Why the Creative Economy is Thriving

The Economics of Creativity

The arts are crucial. Entrepreneurial ventures in the arts sector significantly shape both local and global economies. These enterprises act as vital economic engines, catalyzing cultural tourism, generating revenue, and fostering vibrant, attractive communities where other businesses can thrive.

For example, a flourishing art gallery not only sells art but also stimulates the local economy by attracting visitors who spend money on accommodation, dining, and other local attractions. Similarly, theaters contribute to the economic vitality of their communities by providing employment opportunities and drawing audiences that support nearby businesses. The advent of online platforms has extended the reach of the arts, allowing creators to tap into global markets and diversify income streams, thereby contributing to the digital economy's growth.

According to Americans for the Arts, "673,656 businesses are involved in the creation or distribution of the arts, and they employ 3.48 million people." While these figures are not on the scale of social media companies, it's evident that there's plenty of untapped potential for entrepreneurs and investors alike.

Successful arts-based businesses, such as renowned theater companies and globally recognized online art marketplaces, not only provide direct employment but also create ancillary job opportunities in sectors like tourism, hospitality, and retail. These businesses contribute to a diversified economy, reducing dependence on traditional industries and fostering a resilient economic fabric capable of weathering financial downturns. Examples abound of cities transforming their fortunes by investing in the arts, turning once-neglected neighborhoods into thriving cultural hubs that attract businesses and tourists alike.

However, many cities with a large creative class are facing a crisis. As writer Richard Florida notes, the creative class makes cities desirable and, as a result, pushes out the creative class itself.

In his book, The New Urban Crisis, Florida writes that the influx of educated, upwardly mobile individuals into cities where land is at a premium leads to housing scarcity and price increases that disproportionately affect the most vulnerable workers—many of whom are in the arts. This trend has become especially pronounced over the past two decades. In this urban landscape, artists and creative minds hold a pivotal role: A thriving cultural scene, marked by the presence of working artists, musicians, designers, and other creative professionals, is a critical driver of urban growth. These creatives serve a dual purpose; they are not only sought-after amenities that enhance the city's appeal but also key contributors to the intellectual and creative energy fueling innovation, notably within the tech industry.

Once tech workers discover the artists, they drive up the rents and force the artists out. But what if there was a different way? What if the artists worked with the wealthier startups and investors to grow their reach and revenue?

Entrepreneur and artist Carina Bañuelos-Harrison offers an answer.

"Entrepreneurs in the arts often navigate a delicate balance between commercial success and artistic integrity. While many artists cherish the freedom to create without constraints, engaging in commercial ventures requires a nuanced approach," she explains. "Collaborating with businesses entails understanding and accommodating their expectations, which may influence the final artistic product. It's essential for artists to recognize that commercial projects may involve compromises to align with the vision and objectives of the hiring entity."

The intersection of entrepreneurship and the arts also raises philosophical questions about the nature of art and its role in society. Can art maintain its integrity and cultural significance when entwined with commercial objectives? Practical considerations for achieving this balance include developing business models that prioritize long-term artistic value over short-term gains, investing in community engagement, and fostering environments where creative risk-taking is encouraged. The philosophy that art enriches lives and communities underpins the most successful artistic ventures, guiding their operations and ensuring that they contribute positively to the cultural landscape while remaining financially sustainable. This philosophy does not merely coexist with business goals but rather informs and enhances them, demonstrating that artistic authenticity and commercial success are not mutually exclusive but mutually reinforcing.

Building a Business Model

The most crucial aspect to remember is that anything investable needs a business model. Bañuelos-Harrison has some ideas.

"In the arts sector, various innovative business models have emerged, offering new avenues for artists and organizations to thrive. Crowdfunding platforms, for instance, have empowered creators to finance projects directly through community support," she notes. "Moreover, there's a wealth of art grant opportunities on a national scale, enabling artists to pursue their creative endeavors. In Denver, notable art institutions pool funds into a communal pot, facilitating a community panel review process to allocate resources. This democratic approach ensures that funds are distributed to deserving projects, fostering inclusivity and diversity within the local arts scene."

"Nevertheless, challenges persist, particularly for small arts startups facing inequities in accessing resources. Addressing these disparities remains crucial for promoting a vibrant and equitable arts ecosystem," she adds.

Artists, then, should think like entrepreneurs. Incubators and accelerators offer a combination of mentorship, networking opportunities, and sometimes seed funding, all designed to help creative ventures navigate the early and often turbulent stages of business development. Furthermore, specialized entrepreneurial networks create communities of practice that allow for the exchange of ideas, collaboration opportunities, and mutual support among creatives, reinforcing the foundation upon which the arts sector can thrive and expand.

The impact of these support systems is best illustrated through the success stories of arts entrepreneurs who have leveraged these resources to realize their visions. Recipients of arts-specific grants often go on to achieve international recognition, showcasing their work on global stages and significantly influencing their respective fields. Incubators focused on the creative industries have nurtured companies that merge technology and art in groundbreaking ways, leading to new genres of digital art and interactive experiences. These stories not only highlight the critical role of support systems in the arts but also underscore the potential for creative ventures to achieve both cultural significance and commercial success.

Technology, too, has dramatically transformed the landscape of cultural entrepreneurship, enabling the emergence of new forms such as virtual museums, online art marketplaces, and platforms for streaming live performances. Online marketplaces have democratized the sale and purchase of art, allowing artists to reach global audiences without the intermediation of traditional galleries. Digital platforms for live performances have not only sustained the performing arts through challenging times but have also innovated the way performances are produced, experienced, and monetized.

"Technology is revolutionizing cultural entrepreneurship by democratizing creation and distribution through platforms like social media and digital marketplaces, expanding artists' reach and monetization opportunities," Bañuelos-Harrison observes. "Advancements in virtual reality, augmented reality, and artificial intelligence are pushing artistic boundaries, offering immersive and interactive experiences. Additionally, technology facilitates cultural preservation, education, and networking, connecting artists, curators, and patrons worldwide. Overall, technology empowers cultural entrepreneurs to innovate."

The potential of technology to bridge the gap between global audiences and local cultural offerings is vast and largely untapped. As digital platforms become more sophisticated, they could offer immersive experiences that transcend current limitations, such as virtual reality tours of historical sites or augmented reality installations that blend physical and digital art forms. These technologies not only promise to expand the reach of cultural entrepreneurship but also to enrich the quality of engagement, making cultural experiences more interactive, personalized, and accessible. The future of cultural entrepreneurship, fueled by technology, holds the promise of a global cultural marketplace that is more inclusive, diverse, and vibrant than ever before.

"Just let artists be artists," Jandura-Cessna says. "What really needs to happen is for the beneficiaries of art—the VCs who go to great local restaurants, the programmers who go for wine tastings at a local art gallery, and the managers who take their teams out to see a great local band—to start supporting the arts in a real way. Maybe this is through ticket sales, but more vitally, it should also be through investment."