| The creative industries are driving Europe’s economic growth. Politicians are taking note reports Boyd Farrow  “Culture makes money and money makes culture” is not a refrain from the grungy musicians enlivening the student bars in Berlin’s Kreuzberg district but a phrase from a joint motion submitted to the Bundestag last month by the Christian and Social Democrats.
In Germany, like everywhere in Europe, a vocal band of politicians and entrepreneurs appear mesmerised by the economic potential of the so-called “creative industries”, those businesses based on individual talent that include advertising, fashion, film, architecture, music, design and computer software. In his bestselling book The Creative Economy, John Howkins argues that the intellectual property these sectors generate is already far more important than the “hard goods” that have migrated to Asian factories, and that creativity is a defining commercial factor. US economist Richard Florida asserts that global competition for creative talent will be the defining economic issue of the 21st century. This mindset is already contributing to Germany’s economic identity crisis. Startlingly, the just-published report Kulturwirtschaft 2006 reveals that the cultural and creative industries were already more important to the country’s economy in 2004 than the chemical and energy sectors. The figures stood at €58bn versus €46bn and €33bn respectively. The report, by the Office for Cultural Policy and Economy and the Friedrich Naumann Foundation, suggests that together, 200,000 creative SMEs generated €117bn last year. The German film industry is one of several booming areas, while in the computer software and video game sector, turnover shot up to 11%. Germany’s Cultural Statistics Working Group estimates that the creative industries now employ 815,000 people, more than the banking sector. Now Germany’s social security, copyright, competition and tax laws are all under review, and the employment market and business start-ups are being scrutinised, as the country’s politicians wonder if the creative economy can outperform traditional cash generators such as the automobile industry. The Germans are certainly not alone in wanting to generate new businesses in the creative industries – industries that the UN estimates account for 7% of global GDP and are growing at 10% a year. According to the UK’s Department for Culture, Media and Sports, the country’s creative industries comprised one of its fastest-growing sectors in 2002, contributing more £53bn (€78bn) to the economy. In fact, the UK’s fizzing creative industries accounted for 8% of GDP and supported 1.9 million jobs (more than any other European country) during this ‘Champagne Supernova’ period.  A couple of years later London’s creative industries received a major support package – including £50m in venture capital – with the launch of Creative London, set up by Mayor Ken Livingstone’s London Development Agency. By 2014, Creative London aims to have raised £500m through the public and private sector to ensure that London’s fashion, music, film and arts entrepreneurs will be given the best chance to succeed and receive more international recognition. The new body, backed by the CBI, the DTI and the Treasury, aims to raise even higher the capital’s reputation and performance as a leading world centre of creativity.
Mayor Livingstone told CNBC European Business: “It’s only recently that we’ve been able to fully appreciate the contribution that the creative industries make to London’s economy and present the case for studying and supporting them. These industries make up the fastest-growing sector in the capital and are worth around £21bn, second only to the finance sector. Research suggests that growth rates of 4.5% are sustainable in the medium term, particularly in sectors like digital content, music, design and fashion. So, by the time the Olympics come to London in 2012, we could be talking about a £30bn-plus business – a business that’s bigger than the city’s financial sector. We want to ensure that the creative industries are able to thrive in the capital by maximising their opportunities for getting established and working here. Healthy creative industries – film, fashion, whatever – will also mean that more money will be spent in the capital by everyone else who lives here.” The Department of Culture, Media and Sport launched a Creative Economy Programme in November 2005 as the first step in the government’s plan to make the UK “the world’s creative hub”. Next month it will publish a green paper, the first part of which will provide a coherent analysis of the UK’s creative industries and their significance in the global economy. The ministry is also commissioning research into what drives demand for the creative industries’ goods and services, the sites of multinationals and the links between the creative industries and the rest of the economy. Florida insists that what is crucial to cities’ futures, and what takes great skill to create, is knowledge, meaning, content, style, ideas, plans, stories, concepts and designs. He says that in a very literal sense, the cultural industries and artist-entrepreneurs are the manufacturers of the information economy.  These companies and individuals also form the foundations of more bricks-and-mortar industries. Firstly, the presence of artists in city quarters is often the first indicator of gentrification. Governments acknowledge that the artists themselves are often the driving force that initiates the transformation of dilapidated no-go zones into desirable living and working quarters. Where artists settle, galleries, bars, restaurants, boutiques and restaurants soon follow examples of former low-rent districts that have become revenue-earning areas and often tourist magnets can be found throughout Europe. Moreover, companies are increasingly choosing to set up shop in creative hotspots – Amsterdam and London, for example – rather than expecting workforces to follow the work.
