CREATIVE ECONOMY
The Creative Industries as a Mirror of Society and Part of the Solution for Future Economic Development
Dr. Frédéric Martel & Claudio Bucher
Zurich Centre for Creative Economies – ZCCE,
Zurich University of the Arts(ZHdK)
Both financial and economic capital of Germany as well as major technological hub, the city of Frankfurt tends to underestimate its strengths and discount latent opportunities in the cultural sector, in creative industries, and in the creative economy more broadly. Indeed, this “dynamic” city is inclined to overlook the opportunities lying dormant in its midst. As such, this contribution to the Master Plan Creative Economy aims to make plain the opportunities and, at times, the accompanying weaknesses of the Frankfurt ecosystem. In doing so, it intends to encourage public and private actors to take the untapped wealth of opportunity into consideration and to act on the extant potentials. Finally, it endeavors to present a series of ambitious proposals to support elected officials and decision-makers in their desire to make Frankfurt one of the creative capitals of Germany by 2026.
Frankfurt at the Crossroads.
Strengths, Opportunities, Weaknesses
Almost 760,000 inhabitants live in Frankfurt and 5.8 million in the Frankfurt Rhein-Main region. The city is well known as the economic and financial capital of Germany, the seat of the European Central Bank, a rich center for financial services, and a technology hub – and especially for the so-called “fintech” sector. More than 200 local or international banks and a large number of financial startups are present in the city – 360T, e.g., was bought by Deutsche Börse for $800 million in 2015. However, Goethe’s birthplace also harbors unanticipated resources in the creative industries. Frankfurt is undoubtedly already equipped with many advantages that stem from its fairs and biennials (including the internationally reputable Frankfurt Book Fair), its dozens of thousands of students, and its creative class, e.g., in publishing, design, electronic music, and now in fashion by cause of its own Fashion Week. It is estimated that 41,000 people already work in the cultural sector, – here, the word “culture” is understood in its broad sense – and the income pertaining to the cultural economy exceeds six billion euros.
It is important to understand that a fair, a “fashion week”, or a festival generates an economic outcome much greater than itself. As our studies show, the creative economy works in concentric circles: the first circle represents “cultural” costs and revenues in the strict sense of the term (e.g. festival revenues); the second circle allows a whole ecosystem of activities “related” to cultural activity to thrive (e.g. recording and translation companies, reprography, rental of studios and microphones, etc.); the third circle is unrelated to culture but benefits from it: hotels, restaurants, airports, transportation, tourism, even security companies, IT, and all sorts of suppliers. This demonstrates why cultural and creative industries are essential for the economic development of a city. Therefore, the corresponding leverage effect must be calculated precisely. Based on existing studies, however, we can hazard the assumption that each euro invested achieves a return of three to five times the initial outlay.
Yet, we can see that Frankfurt’s economy is changing. While existing data confirms that the city continues to attract banks and financial services in the wake of Brexit (about 32 new banks from 15 countries have set up in Frankfurt and at teast 17 have increased their presence there), the digital transition has also induced job redundancies at scale. Economist Daniel Cohen predicts that 50% of jobs in the financial services industry will disappear in the coming years. Still, Frankfurt will surely remain the financial capital of Germany and Europe, albeit most likely not without the surrender of a large number of jobs in the years ahead.
Moreover, these processes are accelerated in the short and long term by a double phenomenon: the COVID crisis and the ecological transition. These challenges entail repercussions such as remote work, people leaving cities, ecological concerns, the disintermediation of services and banks, nomadism, and so forth. Ultimately, the entire economic fabric of the city and its jobs are on the brink of being radically, massively, and permanently transformed.
What will happen “after the banks”? What will become of Frankfurt if its financial engine remains but with fewer and fewer employees and less and less office space? If neo-banks are no longer the exception but the norm? If the employees are no longer “in-house” but “remote”, “nomadic”, or perhaps freelancers? These are the questions for which answers must be devised.
The creative economy may then represent one of the solutions for the future economic development of Frankfurt.
