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Brands - a vital component of the creative economy

Nick | 17 Feb 2009, 09:42

C&binet comment: John Noble, Director, British Brands Group discusses the overlooked contribution of brands to the creative economy


In December 2008 a study,“Valuing Brands in the UK Economy”, was published that looked into the economic contribution of branding to the UK. It was commissioned from Westminster Business School by the British Brands Group to help build understanding of the wealth generated by branding and to quantify the contribution it makes to the economic health of the country.

The study reached the following key findings:

- An estimated 1 million people are employed in the UK in the creation and management of brands, equivalent to 4% of all those employed;

- No previous work has been done into the contribution of branding to the UK. Furthermore, branding is simply not being counted in the UK’s measures of economic activity. The knowledge economy is not being valued, and branding is an important element of this;

- Approximately £32.55 billion is invested in creating and managing brands in the UK annually. This equates to 2.3% of GDP;

- This represents an annual investment to the UK economy of £15.85 billion, representing around 12% of all intangible investment and 6% of all investment in the UK.

The creative industries feature prominently in the study. Because of the way national statistics are compiled it was not possible to identify all the people in an organisation who play a central role in the building the reputation of its products or services. It is possible however to identify artists and those employed in marketing, design, advertising and audio visual and it is these who comprise a significant proportion of the 1 million people employed.

So what does the UK obtain from this £15.85 billion investment in the economy? The study highlights a range of economic and social benefits, including a surety for consumers that new products, ventures or markets are “safe”, the quicker adoption of new technologies and ways of living and working, a closer alignment between business and society, a spur to innovation as companies strive to maintain their reputational asset and the enhancement of the UK’s reputation overseas.

The significant question however is, if branding is such a significant contributor to the UK economy but has indeed been so overlooked as this study suggests, what role may it play in the UK’s economic recovery? Certainly a greater emphasis on branding would play to the nation’s strengths, with its innovative record and its vibrant creative industries.

Mobile market passes 4 billion users - the biggest potential market for the content industries

Nick | 12 Feb 2009, 10:13

Mobile industry commentator Tomi Ahonen has analysed the potential of mobile phone market for content-generating industries at Socially Minded. He’s evangelical about the potential of the market, which he describes as the 7th mass media.

“Lets start with comparisons. Newspapers? the total circulation of all daily newspapers worldwide is about 480 milllion… Cable and satellite TV subscriptions? About 850 million. Personal computers including desktops, laptops and netbooks, about 1 billion… Internet users about 1.4 billion. Television sets about 1.5 billion.. But there are 4 billion mobile phone subscriptions now in January 2009… Over 80% have a colour screen… 40% of all phones can install Java or Brew based applications. 20% of all phone subscriptions are 3G high speed data enabled and 10% of phones are smartphones.“

The result is a huge and rapidly growing market for mobile content:

“At the end of 2008, the mobile content industry was worth about 71 Billion dollars worldwide, led by music, gaming, social networking and various TV, video and TV-related services such as TV voting by SMS. For more advanced multimedia based media content and advertising, of sounds, pictures and video clips, the MMS picture messaging system reaches 70% of the subscribers or 2.8 billion people. Obviously this is nearly twice the number of TV sets in use, and more than twice the number of total internet users and almost three times the total of PCs in use in the world.“

Lord Puttnam: The challenge for the creative industries

Nick | 10 Feb 2009, 12:22

C&binet comment: David Puttnam discusses how the creative economy can flourish in the current economic climate

Our creative industries are taking on a greater-than-ever degree of importance in these extremely challenging times.  They are also being transformed by the impact of digital technologies.

Lord Carter’s recent report on Digital Britain addressed the consequences of those changes – and in particular the potential of broadband technologies to in effect transform our lives.

As Lord Carter recognised, for the creative industries the transition from the analogue age to a digital one represents a huge opportunity.  But like all such transitions, it also presents considerable challenges for formally successful, and frequently complacent, incumbents - many of whom are still struggling to find ways to make money from distributing content on the internet.

But in this respect there are one or two interesting lessons to be learned from recent history – epitomised perhaps by an organisation which rejoiced in the name of FIDO - the Film Industry Defence Organisation – a seemingly ‘brilliant’ idea dreamed up in the mid 50’s by British film companies; whereby a pool of money was created, sufficient to buy the television rights to all American and British movies in order to prevent them from ever appearing on television; and in doing so, crush television at birth!

