TechWeb

U.K.'s Prized Creative Industry At Risk, Study Says

Apr 23, 2013 (09:04 AM EDT)

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The U.K.'s creative economy -- which comprises industries from advertising to video game development, filmmaking, fashion design, and more -- must get more serious about embracing digital technology or face losing out to the U.S. and other competing nations.

The warning comes from London-based independent charity Nesta, whose mission is to "help people and organizations bring great ideas to life by working with innovators, community organizations, educators and investors." Its new report, A Manifesto for the Creative Economy states, "Previously profitable business models have been swept away, young companies from outside the U.K. have dominated new Internet markets, and some U.K. creative businesses have struggled to compete."

The report points out that U.K. policymakers have failed to keep pace with developments in North America and parts of Asia, especially in the way the latter have better dealt with disruption and business uncertainty related to digital change. "The biggest winners are digital, American companies focused upon either distribution or devices: Google, Facebook, Amazon and Apple," the report says.

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In another example, the study notes that the U.K.'s once-vibrant video games industry has slipped from third place in international development rankings by retail sales in 2008 to sixth in 2010, with Canadian developers overtaking the U.K. both globally and domestically.

The creative market sector is highly prized by British policymakers as providing jobs for 1.5 million people and generating £36 billion ($55 billion), according to the U.K. government.

The Manifesto points out that the impact of digital technology on society, business and culture isn't even starting to be truly felt, quoting British inventor of the World Wide Web Tim Berners-Lee: "The Web as I envisaged it, we have not seen it yet. The future is still so much bigger than the past." The report cites big data, the Internet of Things, wearable computers, assisted creativity and the Maker Movement as examples of how technology continues to evolve, guaranteeing challenges to established players and opportunities for innovators.

According to the report, the U.K. must adopt a new vision to sustain its creative economy in the next decade, a vision that's based on a "more constructive relationship between technology companies and creative businesses and on grounded definitions and data revised for the digital era."

In practice, the report recommends that priorities be redrawn at a national level to keep Britain competitive. For example, it says, "All [British] teenagers should have the opportunity to learn creative digital skills, such as designing apps and games, as part of a fusion in the curriculum covering technology and art, as well as math, science and the humanities."

As for government policy, "new tools designed to incentivize innovation, from tax relief to procurement rules, should be adapted to the needs of the creative economy." The report also advocates changes in the way the country's publicly funded creative powerhouses -- from the BBC to universities, arts organizations and museums -- should make the most of the next generation of digital technology.

Specifically, this could mean more government tax breaks for research and development and greater collaboration with international research centers. Meanwhile, the BBC, academic institutions and arts organizations should be encouraged to ramp up experimentation with digital technologies and allocate a sustained percentage of their resources to digital work and innovation.

In order for its plan to work, the Manifesto acknowledges that there must be international cooperation to ensure the next generation of the Internet is truly open. This can only be done, it says, if creative economy markets are supervised by "competition authorities" who can act efficiently to address concerns about market abuse. To this end, the Manifesto suggests that national regulator Ofcom should advise the government on the actions needed to ensure the U.K. enjoys a "flourishing, open Internet" that balances the interests of consumers and citizens while remaining committed to supporting innovation and growth.

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