Edited by Matt Baker and Richard Phillips

Manufacturing ConfidenceIn MediaCity

Manchester Business SchoolThe Impact of MediaCity UK

Original Thinking Applied

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Contents

Foreword Peter Kawalek

Manufacturing confidence Felicity Goodey

Creating space, creative space Kalam Ali

Realising convergence: Lessons from the Canadian experience Peter Lyman, Kristian Roberts and Stephen Hignell

MediaCity: A new entrepreneurial era Fred Hasson

Changing the game Damian Hodgson

Funding the barbarians at the gate Kalam Ali

Manufacturing confidence revisited Richard Phillips

Contributors

Kalam Ali is an experienced investment banker and corporate financier with a background in technology investment banking and corporate finance.

Felicity Goodey is a former BBC journalist and chair of the Central Salford Urban Regeneration Company. She led the team which created The Lowry, Britain’s national millennium project for the arts, an international theatre and gallery complex, which attracted to the area more than £450 million of private sector investment and helped create 5,700 new jobs.

Fred Hasson is the founder of Tiga (Independent Developers Trade association) for whom he was CEO for seven years and of the European Games Developers Federation where he was Chairman for five years.

Stephen Hignell is a consultant in Nordicity’s London office and a seasoned project and business development manager with significant experience in both public and private sector projects.

Dr Damian Hodgson is a senior lecturer in Organisational Analysis at Manchester Business School and convenor of the MP3

(Managing Projects, Programmes and Portfolios) network at MBS.

Professor Peter Kawalek (Manchester Business School) works with students on topics related to new media and information systems. He has worked at various levels. He has experience to board level in media industries, and works extensively with government, including Department of the Taoiseach, Department of Communities and Local Government and the NHS.

Peter Lyman is senior partner with Nordicity, and one of its founding principals.

Dr Richard Phillips is lecturer in Comparative Organisational Analysis at Manchester Business School, where he teaches on the Full- time MBA as well as doctoral research programme.

Kristian Roberts is a manager at Nordicity and a recognised expert in digital content industries in Canada and internationally.

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Forewordby Peter Kawalek

Media is at the heart of MediaCity. But what is it and why build a whole city around it? If one thinks about media in a conventional way, media simply means any number of things we experience through a ‘screen’- be it a computer, mobile/smart phone, radio, television set or even the printed page. Even in the age of the internet where the computer and mobile phone are becoming the screens of choice, particularly for the younger generation, our love affair with media is still firmly rooted in the telly. If deprived of it, watching TV tends to be the ‘media’ we would most miss.

It is our love of television and all that it entails that so much informs our literacy and association with media. Yet if you think about media in this way, you inherit all the baggage that this entails media is about someone making programmes, someone broadcasting programmes, someone paying for programmes, someone cozying up on the sofa after work to watch programmes, etc. For most people media is a particular institution they participate in in some way, shape or form. Were we to think of a name that captured our experiences with that institution, the BBC may well be it. And if we continue to think of media in this way, we miss the bigger picture of what media is about. Continue in this vein, and the vision of MediaCity will struggle to project itself as anything other than what others might think of as simply BBC-City.

Yet this is not the only way to think about media. Media might also be thought of as the art and science of knowledge around which different institutions form to shape how ideas are captured and disseminated. On this reading, media is far more than television and the BBC. It is a vast multiplicity of institutions all competing for our attention and seeking to shape what we come to pay attention to in our world, how we experience it, what we come to understand about it, and ultimately, how we act upon it.

Just think about it. The printed word gave us the ‘right’ word. There were official versions of things. Books told

us what was true and what was not true. Just having written one conferred expertise and status. Just having read one could make you a lecturer. Students could not afford books, both in terms of the purchase price and the effort to read. The lecturer could. So, hey presto, he had a job for life. The lifetime of the book, that is.

Great institutions could be formed around books; parliaments, universities and churches. The first two of these sought to manufacture knowledge. The third admitted only to being its guardian. A major function of churches became, if you think about it, version control. Which is the right version? What do we send to the printer? What do we keep for the committee? Because of books, religion became an act of faith rather than an exploration of horizons. People could say to you, if you don’t believe verse x and chapter y, then you are not true. After all, it is written down.

With the electronic age came new institutions. The BBC, 20th Century Fox, Disney and EMI. These institutions created new kinds of contest in society over what we know and experience about our world. Rather than replace earlier institutions, these new media institutions often build themselves upon those of the old and reproduced its patterns. The BBC uses scriptwriters to produce scripts around which a whole institution of actors and production teams mobilise to amplify its content to a mass audience. This is not fundamentally different from the choreography with which the church used scribes to produce the scriptures, and then built institutions around the good book with priests and a whole range of other actors engaged in forms of ritual performances that equally served to amplify the dissemination and consumption of their knowledge.

Yet with the rise of any new institution, the old institutions usually feel their position shifting and their confidence undermined. And right when we grew comfortable with a particular form of what media looks and feels like, along came the internet and a new swathe of digital institutions were born. Sure,

new institutions have shaken the confidence of established institutions, particularly the way in which older institutions charge the masses for their ability to participate in it. Yet rather than replace the fundamental technology and institution of the book, these new institutions tend to repackage it, finding new ways to embody that knowledge and experience as well as new institutions around which to disseminate and consume it. What is Amazon’s Kindle if not this?

And this is media today. It is a great co-existence and fighting for position of different forms of knowledge, experience and ways of participating in it. Media today is about an age of remarkable contest and conflict. In 1962, Marshall McLuhan predicted the move towards a global village marked by constant conflict over ideas. We need only reflect upon the events of today to appreciate the aptness of his observations about the trajectory of media. Has Wikileaks not challenged the values and legitimacy with which governments and organisations define the right to access what should be known and not known about the world? Have social networks like Facebook and Twitter not helped to fuel the revolutionaries on the streets of Egypt and inspired similar uprising across the Middle East?

These are powerful reminders of the impact that comes when you allow simple change in who writes the text, who paints the image, who captures the idea, and then open up access to, and participation in, the dance that surrounds its production and circulation. These are powerful reminders of what media ultimately is about. And as MediaCity looks to define itself through its vision of what it believes media is about, it is a reminder to think more carefully about what it is, and about who is to be involved in that choreography.

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Manufacturing confidenceby Felicity Goodey

Felicity Goodey charts the history of an inspiring transformational journey that still has a long way to go.

One of the great attributes of the North West, and particularly the Greater Manchester area, is its ingenuity and confidence. The history of MediaCity is really the history of efforts to find that confidence, the people to lead a vision for change, and sustain its momentum over time.

The region used to be at the centre of Britain’s economic might with all the innovation in manufacturing and productivity that came with the first industrial revolution. These were the days that made Liverpool one of Britain’s busiest ports, importing all the raw materials that fuelled the insatiable demand from manufacturers in Manchester. These were the days that turned Trafford Park into the largest industrial estate in Europe on the back of a monumental effort to build a canal system that brought access to the sea 36 miles closer to Manchester. These were the days when Salford was the Port of Manchester, reflecting the fact that the Manchester Ship Canal didn’t quite make it all the way to Manchester. But that was then.

Eventually, industrial output would require bigger container vessels that could not get up the canal system. Eventually the pattern of world trade would change and shift the powers of industrial might not only away from the region, but away from the country as a whole. And eventually, the Port of Manchester would die. Yet unlike the Liverpool port which boasts more Grade I Listed Buildings than any other place in the country outside of London, the Port of Manchester left Salford with no redeeming features, no marvellous buildings, virtually nothing that could be reclaimed at a later date and easily built upon. Eventually there was nothing left of the Port of Manchester but widespread contamination and dereliction right in the middle of an already impoverished city. Adding insult to injury, what was once the Port of Manchester was renamed the Port of Salford! For a city that is actually older

than the adjoining city of Manchester and had long provided much of the actual labour for all of its neighbour’s once great industries, Salford really did get the rotten end of the deal.

So here was Salford, an impoverished local authority with this enormous and derelict port and a horrible, highly contaminated canal, reputedly the most contaminated waterway in Europe, wondering what to do about it. The waterways were in such a poor state that you couldn’t sell it to anyone, you could only give it away for free. Even then, no one was interested. Rather, one enterprising developer actually asked Salford to pay them £500,000 for the privilege of taking it off their hands so he could fill the waterways and turn the docks into, what else, a car park. But even this was impossible, as an Act of Parliament has mandated the waterway remains since it now forms Cheshire’s main drain. And draining it was. Thankfully, there were people, like Salford’s council leader of the ‘70’s Les Hough and his Chief Executive Roger Rees, with the will to search for a better situation and the confidence to do something themselves rather than wait for someone else to solve their problems. Were it not for these people who had the confidence to reinvent a place no one wanted to associate with, the MediaCity site of today would never have happened. Herein lies a lesson. To achieve transformation, you need leadership and you need courageous people. While it may be hard to find, often in people from the most unexpected places, finding it is nonetheless an absolute prerequisite to successful regeneration.

When you find it, you also need to support that leadership and confidence. In the case of the Port of Salford in the 1970s, turning it into the Salford Quays of today would take a huge amount of bravery to find the money to back it. The Council stuck its collective neck out and was absolutely correct. The rest of the world, struggling with recession, thought they were completely barmy. An initial investment of £45 million of public money brought in £450 million of investment over the next ten years. The

two anchor investments that got the first phase away were the first multi-screen cinema in the North of England, and only the second in the country, and a hotel called the Copthorne Hotel. It was revolutionary. Nobody had done it before and meanwhile on their doorstep Manchester was still languishing and Liverpool was in a right old mess. Salford ploughed its own furrow and rapidly, but in isolation, created Salford Quays, a destination where people lived and where people worked. Modern offices and service industries moved in, as we moved away from manufacturing into the service sector. But the problem was that this early investment made little difference to the local population. Most of the jobs were going, not to Salford people, but to commuters from Cheshire, Derbyshire, and elsewhere. Local people, trained for a world of manufacturing, had neither the skills nor, in many cases, the aspiration to acquire new skills to take advantage of the service sector jobs that were being developed here. After years of unemployment, lack of aspiration, as much as lack of skills, was a major barrier to regeneration not only in Salford but in many other parts of the North.

Once more Salford City Council, by now with a new Leader, Bill Hinds and Chief Executive John Willis, took a huge leap of faith. They decided they needed something that would be a catalyst for transformational change. But the Council recognised local authority mistakes of the past. In the 1960s terraced houses had been pulled down and replaced with tower blocks. Communities were destroyed and the result was a social disaster. The same thing happened all over the country. New housing replaced the tower blocks but still there was no change in the social wellbeing of the area. As the Leader, Bill Hinds, said, “We need a catalyst, we need something which will transform aspiration and attitude, not just the attitude of people on the outside looking in, but more importantly, we need to transform the attitude and the aspirations of the people themselves; the local residents of Salford”. Without aspiration it is almost impossible to get

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people to change tack. You can put all the skills training in the world together, but if people do not believe it will make any difference to them, why should they be bothered to take advantage of it. Salford recognised that to change aspirations, it was no good building something ordinary. Only something of international quality and distinction would send the message to everyone that Salford people can also have the very best.

