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Driving Growth in the Creative Economy

Frank Boyd
Director
Creative Industries Knowledge Transfer Network
@frnboy

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The Technology Strategy Board

The Technology Strategy Board
@innovateuk

#creativeindustries
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@innovateuk: “the uk’s innovation agency”

#creativeindustries
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@innovateuk: investment priorities
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Creative Industries KTN
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creative industries in the uk
5.3% of UK GVA

Worth > £36 billion
1.4 m employed
5th largest media
market in the world...
Creative Industries Strategy
2013 - 2016
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driving innovation through partnership
an integrated approach

9

Technology
Storytelling
Skills
10

convergence

key theme
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convergence: in production
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convergence: in consumption
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transaction

key theme
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Emerging transaction services

Source: Mary Meeker, 2013
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data

key theme
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Data

Source: Mary Meeker, 2013
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The Data Context Context
The Data
DATA
Collection and transport

Crowdsourcing

KNOWLEDGE
Data Science

Conversion to
...
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crosscutting themes: ‘cross-innovation’
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crosscutting themes: design
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Design SIG: P4I project
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crosscutting themes: knowledge sharing
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crosscutting themes: sustainability
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investment programme 2013/14
• Cross-platform production in digital media: £15m
• Innovation in digital media producti...
24

Investment programme cont’d
• Location based Services: £4m
• helping businesses engage with customers in 'here and
now...
25

for further context
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Driving Growth in the Creative Industries

