries, as a whole, within a region.

These are as follows:-

Fashion

University of the Arts London;University College London;University of Cambridge;  plus Loughborough and Leeds Universities and Queen Mary’s College.

Headed up by the London College of Fashion(UAL)  This £7m. proposal is centered on Sustainable Products – tech, materials and design, and have two key objectives – Business Innovation and Technology Adoption.

University of Leeds; Royal College of Art and University of Huddersfield.

Focuses on creating new approach to design – ‘right first time’ – the goal is to  cut development time for new fashion products from 9 to 3 months . The £6.9m proposal aims to achieve this via a combination of Digitally Connected and Sustainable Processes; Digital Communication and Data Analytics, and Creating a new apprenticeship programme.

Immersive

University of York; British Film Institute; Screen Yorkshire  and independent consultant Kate o’Connor.

A £6.9m set of activities focused on skills development, in particular, story telling within an immersive environment. This work to be carried out by the  Creative Media Lab partnership and involve the extensive use of research students.

Royal Holloway – University of London; Brunel University; University of Creative Arts; National Film and Television School and Pinewood Studios.

The creation of a Story Lab which combines  cross company innovation; data management and next generation training are part of this £7m project. The goal is to produce 155 R&D projects, a 20% increase in funding success, plus 55 jobs and aims to reach over 1m in audiences.

The important connections for both of these proposals are the links with Audiences of the Future and the AHRC’s own VR  Demonstrators.

Infomatics

Two capital cities are the focus for infomatic research projects.

Cardiff University; Cardiff Metropolitan University; University of South Wales and Town Square

Cardiff’s £6m project focuses on two area – Screen data,, especially TV, and News, a journalistic Lab. Using the existing media base in South Wales aims to build new broadcast content and platforms, while also developing new forms of news content and local news provision.

Edinburgh College of Art; University of Edinburgh; Edinburgh Napier University and Codebase

Edinburgh’s £7m budget aims to support the city’s Festivals with audience information to build wider and longer term engagement. The latter builds on the Arts Council’s digital programme and like Cardiff will involve the creation of a Lab.

Games

University of Abertay Dundee; University of St Andrews and University  of Dundee

A programme with a diverse focus on games development using a University based test Lab, combined with R&D fellows in companies and the use of PhD students to create a University-based talent pipeline.  The £7m proposal aims to create original IP and to stabilise the micro games company environment.

Creative Companies

Two of the Clusters spread a wide net embracing the complete range of creative companies in a region – Bristol-Bath, and Northern Ireland.

University of the West of England,;University of Bristol; University of Bath, and Bath Spa University

This £6.8m project is led by the Watershed in Bristol, which provides a firm basis for action. The overall aim is to embed R&D activity into the creative industries into the three Universities.

University of Ulster; Queen’s University Belfast; Northern Ireland Screen and RTE.

This £6.9m broad cluster will embrace many partners in Northern Ireland, including Techstart NI, Invest NI, and Belfast Harbour Commissioners. Encompassing  as it does the whole range of creative industry activities, it focuses on identifying ways of improving the situation for creative companies in N.I.

 

AHRC Creative Clusters and the 90%.

As indicated in previous blogs freelancers and micro-companies make up over 90% of the creative industries

The Creative Industries Federation research on freelancers, which reflected, in part, the conclusions of the AHRC’s own FUSE research, provides a background to this initiative.

In this research three key things were identified as being required to improve the productivity and day-today working of these vital players in the creative industries. These were :-

  1. Access to finance
  2. Legal Advice and support
  3. Access to workspace

None of the proposals explicitly seeks to address these three areas of development for freelancers.

Micro-companies are listed as potential partners/supporters of the big regional proposals but only the games proposal explicitly identifies a specific problem i.e. the stabilising of the micro-games company environment, as part of its aims.

It is Too Difficult

This lack of focus on the small players within the creative industries highlights a problem which often affects national  programmes. These are often aimed at bigger organisations, and dealing with small micro-companies and freelancers is seen as too difficult.  However, if the industrial strategy is to work in the creative industries sector this relationship must change.

This selection of Clusters is a good starting point but it also points to other major challenges within the Creative Cluster bids strategy. It will now be up to the various Universities, and their partners, to demonstrate how they will reach out to the vast majority of the sector, and ensure the innovation, increases in productivity, and economic growth that underpin the ambitions of the industrial strategy are achieved.

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The Future of Indie Film in UK & Ireland.

The last month has seen the UK’s bfi and Ireland’s Dept of Culture, Heritage and Gaeltacht (DCHG) both publish plans for the film industry’s future. The bfi’s Commission on UK Independent Film focuses exclusively on this sector, while the DCHG Audio Visual Action Plan looks at the wider creative sector. However, what is striking is the similarities of both reports views of the challenges faced by independent film, and in many respects the same conclusions as to action which needs to be undertaken.

This blog will focus on the key conclusions and, in particular, the actions both see as essential to improving the situation for independent films going forward.  Actions which address key challenges facing film-makers across Europe, but have particular resonances in the UK & Ireland.

NOTE: Most of the key challenges identified in both reports reflects the conclusions drawn by the the BCre8ive Investment Forum in March 2018 about the creative industries as a whole, and will be referenced where appropriate.

First a Definition

A quick definition of what is an independent film –

Film made by “independent companies – under the control of shareholders resident in the UK(Ireland) – where significant intellectual property rights in the films, with meaningful and continuing asset value, remain with those companies.” –  Commission on UK Independent film.

The Key Challenges Identified

  • The lack of risk taking with investment after the global financial crisis and the impact of digital disruption.
  • A sharp decline(50% in some cases) in traditional sources of finance and revenues, including some tax incentives.
  • An increase in theatrical films being screened – over 800 in 2017 in the UK.  These are often only for tax or financial reasons on limited releases, but they crowd the scene for audiences and make success for independent films more difficult.
  • The inability of production companies to retain rights, and thus being forced to focus merely on overheads and fees as their means of income.
  • The lack of development funding which leads to films being taken to market before they are ready.
  • The lack of marketing support and finance to promote films.