Salford officers looked around the world for inspiration. They saw the power of arts-based projects in Baltimore and the powerful effect this had on regeneration. Guided once again by the architect who had created the vision for Salford Quays, Peter Hunter, they decided to create an international arts and entertainment complex in the middle of one of the most deprived communities in this country. In 1989 Peter Hunter and Peter Henry, the erstwhile Industrial Development Officer for Salford came to me and said, “We’ve got an idea.” They showed me an artist’s impression, based on the regenerated Quays as far as it had gone. Only about half the docks had been developed. Several complete piers were still empty. On the end of one of them, pier 8, Peter Hunter had super-imposed an image of the Royal Albert Hall. My reaction was “You have got to be joking. An Opera House on the Quays?.” They said, “And why not?”

To keep such vision going would require seriously hard work. For many, the immediate reaction to an international arts and entertainment complex for Salford was that we had all collectively taken leave of our senses. Why not build a little local theatre? That would be nice. Or a community arts centre? That would be good and much less expensive. But Salford’s response was would either make any difference? It would be just the same as putting in another road, or another row of houses, or another estate; would that make any difference, would that transform anything? The real crux of the matter lay in finding a way to embed the project within a community. This was the lesson that Salford’s then deputy chief executive, Tony Struthers, a town planner by profession and a man who later became President of the RTPI, would take from the Baltimore experience. Anything less than something ambitious, an international arts and entertainment centre of excellence, would not have a chance of inspiring the residents of Salford to

participate in the success of the Lowry. And without them, the relatively modest subsidy of £1 million pounds a year from Salford to get the project off its feet would not be enough to keep the vision alive.

Today, the Lowry hosts everything from the world’s most famous ballet companies, drama companies and opera companies right the way through to Peter Kay and sing the Sound of Music. Now in its 11th year, the centre is totally financially stable and makes 95% of its own income. The Lowry alone has, on an investment of £127 million, brought in to date, directly and indirectly, £1 billion pounds of private sector investment; not a bad return. Yet behind those figures is a very simple secret, a vision to build something that is able to root itself in and transform the ambitions and confidence of the community that participates in that project. This is the success of the Lowry. And one of the greatest experiences of my life was in the bar one evening listening to three local ladies solemnly comparing the relative merits of the three greatest ballet companies in the world. In 1989 had you asked those ladies had they ever been to the ballet, they would have laughed at you and said why would we want to go to a ballet and there aren’t any here anyway. What a long way Salford has come.

The Lowry was a turning point for Salford. It started to engender confidence in a place that has long had very little going for it. And the power of confidence is its infectiousness. One of the best headlines we ever got through Lowry was in the Financial Times, of all places, under the headline “New York, Paris, Madrid, Salford.” That is just the kind of headline you want when you are trying to transform a place. It concerned the visit of the Paris opera/ballet company to Salford, the first time in 40 years that this company had ever performed outside a national capital; and they came to us. Manufacturing confidence is what all great projects must be about. That is what the community wants. Salford people are proud of where they come from, proud of the fact that they have battled through huge adversities, but we want transformation for the future. MediaCity is simply a continuation in that effort.

Yet MediaCity has its own challenges to get over. The idea itself has a particular

history to it. Just across the border, in the City of Manchester, the BBC had for some time been talking about decentralisation. The pressure on the BBC came from back bench MPs who were getting sick and tired of the fact that although the licence fee is in effect a National Tax they perceived the BBC to be entirely London and South East centred; why should the North pay the licence fee anymore? As the time for licence fee renegotiations was fast approaching the BBC decided it needed to look at decentralisation seriously. Its first option was to consider the redevelopment of existing premises in Manchester, the Network Production Centre, my old home, a horrible building in need of redevelopment! Manchester thought this was a done-deal so when I began to take interest in the BBC opportunity I got my knuckles wrapped and was told to go away. Then the BBC moved the goalposts.

The new BBC Director General, Mark Thompson, saw something else happening in the world. He saw that digital technology would not only change the way we broadcast but change everything we do, communications, leisure, entertainment, education, healthcare, government etc. He realised that unless the BBC changed it would be in serious trouble, and as a former broadcaster, who also had a stake in a commercial broadcast production company, I recognised that too. By this time the BBC had five potential sites in mind, two of which were in Central Salford, and when the BBC came to us to discuss them the gloves were off and we were plunged into a real competition.

If you are in a battle and want to win you need to know what the client wants. Fortunately the BBC introduced me to Professor Mike Joroff who is a work place planner, but ‘work place’ not in terms of offices but in terms of cities. He is from MIT, Massachusetts and he invited me to join forces with the Cambridge/MIT Group who were looking round the world at examples of where the next big drivers for western economies were going to come from. 21st century cities such as Arabianranta Helsinki, Crossroads Copenhagen, Digital Mile Zaragoza, Internet City Dubai, DMC Seoul, one north Singapore, and of course MIT itself represented beacons of where the future was heading. These were not business parks, not science parks but urban landscapes, 24-hour cities being developed on the outskirts of

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already well-established cities, designed as places that attract and retain creative people. They are specially designed places where people live, play, work, learn, and research; they are destinations in themselves. Some are driven by big media; some by design, some by big science. In conversation with Mike Joroff one evening about these world-class developments, typically 150 to 250 plus acres, I said, “Do you think we could be world class?” He looked down his nose at me and replied, “Well I don’t know about that, but I think you could be globally significant”. And that will do us, we will be globally significant!

And this is what we were proposing with MediaCity. Digital new technologies will revolutionise everything we do and that means we have to put in the right infrastructure and create attractive places. If you want to transform your economy, you have to attract and retain creative people. That means creating

attractive destinations, places which enjoy rich culture, attractive landscapes, and beautiful public spaces. Salford is no longer competing with Hull or Leeds or Birmingham or London; we are competing with Amsterdam, Paris, Seoul, and Singapore for the kind of talent that you need to drive these industries. And why should they come to us? We have got to offer great housing, great education, great places to live, distinctive places with character. ‘More Salford, less anywhere’, a place in which local people are ready to welcome newcomers like the BBC because they are comfortable that this new investment will also benefit them and their families. Achieving this distinctiveness is much of what has driven MediaCity to date. There is everything here in phase 1 that you would find in a city offices, houses and apartments, hotels, crèches, shops and supermarkets, and a tram right to the doorstep of the BBC. And we are only the first 37 acres of a 200-acre site.

We should not forget this point. Ultimately, instead of just building a new home for the BBC, as our rivals were proposing, we are taking the BBC as an opportunity and trying to use that as a catalyst to unlock a globally significant MediaCity. There is still a lot to do but with a developer like Peel Holding’s boss John Whittacker Mediacity has found once again a man of courage and vision to drive it forward.

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Creating space, creative spaceby Kalam Ali

It will take more than simply building office space for entrepreneurs to make MediaCity a success, argues Kalam Ali.

Much has been discussed about ecosytems that support innovative product development and the success of technology clusters such as Silicon Valley in the US. Everyone wants to know how to create these ecosystems and most of the time, people conclude that the secrets are so complex that it’s impossible to re-create the magic formulas behind past successes. Yet if you looked more closely at the situation right now in London where I live, you cannot but notice something interesting is happening to the entrepreneurial ecosystem. This makes me think it might be better to simply pay more attention to what is already beginning to happen locally, rather than fixate on where we think the grass is greener.

In the digital space in London there has been a noticeable upsurge in visibility around entrepreneurial activities in the last couple of years. Despite the financial crisis, numerous groups of budding entrepreneurs have begun to emerge. For instance, East London has increasingly become the place to be if you’re a budding web, tech and media company. The emergence of co-working ‘hubs’ offering flexible and affordable work space with hi speed internet set against a backdrop of numerous digital creative agencies, tech startups, record labels, film companies, entertainment

venues, art galleries, coffee shops touting free wifi, numerous developer meetups - many of which are sponsored (free beer and pizza) - and venture capital funds setting up offices locally has earned it the nickname ‘silicon roundabout’. In recognition of the vibrant networking, clustering and knowledge sharing taking place in this area the Technology Strategy Board recently announced a £1m funding competition for local companies touting this area as the ‘Tech City’.

While much of these developments look simply like the evolution of a variety of formal and informal networking events in a cheaper side of the city there seems to be something driving the appetite for these events. They are not developments driven by some central plan, but a process of spontaneous and continuous self-organisation. The web is playing a central role in these developments. Online communities are no longer a replacement for meeting up in real life, but are becoming the tools for finding, organising and connecting to other people with interesting ideas, in real life.

The web has been offering entrepreneurs new opportunities to build businesses with the emergence of free web services that increase efficiency and cut costs, as well as routes to market previously controlled by larger gatekeepers. Social networks such as Facebook and Twitter have also begun to give individuals a relatively free channel

for marketing and promoting new ideas to a larger community of ‘followers’. In short, the development of the web has given to entrepreneurship the possibility of building innovative digital media products more cheaply, the possibility of finding other like-minded people to work with (via wikis, blogs, news articles, podcasts, as well as tools for organising events), and a possibility of finding an initial market to prove their concepts.

That said, another factor also playing a key role in driving this growth in entrepreneurship is access to physical space. Yet the physical spaces that appear to support this growth in entrepreneurship are not simply about providing traditional ‘office space’. Rather, on any given day in London, what one can observe is people using public spaces, such as wi-fi enabled cafes, and transforming them into spontaneous ‘co-working hubs’ - as places to work in and as well as informal (and formal) meeting spaces for a variety of business and social purposes. In short, what we are witnessing is a process where a combination of virtual tools and open physical spaces are increasingly becoming the modern office space of the digital entrepreneur.

While it might not be possible to copy the ecosystem surrounding Silicon Valley that does not mean you cannot create an ecosystem that works here.

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In Britain, part of the challenge of creating an environment for entrepreneurship to flourish seems to boil down to the fact that when we build places for enterprise to happen, the remit of most infrastructure development organisations and their funders is too narrowly conceived. The game is more about building spaces that can be rented to particular groups who get to use it as their own private spaces. This is simply not conducive to creating an ecosystem for entrepreneurs and a culture of enterprise. While places like MediaCity clearly wish to sell offices to groups who want their own space, it seems like its success also depends upon fostering an environment in which entrepreneurship flourishes to supply larger organisations, in the fast growing sectors it is targeting, with the innovation and talent that supports their ambitions. Consequently, large ecosystem projects like MediaCity may find inspiration in what is happening at the other end of the spectrum where ideas and smart people come together creating the next wave of success stories.

