Tag Archives: business models

How can creative businesses be both ethical and profitable?

The relationship between cultural value and economic value lies at the heart of the creative industries and is crucial to the lives and work of every artist and creative practitioner. The value that creative businesses aim to create is not only financial, but also cultural and social and they are often motivated by strong ethics. This has a significant effect on how they function as businesses.

It is however a complex and varied relationship, much contested and, perhaps, often misunderstood. David Throsby attempted a thorough examination of this relationship in Economics and Culture.[1] It is also central to more recent research carried out by NESTA[2]  and the AHRC [3] .  Such enquiries and analyses have begun to develop a more expansive and richer language and set of concepts for thinking and talking about the connection between cultural and economic value. Our discussion panel ‘How Can Creative Businesses be both Ethical and Profitable?’ (University of Greenwich, 3/5/17) sought to contribute to this ongoing discussion, with a particular focus on social value, understanding the latter to constitute an important form of cultural value.

The three contributors to the panel each occupy a particular position with regard to cultural and economic value:

Sheeza Ahmed Shah is the co-founder of The Up Effect, a crowd funding platform for social enterprises. Before they accept a business onto their platform, The Up Effect staff scrutinize its business and social impact plans to determine whether they are mutually supportive and add up to a coherent package. They are looking for businesses with a clear social purpose, which also have a viable and scaleable revenue model. Sheeza is clear that social impact is only achievable and sustainable to the extent that a company can make money and grow.

Seva Phillips manages NESTA’s Arts Impact Fund, which supports cultural organisations in developing their social aims and making sure that the cultural value that they create has social impact. Seva stressed that, to be successful in this endeavour, organisations need to be clear about motivation – why they want to achieve a social impact in the first place, outcomes – what exactly the change is that they want to achieve, and accountability – how they will evaluate whether they have achieved these outcomes.

Florence Magee is Head of Artist Development at SPACE and Programme Manager of the London Creative Network. Her role is to help individual content creators, such as artists, photographers and crafts people, to strengthen the sustainability and increase the capacity of their businesses. The majority of people she works with do not currently make a living from their creative practice alone, but sustain it financially through income from other work. Sustainability and growth in this context mean helping people to maintain their arts practice and to develop its profile, but not necessarily to derive their main income from it.

Our panel thus represented a broad spectrum with regard to the aims, objectives and context of cultural production with a social purpose and it became clear that certain aspects of business and creative production mean different things in different contexts. While Sheeza’s platform helps companies to grow in terms of scaleability and expanding their size and customer reach, for the individual cultural content makers that Florence works with, growth does not so much mean expanding the size of the company (many of her clients are sole traders) as increasing the cultural value of their work – in terms of their profile, the venues in which they exhibit, the publications in which they publish and so on. This increase in cultural value, she points out, is what will increase financial value. Furthermore, while the companies who crowd fund on The Up Effect explicitly define themselves as social enterprises, most of the practitioners who Florence works with would not categorise their practice as having a social purpose, despite the fact that ethics and politics may deeply motivate their work and how they approach it. Their values may be embodied and expressed in their work but they would not generally produce a specific plan for the social impact of their work. Social value is likely to be implicit rather than explicit.

At the same time, Seva pointed out, ethics is becoming something that consumers and audiences want to buy into. Ecological sustainability, fair trade and employment practices and social activism have the potential to translate into financial value and to be advantageous to a company in the marketplace. Large corporations are as aware of this as are social purpose startups. This is why Bank of America Merrill Lynch are investors in NESTA’s Social Impact Fund.

Both Seva and Sheeza stressed that social enterprise is in fact becoming a crowded market and it is vital that part of the social impact that a social purpose company achieves is to tell its story effectively and to make this story a central part of its brand. At the same time, this story needs to genuinely reflect the core mission of the company, not be simply a marketing strategy. This is not easy to get right and is something that large corporations often get wrong in social media campaigns, as Colette Henry recounted in a previous Creative Conversation. There are, in general, some obvious pitfalls inherent in the monetization of social value and care must be taken to get the balance right.

Another issue that arose in discussion was the lack of equitable reward structures to encourage the development, sharing and exploitation of original and innovative ideas. Creativity and innovation are buzzwords in contemporary culture, not only in the creative arts, but in government and across all business sectors. However, it is often the case that, while artists and other innovators generate cultural and social value through new ideas and practices, the financial value is realized by other agencies, which have the resources to scale up and monetise these ideas. Sometimes this may be the result of a fruitful and equitable partnership, but, as ideas are not in themselves protectable intellectual property, this is often not the case.