Last October, a new four-year project, ACRE, was launched by the Amsterdam Institute for Metropolitan and International Development Studies. Bankrolled by €4.5m of European Commission cash, the consortium, which includes 13 countries, will evaluate the chances of selected cities developing as “creative knowledge regions” and improving their economic profiles. The case studies do not include obvious success stories like London or Paris, instead favouring national capitals (Amsterdam, Dublin, Helsinki, Riga, Sofia, Budapest), cities with “partial” capital city functions (Milan, Münich) and cities with a rich industrial history (Birmingham, Toulouse, Leipzig, Poznan). The most important question to consider is that of which metropolitan regions have the best chance of developing as “creative knowledge regions”. While cities compete, Olympic-like, for creative talent, a whole raft of pan-European developments is in motion. The creative industries have certainly gained a new importance in the context of the Lisbon Agenda. The study The Economy of Culture, presented by the European Commission in November 2006, revealed that 5.8 million people were employed in the creative sectors, accounting for a turnover of €654bn in 2003 and contributing 2.8% towards the economy in Europe – this figure is greater than those for the food (1.9%) and chemical (2.3%) industries.  While the potential for the creation of growth and employment was already a focal point under the Council Presidency of the UK, Austria and Finland, Germany is eager to exploit it further. European Commissioner Ján Figel says that without more investment in these industries, Europe will “fall still further behind other regions of the world” in the global economy. The development of coherent policies to coordinate this highly diversified sector, Figel says, will contribute more effectively to the support of the cultural industries. In May, Berlin hosted a European conference (funded by the German Federal Foreign Office and the European Commission) to develop such plans. This will certainly not be the last event where politicians and creative types find themselves singing the same song.
A variety of creative hotbeds is emerging throughout Europe London
Film and TV special effects  With Soho its epicentre, the UK’s visual effects industry is one of the three largest in the world, directly employing more than 30,000 people and supporting more than 100,000 jobs in flm, TV and commercials. It also contributes more than €5bn to the UK’s GDP. “Post-production” – now something of a misnomer, as computer-generated imagery is integrated into the entire production process – accounts for around 25% of all spending on film in the UK. Moreover, the sector invests heavily in research and is estimated to have invested around €150m in capital assets, providing virtual homes for the Harry Potters and James Bonds of the future.
Cambridge
Interactive entertainment software The UK market in interactive entertainment software – or video games to you and me – is the biggest in Europe and the third-largest in the world, after the US and Japan. Though it attracts less fanfare than the film, music or fashion businesses, the UK games industry employs around 25,000 people, produces some of the world’s best-selling games franchises, including Lara Croft: Tomb Raider and Grand Theft Auto, and has nurtured some of the world’s leading producers, developers, technologists and commercial managers. Larger than the market for video rental or cinema, the UK games sector hit an all-time high in 2006, with the industry enjoying a 7% increase on units sold and the retail market reaching €2bn. Antwerp Fashion  With fewer than 450,000 inhabitants, Antwerp is hardly a heaving metropolis – but it punches way above its weight in terms of the fashion industry. This is because of the number of globally feted designers (including Ann Demeulemeester, Dries van Noten, Dirk van Saene, Dirk Bikkembergs and Martin Margiela) who graduated through the Flanders Fashion Institute and the Antwerp Fashion Academy. Fashion students now arrive from more than 30 countries; many stay and teach the next generation, contributing to the Belgian city’s continuing economic boom. This has led to a lift in tourism and more designer boutiques than any comparably sized town in Europe.
Marseilles
Rap music  While French music is, for many people, an oxymoron, rap music in Marseilles is one of the few contemporary musical highlights. This is largely the result of La Friche Belle de Mai, the centre for cultural and artistic activities situated in a 40,000 m2 former tobacco factory in the north-east part of France’s second-largest city. La Friche is home to contemporary musical associations, recording studios and studio space for theatre, architecture and sculpture projects, a local radio station and a newspaper. These diverse activities enable La Friche – the resources for which come mainly from public funds – to contribute to the development of the diverse cultural components that make up contemporary Marseilles. Much of the profits from artistic productions are injected back into the local creative sector.