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  • The Technology Strategy Board is the UK’s Innovation Agency, a national body set up in 2007 to invest in innovation The TSB’s goal is simple: to accelerate economic growth by stimulating and supporting business-led innovation research and development. It works across business, universities and government and most staff come from business backgrounds It’s budget for 2013/14 is£440mOver the past 5 years it has Invested >£2.5bn in innovationEvery £1 invested returns £7 in GVAIt’s budget is growing and is £450,000 in 2013/14There were around 60 competitions in 2012/2013, which Invested in ~3000 projectsIt is working with >4000 companies and 110 universitiesAt least 50% funding in recent years has gone to SMEs, which are regarded as an important source of innovation.
  • The TSB’s investment is made at a number through a range of funding programmes: from ‘Knowledge Transfer Partnerships, which enable individual academic researchers to work in businesses to major strategic interventions designed to have an impact on a whole industrial or economic sector.Some programmes are open for bids from single companies and aimed specifically at SMEs (Feasibility Studies and SMART, for example), but the majority of the investment is made in Collaborative R&D projects, designed to encourage interdisciplinary collaboration which is seen as the most likely source of disruptive innovation. Collaborative R&D projects must be business led but a consortium may include academic partners.Larger projects include Demonstrators, usually involving many partners in a consortium to enable large-scale testing of new products and services in the real world.And the Catapults, a network of Technology Innovation Centres designed to transform the UK’s innovation capability in key areas to help drive future economic growth. They cover the Connected Digital Economy, Transport Systems, Future Cities, High Value Manufacturing, Renewable Energy, Satellite Applications and Cell Therapy, The TSB’s commitment is to 5 years funding at £10m for each which is intended to be a third of their budget.
  • EnergyHow the challenges of secure, affordable and sustainable energy supply bring opportunity.Built environmentTough carbon emissions targets will require a revolution in build, design and operation.FoodThrough innovation we can raise productivity and reduce environmental impact.TransportA step change is needed to develop sustainable and efficient transport systems. HealthcareHealthcare providers face great challenges from ageing populations and from disease.High value manufacturingInnovation in manufacturing is vital to enable the advance of other sectors and technologies. Digital economyThe internet and mobile communications are transforming business across the economy.Advanced materialsAn enabling technology in key sectors including construction, clean tech and transport.BioscienceBioscience-based products and services, from food to medical care, are integral to our lives.Electronics, sensors and photonicsAn enabling technology for many other sectors, from consumer goods to energy.ICTICT enables process, product and service innovation across all sectors.SpaceSupporting innovative developments using satellite data and space-based satellite systems.Resource efficiencyHow can we use the Earth’s resources without deeply compromising ecosystems?
  • The UK’s Innovation AgencyThe TSB’s goal is simple: to accelerate economic growth by stimulating and supporting business-led innovationA national body set up in 2007 to invest in business innovation • Works across business, universities and government • Most staff come from business backgrounds • Has a budget of over £300m/year £390m for 2012/13 £440m for 2013/14 Invested >£2.5bn in innovation Every £1 invested returns £7 in GVA 50 new competitions in 2011/2012 (~60 last year) Invested in ~3000 projects Working with >4000 companies and 110 universities ~50% funding went to SMEs in 2012
  • The creative economy is one of the few industrial areas where the UK has a credible claim to be world–leading.The creative industries make up one of the UK’s leading industrial sectors, responsible for 1.5 million jobs and 5.3% of the country’s gross value-added (GVA). They are worth more than £36 billion a year they generate £70,000 every minute for the UK economy; they employ 1.5 million people in the UK. they have a share of around 5% of the global export market for creative goods and account for around £1 in every £10 of the UK’s exports.The UK’s entertainment and media market is the fifth largest in the world5 The UK exports more than £100m in design services each yeartheUK film industry contributed over £4.5bn to UK GDP in 2009The UK is one of only three countries (along with the US and Sweden) to be a net exporter of music8 The UK has the largest publishing industry in Europe, exporting more books than any other country in the world9 The UK advertising industryisworth £16bn a year. Over two-thirds of global advertising agencies have their European headquarters in London10 The UK government increasingly regards the sector as a priority for support and investment. In his 2011 budget speech Chancellor George Osborne stated that he wanted the ‘UK’s creative industries to be a world- beating sector’ and put money behind his words in announcing tax credits for five sectors in the industry and £25m in additional funding for R&D and for skills development.The sector faces a number of threats, challenges and opportunities, many driven by the disruption caused by technological innovation to patterns of production, distribution and consumption. To highlight just a few of these:Definitions:The definitions of what comprise the sector are now outdated and contested, notably by Nesta, an independent research body that supports innovation and has an important creative economy programme. Nesta argue that as well as considering the ‘vertical value of the 13 sectors that comprise the creative industries, the Government should also take into account the role of individuals in creative jobs in other parts of industry: industrial or graphic designers working in the automotive sector, for example. They argue for a simple definition: “those sectors which specialise in the use of creative talent for commercial purposes.Seen from that perspective, Nesta estimates the creative economy to employ 2.5 million people and to be worth 9.7% of GVA.Business Models:Thetorrent of change, the ‘digital torrent of creative destruction’, presents creative businesses with a bewildering array of innovation opportunities, sometimes obscured by a blizzard of threats to existing business models. The fear of cannibalising established revenue streams, while sometimes well founded,can undermine willingness to experiment with new business models. Incumbents’ resistance to change also encourages attempts at regulatory reform, most evident in policymakers’ traditional hostility to flexibility in the Intellectual Property Regime, which is needed to reflect changing consumer expectations and practices and to prevent copyright from creating barriers to innovation in other parts of the economy, such as medical and other scientific research.Access to FinanceDespite the strengths of the sector, creative businesses have often struggled to secure private investment, and access to finance is identified as a core barrier to growth for many businesses and entrepreneurs16. There is a range of reasons for this, including issues around the high risk valuation of intellectual property and content assets and perceived lower than desirable levels of business and management skills. The sector is often characterised (and caricatured) as being dominated by start-ups, micro enterprises and ‘lifestyle businesses’ that put too much emphasis on creative rather than commercial objectives. Fusion• fusing key expertise, knowledge and experience in individuals.