Much of the demand for new types of spaces to support creative entrepreneurs is increasingly being supplied by members of the same community. For instance, intermediary organisations such as ‘Spacemakers.org.uk’ havebegun tackling these issues through development projects in areas where empty spaces are underutilised despite the value they afford local communities. Like larger public infrastructure projects, the effort begins with repurposing unused or diminishing spaces. However, these projects are not about building to an economic plan and then looking to find people for which that plan fits. Rather, the game is about actively looking for ways to harness the strength and motivation that already exists within the local community by finding new ways to enhance network connections between newcomers and residents. As with the wi-fi enabled cafe that spontaneously becomes the co-working hub for many creative entrepreneurs, a central aim of the development project is to find ways of incorporating both online and offline tools for channeling a constant flow of relationships into that space. Consider the case of the Brixton Village Project, an indoor market which was close to empty and is now a hub of cultural, entrepreneurial activities and social exchanges in South London. The NY Times recently ran a story on it describing how a mostly empty market

was revitalised in six months becoming ‘a mixture of playful pop-up shops and independent businesses with more long-term ambitions’ 1.

Spacemakers recently listed some noteworthy features of their strategy:

• build trust through personal outreach and engagements mediated through open online networks as well as regular open meetings and collaborative events;

• re-use existing assets, recognise potential of the space and involve local communities;

• engage in co-production and not just top-down consultation.

This resulted in a successful campaign that transformed the market, bringing it to life and adding much needed value to local communities whilst also demonstrating to its property developers better ways of encouraging local commerce. This included weekly themed events co-organised with the various arts collectives, pop up shops and the current residents which created the ‘glue’ that brought together new tenants with old, both benefitting from the increased footfall drawn to this hub of activity.

Themed hackdays, a popular activity in digital industries, achieves something similar where entrepreneurs, tech startups and freelancers come together in an experimental event hosted by a business where the expertise of the innovators is drawn upon to find creative solutions to a business problem in an informal, relaxed atmosphere.

For larger ventures like MediaCity, some of these lessons may offer useful ways of expanding the digital media and tech cluster in Salford. In particular, activities that encourage collaboration between entrepreneurs and industry, such as ‘hackdays’, mentoring and project finance, for example, would help create feedback loops and networks which reward effective information exchange and networking, which in turn stimulate greater entrepreneurial activity. The backdrop to this would also require an exercise in branding or instilling a sense of belief and urgency that Mediacity (or any other similar infrastructure project) is not only useful office space but also a defining moment for digital industries in this region.

We are in a period of widespread experimentation and innovation in digital platforms. As this continues to expand it becomes increasingly important to understand emerging business models, disruptive innovation, the new mechanics for media distribution and provide relevant and timely support to those companies and individuals innovating in these areas. Some companies will fail, that’s normal in any ecosystem, but we want to see lessons learnt applied quickly and best practice adopted across an industry. This tends to spread better in robust and well connected ecosystems - where the process of learning, adapting, innovating and growing are all embodied into the local culture and day to day activities.

Proximity to and access to established players and large companies also plays a key part in this process as seasoned industry executives guide, mentor and connect earlier stage initiatives to their larger counterparts seeking to harness these innovations.

From a corporate finance perspective a successful self organising ecosystem as described here creates growth opportunities which scale well and inspire more successes. This will attract talent, investment, expansion capital and create strong conditions for M&A activity, which in turn creates even more sustainable feedback loops - such as the next generation of leaders who contribute further to its success.

1 http://travel.nytimes.com/2010/08/08/travel/08headsup.html

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Realising convergence: Lessons from the Canadian experience by Peter Lyman, Kristian Roberts and Stephen Hignell

Peter Lyman, Kristian Roberts and Stephen Hignell from Nordicity, one of Canada’s leading strategy consulting firms for the creative industries, explain why policy steps to stimulate convergent activity need to be handled carefully.

Among the wash of jargon that seems to pop up faster in the digital age than weeds growing in an un-kept garden, one of the most resilient terms to arise in the creative industries has been ‘convergence.’ Indeed, this loose concept that ‘things are coming together’ has appeared to underwrite policy and funding decisions around the world. Like most jargon (eg globalisation), convergence lacks precise definition, but has real – if nebulous – effects on the field of endeavours to which it is applied. This short essay will provide a working definition of ‘convergence’ and examine efforts to realise tangible benefits from convergent activity in the creative industries. In so doing, it will draw upon the Canadian experience with convergence to highlight lessons for consideration by MediaCityUK.

One can define convergence (insofar as it relates to the creative industries) as the ‘conjoining of previously distinct media in the financing, development, production and distribution of creative content.’ Notably, this definition extends well beyond the notion of convergence being primarily a distribution issue. Indeed, for reasons that will be elaborated upon below, practical convergence must touch all stages of content creation. Let us draw two hypothetical examples to make this distinction clear

1. A producer of a television programme contracts an interactive media producer to develop an accompanying product in this example, the interactive producer is brought in at the end of the production cycle, has limited access to talent, and is generally considered to be a means of marketing the TV property that is peripheral to the core creative experience.

2. A single production company (or two companies working within a co-production agreement) in this example, the two companies work together from the initial stages of development through the distribution of the final product, both have equitable access to talent and both products are considered to be part of an overall experience. As the above examples show, ‘convergence’ can occur at a variety of levels. So why does a convergent creative product stand a better chance of success in this environment? The assumption is that extending the users’ experience over multiple platforms with a variety of ways to interact with the material (e.g. linear audiovisual content and interactive game content) will have a number of desirable effects. These benefits include (but are not limited to) a deeper relationship with the user/view, more aggregated television viewers (and thus more advertising revenue), and increased direct unit sales (eg of DVDs or of other merchandise).

From our perspective, the push towards convergence seems to be driven (at least in part) by the on-going digitalisation of all forms of media for consumption on a screen – in other words, by a shift in the devices that consumers use to access content. From the growth of ebooks, (projected to grow at a compound annual rate of 23.3% through 2014) 2 to the increasing web and app-based presence of magazines, all media are converging towards a common digital setting. Indeed, PricewaterhouseCoopers estimates that by 2014 one third of all global entertainment and media spending will be on digital products 3. Among more industrialised jurisdictions, that ratio is expected to be even higher.

Related to this digital revolution is the increasingly global nature of media distribution. With services like iTunes and other digital download services, it has become much easier to sell one’s creative product in distant lands. This lower barrier to market entry has resulted in an increased level of competition within traditional media (eg television, sound recording, etc). When combined with increased competition between media (eg both the Economist and

BBC competing online for news-bound eyeballs), the globalisation of media further heightens competition. With the heightened level of competition creating a deep level of engagement with users/viewers that can move between platforms, this can be the key to gaining (or maintaining) market share.

2 PricewaterhouseCoopers, Global Entertainment and Media Outlook, 2010-2014. 3 Ibid.

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International policy examples

This convergence of media has created an impetus for governments around the world to develop initiatives to help their creative industries cope with the highly disruptive effects of the digitising media. While there are numerous differences

between their approaches (as described in the table below), all initiatives are aimed at stimulating co-located creative industries to productively build off one another.

While the promise of convergence is indeed real, so too are the challenges that accompany it. As alluded to above, most of the talk of convergence (understandably) is focussed on the distribution and consumption of media

- which is, after all, where convergence is most obviously observed. However, for a convergent product to realise its promise, one must also address the financing, development and production of media such that all parties have access to the

right resources at the right time. In short, enabling convergence requires a flexible policy approach.

Jurisdiction Development

Seoul, South Korea Digital MediaCity

Dubai, UAE Dubai MediaCity

Singapore Mediapolis

Zaragoza, Spain Digital Mile

Approach

A state-of-the-art digital media entertainment (M&E) cluster, located in Sangam-dong over 569,925m2 at the centre of metropolitan Seoul.A live/work/study/play space including ‘green parks, music cafes, vitalised streets and comfortable housing facilities’ Focussed on ‘the new development and improvement of businesses that enhances the capabilities of the existing large cities . . . not about painting on a clean slate but remodelling Seoul.’Planned completion in 2015.

A tax-free media zone located in Dubai.Purports an ‘open and flexible environment’ including an ‘international media production zone’ aimed at creating a cluster environment for media production companies from across the industry value chain, and from across the world, to interact and collaborate effectively.

Singapore’s first digital media hub where creative talents live, work and play in a synergistic environment.19 hectares of innovation and R&D facilities including green screen capabilities, digital production and broadcast studios.It will also offer broadband connectivity to enable efficient processing, management and distribution of digital media content and services.Slated to be fully completed by 2020.

Occupies the space between an old train station and a new one.Co-location of housing, business, art and education with access to advanced telecommunication infrastructure.Contains several ‘digital public spaces’.

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Lessons from the Canadian experience

The recent launch of the Canada Media Fund (CMF) exemplifies the difficulty of a heavy-handed approach to convergence. In 2008, the Government of Canada expressed its desire to stimulate innovation in the ‘screen-based industries’ by combining existing funding programmes into a converged funding programme. The resulting CMF has two major streams an aptly-named ‘convergent stream’, and an ‘experimental stream.’ For this paper, we will focus on the convergent stream’ which ‘supports multi-platform Canadian projects they provide content on at least two distribution platforms, one of which is television.’ 4

The critical (and flawed) assumption made by policy makers is that, by supporting the financing of convergent

products and by mandating a multiplatform distribution model, Canadian television and interactive producers would immediately be stimulated to converge their activities. However, it is here that policy makers have missed the middle of the production chain (ie development and production).

For example, whereas television producers tend to require access to talent (ie actors, director, etc.) for a short duration towards the end of a production cycle (i.e. during principal photography), interactive producers tend to require access to that talent once the majority of the project has been completed. Indeed, most interactive products lack the defined three-stage development cycle of a television production (ie pre-production,

production, post-production) and can even extend the production cycle beyond the final distribution of the product (eg with patches, new levels, new characters, etc). Furthermore, soon after the CMF’s inception, producers pointed out that not all television programs actually benefit from a convergent digital property.

As a result of these difficulties (including some producers avoiding the programme entirely), the first two years of the CMF have been tumultuous and the desired outcomes have yet to be realised. Indeed, only 2% of all funding that was delivered through the CMF’s convergent stream in its first year was spent on original digital media products and only 37% of projects funded have any convergent products at all (excluding websites and streaming content). So, the

4 It should be noted that a website or similar ‘brochureware’ is not deemed to be distribution on a non-television platform.

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key lesson to be drawn from the CMF is that one cannot mandate convergence, and that combining funding mechanisms is not sufficient impetus to change the underlying production incongruities of the television and interactive communities in Canada.