Amsterdam
Advertising  The famously laid-back city of canals has long been a hotbed for the advertising business, with local outfits often being hired by A-list clients throughout Europe and the US, such as Sony, Electronic Arts, Adidas, Ikea and Coca-Cola. Amsterdam outfits like StrawberryFrog, 180 and Wieden + Kennedy have made their names with unconventional campaigns. The city’s open lifestyle helps attract creative talent, as do a vibrant design scene and a cosmopolitan mix of people. “Amsterdam allows us to be in touch with the world without being swallowed up by any particular culture,” explains Brian Elliott, co-founder of StrawberryFrog. Peter Hayden, director of production at Tribal DDB, says: “Where else are creative people going to gather but in the most liberal, free environment?”
Berlin
Film  In addition to the existing system of local production incentives and subsidies available to local producers, the German government has just set aside an annual pot of €80m solely to support production costs for three years. The timing is spot-on. Germany’s recent history is finally becoming a treasure trove for filmmakers and a gold rush to exploit the improbable commercial success of dramas set during the country’s Nazi and communist regimes is spreading across the Atlantic to Hollywood. Following the Oscar-nominated Downfall and The Lives of Others, a fictional story about the notorious East German Stasi, a veritable army of film types is heading for Berlin. Even Tom Cruise has signed up for Bryan Singer’s World War II thriller Valkyrie; he is set to play Count Claus von Stauffenberg, famous for leading the failed plot to assassinate Hitler in 1944.
Turin:
Architecture and design  Long dominated by car manufacturing, the “creative city” of Turin is Europe’s poster child for culture and knowledge-led regeneration. In developing the first strategic plan for any Italian city in 2000, and with a new strategic plan for 2007–2015, Turin is committed to city planning and policies driven by contemporary creativity and knowledge. The Lingotto, traditionally the industrial heart of the city, has been transformed into a centre for leisure, shopping and innovative businesses. In addition to the 2006 Winter Olympics, the city has competed for a range of other events, including status as joint World Book Capital in 2006 (with Rome). This year Turin was nominated World Design Capital.
Berlin
Fine art The Berlin arts market has been growing at such a pace that official statistics can barely keep up. The 2003 Culture Industries Handbook estimates that 92,313 freelance visual artists work in the German capital. According to the Berlin Association of Gallery Owners, galleries in Berlin now provide a total exhibition area of 57,000 m2 and organise almost 2,000 exhibitions a year, most of them featuring contemporary art. In the beginning of 2003, a total of 284 gallery owners were registered in the city; that figure has risen to around 400. It may be assumed that turnovers and numbers of exhibitions have increased accordingly – tourism and property prices certainly have. Belgium  On 31 December, 2006, the Flemish government launched an initiative called CultuurInvest for companies in sectors including new media and computer games, film and digital design, music, fashion design, graphic design and publishing. CultuurInvest offers project financing, capital participation in more mature companies and subordinated loans. It also facilitates financing via the Vlaams Innovatiefonds (Flemish Innovation Fund), which invests risk capital in innovative start-up enterprises, a renewed guarantee arrangement allowing acknowledged credit granters to cover their credit with a government guarantee, and other instruments such as the co-financing of projects supported by the Federal Participatiefonds (Participation Fund). CultuurInvest also intends to provide management support and coaching to cultural entrepreneurs. CultuurInvest started out with a purse of €20m, provided by the government (50%) and private companies.
Denmark  In 2000/2001, the value of Danish culture industry exports amounted to €9.1m, or 16% of total Danish exports. This prompted the Ministry of Culture and the Ministry of Economic and Business Affairs to embark on a programme to forge a new common ground between the business and cultural sectors with respect to marketing, design and product development. The big idea was to enable cultural entrepreneurs to have closer cooperation with the business sector. Examples have included venture capital for the film and media industry and a film and media investment fund. Learning Lab Denmark, an institution linked to the Danish University of Education, has established a research unit with a focus on “the creative alliance”.