• fusing industry and higher education together.• fusing the different parts of the creative media industries together.• fusion management skills.The Brighton FuseThe Brighton Fuse Report, a two year study of a cluster, demonstrate that combinations of diverse skills and knowledge sources can be a source of competitive advantage to new business ventures Two thirds of the firms in the Brighton cluster combine creative design and technology in their work, comprising a workforce from people with arts and humanities with people from science and technology disciplines. We refer to them as the ‘superfused’ firms. The average growth of a ‘superfused’ company is three times that of those that do not have this combination of skillsets in their workforce.Relationship with AcademiaHaving to find new ways of preparing students for this evolving landscape. Some, notably the former polys, are doing a very good job: Abertay in Scotland, Bournemouth, Portsmouth and Ravensbourne College are amongst these. There is some tension between what industry sees as the role of tertiary education and the universities. This is probably most forcefully expressed in the Next Gen Skills report: there are severe misalignments between the education system and what the UK video games and visual effects industries need Academic research and business R&D are not as well connected as they could be. The AHRC in particular has struggled to meet the new research assessment criterion for impact and is re-structuring its relationship with industry, principally through four knowledge exchange hubs which have put a strong emphasis on the role of artists and designers in innovation.
  • Key element of the new strategyWe recognise that innovation in the creative industries is driven by an intricate relationship between content and technology; the collaboration between artist and scientist. We will further develop our already good relationships with partners, such as cultural institutions and other organisations in the sector, to explore how we can best work together through our various remits (in innovation support, fostering the arts and content creation, advancing skills development etc) to further enhance the innovation climate in the UK.
  • Encouraging companies to collaborateWorking with other public sector organisations (Creative Skillset, UKTI, NESTA, Creative England, AHRC, ACE, BFI, etc)Working with central Government and the Creative Industries CouncilExtending with CI KTN, CDEC, _Connect and other programmes
  • Streaming audio and video dominate net trafficCross-platform production increasingly central to content businessesSmartphones and tablets driving pervasive media and hyper-local mediaNew tools and work processes needed to re-purpose content over wide range of devices
  • New platforms, disintermediation, and fragmentation of markets all present challenges in building relationships with users and capturing value, but we believe that there are sizeable opportunities, including digital currency, and easy ‘friction-free’ licensing and commerce.Traditional value chains disrupted: new ways to reach consumersContent businesses struggle in fragmented marketplaceNew ways to transactEmerging new business models
  • New platforms, disintermediation, and fragmentation of markets all present challenges in building relationships with users and capturing value, but we believe that there are sizeable opportunities, including digital currency, and easy ‘friction-free’ licensing and commerce.The availability of goods and services in the digital age is unprecedented. Consumers have never before had such easy access to both physical goods and digital content and services in such a vast array of forms. Meanwhile, businesses have never before had such access to distribution channels that can reach international audiences and markets so swiftly, nor have they had the potential to understand their consumer base so thoroughly. Whether these transactions involve the passing of data or content from one person to another or the provision of a service, the digital nature of these transactions has brought fundamental change.The economic benefits of such ‘frictionless commerce’, in which the barriers and costs to transaction become dramatically reduced are considerable. Whether it is crowdfunding investment, aggregation and recommendation services or the delivery of niche or ‘long tail’ content through subscription services, new opportunities are emerging for businesses, investors and consumers to interact and build value.However, for all parties in the value chain – creators, wholesalers, distributors, licensees, retailers, re-sellers, advertisers and consumers – there remain areas in which the process of transaction remains difficult, opaque and sometimes impossible. Whether as a result out-of-date intellectual property regulations, proprietary “walled garden” operating systems and apps markets or poor meta-data standards, commercial activity in the content sector and beyond is being frustrated.Overcoming such barriers will require a range of approaches – public policy, business strategy and technological – from across industry and government. Of particular importance will be the Copyright Hub, a response to the Intellectual Property Office 2012 paper Copyright Works Streamlining copyright licensing for the digital age, and which has been launched to investigate ways to address a range of long-standing licensing problems.The Technology Strategy Board is playing its part by attempting to address the innovation barriers to frictionless commerce. A competition will launch at the end of September, looking to invest £2.5million in Collaborative Research & Development (CR&D) projects that lead to efficient digital transactional environments for the content industries.