These issues are part of an overall set of similar challenges affecting games, and animation, as reflected in the DCHG Action Plan, but they also affect other sectors of the creative industries e.g. graphic novels.

The Solutions Suggested

  • Increase Funding for the Film Industry

Screen Ireland will see its funding increased, amounting to over €200m over the next ten years. bfi funding was set in in 2016 at nearly £500m for 2017- 2022.

Tax initiatives to funnel equity investment into film companies has always been part of governments’ policy. In Ireland this is section 481, which will see an increase in its upper ceiling to €100m.

In  the UK PACT’s recommendation for changes to the current Tax scheme were reviewed but not taken up  by the Commission. However, the bfi Commission identified a new approach to EIS investment, which could overcome the recent interpretations that effectively closed this avenue to independent film makers.  This new approach would involve the creation of an EIS based fund , supported but independent of the bfi, where “risk would be mitigated by supporting a diversified group of perhaps ten or more production companies.” – Commission on UK Independent Film

This portfolio/studio approach to investment was identified at BCre8ive’s March Investment Forum.

  • Improving the situation for co-productions

Both reports highlighted the need to improve the need for more co-productions to enhance the financing and distribution of independent films.

The Bfi Commission focused on two major elements to improve the climate for co-productions . First, changing the rule in the film tax relief so that the UK
co-producer can claim 100% of qualifying UK spend (up to a maximum of 80% of the total budget), rather than the current maximum of 80%. Secondly, rejoining Eurimage as part of an increased cooperation with European progammes, which includes staying as part of the Creative Europe programme as it goes forward.

Ireland already has these advantages and therefore it aims to increase the funds available to co-productions by €3m per annum.

  • Undertaking new marketing initiatives

This has two distinct foci. On the one hand reaching out to new audiences – part of the Commission’s approach to younger audiences, and improving the marketing activities of the film companies. The latter is the dominant approach of Screen Ireland going forward with “limited” support for attendance at trade events., while the bfi recommends supporting up to 6 UK Indie films a year in a new marketing strategy.

The interesting point here is that neither approach rcognises the potential for social media and global web marketing/distribution, while recognising that digital disruption is part of the challenge going forward. As one contributor said having a P&A i.e. marketing spend available improves a films marketability enormously.

  • Creating new Development Funds

Both plans aim to create new development funds. In Ireland this is a specific commitment of an additional €2m a year. While in the UK the aim is to create a new £5m+ Commercial Development Fund working on a portfolio basis  for investors. The objective of the fund would be “to provide financial support to producers to develop high value IP with the potential to reach a wide audience, have the potential to become franchises, or to deliver an outsized value to the UK independent film sector through its production/distribution impact.”(ConUKIF).

These ambitions however do not address the elephant in the room. This is that large development funds have been available in the past e.g. UK Film Council, without any increase in the success of indie films.

This arose from two distinct reasons. One, large parts of the funds were spent in bidding wars for rights to existing works, and so money was lost from actual film development. Something which appears to be encouraged in the UK Commission’s report. Two, the production culture has created little incentive for understanding how a screen narrative works for audiences. It has focused instead on attracting actors, who can attract the finance. The result being that few producers, or writers, have the skills or knowledge to improve screenplays even if the money for development is there.

  • Creating new business support structures.

Though both action plans identified the need to improve support for film companies from identifying routes to finance to cheaper premises and skills development little is planned.. The bfi plan recommended no significant actions, while Screen Ireland has committed to an approach similar to the UK’s Creative Skillset in the coming years.

The lack of specific business support was highlighted as part of BCre8ive’s investment forums and as such is seen to be crucial to the success of any new investment/funding strategies, and the exploitation/retention of IP rights.

  • Maximising Rights

The impact of online platforms Facebook,Amazon,Apple, Netflix and Google (FAANG) is seen by both reports to have made revenue issues very difficult for independent films.  There is no ‘magic bullet’ suggested by either plan but both call for a coming together of the various players especially the Public Broadcasters and exhibitors to address how new models of revenue and IP rights exploitation can be developed for independent films.

The failure to really engage with this issue beyond the renewed call to fight piracy and to avoid inadvertently inhibiting producers/production companies from retaining rights is a clear weakness within both strategies.

Conclusions

There is clearly a crisis within independent film-making in the UK/Ireland. Lack of funding at various stages of the film production process, and the new distribution landscape pose major barriers to improving this. Both action plans suggest some new, and old, ways forward.

However, the failure to address how IP rights can be retained by production companies: how small micro companies and freelance operations can be supported in an increasingly monopolistic environment; and how returns can be created for investors, will unfortunately limit the impact of any actions undertaken.

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Do you need to build your own Creative Cluster?

Creative Clusters are now at the the heart of new funding for the Creative Industries in the UK. As was pointed out in the previous blog on opportunities for investors, there will be more money at seed level i.e. up to £50,000 for new creative projects in the coming three years. However, the vast majority of these funds will be focused on existing creative clusters as defined by NESTA research and the AHRC Creative Clusters Programme.

Therefore, the vast majority of the UK is not seen to have a creative cluster by current definitions.

This begs the questions what happens if you are not in a recognised cluster, and how will freelancers and micro-companies (over 90% of the Creative Industries) benefit from a programme, which largely excludes them by definition. This latter point stems from the lack of information in government statistics on creative freelancers and micr0-companies. 

The answer lies in a three tier approach for creatives, universities, local authorities and LEPs working up their own Creative Cluster.

Why build a creative Cluster?

