Tag Archives: creative economy

More than Creative Workers: Creative Exports

There’s much more to creating a creative economy than calling your city a friendly home for creative workers. There’s more to it than offering jobs that are (potentially) sustainable, more than a convivial lifestyle for the creatively inclined. There is even more than winning new visitors who spend money locally, though this is in itself significant. A centerpiece of economic development is exports – gaining new dollars into the economy from other markets that buy what you produce. As such, an export plan, strategies, and sales force are essential to the success of a creative economy. When I think about the arts councils of tomorrow, the roles of chambers of commerce and economic development agencies in fostering the creative economy, the first thing I think of is how all of these can work together to create a climate favorable for and even facilitating the export of local creativity-based products and services to create new revenue from outside the market.

Exporting drove the growth of the American arts sector in its early post WWII decades, though it was largely focused around the major institutions from the major population centers. In the heyday of recordings and tours, performing arts organizations and museums alike realized revenue from export sales far outside their own markets. (The recording contracts of old brought in real new dollars from around the country and around the globe. And the brand and image boosts from tours brought in more than audience and donor revenue: it rubbed off on other export products, opening up markets for other products from the same cities. Mayors and business delegations used to go along on international tours with their local orchestras or ballet companies for this very reason.)

Those days are largely gone. At the same time, hundreds of smaller cities and towns now seek to realize economic gain from creativity, and the creation and maintenance of such an economic gain needs more than cultural tourism to drive it. Today’s smaller markets need to export creativity, just as our big cities did a generation ago. We need a new generation of export strategies, developed and implemented at the local levels, to open up, expand, and sustain national and international markets for local creative work that includes everything from fine art to creative innovation – and is likely delivered via technology.

To get there, new training for the field is important. How does an artist move from a local market or a regional tour market to an international market? How does an artist entrepreneur connect to and supply an international buyer market? And how does this local export industry grow and thrive, so that the attention and money that comes into the market from the first sale leads to greater opportunities as your city becomes increasingly known for its creative products? What about protecting intellectual property rights for the creator?

There’s another interesting point to thinking about the exportability of creative work. Is it of the quality and uniqueness that claims interest and purchase from other markets? The ability to succeed as exports drove a huge number of America’s arts organizations to invest heavily in excellence in the decades post WWII. Local leaders rationalized making investments to attract top artists to take up residency in their communities and spend their careers on their stages so that they could compete and win market share outside their own communities, through the unique product to entice new visitors, recordings, touring and other outlets. (I have a hunch that a great deal of what was initially thought of as short term investment to build highly competitive creative (arts) product went on to become annual grant funding. Along the way, the original rational of funding excellence that had export value was lost, to be replaced with more locally-oriented definitions of excellence, outreach, or service, which I think led to a lot of the anti-funding sentiments out there from politicians and local business leaders who once supported arts funding.)

As it was a generation ago, it is time to raise the exportability issue. Other revenue options are constrained. Funding is diminished. Local markets aren’t big enough to sustain local creative economies. Yet creative product is highly prized and valued world wide, and America’s creatives take the back seat to no one. In this global economy, our collective creative economy goals should be to win ever greater international market share and benefits back into our local economies.

Trend # 10. Create Jobs to Sustain the Creative Economy

Tenth in our series of Eleven Trends for 2011 is a prediction that this year we will come to realize that job creation and retention in the creative industries – is a major contributor to how to create, save, and sustain creative cities, and, as a result, to our economic recovery.

There are roadblocks. And they need to be addressed if we can fulfill this vision.

One problem is that a large portion of the creative sector hasn’t been holding onto jobs. Nonprofit cultural institutions have cut their payrolls to the bone. Despite the job-retention intentions of the Federal stimulus funds passed along to nonprofits through Federal appropriations to state arts agencies, the nonprofit creative sector is not adding extra staff. Even foundations that fund creativity through their grants don’t ask grantees how many jobs they have created in their organizations.

At the same time, those foundations have also been investing less in the arts. As I have discussed in previous blog posts, working capital is at what could be an all time low.

So when we talk about the ability of the creative sector to rebuild and sustain our cities, are we simply talking about the so-called ripple impact of the arts onto other sectors – the waiter jobs created when people eat out before going to a performance?

This is the point: the creative sector has been limping and hasn’t been sustained through any systemic approach. No one has provided realistic growth goals for the creation of jobs in the creative sector.

