Embracing business

The recently published report What is resilience anyway? that Golant Media Ventures and The Audience Agency carried out for Arts Council England (ACE) unearthed several drivers for relationships between culture and business. The research began on familiar territory but ended up breaking entirely new ground in places.

Main challenges

When cultural respondents were asked to rank the challenges to the sector, three rose to the surface.

• Finding new sources of funding and revenue: 90% of respondents regarded this as ‘important’ or ‘very important’. Finding new ways to earn money or get a financial return on investments can often propel cultural operators towards businesses that focus laser-like on these two outcomes. Even cultural non-profits have to embrace an attitude of social enterprise, wherein profit and exploitation (of assets) are not dirty words. Such profits are not for private gain but instead help advance a cultural and social mission.
• Audiences expecting to engage with us in different ways because of technology: 68% of respondents regarded this as ‘important’ or ‘very important’. Mobile phones, social media and messaging platforms like WhatsApp (see Ofcom research) compete with culture for our limited time and disposable income. The internet dominates contemporary leisure time, while our television watching has been turned upside down by streaming services and people can now self-teach via YouTube from playing the accordion (my personal obsession) to jewellery making. e-learning has also become commonplace in schools, universities and corporate settings alike.
• Competition from other forms of entertainment and leisure: 67% of respondents regarded this as ‘important’ or ‘very important’. For-profit theatre, galleries, festivals, bookshops, music events and publishing offer audiences alternatives to non-profits. Even further and higher education providers, although not strictly speaking for-profit, will market and deliver short courses in a business-like way. Shops, cafés, spaces and facility hires in the cultural sector are almost always competing with commercial alternatives.

Cooperating with the competition

Cultural players need to understand their commercial competition and not be fooled by perceived differences. Just because you don’t see yourselves as similar, that does not stop potential audiences, customers and visitors from seeing what commercial and cultural enterprises offer as a direct alternative to what you do. Live events, days out for kids and so forth can be just as core to their vision and business model as yours. Recognising and exploiting these similarities, with some form of ‘co-opetition’ (cooperating with your competition), can often prove the most mutually beneficial response.

Cultural players need to understand their commercial competition and not be fooled by perceived differences

Co-opetition can be easier said than done. Our survey of more than a thousand arts and culture sector workers showed that people identify overwhelmingly with their own artform (18%) and the arts sector at large (11%) ahead of all other tribes. Most germanely, this includes creative industries/digital (2%), commercial sector/market (1%) and leisure/entertainment (1%). Typically, we are recognising ourselves least in our closest competitors.

Communication and sales channels

Most of us discover and select our entertainment and leisure through channels that didn’t exist 20 years ago. Emboldened by TripAdvisor holiday triumphs, we have adopted the same leisure planning processes closer to home. We trawl through thousands of reviews, then plan the route to our chosen five-star activity via Google maps. Performers, venues and individual events attract our attention through Facebook, Twitter and Instagram, not just with targeted advertising but specific comments and recommendations from friends, colleagues and broader social networks.

While these are public spaces where culture can come to play just as readily as anyone else, they are still privately owned platforms. Culture, just like journalism, media and politics, needs to think more than ever about its collective agenda in this ungoverned and unregulated showground.

The arts need to find a firm footing in this new normal. We see the ready benefits of embracing commercial familiarity in the popularity of filmed performance and event cinema, in their ability to engage audiences that might not otherwise experience opera, ballet or theatre. Again though, most cinema venues, film distributors and online platforms for film are private businesses, so a cultural organisation that wants to be ‘in film’ simply can’t avoid dealings with them.

With the Amazon-style shift to online commerce with groceries to your door as standard service, the expectation of being able to buy anything and everything online is near absolute. Services and experiences are no exception – not just tickets to shows, but artworks, courses, creative gifts and interval drinks. From Eventbrite to Noble, Etsy to Artfinder, online sales, promotion and aggregation (creating a critical mass of products from a variety of providers) is firmly in the hands of the for-profits.

This doesn’t remove the need for in-person experiences, a high-street presence or places where people can congregate but the high street is changing rapidly. The increasingly mainstream ‘experience-led’ offer should be an advantage for cultural organisations, whose bread and butter is the creation of meaningful spaces. As it stands, I’m not aware of any existing partnerships along these lines.

Current relationships

What form are relationships taking between cultural organisations and businesses in this shifting context? They have tended to fall into a limited range of established and familiar patterns:

• Supplier: A cultural organisation buying in resources, facilities or a service that can be more effectively and efficiently provided by an external, commercial third party. This could be cleaning and security services, design and marketing, construction and fancy lighting rigs.
• Sponsorship: Although patronage of this kind may appear to be a gift from the point of the view of the cultural organisation, it is very much an investment for the business concerned. And it comes with ethical dilemmas (as ArtsProfessional’s report attests) and real reputational risks (think the Natural History Museum and the Saudi Embassy).
• Brand/sales promotion partner: A business that helps a cultural organisation reach more potentially new or different audiences through its brand, communications, marketing and relationships. Travelex’s partnership with the National Theatre is an example, although this has recently come to an end.