Apart from a desire to join the likely recipients of new monies, the bigger argument rests on the need to create more local employment, boost the income of many small creative companies and participate in what is the fastest growing part of the UK economy. In addition, it is clear as automation hits transport, manufacturing, and distribution the creative industries is one of the key areas where work will still be dominated by human activity.

In this context it makes sense for everyone with a role to play in building creative clusters to play their part.

Local Knowledge

The key starting point is to discover the creatives on your doorstep. You may be in a local creative MeetUp. However, it is probably based on a particular skill or shared interest. This probably means you do not know about different creative groups, who meet in the same town/area and share the same issues/needs as you. Needs which could be met by an active creative cluster. So connecting up with other creatives means you could not only help each other but also ask for effective support.

Local government is hampered in having any effective creative cluster support owing to a general lack of information/statistics on creative activity in their area. This has been partially overcome by the recent Nesta interactive infographic.  This incorporates the latest government statistics (sometimes only as late as 2014) and their Creative Nation work also incorporates MeetUps and some other sources.

In 2007 Westminster City Council undertook a survey of their area and discovered a vast unrecognised creative economy, which they had to date not realised was so important to the area. A general awareness has now been created across the UK of the importance of the creative industries with some LEPs,  and Mayors, in particular, taking a lead. Despite this change the issue remains the invisible nature of creatives in local economies from craft creators to photographers, and indie games developers.

Therefore, there is an urgent need for local government organisations to undertake local creative economy surveys, and build a clear up to date picture of the  creative activity in their area. With this knowledge effective policy and investment plans can be made and a clear sense of the creative cluster developed.

 

Local Support

The CIF Freelance survey and the Brighton FUSE 2 report identified the fact that creatives need a number of specific business needs. These range from access to finance to legal advice, and workspaces. Creating these tailored services could be undertaken by Universities and local government or LEPs, thus ensuring that when new products and creative opportunities arise they do not flounder owing to a lack of basic business knowledge and support.

Note, that in some cases this may mean an active support structure not just expecting creatives to suddenly turn into pro-active entrepreneurs overnight. Remembering also being creative does not necessarily mean being able to pitch or work out a business plan.

In terms of sustaining the local creative clusters FE colleges and schools can play an active part in promoting creative skills, supporting new talent and networking with national and local skills services. This work is currently being focused on by the Creative Industries Federation(CIF) and Creative Skillset.

Local Investment

Much of freelance creative work, beyond service contracts, is self-financing. Access to finance for freelancers and micro-companies, who want to develop their own work and not just work from one commission to the next is very difficult as indicated in numerous research projects – see above. Therefore the creation of a local investment community focused on creative products and activity will play a vital part in growing local creative clusters. The problems  associated with this have been addressed in ‘New Funding for Creatives‘.

In this context the development of a Creative Investment Forum is critical to the long term sustainability of any creative cluster.  The aim of the Forum will be to educate local business angels in the investment opportunities provided by the creative industries in their area.

Opportunities which will be enhanced by the increase in public sector ‘seed’ funding, the local creative support network, the active participation of local organisations,  plus the predicted increase in growth, and value, of the sector over the next five years. Obviously there are the tax benefits of SEIS/EIS activity, and the increased R&D tax credits available to creative activity. However, in addition, as part of the government’s Creative Industries Sector Deal, there is a stated ambition to create a new Angels co-pro fund to match local investments outside of London.

Looking to the Future

It is clear that these three tiers of activity cannot be undertaken overnight. However, if organisations and creatives start on surveying the local creative activity, and build towards organising Investment Forums over a twelve month period a new local creative cluster could be active and successful.

The opportunities exist – the question now is which areas, cities, or towns will join the fastest growing part of the UK economy?

 

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What Will the Sector Deal Ever Do for You – Investors?

In this, the third of three blogs on The Creative Industries Sector Deal, which was published recently by the UK Government, we set out the opportunities and questions for Investors in the UK’s Creative Industries.  The Deal sets out a range of goals and actions designed to help the creative industries and its partners, as part of the UK Governments Industrial Strategy. However, in the light of the famous Monty Python line “What have the Romans ever done for us?” we have looked at what the Sector Deal might do for different people involved in creative work in the UK.

Those investors who might benefit range from regional Angel Funds to Creative Investment Funds and individual investors.

 

Creating Investment Opportunities

As illustrated in the two previous blogs – Freelancers and micro-companies and Universities and Major Companies/institutions – the Sector Deal creates a range of new creative and company investment opportunities. Opportunities, where Seed Funding is available to much of the sector,  and therefore the initial risk to investors is mitigated.

In the light of this, and the existing tax credits for film, high end TV, animation and games, the creative industries over the next two years is a real opportunity for investors to engage in a rapidly expanding market. A global market worth in excess of  £1,580bn, with a UK digital global reach alone, already worth an estimated £9bn in 2017.

An Explosion in Seed Funding

The Creative Clusters due to come into operation in October 2018, joint ventures between universities and creative companies, are expected to create a number of local seed funding operations.  These will provide from £10-100,000 in seed capital to creative enterprises in cluster areas. The likely outcome of which, if managed well, will be numerous IP investment opportunities.

£16m will be invested in immersive demonstrators, which in themselves provide new investment opportunities. This combined with the £12m R&D funding, via three national competitions makes match funding and post-seed funding in immersive technologies very attractive over the coming years.

Extra money for the UKGames Fund, which provides seed funding for games developers means further opportunities to invest in the UK games sector, now worth over £5bn.

A £60m Contestable TV Fund will be launched by the bfi later this ear, which will provide opportunities for investors to match fund broadcasters and participate in the IP exploitation of new children’s TV programmes.

In addition, InnovateUK – now part of UK Research and Innovation – will be taking a new approach from 2018/19, so that all its competitions will be open to Creative Industry companies. The total budget for all of UK Research and Innovation’s work is £6bn p.a.. However, only 2.4% of InnovateUK’s budget in 2016 has been spent in the Creative Industries, and the appointment of Sir Peter Bazalgette to the board is aimed at improving this scenario.