Fortunately, our creative industries have shown just a tad more foresight than those who sought to run the British film industry as a cosy duopoly in the 50’s and 60’s.

But my central point holds good – our existing strengths will count for little if we do not actively embrace the evolution of the media, and seize every scrap of advantage from it.

Yet despite the myriad changes which digital technology is bringing to our creative industries, it’s also worth remembering that a few ‘fundamentals’ remain remarkably consistent.

I would broadly place these in three categories: talent, opportunity and distribution.

Let me say a little about each; first of all – ‘Talent’.

I was enormously encouraged by the emphasis the Digital Britain report laid on skills and talent. As Lord Carter put it:

“We cannot afford to treat education and training for digital technologies as just another ‘vertical’ subject area. It underpins everything we do in the 21st Century.“

I completely agree. 

One of the great successes of this Government in recognising and promoting the UK’s Creative Industries, has been the attention paid to maintaining and strengthening the talent and skill base, through enhanced education and training at every level.

If I’ve one disappointment, it’s that there appears to have been little in the way of a matching commitment from many private sector employers.

An abundance of talent of every kind is the only certain way of ensuring a bright future for the whole of the sector;  combine that with a consistent supply of world class skills and you’ve held down costs whilst creating what would seem to me, an unbeatable combination.

Maybe it’s because this is self-evident that it gets so little mention, but if it is so self-evident why do I get the sense that many employers, who honestly should know better, seek to evade or avoid their very obvious responsibilities in this area?

If we fail to invest in talent for the future, we will very quickly fall behind other nations in seizing the potential offered by the digital universe.

By way of an example, I’m very fortunate in being able to visit Singapore a couple of times a year in my capacity as an adviser to their Media Development Agency.  There I listen to advanced plans to ensure that 2 gigabits of connectivity are available, business to business by 2015 at the latest.  Meanwhile we in this country are giving serious thought to making 2 megabits generally available. hat is in effect, 1,000th of the ambition of the Singapore Government. 

Clearly one of these two options is barmy.  I’ve a nasty feeling that, in our ingrained desire to ‘make do and mend’ it could be us!

Turning to the second of my ‘fundamentals – ‘Opportunity’.

You don’t have to be a genius to realise that talented people will always need a plurality of doors at which they can knock in seeking acceptance, or recognition, of the skills and ideas they have to offer.

In an ideal world, the gatekeepers at each of those doors will be open to original ideas and concepts, and have sufficient expertise to be able to sort the wheat from the chaff; although I would suggest that it’s also a good idea to take a second look at the ‘chaff’ – the history of our creative industries is full of examples of eventual success greeting once rejected ideas.

Our present system isn’t bad; but with an exponentially increasing number of platforms and opportunities we must ensure that the ‘funnel’ that takes ideas into projects and programmes is not allowed, for whatever reason, to narrow.

Imaginative commissioning and creative risk taking have been among the great strengths of our creative sectors, but I’d like to see those same qualities applied to the development of concepts and content that contains sufficient ambition to interest and excite audiences outside of this country, audiences that don’t necessarily share the more parochial of our cultural concerns.

Lastly – ‘Distribution’.

I could offer a blizzard of facts about the way in which the global appetite for content of all types has enlarged and extended in a digital world.

What’s absolutely certain is that today’s global marketplace already offers more commercial possibilities for well made content than have ever previously existed.

If we are absolutely honest, we in the UK have always been far better at creating ideas and products than marketing them. If we are to succeed in the new global marketplace we have to become far better at aligning our traditional strengths with the disciplines and opportunities that marketplace demands.

This ‘trinity’ of strengths – talent, opportunity and distribution – served us well in an analogue age, and given the right encouragement, has the potential to serve us even better in the digital era we’ve now entered.

It’s my belief that an economy based on our creative industries is considerably more sustainable in the long-term than one based on credit default swaps.  Or, as Lord Turner, the chair of the FSA put it in his Economist Lecture recently:

“Not all innovation is equally useful. And in the years running up to 2007, too much of the developed world’s intellectual talent was devoted to ever more complex financial innovations.”

