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The best of the Creative Economy: Laurence Green on the The National Gallery ‘Grand Tour’

Nick | 26 Jan 2009, 11:08

C&binet ambassador Laurence Green, founding partner and Chairman of Fallon London, has nominated The National Gallery ‘Grand Tour’ as the most creative innovation of the past year. This nomination is the latest installment of C&binet’s best of the creative economy in 2008.

Creative Agency, The Partners, developed the concept of hanging some of The National Gallery’s world famous collection around the streets of Soho, Piccadilly and Covent Garden to create a giant, interactive gallery and bring art to a wider audience.

“An audacious but thrillingly simple response to the most fiendish of briefs: connect the National Gallery’s collection with people who don’t go.  Here the medium is the message: a thoroughly modern communications idea.” 

Karl Lagerfeld: Fashion has entered an era of “new modesty”

Nick | 24 Jan 2009, 09:34

Chanel boss Karl Lagerfeld has declared the death of bling and the rise of modesty.

His comments echo those of Philippe Starck reported by c&binet recently.

Lagerfeld told the IHT:

“This whole crisis is like a big spring house-cleaning - both moral and physical. There is no creative evolution if you don’t have dramatic moments like this. Bling is over. Red carpetry covered with rhine-stones is out. I call it ‘the new modesty’.“

The French fashion house recently announced it would cut 200 jobs, which constitutes 10% of its workforce, but as Forbes reports, luxury is not disappearing, but changing:

“In addition to seeking fewer, better items, consumers will demand for socially and ecologically produced goods. While shoppers seem to recognize “green washing”, they do expect luxury companies to adopt ethical practices.“

This trend could help to explain why relatively understated UK fashion brand Burberry shrugged off recession to reveal a 30% sales increase in the last quarter of 2008, although even this was not enough to deter a major restructuring and the loss of up to 540 jobs.

Forbes adds:

“Ron Kurtz, founder of Alpharetta, Ga.-based market-research firm the American Affluence Research Center, says this might not be the case for long. As the oil that has made many in the Middle East so wealthy loses its value, those who he calls the “new rich” may begin to cut back, including those in Saudi Arabia, Brazil and China. New initiatives—such as Saks Fifth Avenue’s Jan. 12 announcement that it would open a store in Jeddah, Saudi Arabia, its second in the country—might be postponed due to a decline in overall consumer confidence.“

And as this report by Emirates Business 24/7 illustrates, the global downturn has already impacted demand for luxury in the Middle East.

Sarkozy intervenes in French newspaper industry

Nick | 24 Jan 2009, 08:40

The New York Times reports that French President Sarkozy has announced a package of measures designed to support the domestic newspaper industry, which is in crisis:

““It is the state’s primary responsibility to respond to an emergency,” he said, “and there is an emergency caused by the impact of the collapse of advertising revenue.” The French government’s support, which totals about 280 million euros, or $362 million, a year, would be increased by about 200 million euros a year for three years under Mr. Sarkozy’s plan.“

While the decline of ad revenues has prompted the short-term crisis, the industry has been in long-term decline as a result of structural challenges, such as poor distribution and expensive print costs - the result of a highly-unionised system. Already heavily subsidised, the product simply isn’t popular. According to the World Association of Newspapers, newspaper readership levels are half that of Germany or the UK, a trend which dates back to the Second World War.  Since then, French newspapers have done little to shake off their elitist image among the French public.  Titles like L’Equipe and Paris Match have filled a hole that the “popular press” occupy in other markets.

In this context, the other plank of Sarkozy’s strategy - subsidising a year’s free newspaper subscription for every 18 year old - seems unlikely to kick-start paper publishing, particularly at a time when the trend across the industry is towards free, ad-funded models and digital-only publishing.

As Chris Matyszczyk writes on CNET:

“But isn’t the habit of getting all your information online beginning when kids are 3 or 4? Isn’t waiting until kids are 18 before they can be blessed with a free copy of Le Monde a little like waiting to lose your virginity at 40? Or marrying your first rock chick at 53?