But at the same time, the creative sector has real potential to create jobs, lots of them. Not jobs based on ripple effect spending that supports, for example, x number of jobs in hotels or restaurants that are near performing arts centers, but true creative industry jobs. (Of note, these are not predominantly nonprofit, educational, or public sector jobs.) The true creative jobs are commercial musicians playing gigs and making recordings, tattoo artists and chefs, game designers and film screen writers, commercial and industrial designers, photographers and animators. They are custom furniture makers and stone fabricators. They are clothing designers and the creatives sketching out newly aerodynamic running shoes. They are videographers, website designers, the writers of sitcoms and documentaries, the entertainers at the ever-expanding number of casinos, the comedy club owners. They are the architects and designers who have hung on through the tough times, the landscapers who have introduced beauty back into urban neighborhoods. They are the novelists and ghost writers, the technical writers and the designers of tomorrows apps. Even the precious few music and theater critics left.

It has been a long time since Richard Florida started talking about them (us) all as a sector, but our industry still is just as fragmented and splintered a sector as it was a decade ago. We all need to work to make this happen.

Who represents this commercial sector so capable of growing in response to society’s quest for the new, cool, and aesthetically next thing? Who gathers them together as an industry to lobby and win economic incentives? Who represents them in seeking their start-up and business building capital? Who creates industrial parks for their start-ups?

And, if we figure that out, how does the sector go about growing jobs in all these fields and careers?

Here are some ideas.

Who:

Our industry should champion for economic development councils, redevelopment agencies, job corps and workforce development entities to take this on. We should build a case for them to stake their own economic development goals on it. We should challenge and support them if they pledged to grow the creative sector jobs in their town by x% a year for 10 years. We need to build this partnership.

How:

As an industry, we have to develop and sell a portfolio of investment strategies. For example: the start-up funds for those musicians needing pre-major label recordings, or the business growth funds to capitalize the potter whose new lines could go commercial. We need to show our partners in economic development the advantages of investment pools for backing local film makers on their next fund, and backing the next playwright on the next play. We need to demonstrate to individuals that investments in the future of artists can have viable returns. We need to push for annual creative industry job fairs, standing industry round tables, and industry promotions. We need to promote the use of government programs like AmeriCorps to provide on-the-job training and career growth in creative industries, and job bank resources.

We need to work to update the funding and grant paradigm of the last decade that placed audience growth as a top priority and job reduction as the top necessity, moving now to favor a job growth and capital growth as the dual top priorities so that nonprofit cultural and creative institutions can do their part in building the industry. We need strong metrics, however, to make sure that both the jobs and the capital do what they should to develop new excellent product that in turn garners additional earned and contributed income. And we need to change the all-too-common mindset that still thinks healthy cultural nonprofits are those that just manage to scrape by.

We need to broaden our concepts of commissions and the use of funding streams such as percent for public art, to provide start-up opportunities and portfolio development for every type of creative. Decades ago, it was not uncommon for cities to commission symphonies or plays. Governments have long commissioned sculpture and other public visual art. Let’s look at commissioning the full range of creative work, and let’s also create the comprehensive rosters of creatives so they can advertise and promote their own excellence.

In many states and more than a few communities, government arts agencies have already become a part of economic development departments. Some have begun moving into this more comprehensive direction. But it is still viewed as a sidebar to the core task of traditional grants to nonprofit cultural organizations. But rather than ad hoc movement in this direction, let’s now go for the logic-path of realignment to the creative industry of today. Let’s focus on jobs, backed by working capital. Let’s treat the creative sector as what it can be, a true engine of economic development.

Trend # 6: Should Cultural Institutions Pay Property Taxes in 2011?

Happy New Year everyone! May your year be creative and exciting as you lead the way in the world of arts, culture, and creativity.

Today is the first business day of 2011, and today’s trend in our Eleven Trends for 2011 sets the tone for thinking about the relationships between local governments and nonprofit cultural organizations this year.

Does your organization expect to pay taxes on your building this year? NGO watchers expect municipalities to look increasingly at various forms of tax on land-owning nonprofit institutions that have traditionally remained exempt. While the early targets of this have been entities such as nonprofit senior living centers and educational institutions, along with some churches, it will be increasingly hard for governments that are starting to tax these types of nonprofits to leave museums, cultural centers, and nonprofit cultural facilities off the municipal tax rolls. Some of the taxes will come in the form of user fees – sewer, water, street maintenance, snow removal, security – but others will be a straight property tax. Expect this to come up for discussion as budget season starts everywhere and local government face shortfalls. Be ready to advocate, and organize to develop win-win solutions.

