By Gene Shill
The value of intangible goods is making an unprecedented contribution to the global economy as the world becomes progressively digitised, with many products and services shifting from the marketplace to the marketspace. This article discusses and outlines the formative steps to commercialising intellectual property in the creative industries and the impact the creative economy is making globally.
The value of intangible goods is making an unprecedented contribution to the global economy as the world becomes progressively digitised, with many products and services shifting from the marketplace to the marketspace. While the price of intangible goods such as patents, intellectual property, and brand equity carry a mystique and value challenging to calculate, its presence in the global economy is unapologetic. Further, add the importance of social and cultural capital into the fold, and the future of intangible asset trade becomes an exciting prospect.
With consumers placing greater emphasis on experience, quality and performance, products of the Creative Industries that sit within Global Creative Economy offer additional value add through intangible creations such as, but not limited to, ephemeral art. Typically, ephemeral (temporary) art transcends the physical and malleable characteristics of tangible goods and are more often than not measured by attitudes and perceptions which can be directly related to social and cultural capital. Furthermore, advancements in technology also enhance the capabilities of knowledge-based industries such as creative, education and innovation to now emerge as some of the most dynamic sectors of the global economy. Although commercialising intellectual property and placing value on intangible goods is not a new concept, leveraging its ‘invisible advantage’ and combining it with the likes of technology is what’s creating an additional value add within the Global Creative Economy.
Products of the Creative Industries’ (advertising, architecture, art, crafts, design, fashion, film, music, performing arts, publishing, R&D, software, toys and games, TV, radio and video games) drive the global Creative Economy which is forecast to generate upwards of €580 billion euros annually at the close of the 2020 European fiscal year.1 In short, the Creative Economy is leveraging creativity, technology, culture and innovation to foster inclusive and sustained economic growth and development, which provides both commercial and cultural value. Acknowledgement of its dual worth has led governments worldwide to expand and develop their creative economies as part of economic diversification strategies and efforts to stimulate economic growth, prosperity
Calculating the value of intellectual property varies depending on a broad range of factors – primarily the time, context, purpose and application of the valuation. The music streaming platform Spotify demonstrates how their business model successfully operates in response to these key factors by using intangible products of Creative Industries to engage with their subscribers. It allows subscribers to access a global catalogue of music and podcasts via a ‘freemium’ or ‘premium’ subscription service.
This service exists entirely on streaming intangible goods, but also provides the company with a secondary source of income via intangible assets. It permits Spotify to collect and collate big data which can be ‘sold on’ to varies parties interested in researching user habits. This data then forms the basis of new initiatives to access and capture new audiences through digital applications.
Premised by the commercialisation of intellectual property, this business model signifies the uncapped potential of Creative Industries products can provide when adequately valued and modelled. Further, it proves duel worth not only exists in ‘tangible’ commercial and cultural goods but also found in the invisible advantage of intangibility, which in this case is worth roughly USD 409 million to Spotify annually.
Here are the first ‘3 Steps to Commercialising Intellectual Property in the Creative Industries’ which initiate and inform strategy.
1. Creative Intelligence
1) Ensuring creatives’ are intrinsically invested in their craft/discipline enough to leverage their skills to create novel and interesting ideas; and
2) Placing direct value on the ability to think laterally and create new revenue streams through new or pre-existing IP.
It is safe to say we generally associate orchestras with set classical repertoire, but their musicianship can be commercialised and used in ways that far exceed the traditional ephemeral live and recorded form.
Much of today’s music is recorded using sampled music, which is not necessarily illegally obtained and appropriated into a new context. It comes from sample packs or ‘user interfaces’, where a producer or production team use instrumentalists to create a small bespoke library of sounds sold digitally and royalty-free as a profit share agreement. These samples are typically accessed using a subscription service and make their way into commercial recordings used in advertising, video games, animation, film, television, or into the song of a new artist.
By utilising an orchestra’s ability to perform at a very high level, they are applying creative intelligence to launch into a new market far outside the scope of its traditional application. The most successful sample packs demonstrate not only high-quality recording and production skills but more importantly, performance skills. It allows the musicians to gain an ROI against their developed skillset but also in a broader context, develop a form of brand extension.
2. Value Proposition Design
1) UCE (Unique Customer Experience). It’s all about the experience. Is it tangible or intangible? Alternatively, both?
2) Create value through narrative cohesion. Build a consistent relationship between the product and the audience. The narrative shouldn’t shift too far left or right and if it does, guide the audience with context and information.
3) Shift focus to place value on both tangible and intangible assets. Does this double the value when combined? Extract and define the intangible elements and how it relates to the overall experience.
4) Why buy and why use? What’s the magnet? In the case of the orchestra, the magnet is giving artists’ and producers’ the means to access content they a) can’t make themselves or b) unable to afford to make themselves. They’re also looking for ROI.
3. Innovative Business Models
A business model is a system of elements and connections; some features and relationships are more important than others. Therefore, how do these essential aspects function to your advantage? There are no one-stop bullets for creating, evaluating, adapting or implementing business models, brilliant or otherwise.3 Therefore creating or modifying a business model to suit your purpose is paramount.
1) What business models exist and align with a technologically savvy world? Do pre-existing models from other industries work or is a hybrid model required?
2) History has told us that not all business models are effective, but a flexible organisational structure can be. How does this relate to your current organisational structure? Moving quickly and efficiently is advantageous.
3) Verify the most intimate details of the concept/product, evaluate market size and profitability, evaluate possible sustainability and of course, the ability to define a target audience.
As technology and digital platforms develop, so will the demand and growth of intangible goods. Marisa Henderson, Chief of the United Nations Conference on Trade and Development’s Creative Economy Programme, is leading global discussions and panels in this field. The Creative Economy Programme is at the forefront of research and developmental initiatives to support the growth and future of the global Creative Economy, focussing on commercial and cultural goods trade.
About the Author
Dr Gene Shill is Assistant Professor in Creative Entrepreneurship and Practice at Hong Kong Baptist University. With a background in entrepreneurship and intellectual property law in the global creative industries, he is also an established contemporary saxophonist and record producer of the alias ST. AMANT.
UNCTAD. (2018). Creative Economy Outlook: Trends in International Trade in Creative Industries. P.1 Retrieved from Geneva: https://unctad.org/en/PublicationsLibrary/ditcted2018d3_en.pdf
UNCTAD. (2018). Creative Economy Outlook: Trends in International Trade in Creative Industries. Retrieved from Geneva: https://unctad.org/en/PublicationsLibrary/ditcted2018d3_en.pdf
Bock, Adam J. & George, Gerrard. The Business Model Book: Design, Build and Adapt Business Ideas that Thrive. P.28. Pearson