The Great Transformation of the Creative and Cultural Industries
Since the 2000s, the creative and cultural industries have experienced an unprecedented transformation: First the internet, then social networks, and finally the smart phone have completely altered the sector. Reviewing the launch dates of some of the major actors involved, the acceleration seems staggering: Google (1998), Facebook (2004), YouTube (2005), Twitter (2006), first iPhone (2007), Instagram (2010). Even Amazon, so dominant today, only dates back to 1995.
This transformation is reflected in major trends, retold here in broad terms and a few bullet points:
- For a long time, the “industrial” model dominated “cultural” content. Today, the consequential term in the expression “cultural industry” is no longer “industry” but “culture”. At the same time, we have moved from “cultural industries” (dear to the tradition of the Frankfurt school) to “creative industries” (expansion to all creative content, especially digital).
- The cultural industries created “products” and “cultural goods” (CDs, DVDs etc.); they now produce “services”, “streams”, “applications”, or “formats” (streaming, Netflix, etc.). The nature of the value generated therein has shifted from product to “content”.
- Yesterday, this “content” was attached to a specific medium or broadcast. Today, it is generally independent of the “medium” and has a life of its own (application, site, “global” content, etc.).
- In the past, the owners of the means of production chose the culture they produced (again, an idea associated with the Frankfurt school). Today, neither Sony, Universal, nor Paramount are in charge of the content. Instead, they are a bank conglomerate of sorts, which claims copyright ownership in exchange for the provision of a budget.
- Yesterday, creative talents were full-time employees loyal to a single studio. Today, the business model is independent and based on the individual “project” (contract, Work for Hire, etc.). The writer (or “showrunner” for a TV series) crucial to the creation process.
- The “start-up” model has become the norm. It is no longer the case that a single “major” corporation is in command. Instead, a “constellation of actors” is involved.
- Film studios, music groups, and publishing conglomerates were once cultural producers; they are now financial services. The “major” players call on independents or “specialized units” to create their products (mini studios in cinema and video games; printers in publishing; labels in music, etc.).
- Today, the digital dominates all of these sectors – if the digital industry were a country, it would already be the fourth largest economy in the world.
Action 1:
Why Creative Economy Matters (Global Trends)
Some of our previous studies show that global cultural capitals (Berlin, London, Los Angeles, Milan, New York, Paris, San Francisco, Tokyo, Tel Aviv, etc.) and regional capitals (Beirut, Hong Kong, Miami, Tallinn, etc.) almost always assemble the same constituent elements. All of them have common singularities that provide a favorable environment for creation:
- A virtuous ecosystem which is first and foremost based on reliable economic and legal conditions:
– secure banks, several banking systems,
– legal system/rule of law, quality law firms, - protection of copyright and patents, freedom of enterprise, etc.
- A dynamic ecosystem of art schools and universities (e.g. film schools such as USC, UCLA, and CalArts near Hollywood, or Stanford University near Silicon Valley, etc.).
- Modern technological and digital infrastructures as well as high-quality internet/broadband networks (backbone, data centers, cloud, speed, etc.).
- An “environment of possibilities”: an abundance of projects, a vast mix of ideas, a multiplicity and diversity of creative people.
- A mature advertising market with strong creative agencies and (even more important) agencies that conduct purchasing of media space.
- A media environment capable of creating a global “buzz” around a city, owing to a network of (television) broadcasters, media companies, and international correspondents (in particular Variety, Hollywood Reporter, Billboard, etc.). All of this aids the creation of an enticing global aura for a city.
- An environment favorable to the freedom of creation: freedom for artists, women, gays, etc.
- The existence of a great urban counterculture, a bohemian neighborhood, a city for the “poète maudit”, for neo-hippies, etc..
- Expansive geographic interconnectivity (transportation, airports, highways, etc.)
- A network of supporting businesses and a highly skilled, specialized workforce (studios, audiovisual capabilities, technicians, rental of material/equipment, start-ups, etc.)
