The UK is arguably the most creative nation in the world. UK music, television, film, games, fashion, design, advertising and architecture is celebrated around the world. Creativity gives this country a unique advantage in a world evermore reliant on the knowledge economy. But whilst UK creative talent might win coveted artistic awards, too often it's the case that the revenue derived from their endeavours is banked overseas. Given our ability to create world-beating intellectual property, the opportunity to contribute more to UK GDP is often lost when content is produced on a work-for-hire basis for overseas companies who see greater value in UK intellectual property than we do ourselves.
If we are to truly make an economic success of the creative industries in the UK, we must aim to retain legal ownership of intellectual property in the UK so that the global taxable revenues from its exploitation flow back to the UK. There is an urgent need to (a) better understand the critical relationship between intellectual property ownership and risk capital, and (b) invest in the next generation of content creators to keep the flow of IP coming.
Whilst the creative industries are currently defined as a group of content, service and craft businesses, their traditional taxonomy is being challenged by the speed of technological change. Demand-led service companies carry less risk than supply-led content companies. In the main, content companies are under-capitalised, one consequence being that they are unable to retain ownership of their IP, typically trading it away for project finance. Content companies whose needs are greatest tend to be least understood by the investment community. With the explosion of digital content being served to global markets via high-speed broadband, it is important to understand the potential of these companies to scale, thereby offering significant returns on investment.
The creation of intellectual property in the creative industries tends to come from a myriad of small or start up enterprises. These companies require finance to become established, but few have fixed assets. The intangible assets they generate during development are difficult to value until after launch, making it difficult for financiers to invest if they do not understand the sector and its business models. Moreover, content businesses, especially digital content businesses, are "hit driven", therefore requiring a portfolio approach to investment to mitigate risk. It is inappropriate to apply ‘old world’ ways of valuing these businesses.
Creative ideas are being turned from concept into reality at a rate that is challenging for traditional investors to respond to. The world is moving from analogue to digital, from products to services, and from premium to freemium pricing models. Data is key to assessing risk. Creative content entrepreneurs should not, therefore, think of ‘old world’ banks as their first port of call to raise finance. High street banks are not best placed to provide the type of investment required. Nor should they be. The real need is for equity investment, not loans, in order to scale.
Innovation is undoubtedly accelerating economic recovery. Innovation in access to finance such as crowd funding. However, access to finance is just part of the bigger picture to make the UK the best place to do business for the creative industries. Super high-speed broadband is vital for serving digital content to global markets. Critical mass of activity in the sector can only result from an understanding of the sector today, and an investment in our children of tomorrow.
Continued government investment in teacher training is also needed to produce a digitally-skilled creative workforce built on the introduction of computer science in the classroom. Google estimate that 90 per cent of jobs in the UK will require computing skills by 2020. And children need to be able to create technology as well as use it. The promotion of art and design in the classroom will encourage the marriage between art and science, so vital to the creative industries.
We need to create a landscape in which creative minds will flourish, and creative businesses will be built. This requires applied learning in schools, relevant to children’s lives, narrowing the gap between education and the workplace. We need to worry less about over-testing our children with too many exams, forcing them to remember myriad facts (especially when Google could do it for them). STEM subjects, yes, but let’s embrace a classroom pedagogy of problem-based learning, project assessment, creative technology, humanities, sport and art. Education should facilitate learning not testing. Humans are all different and good at different things, so collaboration should be encouraged as it simulates working life.
For too long the creative industries have been seen as "fluffy" and run by "luvvies". For too long, they have been over-talented and under-resourced. There is a real opportunity for designers, artists and creative technologists to realize the true wealth-creating potential of their creativity and innovation for themselves and for the benefit of the nation. In order to grasp the opportunity, investors must do more to support creative innovators. Government must also play its part in supporting the creative industries, especially in education. There is no doubt the UK could double the size of the sector over the next decade. The economic benefits are obvious. The challenge for public policy is to fully embrace and invest in this dynamic sector or regret the dire consequences if ignored.Reuse content