It will research national and international trends in culture and business. There is also a “forum for business and cultural life” called NyX, supported by the Ministry of Culture. This enables business leaders, artists and cultural institutions to exchange ideas and develop new products. Germany  While culture is a huge industry in Germany, the term “creative industries” is becoming much more significant. According to the current statistics of the Arbeitskreis Kulturstatistik, as of November 2006, the turnover of the culture industries fell by 11.8% between 2000 and 2003, from €92.8bn to €81.5bn.
In the same period, the creative industries, including film, design, TV production, architecture, software and video games, achieved higher growth than the economy as a whole. Several regional authorities have commissioned and published reports on the state of the creative industries, and legislation to update copyright and tax laws is pending. Strategic partnerships are increasingly being formed between the public and private sectors in order to fund cultural projects and institutions. There have been various concrete efforts to provide training within publicly financed small business start-up programmes for the cultural industries. Exemplary in this area has been StartART, which forms part of the Northrhine-Westphalia startup network Go!nrw. Italy  Under the newly restructured Ministry for Culture – which has a remit to find alternative funding sources such as lottery and EU structural funds – culture is to be given an enhanced role in economic development. Public-private partnerships are being encouraged via fiscal incentives, privatisation and the dismantling of bureaucracy. The threshold has been lifted on corporate investments in the media by removing, from 2009, hurdles to cross-ownership of newspapers and TV networks. Priorities include a general rethinking of the existing interrelations between economics, culture, art, territory and tourism and gradually restoring the ministry’s budget for financing culture.
Netherlands  The creative industries make up a relatively large sector in the Netherlands, being worth €8.4bn and providing around 240,000 jobs (3.2% of the labour market). In October 2005, a policy document entitled Our Creative Capacity introduced measures to help the creative industries achieve their full economic potential. The main objectives were to strengthen relations and cooperation between the creative and other sectors, to improve financial provisions for cultural businesses, to stimulate private sponsorship and investment in arts and culture, to optimise conditions for exploitation of intellectual property, to boost exports of Dutch cultural products abroad, and to improve management of cultural institutions and businesses. The Our Creative Capacity programme runs up until 2008 and has a budget of €15.5m.
Spain  Though the concept of cultural industries is not defined in Spain’s official policies, the term “cultural enterprises” does appear. This covers those businesses whose main economic activity is in the cultural arena, such as libraries, archives, museums and galleries, and firms involved in cinema, video, radio, TV and artistic performances. The latest data from the Ministry of Culture shows that the turnover of the Spanish culture industries in 2004 was around €32bn. The most important sectors are publishing (€8bn), graphic arts (€8.6n), radio and TV (€5.7bn), and cinema and video (€3.7bn). The number of companies whose main economic activity was defined as cultural reached 60,000 in 2004. The new Ministry of Culture has acknowledged culture as a tool for economic development and social cohesion, and a new promotion plan will soon be introduced for the cinema and audiovisual sector. Television companies are now obliged to invest 5% of their annual income in the production of European cinema and TV (3% reserved for Spanish production). The Intellectual Property Act has been modified in 2006 in line with the EU’s Information Society Directive.
Sweden  As in the other Nordic countries, the Swedish authorities have traditionally had no specific policy towards the culture industries. There are, however, schemes to support quality production in the areas of books, art periodicals, music and film.
In April 2007, the Swedish network of creative industries created a report entitled New Start, based on workshops and interviews of 400 Swedes working in the creative sector. The idea is that all sectors should work together, and in that melting pot new companies will emerge. In the report, 10 proposals are made that will enhance employment and exports in Sweden’s creative businesses. The report recognises the need for meeting points, new business models, a sustainable export strategy and a holistic view of the creative industry. UK  The Department for Culture, Media and Sport (DCMS) defines the creative industries as “those industries that are based on individual creativity, skill and talent. They are also those that have the potential to create wealth and jobs through developing intellectual property.”
The DCMS’s work on the creative industries includes the Creative Economy Programme, the first step in the DCMS’s goal to make the UK the world’s creative hub; a number of government initiatives and funding schemes that support skills development and training in the creative industries; working across government and with other organisations to ensure that the creative industries have the support they need to succeed; and working with HM Customs and Excise and Inland Revenue on issues of taxation and regulation that affect the creative industries, including intellectual property rights and tax relief for UK filmmakers. The creative industries are the economy’s fastest-growing sector in London, employing more than 500,000 people (one in five new jobs in the capital) and generating more than €30m a year. |