How does digital transformation impact the creative economy?

The creative economy grew from employing 2.5 million people in the UK in 2010 to over 4 million people in 2021, and it is said to be one of the fastest developing sectors.

In recent years, the widespread digitalisation across various sectors has increased the demand for creative professionals even outside of the traditional creative industries, creating frequent overlaps between technology and creativity. The creative economy has been at the forefront of digital transformation as culture is now accessed more and more through social media and dedicated digital platforms and apps.  

The Covid-19 pandemic has been the main contributing factor in technological transformation within the creative industries: from music and theatre to publishing and marketing, stakeholders and business leaders have been forced to consistently rely on tech-based services like outsourced IT support. While this has always been the case for some sectors, like video gaming, a new ecosystem of digitally transformed creative industries is now emerging to include video streaming, online and mobile games, e-books, immersive content and music, falling under the umbrella term ‘createch’.   

Artificial intelligence and virtual reality 

The Covid-19 pandemic encouraged the use and exploration of artificial intelligence (AI), virtual reality (VR) and augmented reality (AR) to interact with and reach wider audiences in times of social distancing. This sudden IT transformation generated knowledge and industry spill-overs whereby services such as outsourced IT support and technology consultancy - which are not traditionally considered creative - are now playing a pivotal role in the growth of the creative economy.  

For example, creative practitioners in the heritage sector were particularly affected by the first lockdown in March 2020 as they negotiated to interact with a now exclusively digital audience. For the first time, audiences have been able to experience cultural events and museum exhibitions from the comfort of their own homes, including 360° tours, online collections and interactive galleries. This also prompted an acceleration in the use of AI-generated art as well as virtual reality technology for immersive exhibitions.

A 2021 study published by the Creative Industries Policy and Evidence Centre, looking at the implications of the Covid-19 digital pivot in museums and galleries, found that having a pre-existing IT infrastructure and digital strategy represented an advantage for companies that were able to alleviate the sudden pressure on digital capacity.

Institutions that were less digitally mature at the start of the pandemic are now recognising the value of digital skills and investing in both upskilling and outsourcing, in a creative landscape where IT software and computer services have become the biggest participants in createch, accounting for over 62% of projects across the UK.

These new technologies have the potential to make culture more accessible to certain audiences, such as people with a wide range of disabilities who are unable to access physical creative spaces. But there are concerns about the cost of such developments: will cultural institutions still be able to cater to different audiences, including financially disadvantaged groups?

The Metaverse  

The Metaverse is predicted to bring the most disruptive change to the way we use the internet. Being able to access social media platforms through an avatar in an augmented reality environment presents new opportunities for content creators and consumers alike, but it also poses concerns regarding privacy, regulation and identity hacking.

In the early days of the metaverse, making friends, creating content, playing games and shopping have already become standard practices, but the implications for the world of creative work have received little attention. The limitations on in-person meetings and travel brought about by the pandemic are pushing enterprises to invest in interactive, remote and hybrid work experiences which are likely to expand the metaverse far beyond social media. 

Specifically, it is likely that the metaverse will reshape creativity in collaborative settings, introducing immersive forms of team collaboration, AI-enabled colleagues, enhanced virtual and gamified learning, and new practices in enterprise networking within the metaverse economy.

Simply put, these developments could allow the traditional office environment and the flexibility of remote working to coexist seamlessly in a virtual dimension. Existing research on this topic is currently speculative, but the role of technology consultants is already proving to be crucial to tackle concerns such as speed of adoption to avoid excessive competition between businesses, and potential cyber security risks

Non-fungible tokens (NFTs) 

‘NFT’ was chosen by Collins Dictionary as Word of the Year 2021, signalling a radical change in what we talk about when we talk about creativity, ownership and profit in the context of digital transformation.

Non-fungible tokens are unique and protected digital representations of goods such as works of art, pictures, videogames or even popular tweets. Each NFT is recorded on a blockchain, which is a public database used to prove ownership and protect from hacking. In other words, NFTs are financial instruments set to revolutionise the art market by limiting piracy, encouraging transparency and providing fairer royalties for artists.

However, this emerging business model raises concerns around cyber security and the need for both businesses and investors to rely on an increasingly complex IT infrastructure to protect against cybercrime. These include fake NFT sales and marketplaces, account hacking and private key theft, or just common malware.

This emerging technology is already demonstrating great potential, especially in the fields of digital art and music, but since the wider implications for copyright management are still unknown, it is important that business leaders in the creative economy work with technology consultants to make the safest and most profitable decisions.   

NFTs also have a significant environmental impact, due to the emissions generated by the cryptocurrencies used to buy and sell them. In the current climate crisis, the use of these technologies can have disastrous effects, which is why sustainable alternatives are being developed.

Event technology for virtual events and performances 

Event technology was a defining component in the first half of the pandemic and continues to be a priority for creative institutions willing to reach wider and in many cases international audiences. For example, online performances in the National Theatre at Home initiative significantly broadened cultural participation, especially among marginalised communities.

