Creatives seeking return on investment

09/10/2020 - 08:30

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Taking inspiration from the venture capital sector to shake-up cultural funding could support the tireless work of emerging talent, and unleash creativity.

Kate O’Sullivan says creative people work through adversity because they love what they do. Photo: Gabriel Oliveira

The passion of young creatives such as Bri Clark and Kate O’Sullivan is striking.

Like many artists who spoke to Business News for this article, their motivation for pursuing art extends far beyond the purely financial.

That passion keeps the creative sector alive despite financial pressure, immense competition for audiences, and technological disruption.

And it keeps emerging talent inspired to incur big costs and invest many hours into a product, despite no guarantee of monetary success.

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Musician Bri Clark has been in the industry since 2015, including making the shortlist of the Vanda & Young Global Songwriting Competition.

Ms Clark said she was lucky to do what she loved.

“When I’m writing music and creating something, it’s just what I do … if I don’t do it, other things in my life suffer,” she said.

“[But] it’s like any piece of art; the risk of it going well or falling on its face is 50-50.”

An artist might get everything right but the piece may not get traction due to a variety of external factors, Ms Clark said.

Up and coming creatives face significant financial pressure.

In music, it can cost thousands to create an album, while performing artists pay upfront costs to put on theatre productions.

“There’s a huge disillusionment with how sustainable a music career is … and there’s an endless well of money that seems to leave,” Ms Clark said.

To supplement the inconsistent cash flow of life as a musician, Ms Clark works as a topliner, writing songs with other musicians.

This journey led her to Sydney, where the writing scene is bigger, although she recently returned west during COVID-19.

“I’ve written with a lot of amazing Australian artists, [even] overseas producers,” Ms Clark said.

“It’s nice to diversify, it means you don’t have to wait … to release an album every two to three years.”

Perth International Jazz Festival artistic director Mace Francis was in a similar position, currently performing and teaching.

“It ebbs and flows,” Mr Francis said.

“There are years where it’s good.

“Every week is different … regular gigs don’t really exist any more.

“It’s hard to survive if you only perform … you have to have a versatile portfolio of income streams.”

But he said it was love that kept artists going.

Musicians who spoke to Business News estimated fewer than one in 50 who pursued a musical career eventually earned a living from it.

Actress Kate O’Sullivan agreed that most creatives had variable income sources, with few roles available for artists to perform full time.

This meant they were particularly exposed to shocks like COVID-19.

From March to August, jobs in arts and recreation fell 14 per cent nationally, according to Australian Bureau of Statistics data, the second biggest fall of all industries.

The pressure had been there long before the pandemic, however.

“People go into the arts because they love it … they can’t imagine doing anything else,” Ms O’Sullivan said.

“You can’t keep me off a stage.”

However, she said earning an income was tough.

“The money isn’t there, therefore a lot of people work casual jobs, part-time jobs, to afford to do the gigs ... or for financial security,” Ms O’Sullivan said.

These jobs were usually still within the sector, including operations work within theatres, acting as ushers or selling tickets, she said, and the industry supported many jobs in backstage roles. 

For some, Perth’s Fringe Festival might be their sole annual opportunity to create and perform a show, because of financial and time constraints, she said.

To better connect with a bigger audience, Ms O’Sullivan said she was working on a performance that would highlight female scientists. Designed to be portable, it would tour different locations to ensure its viability.

She said while artists had been critical to the community during lockdown, through music, books and film, culture was still somewhat undervalued.

Western Australia’s market was also particularly small, Ms O’Sullivan said, with some hopefuls heading elsewhere to train or perform.

In the US, for example, many cities of a similar size to Perth had devoted improvisation theatres.

‘Breaking out’ was also a challenge, she said, with a big gap between the top performers and the bulk of the industry, much of it down to luck.

Tech, taste trends 

Mr Francis said there was a frustration that consumers of music were becoming less willing to pay for it.

There was now a flood of content, and artists prepared to work for very low fees, or free, competing against people who had spent years perfecting their craft.

“The worth people see in live music has come down a bit … Spotify, YouTube, you can listen to anything pretty much free,” Mr Francis said.

Spotify’s business model was particularly difficult for artists, he said, with less than 1 cent paid per stream.

With the company reporting a loss in its second quarter 2020 financials, that pressure could continue.

But Mr Francis said a positive for the scene in WA was the increasing number of talented young people entering the Western Australian Academy of Performing Arts every year.

In live music, the trend was away from bands towards DJs, guitarist Nelson Thane said.

