[This is the first of three guest posts by Tom Harvey, CEO of Northern Film+Media]

The commercial creative industries play a central role in the UK economy and generate significant profile for the UK abroad, this is at a time when technology is offering new platforms, distribution mechanisms and revenue opportunities. For such a tiny island the work of our commercial creative talent is exceptionally popular. Wherever films are produced, music created, television written and directed and games coded you will find British talent high up in the creative teams.

The UK is the third largest music market in the world, in 2008 one in ten albums sold in the US were made by a UK act, four of the top ten best selling artists were British. (UK Music, 2009)

With 2.5 million hours of television broadcast in 2008 and revenues of £11.2 billion the UK’s television market is second only to the USA in revenues percapita. (OFCOM, 2008)

The UK film industry generates £3.7 billion in revenues and the UK is the third largest film market with UK films and coproductions accounting for 21% of releases and capturing 31% of the global box office. 5 out of the top 20 films globally in 2009 were of UK origin. In that year 17% of all major film awards went to UK films and talent. (UK Film Council, 2009).  The UK’s Games market generated £3.3 billion in 2009 making it the 5th largest games market in the world.

It would be a fair assumption then, that our creative industry development was well tuned, that our public sector was well focussed on the needs of the creative industries and that we had successfully managed to harness the creativity of the nation.

Sadly this is far from true. If we are honest our creative industry support is pretty woeful. London remains the only real hub for the creative sector in the country, despite many regional claims, and anyone with any real talent or desire to work in film, television, web, mobile, games or music will, in the end, arrive in London.

My experience has been in trying to build the creative industries in the North East. There are many challenges in developing the commercial creative sectors here. Like much of the country there is a lack of focus and alignment of business support; a confusion of definitions; a lack of integration with private sector investors; poorly structured local funds with misaligned incentives; a thinness of expertise, networks and markets and a lack of understanding of evolving platforms and commercial markets. Crucially it is a sector that remains overly isolated from the commercial hubs of London and the U.S.

I have a unique insight into local funding and national and international investments as they become applied to a region. Within the North East at least, I see the impacts and the risks, the success and the failure, the projects that work, those that will never work, those that worked once and those that would work if they were supported for longer.

Every day, I see talented and creative people living and working in the regions. Sadly, some of what I see is depressingly familiar – I see a regional support structure that commits more resources to supporting people to compete with each other instead of on an international stage, I see those with little knowledge of the sectors they are working with offering support to those who know even less. I see genuinely talented people wasting their efforts as they are churned around in a regional lifestyle economy instead of being guided into a commercial market.

If we want to continue to punch so far above our weight as a tiny island with such huge impact on the world’s creative industries we have to change. We have to firstly accept that it is a terrible waste to have London as the only hub for our creativity. London is the ROUTE to market, in this broadband connected age (well nearly) it no longer has to be THE market.

We have to also accept that we have got development of the creative industries wrong.

Public money should be aligned much more closely with the private sector to merge financial support with expertise, experience and networks.

The UK must focus on ensuring it is supporting the commercial creative sectors effectively and productively. Though some public subsidy is essential, in the current economic climate it is essential to encourage more private sector investment into the content production industries. To achieve this, the creative sectors need to be more investor friendly. The film sector in particular is translucent at best in its accounting practices and openness around financial structures, terms and projections. In the current climate, NO sector has the right to expect public subsidy, so the commercial creative sectors, and film in particular, need to address themselves urgently to building transparent investment models with clear exits.

A clear definition is required for commercial creative industries that separates the cultural from the commercial and fully understands the role of IP and the potential for digital technologies and platforms to help drive growth. The commercial creative industries in the UK must be seen as important sectors in their own right not as an adjunct to the culture and heritage sectors. Great as the Arts Council is, the commercial creative sectors should be kept far from their worthy grasp.

We also have to move the area of focus for creative industry development in the UK beyond ‘creativity and innovation’ and into a more rigorous approach to the commercialisation of ideas. We have to use the best of the public sector skills in developing talent and building skills and combine it with a private sector commercial imperative. There is no shortage of creative talent in the UK and no shortage of good ideas, but there is a real shortage of commercial focus and access to global networks and contacts to shape these ideas and the approach of our talented practitioners to create content that sells.

Public money is often used to support creative, digital and technology innovation. For much of the country these innovation programmes are, and let’s be honest here, pretty isolated from the commercial world. With the odd exception, they are at best, well funded early research, and at worst subsidised playing.

The public sector obsesses about creativity, ideas and innovation, and spends millions investing in those areas. The truth is, we are already a very creative country with no shortage of ideas, there are millions of them wherever you look. What we sorely lack is the ability and structure to commercialise these ideas.

This is the area from which the public sector abdicates responsibility. Many regional creative entrepreneurs are happier applying for ‘innovation grants’ than they are commercialising the previous idea they have already developed. Creating real long term value is often much harder than building an income stream from public funding. The public sector needs to be much more aggressive about building solid routes to market, national and international networks, utilising private sector expertise, contacts and market focussed investment.
I seldom anymore hear the phrase R&D in the public sector. Which is a shame as there is something practical about cheaply researching an idea first to see if it might have legs, and if that appears to be the case, developing it with an end user and a market very much in mind.
Public sector funded innovation is tending too much toward a ‘build it and they will come’ model, servers are full of clunky aps and software that never quite took off with the users, shelves are full of films that never quite worked with the audience and everywhere, publicly subsidised content sits unwatched, unused and unwanted.

As a country we are innovative enough without spending more public money on over developing ideas that find no traction with the market. R&D is a commercial process and the public sector funders need to make better use of the model before jumping on the Innovation band wagon. Without an idea of a way to commercialise the idea the innovation band wagon just goes round in circles.

Now I have painted a suitably grim picture of the existing development structures for the creative industries outside London, in my next piece I will look in a more detail at the specific challenge.

[Tom Harvey is Chief Executive Officer of Northern Film+Media, the screen agency for the North East of England.  This article is an extract of a white paper he has written as part of his involvement on the Clore Leadership Programme.  Read the abstract here and the full paper here]