Virtual events also unlocked unprecedented possibilities for social activities and networking among creative practitioners in the UK, shifting the mindset from a London-centric scene towards a multiplicity of both hyperlocal and multicultural realities.

However, they inevitably caused a sudden growth in cyber hacking, making 2020 and 2021 the worst years to date. Hackers tend to target and steal both attendee lists (including personal and credit card details when possible) and entire virtual conference rooms. Some also attack for political reasons, exposing creative practitioners and businesses to significant risks of reputation damage. 

For these reasons, simply implementing built-in security measures on virtual events platforms might not be enough, and an increasing number of creative institutions are now relying on technology consultants to moderate their virtual events and/or set up extra security measures in advance.  

Algorithms 

Marketing, advertising and publishing are going through a complex transformation due to frequent changes in algorithms. Technology platforms such as social media now influence most of the editorial output of companies and publications, and algorithms act as gatekeepers by defining what content gets the most views and, in turn, revenue.

Recent algorithm changes in platforms such as Instagram favoured video content to keep up with new competitors like TikTok, meaning that businesses have had and will have to continue redefining their marketing strategy. This often includes relying on IT professionals to implement a more complex digital strategy as well as software to keep track of changes and analyse audiences.   

Within the creative industries and creative economy specifically, the rise of algorithm-driven content is likely to generate inequalities in the kind of content that gets attention. If algorithms are to become the only tool to determine what drives engagement, how are businesses going to ensure diversity? How can audiences have access to the full range of digital creative products available online?

Recent research by the European Parliament for the CULT Committee observed that the criteria used to recommend or select results when searching for an image, song, film or video are not transparent and are likely determined by the platform based on what is profitable. Underrepresented creatives are unlikely to be included in this system, creating bias in the creative industries. 

Conclusion: supporting digital transformation in the creative economy 

The creative economy is going through a time of unprecedented digital transformation and disruption, expedited by the Covid-19 digital pivot. A European study on technological trends in the creative industries found that the creative economy is now at the forefront of applying new technologies.

There is a high demand for professionals with technological and digital skills who are able to solve problems quickly and create innovative products. Many business leaders are choosing IT outsourcing and technology consultants to guide them through their IT transformation journey and advise them on how to avoid the pitfalls of rapid digital transformation.

However, innovation comes with a range of complexities and ethical debates. As of now, we do not know enough about the future of these technologies to be able to determine the impact they will have on creative businesses and society more broadly.

It has been predicted that AI will completely change the value chain of creative products, from production and consumption to distribution, and there are ongoing debates about the ethical implications for ownership and originality. In the case of AI-generated art, who owns the piece? Is it the creator or the engineer who trained the machine? As for AI-assisted journalism and social media content, will machines eventually replace content creators?

There is currently no definitive answer to these questions, but the advantages of a responsible use of new technologies in the creative economy are undeniable, as demonstrated by the use of VR to make cultural spaces more accessible. Only time will tell how creativity and technology can grow together: in such a fast-paced landscape it is essential that creative business leaders work with technology consultants to harness their full potential and stay on top of the latest trends.  

References
  1. Cirstea, A. and Mutebi, N. (2022) The impact of digital technology on arts and culture in the UK. UK Parliament Post 669. [Accessed: 7 June 2022] 
  2. European Commission (2021) Technological trends in the creative industries. European Commission May 2021. [Accessed: 8 June 2022] 
  3. European Parliament (2020) Research for CULT Committee: The use of artificial intelligence in the cultural and creative sectors. European Parliament May 2020 [Accessed: 13 June 2022]​​​​​​​
  4. Golino, M.A. (2021) Algorithms in social media platforms. Institute for Internet and the Just Society 24 April 2021 [Accessed: 9 June 2022]
  5. Kidd, J. et al. (2021) Pivot to digital. How museums and galleries responded to Covid-19. Creative Industries Policy & Evidence Centre 16 November 2021. [Accessed: 7 June 2022] ​​​​​​​
  6. Mateos-Garcia, J. (2021) Mapping the R&D landscape for creative technologies. Creative Industries Policy and Evidence Centre 15 June 2021 [Accessed: 10 June 2022]
  7. Metro Dynamics (2020) The impact of arts and culture on the wider creative economy. Arts Council June 2020.  [Accessed 7 June 2022]  
  8. Nesta (2013) A Manifesto for the creative economy [Accessed: 8 June 2022]
  9. O’Brien, C. (2022) How do social media algorithms work? Digital Marketing Institute 19 January 2022 [Accessed: 7 June 2022]
  10. Purdy, M. (2022) How the metaverse could change work. Harvard Business Review 5 April 2022 [Accessed: 9 June 2022]
  11. Smee, S. (2021) Will NFTs transform the art world? Are they even art? The Washington Post 18 December 2021.  [Accessed: 10 June 2022]

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