Mr Thane, part of the duo Tin Shed, had been busy enough to make music his living, at least before COVID-19, with touring a part of that success.

“It was the best job to have,” he said.

“I got to travel around and play music, and meet great people.

“It’s definitely hard to get to that level.”

Resolving the challenge

There was a strong consensus among creatives that the sector played a huge role in ensuring community wellbeing.

It’s partly for this reason that sections of the industry are supported by public funding, including through the Australia Council (federal), Department of Local Government, Sport and Cultural Industries (WA), and Screenwest.

Business News’ Data and Insights reports about 52 per cent of funding for WA’s 25 biggest arts organisations came from the state government.

Operating revenue was 24 per cent.

The US represents a contrasting case.

About 9 per cent of revenue for non-profit performance groups and museums flowed from governments, according to Americans for the Arts.

About 31 per cent came from companies, individuals and foundations.

While creatives generally agreed that the sector would benefit from higher government grants and more support from patrons, there were a variety of views on how existing funding mechanisms could produce better value.

This included the way the bureaucracy made funding decisions, particularly selection panels for grants, while the lobbying power of bigger organisations was highlighted.

One industry player observed to Business News that some panel members responsible for distributing funds may not always be best placed to make creative judgements.

Another, who had been closely involved in the decision-making process, said it was sometimes difficult for those on the panel to leave prior conceptions at the door, with more familiar or visible names more likely to earn support.

Bigger entities also have a big advantage, according to some.

A former board member of a WA arts organisation observed that the biggest cultural organisations could gain the ear of decision makers through high-profile advocates.

“If you are connected in the right circles, you can afford to lobby,” they said.

“Everyone is looking for the marquee director who will change the future of an organisation.”

RMIT University economics professor Jason Potts said many of the flaws in the existing model of arts funding could be remedied by moving away from using grants targeted at specific projects.

Professor Potts, who formerly worked at the Queensland University of Technology Centre of Excellence in Creative Industries, said inspiration should come from venture capital and startups.

That would prioritise innovation and variety, rather than minimising risk to public agencies.

“Creative industries would benefit from behaving a lot more like the venture capital sector,” Professor Potts told Business News.

“They’re producing goods and services with uncertain value … enormous when it’s big, not so enormous when it’s small.

“Artists and entrepreneurs are similar in the sense they’re trying to produce something valuable … under enormous uncertainty.”

He said a solution could be for agencies to invest and take equity in creatives, rather than giving project-focused grants.

The investing agency would receive a portion of the artist’s income for a pre-agreed period, so funding bodies earned a payback from the most successful selections.

“Modern arts funding has never succeeded in being able to have an equity stake in those extreme successes,” Professor Potts said.

In practice, 1 per cent of a band’s income might flow back to the agency as a dividend for initial support.

A 2018 OECD discussion paper said a rethink of funding models was worthy of consideration, suggesting governments investigate development banks, angel investing or a venture capital method for the arts.

This would replace one-off donations.

While the venture capital approach sounds a little radical, it is used outside the technology sector.

WA property magnate Dale Alcock has been an investor in Calan Williams Racing Investments, which supports local motor racing hopeful Calan Williams’ ambitions to become a Formula 1 driver.

Investors will earn 50 per cent of the F1 team salary or endorsement earnings over Calan’s F1 career.

Professor Potts compared the existing art funding model to a world where banks solely funded startups, insisting only on safe investments.

The existing model was conservative, and discouraged risk taking, he said, although it had a high level of accountability and prestige for decision makers.

“A lot of the ways in which public funding in arts proceeds, it wastes a huge amount of money trying to pick winners,” Professor Potts said.

“The effort people put into grant [applications] is just pure waste.

“Funding bodies and agencies like the drawn-out process, it gives them a lot of power.

“A lot of these processes benefit the [funding] organisation more than the recipient.”

These problems were not unique to arts funding, he said.

“It’s very expensive to give away money,” Professor Potts said.

“It’s easily captured [by lobbying], it’s highly politicised, it rewards conservative mediocrity, and it produces highly predictable outcomes.”

A 2019 paper by Erasmus University assistant professor in Cultural Economics and Entrepreneurship, Ellen Loots, highlights some of the challenges for maximising value from public funding of arts.

Assistant Professor Loots said artistic quality was difficult to evaluate. 

She said studies reviewing assessment panels had reached differing conclusions.

Some studies had found arts subsidies were still easily enmeshed with political perspectives, she said, although others had found this could be mitigated.

