Square One Dr Peter Troxler

The turn of the 21st century has seen a shift in public interest from knowledge to creativity and a growing focus on creative industries from an economic and wider social perspective (see e.g. Scott 1999, DCMS 2001, Florida 2002, Steenhoven, Stikker et al. 2005). Creative industries typically include advertising, architecture, art and antiques markets, crafts, design, designer fashion, film & video, interactive leisure software, music, performing arts, publishing, software & computer services, television & radio (DCMS 2001, see also Fronville 2003, Wiesand & Söndermann 2005).

Those industries have their origin in individual creativity, skill and talent and are seen to have a potential for wealth and job creation through the generation and exploitation of content (DCMS 2001, p.4).

Exploitation of content—or ‘intellectual property’ (IP)—traditionally means creating content once, cashing in on its reuse many times. ‘Creative industries are today firmly established as a vital component of our lives, substantially contributing to economic, social and cultural development. Deeply rooted in copyright protection, these industries have demonstrated growing importance worldwide.’ (WIPO 2006).
Innovation in the creative industries is—so far—largely dominated by legal protection of content through copyright, trade mark registration and similar mechanisms. Their enforcement is believed to be vital for business; ‘lack of effective enforcement of copyright threatens industries, such as the motion picture and publication industries, manufacturers of computers, computer programs and communication systems, and the broadcasting and music and recording industries’ (IPC p.64.)

The availability of digital tools for creative expression and distribution certainly helps these promises of a society turning creative come true. Yet, this might not be happening exactly in the way expected by the governments’ and industries’ policy writers. Consumers have started to become producers of content themselves as well—conveniently labelled as prosumers.

It is only logical that in prosumer communities—which often claim to be themselves the real source of creative innovation—the free sharing of otherwise copyrighted content has proliferated. Allegedly with no intention to, or more accurately without the need to generate financial revenue the (free of charge) sharing of what would conventionally be copyrighted content has proliferated.

Coincidentally, an economy has developed online where the default price is zero, as Chris Anderson notices: ‘Digital goods—from music and video to Wikipedia—can be produced and distributed at virtually no marginal cost, and so, by the laws of economics, price has gone the same way, to $0.00. For the Google Generation, the Internet is the land of the free’ (Anderson 2009).

Consequently, creating revenue from content only has become difficult—the music industry deploring shrinking CD sales being the most vocal representative of that fading business model of create once, cash in many times. Kendall Whitehouse, senior director of IT at Wharton, puts it that way: ‘What funded the traditional content model is falling apart. Ideally, I see Internet content being a blend of professional and amateur content, but how do we develop an economic model that supports both?’ (Knowledge@Wharton 2008).

The Controller of the European Patent Office, Ciaràn McGinley, publicly asked the provocative question: ‘Do we still need patents?’ speculating on a phenomenon he chooses to call ‘global patent warming’, the overzealous IP protection and its potential conflict with competition law (McGinley, 2008). Vijay Viatheeswaran and Iain Carson noted earlier that ‘patents are becoming much less important nowadays than brands and the speed at which products can go to market’ (Viatheeswaran & Carson, 2007). The Dutch think tank iip/create recognizes a trend of fading classic intellectual property rights (iip/create 2007, p. 45) or rather their importance for doing business.
A recent European Commission Staff Working Document reported some interesting discoveries: ‘Approximately twice as many industrial than service firms applied for a patent and more industrial than service firms applied for a trademark. A much lower percentage of firms in KIBS [Knowledge Intense Business Services] apply for a patent than industrial firms (12.0 % versus 20.1 %) and KIBS firms are also less likely to apply for a trademark.’ (EU 2008, p. 17). The study then comes to the conclusion ‘that service firms use more often than manufacturing firms informal methods of protection to protect their innovations’ (p. 18), such as publishing, making tacit knowledge explicit, etc. The authors hence advocate the combination of traditional and informal IP protection.

The challenge for the creative industries, so it seems, is to overcome the traditional understanding of creative services as repeatedly providing canned content (the ‘create once, cash in many times’ paradigm) and innovate in a business environment that operates beyond traditional copyright protection.

The full article was published in Supporting Service Innovation Through Knowledge Management by Patricia Wolf, Sami Kazi, Peter Troxler and Ralf Jonischkeit (eds.) Bristol: KnowledgeBoard, Zurich: Swiss Knowledge Management Forum, 2009. It is available through SSRN.