Commercial Dimensions

The UK's creative industries currently earn £112b a year according to statistics from the Department for Culture, Media and Sport, representing a growth rate of 9% annually between 1997 and 2000 (compared to an average of 2.8% for the whole UK economy).

These industries contributed 7.9% of the UK's Gross Domestic Product in 2001, providing 1.95b jobs. In London, the creative industries have annual revenues of£30b, employ 550,000 people, and grew 7% in each of the five years up to 2000. Not a lot of people know that.

Nor do many people know that in London alone the creative industries are missing out on a potential further S.4.5b income every year – for three key reasons. There is a major shortage of business and vocational skills in the creative industries, a shortage of low-cost, short-term finance for them, and the UK's laws for the protection from commercial exploitation of creators' intellectual property need improving. These issues were addressed at a Creative Business Forum held in May 2003 at London's Commonwealth Centre, where leading representatives of the UK's creative industries – including art, architecture, advertising, crafts, design, fashion, film, music, the performing arts, publishing, TV and radio, and video games – explored possible solutions. Entitled 'Edge', the conference was organised by London First – a business membership organisation supported by over 300 of London's major companies, whose mission is to improve and promote the capital. It was sponsored by Arts Council England, British Telecom, Trade Partners UK, the Learning Skills Council, and Yahoo! Chaired by Michael Grade, former Controller of BBC1 and Chief Executive of Channel 4 Television, keynote speakers included the inventor James Dyson, former Arts Minister Chris Smith MP (recently appointed Director of the Clore Duffield Leadership Programme), Tony Elliott (Founder and Chairman of the Time Out Group), Michael Heseltine, Tessa Jowell MP (then Secretary of State of the Department for Culture, Media and Sport), fashion designer Paul Smith, and Alan Yentob from the BBC. Five specific issues were examined in detail, and key outcomes were reported and discussed, with an eye on further action.

Can intangible assets produce real returns?

No, was the consensus from delegates. Essentially because it is the distributing companies that make most money out of the 'value chain' from creativity to consumption/experience. 'If bankers can't kick it, they usually don't like it', was the summary judgement of delegates, reporting their collective experiences of venture capitalists' basic evaluation of creators' intellectual property/intangible assets such as copyright. The key to success lay in approaching potential financial backers with very specific financial needs for creative projects, and then trying to match them to the backer's contractual requirements. The Department of Trade and Industry publishes a list of potential financiers and their requirements.

Is there really a skills shortage?
Mixed answers were reported. Secondary schools in the UK were said to give bad careers advice, because they had a very poor understanding of opportunities for working in the creative industries or of appropriate tertiary education courses. Substantial cuts in government funding of higher education, over the past 20 years or so, have resulted in there being too many students being tutored by too few staff; and this in turn has produced 'laughable' ratios of direct student/tutor contact time. Moreover, higher education policies – requiring formal academic teaching qualifications – have substantially reduced the number of creative practitioners able to contribute as visiting tutors to the skill-set of students on creative courses. Significantly in the artlaw context, delegates identified a real need for the re-introduction of a low/no cost service providing creative practitioners with specialist legal advice and help. Reference was made to the successful Artlaw Services not-for-profit organisation, which met these precise needs in the UK from 1978 to 1984, when its Arts Council of Great Britain revenue funding was ended. In addition, it was recommended that creative courses in higher education should be tailored to address the commercial dimensions of practice, with 'professional practice studies' being integrated holistically within creative curricula.

Can you brand an idea?
Delegates in this session endorsed James Dyson's earlier remark in his keynote address (How to own ideas), in terms that 'the brand is in the consumer's head'. In other words, there is a key role for the brand, which gives the creator the wherewithal to hold onto the idea, and brands are a means by which the consumer owns the idea – especially because brand values cannot be protected by intellectual property law.

How broadband can expand your market was a session that examined how ICT can offer important opportunities to produce new kinds of content, to integrate mass media and one-to-one media, and to distribute content more rapidly The message was that broadband is here to stay, and will soon become stronger, better and cheaper to use. In this context, reference was made to the recent deal made between Apple and the major US music distributors, whereby a single CD track can now be legitimately downloaded and copied for less than one US dollar – an example that was strongly reinforced in the final session.

Intellectual property: the future.
Whilst intellectual property rights laws are vital to protect the products of creators' original labours against unauthorised commercial exploitation, delegates readily acknowledged that a larger public domain (ie freedom to appropriate and further develop the original works of others) was essential to encourage healthy exercise of imagination and freedom of expression. The inevitable tension between those two competing claims – good legal protection of intellectual property rights, versus greater freedom to appropriate – required legal, social, cultural, and commercial changes, in order to get the balance more right than it is currently Significantly, again, delegates in this session identified the need for a good cheap, Citizens Advice Bureau-type service for the creative industries.

In the final plenary session delegates heard from Michael Fry, Chairman of the London Mayor's Commission on the Creative Industries. Launched in January 2003, the Commission conducted intensive and extensive research into the most pressing needs of the creative industries, and had made four main findings:

  • there is a serious lack of affordable working space for creative practitioners that they could move into quickly;
  • a need for pump-priming/seed money/venture capital;
  • a shortage of business management and entrepreneurial skills, especially in relation to law and intellectual property rights;
  • and a great need for networking/communications and distribution channels for the products of creativity.

The Commission recommended the establishment of a permanent Commission to deal with these matters, including the creation of a cultural industries property trust, a pump-priming fund, a para-intellectual property services centre, and a networking and mentoring bureau.

During the closing panel discussion, fashion designer Paul Smith commented that 'The hardest bit is turning ideas into reality. It's hard for young people to get specialist advice to help them. It's not good enough to think only about creativity – it's about the business side as well. The UK has a gold mine of creative talent, but not of business entrepreneurs.' And in response to Michael Grade's probing for when and how he had secured his first business loan, Smith explained 'I have never borrowed at all. The key thing is to find out how to be better than “good”, when there's so much “good” around. You must never think you've “made it”; you must always change, transform.'

Let us hope that the key outcomes of this unique and constructive conference help to stimulate changes needed to improve support for the UK's creative industries; for art in particular.

© Henry Lydiate 2003

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This article is from the Artlaw Archive of Henry Lydiate's columns published in Art Monthly since 1976, and may contain out of date material. The article is for information only, and not for the purpose of providing legal advice. Readers should consult a solicitor for legal advice on specific matters. Artists can get free online legal information from Artquest.