You can make money online

Think people won’t pay for creative content because so much is available online for free? That’s not what the numbers show.
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Think people won’t pay for creative content because so much is available online for free? That’s not what the numbers show.


In fact consumers are spending more for digital creative product every year and while other parts of the creative economy stagnate, digital is proving a money spinner.

 

Much to the surprise of the doomsayers, the digital economy appears to be driving growth in the creative sector, according to a major study in the UK and Europe. The  study commissioned by Google Inc. and Creative England, has found digitization is leading to increased creative opportunities, more time spent on creative consumption and, perhaps most surprisingly, growing revenues.

The common complaint of digital erosion, which blames pirating and online under-cutting for all the creative sector’s problems, is blown out of the water in The Digital Future of Creative U.K: The Economic Impact of Digitization and the Internet on the Creative Sector in the U.K. and Europe. The study was produced by the consulting company Booz & Co through expert surveys, interviews and desk research.

The study takes a positive view of digitization – hardly surprising given that Google paid for it – but it has the numbers to prove a point. Consumers are paying for digital content and the level of those payments is increasing much more sharply than traditional revenue sources such as sale of tickets or physical products.

 

‘The vast majority of all growth generated by today’s creative sector is digital. Depending on the industry, the non-digital part of the business is generally stagnating or even shrinking, but all industries have one thing in common: Digital is growing, enabling a 2 percent yearly growth for the entire creative sector in Europe. This growth is primarily driven by direct consumer payments, which are up 25 percent from the numbers in 2001—underlining the point that consumers are sustainably willing to pay for creative content.’

 

In fact consumers are spending more than they used to when they bought records and paid for movie tickets.

‘Consumer spending in the creative sector is up by 28 percent from spending in 2001 in the U.K. and up by 25 percent across Europe; as further analysis shows, there is no lower consumer willingness to pay…

‘Although observers question whether online business for the creative sector is sustainable, and many believe that consumers are less willing to pay for digital products than their physical equivalent, research is leading to a different conclusion. Consumers overall are spending More on products and services from the creative sector than they have in the past, and this revenue stream will continue to constitute the largest growth opportunity.’

The models of earning are varied and complicated. While most successful platforms earn some proportion of their income from advertising, user pays models of various kinds are developing including subscription services, value-added products and the use of customer data collection.

A key factor is that with improved consumer access people are accessing more creative content so even if they only pay for some of it there is a bigger market. Consumers are more likely to watch a film, listen to music or read than in the past because they are able to access material more easily

‘Creative industries dominate leisure time: The importance of the creative sector is best illustrated by the share of time people spend consuming creative products. Of the approximately 6.8 hours per day the average European consumer has available for activities other than work, meals, sleep, and household chores, more than 60 percent are spent consuming creative industry products. This includes reading the newspaper or watching television.  The role this sector plays in people’s lives can hardly be overstated.’

Of course not all online activity is creative. In fact the study shows only about 20 per cent of online time is spent reading and only another 13 per cent is spent on multi-media sites. But separating out the proportion of other activities that engage with the creative sector is an impossible task that quickly gets mired in definition problems. Sharing a YouTube video on Facebook? Googling for information about your favourite musician? Online browsing for e-books?

What is clear from this study is that both time and money are being spent on creative content online and that the digital world is not a threat to the arts industries but a growing and productive part of creative culture.

It is certainly true that there are traditional arts with reason to feel concerned about where they sit in this new world. The research covered the major copyright industries: film and television, publishing (both books and periodicals including newspapers), music and electronic gaming. Live arts, both performing and visual, were excluded as were architecture and design.

But these tensions between live and technically transmitted arts are at least as old as recording and are not at the core of the concern about an unwillingness to pay for transmitted content.

What is striking and important about this study is the strong evidence it presents that consumers not only will but do pay for creative content and these payments are driving growth in creative economy.

‘Digital is growing, enabling a 2 percent yearly growth for the entire creative sector in Europe. This growth is primarily driven by direct consumer payments, which are up 25 percent from the numbers in 2001—underlining the point that consumers are sustainably willing to pay for creative content.’

 

The report suggests digital earnings are responsible for sustaining stable employment figures within the creative sector in Europe and the UK over the past 10 years. That’s stable employment figures not stable employment. If you break it down you can see employment in music, book publishing and especially periodical publishing has declined while gaming, film and television increased.

Given the global nature of digitization, there is every reason to expect that these findings apply equally in other markets including the US and Australia. There are still extraordinary challenges in digitization for creative people, especially those engaged in traditional art forms.

But  there is also money to be made.

Deborah Stone
About the Author
Deborah Stone is a Melbourne journalist and communications professional. She is a former Editor of ArtsHub and a former Fairfax feature writer.