4    Development prospects

4.1  The next steps

In the end it is a shift in governance that is required. 

Whilst beginning this process of promoting understanding of the full possibilities of the cultural sector and how changes in its governance might increase its potential, we have to realise that this will not be an overnight process. Moreover, it is a process that will require those in the independent cultural sector to act for themselves:  this is not just because of financial needs, but because the sector's perceptions of opportunities and solutions to current problems can be helpful in influencing change in local structures of governance and levels of commercial activity. Manchester's Cultural Industries Development Service emerged from a long process of maturation in both the sector itself and in local government's understanding of it.

However, there are some steps that can be taken. 

St Petersburg's creative industries sector needs a more coherent voice – it needs to be able to articulate its requirements in non-cultural policy and funding environments. It needs more ‘self-awareness’.

The sector needs to open up its networking structures to embrace other network areas. Many respondents to the 2001 survey suggested this would be very difficult – due to considerations of ‘closed networks of trust’ discussed above, but also because of a sense of competitiveness and lack of common interests. These are certainly serious issues, but experience in Manchester and elsewhere suggests that the network can deliver very real benefits. In order to do this it must be as open as possible; and it must achieve acceptance that not all benefits will apply to each business or sub-sector all the time (eg start-ups and established businesses will need different things). That is, associations of like-minded creative producers must establish trust – which can be a long and difficult process.

There is clear potential for joint or collaborative activities – marketing, information, legal issues, networking, foreign links, support in grant application etc. These will benefit the sector as a whole, they will be essential parts of the foundation on which the sector will develop. They will provide a strong, unified voice with which to engage in potentially positive dialogue with the authorities and meet the needs of the situation.

4. 2  Project recommendations

Strategic vision
	
•	That the vision for St Petersburg embodied in strategic documents contain a specific emphasis on the way the city's cultural strengths can meet its economic and social priorities. 
 
•	That the themes of cultural heritage, cultural tourism, creative industries and urban regeneration be brought together in a unified policy priority.

•	That the importance for St Petersburg's economic future of innovation - stimulated by specifically contemporary culture - be affirmed.

Development policy

•	That the legal, financial and taxation status of cultural enterprises and organisations be reviewed, possibly in the context of wider reviews of small business development.

•	In particular, specific note needs to be taken of the inflexible and damaging legal situation placing SMEs and not-for-profit organisations in strictly divided regulatory categories – the constraints on each side are seriously restrictive for business in general, but particularly in the cultural sector where much activity is related to state and foundation/ charity funding and where private-public funding mixes are common and effective. What are the options for more flexibility at local level?

•	Current initiatives for SME support and development can be adapted to the cultural sector, in areas such as training, advice and financial support – but these need specific tailoring to creative enterprise needs. Existing and emergent lead cultural bodies need to be partners in this process of adaptation.

•	That review be made of the role in creative industries of further and higher education institutions, and of their potential to interact with specialist creative producers. This includes both ‘origination’ (designers, artists etc.) and technical skills for manufacture. 

•	That policies to promote ICT skills and businesses should be aware of the potential role played by the emergent creative digital media sub-sector in St Petersburg.

•	St Petersburg as a whole needs to develop an international ‘brand’ or image to supplement that of the historic flagship institutions – the creative industries will be crucial in helping create this brand and will benefit from it (see below).

Sector structural development

•	That informal network initiatives be supported and encouraged in order to strengthen cross-sector and intra-sectoral awareness and communication. 

•	That there be high-level policy forums in which lead voices from the sector may articulate needs and problems.

•	That more formal organisations be promoted, such as business or trade associations with specific sub-sector focus.

•	That information initiatives should be supported and encouraged – in order to improve communication within the sector about grants, events, initiatives, policies and other professionally useful information

•	That sectoral and sub-sectoral marketing initiatives be encouraged and promoted to provide tourists, clients and investors with a better knowledge of the varied cultural and creative business ‘offer’ of St Petersburg.

•	That joint promotional activities be encouraged and promoted within Russia – showcasing St Petersburg creative industries businesses in other trade shows and through St Petersburg-based festivals and exhibitions. These should be linked to joint marketing initiatives.

•	Joint export and trade initiatives should be encouraged and supported, building on the success of the big flagship institutions but targeted at collections of small businesses – design, music, fashion, contemporary art etc. 

•	All these marketing and promotional activities will benefit from the establishment of a St Petersburg ‘brand’ which reflects its vibrant contemporary cultural scene.

Capacity-building within the sector

•	All parts of the sector (commercial businesses, not-for-profit, state- sponsored and freelancers) lack a range of generic business skills in the areas of: management; business planning; financial management and planning; marketing; professional information gathering; ICT skills. These skills, though generic to some degree, need to be offered by SME development schemes, adapted to this sector's specific needs in conjunction with the creative industries' own lead bodies.