These initiatives may also be supplemented by activities under the new £20m Creative Development Fund.

All of which are in addition to funds available through Creative England,bfi,Arts Council,Creative Scotland, Creative Wales, prsFoundation,Crafts Council and Northern Ireland Screen and numerous Lottery awards.

New Investment Funds

The British Business Bank will seek to improve access to finance for high-growth firms outside London – including creative businesses – via a commercial investment programme to support clusters of business angels.  The key here is to ensure that these new funds do not end up picking ‘low-hanging fruit’ and focus on the tech sector, which has been the case to date.

The problems identified by investors in creative industries are laid out HERE . Given these problems the Sector Deal seeks to improve the investment readiness of creative enterprises.

Investment Support

One of the key barriers to investment is a lack of awareness of the opportunities and contacts within the creative industries. Therefore, it is planned that a creative industries roadshow to introduce businesses and investors will be organised in 2018..

The government also aims to invest up to £4m (subject to a business case) in a programme of intensive business investment readiness support. This will need to be tailored specifically to creative enterprises, as past evidence has shown that generic business support does not work for freelancers and micro-companies.

This work is to be led by the industry, who will establish a Creative Champions initiative to offer tailored advice, mentoring and networking opportunities for creative entrepreneurs and businesses in order to help them become investment-ready, and to improve understanding between investors, financiers and creative businesses.

In order to facilitate these developments the government will convene a Creative Industries R&D Working Group from across the sector. Its focus being barriers to R&D funding, and opportunities to improve the take-up of existing support e.g. R&D tax credits.

The Keys to Major Successes

The fragmented nature of the creative industries with over 90% being freelancers or micro-companies(the majority under four people), and the ‘long-tail’ of revenue returns on many creative IP rights creates particular problems for successful investment.

In this context pro-active investors are critical to ensuring effective and high rewards. This means engaging with the intermediary bodies e.g. Universities, Arts Council England, who have information on thousands of creative start-ups and established artists. It means being prepared to work with collectives of freelancers, and groups of micro-companies with limited rack records. Crucially, it means portfolio investment, rather than a ‘picking winners’ strategy.

In addition, patient capital needs to be available to extend beyond the limits of EIS, and 3-5 year returns on investment.   This could be achieved by either rolling over existing investments or providing new equity for companies and products/projects, which have already gone to market in some capacity. However, this latter position is likely to see new investors squeezed out by major media/arts companies.

For more on the Sector Deal and Freelancers and Micro-Companies please read HERE

For how the Sector Deal will help Universities and Major Companies please read HERE

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What Will the Sector Deal do for You – Universities and Major Companies/Institutions?

The Creative Industries Sector Deal, published recently by the UK Government, sets out a range of goals and actions designed to help the creative industries and its partners. However, in the light of the famous Monty Python line “What have the Romans ever done for us?” we look at what the Sector Deal might do for different people involved in creative work in the UK.

Those who might benefit range from the tens of thousands of freelancers and micro-companies who make up over 90% of the industry to regional investors and universities.  All are mentioned in the 71 page report, but in this second of three blogs we will review what the options are for universities and major companies/institution.

Universities are Major Gainers

£64m in an Arts and Humanities Research Council programme to deliver eight partnerships between universities and creative businesses across the UK. Announced last year the process of selecting the eight Creative Cluster centres is well under way.  The shortlist of possible centres is HERE and final decisions will be announced this summer.

25 Universities will also benefit from the new Institute for Coding which will receive £20m in funding within the Industrial Strategy funding programme. This was announced at Davos earlier this year.

The development of talent in the latter initiative is only one part of a general increase in funding and focus on the talent pipeline for the creative industries that will feed through into the universities. These include :-

  • £2m(dependent on  a business case) to ensure there is a larger and more diverse intake of talent and a broader range of routes into the creative industries;
  • DCMS support for a creative careers strategy;
  • a creative industries toolkit that will be made available on the web; and
  • a national campaign led by the Creative Industries Federation.

Major Company Opportunities

Creative exporters will benefit from a new programme and a new Creative Trade and Investment Board supported with at least £4m from Department of Trade budget. This will include continuing support for the Trade Access Programme and Music Export Growth Scheme.

The Creative Kickstart Programme aimed at creative companies in creative clusters with mentoring and advice on finance, exports and IP, including a creative industries roadshow to introduce businesses and investors.

£33m investment from the Industrial Strategy Challenge Fund into the Audiences of the Future Challenge that will be administered by the UK Research and Innovation. This is a new body created on April 1st 2018, bringing together UK Research Councils, Innovate UK and a new organisation, Research England.

An increase in the rate of R&D tax credit to 12 per cent from 11 per cent. Essential tax benefit for companies in the creative industries ,who undertake extensive Research and Development.

Developing Institutions

Creative Local Industry Partnerships will be created to enhance collaboration between creative industries consortia,including the Creative Industries Federation, Creative Industries Council, Local Enterprise Partnerships, Combined Authorities and partners in Devolved Nations.

A £10m Industry Centre of Excellence (supported by £5m from the AHRC’s clusters programme) to overcome silos in the key industries, ensuring the UK creative workforce is the most skilled in the world in the use of immersive technologies.

A £20m Cultural Development Fund open to bids from local partnerships. The fund will run over two years and will invest in areas of the country that can demonstrate high impact, robust plans for using investment in cultural and creative industries assets to further economic growth and support local communities.

Two Key Issue

Over 90% of the creative industries is made up of freelancers and micro-companies. In order for the Sector Deal to work it will need to reach out to this fragmented community to ensure that past mistakes are not repeated.