  • Data has become recognised as crucial to business success. In Brussels, May 2013, NeelieKroes, Vice-President of the European Commission responsible for the Digital Agenda stated “the world is generating 1.7 million billion bytes of data per minute. That’s over 6 Megabytes per day for every man woman and child on the planet…. Quite simply, knowledge is the engine of our economy. And data is its fuel”.Metadata was one of the key themes of the importance previous, 2009 strategy, its use has mushroomed, with metadata solutions enabling new ways of driving content discovery, licensing, consumption and new, as yet undetermined, business models.Metadata is no longer a niche interest – it is now mainstream. We’re now broadening the scope of that theme to respond to the opportunities that the exponential growth in available data is creatingWe see some creative businesses structuring their business around data, Zynga (the makers of Farmville, for example) describe themselves as “an analytics company masquerading as a gaming company. Everything is run by numbers” said Ken Rudin, Zynga’s analytics chief.Other businesses have been set up specifically to take advantage of the flood of data now becoming available from the vapour trails left by consumers across social networks and other sources. A colleague has recently set up a company called Music Metrics to track popularity and fan trends for any artist in context., allowing artists and their managers to compare against other artists and industry benchmarks.It can also help in storytelling. Just last night for example, Columbia Journalism School professor Mark Hansen is reported to have said."Data deepens your stories," he said, "It's an incredible resource and being able to interview data makes you a better journalist."ManyCreative businesses have still to understand the importance of data and take advantage of it.
  • Ninety per cent of the data in the world today was created in the last two years alone. "A study at the end of 2012 by IDC predicts the ‘digital universe’ will reach 40 zettabytes – that’s around 45 trillion gigabytes – by 2020, a 50-fold growth in a decade”More than 500 million photos are uploaded and shared every day. About 100 hours of video is uploaded to YouTube every minute. This exponential growth in the volume of information available presents two major areas of opportunity for creative businesses:In its own value chains andIn other sectors of the economyData can be transformative for creative businesses in helping them to understand their audiences, pilot products, and increase the efficiency of production processes. “Discoverability is a major factor in the survival story of our industry’s lurch towards an atomised constellation of entrepreneurial start-ups”Digital technology may make it easier to create content and distribute it but being discovered by the consumer when you are there in the marketplace is an increasing challenge. If you can’t connect to an audience or user, or even gradually grow that base, then you are not going to survive long.The more data you can obtain on the market conditions and your potential customers the more intelligent and focused your marketing can be.Good capture and analysis of data may help solve the apocryphal conundrum of “I know half of my advertising budget is wasted, but I don’t know which half”. Access remains a major issue, controlled by gatekeepers like Google, Facebook, Amazon and LinkedIn - the sites that have global and seemingly complete footfall. This may prove the biggest challenge – access to the data that can transform is denied to the small companies in the creative industries to harness But if anyone can help level the playing field, Government can. After all, The Government knows it needs to empower small businesses to be data-driven. It wants to see “…small and medium enterprises (SMEs), confidently using technology, able to trade online, seizing technological opportunities and increasing revenues in domestic and international markets”. It’s aware currently only a third of SMEs currently sell products and services online.The UK is leading the world on open data, through its data.gov.uk portal which brings together over 9,000 datasets into one searchable website.Other support is available to the small creative business through the Technology Strategy Board’s Connected Digital Economy Catapult which promises to be “a new force to accelerate the success of UK digital innovators and SME entrepreneurs realise the commercial opportunities in the growth areas of the connected digital economy”. The Government is targeting small companies who are either already online and looking to scale up, or yet to commit. The intention is to reach 1.6 businesses in the next 5 years.Big Data won’t replace creativity, inspiration, guesswork, creative hunches, but it will support them. It will enable our small companies to find their customers, to improve their products, and to adapt to be seen and experienced in the creative universeWe know how to train great creative talent quite well in the UK. Now, because of start-up culture, we need to examine how big data can help the creative industries connect and grow. We’ve got to learn to love numbers.
  • The other opportunity for creative businesses is in working with other sectors of industry to help them tell stories and create meaning from the data available to them.
  • The creative industries act as an innovation catalyst in four main ways:Helping businesses innovate Expertise in design, craft and audio-visual production helps other industriesto innovate by providing tools, processes, new ways of thinking or skills that can lead to new products and processes: games and behaviour change, compelling experiences across screens, storytelling, social networking, etc.Embedding innovation in other sectors People in creative occupations are often embedded in businesses in other sectors, particularly design-intensive industries such as healthcare or automobile manufacturing, either working in-house or as freelancers. Individuals in creative occupations have been found to be a robust driver of tangible innovation when they work in other sectors. Pioneering ways of working The creative industries have adopted models of business practice that are shared across the economy such as hot- desking and collaborative team working, which originated in advertising agencies. Creative businesses compete through an emphasis on the new and original, which requires organisational structures, and specific attitudes and skills, including skills at interpretation, a willingness to try new things and tolerance of ambiguity.
  • 'The effective use of design is fundamental to the creation of innovative products, processes and services. Good design can significantly add value to products, lead to growth in sales and enable both the exploitation of new markets and the consolidation of existing ones.’Competitiveness White Paper 1995However, even though the link between the skills and abilities of designers and the skills and abilities required for innovation seem quite obvious, many organisations still do not exploit the skills of designers in order to innovate.Design SIGDesign Option
  • New KTN Company; one community many entry points, renewed emphasis on cross cutting themes.
  • Driving Growth in the Creative Industries