Some Conclusions and Further Questions

As expected, the wide ranging discussion threw up more questions than it answered. Social impact has clearly become a central focus for discussions about the relationship between cultural and economic value. At its most basic level, this is because evidence of social impact has become something that customers will pay for, making it an easily identifiable and measurable signifier of the correlation between economic and cultural value. This is largely a positive development. Adam Arvidsson has written about the way that businesses may become more and more dependent on ‘productive consumer publics’ for their value in the marketplace, giving such publics the power to ‘set the values that are attributed to consumer brands.’ [4]

However, if ‘economic impact, often defined more narrowly than conventionally understood by economists, has become the principal way for proponents of arts and culture to argue its economic importance,’ [5] so too the application of too narrow a definition of social impact and/or an overemphasis on its monetisation or cost effectiveness (an important consideration with regard to the introduction of the Public Services Social Value Act) would be unhelpful. This would have the effect of straitjacketing, rather than developing and encouraging creative and social practice.

At the same time, the prevalence of discussion around community interest, social purpose and social impact could and should encourage creative practitioners and businesses to think more about how relevant this might be to what they do. Many creative practitioners and companies may not immediately think of themselves in these terms, but, on reflection, might find that they do operate according to strong ethics and are creating social value or have the potential to do so. Building this more explicitly into their strategy could help their business and the local and wider communities of which they are part.

Questions that seem particularly pertinent to explore further, with regard to how creative enterprises might practically develop their cultural, social and financial value, include:

    • Cultural content producers tend to channel creativity and develop original ideas at the level of content, while pursuing traditional business models for their sector, e.g seeking public funding, focusing on increasing the cultural value of their work through existing institutional frameworks. Should they perhaps also be focusing on developing original and creative approaches to their business model itself? If so, what might these be?
    • What more equitable reward structures might be developed to encourage the development, sharing and exploitation of original and innovative ideas? How might artists and other creative practitioners develop forms of expression for early stage ideas and creative practices that give them a status as cultural assets with a definable and tradable value?
    • Crowd funding is an example of how digital technologies can be used to catalyze and motivate users to come together to form a customer base that is simultaneously a community. What other ways might there be to achieve a scalable convergence of market place and community ? For example, a multitude of online hosting platforms exist – for websites, video, audio, designs, online stores etc. – to facilitate marketing and distribution of creative work. To what extent are these helping creatives to create viable businesses? Where are the opportunities for increasing cultural and social impact and profit? How might such approaches perhaps address the two questions above?

[1] Throsby, D, Economics and Culture, C.U.P 2001

[2] Bakhshi, H, Measuring Cultural Value, NESTA 2012

[3] Crossick, G & Kaszynska, P, Understanding The Value of Arts and Culture, AHRC 2016

[4] Arvidsson, A, ephemera: theory & politics in organization, Volume 13(2): 367-391, 2013

[5] Crossick, G & Kaszynska, P, Understanding The Value of Arts and Culture, AHRC 2016

 

Creative Hubs in the Digital Age

What is the Value of Creative Hubs in the Digital Age?

In 2015 The British Council’s Creative Economy Team released a Creative Hubkit [1] as part of a report into Creative Hubs. The kit highlights the fundamental ideas used by existing creative hubs and how these can be used to establish new ones:

10 key elements of a creative hub:

  1. A creative hub is flexible. The hub can take form as an online platform or alternatively in a variety of physical spaces.
  2. A creative hub promotes collaboration
  3. A creative hub nurtures idea growth and networking.
  4. A creative hub engages together as a community and will positively impact the local community.
  5. A creative hub focuses on creativity, culture and technology.
  6. A creative hub has aims of creating social, economic and cultural value through enterprise and social innovation.
  7. A creative hub is diverse and involves people from a range of social, economic and cultural backgrounds.
  8. A creative hub can facilitate with practical spaces, hardware and tools i.e. work benches, studios, screen printing materials, 3D printers etc.
  9. A creative hub will be structured with a new business model. There will be a shared mission statement that works towards improving humanity or society.
  10. A creative hub is a supportive environment that strives for growth in creative practice, business and audience reach.

Makerversity is an example of a modern face to face creative hub, as highlighted by The British Council[2]. The business model revolves around using their work space to bring people together. It boasts a variety of creative and technical expertise in order to encourage work, inspiration, and most importantly community. According to The British Council’s Economy Team “these [kinds of] spaces promote community spirit, vital to local and global economic and social development.”[3] Interestingly Makerversity is a members only scheme. In order to acquire a membership there is a monthly fee. The fees are in place to ensure all users have access to quality facilities and also to provide social networking events.

