Crazy ideas attract investment says creative industries specialist

Creative companies account for around 4.5% of the EU economy. How does the cultural sector attract investment and help developing territories?

Ragnar Siil, an expert on the creative and cultural sectors, explains how this works and shares experience from Estonia. He started working with the EU-funded “Culture and Creativity” programme to support the cultural sectors in Eastern Partnership countries.

Why does culture matter? Why should government pay more attention to it?

Culture is a source of economic growth and new jobs. Policy-makers should start looking at it not simply as entertainment, but as a source of employment. Our reports say that culture can add value to other spheres, such as tourism and business. Culture and nature are the main motivations for tourism.

Culture helps improve living environments for both locals and visitors in parks, cafeterias, business centres, residential areas, third places, and on the streets. Looking at typical post-soviet cities, you might get the impression that the most important part of city life is not people, but cars; the people are underground, pushed aside.

Culture regenerates cities. There are a lot of vacant industrial and military buildings. Artists can give them new life. An example is the Art-zavod Platforma, which was transformed from a factory area to an art and co-working space. This kind of repurposing is very popular in cities like Tallinn, Liverpool, Madrid, and Barcelona. After the collapse of the coal industry in Liverpool in the last century, lots of industrial buildings were abandoned;  culture made them popular again. The arts can actually contribute to increasing property values in these places by making neighbourhoods more attractive to investors. This sometimes has a negative effect too: artists come to these neglected places and transform them, but the rising prices make it too expensive for those same artists to continue living there, so they leave. This is called the ‘Soho effect’ after a neighbourhood in New York City, which was once popular with artists but whose rising popularity made it so expensive that artists could no longer afford to live there. So, culture is like an engine for development.

Culture is especially important now for creating social cohesion. It is a tool for integration, which helps solve all types of social challenges. How to activate people with disabilities and special needs, or bring together people with different backgrounds?

Culture is the space where people come together. In many European countries, like Estonia, libraries are creating programmes for migrants, giving them the opportunity to attend cultural events, support groups, or language courses to help them better integrate into the community.

What share of the EU economy does culture make up?

First you must understand the difference between ‘creative industries’ and the ‘creative economy’. Creative industries represent how much economic activity is taking place within cultural sectors. Creative companies account for around 4.5% of the EU economy. It’s a big share.

The other piece is the creative economy, where other sectors use culture to improve their own business. For example, design is an important element in the automobile manufacturing industry. Skoda, Kia, and Porsche gained a competitive edge thanks to talented designers. But you cannot calculate the exact value of design in that industry. So the economic impact of culture is much bigger than 4.5%. This number is just the small portion of the economy for which we can directly calculate the impact of culture.

Just give you an example: A city organises festival. All the revenue that this festival earns is within creative industries (the people they employ, the tickets they sell, the services they provide). Those earnings may not be a huge amount in the context of the economy as a whole. But because of that festival, thousands of people may travel to that city. They eat at local restaurants, buy from shops, use transportation, and stay in hotels. That’s money, money, money. It is not calculated within the cultural and creative sectors, but this festival may generate millions for the city when all the spin-offs are considered.

That is the difference between the direct and indirect impact of culture.

What are some local examples of successful cultural projects?

I always use the example of my home city. It’s a small Estonian city called Rakvere with 15,000 residents. The local government has invested in culture and creativity over the years, and now it is one of the most famous cities in Estonia. The municipal government put money into designing a unique central square. It’s a surreal design with big mushrooms all over the place. It became so popular, that the municipal government managed to raise money from businesses located near the square, and invest it in new buildings and infrastructure.

The government is always coming up with crazy ideas to attract more visitors. The city is famous for a traditional music festival. So they transformed it into a punk music festival. For two days, thousands of people arrived in town wearing leather. Estonia is also famous for folk dance festivals. Rakvere decided to restrict the dance festival to men only. It was very funny.

An Estonian from Rakvere became a famous sumo wrestler. So the city applied to host the sumo championship. It was only the second time in history that a sumo world championship took place outside of Japan.

These kinds of crazy ideas attract attention and investment and can make a small city global.

Part of the Culture and Creativity programme is conducting research and providing recommendations to policy-makers. Could you share some recommendations for Ukraine?

We have already generated a number of reports across the Eastern Partnership. Our experts from the United States and Lithuania looked at the legal environment in Ukraine and recommended establishing contemporary museum and cultural heritage systems in the country (which do not really exist at the moment). Part of this is improving management skills. We found a lot of problems in the ways museums are managed, including programming, communications, and sales. These elements could be managed much more effectively.

Our main recommendations to the Ukrainian government are focused on solving these issues by reforming museum laws. There is a need for clear rules across museums, including rules on appointing museum directors. Ukraine also needs to invest in the digitalisation of its cultural heritage.  

At the museum level, staff should be better trained. They tend to be knowledgeable in their areas of expertise, but they often lack management skills or an understanding of how to attract new audiences.

To bring in younger people, museums need more attractive programmes, interactive activities, and effective promotion. Museums need to start providing better services. It’s not just about ticket sales. There should be cooperation with businesses and tourist organisations.

What was Estonia’s experience in reforming its cultural heritage practices?

Estonia went through this process 15 years ago. Last year, Estonian museums had 3.5 million visitors, and there are only 1.3 million people living in the country.

The government has invested a lot in its museums. The museums are now run professionally, they offer many special services, and they have world-class programming.

The maritime museum in Tallinn is the most popular museum in the country with 420,000 visitors per year in a city of less than half a million people. Just imagine such a small museum in a small city getting half a million visitors! A full ticket costs €14, which is quite expensive, so why do people pay?

It’s a kind of cycle of benefits. If you invest in services and innovative solutions, people want to come to the museum and they will pay relatively high ticket prices. Those revenues are then invested into better services to attract even more visitors.

In Ukraine, things tend to work the opposite way: museums don’t have the money to promote themselves or offer quality services, few people come, tickets prices have to stay low, the museums don’t earn money, and don’t have anything to invest.

So what Estonia did was invest in the development of the cultural sector?

Yes. We organised training and made investments, but the biggest change was in attitude. In Estonia, we turned almost all cultural institutions into private foundations; they are government-founded, but run by business managers. This puts more of the responsibility for success back on the museum, since they can’t merely rely on government money, they have to earn it themselves.

So a turn to business-minded thinking was the most important part of these reforms.

What is your advice to people working in the sector who want to develop profitable cultural projects?

I think it is not so much about being profitable, as about being impactful. If your project can really make a change, it will raise money. In Ukraine, you have quite a lot of creative initiatives supported by businesspeople; it’s not about money. First of all, you should have a good idea of what kind of impact you want to make.

You should have a business mind-set and have the ability to reach your audience. Sometimes artists think that it is enough to simply create art. But if you can’t get the results of the project to the public, then it’s only halfway successful. You should have communication skills and a clear communication plan. You should effectively use social media to reach young people.

You should speak English. After all, how on earth will you be able to get involved in European networks without it? I still encounter many people who don’t know the language.

So, invest in your skills, be active, and take advantage of opportunities when they arise.

Where can these opportunities be found and how can people participate in European cultural projects?

Our programme’s website has lots of materials, tools and announcements:  

But the most effective way to get involved in European cultural projects is to get to know the European networks. If you are singer, go to music festivals. If you are museum manager, go to the European museum awards. Be there. Go to conferences and develop contacts. That’s the way to get partners for joint projects.

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