    1. 1. 1 Driving Growth in the Creative Economy Frank Boyd Director Creative Industries Knowledge Transfer Network @frnboy 1
    2. 2. 2 The Technology Strategy Board The Technology Strategy Board @innovateuk #creativeindustries
    3. 3. 03 @innovateuk: “the uk’s innovation agency” #creativeindustries
    4. 4. 04 @innovateuk: investment priorities
    5. 5. 05 Creative Industries KTN
    6. 6. 06 creative industries in the uk 5.3% of UK GVA Worth > £36 billion 1.4 m employed 5th largest media market in the world definitions 2.5 m employed 9.7% GVA business models (incl copyright) access to finance Advertising industry worth £16bn a year fusion £100m Design Services exported role of academia: skills research
    7. 7. Creative Industries Strategy 2013 - 2016
    8. 8. 8 driving innovation through partnership
    9. 9. an integrated approach 9 Technology Storytelling Skills
    10. 10. 10 convergence key theme
    11. 11. 11 convergence: in production
    12. 12. 12 convergence: in consumption
    13. 13. 13 transaction key theme
    14. 14. 14 Emerging transaction services Source: Mary Meeker, 2013
    15. 15. 15 data key theme
    16. 16. 16 Data Source: Mary Meeker, 2013
    17. 17. 17 The Data Context Context The Data DATA Collection and transport Crowdsourcing KNOWLEDGE Data Science Conversion to knowledge and insight OUTPUTS Disruptive and mashed User centricity Transport NEW Solu ons Social Media Digital content Internet of Things Stored Curated Linked Analysed Visualised Modelled Space Enterprise Data NEW Services Retail Educa on Environment NEW Applica ons Media Financial Services NEW Products Defense Ci es Public sector data Security and Trust Graphic courtesy: Neil Crockett, CDEC
    18. 18. 18 crosscutting themes: ‘cross-innovation’
    19. 19. 19 crosscutting themes: design
    20. 20. 20 Design SIG: P4I project
    21. 21. 21 crosscutting themes: knowledge sharing
    22. 22. 22 crosscutting themes: sustainability
    23. 23. 23 investment programme 2013/14 • Cross-platform production in digital media: £15m • Innovation in digital media production tools and systems • Frictionless commerce: £2.5m • Creation of “frictionless” digital transactional environments • Hyperlocal Media Demonstrators: £2.5m • Development of content services at local level • Greater Manchester Creative & Digital Launchpad: £1M • R&D, cluster and business support
    24. 24. 24 Investment programme cont’d • Location based Services: £4m • helping businesses engage with customers in 'here and now' context • Big Data Exploration: £3.5m • Stimulate new ways to explore big data, metrics and analytics • Valuing & Pricing Digital Assets: £2.5m • New ways to value and price in digital transactions
    25. 25. 25 for further context

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