- and, finally, ample cultural diversity.
These criteria explain why Miami is a significant cultural capital and Caracas is not; why Beirut (despite the crisis) is and Riyadh or Cairo are not. This is why Hong Kong is so important, and why Shenzhen will struggle to become China’s new southern cultural capital.
The strengths and weaknesses of Frankfurt should be reviewed in light of this set of criteria.
Action 2:
The Mayor Role of Universities
Existing studies show that universities are essential to the creation process in the US creative industries. In film, publishing, and music, as well as in the field of the digital and gaming, R&D, experimentation, and the corresponding workforces at universities are precious assets. Silicon Valley most likely would not have existed without Stanford and, in part, Harvard, MIT, and Berkeley. Hollywood has its R&D done at the University of Southern California, CalArts, UCLA, and the Tisch School. Similarly, Broadway is based on the system of experimentation otherwise found in universities and non-profit theaters. Moreover, the American publishing world is frequently renewed thanks to authors discovered by a university publisher (for instance, an author at MIT Press would subsequently move to Bloomsbury), etc. The role of universities is very often underestimated in the cultural and creative industries. The Master of Fine Arts (MFA) is becoming the benchmark diploma for all “creatives”. Therefore, this dimension should be encouraged.
Concurrently, Frankfurt is an important city for students. It has several prestigious art schools and dedicated training courses in visual arts, music/dance, cinema, design, but also in the history of art or cultural management. As such, it is particularly well prepared to succeed in this area.
The focal point here is not so much the parallel existence of creative industries and art universities (this constellation exists everywhere) but well-articulated interrelationships and interactions between the two.
Action 3:
Intelligent, Urban & Sustainable City
There are many definitions, models, and constituent elements that characterize a “smart city”. Expressed as a “mot-valise” or a catchphrase, it serves policies of various kinds, often good, sometimes not so much. The term invariably involves a technological element and, increasingly often, an ecological dimension. The “smart city” seemingly makes possible the optimization of traffic and public transportation, improved garbage collection, more efficient and green energy distribution, etc. Conversely, enthusiasm for smart cities diminishes when its association with large corporations or state surveillance becomes apparent. Companies such as IBM, Cisco, Google, Microsoft, Vinci, and Accenture have developed comprehensive plans to make cities “smart”. In their search for new modes of storytelling, corporates occasionally speak of the “smart city 3.0”, “4.0”, even “5.0” …
Beyond the technological dimension, the question of smart cities entails the issue of the territory actually concerned (city, urban agglomeration, region, etc.). In Germany, mistrust of “big data”, facial recognition, and AI also play a role in civic mobilization against surveillance and, therefore, against smart cities.
The city of Frankfurt, which has already opened an office dedicated to smart cities and appears to be particularly well prepared for future developments (thanks to its interconnections with Germany as a whole), could distinguish itself with regard to the overall movement by rethinking the notion of the “smart city”, renewing the idea by reconceiving its space and territory, organizing its civic reappropriation, and introducing a collaborative and humanist dimension. Security is essential, and both energy and public transportation must become “smart”. Nonetheless, a city can only become truly “smart” if it cares for its citizens. Instead of working on smart cities, we need to work on smart citizens! (To this end, we could work on data/mappings for smart city criteria using both established data sources, such as Eurostat, as well as new online data sources).
Since they act as a mirror of society and its future, the creative and cultural industries will increasingly be challenged to represent this society in terms of diversity and ecology.
The cultural and creative industries sector is one of the domains most adept at addressing environmental concerns. Some exemplary cases may be found in supply chain transparency (Canopy), appropriate prosthetic technologies made of recycled plastic (Circleg), smart energy systems, and a foldable staircase (Klapster, winner of the Frankfurter Gründerpreis 2020), etc..
Frankfurt already has countless assets in the ecological field. It is a « human-sized » city in which all urban areas can be reached within 30 minutes by car, from the airport (only 12 km from the city center) to the outlying districts (millions of inhabitants within a radius of about 30 km by car).
