More creatives than ever before are meeting with angel investors, prospective sponsors and financial institutions to raise money for new ideas. But before they get in the game, potential funding partners want to better understand the creative business model and the local creative economy.
What’s a simple way for a creative to share with a business person the big picture growth opportunities in a creative business, using shared language?
There’s Money to be Made
First of all, it’s good to reinforce that the creative industries are not just sexy, they’re potentially big business.
The value of the global market for creative goods doubled from USD$208 billion in 2002 to USD$509 billion in 2015 (UNCTAD). And now the total value of global creative economy is estimated at USD$2.253 trillion.
The Creative Value Chain
So now that we’ve established there’s money out there, the next step is to show how the business at hand is gonna create value. One way to discuss the opportunity is to show where the growth opportunities are and how you’re poised to maximize on them with your big bad creative idea.
Existing research details rich and complex mappings of the structure of individual industries such as music or film. But for a simple conversation starter on how value is created in any creative industry, here are 5 key value drivers that promote growth and profitability:
Creative businesses generally focus on one or multiple of these 5 drivers. They create IP, produce it, promote it, distribute it and finance their growth. I’ve found this model universal in outlining where value is created within any company in the creative industries for 4 reasons.
- It applies to all creative industries. Whether it’s music, film or visual arts, after IP is created it’s put through a pipeline of pre-production, production and post production, marketed and distributed and its growth is funded to scale operations. It gives a big picture of where value is created in the industry on a whole.
- It applies to non-creative businesses. This model helps as a starting point for funding conversations because it’s the same model for all businesses, whether creative or traditional. Whether you’re shipping bleach, blankets or a blog the raw materials may be different but the model for turning it into a business is the same. Using language a business person can identify with helps to start from a place of shared understanding.
- It highlights where companies or individuals are focused. Some companies focus on only 1 value driver, such as financial houses that cater to the growth of SME creative entrepreneurs in growing markets. I’ve also noted that we have local players servicing local and international markets with a singular focused service, such as post production for film (I’m thinking of Frame of Reference here).
- It maps out how companies are multi-faceted. One company can also create value in different ways along this spectrum. Large vertically integrated corporations (think Disney) offer multiple services and products that create value. And independent studios like ListenMi for instance, create IP, produce animations and designs and promote them to a growing audience.
It’s not always a straight line though. Depending on your starting point, the order of the process may be different. One creative’s output e.g. a book or song often becomes raw material inputs for new products e.g. a movie or a theatrical production. If this loop is closed, this framework is less of a straight line and more of a circle. But the steps are pretty much the same.
Kenia is a founder of ListenMi, an animation preproduction and design studio for diverse content. She enjoys developing creative products, services and communities. Give this post a👏 👏👏 if you’re thinking about this stuff, and share it with others who do too.