The control of large parts of the monies allocated to the Deal rest with major institutions and are geared towards major companies, who have staff available to participate in bid applications and the various committees required to run programmes. At one level this is understandable, but unless these bodies make a real effort to engage with the freelancers and micro-companies by offering effective support and simple, open-access to funds, much of the ambition stated within the Deal will be lost.

Much of the Deal focuses on start up and seed type investment funding. If match funding, and crucially follow on funding, is not provided good ideas and talent will be either lost or the exploitation left to non-UK companies. The engagement of investment groups, in particular Angel Funders, outside of London will be a critical factor in any future success.

On the latter point see ‘What will the Sector Deal Ever do for You – Investors?‘.

For possible implications for Freelancers and micro-companies see ‘What will the Creative Industries Sector Deal Ever do for You ?’.

 

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What will the Creative Industries Sector Deal Ever do for You – Freelancers and Micro-Companies?

The Creative Industries Sector Deal, published recently by the UK Government, sets out a range of goals and actions designed to help the creative industries and its partners. However, in the light of the famous Monty Python line “What have the Romans ever done for us?” we look at what the Sector Deal might do for different people involved in creative work in the UK.

Those who might benefit range from the tens of thousands of freelancers and micro-companies who make up over 90% of the industry to regional investors and universities.  All are mentioned in the 71 page report, but in this first of three blogs we will review what the options are for freelance creatives and creative micro-companies.

But First – A Short History of the Deal

The Creative Industry deal follows on the government’s other Sector Deals  e.g. automotive, and construction, which are part of the Industrial Strategy, and follows on from an independent review of the Creative Industries by Peter Bazalgette.

It is stated to be the first part of a series of agreements for the creative industries, which are recognised to be one of only five sectors within the UK economy being deliberately targeted for government support.  The reasons for this include the growth of the Creative Industries compared with the rest of the economy – twice as fast, and the expectation that employment in this sector will not only  grow, but it is seen to be safer in the new digital AI world from being replaced by machines.

Which Creatives Potentially Benefit?

Games Developers, one of the largest parts of the UK Creative Industries, were already being supported until 2019 under the UK Games Fund and will now be supported until 2020 with an extra £1.5m. Projects supported by the Fund and other micros may be eligible for the Angel Funds and form part of Creative Clusters.

Immersive companies are big gainers with £33m into the Audiences of the Future Challenge. £16m of which will be invested in projects, and £12m will be used for three UK competitions including one aimed at making high quality content cheaper, faster, and more accessible.

Children’s TV Production Companies will see a new £60m Contestable TV fund, financed out of the license fee, made available for UK productions. This may, given current production trends, benefit animators more than live action creatives.

Creatives who live or work in Creative Clusters. Later this year the AHRC will announce the eight creative clusters it will be supporting with the £64m funds made available through the Industrial Strategy Fund. In addition, micro companies in creative clusters will be eligible for support from the Creative Kickstart programme.

Visual Artists the biggest revenue generating creatives globally already have a new £3.6m development fund, which is being rolled out by the Arts Council of England, and was announced only days before the Sector Deal was published. Under the Deal they are not specifically identified, but artists working within the areas that become Creative Clusters, or who organise themselves to be attractive as collectives to regional Angel investors, may well attract new finance for their work. In addition they may be eligible for support under the £20m Cultural Development Fund.

Which Creatives do not Obviously Benefit?

Film-makers, writers, photographers, illustrators, musicians, graphic novelists, web and craft creators, fashion designers, designers and architects.  All these individuals and companies will need to be linked to a supported creative cluster to obtain direct benefit for creating new work.

% of Jobs in Creative Industries in UK in 2016

Possible benefits for all creatives across the UK.

The £20m Cultural Development Fund is open to partnerships to bid across the UK. So creatives need to be pro-active and engage with museums, galleries, universities, and local government to ensure access to these funds do not all end up in existing cultural institutions.

£4m is being made available to support companies seeking additional investment. However, this is open to all companies, not just creative industry ones, and competition will be stiff

A new Creative Industries Trade and Investment Board is being created, which could help creatives export their work. This is especially the case with digital creative goods and services accounting for an extra £9bn in exports above the official government figures.

£2m – dependent on the business case being made – to improve talent diversity across the creative industries.

Increased R&D Tax Credit from 11%to 12% which can be claimed by creatives in the early stages of most projects.

Innovate UK funding is being re-designed to ensure the creative industries receives more than the 2% of funds currently made available to them.

What next for the 90% of the Creative Industries in the Sector Deal

Much will depend on the eight Creative Clusters, and who wins any bids for the Cultural Development Funds. So  the key in the short term is to ensure that all freelancers and micro-businesses contact their  local authorities, to see if they are involved in bids. In addition, there is an urgent need for groups of creatives to form collectives, which could be eligible for investment form the new regional Angel Funds. Typically these funds provide from £100,000 to £1m for new works. Details of the Angel Funds are not yet available but will be administered through the British Business Bank.

See our blog on new monies – http://blog.bcre8ive.eu/money-for-creatives-ways-forward/

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Money for Creatives – Ways Forward

This is a summary  of the BCre8ive and Digital Catapult  ‘Ways Forward’ event held on Monday 19th March 2018 at Digital Catapult. This was the follow up event to their successful November 2017 Investment Forum, and involved numerous creative freelancers, micro-companies, plus public and private financiers.

The aim of the event was to build on the previous discussions, and look to solving the weaknesses in the UK’s investment structure for freelancers and micro-companies involved in original content production.

The following is a brief summary of points raised which will be expanded upon in future blogs.

A number of key points had been identified prior to the event

  • The continued rapid growth of the Creative Industries in the UK – 34% 2010-15.
  • The fragmented structure of the content creators – over 90% of the Creative Industries in the UK are freelancers or micro-companies, often under four people.
  • The huge global market in creative and cultural revenues worth £1,723bn in 2015, while the trade in creative products was worth £389bn.
  • UK Creative Service exports in 2015 amounted to less than 1% of these global revenues – suggesting a massive opportunity for global expansion in what is still a growing market..