Action 4:
Positive Economy & Resilience
A so-called “positive economy” (an expression coined by the French poet Arthur Rimbaud) has always been a necessary quest for every artist. How can the time to create and find one’s voice be reconciled with securing the means to continue living and eating? Indeed, the success of artistic careers depends, in part, on the answer to this question.
Meanwhile, the very term “artist” is vague: cultural services in cities tend to restrict its applicability to the visual and performing artists, neglecting the vast number of “artists” engaged in the creative industries and the digital world. Therefore, one should not view the term “artist” as a narrow category, instead broadening it to include the entire creative and artistic group. At 5,1% of the workforce (30.444 employees in 2019) and 6% of total turnover, this class represents a sizeable segment of a city like Frankfurt. For the same reason, the “creative” must be understood not only by departments for cultural affairs but likewise by departments for economic development.
Furthermore, artists have always learned to be “resilient” and to adapt to all contexts. They have multiplied jobs (the “gig economy” is central to this sector); their modes are fluid; and they are highly adaptable. The Covid crisis has further augmented these difficulties and trends. Faced with the collapse of income models, particularly in the performing arts and music, several European governments have come up with vast schemes for financial aid akin to the New Deal (France, Germany, etc.).
To effectively support artists, it is important to know how to attract and work with them. Artists are risk-takers and work at the innermost core of society’s creativity. Concurrently, it’s important to remember that artists consistently live with their share of doubt, permanent questioning, the fear of jumping into the void, personal tensions, and needs. Likewise, artists know how to take risks, manage failure, as well as organize and engage with failure over time. An artist lives according to values which differ from those of others.
In the short and medium term on the one hand and in the long term on the other, it is necessary to support artists and creatives in helping themselves. In order for them to survive and persevere, we must help them retain their “resilience”.
Action 5:
Immigration, Diversity, and Cultural Economy
All the studies we have conducted or consulted in the past confirm the decisive role of diversity in cultural development. At the beginning of the 20th century, most of the founders of the major Hollywood studios were immigrants; by the end of the 20th century, two-thirds of the founders of the major Silicon Valley start-ups were first- or second-generation immigrants.
According to the available data, Frankfurt itself is a city of immigration. Approximately 50% of its inhabitants are said to have a “migratory background”, i.e., either they themselves or a parent (first or second generation) are of foreign origin. In addition, about one-third of Frankfurt’s population is said to hold foreign citizenship. Christianity is the dominant religion, but Muslims, and Jews are also very present. Thus, Frankfurt is already a diverse city.
Particularly in the creative and digital sector of the economy, immigration is an asset. Provided that dynamic programs and successful policies for (social) integration are built upon, migrants may well be at the center of Frankfurt’s future.
Moreover, artists have long been ahead of their time regarding the representation of women, homosexuals, and gender issues, particularly in the United States. While works of art and books reflect these concerns, female artists nevertheless remain under-represented in this field.
Action 6:
Innovation: Science + Technology + Arts + Citizens
Frankfurt is the international hub and “Pendlerhauptstadt” of the polycentric metropolitan region Frankfurt-Rhein-Main. A center of competence with international standing that acts as a local nucleus for the creative economies is still missing in Frankfurt, the core of the metropolitan region. Knowledge transfers throughout the region can be expected to stem not only from innovation potentials across technology, economy, arts, and culture (cultural and creative spill-overs; the “fusion of skills” between arts and science; outreach and education to prompt awareness for the creative industries), but also from the development of innovative, sustainable entrepreneurial models in an experimental process. Protagonists of the creative economies can also provide valuable impulses on a societal level (new work, prototyping, affinity for technology, formation of clusters and enhancement of regional identity, product development and conception, or innovative solutions in the field of ecology, among others).