Over more years than I care to remember I, and other so-called ‘luvvies’ have been accused of promoting ‘fluffy’, or at best ‘marginal’ sectors of the economy like film, broadcasting and design, at a time when more hard-headed ‘realists’ insisted that our true future lay in the area of ever-more sophisticated financial instruments and services.
Well, it turns out that those self same ‘financial instruments’ were the very first things to give way when the global economic storms began to rage out of control.
Our intellectual property, on the other hand, if we carefully nurture and develop it during these hard times, could well prove to be one of the crucial drivers of growth for UK plc going forward.

I think there’s broad political agreement here.

Certainly regarding our policy ambitions – if not always, perhaps, the means of achieving them.

Digital Britain provides an invaluable roadmap for the future, and we all need to step up to the plate and ensure that we really do seize the opportunity to maximise the economic and cultural benefits of our creative industries in a digital era.

Nintendo targets US and European gamers

Nick | 06 Feb 2009, 16:10

Nintendo’s worldwide president, Satoru Iwata has told shareholders that the company will give greater focus to the American and European markets to drive its expansion. Wired quotes him as saying:

“As we strive for the expansion of gaming population worldwide, we are also thinking of developing products that cater to the American or European markets. We are actually working on U.S. and Europe-originated Touch Generations products, which may have a smaller demand in Japan than overseas.“

The company currently sets the pace for innovation in the games industry and Iwata feels justified in stating that user-generated and social gaming will remain the key driver for growth in the industry:

“There are some people, although they may be a minority, who love to create something creative, share that with others, and enjoy seeing other people being entertained or responding positively to their creation. At the same time, great majority of people are rather passive and love to applaud the creative efforts by others and enjoy playing with them. In other words, (user-generated content) has the unique characteristic that, regardless of their game skills, people on both sides can enjoy.“

Ticketmaster and Live Nation in merger talks

Nick | 05 Feb 2009, 14:48

Two US entertainment industry giants - recent spin-offs Ticketmaster and Live Nation - are reportedly in merger talks.

As Ian Burrell argues in the Indepdendent, the talks mark the rapid change underway in the music and entertainment space and the growing importance of 360 deals for artists:

“Four years ago, Live Nation didn’t even exist. Today, it’s on the verge of assuming a position that bestrides the music business, by merging with Ticketmaster, the world’s dominant ticketing and artist management company. Already Live Nation has an extraordinary track record, having persuaded some of the world’sbest-known music artists, such as Madonna, U2, Jay-Z and Shakira, to sign up to its “360 deals”, which allow the company to make a single payment for the right to make money on everything from recorded music to concert ticket sales, merchandising and official websites.“

US commentators suggest that the deal could fall foul of antitrust laws due to the dominant position it would hold in the event ticketing market.

A new way for bands like The Alps to get a slice of the pie

Nick | 05 Feb 2009, 12:58

Music industry harnesses the wisdom of crowds

Slicethepie.com is a website that has created a new model for investing in music acts.  Launched in 2007, it provides a platform, which enables artists to raise money directly from music fans. Richard Tyler at The Telegraph explains:
“Slicethepie’s sales pitch is that just as file-sharing site Napster and publishing platforms such as MySpace revolutionised the way bands distribute their tracks to potential fans, so it aims to challenge the conventional economics of music production. Here, fans get to help their favourite unsigned bands record and release an album - and they can then share in the profit if the band goes on to sell more than 10,000 copies.“

Although the sums the site and its competitors, such as Sellaband.com, have raised so far are tiny compared to the investments made by major labels, Slicethepie has already enabled 22 acts to record albums and found an innovative way for music fans to engage with the industry.

The Alps are a UK band that signed up with Slicethepie for its launch and c&binet spoke to lead singer Daniel Heptinstall and Slicethepie CEO David Coutier-Dutton to get both sides of the story. Firstly, Daniel Heptinstall:

C&binet: How did The Alps get involved with the site?

DH: We were approached by Slice the Pie to be one of their launch bands. I believe we were approached as we already had a bit of a profile and a large online fanbase. The SLP approach fitted in nicely with our DIY ethic of doing things. We’d already set up our own label to put out a couple of early singles, so for us raising money through fans to fund the debut album seemed like a great idea

C&binet: How much did it help you raise?

DH: £21,000. About half of this was spent on recording the album, mastering, production etc.. The rest went towards PR and plugging services.

C&binet: Once you’re raised the money, what happens?