In addition, 2018 will see a number of public sector contributions to the finances of the Creative Content Industries. These include

These amount to a large injection of seed funds into the creative content sector. These will be supplemented by an expected several million pound new initiative, under a Sector Deal for the Creative Industries,  announced at the end of March.

At ‘Ways Forward’ a number of problems were identified during the round table discussions.

PROBLEMS FOR CREATIVES

The dependence on service work by the content creators, which severely restricts their ability to develop their own IP and then profit from its exploitation.

The current funding gap between initial seed funds and the large Venture Capital Funds available for bigger companies.

The lack of sufficient development funding to sustain a viable content creation sector.

The lack of effective services and information for freelancers and micro-companies, who operate differently from the standard retail and tech models, which dominate much of the start up investment sector.

PROBLEMS FOR FUNDERS

The scale of public funds is not sufficient to move far beyond seed funding.

The small scale of most content creators activities makes them unattractive to investors owing to the  proportionately large administrative and legal costs of investing.

The perceived ‘risky’ nature of investing in one-off creative projects.

The myth of the ‘romantic artist’ dominating the dialogue between creatives and investors.

The inability of freelancers and micros to monetize their creative work at a level to provide a significant rate of return on investment.

However, no sooner were problems posed then potential SOLUTIONS were proposed.

The Creation of Creative Groups.

These ranged from the creation of a number of independent feature film development ‘Studios’ to creative development Labs along the lines of the Danish Broadcasting model or ‘Tin Pan Alley’.

An essential part of the grouping of creatives will be a focus on enabling the enablers be they indie producers, small publishers  or creative group managers.

Match Funding Opportunities

In some sectors match funding by government for investors is already possible and could be used within the Creative Content sector. At a seed funding level this could be combined with crowdfunding initiatives. Initiatives which will reduce the risk for investors.

Services for Micro Creative Companies and Freelancers

The lack of centralised information services for creatives was highlighted. In addition, for areas such as VR, where there is currently no proven market and micros are struggling to grow/survive, there is a need for business training and growth support.

Marketing, and in particular web-marketing has a key role to play in increasing the profitability of creatives. – a new report suggest 20% of UK creative exports are now digital.

Government Initiatives

Beyond the planned Sector deal and the already announced extra funds there was a need to bring practicing creatives closer to the decision making process, and to ensure that applications for funds are make accessible for all not just major companies.

Make Access to Creative Funding Easier.

Retaining EIS/SEIS for new creative companies, plus the specific Tax Credits are essential. However, it is also critical to ensure tax credits are protected for the micros. e.g. TV companies are taking a slice off budgets to off set a micro-companies tax credit.

The Bigger Picture

Beyond these specific points there was a consensus about some larger issues.

First the need to be more ambitious. Not only in terms of companies and freelancers reaching out to the global markets, but also in the approach to investments.

Second the need for scale. To create new content on the scale needed to have an impact new funds in excess of £100m are needed.

Third to be market orientated. Critical to success is being aware of potential markets, but also where new markets can be created. In both instances the concept of making a company or group of freelancers more attractive to investors is essential.

Finally, focusing on quality. Creative content is a growing global market, but it is highly competitive. To succeed creators and investors need to focus on quality to stand out.

 

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The Award Winning Genre

Every year major film awards are made in the world the Oscar’s; the BAFTAS; EFA, Palme D’Or; BIFA, Sundance, IFFA etc. with much press coverage, celebrations, disappointments, box office boosts and some disbelief. However, what genre is most likely to win you one of the major awards? Recent winners include ‘Three Billboards Outside Ebbing, Missouri‘; ‘I, Danial Blake’; ‘Moonlight’;Toni Erdmann’ and ‘Neerja‘.

In this blog I identify the genre which dominates the global awards , and layout the key elements you need to create a potentially award winning narrative.  Note, this is not the genre they may have been advertised as for example a thriller or comedy, but the underlying genre which allows an audience to connect with the film.  It is also not the subject of the film, which is almost certainly why thee films were chosen for the award lists in the first place.

The genre we are looking at is personal dramas.

This is the genre which has dominated independent and art-house cinema and much of low budget film-making for the last thirty years. Not discussed in the same way as thrillers or horror are discussed as genre, but probably the most important genre with regard to addressing the major issues confronting societies at the time of  their making. A genre that has largely worked quietly to to explore those things that we find difficult to discuss or possibly act upon.

To understand this genre we need to identify the common elements of all these award winning films.

First there is the protagonist.  A isolated protagonist/s, who undergo, or attempts, a major transformation of themselves or their world.  This is really clear in ‘Three Billboards…’ but it is also true of the more comedic ‘Toni Erdmann’.  The nature of this isolation is dependent on the sub genre group to which the film belongs.

In most recent award winners the main character has been isolated from, or within, a community ranging from a theatre group in ‘Birdman‘ to the social system in ‘4 Months,3 weeks ,2 days’. It is the conflict with the communities around us which appear to be a key element to making award winning films.

On of the major advantages, and joys, of  going to the cinema is to enter a distinct world. A world audiences are not normally part of, and crucially do not often see on television. It is in this distinctive world which our protagonist is at odds with, and is critical to the success of the award winning films.  The creation of a particular set of locations and characters which define this distinctive world is  another of the key factors in making an award winning film. The most important element of which is that is not one which can easily be found in television dramas.

Successful personal dramas are hard to create as they operate in the same dramatic space of much television drama e.g. the workplace, local community, or family. Therefore, it is essential that this distinctive world is somehow clearly defined as not television.  This of course highlights one of the major advantages of this genre – its ability to deal successfully with minority cultures and experiences which are not dealt with on television.

