WHAT CULTURAL PRODUCERS MAY LEARN IN TIME OF RECESSION

By Tiziana Cuccia and Ilde Rizzo

Cultural producers adopt different strategies to cope with the effects of the great recession and differentiate the sources of their funds. Looking at a sample of cultural operators in Catania (Italy), the multi-product choice and the network-based co-opetitive solutions are examined to offer some policy suggestions.

The 2008 financial crisis imposed severe public budget constraints almost everywhere. Public intervention in the arts has changed drastically: less funds and a stronger need of legitimacy. The responses of cultural producers to these “bad news” depend on their size, reputation, ownership pattern and the institutional context.

In Italy, it is worth noting, the negative trend started before. Public resources devoted to “culture and leisure activities” registered their maximum in 2004, followed by a sharp negative trend. Financing has become more decentralized, in order to increase public expenditure effectiveness and to solicit the intervention of other private funders. The consequence of the crisis for cultural producers, in general, can be highlighted as follows:

• Cultural producers experience a reduction in their revenues due to a drastic cut of public budgets, a decrease in demand and a different attitude of sponsorship.
• Cultural activities need to be socially involved and engaged in the community to compete for public expenditure constraints that prioritize public support towards health, housing, employment, education and the environment.

What are the possible directions? Two possible options deserve attention: the multi-product choice and the creation of co-opetitive relations within a network.

Multi-product strategy

In the first approach, cultural operators widen the range of cultural activities able to attract different kinds of public (both popular and elitist), including non-cultural activities related to the commercial uses of the premises.

In a static framework, organizations adopting a a multi-product strategy produce a wide range of complementary products (e.g. different kinds of music, but also musical, theatrical or dancing performances as well as visual arts) while using their space and technologies. This lowers average costs of each activity to enlarge the range of cultural supply, generating higher productivity and, therefore, increasing revenues. In a dynamic perspective, such a strategy stimulates innovation, sharing the risk across traditional and innovative arts products. That is, the revenues coming from the most popular performances can finance experimentations.

Cultural producers may also propose themselves as socially responsible, producing social activities involving the local community and locating in abandoned buildings and degraded areas to promote urban renovation. So, multi-product choice can be qualified as a multi-function strategy: stressing the social role of culture fosters legitimacy and allows to access specific public funds.

Network strategy and co-opetition

A network approach provides benefits as it connects complementary cultural producers that have to face very uncertain and unstable final markets. The transactional nature of the network favours the transmission of skills and better-practices, such as coordinating performances and events schedules. It may also generate benefits by grouping purchases, or by allowing small cultural producers to realize productions that they could not pursue on their own. However, networks are difficult because willingness to cooperate and reciprocal trust are usually rare among cultural producers.

These difficulties might be overcome with a co-opetitive network, implying the simultaneous presence of cooperation in the stage of financing and competition in the cultural market. Cooperation strengthens the position of each cultural producer, when interacting with the political counterpart, and facilitates to access private credit market and European funds: it shares the information and the skills to participate to European programs. Private or public/private agencies might make cooperation possible, acting as the hub of the network.

The case study

Evidence of the above strategies and the related difficulties emerge from the case study- a sample of small cultural operators, in performing arts (Centro Zo, Scenario Pubblico, Brass Jazz Club and Teatro Coppola), visual arts (Fondazione Brodbeck, Fondazione Presti and BOCS), and heritage valorisation (Officine culturali), located in Catania, a medium-size town in the eastern part of Sicily (Italy).

In Less might be better. Sustainable funding strategies for cultural producers, we find cultural producers combine multi-product and multi-function strategies. As a ‘last resort’, a large majority provides a wide range of activities, including commercial services, representing in some cases the first source of entrance. Some contribute to the regeneration of urban areas but only few interact with the local community. There are attempts of networks but no evidence of co-opetitive networks.

What policies?

The above scenario implies that “less might be better” if structural policy changes take place:

• From public subsidies to the provision of material and immaterial services such as in-kind services as public-property location,
• Advisory services and technical support for accessing supra-national funding programs,
• Support to public/private agencies to facilitate networks, and
• Financing schemes providing incentives to cooperation, such as micro-credit schemes with shared responsibility.

The picture described in the case study can be generalized to the national level. In these years of recession, Italian cultural producers have tried to react adopting multi-product strategies to ‘survive’; however, a long term strategy is still lacking. There is wide room for public policies to support entrepreneurship and networking and to promote the co-opetitive network strategy. Such a strategy, in fact, might allow for increasing funding opportunities for cultural operators enhancing their capability to compete in the markets and, at the same time, the variety of cultural services supplied to the audiences.

 

This article is based on:

T. Cuccia – I. Rizzo, “Less might be better. Sustainable funding strategies for cultural producers”, City, Culture and Society, 2016. Doi: 10.1016/j.ccs.2015.07.002

Author Information:

is professor of Economic Policy at the University of Catania.

Ilde Rizzo is professor of Public Finance at the University of Catania. She is currently President-Elect (2014-2016) of the Association for Cultural Economics International (ACEI).

Image:

Sudvirus (2013) by compagnia zappalà danza.