BCre8ive invited investors, creatives and public bodies to join forces on 7th November at Digital Catapult, in London, to start a dialogue about how to fund the future of the creative industries in the UK. This blog is the first of three which will pulls out of this afternoon’s packed discussions the key points as we look forward to 2018.
This opener looks at the bigger landscape laid out at the introduction and opening sessions by Phil Parker(BCre8ive), John Spindler,(Capital Enterprise); Patrick Bradley(Station 12), Solomon Nwabueze(Creative England) and Jeremy Silver (Digital Catapult). A landscape of big corporations, thousands of freelancers, a huge global market and massive opportunities.
Setting the Scene
Creative industries are being disrupted on a regular basis – the business models are always evolving but as Jeremy Silver pointed out the UK is a real player in creative industries, with global reach.
Between 2010 and 2015 they grew by 34% – faster than any other sector and contributed £87.4bn in Gross Value Added in 2015, according to DCMS.
“Creative and Cultural Industries revenues worldwide exceed those of telecom services (US$1,570b globally), and surpass India’s GDP (US$1,900b)” Cultural Times: EY : 2015
The creative industries exported £21.2bn of services in 2015, but this is a small part of the cultural and creative sectors globally which were estimated to be worth over £1.700bn. So as Phil Parker pointed out despite a 34% growth in the creatives industries in the UK in the last five years, there is still enormous potential for growth.
The Investor’s Issues
John Spindler stated that Capital Enterprise had only invested in 4-5 creative startups out of the 110 they had invested in, in the last four years. There were three key issues for him which made investing difficult : –
- The sector is fragmented, divided between big corporates, and individuals with creative ideas;
- Creatives focus more on their status as ‘artists’ , than on how to sustain themselves as a business;
- There is a lack of good teams, who can provide clear sustainable routes to recoup investment.
Fragmentation, in particular, the absolute dominance of freelancers and micro-companies in the sector was one of the major reasons for starting this dialogue, and the call to look for new ways of supporting the creatives and companies.
Distribution verses Content
Solomon Nwabueze, with a background in music and arts broadcasting, picked up on the point that distribution is the key to creative success. In particular, that there is a problem in the film, mobile games and music industries, where platforms control who can and cannot make money. Therefore, investing in content becomes a problem. In this context timing, lack of development and marketing are key factors in any content’s success.
Patrick Bradley agreed that distribution does play a major role but sees investment in talent and content as being the key deciding factor in which platforms succeed or fail. Therefore, an essential part looking forward is to support content creation in order to give companies an edge in the crowded market place. He stated that the UK needs to grow bigger content creation companies – the BBC cannot do everything.
Patrick stated that UK investors are risk averse compared with US investors, where this is a bigger domestic market, and therefore, more opportunities for success. Overcoming this risk aversion is a key aspect of re-thinking how to fund content creation in the UK.
A Long Term Vision
In the introduction the issue of patient finance was illustrated by the success of Papenburg, a small town in Germany, which now dominates the world production of major ships, including Disney’s fleet, despite being on a small river twenty miles from the sea. The key is it has been family owned since the Eighteenth Century, has adapted/pivoted throughout its history, and focused on quality..
John Spindler pointed out that Skype and Spotify had both been developed in London, but with non-UK founders. A problem compounded by the propensity, especially in the UK media sector, for owners to sell out rather than build a global company. This highlighted the need to look to founders i.e. creatives, who have a long term vision, and are prepared to adapt to changes as the market changes.
The question is can this be done with a select few being supported as has been the case with nearly all the government backed initiatives or do we need to support the many and then develop those who show potential? In order for the latter to happen there is a need to create a ladder of investment, as suggested in the Bazalgette review.
One aspect of this may be the outcome of the recent UK Treasury consultation on patient finance.
Having spelt out the main issues confronting any investment in the creative and cultural industries the discussion moved on to the recent experiences, and needs, of freelancers and micro companies, and the existing public funds available to support new creative content creation. The latter ranged from ACE’s £440m including the £70m ‘Grants for the Arts’ to the AHRC’s £80m Creative Clusters Programme.
All of these points will be discussed and more in the next two blogs.
Phil Parker with thanks to Kevin Marks.