Like the CMF, the Province of Ontario (regional government) has taken policy steps to stimulate convergent activity through an innovative funding mechanism. To that end, in 2009-10 the Province launched a pilot fund called the Intellectual Property Development Fund (IP Fund), aimed at supporting ‘eligible early stage development activities to bring screen-based content properties closer to production or market ready stage.’ Rather than targeting the distribution of content ‘on more than one platform,’ the IP fund targeted a particular type of activity research and development.

By rebating a portion of the early stage development costs of a ‘screen-based product’ the IP fund does not directly stimulate convergence per se, but rather enables the types of activities (e.g. new prototypes, new business and marketing plans, market research) necessary to reap a financial reward from convergent media properties (which remains a somewhat elusive goal). If convergence is a natural consequence of changing consumer habits and heightening global competition, this focus on the ‘fuzzy front end’ of screen-based media seems quite appropriate. With this approach, the IP Fund was widely lauded by Ontario’s creative industries. The IP Fund thereby shows the importance of targeting core innovation activities -rather than trying to predict a desirable outcome of that innovation.

Given that MediaCityUK is looking to effect some change by co-locating firms, it may be helpful to draw on the experience of a Canadian co-location facility. To that end, Toronto’s MaRS Discovery District (MaRS) offers some key lessons in the stimulation of convergence of previously distinct industries. While MaRS is not dedicated solely to the creative industries it does maintain a strong presence in ‘digital media.’ MaRS offers low(er) cost facility space to small entrepreneurs and supports these tenants with a range of services including speakers series’, facilitated access to key market data and mentoring (among others). Given its broad scope, one might reasonably ask

what relevance does MaRS have for film/TV convergence with interactive media. To answer that, we must first point out that MaRS was intended to primarily house life sciences and biotechnology firms with a nod to digital media – but now digital media firms make up over 80% of the resident companies. The key lesson here is not to try to predict how your support mechanisms and services will be used. Rather, as with the IP Fund, the lesson is to identify a key activity and stimulate that activity (without a view to the end product). This wide-angle lens approach may be appropriate for MediaCityUK.

If one accepts the premise that convergence is occurring and that it is desirable, policymakers should be considering means to stimulate activity that will allow local firms to exist at the forefront of this type of content development. From the above examples, one can conclude that if MediaCityUK is to effect an increased level of convergent creative product, it should consider the following lessons from the Canadian experience

• It is difficult - and even perhaps counter-productive - to mandate convergent activity;

• Flexible programs with broad definitions of eligible content (e.g. ‘screen-based content’) have met with greater success;

• It is important to target a particular type (or types) of activity to promote, such as front-end research and development;

• Do not try to predict how your programs/facilities will be used - remain flexible and keep goals (creative) industry agnostic.

A summary of lessons learnt

POLICYMAKERSSHOULD BE CONSIDERINGMEANS TO STIMULATEACTIVITY THAT WILL ALLOW LOCAL FIRMS TO EXISTAT THE FOREFRONT OF THISKIND OF CONTENTDEVELOPMENT

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MediaCity: a new entrepreneurial era?by Fred Hasson

It is the pirouetting kite surfer, not the mega tanker, that enterprise policy makers and implementers need to be focussed on, argues Fred Hasson.

The concept of MediaCity UK was construed at a time when all things looked bright. The dot com bubble didn’t stop the wheels of economic growth from turning. The importance of the creative industries was, like property prices, only going in one direction up. And pushing the BBC out of expensive London premises looked like a good way to get more value for money out of our principle public service broadcaster (PSB). The idea of turning the Beeb into an ‘anchor’ tenant at a place designed to be the home of Europe’s largest media enterprise zone should be recognised for what it is - a continuation of some well-trodden aspects of government thinking on how to spur the growth of new enterprise. Indeed, at a British Screen Advisory Council (BSAC) conference in February 2011, Ed Vaisey, the current DCMS Minister, placed great emphasis on the government’s interest to build upon the successful model used in the past to create the independent TV sector. In other words, as we seek to understand what the government has in store for its plans for ensuring a sustainable future for the film and creative industries, all the signs are that we should expect more of the same. Accordingly, it helps to begin this discussion with a little background into what that thinking is all about.

Part of the government’s thinking behind MediaCity is broadcasting specific in nature. Using the BBC as a tool to spur the growth of (independent) ‘enterprise’ has long been one of Britain’s successes in finding a form of industrial policy that is not about the state ‘picking winners’. Initially this was achieved through imposing a 25% quota on the public service broadcasters, the 1990 Broadcasting Act mandating a level of acquisition of content from independent TV producers. A space for new enterprise was born, at least in a principle. Unfortunately, given that new enterprise does not simply emerge from nowhere, much of this ecology was initially filled by people who were once inside the

PSBs. Rather then the growth of new enterprise, much of the Act simply led to the growth of new employment contracts. It should not be forgotten that much of the thinking behind MediaCity emerged out of this period, a variation on the theme of well-established government interests to grow enterprise while also getting value for money.

The MediaCity initiative also fits squarely with another key pragmatic feature of current thinking on enterprise. For the government, much of its efforts to support new enterprise have tended to fit a mould where public monies are utilised in capital investment projects. In one form or another, these projects are supposed to provide a physical home for new economic activities and associated supports. For instance, the growth of new business ‘incubators’ in Britain in recent years has tended to have a strong bias towards providing a physical space for new enterprise to flourish.

This aspect of the government’s thinking is understandable, particularly given what had been happening in the UK property markets for the last two decades. Essentially, by using public monies to redevelop derelict land and filling it with new shiny premises where you could be relatively sure of occupancy rates, you not only help to gentrify those previously deprived places, but you provide the government with one assurance that the risks of failure in growing new enterprise can be mitigated by the increase in the underlying value of those properties - something that seemed to be more or less assured in the UK. While the rhetoric of regional development may provide the legitimacy for efforts to push more of the BBC out of London, we should not forget that such moves are a necessary consequence of a model looking to harvest the value of past development projects while the gettin’ is good.

Unfortunately, the unfolding of events since the current financial crisis erupted in 2007/08 has washed away the good ol’ days and many of the assumptions that made the original concept of MediaCity seem like a clever idea. We can no longer rely upon high property

values to save us from the difficulties of fostering a genuine growth in new enterprise. Furthermore, while the BBC will soon begin to occupy its anchor position at MediaCity, we also cannot rely upon television to be the engine of growth in new enterprise. Indeed, the challenge of MediaCity lies in the problem that we can no longer rely upon the established areas of media - film, television, and music - to provide that growth engine of new creative enterprise. While it is true that established markets are still where the majority of economic activities are based, each of these areas is experiencing their own signs of decline. Even in the computer games space, one of the principle growth segments in the creative industries, the writing is on the wall for many of the traditional forms of console-based gaming with their blockbuster development budgets and large development teams. In other words, MediaCity is a microcosm of the broader UK challenge of growing new enterprise to ‘re-balance’ the economy. It personifies the challenge of finding a new model with new thinking about how to spur new forms of economic activities during a time of industrial transformation and economic stagnation. And it encapsulates the challenge of managing a situation where traditional markets still outweigh the uncertainty of emerging markets, yet where short-term economic gains depend upon forms of certainty that are certainly undergoing declines in the future.

At present, the greatest prospect for new enterprise at MediaCity lie in the emerging media markets. These markets are all about new forms of interactive/social media, mashing together traditionally separate forms of media, communication, education and entertainment, through new content creating and content distribution technologies. These markets are all about new enterprises that labour to explore a wide space of opportunities and find new routes to market. They are emerging markets that established players are too jaded, risk averse, or otherwise inflexible to follow. And they are markets that nonetheless face the

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age-old struggle of how to fund the development and exploitation of these new opportunities. These are the real contexts that modern enterprise faces.

My concern with current thinking is that the government still clings to what worked in the past at a time when there is simply no contemporary legislative opportunity, 20 years on, to set the emerging ‘digital’ media sector alight. Accordingly, the litmus test for progress in thinking about growth, enterprise and MediaCity is one defined by the extent to which it moves beyond the aim of getting the BBC and other large tenants to occupy new shiny buildings. While this may be critical in assuring the viability of a property development project, it has little obvious connection to the aim of enterprise and in contributing to Britain’s ability to re-group itself to claim a piece of these emerging pies.

Thinking differently about enterprise

Clearly, MediaCity is a capital investment project that must, as part of its raison d’être, strive to attract large multinational media tenants to pay for its shiny new facilities. Yet this need is not divorced from a concern with growing new enterprises. Rather, it is dependent upon them and for two basic reasons:

Firstly, for most international media multinationals, the UK will never be their main market. While an important national market, it is simply too small compared with the likes of the US or the prospects of emerging markets in China, India and elsewhere. Coupled with the relatively strong pound and high cost of production, Britain is simply not a natural home for many media multinationals to use as a major supply base (which is why many US information technology companies for instance would rather choose places like Ireland over the UK as their regional base for supplying the European market). Given all the kicking and screaming the BBC has put into a relatively small move from London to Salford, it is hard not to imagine the barrier is even greater for other media giants.

Secondly, it stands to reason that outside of the public service broadcasters, many if not most major media companies would only look to MediaCity if they could tap into a unique ecology of creative talent and business experience capable of supplying world-class products and services at competitive prices. We should not forget that many of the new media opportunities are not originated by the multinationals. They are acquired by them. In the digital ecosystem, the Disney’s of this world are there to pay $600m for a website that cost an entrepreneur less than $600k to build and prove the concept of. It is this pirouetting kite surfer, not the mega tanker, that is what efforts to promote media enterprise must stay focused on.

Building enterprises that make others want to be a part of them, as buyers of products, services, or company stock, is what MediaCity must be relentlessly focused upon. These are the enterprises that excite investors hoping to get into the action early on before eventually exiting through trade sale, or in more rare situations, public floatation. These are the enterprises that overcome the so-called ‘equity-gap’ and do not

depend upon a system of public grants and subsidies administered through layers of bureaucracy. And in so far that these enterprises did not simply exist pre-MediaCity, that ecology of enterprise must somehow be ‘created’, both in a consolidating sense of attracting this talent from elsewhere around the country, and internationally, as well as in the sense of building an ecology that drives the growth of genuinely new talent into the future. In short, the formula for MediaCity success on its own occupancy criteria is fundamentally about success of enterprises that really should never be burning their cash on shiny office space.

Two key concerns inform this shift in mental processing the issue of enterprise and what it really means, and the question about what enterprise needs in order to thrive. Let me tackle each in turn.

Enterprise is a term that means many things to different people. In Brighton where I live, it might refer to the cafes, bars, hairdressers or any other of the innumerable niche life-style businesses that occupy the North Laines alongside

MY CONCERN WITHCURRENT THINKING ISTHAT THE GOVERNMENTSTILL CLINGS TO WHATWORKED IN THE PAST

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that occupy the North Laines alongside the budding technology companies the city is known for. However, when the Prime Minister talks about enterprise, and more recently about the ‘enemies of enterprise’, what he is talking about is what the government’s effort to promote growth through ‘enterprise’ really boils down to.