The main story of this genre is a quest, which forms a central plotline.  This is the dominant type of storyline identified in most of the recent books on screenwriting from McKee’s ‘Story’ and Vogler’s ‘The Writer’s Journey to Synder’s ‘Save the Cat’. However, this genre also frequently uses the character who cannot be put down story type, often found in action thrillers – think Superheroes etc..  However, this story type can often be found in true life based winners e.g. ‘Spotlight’ and Neerja’, where the main character/s do not fundamentally change but they do change the world around them.

The central character’s dramatic arc is enormous compared with the changes within the characters of other genres. If you think of the protagonists in these award winning films they change enormously. For example, the estranged father and daughter, who bond in ‘Toni Erdmann’ to the astronaut in ‘Gravity’ discovering her true strengths.

Interestingly this is the one genre, where though the dramatic structure is generally linear it is happy to use large time jumps. An option difficult in thrillers and horror, except for prologues, as the tension leaves the plot with too large a time jump. In personal dramas months and years may have passed between scenes, and over the course of the narrative.

The emotional themes of this genre are a desire for order, or the desire for validation. These are the underlying themes that focus the audience’s emotional engagement throughout the narrative. The desire for validation is clearly dominating the current crop of award winners from ‘I,Daniel Blake’ to ‘Three Billboards….” and is a reflection of a wider dominance of this theme’s power stretching at least as far back as ‘The Full Monty’ and including such animated classics as ‘Up’.

The desire for order is more prevalent in the big action driven personal dramas e.g. ‘Star Wars: The Force Awakens’ or the superheroes franchises, which tend not to  win prestigious film awards except for special effects etc. The exception to this being ‘Lord of the Rings: The Fellowship of the Ring’.

The dominant style of the genre at the moment is expressionist, but naturalism is also commonly used. Expressionism, a style created in German cinema in the 1920’s and 1930’s grew out of the silent era. It has evolved from the exaggerated acting of this era into a sophisticated combination of camera angles, stark lighting and an emotional use of sound.  It can be found in everything from ‘Pulp Fiction’  to’12 Years a Slave’. The use of which reflects our sense of everyday reality but adds exaggerated points of view, and seeks to engage an audience directly in the protagonist’s emotions.

There are some award winners which us naturalism e.g. ‘I ,Daniel Blake’, where an almost documentary style of images and sound dominate the visual look and feel of the narrative. Historically, realism has been a successful award winning style in this genre e.g. ‘Rosetta’,Tree of Wooden Clogs’. However, the lack of recent winners in this stye points to a shift in acceptability.

Personal dramas are the big film award winners, yet as a genre it is barely recognised hiding as it does behind other genre labels e.g. thriller; tonal categories e.g. comedy or the subject of the narrative from true-lives to outcasts.  However, if you want to make an award winner it is probably wise to check if you have all the key ingredients of this genre if you want to succeed.

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R&D Tax Relief in the Creative Industries

This is part of our series of blogs on the way in which creatives may obtain finance for their work. Written by guest blogger David Farbey of Myriad Associates this piece reviews one aspect of the UK Tax system which could benefit creative companies – R&D Tax relief.

David writes how as well as specific funding and grants for creative projects, some activities undertaken by companies working in the creative sector may be eligible for public funding in the form of Research and Development tax relief.

What is Research and Development (R&D) tax relief?

R&D tax relief is a government incentive to encourage innovation. It is administered in the form of a reduction of or rebate on a company’s liability for corporation tax. R&D Tax Relief is not limited to any particular industry, and you don’t need to have a team of lab-coated scientists in order to apply. In the year to April 2016, the government gave away some £2.9 billion in this kind of tax relief to companies undertaking R&D across all sectors of the economy, benefiting more than 25,000 companies.

You do not have to be in profit to make a claim.

As R&D tax relief is a reduction or rebate on corporation tax, the first thing to know about claiming R&D tax relief is that you must be a UK company that’s liable for that tax. Your company does not have to be profit-making in order to claim a benefit under this scheme, as loss-making companies can get their R&D tax credit as a cash rebate. However, the R&D tax relief incentive isn’t available to self-employed people. The amount you can claim is related how much you have spent on R&D, and there is no upper limit on this.

What activities qualify as R&D?

The Government’s current guidelines state that R&D tax relief is allowed when a company is undertaking work that is attempting to make an advance in science or technology, or an appreciable improvement in existing technology. Such work must be aimed at resolving a technological uncertainty, and be aiming at a solution that was not readily deducible at the start of the project. Projects therefore proceed through experimental development and testing and as a result – even if the project does not succeed – add to the sum of knowledge in their field.

How does it work for Creative Activity?

At first glance the exclusive role of technology in defining R&D may seem to exclude the sort of creative activities that occur in the arts and the humanities, and although this approach is being challenged by research from NESTA and others, it remains government policy for the time being However, there is nothing to say that an entire project must fall under this definition of R&D in order to make a claim for tax relief. Hardly any aspect of modern life is entirely free of technology, and that includes the plastic, performing, and digital arts. If one segment of a project in the arts involves not just using technology, but developing new technology, then the costs of that part of the project may well be eligible for R&D tax relief.

How much is R&D tax relief worth?

Once you have demonstrated that you are undertaking a project that qualifies as R&D, you can calculate the expenses incurred by that project and, if you are a small to medium sized company, you can get back up to 26% of your R&D expense as a saving on your corporation tax bill. Loss making companies can surrender their losses for a cash payment worth up to 33% of the R&D expenditure.

“33%”

The most significant element of claimable costs under the scheme is staff costs, and this can include both your own staff and any subcontractors. Direct staff costs include salaries, employer’s National Insurance contributions, and any company pension payments. You can also claim up to 65% of subcontractor costs. The claim should relate to the amount of time actually spent on qualifying R&D projects, so for example if someone spends 30% of their time on R&D you can claim 30% of their salary costs.