An extension of the ”house of-“ concept pursued by the Hessian Ministry of Economics is proposed. This concept is based on the triple helix model of economy, science (research), and politics (public policy), with a strong emphasis on interdisciplinarity. An extension thereof may be envisioned as a semi-virtual concept for a “House of Creativity & Innovation”, which could be conceived as a network structure oriented towards a human-centred quadruple helix model. Thereby, the existing model is enhanced to include aspects of, e.g., arts-based innovation and the democratic knowledge of civil society. Not least, such an expanded model features added potential to foster an international profile at the interface of arts and technology. Based on the flexible working structures of the creative industries, such a “house” could be designed in a semi-virtual way with, e.g., co-working spaces or ‘satellites’ at the ‘peripheries’, a state-of-the-art workspace with an AI makerspace, and fablabs in the center (exemplary cases: Steamhouse, Birmingham or Taiwan Contemporary Culture Lab, Taipei, a center for artistic, technological and social innovation spanning seven hectares, spearheaded by the Ministry of Culture, the Ministry of Science and Technology, and the Ministry of Economic Affairs).
Furthermore, a link between the development of the arts, digitalization, and a strong electronic music culture is discernible in some cities. A city with a strong music scene, especially in the electronic genre, Frankfurt is well equipped to imagine a future built from this musical heritage. Its famous clubs and an energetic alternative scene are indicative of this opportunity. The establishment of a Museum of Modern Electro Music (MOMEM) is important, as is accommodating the electronic music of the future.
Action 7:
Digitalization
Our studies show that creators and artists are now intrinsically linked to matters of the digital, which accompanies the entire creative process and is even infused into the substance of the work. Entire sectors of the creative industries have shifted towards digital modes. Even if some areas remain exempt (dance, theater, live performance), we note that the internet nevertheless intervenes in their marketing, communication, or management processes.
Artificial intelligence would further expedite this process. Fortunately, Frankfurt is well positioned in this regard: it is estimated that 8.5% of all start-ups are focused on AI or big data (13% of the VC investments of the last five years have been made in this sector).
Bridges between art and the digital are also very common, as some artists additionally operate as engineers. Interesting models for training or collective work have been developed between artists and engineers (Medialab/MIT, UCLA, Speap/Sciences Po/Paris, etc.). A wide variety of incubators, co-working spaces, third places, hacker spaces, and other makerspaces already exist, especially in Frankfurt.
Cultivating such connections between art and technology should be encouraged throughout the entirety of an artist’s professional trajectory, from training to maturity. It should become possible to offer continued education on these issues to artists in different stages of their creative lives.
Finally, our studies show that increasingly often artists adopt a start-up model for their way of working (artist collectives, designers, production houses, studios, freelancers, etc.). This represents a fundamental evolution that must be taken into account if nurturing artists is to succeed. However, a “gap” continues to exist between the world of artists and the world of start-ups. Particularly in Frankfurt, start-ups are primarily thought of as belonging to the realm of “fin-tech”. How can this gap be bridged? How can a better link between content and business be established?
Action 8:
Fairs, Cultural Industries & City Marketing
One of the models that could be studied for its relevance to the globally salient evolution of Frankfurt is Austin, Texas. Thanks to the festival South by Southwest, the city has seen rapid transformation since 1987. Spanning music, film, and digital media, the SXSW Music and Media Conference has helped make Austin the second digital capital of the United States.
A city of major fairs and biennials (Frankfurter Buchmesse, Ambiente Frankfurt, Light+Building, etc.), a city with an important electronic music and clubbing scene, and a city with counter-cultural energy and underground creativity (the districts of Bahnhofsviertel, Sachsenhausen, Ostend), Frankfurt could reposition itself based on an approximate model of Austin by contract or imitation. Instead of offering just “fairs”, Frankfurt could become a permanent, online “platform city” dedicated to the creative and digital industries. This evolution, which has been proposed previously (e.g. in the context of the future development of the Frankfurter Buchmesse), would bundle all the topics mentioned previously in this note. It would make Frankfurt the Austin of Europe and allow the city to build its own SXSW.
Action 9:
A Globally Creative Administration
Ultimately, it is also necessary to assess the city’s administration and its structures for their adequacy with respect to cultural and creative industries projects.