All the signals are that government thinking on the matter has not fundamentally shifted. Thinking on enterprise has long tended to treat the notion as interchangeable with that of entrepreneurship, or more commonly, as a reference to a small (and medium-sized) business - the ‘SME’ in policy speak. Enterprise is tantamount to interventions designed to support the broadest range of ‘enterprise’ possible, distinguishing only between ‘large’ businesses and ‘those that still have room to grow’.

Sure, while setting up a hairdresser does represent enterprise compared with just looking for a job in one, it is nonetheless a million light years away from what awaits budding entrepreneurs in the digital economy as in any other area where the foundations for Britain’s future economy could lie. It seems that the only way in which government thinking can entertain these differences in enterprise is through another common policy distinction ‘high growth’. Despite not wanting to ‘pick winners’, this is actually what many government inventions are all about.

Alongside policies intended to support every SME in the country, the government reserves many of its most powerful support mechanisms to only those enterprises qualifying for various ‘access to finance’ schemes. Now, whether we are talking about the many venture capital funds that have public monies invested directly into companies or other private VC funds, or various tax-incentive schemes, such as the Enterprise Investment Scheme (EIS) or Venture-Capital Trusts (VCTs) both of which give tax reliefs to incentivise private investment into small businesses, we are talking about the qualification that is essentially about ‘high growth potential’. Let us speak plainly about these schemes, they are interventions whose success fundamentally depends upon spotting and supporting a number of high growth businesses.

How well has Britain faired with this project? Unfortunately, the government’s own evaluation of these programmes suggest interventions do not actually go to ‘high growth’ enterprises. For instance, the National Audit Office concluded in December 2009 that of the 28 separate VC funds in operation at the time, not only were all broadly created with similar, open-ended objectives, but that these funds as a whole were failing to actually go to high growth businesses, failing to generate a net positive return for the government, and thus making these interventions highly expensive business support that did not provide any clear value for money. It seems like all the effort to conform to a fundamentalist interpretation of EU and WTO competition rules only means we still attempt to pick winners, but do so in ways that tend to support losers. How can we hope to have growth and build businesses capable of capitalising on new opportunities when government thinking on enterprise is simply a muddled excuse for support mechanisms that are not fit for purpose? Where is the leadership on enterprise when all the talk revolves around a language hell bent upon defending itself against any whiff of criticism of industrial patronage or social exclusion and thus forces government action to be a ‘one size fits all approach’ open to the broadest range of ‘enterprise’ possible?

The fact of the matter is no one knows what the winners of tomorrow look like at the moment. The fact of the matter is ‘the market’ has just as much difficulty in picking winners as ‘the state’. So who should be the recipients of enterprise support? One suggestion is that the focus of thinking about enterprise needs to change. Enterprise is not simply the stand-alone business, but the relationships with things these businesses need to thrive. When thinking about what these things may be, we are invariably drawn to some notion of the ecology that reproduces that business and the people in it.

For instance, when we think about Google, we often think immediately about ‘Silicon Valley’ and any number of features that seem to be associated with its success, yet are difficult to reproduce on this side of the pond. Similarly, when budding entrepreneurs think about enterprise, they often think about where they need to be in order to pursue their ambitions. Whether or not the entrepreneur in question sees themselves as part of a new ‘creative class’, they nonetheless have some concept about what ‘the place to be’ looks like.

It is no accident that urban planning gurus like Richard Florida have picked up on the role that place plays in spawning creativity and innovation out of people. Indeed, the location of MediaCity is already supposedly positioned in one of the leading centres of creativity in the country. Unfortunately, the mere fact that MediaCity has been built somewhere that tops the league tables in terms of some ‘creativity index’ does little to guarantee that enterprise will come and grow if only you build your field of dreams in the right post code. Indeed, if the BBC’s own previous record of cautious creativity is anything to go by, simply ensuring a couple of anchor tenants are present also does not guarantee that enterprise will flourish.

So what makes MediaCity the place to be? Some broadband infrastructure that is still far inferior to competitors in Scandinavia and East Asia? Some Media Enterprise Centre still looking for a clear sense of its service offering and value to enterprise? A clear and convincing answer to the question of enterprise growth is yet to emerge. As MediaCity look to build confidence in its vision of the future, I suggest it go back to basics. Think about what enterprise is really about and focus on things that help to accommodate its diversity. Current thinking pretends this diversity does not exist. It does so in order to apportion support to entrepreneurs as one would assign patients to the doctors with the shortest queue. It is a form of thinking that constantly seeks to grow entrepreneurs through some standardised assembly line and referral service that may seem like an ‘efficient’ way of spending money, and may even keep the public sector’s value for money vultures at bay, but never delivers the growth that is the ultimate criterion of success.

BUILDING ENTERPRISESTHAT MAKE OTHERS WANTTO BE A PART OF THEM,AS BUYERS OF PRODUCTS,SERVICES OR COMPANY STOCK, IS WHAT MEDIACITY MUST BE RELENTLESSLYFOCUSSED UPON

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New thinking new actions

Notwithstanding the concerns raised above, I believe that MediaCity could be the place to be, and that the blueprint for creating a real and lasting media enterprise hub around MediaCity should look and feel ‘something’ like this

1. Identification of the media enterprise space (as opposed to office space) that MediaCity is going to operate in.

MediaCity will clearly start life as a ‘television’ production hub with associated skills development activities coupled with some seedling ventures into other areas like computer gaming. But given the fact that one of the key anchors to the potential success of MediaCity is the significant availability of venture capital and loan funds the region has a 10-year window of opportunity to make something of, MediaCity must seek to attract the enterprises that make investors excited.

Without wanting to be overly prescriptive, in the digital space, the exciting enterprises generally fall into the following categories

• those that dis-intermediate existing value chains across all media;

• those that create tools and technology that can simplify the processes of building interactive content for any or all interactive platforms;

• those that create innovative content based applications;

• those that create tools and technology that can track users’ needs and habits;

• those building applications that allow consumers to better communicate and do new things;

• those that develop and find new ways of developing technical or content based IP.

The question is how does MediaCity find and approach enterprises in this space wherever they may be around Britain, Europe or internationally. This takes us to the next element of the blueprint.

2. A new form of high growth enterprise zone run with different kind of market principles

All businesses are built upon relationships needed to foster their development. Currently, enticing businesses to come to the region is based upon the sales pitch of those paid

to promote the zone’s initial offering. This leads to the chicken and egg problem. How do you entice a broader range of enterprises when the initial offering is based around a few anchor companies and activities? But if you don’t entice this range of enterprises, you don’t entice more large anchor tenants from outside broadcasting and media education.

A key lever of inward investment needs to be people and relationships that enterprises want to access, particularly those that help broker access to the things all businesses requires access to markets, access to money, and access to other forms of technical and busi-ness expertise. These are things that MediaCity does not have a monopoly on and thus must build partnerships with in order to strengthen its offering. Given that a major potential resource is the availability of alternative funding op-tions to the commissioners at the BBC, relationships that help enterprises access those options represent one obvious area to incentivise new partnership building.

Attracting enterprises by virtue of the possibility of alternative opportunities to fund new media ventures is essentially the world of corporate finance where combinations of (proven) entrepreneurs, business mentors and assessors, and business angel/financiers (‘EMBAFs’ for short) come together to help cover gaps in the knowledge, experience and funding as well as help shape a new awareness of media spaces and opportunities that a particular entrepreneurial team may be poised to go after.

EMBAFs are growth-seeking beasts, usually looking to work with investment groups, to identify and support those enterprises the community believe to be of enough potential to work with. Were MediaCity to draw upon EMBAFs around the country if not also internationally, it would have a key lever for identifying and attracting a better stock of entrepreneurs from around the globe, not just from around the North West. Of

course, one might think that this is what the anchor tenants are supposed to do. My point is that EMBAFs are not simply a complimentary approach, they are actually a better tool for the MediaCity project.

Large media firms tend to attract smaller companies that want to get work from them. The drive to co-locate is thus only as ‘sticky’ as the sourcing policies of those large firms. This changes, and the reason to be at MediaCity changes for those firms as well. Now, large firms know they are usually in the driver’s seat of negotiations and will always look for more and more concessions from their locations in one way or another. The result, keeping large firms happy to stay in one place is always an expensive proposition somewhere in the fine print. And what do we get? Given the diversity of opportunities in the media space, your large anchor firm still only attracts a relatively biased sample of the potential opportunity space. Furthermore, large firms are large because they are good at keeping as much money as possible flowing to them and not to someone else. As such the companies they attract are not really about growth. Rather, they are usually looking to lower their costs to make a little more money out of their current deals. And if they can do this well, they can take more deals away from others, cornering the ecosystem and becoming the preferred supplier to the media giant. Is this the kind of firm MediaCity wants to attract? Is this the eco-system of the future?

In contrast, EMBAFs scan their world looking to detect opportunities before other gets their hands on them first. In media, this usually means they look for companies doing things that the large firms are not pursuing. In short, EMBAFs work to scan the opportunity space not already captured by the large firms. This is critical to MediaCity becoming something more than a TV hub. Furthermore, EMBAFs spend their own time and money doing this. They only get this back by using whatever resources they have access to, and targeting those resources to companies that are looking for growth, not reducing costs. These kinds of companies should be critical to MediaCity. And that’s really the power of the EMBAF. They make the task of building the enterprise community around MediaCity far easier and cheaper to kickstart than offering incentives that Media Giants will want

A KEY LEVER OF INWARDINVESTMENT NEEDS TOBE PEOPLE ANDRELATIONSHIPS THATENTERPRISES WANT TOACCESS

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as compensation for bringing their business to Salford.

How to progress this front? Clearly, you have to offer EMBAMFs resources that are actually useful to growing businesses. There are basically two complimentary ways of going about it. Firstly, MediaCity can facilitate a process of identifying resources that are useful and can be used as an incentive for EMBAFs to think about opportunities that makes sense for the project. Furthermore, you can underwrite the costs they incur in searching for growth companies. There are likely to be clever ways to do this that avoid common attempts turn these individuals into salaried employees or members of some prestigious committee. For instance, helping them bid for new forms of government funding into ‘social enterprise’. This would help use public money to pump-prime the building of EMBAF relationships with both the providers of space and services specific to MediaCity, as well as providers of capital and other forms of important resources available within the region. Progress on both of these fronts is what can help turn the power of the market into the agents of MediaCity.

This takes us to the final part of the blueprint. Championing a vision for how support for enterprise can look and work much differently than it has in the past, effectively helping to carve out a new space for what the role of Government and its regional agencies is all about.

