Background and History
For the first time, the term “creative economy” was used by the New York magazine Businessweek in 2000, and since then, it has only become wider (Brouillette, 2020). Although the term “creative industries” has been in the vocabulary of cultural economists for over 20 years, discussions about the content and shared understanding of creative industries continue to this day. This is because the creation of products with a high proportion of the creative component is typical for many sectors of the economy and goes far beyond the sector of culture and art (Ihani et al., 2020). Instead, it makes sense to talk about creative industries because many are not associated with industrial production. To date, a consensus of experts has been reached on the structure of creative industries and the inclusion of specific cultural sectors in this concept to form cultural policy. It includes traditional cultural expressions, performing arts, audiovisual creativity, new media, creative services, design, publishing, artistic creation, and cultural property (McRobbie, 2018). In general, this classification can be simplified and presented in the following sectors: fashion, art, culture, performing art, design, photography, and media.
The main challenges of this sector of the economy are that the goods of the fashion industry generally have a short life cycle; that is, the obsolescence of products occurs faster than in other sectors of the economy. The industry is also characterized by rapid and difficult-to-predict changes in consumer preferences (McRobbie, 2018). Supply chain management in such a fast-growing industry with high demand volatility is becoming increasingly challenging. New market challenges have emerged in recent years, to which fashion companies must find the right and timely response.
The main challenge that the art market faces in digitalization is Internet nihilism, which, in the opinion of many, implies the freedom of the Internet from legal restrictions (Prokupek, 2020). This phenomenon inevitably leads to copyright infringement. At the same time, its protection in the era of digitalization is complicated by a considerable number of additional problems due to the constantly growing need for a quick exchange of information, which can be complicated by the lack of access to copies of works of authorship, and their high cost.
The main problem in the cultural sector is the uncertainty of demand, the uncertainty of consumers’ reaction to the product in advance, and the difficulty in assessing this reaction after (Hernando & Campo, 2017). The products are distinguished by quality and uniqueness; each product is a distinct combination of inputs leading to an infinite variety of options. The processes of industrialization of culture are aimed at individualization, at the maximum segmentation of the mass consumer.
One of the main challenges facing this sector is the ambiguity in assessing the elasticity of demand. Economists have no consensus a priori about the price elasticity of demand for performing arts, and the polarization of opinions on this issue is closely related to whether performing arts should be classified as luxury goods or not. There is some theoretical reason to believe that demand for performing arts is not price elastic. Among such factors are the formation of artistic taste (habits) in the audience, imperfection of information, leading to the fact that an inexperienced audience perceives the price of a ticket to a performance or concert as a signal of its “quality,” as well as the Veblen effect when the presence at a specific performance or concert acts for the viewer as a means of demonstrating social status (Brouillette, 2020).
The main challenge for the design sector is the environmental agenda. The creation of new artificial and synthetic materials used by manufacturers in the design sector, on the one hand, improves the functional properties of products and, on the other hand, leads to a return on investment in raw materials innovation and brings profits to developers and investors. However, given the hydrocarbon origin of most of these materials, it can be argued that their production is not environmentally friendly (McRobbie, 2018). This is confirmed by the colossal volume of microplastic released during washing clothes and shoes and through the drains entering the waterways.
Photography as a separate direction within the cultural and creative industry also faces challenges, among which the main one is the problems of intellectual property in connection with the development of digitalization in this segment. Regardless of the method of obtaining photographs, experts note the need to recognize the value and property of these works since the photographs bear a vivid imprint of the author’s personality (McRobbie, 2018).
The main challenge for the media sector is that it cannot draw long-term conclusions from the trends observed. Most experts point to the existence of one or another trend or market but were unable to assess the potential effects due to an increase in scale (Brouillette, 2020). For example, considering the market of niche TV channels, experts found it difficult to predict how widespread diffusion and decreased cost of services will change the television landscape. A similar problem concerns mobile video consumption, which, if widely distributed, would compete with a book or tablet magazine. Most of these trends lead to the transformation of existing and the development of new media business models.