How do you submit a claim for R&D tax relief?

Once you have calculated the amount you are entitled to claim as R&D expenditure you need to enter the amount on your company’s tax return form (known as CT600). If you aren’t ready to claim when you submit your original return, you can submit an amended return up to two years after the end of your company’s reporting period. That means that if for example your accounting period runs from 1st April to 31st March each year, you have until 31st March 2018 to submit an amended return with a claim for R&D tax relief for the period that ended on 31st March 2016.

In addition to submitting the correct figures on your tax return, it is a good idea to accompany this with a narrative report describing your project. Your report should explain what the technological challenges were, how you overcame them, and why the solutions you developed constituted an advance in technology. Many firms choose to use specialist consultants and advisers to help with preparing their R&D tax relief claims, as they have understanding and expertise in knowing what the tax authorities look for when they evaluate a claim.

David Farbey, Senior Technical Consultant, Myriad Associates

December 2017

About the author

David Farbey is a Senior Technical Consultant for Myriad Associates  and helps clients achieve their R&D funding by researching and writing technical reports to support R&D tax credit claims and grant applications. David is a Fellow of the Institute of Scientific and Technical Communicators (ISTC), and also a Fellow of the RSA. He serves on the ISTC Council and was Chair of the ISTC’s annual Technical Communication UK conference from 2012 to 2015
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New Investments in Content Creation

In the previous blogs on the Content Investment Forum organised by BCre8ive and Digital Catapult we covered the initial issues, and a range of experiences from freelancers and micro companies. In this final blog in this series we are looking at public commitment and private opportunities. The aim of the forum was to start a dialogue about how we could improve the investment landscape for content creation, given that the vast majority of active participants in the creative industries are freelancers and micro-companies of less than four people.

The story so far

The need to focus on content creation has been established, as has the need for new financial structures and support organisations. The key now is to review what is currently available and planned for 2018 and beyond. In particular, how the various options for finance and support can be co-ordinated and improved. In addition, there is the issue of identifying gaps in the content creation pipeline and how we might fill them.

Public Commitment

With a new Government Industrial Strategy – see previous blogs – and in particular the sector deal for the creative industries not yet published 2018 has a large question mark over what government support will actually be available. However, as was explained at the Forum two major aspects of funding are guaranteed. The first is the AHRC Creative Clusters programme. The second is the existing £400m Arts Council of England budget, and the equivalent for the other UK nations – over £200m.

As Andrew Chitty explained, the AHRC programme with an ambitious target budget of £80m, and as part of the new Challenge Fund, aims to create up to eight creative clusters in the UK with an initial spend of £29m. This will be achieved, via the University network, and will start delivering in autumn 2018 and run for the next five years . The idea is to use Universities resources and Cluster fund monies to solve creative industry problems.

The major limitation on this from the perspective of content creation is that much of the money may be spent on aspects of the creative industries which are not focussed on original content creation e.g. museum and gallery curation, In addition, the timescale has left little opportunity for freelancers and micro-companies to be part of the initial bid process. Therefore, ensuring the creative clusters, when final agreed upon, actually address content creation is one of the big challenges of 2018.

The various Arts Council’s programmes are effectively decided for the coming years. However, Francis Runacres, made it clear that there are sums in the next two years programme which could be still aimed at new groups. In addition, he asked for suggestions for the 2020-2025 programme, which could address the needs of the freelance and micro-company communities. Particularly relevant for new emerging digital art forms, short term projects and development work for individual artists in all mediums.

The Grants for the Arts programme with its small scale, fast turn around process, along with the renewed Games Fund, provide examples of how initial development support for new creative content can be supported. However, the key aspect of this type of funding is how do you then move up to the next level of development, and ultimately reach out to a large audience? This is not to suggest that all creative work needs to reach a mas audience but given that one art work can support a small studio – it is the commercial potential, which really needs to be identified.

This latter point also illustrates a key aspect of future investment. Namely, that productivity and profitability may come in multiples of work not in one big hit. There are few freelancers or micro-companies who will grow to be the equivalent of Aardman Animations or King – but it is definitely possible that 100 creatives could generate as much total revenue.

Private Opportunities

There are a number of ways in which private investment may engage with original content creation. These range from tax schemes through incubators to Angle support and crowdfunding.

The latter, which often initially amounts to ‘the bank of Mum and /Dad’ plus Friends, has seen numerous small designer companies launched and graphic novels get of the ground. The most successful crowdfunding has been committed documentaries with a clear target audience, and projects that are based upon an existing brand or personality.

The tax system has been a major focus of support for creative industries in the recent past. However, the recent HMRC clamp down on EIS usage for film production may be seen as a step backwards for investment in creative content. The point to make here is it is all about proving risk, and creative content creation is by its very nature risky. In addition, the other major tax break, around R&D spend, is still largely under utilised as a source of cash flow support for creative enterprises.

However, it is the area of incubators and accelerators, as Hazel Hutchison from Aegis pointed out, which is the key space in which investment has to date been lacking. It is also the part of the ladder of creative development, which has less risk than say the Grants for Arts level of activity. In addition, with effective portfolio development, it has the potential to unlock the numerous profitable creative activities, and support a range of freelance work.

The Future Approaches

In order to make this work, new types of organisation – such as the Biome Collective, with its core freelance members and wider associates – will be needed. Reviewing how Intellectual Property rights and values are distributed across several people or within a portfolio will also have to be addressed.

All of this speaks to a need to re-think how we make investments in creative content. Creating a ladder of opportunities as outlined by Peter Bazalgette in his independent review of the creative industries is essential. Critical to its success is a solid financial investment structure which reflects the reality of the sector and is agile enough to respond to changes in direction by creative. It will take patient finance in many cases and a portfolio approach to ensure the risk taken is not an attempt at the failed ‘cherry-picking’ model.

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