3. The role of Government and regional support agencies

EMBAFs already work with private investors, but what we now need is to invent new arrangements to enable them to work with a project of building a broader media ecology. The role of government and its support agencies will always be critical to getting the ‘market’ to act as part of a larger project. And given the limits on what MediaCity, at present, can offer to enterprise, MediaCity stakeholders will be important in changing the government’s mind on how best to create the incentives for activating broader participation and enterprise community-building efforts. As highlighted above, the social enterprise agenda is likely to be one avenue for exploring these possibilities alongside the expressed need for better ways to offer business supports to enterprise.

Yet let us not forget the legacy of past investment agendas still alive and well that should come to see MediaCity as a key part of their activities. For instance, not long before the last General Election, Lord Mandelson got the government to think about ways to start picking winners. This emerged in the guise of a £900m Special Investment Fund (SIF), which offered money to grow projects in targeted sectors. At present, only a tiny bit of this is coming to MediaCity. There needs to be an important follow-up to this. How MediaCity might seek to use EMBAFs could be one way to help consolidate a new appeal for funding to accelerate the range of projects the zone is able to engage with.

Another potentially relevant initiative that is also more or less targeting the same sectors and industries as the SIF, including creative industries, is the UK Industry Investment Fund (UKIIF). This is a £325m VC fund with the government acting as an investor to the tune of £150m, with private VC funds contributing £175m. There is little to report on the successes or failures of this project having only been afloat for a year. However, the critical issue is how these funds are structured and operated given the concerns raised by the National Audit Office and other studies (by NESTA for instance) on the problems of publicly backed VCs to growing new enterprises. These initiatives are all experiments in a debate that has raged within government circles for at least a decade-the so-called ‘equity gap’ debate about the need to fill the £100k-£2m funding gap for supporting new and growing businesses. In this area, the government has recently begun to move away from investing its own money into companies, towards a model of investing directly in members of UK VC industry. The risk of this manoeuvre is that it bets Britain’s future on those enterprises and sectors that the VC industry is already comfortable in dealing with.

We already know, thanks to the work of the British Venture Capital Association, that the UK VC industry chooses to invest not only more money in foreign companies, but also invests more money per company, on average,

and at each stage of investment, in foreign companies relative to their domestic counterparts. For start-up and expansion stage investments in particular, the average size of UK venture capital investment which goes into a foreign company has been six to seven times greater than comparable investment in UK companies over the 1998-2007 period. Couple this with the fact that many professional investors are not particularly media savvy, what hopes can we really have that much of the government’s efforts to overcome the equity gap actually apply to the digital media space? MediaCity represents an obvious champion to raise these concerns and lead the way towards an alternative approach.

And why should MediaCity concern itself with such things? How else will it raise funds to build new facilities and services of interest to media enterprises? As the government invariably focuses on things that suit its own policy interests, such as motions to cut red tape and give SMEs more possibility for winning government contracts, the government will perceive its support of MediaCity as going no further than helping force the BBC’s hand.

In championing a new thinking on enterprise, MediaCity is essentially working to set a new agenda from which its own requests for enterprise funding are to be defined against. A view which makes EMBAFs central to the methodology not only fits with the ‘market’ and ‘social enterprise’ ethos of the day, but also fits with the interest not to recreate the plethora of bureaucratic agencies that always seem to want their salaries paid for to administer. It creates a vehicle through which other groups, such as educational institutions, can work with entrepreneurs and EBAMFs to provide a combination of technical (in the case of science and engineering based departments) as well as commercial (in the case of business and management based departments) supports to businesses. It creates the possibly to get around the filters that all government officials have for ‘sectors’ requesting special or supplementary funds unique to them, opening the door to reforms that are about fixing what is clearly broken forms of old thinking about enterprise and old policies for supporting new enterprise in high growth areas.

For me at least, this is an exciting vision of what MediaCity could be about.

LARGE FIRMS ARE LARGEBECAUSE THEY ARE GOODAT KEEPING AS MUCHMONEY AS POSSIBLEFLOWING TO THEM ANDNOT TO SOMEONE ELSE

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Changing the game:Revitalising game development in the UKby Damian Hodgson

If the British gaming industry is to weather the storm, argues Damian Hodgson, then MediaCity must provide a model to help UK studios revive their fortunes.

As an emotional Peter Molyneux stepped onto the stage at the Park Lane Hilton earlier this year to receive his BAFTA fellowship - the highest accolade the Academy can bestow - it was taken by many commentators as more confirmation that the industry, and particularly the British games industry, had finally ‘come in from the cold’. In taking his place alongside Hitchcock, Spielberg, Chaplin, and Kubrick, Molyneux, best known as creator and enthusiastic publicity machine for games such as Fable, became only the fourth creator of video games to receive this award, and the first from the UK. He also personifies many of the best qualities of the British game industry - a visionary and iconoclast who has survived hard times and managed to reinvent both himself and the industry in the process. However, among the champagne and tinsel, it would be easy to lose sight of the storm clouds now surrounding the British game industry.

While BAFTA has been celebrating video games and their creators for nearly a decade, many other institutions have been much slower to warm to this home-grown success story. For most of the last thirty years, the British game development industry has been routinely ignored by cultural commentators, academia and government alike. The sole exception to this fog of indifference has been the regular eruptions of moral panic over the effects of video games, exploited to the maximum by tabloid media and the more opportunist parliamentarians, as games are blamed for a range of social ills, from youth violence to obsessive behaviour, obesity, and depression.

Despite this, and despite the violently cyclical nature of the industry, game development in the UK has proved itself to be remarkably robust. As technological platforms, markets, consumer demographics, business models, and modes of distribution

have been in an almost constant state of radical transformation, from the cottage industry on home computers of the 1980s, the three cycles of console wars (of the 1990s and 2000s) and the sudden and sweeping move to social, browser and casual gaming in the last few years, it might be seen as surprising that the industry in the UK has held its position behind the USA and Japan for so long. The roots of the industry in the UK are older, deeper and more extensive than in most European competitor nations, tracing back to the home computing boom of the 1980s and Clive Sinclair’s ZX Spectrum, and the sector has proven itself to be quietly adept at self-reinvention since then. Belatedly, this resilience was recognised as New Labour discovered the political and economic value of the ‘creative industries’. The first indication of a turning tide following their election in 1997 was the transformation of the Department of National Heritage into the Department of Culture, Media and Sport (DCMS). The incorporation of video games in the suddenly-fêted ‘creative industries’ provided a route out of the policy ghetto for the industry; without video games, the economic footprint for the newly-minted creative industries was reduced by almost half, greatly undermining any economic case for paying serious political attention to these industries.

For a period, then, it appeared that a general rehabilitation of the industry might be on the horizon. Through the decade, a string of reports by the Department of Trade and Industry (DTI), DCMS, the Work Foundation and most notably NESTA (the National Endowment for Science, Technology and the Arts) have explored and often trumpeted the economic potential of video game development. At the same time, the video game developers’ trade association, TIGA, has pushed hard to improve the image of the industry, to educate policymakers on its value and potential, and to try and secure more concrete financial support for the industry. The nub of this campaign by TIGA has been a call for tax breaks to enable British developers to compete with firms benefiting from what others are offering, in particular Quebec’s

refundable tax credit. This initiative, which can cover 37.5% of a firm’s labour costs, has transformed this Canadian region into a global hub for video game development, resulting in a 600% growth in the size of the industry (measured by employee) since 2003. Ontario and British Columbia have since introduced similar measures, with increased direct investment as global developers choose Canada as locations for new studios, and enhanced competitiveness for Canada-based studios pitching for work. This success brings into sharp contrast, TIGA’s claim that there has been a nine per cent reduction in the UK workforce in the industry since October 2008.

In light of this, and the reported ‘brain drain’ in the UK as studios close and top talent crosses the Atlantic, there was much celebration in March 2010 as the Labour government of the day finally took the decision to support tax breaks for the industry, swiftly followed by the Conservatives. The sudden cross-party consensus as the General Election loomed again seemed to mark a rosy future – finally, game development was recognised for the political potential– innovative, cool (more or less), youthful, driven by the STEM subjects, carbon-neutral, part of the ‘real economy’, located countrywide and export-focused. Unless you are Keith Vaz, what’s not to like?

What a difference a year makes. Shortly after the election, the offer of tax breaks was abruptly withdrawn by the Coalition government. Cue disappointment, anger and talk of ‘broken promises’ from many in the industry, much wringing of hands from Ed Vaisey, the new Minister at the DCMS, about his lack of influence on Treasury decisions. Of more concern were the light sighs of regret from CEOs of global game development giants; as Activision boss Bobby Kotick described the reversal as ‘a terrible mistake’, shortly before allowing the axe to fall on Activision-owned Bizarre Creations studios in Liverpool with the loss of some 200 jobs. Since then, the bad news for the industry has continued to accumulate; closures and major redundancies in landmark studios have continued (at Activision-

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owned Bizarre Creations in Liverpool, Realtime Worlds in Dundee, Ignition in London, and most recently the Disney-owned Black Rock Studios in Brighton, among others). Despite this, the budget changes announced by the Coalition Government since the Spending Review and subsequent press briefings have reinforced this impression that the government has set its face against any kind of special treatment for video game industry, and places what support it offers in general action on corporation tax and R&D tax credits. Barring an unexpectedly rapid economic recovery or an opportunistic change of policy, the tax break ship seems to have definitively sailed.

What future then for game development in UK? The consensus until recently has been that the future lies in one of two directions, the first being ‘triple-A’, big budget blockbusters - the Guitar Hero/Call of Duty/Grand Theft Autos. The risk associated with triple-A game development is increasingly apparent, even for the behemoth publishers such as EA, Ubisoft and Activision. As the cost of developing triple-A games reaches $50-100 million, games require sales in the millions to break even and marketing budgets to match the development budget. Even for the largest publishers, and certainly for many studios, games become ‘too big to fail’- and yet, many do, bringing down developers with them. Studios in the UK of sufficient scale and with the management capacity to take on and deliver these projects can be counted on one hand, and indeed, there are signs in the recent wave of studio closures worldwide that the major publishers are falling out of love with the blockbuster model - or at least deciding to broaden their portfolio beyond the triple-A. Given gloomy forecasts for the mid-range, mid-budget section of the game development industry, it is therefore no great surprise to see huge and growing interest in the burgeoning opportunities at the other end of the market, developing casual games for mobiles, browsers and similar. In a very short period, casual and social gaming has started to make the move from subsistence farming to next big thing, spurred by the mainstreaming of social networking and the take-up of platforms for casual gaming, including smartphones and the Ipad.