Possible relationships

In the context of resilience, of the need to not only bounce back but bounce forward too, it is worth considering less common or newer templates for the development of some ‘aisle-crossing’ relationships. Here are some options.

Acquirer

A cultural organisation buys a business. There is the same intention to achieve greater effectiveness or efficiency as when using a private-sector supplier. It can be an investment to generate longer-term value at a better rate or lower risk than other alternative places of putting that money. It can also be a strategic move, one that strengthens both organisations through shared values and complementary capabilities, assets and relationships. Such was the merging of Golant Media Ventures into The Audience Agency’s enterprise arm.

Client

A cultural organisation sells services directly to a business, such as the short-term renting of space, events and hospitality and corporate membership packages (often within wider sponsorship deals), or less commonly, training, development, consultancy and facilitation. Creative working practices, use of volunteers and the engagement of stakeholders are core competencies of most cultural organisations, but may come less easily to some more traditional businesses. Having a big business as an anchor tenant in a building redevelopment is another rarely trodden route. Live Theatre in Newcastle leads the way here.

Donation ‘aggregator’

Fundraising in the style of crowdfunding, online aggregation of donations or payroll giving. 

Funder/investor

A private organisation invests in an enterprise that a cultural sector organisation runs. Investors in commercial cultural ventures, like the funds managed by Ingenious, funnel their money into everything from festivals to concerts. Less usually, businesses co-invest with a cultural organisation in an enterprise aligned with the interests and capabilities of both. For a charity, this would most easily be via a trading subsidiary (see below). 

Knowledge transfer/capacity building

Funded arts organisations can look to the many really innovative applications of technology that are happening in the wider creative industries, in the charitable sector and beyond. It can be beneficial to the funded arts sector to look beyond direct peers for inspiration and reference points at secondments, collaborative R&D, pro bono strategic advice and other partnerships. These seem much more effective than the traditional ‘having a business person on the board’. 

R&D partnership

Cultural organisations can harness R&D resources and commercial capabilities of the business and technology sectors. Our own work in this area with cultural organisations, aided by the Digital R&D in the Arts and Digital Innovation for the Arts in Wales funds, yielded a range of results. We explore the approach’s varying successes in our Evidence review: The adoption of digital in the arts.

The result is that the cultural partner often ends up with little or no financial benefit from the new products they have helped conceive

While this might seem a match made in heaven, our research showed a disconnect between arts organisations (for whom making money is not at the heart of their mission) and their commercially minded, financially motivated technology partners. The result is that the cultural partner often ends up with little or no financial benefit from the new products they have helped conceive. 

Collaboration agreements for the exploitation of the outputs of R&D are not commonplace in the arts, and cultural non-profits rarely have much commercial, legal or financial knowledge around intellectual property or intangible assets, beyond the creative works of their core artform.

At Golant Media Ventures we have endeavoured to walk a different path in collaborating with cultural non-profits:

• A digital user engagement tool resulting from Nesta/Arts Council Wales-funded R&D is currently being jointly developed and marketed with cultural partner g39. 
• An open source CRM product from an R&D project funded by ACE’s capital funding is currently being jointly funded and expanded with partner Artsadmin.

Shared services

Groups of cultural organisations can club together to buy a service where there is a common need that can be provided more effectively and efficiently across multiple organisations by a commercial supplier. Whilst there is a tendency to assume that each cultural organisation’s needs will be different, the Nesta research shows that “the uniqueness of individual organisations is not threatened by sharing many of these functions and could provide a lower cost basis to widen the impact of the arts across the economy and society”. 

The Welsh Millennium Centre successfully provides sub-licensed Tessitura box office services for Welsh National Opera and the Eisteddfod. Newcastle and Gateshead cultural venues are going in a similar direction and we have recommended a comparable approach for the future of Liverpool’s cultural sector.

Trading subsidiary

A for-profit business can be wholly owned by a charity gifting its profits to its parent, thus avoiding corporation tax. Trading subsidiaries are used by charities to conduct trading that is beyond their primary purpose. In the arts world, this most commonly refers to running cafés and shops, although entertainment production and distribution (films, music, books, merchandise) are also channelled this way. Potentially profit-making subsidiaries can be used to draw down theatre and R&D tax credits (the latter crucial in financing digital innovation).

There is a tendency for the trading subsidiaries of cultural charities to be in the shadow of their mothership (just an accounting mechanism), which can prevent them being an entrepreneurial, profit-making business. Examples include the Scott Trust’s ownership of the Guardian Media Group generating profits to subsidise The Guardian newspaper and IOP Publishing as part of the Institute of Physics. Generating a financial return, or at least making a good attempt at commercial exploitation, is a prerequisite for accessing loan finance and Innovate UK funding.

There’s no more room here, but much more to discuss. Do tell me what I’ve missed and what most interests (or horrifies!) you about these lines of thought.

Patrick Towell is Executive Director of Golant Media Ventures and Innovation Director of The Audience Agency.
www.theaudienceagency.org

You can get in touch with Patrick at [email protected].

This article, sponsored and contributed by The Audience Agency, is in a series sharing insights into the audiences for arts and culture.