CNBC Business | Creating  A Scene

Creating  A Scene

Desperate to attract a burgeoning creative sector, ‘creative clusters’ are the new economic drivers of Europe, but are they  the answer? Colin Brown reports 

Sunny as it will be elsewhere along the Côte d’Azur, the mood inside the Cannes Film Festival come mid-May will be decidedly dark. And not just because auteur darlings like Quentin Tarantino, Austria’s Michael Haneke and Denmark’s Lars von Trier are expected to compete for the top prize with stories set around Nazi scalpings, child torture and the true nature of human evil; gruesome as these films might prove to sit through, try selling them in today’s global marketplace.

The independent film business that swarms to the French Riviera for this annual orgy of art and commerce has been bloodied by a spate of payment defaults. Things are dire enough for sales agencies, whose job it is to shop territorial rights of non-studio films to distributors around the globe, to now share a blacklist of indebted clients to avoid.  

Yet, despite all the carnage, cinema is one of the few bright spots in what’s left of the global economy. Ticket sales are up and there will be no shortage of films to see and acquire at Cannes — thanks to over-production as Wall Street’s casino money poured in. Even as that debt-fuelled spring dries up, new equity financiers, such as Indian conglomerate Reliance, are jumping in. For every distributor going out of business, another venture is forming, ready to woo prospective backers with talk of how well movies perform during downturns and how the surge in home viewing options puts a premium on back catalogues. 

Such economic resilience helps explain why so many European regions are banking their job-creating futures on the creative industrial complex. Even now, with ad-supported media gasping for revenues, the UK’s creative sector is still expected to grow by 4% between now and 2013. By then, it will employ 1.3 million and outstrip the financial sector in size of workforce, predicts the National Endowment for Science, Technology and the Arts (NESTA). “Today’s figures point to the creative industries, and specifically the talent we have nurtured within it, becoming a key driver in the UK’s recovery from recession,” says NESTA chief executive Jonathan Kestenbaum. 

The same sentiment is being expressed across Europe where, at the last reckoning, the content sector generated an annual €433bn and accounted for at least 5% of the EU’s GDP. Put together, film, television, publishing, music, advertising, video games and all the hybrids that digital new media have since spawned, employ four million people in Europe. But these are also notoriously transient industries, comprising huge numbers of freelancers and a fluid infrastructure of tiny companies capable of decamping to anywhere. The core issue becomes one of keeping these highly prized skill-sets from fleeing. 

The popular solution has been to cultivate so-called “creative clusters”. World capitals such as London, Paris and Berlin have always served as both living laboratories and fertile business environments for the nomadic tribes of artists and creative professionals. For decades, their competition has been other multimedia Meccas like New York, Los Angeles and Tokyo. But now their ranks are being joined by dozens of upstart hubs being expressly developed as creative magnets. 

Using Silicon Valley as a model, neglected backwaters are being converted into hospitable, highly wired incubators that draw together a synergistic mix of media types under one mutually sustaining entrepreneurial roof. Where possible, these communities have close ties with academic institutions, employ star architects or designers, carry the imprimatur of some globally known brands and boast high-end social amenities likely to appeal to prosperous, educated “knowledge workers”. Often districts are re-baptised with a 21st-century name: SmartCity (Malta), Crossroads (Copenhagen) One-North (Singapore), Milla Digital (Zaragoza), twofour54 (Abu Dhabi), Dubai Media City, Titanic Quarter (Belfast) and MediaCityUK (Salford). 

Such utopian ambitions are also very expensive to pull off and come with no likelihood of a quick return on investment. There’s the cost of building all that infrastructure — the land preparation costs to convert 54ha of Seoul landfill into a futuristic info-media enclave is put at €687m — plus the expense of luring those anchor tenants that act as talismanic beacons to other creative types.  

“Building creative clusters is bloody hard to do without some kind of public sector support,” suggests Jonathan Olsberg, whose London-based consultancy firm Olsberg|SPI has advised many major government bodies on the development of film and media sectors.  

Collusions between top-down state bodies and commercially minded private-sector enterprises in such projects are often fraught with conflict, as Dublin can testify. In 2005, five years after Media Lab Europe opened in an old Guinness brewery at the height of the dotcom boom, it shut, with little to show for the €35.5m of taxpayers money. The problem was that its two principal stakeholders, the Irish government and the Massachusetts Institute of Technology, could not agree on a funding model that satisfied both their interests.  