DH: There are no direct conditions on how we use the money when it is given to us. But to squander the money in any way not related to the band would be throwing our fans support for us back in their faces. So we felt a responsibility to try and use the money wisely. STP have a number of industry contacts, such as PR, pluggers and manufacturers, that they are able to put their artists in contact with, but they don’t spend the money on our behalf. SLP take a cut from each album sold – a couple of quid. The advantage of this for us is that we retain more of the money from sales than we would if we were in a typical record contract.

STP has provided us with the funds to record and promote the album while we retain all copyright on the songs. It gives us the best of both worlds. We have complete control over our sound and a direct connection with our fans - the very people who gave us a chance to record this album.

C&binet: How long did it take you to raise finance in this way?

DH: I believe it was around a month. Our previous single releases were funded directly by ourselves, which was a bit of a struggle. It hadn’t really occurred to us before STP that we might be able to raise funds via our fanbase.

C&binet: Were there any other benefits from being involved?

DH: We do get a lot of traffic through to our website and MySpace site via the Slice the Pie website, so it certainly hasn’t harmed our visibility. And, as we were one of the launch bands for STP, we did attract a fair amount of press interest, which has generally been very positive.

C&binet: Do you think it fills a gap in the market? 

DH: To be honest, if some deal had been put on the table by a decent label at some point along the way - we may have been tempted to go with it. But it’s never felt like something we particularly relied on.

We can only really speak from our point of view, and so far it’s working for us. It’s allowed us to go into the studio with legendary producer Dave Allen, who was responsible for many of The Cure’s finest albums, and Filthy Duke - Mark Ralph, and now we’re getting a chance to get our music out there and see where it takes us.

The traditional music industry framework seems to be under threat due to the digital revolution. It feels like a positive thing to be exploring fresh and alternative approaches – all the better for the diversity of music worldwide.

Slicethepie.com is also diversifying its services to complement traditional A&R models for identifying talent.  The recently launched SoundOut service was compared by Wired to the “Idol” TV format, harnessing the ‘wisdom of crowds’ to help labels guage potential interest in an act before investing:

“SoundOut will let labels audition rough demos anonymously within the system in order to determine what the public will like. If the band resonates, the label has invaluable market intel. If doesn’t, the label is out maybe 50 bucks.“

David Coutier-Dutton talked to c&binet about the evolution of his business:

C&binet: What’s been the response from the labels to what Slicethepie is doing?

DCD: Initially, digital start-ups like ours were seen as a useful new source of revenue for the industry.  Backed by VC investment, these companies were making substantial up-front payments for access to labels’ back catalogues.  The labels got a new revenue stream for minimal effort so they were happy but not terribly interested in what those companies had to offer as partners.  This has changed in the last 18 months as VC funding has dried up and, consequently, those digital revenue streams are under threat.  I think that will spur the industry to develop proper partnerships with online brands.

C&binet: Do you think the music industry has been quick to innovate in response to new technologies?

DCD: Small companies will always be more nimble and help to make the market.  There is a lot of innovation in the music industry right now – the one-to-many way of doing business is under threat, that’s widely understood.

C&binet: How much potential do you think this model of fund-raising has?

DCD: There is a lot of room for growth. The new version of our site lets established artists raise money, as well as new artists.  That means any act with an established fan base can seek financing for a new album directly from the people that follow them.  In the future, we will see co-financing deals with major labels and partnerships with social networks to reach a much wider audience.

But revenue and investment generation is only one side of the equation the other major opportunity for our business will come from SoundOut – our new product, which helps A&R teams reduce costs by doing audience research more efficiently, in advance.  About US$4 billion is spent on A&R every year, so it’s a big market.  We currently have a database of 2.2 million track reviews and we can process as many as 3,000 tracks in 3 days.  SoundOut could account for as much as half of our revenue in the future.

There is also scope for international growth.  Currently, about 60% of our revenue comes from the UK, but we are growing in the US and there’s potential to grow in new and emerging markets.

C&binet: Do you think new models of financing and marketing acts will change the nature of successful artists?  Do you think they need to be entrepreneurs as well as musicians?

DCD: No, they just need to be digitally savvy, which anyone under the age of 25 is these days.  The Alps are doing a great job and there are other Slicethepie bands doing well too, like Scars on 45.

- The Alps’ new single, Obstacle Race is out on May 25th, 2009.  You can watch it at planetofthealps.com

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