Posted in by Generator on Wednesday 12th of October 2011
After years of musicians getting knocked back by banks for funds, a new report from Think Tank Demos has suggested that creative industry start-ups are actually less risky than businesses in other sectors.
‘Risky Business’ was published this week and echoes the work of Generator and UK Music by placing the creative industries at the centre of UK growth. Written by Helen Burrows and Kitty Ussher, the report also states that creative industries in the UK are the ‘Cinderella sector’ of the economy, worth 6% of the GDP, which is twice the European average.
The attitude of banks has been to reject music companies as being stereotypically high risk- Chairman of the Music Managers Forum Brian Message has frequently spoken out on the issue, revealing that in 2010, he failed to get a loan from the four big high street banks to fund The Rifles, a band with a commercially proven track record who were selling out large UK venues such as the Roundhouse at the time. It took two years and nine applications to get RBS to put up a loan of £45,000, a quarter of what Message was actually looking for.
This has resulted in criticism of the Enterprise Finance Guarantee (EFG) scheme- a £2bn pot backed by theGovernment to supposedly help new musicians and promoters. Figures announced in July this year showed that only two music sector loans had been approved in two years of the scheme.
Blasting away the stereotypical myth that it is difficult to quantify creativity and equate it with cold hard cash, the Demosresearch found better survival rates for new music and creative business start-ups over the first five years than in many other sectors.
A UK Music spokesman said: “The main thing is the report highlights that creative industries are highly adept at managing risk. In other words, even though music companies are hugely entrepreneurial and invest in “unpredictable” products, their longevity is above average.”
‘Risky Business’ contains 16 policy recommendations to Government including that they need to broaden their definition of the creative industries and facilitate greater understanding between the finance and creative sectors.
DOWNLOAD THE REPORT HERE