And win-win scenarios can happen. Economic development specialists and many others recognize the importance of nonprofit cultural institutions and related districts to economic vitality. Cultural districts that work can literally save urban areas, which economic leaders well know.

Performing arts centers or museums that need a subsidy to keep their programming alive, at the same time create the restaurant scene that keeps downtowns lit, exciting, safe at night, and create business for nearby parking facilities, retail, and more. The net positive economic impact is usually much greater than any subsidy, but this equation may need to be stated and documented with more clarity than ever before.

When good documentation of this net positive benefit is offered, look to economic development and planning specialists to be strong advocates and important allies in finding equitable solutions that keep tax/fee costs down while stressing -and building – the value of nonprofit cultural institutions as drivers of business and property values. Cultural organizations that have never met their colleagues in local economic development agencies need to start building good partnerships now for this to happen.

A tested and viable approach is service in lieu of taxes (or fees) that can be win-wins for the public sector and NGO cultural organizations. These approaches have typically included options such as free admission days to the public for museums, or free performances for civic celebrations. While not always easy to arrange – i.e. the contractual issues of professional musicians or actors doing free events – the public willl see tremendous benefits and the in-kind arrangements are almost universally more favorable than the tax or service fees would be.

Among other scenarios: look to more currently unaffiliated groups of nonprofits in a downtown or other part of the city to define themselves as a group and establish BIDs or similar districts, with strength to market themselves as a group and create an advocacy base that establishes favorable contracts with municipal departments and works toward building the excellent reputations that attract developers to a neighborhood. While this, too, has been a tested practice, count on seeing it more widely used with the goal of creating economic value for the municipal government by boosting the overall property values in what could be multiple small cultural and creative districts. (Sometimes smaller districts, each with a unique identity and niche, can be more effective in notching up investment a few blocks at a time.)

Look, too, at the marketing and fundraising opportunities that may come about as groups see strength in banding together. Even donors that aren’t particularly interested in, say, a historical society or community arts center may get behind “The Cultural Centers of City X” based on what the group of institutions make possible in economic growth.

Consider this to be a newly focused type of united fund concept, in which savvy organizations work in small and symbiotic coalitions – perhaps subsets of larger cultural funds, or groups coming together for the first time – to attract attention from today’s cause-oriented donors. Look to coalitions like this to develop joint case statements about their combined contributions to the six or eight block areas they anchor, demonstrating their value in social and economic stories that compel more financial support – even in the face of municipal fees – because of their combined net value. When groups can show that “in our six blocks, our four organizations make X economic difference” and when they can show that the net positive difference far outpaces the cost of public services for their few blocks of geography, they can develop quite a case for support.

At the end of the year, expect there to be some impressive new models in place, where marketing, advocacy, and excellent working partnerships with municipal governments and economic developers pave the way for actual boosts in overall local support for cultural institutions.

Rewarding the Creators

There’s a must read column in today’s on-line Forbes by Silicon Valley technology entrepreneur and strategy consultant Saramana Mitra. Anyone who thinks about the role of creativity, of invention – the absolute thinking processes we learn from and through the arts – should ponder it.

Writing about our economy, Mitra says,

“We’re not having any recovery. We need the innovators, the entrepreneurs, the creators, the scientists, the technologists–those who build value, those who create jobs–to lead us out of this nightmare. Not a bunch of speculators who make money regardless of whether value gets created or destroyed. In fact, many of them are incentivized to destroy value by spreading fake rumors about companies and stocks, and they do so often. Some get caught, most don’t.

And our talented youth gets seduced by this profession of speculation known for its easy and abundantly flowing financial rewards, avoiding those that require much greater intellectual capacity. Most importantly, very early in their lives, our talented youth come to realize that fields that may earn them a Nobel Prize–cancer research or multi-core computing–may not make them rich. But moving money from here to there will.

And thus, we lose Berkeley Ph.Ds in nuclear physics to hedge funds and MIT computer scientists capable of delivering computing to 6 billion people to derivative manipulation on Wall Street.”

Mitra’s focus on nuclear physics and computer scientists could well have included the documentary film maker, the author, the composer, the designer whose creativity and innovation should also lead the way.

Until we see that creativity is fundamental to economic as well as social progress, and make creativity a fundamental (and attractive) value throughout our culture, we’re stuck. Intellectual property is the currency of the future. What drives its creation?

Creativity and innovation.