“Also, while it is evidenced that a narrow range of voices from a powerful cultural elite still put their mark on decision making in the arts, it is equally demonstrated that the privileged positions in those assessments appear to have shifted from experts who possess the capacity of aesthetic judgment to … [experts in] evidence-based decision-making,” Assistant Professor Loots said.

Some alternatives are designed to put power in the hands of the broader public.

The Centre for London think tank suggested in September that the UK government finance culture vouchers, which would offer younger people discounts to attend theatre works, to encourage attendance post-lockdown.

South Korea has given culture vouchers to support underprivileged citizens, while Slovakia has used vouchers for school children.

A broader voucher scheme would direct funding to the arts ventures that draw interest from the public, rather than those prioritised by funding bodies.

Action

Industry veterans had ideas for adjustments that could be made in the near term.

Revelation Film Festival director Richard Sowada said one improvement would be to reduce the barriers that compartmentalised funding into specific purposes.

He said new forms of technology meant traditional boundaries between art forms no longer existed.

Film was blurring with other arts, and consequently funding needed to be more integrated, he said.

Emerging areas of art needed particular attention, Mr Sowada said, including computer gaming and immersive technology.

Private philanthropy had an important role as it was often longer term, and more flexible than government funding, he said.

Mr Sowada said open-mindedness was critical.

“You have to take risk, you can’t be a backwards-looking industry,”he said.

“You have to be ambitious, back ideas that don’t have a model.”

Spare Parts Puppet Theatre artistic director Philip Mitchell said more funding for the sector generally would support creation of new works.

Mr Mitchell said smaller organisations had particularly tight funding constraints.

When the funding pool was not enough, smaller organisations would often miss out.

“It really is the small-to-medium sector that produces the most work … but we’re getting a lot less of the funds,” Mr Mitchell said.

“It’s our eternal frustration that governments don’t think we’re a priority.

“We survive through passion and commitment, not necessarily being well resourced.”

Federal funding was generally allocated by judging panels heavily weighted to east coast participants, which had more awareness of east coast work, he said.

That could be resolved by stricter requirements about how much funding went to each state, Mr Mitchell said.

Data from the Australia Council shows WA received $35 million in the past four years. 

A spokesperson from the state’s Department of Local Government, Sports and Cultural Industries said about $9 million was allocated by the state through its National Performing Arts Partnership commitments, which focused on major performing arts companies. 

Other programs included a $10.3 million pool to support 37 small and medium organisations.

Infrastructure

Perth is set for a wave of investment in cultural infrastructure.

The Perth City Deal, announced in August, included $695 million for Edith Cowan University to move part of its operations, including the Western Australian Academy of Performing Arts, to Yagan Square in the CBD.

In addition, $20 million will be spent on improvements to the Perth Cultural Centre, and $42 million on the Perth Concert Hall.

Then there’s a potential Aboriginal Cultural Centre, with $4 million to be spent on pre-feasibility work.

Separately, the state government has allocated $15 million for an upgrade to His Majesty's Theatre.

That comes on top of the about $400 million for the soon-to-open WA Museum Boola Bardip, and follows about $74 million on the Yagan Square public space.

The ECU move was broadly welcomed.

West Australian Opera executive director Carolyn Chard said it was one of many positives lining up for the art sector after the COVID-19 crisis.

“That’s [the move] a very good thing to bring more people in, also to bring creative people into the city,” Ms Chard told Business News.

She supported the allocations to theatres, particularly the Perth Concert Hall, which Ms Chard said would become a fantastic facility. 

What is not yet clear is how the business cases stack up against alternative funding uses.

A representative for the state government told Business News that ECU, and other universities planning a shift into the city, would need to provide the federal and state governments with approved business cases before they received the funding allocated.

None had yet been provided.

Some alternative infrastructure investments have been floated in the past.

A Committee for Perth analysis of performing arts infrastructure in 2013 highlighted three priorities, including an indigenous cultural centre and a potential additional concert or recital hall.

Probably the best-known idea was for a major new lyric theatre to showcase opera, ballet and musical theatre.

In a report in June 2020, the committee suggested a World Centre for Indigenous Cultures as the potential unique, “big thing” that could set Perth apart.

It, too, recommended establishing an education precinct in the city.

A more radical proposal was made in 2013, when former lord mayor Lisa Scaffidi suggested building a monument the size of New York’s Statue Of Liberty in time for the city’s bicentennial in 2029.  

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