However not all hubs require membership. The business models that are more inclusive are the ones that don’t require membership payment. In being able to offer unlimited free access, they are able to provide access for all and are consequently diverse. Ultimately, and understandably, all hubs need donations or funding for running costs, especially when they intend to expand.

Hubs such as HackSpace are non-profit and are specifically community-run. They provide workshops and shared spaces for work, learning and teaching. Membership is an option but there isn’t a specific payment amount required. Their members help to run the organisation and will pay only what they think is fair.

2017 marks the launch of Europe’s largest creative hub. Officially launching June 17th 2017; Plexal will be located at the Queen Elizabeth Olympic Park. The hub will be the first of its kind, emulating a mini city. With the latest creative technology hosted in an environment created by architects and designers, it aims to be the next innovation of creative hubs. Plexal membership prices are estimated to start from £200 for a basic co-work space and over £400 for a premium private office. The scope and size of the creative hub will being a diverse range of creatives with varying business models.

According to Claire Cockerton CEO of Plexal, the new hub could potentially create a new definition for what constitutes a creative hub and the scope of its environment. Claire explains [4] that the difference with Plexal is that “the whole focus of our space is on connected devices and we’re focusing on sport, health, fashion and IoT technologies.” Plexal’s name derived from plexus meaning, “A complex structure containing an intricate network of parts.”[5] Cockerton has said Plexal is, “very much trying to embody the concept of connectivity and also humanity.” If other creative hubs follow Plexal’s lead, integration of state of the art technology and in house specialists such as lawyers etc. could impair the efficiency of standard practical spaces.

With any creative hub there is a need for a purpose and drive. Value is derived from the members that make up the community, sustainability derives from the hub. As discussed in The British Council’s Creative Hub Report [6] creative hubs hold strong shared ‘value and values’ with their ethos and work practice, for example; promoting social change, improving education or gender equality etc. With these values at the forefront of the hub, a positive impact will be made on the identity of the hub, its members and the networks it builds. As a combination of talented people working collaboratively in a positive social environment, the individuals gain confidence and as a team are more likely to succeed. “…these shared values are powerful motivators for the often precarious and risky lifestyle of the creative economy.” [6] This is what makes creative hubs valuable to other sectors, businesses and authorities.

Additionally The Creative Hub Report [6] also points out that “success is not defined in the same way in every hub. Understanding the unique proposition of a hub, and its relation to the local creative community, underpins a successful outcome.” With this in mind it would be interesting to monitor if and how non-profit creative hubs are able to keep their values when faced with economic pressure from profit driven creatives.

In conclusion it is extremely important to understand the current digital climate of the creative industries. The Creative Hub Report states “the development of a creative hub is an ongoing process, and it points to the need to continually review the relevance of the governance to practice and to the stakeholders if a resilient hub is to be sustained.”[6] With the opening of Plexal and potentially similar hubs to follow in the future, it is likely that we will see a gradual change in the way that creative hubs work and how collaborative production takes place. Although technology may currently empower creatives to connect in an instant, it is the creative hubs with their focus on ethical values that are driving working dynamics.

 

[1] “Creative Hubs”. British Council |Creative Economy. N.p., 2017. Web. Jan. 2017. http://creativeconomy.britishcouncil.org/projects/hubs/

[2] “In Focus: Makerversity”. British Council |Creative Economy. N.p., 2017. Web. Jan. 2017. http://creativeconomy.britishcouncil.org/blog/15/01/04/focus-makerversity/

[3] “Creative Hubs”. British Council |Creative Economy. N.p., 2017. Web. Jan. 2017. http://creativeconomy.britishcouncil.org/projects/hubs/

[4] “PLEXAL: The Quirky Innovation Centre With A ‘High Street’ That’s Being Set Up In London’s £150 Million Tech Hub”. Business Insider. Sam Shead., October 2016. Web. Jan. 2017. http://uk.businessinsider.com/plexal-here-east-london-olympic-park-2016-10

[5] “The Definition Of Plexus”. Dictionary.com. N.p., 2017. Web. Jan. 2017. http://www.dictionary.com/browse/plexus

[6] “The Creative Hubs Report”. The British Council, 2016. Web. Jan. 2017  http://creativeconomy.britishcouncil.org/media/uploads/files/HubsReport.pdf