More on the creative economy…

Randy Cohen, the research director at Americans for the Arts, noted in response to my post yesterday that they actually do include musical instruments manufacture! Thanks for the clarification, Randy. He’s also been great to send along the links to the reports they offer at the congressional district level and the state district level – incredible advocacy tools.   My hope is that AFTA will offer their reports at the MSA level, and/or the county level, to correspond with the way that a lot of planning work happens on the ground.   Those of us in the field using IMPLAN to give accurate pictures of economic activity at the micro level could really benefit.  And, I’d love to continue the dialogue to include many, many more industries in the “creative economy” definition.

So just what is the creative economy?

One of my goals whenever I work on a cultural plan is to establish a baseline of the area creative economy, and then to identify ways to grow that economy.  Too often the creative economy – at least in the US – is  narrowly defined.  (Americans for the Arts has done a fabulous job with the conservatively defined arts-centric part of the creative industries, but I think their creative industries data under-represents reality.) (See blogroll for their 2008 update.)  On the other hand, some define the creative economy as anything based on intellectual property, which might be too broad.  ( My geologist friends develop a great deal of intellectual property, but does that make the mining industry a part of the creative economy?  Doubts.) 

So just how do we get to a viable baseline?  Americans for the Arts uses Dunn & Bradstreet as their data source.  In my own searches, I begin with the North American Industrial Classification System, or NAICS codes.  NAICS codes are assigned to every enterprise in North America, and from this we can assess the enterprise impacts, the jobs, the value added, and their total economic value.  As such NAICS can be the key to assessing the bgroadly defined creative economy.  But there are many judgement calls to be made, and this offers an interesting discussion for the arts/cultural development field.  Wouldn’t it be great if we had a standardized way of defining what codes belong to the creative industries and which codes don’t? Something bigger than what we see now from AFTA, but realistic extractions out of NAICS?

Each creativity-based element of NAICS has three components: education and training, jobs and the creation of economic value, and impact – audiences, buyers, users, and those touched economically and socially.  Think about the case we could make if we would work toward a true definition of the worth of our industries.

The first three sets of NAICS codes – ag, mining, utilities – don’t have any sub codes that really seem a part of the creative economy.  The forth, construction, might have a few.  By the fifth, manufacturing, you get into some interesting judgement calls.  For example, I would include the Manufacture of Fine China, Earthenware, and other Pottery; and the manufacture of Pressed, Blown glass, and Glassware in my creative industry profile of a community.  (AFTA includes individual artisan work, but not manufacture.  But many artists and artisans are employed in the manufacturing process, so I’d opt for the larger definition.) But should the manufacture of other glass containeers be included?  Book printing, yes, but should Quick Printing be included?  How about clothing manufacturing?  Do we include it all, or just sub-parts – for example, manufacturing of Schiffli lace?  Or what about food manufacturing?  I guess you would include specialty cheese manufacturing – my neighbor who makes artisan cheeses would argue for that – but what about fruit and vegiatable canning?  Include piano and musical instrument manufacturing – yes.  But what about photographic equipment? (AFTA includes photographic equipment, but excludes musical instruments.)   

 I’d be likely to include all of the economic activity of NAICS code 51 – Information – which in addition to  sound recording and movies includes telecommunications.  

Code grouping 54 codes professional and scientific enterprises.  From these, the normal picks include graphic design, interior design, photographic studios and the like along with the standard inclusion of advertising agencies.  But how about custom computer programming? (That’s where some computer game enterprises can be found, and these are largely considered a part of the creative industries.)  Most defitions already include architectrual and landscape architectural enterprise, but how about mapping? 

The codes (71) for arts, entertainment and recreation are particularly frustrating for those of us in the arts field.  For example, how are we to break out the enterprises/occupations from the grouping “promoters of arts, entertainment and sporting events?”  Does that mean a local NFL franchise and Symphony are in the same code?  (Yes.  AFTA has broken these out using D&B data.)   How about food services codes?  Do we include chefs/fine dining, but not the coffee shops offering up custom lattes? 

The point is, creativity, innovation and foundational arts thinking can be found to shape and influence hundreds of industry classifications, and thousands of job types.  The arts field is even broader than  represented by AFTA’s ground breaking analysis.  And, if as a field we had a broader definition of what is in and out of the “creative industries” of NAICS – which opens the door for many detailed economic profiles at the local level – we’d be better positioned to make the case for what the arts really mean to our economy and our communities.  We’d be able to work toward a far more holistic approach to educating for the creative sector.   And we’d come even closer to assessing the real value of the economy driven by creativity.