“Mr. Sarkozy is rightfully concerned that he must fight for an “independent, free and pluralistic” press. Does this mean, though, that such a thing is not possible online? Let me Google that and get back to you.“

The best of the Creative Economy: Tony Orsten on the late Sheikh Zayed bin Sultan Al Nahyan

Nick | 23 Jan 2009, 11:21

C&binet ambassador Tony Orsten has nominated a portrait of the late President Sheikh Zayed bin Sultan Al Nahyan by Sandrine Pelletier as his most creative innovation of the past year, in the next instalment of the best of the creative economy in 2008.

twofour54 commissioned this portrait of Sheikh Zayed bin Sultan Al Nahyan at the beginning of 2008 to reflect the respect the United Arab Emirates has for the late President, the ‘father of the nation’.  The portrait was created by Swiss artist Sandrine Pelletier who used 350,000 stickers to create a mosaic effect.  twofour54’s intention was to demonstrate that creativity in all its forms is fundamental to their remit.  Upon completion, the portrait will hang in twofour54’s new HQ in Abu Dhabi.

“This portrait is unique.  To our knowledge, His Highness’s likeness has not been used in this way before.  We sincerely hope that the boldness of the image and the artistic processes will, in its way, stimulate people in our region to embrace the content creation opportunities which twofour54 will offer.“

Lorna Tilbian: Lessons for the media sector from the last economic upturn

Nick | 23 Jan 2009, 11:07

C&binet ambassador Lorna Tilbian is the UK’s top-rated media analyst and an Executive Director at Numis Securities.  Her latest industry update is entitled “Lessons from the Last Upturn” and although it focuses on the UK media sector, its insights are applicable more broadly. 

In October 2007, Tilbian published Lessons from the Last Downturn, which detailed the cyclical, structural, financial and valuation risks facing the sector. She says:

“At that time, we favoured the professional / educational publishers and large agencies, and warned of the challenging outlook for FTA broadcasters and leveraged B2C groups.
“This assessment proved directionally correct, though we were taken aback by the scale of deterioration. We are not calling the turn, and retain our view that 2009 will be a hostile environment for the sector, with share prices not bottoming out until forecasts have stopped falling.

“However, as we progress through 2009 we believe the market’s gaze will turn to recovery. Our experience of the 2003-07 upturn identified two phases of recovery. The first is re-rating, which runs for a year from when the market turns. In the year following the March 2003 trough, the sector p/e expanded from 13x to 22x as the market discounted recovery.

“The speed at which share prices rebounded was extraordinary, with classic recovery plays such as the agencies and FTA broadcasters rising +141% and +99%, respectively, over this period. The second phase is driven by EPS growth, and here both structural and cyclical factors play their part. The agencies and B2B groups, which we view as structurally sound, enjoyed growth through the cycle, while the structurally-challenged B2C publishers and FTA broadcasters were unable to convert a benign economic backdrop into higher EPS, and therefore share prices.“

Her analysis leads her to conclude that many professional and educational publishers like Pearson, Reed Elsevier and Thomson Reuters offer “excellent long-term value” while agencies “offer an excellent risk/reward balance” and their variable cost bases offer protection for shareholders should the downturn be protracted, since most of their costs are consumed by salaries, rather than fixed cost infrastructure.  She also praises the way in which B2B publishers have managed the transitition from print to digital and believes their shares generally represent excellent value.

On the other hand, she is less positive about the outlook for free-to-air (as opposed to subscription) broadcasters, she says “we can think of no more economically sensitive group than an FTA broadcaster, which given economic uncertainty makes them higher risk investments. However, with digital migration nearly complete, we view them as better placed structurally than in the previous cycle.“

Finally, she believes that B2C publishing is “an intriguing category, and we view the newspaper / directory publishers as ‘death or glory’ stocks, which are probably best played (if at all) through a
basket of stocks to minimise specific risk. The B2C groups outside of this area have less extreme recovery potential, but with lower risk profiles.“

The best of the Creative Economy: Tim Hincks on Take That

Nick | 22 Jan 2009, 13:04

In our review of the best of the creative economy in 2008, Tim Hincks has nominated the re-launch of Take That as the most creative innovation of the past year.

Take That had an extraordinarily successful year in 2008 winning awards, gaining multiple Number 1s and breaking the record for the fastest selling UK tour of all time.

The band released the second album since their re-launch called ‘The Circus’ which made a debut at Number 1.  The first single from the album ‘Greatest Day’ also hit Number 1 on release.

The group won ‘Tour of the Year’ at the Vodaphone music awards as well as ‘Most Performed Work’ with ‘Shine’ at the Ivor Novellos. 

“An extraordinary British success story - the fastest selling gig in history, unadulterated mass entertainment, and driven by the creative talents and craftsmanship of Gary Barlow who is responsible for 17 number ones and thirty million album sales worldwide. And best of all it’s a story about succeeding when everyone has written you off. Proving the key maxim for all creatives - trust the audience. They want and demand quality. A great British export with creativity and passion at its heart. Robbie who?”