It became apparent that the cultural sector is experiencing a severe lack of funding everywhere (Borin et al., 2018). The dialogue of the state with the sphere of creative industries is poorly established, mechanisms of public-private partnership are absent or ineffective, the existing tools to support the creators of cultural content – both social and economical, and, often, legal protection are insufficient (Borin et al., 2018). An essential step towards solving this problem was created in many countries of the world anti-crisis funds to support the creative sector and flexible financial instruments such as subsidies and grants.
Train the Artist How to Transfer their Art into Business
Monetizing artwork or company products from the creative industries is challenging. On the one hand, there is a lot of competition in the field (Brouillette, 2020). On the other hand, supply and demand do not work directly in pricing in this area. The mass consumer is often unable to estimate the actual value of the work. In modern realities, artists must be prepared to transfer their art into business, where training becomes relevant.
Lack of Engagement of Community with Cultural Institutions
Another side of the problem of the productive and successful functioning of the sector is the lack or little involvement of the audience in art. The cultural value embodied in the object of art is rarely realized by the mass consumer (McRobbie, 2018). In addition, most of the offerings and exhibitions show a lack of demand from a mass audience and young people in particular due to incorrect positioning (). Another reason is the consumer’s lack of interest in history and the mismatch between contemporary demands and traditional art forms such as opera and ballet.
The cultural and creative industries need to make sure that innovative high-tech products and intellectual products are professionally formalized as the results of intellectual property and are qualified not only by the authors and manufacturers themselves. The situation well illustrates an example of the problem of intellectual property with Banksy. “Copyright is for losers” has been the artist’s motto for a long time. However, in 2014 he registered his famous “Flower Thrower” motif as a trademark. However, one UK company sold postcards with this motive and filed for revocation of these trademarks – with success (Du Plessis, 2020).
Lack of Training Centers
Currently, the cultural and creative industry is more of a spontaneously replenished segment than a purposeful, structured process of recruiting those involved in production. The fact is that there is a shortage of centers for the training of qualified personnel that turn talented youth into full-fledged trained participants in the industry (Brouillette, 2020). This is also because today, there are problems with the standardization of training in these areas (McRobbie, 2018). Thus, the industry includes those who have managed to combine talent and business processes on their own.
Opportunities to Solve the Challenges
It is increasingly vital to support initiatives that combine creativity and knowledge, innovation and heritage in today’s world, and open up new opportunities for dialogue between cultures and communities. It is also necessary to strengthen cross-sectoral cooperation to create the most professional and effective policy for promoting the creative industry among the mass consumer and various audience segments. In addition, high-tech products, processes, and phenomena are emerging, allowing the industry to move to a new level and solve many problems. For example, blockchain platforms meet the needs of all participants in the art market, providing unprecedented security and liquidity of transactions. In addition, it becomes possible to control the circulation of such works of art as photography and digital images, which, in principle, do not have an original since information about each printed copy will be contained in the blockchain.
Borin, E., Donato, F., & Sinapi, C. (2018). Financial sustainability of small-and medium-sized enterprises in the cultural and creative sector: the role of funding. In Entrepreneurship in culture and creative industries (pp. 45-62). Springer, Cham.
Brouillette, S. (2020). Literature and the creative economy. Stanford University Press.
Du Plessis, I. (2020). No, Banksy, copyright isn’t for losers. Without Prejudice, 20(10), 6-7.
Hernando, E., & Campo, S. (2017). Does the artist’s name influence the perceived value of an art work?. International Journal of Arts Management, 7(1), 46-58.
Ihani, W., Syofya, H., Sari, A. L., Mulawarman, W. G., & Sriyanto, S. (2020). The Role of the Creative Industry in Economic Development. Journal of Environmental Treatment Techniques, 8(1), 268-271.
McRobbie, A. (2018). Be creative: Making a living in the new culture industries. John Wiley & Sons.
Prokůpek, M. (2020). Digitalization of Cultural and Creative Industries and Its Economic and Social Impact. In Examining Cultural Perspectives in a Globalized World (pp. 117-140). IGI Global.