In the face of increasing disruption – most often digital and most recently pandemic-related – organisations from nearly every sector have transformed their revenue models to adapt, few more so than the cultural sector. The question of how to generate revenue starts with identifying how an organisation can create value. Corporate leadership has increasingly recognised that expanding the meaning of value creation beyond the economic definition is not only a sustainable strategy, but a resilient one. Furthermore, organisations have come to embrace new technologies as a way to not only scale economic value drivers, but environmental, social and governmental ones as well.
Boster Group was delighted to examine these ideas in the context of the cultural sector for CognitionX’s Createch CogXtra session this week. Founder and CEO, Susan Boster, was joined by an array of distinguished leaders from the worlds of finance, policy, culture and technology: Andrea Sullivan, Lord Vaizey, Kara Medoff Barnett and Suhair Khan.
The past decade has seen meaningful change in the cultural sector’s use of digital tools and platforms for income generation. Progress in this area has accelerated dramatically in response to the COVID-19 pandemic, yet many creatives and cultural organisations have been slow to adapt their business models to monetise their new digital offerings. In a recent survey of cultural audiences, 79% revealed that they would be willing to pay for digital content, compared to just 12% who reported actually paying for online cultural content; an illuminating discrepancy. According to cultural organisations, a frequent reason for this is the lack of funding for digital projects, which are often seen as high-risk.
Although philanthropists such as Sir Lloyd Dorfman and John Studzinski have been innovating with digital tools to raise funds for cultural institutions during the pandemic, it is evident that relying on philanthropy alone is not sustainable for addressing the funding and skills gap in the future. Cultural organisations should be looking to increasingly diverse pools of capital and resources for support – utilising, for example, resources such as the Arts and Culture Impact Fund, a £20 million impact investment fund born from the partnership of public, private and philanthropic investors. Over and above building resilience in arts organisations through a flexible loan scheme, the fund – backed by Bank of America – works closely with cultural organisations to strengthen their social impact measurement capabilities. Andrea pointed out that technology provides useful tools for efficiently collecting data and quantifying impact. That data unlocks other sources of impact funding, creating even greater long-term value.
In addition to unlocking access to new and diverse audiences, digital tools facilitate the diversification and expansion of cultural content beyond the confines of auditoriums and galleries. This creates new pandemic-resistant revenue-generating opportunities. Yet, as Ed pointed out, while digital platforms such as YouTube and subscription model Patreon present opportunities for individual creatives to monetise their content, sector-wide models for institutional income generation are yet to be widely established.
Andrea believes the success of the Arts and Culture Impact Fund is due to the strength of its partnership across sectors, but other panellists pointed out that more collaboration is needed to make sector-wide impact. Ed spoke about the Digital R&D Fund for the Arts, which provided support for 52 cultural ideas that used digital technology to build new business models and reach new audiences. However, Ed expressed disappointment that the partnership (between Nesta, the Arts and Humanities Research Council and Arts
Council England) wasn’t being used as a springboard for future efforts to unite technology and the arts. His sentiments echoed those of Kara, who urged technology executives to think expansively about how digital tools can create social impact, and to get involved in more causes involving the third sector, which play a vital role in cultivating cultural understanding, as Andrea emphasised.
Organisations such as American Ballet Theatre (ABT), for example, have used digital tools to create an array of engaging social media content during this time, giving digital audiences an exclusive insight into the lives and talent of its dancers while helping the company fulfil its mission to bring “the best of ballet to the widest possible audience.” One of the challenges, however, has been identifying how to create greater access – and, in the case of ABT, fulfil their mission – while also ensuring that they operate robust and resilient business models to enable survival and scale.
For instance, cultural organisations often build education-focused revenue models to fulfil the dual purposes of generating revenue and performing an important social function. ABT’s virtual classes help participants combat isolation, and Kara spoke about how ABT has capitalised on an increase in demand for at-home learning and development programmes while further developing the key social impact of such programmes – which, for example, reduce loneliness and isolation, especially for vulnerable groups. The company facilitated thousands of online dance classes over the lockdown period and delivered its Summer Intensive course at RRP online. Not only did it reach more students around the world, but the success of the initiative points to remote learning as a promising area of revenue generation, just as physical workshops and classes often are. Furthermore, Suhair suggested that future business models will likely rely on a hybrid of digital and physical access to cultural content, which can be facilitated by partnering with corporations that have existing digital resources and expertise. She spoke about HTC’s partnership with the V&A, which invites audiences at home to experience a VR interpretation of the ticketed exhibition Alice: Curious and Curiouser, for a small cost – making the exhibition both impactful in terms of reach and revenue-generating for both partners.
Bank of America’s partnership with the National Theatre provides creative career opportunities for BAME youth, and Andrea spoke about the social value the bank derives from the arts and the role they play in enriching societies. Emphasising that there is more to resilient business models than financial revenue, she proposed that organisations and funders should build their models together to establish mutually beneficial relationships. For example, Bank of America offers marketing and digital support to partner organisations, and in return receives (among other benefits) personal development training for employees.
The blueprint for consuming cultural content has changed forever, and hybrid digital/physical programming is likely here to stay. To support this new cultural landscape, policymakers, cultural organisations and the private sector must work together to identify where their partnerships can create value – economic, social, environmental or otherwise. By facilitating the resilience of the cultural sector, these partners, in fact, facilitate their own resilience.