The performance of Rovio’s Angry Birds, taking a $140,000 budget and reaping $70 million in revenue, marks the high point so far of the casual

gaming subsector, offering substantial opportunities for the troubled British games industry. As budgets are significantly less for games of this kind, entry barriers such as the prohibitive costs of developing a prototype and the massive risks of big budget projects can be sidestepped. Failures, inevitable in every creative industry, can be survived, workforce numbers can be balanced over time as a project portfolio becomes affordable and manageable, even for the smaller studios - not every game needs to be an Angry Birds to break-even. Equally importantly are the alternative routes to market for casual gaming, freeing developers from the reliance on retail chains, and the substantial costs of physical distribution and blockbuster marketing in a crowded marketplace. This route also reduces reliance on publishers as the sole source of significant game development investment in the UK, sparking the exploration of a range of new business models, including subscriptions, downloadable content (DLC), ‘freemium’ - many of which are less punitive to development studios than the traditional console-based big budget work-for-hire model.

It appears that, while waiting for the next tide of consoles to revitalise the industry, another wave has hit the market from the side, and the British industry finds itself surprisingly well-placed to take advantage – no longer caught in the ‘squeezed middle’, but in the sweet spot with a deep, embedded pool of experienced talent centred on a number of geographically dispersed clusters and an industry which has over decades displayed some expertise in self-reinvention. The northwest of England was recently pinpointed as one of the stronger clusters of game development in the UK, alongside West London and the Oxford-Cambridge-Reading triangle (NESTA, 2010), findings which support a detailed study conducted by colleagues at MBS looking in detail at the studios in the region (Philips et al, 2009). The picture revealed in this study highlighted, on one hand, the significant competitive pressures developers were subjected to given the industry structure, but also provided strong evidence for the relative efficiency of developers in the region and their creative, technical and often commercial capability, necessary to survive on an unsustainably uneven playing field. The game has now changed, and no doubt will change again, but at this critical moment,

targeted support informed by research and focused on key clusters could have a disproportionate impact on the industry.

So what can MediaCityUK offer the industry? There are clearly limits to what can be delivered through bricks and mortar, or even glass and steel; we cannot expect the impressive architecture at MediaCityUK to compete with the substantial tax breaks touted in Canada and elsewhere. What is on offer in Salford, however, is a conduit through which more modest, targeted support can be provided to a resilient and entrepreneurial game development cluster in the region; the practical advantages of the Media Enterprise Centre (MEC) at MediaCityUK include the NorthernNET high-speed communications network, game testing laboratories and, hopefully, intelligently-targeted funding at the local level. This will require coordinated action with serious buy-in from the existing studios in the region, including big players such as Travellers Tales and Sony, overcoming parochial intra-regional rivalries and local politics, and strong cooperative links with other national developments such as the Centre for Excellence in Computer Games Education at Dundee. And success will depend on swift action and meaningful levels of financial support from the freshly-minted Local Economic Partnerships and in particular Creative North, which will need to act exceptionally quickly to fill the boots of the North West Development Agency and NW Vision + Media.

Achieving success will require building connections within the industry, supporting links to other creative and digital sectors locally and nationally, encouraging diverse modes of investment, technical and business mentoring to help small studios to grow beyond the cottage industry stage. MediaCityUK will not deliver on all of these goals. However with a broad vision which goes beneath glass and steel, and an informed understanding of the latest transformations of the digital gaming industry, it may just act as a crucible which draws together the right kind of partners to move towards a healthy and sustainable industry in the region, and a model for a national industry capable of weathering the storm.

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Funding the barbarians at the gateby Kalam Ali

Overcoming the limitations of public sector pump priming is a major challenge that MediaCity has to address, argues Kalam Ali.

Creative media is a funny business. Sure, the costs have been dropping as the tools used for building media content have come down. Yet growing a business based upon someone’s creativity and skill in wielding those tools is nonetheless an expensive proposition with lots of unknowns. To make matters worse, large gatekeepers tend to control the main thoroughfares that connect up content to mass audiences and ensure they tax all travellers moving through their territory. Then, if you’re in a situation where your content uses someone else’s ‘platform’ you’ve got the problem of finding your market on each project you pursue as past investments often do not give you any cumulative advantage over time. Alternatively, if your content is about creating a platform for someone else to use, you’ve either got the problem of competing against deep-pocketed incumbents who don’t like others diluting their network, or the problem of getting enough other creatives to buy into your prefab ‘tools’ for their own variable projects.

Whatever pathway you go down, the challenge of growing new creative media businesses is essentially about finding ways to mitigate the risk of failure. You see, the game is about surviving long enough in an eco-system to be able to carve out a relatively stable position for yourself within that community. At this point, you can begin to shape other activities around you for your own benefit. When this happens you, in turn, become part of ‘the establishment’ - you become an ‘insider’.

If you’re reading this, you’re most likely an outsider. And being an outsider is an uncomfortable place to be for anyone bankrolling a creative pundit with unknown potential. For most investors, it stands to reason that most opportunities in this space will tend to look like a gambling proposal rather than a business proposition. Investments often seem like (pet) projects which can be hit and miss (usually the latter) for

reasons that no one ever really gets to the bottom of until it’s too late. And this is what makes building a creative media business difficult. Creative projects are not businesses that look to scale some basic assets that the company owns, but are usually about a portfolio of gambles where whoever puts up the money simply hopes the gods are on their side. And in situations where investment is essentially a passive activity with little opportunity to actively manage that risk, we cannot but expect little incentives to plough much money into the eco-system - at least not from your mainstream investment community.This is a problem that is not safely outside of the walls of MediaCity. It is one intrinsic to the foundations upon which it is built. Somehow, MediaCity must find a way to harness a wide variety of routes in which to fund the activities it seeks to be at the centre of. Sure, anchor tenants help, but they tend to simply reproduce whatever eco-system already exists around its commissioners. Having publicly-backed venture capital in the region also helps, but only for opportunities and teams well advanced in their ability to prove their commercial potential. In so far as MediaCity seeks to be something more than a form of tax on a set of activities that were once simply somewhere else, it is faced with the challenge of helping to prove the potential of things that have no proof (or collateral) to access traditional channels for funding and commercialisation.

So what can be done about it? This challenge is normally the preserve of the public sector where groups bid for government money to pump prime ‘market failures’. As discussed by other authors in this volume, success on this front is likely to be based upon new thinking that overcomes the limitations of the public-sector approach. I would wager that this thinking looks something like what is already beginning to happen in the area of ‘crowdfunding’.

Crowdfunding is simply a word to describe a common denominator behind a new breed of mechanisms to help innovative ideas raise seed-funding

to get going. Where those setting up new businesses have long found that pooling together money from friends and family is the only way to get an idea off the ground, crowdfunding magnifies this practice by promoting and socialising a project online. This creates the possibility of collecting smaller contributions (as little as $10 using online payment systems) and still help kickstart a substantial new venture.You see, crowdfunding is very much a development in what can be done with the power of social networking and the internet. What makes it work is a cost-effective and efficient way of tapping into an extended network of surrogate friends and family. This is what social networks provide the crowdfunding approach. The irony of the whole thing is that it is even being used to fund the development of a new open-source social network to rival Facebook!

At present, there are two breeds of explorers in this space. One group seeks to take advantage of the fact that the approach is project neutral and works just as well to support a political campaign as it does an indie film, a rock band, a music album, a literary project, or any range of new product launches. Sites such as indiegogo.com and kickstarter.com represent the generalists in this space. Both these sites were borne out of a frustration with the difficulty of raising finance for creative ideas and started with a handful of projects, in 2008 and 2009 respectively. Since then they have produced numerous successes using this model and continue to demonstrate new funding avenues for creative media projects and also commercial ventures. IndieGoGo in particular went on to partner with MTV to identify and develop new content for their music channel. In terms of numbers, Kickstarter released statistics recently showing up to $53m in pledges passed through their site, out of which $20m was for funding film and video projects.

At the other end of the spectrum are the specialists. Sites such as MyMajorCompany.com, Sellaband.com and RocketHub.com are all music specialists in crowdfunding. The focus

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upon music is not accidental. Music, like film and other traditional media content, has been struggling to curtail aspects of the internet that work against their business models. As filesharing has eroded the ability to recoup investment from the retail sale of physical media products or legal online downloads, established music publishers have been forced to decrease their investment into new projects and stick with immediate mass appeal. Consequently, an increasing number of artists have had to experiment with ways to secure direct fan engagement to raise funds and drive sales/coverage through new social networking platforms. The crowdfunding specialists have started filling in the gaps left by the large media incumbents.

Within this landscape, websites such as MyMajorCompany, a music label in France and now the UK, have shown some success in exploiting these innovations. In addition to attracting funding through conventional perks such as free downloads, concert tickets and merchandising, a key development pursued by MyMajorCompany is its ability to offer financial returns to fans if a band is successful. This move has pushed the crowdfunding model to its extreme, literally blurring the distinction between who the investors are and who the market is.

“MMC is finding better ways of sourcing talent via the crowd (also through our A&R teams in the UK) and co-developing bands with their fan base. As the crowd covers the costs of development, it enables us to focus our industry know-how in marketing and distribution to help drive sales. When this works, we create a return on investment not only for the label and its artists but also importantly, for the fans who backed them and continue to support them.” - Paul René Albertini, CEO of MyMajorCompany in the UK and former Chairman and CEO of Warner Music International

As the MyMajorCompany case highlights, there’s a lot more potential to the crowdfunding model than simply the search for a new banker. In crowdfunding, money talks (literally).

By drawing your funding from the same pool of people that the business ultimately seeks to get its income from, you provide the project not only with a clear way of demonstrating the commercial potential of a project (or the

lack of it), but also an army of believers to grow the word of mouth campaign behind a project and promote it to new people to help drive its commercial success. This means a key area of exploration is how sites attempt to wield the power of this army through different incentives they choose to offer.

At present, most projects attract their fans through simple incentives such as having your name in the credits, free screening tickets and merchandise, or even dinner with the director of a film. All these represent low cost perks offered to fans in return for their financial support. Yet the more crowdfunding develops into an alternative form of venture capital arrangement, the more fans become both investor and route to market. In some ways, this probably represents the holy grail of the crowdfunding approach - to get paid by people who end up doing a lot of the work to help co-develop and promote the sale of your product. And the more this happens, the more we reduce the potential for projects to be artificially excluded from the market because they do not conform to what those who gate-keep over funding and routes to market believe will work.

As the current fiscal austerity measures take effect in the arts and other media-related pots of public grants, it is conceivable that efforts to boost investment into crowdfunding mechanisms may represent a venture that is both cost-efficient in the use of public funds to support growth businesses, but also an effective tool for stimulating the kinds of disruptive media projects that, for various reasons, typically tend to emerge outside the traditional networks of media corporates and private venture capital.