More arms-length support, say in the form of incentives to lure in high-spending film shoots that stimulate local business are far from bulletproof either. Right now, Germany’s tax incentives schemes are among the hottest in Europe; they, in effect, subsidised the cost of the three Cannes-bound films from Tarantino, Haneke and Von Trier, bringing with them economic benefits to several different hubs across the country. But that could soon change. “The problem with just offering production incentives is that it becomes a race to the bottom,” says Olsberg. “They are also vulnerable to two factors totally out of anyone’s control: exchange rate fluctuations and what other countries might decide to do.”  

Overriding all such concerns is how you evaluate the economic contribution of creative clustering. According to Christopher Chia, chief executive at Singapore’s Media Development Authority, the overall media sector has contributed S$5bn (€2.45bn) value-added and S$19.5bn (€9.53bn) revenue to the economy, employing 54,700 workers, since 2006. Moreover, the compounded annual growth rate of the sector from 1996 to 2006 was 8%, higher than the 5.2% for the overall economy. Says Chia: “In TV, our strategy to pursue co-productions have reaped dividends for Singapore production companies whose collaborations with international partners and distributors have enabled Singapore-made content to land in some 50 countries”.  

This is what the developers of the 80ha Salford Quays complex are gagging to hear. The first phase in what will be Britain’s biggest creative hub, within walking distance (across the Manchester ship canal) of Old Trafford football stadium, will officially open in 2011. As a kick-start, the BBC is relocating five London departments, including BBC Sport and Future Media & Technology, and 1,620 posts there. It is envisaged that MediaCityUK will generate €1.6bn for the local economy and provide jobs for 15,500 people.  

But drill down and it seems that, of these, 10,500 will be net additional jobs as opposed to jobs displaced from London. As for the people of Salford, the best guess is that 3,250 will come from the locality — and probably most in the service sector. Still, in the current climate such numbers will be welcome. 

Whether Salford will emulate the creative energy of London remains an open question. Without that dynamism, much of the business logic behind artificially induced clusters quickly evaporates, turning digital dream factories into little more than white elephants. It’s an issue recognised in cities such as Copenhagen and Singapore, where emphasis is put on cultivating entrepreneurial instincts. Without that edge, passivity might easily become the default mode in such comfortable settings. 

Then again, there is also an argument against too much grittiness, especially for creative types who are no longer struggling on the margins. James Marsh, the British filmmaker who won an Oscar this year for the documentary Man On Wire, is among those who escaped London for New York. Married to a Dane he has since moved to Copenhagen.  

“Generally, once people who work in the creative professions have families they often need to make a compromise about where they can live. Copenhagen is a good compromise. The city is small, sophisticated and efficient. We live right in the centre of the city but I can be at the airport in 20 minutes on the metro. There’s also a functioning film industry and production infrastructure here which is very well connected with the UK film industry.” 

As it happens, Marsh is not the only Oscar-winning transplant in the city. Anthony Dod Mantle, the British-born cinematographer responsible for global box office hit Slumdog Millionaire, also lives in Copenhagen where he has a long association with Von Trier.  

“Ironically, as a freelance filmmaker, I am not actually here that much” concedes Marsh. “So for me, it’s a safe, comfortable and connected place where I can leave my family.” 

For Copenhagen’s urban planners, who are doing all they can to bolster the region’s burgeoning film and videogame communities and weld them together in one multimedia melting point, such comments will be music to their ears. The injection of international expertise — even if drawn in by the Danish childcare system — will be essential if those local creatives have any chance of thriving on the harsh global stage beyond Cannes.  

They should also be mindful of how fickle and footloose creative industries can be. Exactly 100 years ago, when Hollywood was still mostly orange groves, a permanent film lot was established that evolved into what is now Universal Studios; not only has that studio switched ownership from the US, to Japan, to France and back to the US, but the site of that production nexus, the original motion picture capital of America, is now the rather anonymous town of Fort Lee, New Jersey. Surely it can only be a matter of time before a new media city arises from these ashes.