Much of the appeal of a crowdfunding proposition is that it overcomes a well-understood by-product of existing funding mechanisms pre-screening. As the government pursues publicly-backed venture capital funds to support growth industries, such initiatives invariably work to reject the majority of the propositions placed on their desk. The problem with this filtering is that there is little to suggest they actually pick the right winners, at least in any consistent manner. The crowdfunding model, in some way shape or form, may represent the only way to truly overcome the reported ‘market failures’ that government already recognises

as stunting the growth of emerging industries like digital and creative media. Herein lies the importance of crowdfunding to MediaCity. Crowdfunding platforms are built upon access to extensive online connectivity, physical premises to run operations in proximity to a strong pool of creative talent to establish a platform in the market, and a base of existing commercial activities and expertise through which to extend the model to other areas of media business activity. MediaCity already has what it takes to either build from scratch a new service, or attract an existing crowdfunding service. This would give it a powerful vehicle through which to grow its own eco-system. And if further incentives were required, attempts to secure pump priming for such a venture through whatever public funding provisions are still in place would represent the obvious way forward. The logical aim in the case of MediaCity would be some form of crowdfunding platform specialising upon film, television, music as well as computer games and other forms of interactive media. As MediaCity works to build the ecosystem of the future, harnessing the power of the crowdfunding model represents a strong complement to traditional routes of financing creative media enterprises such as commissioning by large publishers and private equity such as the VCLF European funds recently set up in the region.

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Manufacturing confidence, revisitedby Richard Phillips

The power of regeneration relies on building relationships not crafting rhetoric, argues Richard Phillips.

As we look for greater clarity over the pathway to success for MediaCity, we encounter the reality that there are bound to be many chefs in this kitchen, each with their own recipes. The views contained here, however, strive to remind us of where we should keep our focus. MediaCity is about the future and thus about winning the hearts and minds of people to believe in that future. This means that MediaCity is fundamentally about manufacturing confidence. It is about sustaining efforts that hope to increase participation in a range of activities we all want to be an integral part of the future of not only the region, but of Britain’s economic prosperity in general. But moving from that aspiration to reality is a path paved by resistance, disbelief, and the constant opportunity for compromise to take it down a path that ceases to inspire and becomes ploddingly predictable.As all those behind the project look to continue manufacturing confidence in its aspiration, the practicalities of balancing the need to pay the bills while sustaining confidence in its ambitions will always come into conflict. Every entrepreneur faces this when they realise their vision of where they want to be in the future is too far away from the things that actually covers their costs in the present. MediaCity is not immune to this basic entrepreneurial predicament. As with any budding business, it has to pay for the first attempts to define their identity in the marketplace. In this case, it has to pay for Phase I. And to do so, it has chosen an ambition that requires it to look for anchor tenants with deep pockets of which there are very few first movers.

And why should there be? Think about it, much of the effort placed upon the distinctiveness of the vision is really about what would look pretty in a photograph, win some awards and be called ‘iconic’, and ultimately serve to differentiate Salford from Dubai in marketing brochures. Where is the demand for this really coming from? It isn’t driven by political mandate to

decentralise the BBC, that’s for sure. Strip away the polished marketing rhetoric and you’re left with the reality that MediaCity is also a vision someone was paid X to design, that cost Y to build and thus requires Z to be sustainable. The challenge of MediaCity lies in the fact that these decisions have already been made to some degree and now we have to make that equation work. This is a challenge that boils down to people who are so focused on that equation it’s easy to forget something more fundamental. Whatever ‘iconic’ features you carve into the landscape of Salford, you will not by those acts alone, dramatically pull people away from wherever else they may be held up. The precarious and politically charged circus surrounding the BBC move up north is itself a testament to this fact.

Underlying the voices contained within this collection is the notion that no one is actually going to be buying MediaCity brochures. They are actually buying into something else that isn’t in the glossy pictures. This collection merely attempts to capture the essence of what that hidden ingredient is and how it might be brought back into the foreground. And the secret can be summarised into one word, relationships. Relationships underlie all business activities, not just media. So what relationships matter? In the case of MediaCity, the region is entering into a whole different league of relationship-building challenges to those of its previous transformation projects, such as getting the Lowry accepted by local Salfordians. MediaCity is seeking to be globally significant not through the labours of its Salford residents or even those of what already exist in the region, but the labours of residents from all over the world who want to participate in relationships that they can’t otherwise establish from where they currently are. As MediaCity searches the world for its anchor tenants, it should pay attention to the fact that anchor tenants send signals to the world about which particular relationships are available, but also unintended signals about what relationships are not there. Sometimes, it is the latter message that reaches the masses more than the intended ones. This is what needs to be overcome as you seek to move minds away from Salford

being BBC-City and towards it being the heart of a genuine MediaCity. Fishing for anchor tenants, while understandable, will never address this basic problem.

So what can be done? How do you put together relationships that don’t exist elsewhere (and aren’t necessarily crystalised here as well)? As discussed in the ‘Realising convergence’ piece, one of the first points raised in this volume is the idea that you cannot legislate these relationships into being. As the Canadian experience shows, you must manufacture the confidence for different people to want to form these convergent relationships of their own volition. And the more we think about the challenge of MediaCity in this way, the more we leave open in our minds the answer of what media may become, the more we find that there are actually many ways in which you can go about manufacturing confidence in others beyond efforts to reel in the big fish.

You can envisage space in very different ways as, for instance, was discussed in the first paper by Kalam Ali on ’creating space, creative space’. It’s one thing to envisage space that is to be private and owned/rented, its quite another to envisage spaces that are intended to channel a constant flow of people into that space. Ultimately, what matters is not the ‘distinctiveness’ of the facilities per se (that is the fastest route to unsustainable over-indulgence). Rather, what matters is that space is created and supported by efforts to attract others into the possibility of engaging in new relationships. This game is about increasing the volume of possible relationships and accepting that by their very nature, relationships once formed will actually take place anywhere, anytime, online and offline based upon their own precarious logic. Were MediaCity to pursue this avenue in its offering, it could start to manufacture a greater confidence in the notion that MediaCity is not just about entertaining the big boys in the media space. And this is critically important for one simple fact of life, the food chain works from bigger fish chasing after and eating a healthy stock of smaller fish, not the other way around.

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Yet space alone can only go so far to manufacture confidence in MediaCity. For those looking to build new media businesses, confidence is very much tied to interpersonal relationships that helpadvance their projects - relationships that help pay for their creative investment or help sell their creative outputs. Anchor tenants represent one way of addressing this, but only within a very narrow remit and are always susceptible to the vagaries of that particular tenant. What MediaCity requires is an alternative vision for how it attracts ‘anchor relationships’ rather than, or at least in addition to, ‘anchor tenants’. As highlighed by Fred Hasson in his piece on ‘MediaCity New Entrepreneurial Era’, the most important relationships in business are always about those that help give access to markets, access to money, and access to other forms of technical and business expertise. Given that MediaCity is still a vision about a future, it is understandable that most people will simply sit on the fence and wait to see what happens before they do anything themselves. This means something must be done to get these people off that fence. One way to do this is through an effort to improve the relationship offering behind MediaCity. And those that most businesses care about are always relationships concerned with money.

Given the region has a unique window of opportunity provided by Europe in terms of the availability of venture capital and loan funding, MediaCity has a way to offer alternative sources of funding alongside the commissioners at the BBC. This makes relationships that help enterprises access those funding options one obvious area to build into the MediaCity message. This should not be thought of as a ‘gate-keeping’ project with all prospective companies funneled through some MediaCity check point. Rather, its about promoting access to relationships that give people a sense of the greater business-building prospects they can find here rather than elsewhere. In this, having a pool of funding available is merely the lure. Having alternative pools of money is one thing, but let’s face it, professional investors are not the most knowledgeable about all the diverse technical and market opportunities in the digital/creative space. This means alternative funding channels will never be substantially unlocked by people who are used to funding more conventional, more established forms of business

opportunities. Consequently, the real hook is actually to promote relationships that give hope to there being help in shaping media companies into something that looks good enough to get funding.

These relationships exist. Yet left to the ‘market’, entrepreneurs get help in building their businesses from an ad-hoc combination of business mentors, assessors, and non-executives, often with some managerial background in the same area, coupled with individual angel investors and organised fund managers who actually put up the cash. These people are in relative surplus in Britain compared to our neighbours on the continent or in other emerging economies. This gives Britain a natural advantage were it able to harness these relationships. The problem is these individuals exist in relative isolation and usually away from the media space (media companies typically work with industry commissioners to get their funding). MediaCity could have a major impact on the media space at large by helping to incentivise these individuals to specialise upon media-specific opportunities. This could be done through pump-priming groups to act as scouts for inward investment opportunities. Or by establishing location specific incentives (rate reductions, preferential terms on access to key resources, etc) that these groups were authorised to offer to the ‘right’ kind of companies they help find/create. Along with the management and hosting of events through the year, these could create an incentive and infrastructure for commercial groups to form around media-specific business support and investment opportunities.

Finally, the piece on ‘Funding the Barbarians at the Gate’ shows that you don’t necessarily need to pool expertise first around a sector in order to support it in securing funding. You can actually do things more directly to help grow companies and in a way that works to attract the investors and other growth-minded business builders to those companies in the first place. You can do this by building a specialist platform for having the ‘crowd’ demonstrate their interest in particular creative projects

through distributed micro ‘investments’. This provides a way of promoting businesses to a wider audience, a way for identifying those with a strong enough market appeal, a way to get ‘seed’ capital from the masses to turn a creative idea into a commercial output, and a clear signal to potential investors on what the demand is like for that idea and where the market actually is. Firms that overcome these hurdles are invariably in a much better position to secure traditional forms of investment than those who have yet to find any proof of their concepts and are stuck in a chicken and egg rut. Again, this suggests that all the power of the advanced network infrastructure being built in Manchester resides not simply in it being an incentive to attracting new tenants. Rather, thinking laterally about the resources available to support MediaCity, efforts could be made to invest in crowdfunding and other ‘concept-testing’ type online platforms so as to provide the final missing ingredient in the current MediaCity project—a clear way of embedding that project back into the community. This would surely silence any critics who believe that leveraging the passions of everyone interested in media, and harnessing it in ways that allow them to participate in the selection and development of the media futures they want, is nothing but political rhetoric. It isn’t.

In conclusion, I hope that the suggestions in this volume are seen not as alternatives from which to pick and choose, but rather as integral seed-corn elements behind a whole world of alternative options for manufacturing confidence in MediaCity.

SPACE ALONE CAN ONLYGO SO FAR TO MANUFACTURECONFIDENCE IN MEDIACITY

Manchester Business SchoolBooth Street WestManchester M15 6PBUnited KingdomTel: +44 (0)161 275 6303Email: marketing@mbs.co.uk

www.mbs.ac.uk

For more MBS articles and research visit Transforming Management at www.tm.mbs.ac.uk