•	These generic skills need to be supplemented by the targeted development of specific professional services with knowledge of the creative industries sector – accountancy and financial advice, legal services (especially copyright and contracts), professional management and agents, and other key skills essential to the functioning of each sub-sector.

•	International expertise needs to be transferred via master classes and seminars, international visits and placements. 

•	There is a need for trade directories and professional information services for the sector.

•	Resources such as international creative industries publications – focusing on design, music, architecture etc, but also trade magazines such as Variety, Music Week or Financial Times supplements that benefit small UK businesses – should be made available as part of any training and information services for the sector.

•	An industry-lead body, along the lines of Manchester's Cultural Industries Development Service, but adapted to the St Petersburg situation, is crucial in pushing forward these recommendations

Continuing research

•	Much better information needs to be obtained about St Petersburg's creative industries sector in order to inform support and development strategies; such information is also crucial in the promotion of St Petersburg's ‘cultural offer’ and in establishing a contemporary ‘brand’ for the city.

•	Statistical information needs much greater precision – whilst it is clear this may not come about in the short or even medium term, a closer review of existing sources could reap some benefits.

•	It should be noted that there is currently a general review of SIC and SOC codes as part of a review led by the United Nations – this is due in 2008. The UK government have asked the creative industries sector (via the Ministry of Culture, Media and Sport) to provide input.  How does Russia stand on this?

•	In the absence of statutory information, local quantitative ‘mapping’ research needs to be carried out in order to give St Petersburg a sense of what exists. There are now well established methodologies for this type of research.

•	This quantitative research needs to be supplemented by more qualitative research into the sub-sectors – including market position and opportunities, skills and financial needs etc. But a general assessment of the cultural ‘assets’ of St Petersburg needs to go beyond formal cultural institutions to include meeting places, cafés, alternative markets, alternative publications, key intermediaries, existing international connections etc.

4.3  Pilot projects

As a result of the project survey, an Initiative Working Group was set up, bringing together individuals in the creative industries sector already working in a strategic way on behalf of their own and other entrepreneurial organisations and businesses (see Appendix 3). Achievement of the project's goals include long-term infrastructure solutions - removal of legal, bureaucratic and fiscal constraints - which cannot take place immediately.  But the process of change is being speeded up by a series of pilot projects, initiated from within St Petersburg's creative industries sector itself, which members of the Initiative Group are working on.  Three of these are outlined below:

(i)  St Petersburg Centre for Creative Industries Support

Problem. St Petersburg's classical heritage and culture are its strength, but the creative industries are less well developed. Entrepreneurial activity in the cultural sphere is hindered by lack of a targeted support service and sector-specific business skills.  While creative industries activities can enhance the economic performance of large cultural institutions, increase earnings from tourism and support the restructuring of manufacturing industry, there is little understanding at all levels of this potential impact. 

Expected results.  The project envisages a series of activities that will lead to the detailed planning and creation of a St Petersburg Centre for Creative Industries Support and the first stage of its working.  It is designed as the Russian/St Petersburg equivalent of the specialist services or agencies functioning in various west European countries.  It will provide the missing skills and other support, while working to create a favourable environment for enterprise in the cultural sphere.

For whom?  The target groups and constituencies of the St Petersburg centre are primarily:
•	Existing creative industries
•	Not-for-profit organisations in culture and the arts
Work will also be carried out with:
•	Business
•	The authorities
•	The public

Purpose.   The strategic goals of the St Petersburg Centre are:
For the creative industries:
•	Growth in the number of organisations and companies in the creative industries sector and their increased administrative and financial stability.
For not-for-profit cultural organisations:
•	Development of entrepreneurial activity in the state and non-state not-for-profit sectors.
For business:
•	An increase in collaboration between the business sector with creative industries and not-for-profit organisations.
For the government:
•	Development of official policyin support of the creative industries sector, as an essential component of the social and cultural life and economic development of the city and region.
For the public:
•	Recognition that entrepreneurial activity has a natural and essential  role to play in the development of the cultural sector and its organisations.
For the Centre itself:
•	Promotion of the St Petersburg model o creative industries support in other regions of Russia, followed by the creation of a network of similar Russian centres.

Project method.  The activities involved in the proposed project include:
Decision-making about the specific types and forms of support needed by St Petersburg's creative industries and how this should be delivered, followed by work to create the Centre.
•	Research and analyse the sector
•	Research the market for this service
•	Develop the organisational structure
•	Work up the Centre's Business Plan
•	Implement the first stage of the Centre's functioning
•	Attract the necessary investment
•	Study and adapt to the realities and needs of the city and North West Russia Region west European models for centres/services/agencies for creative industries support and development.
Forming a climate of acceptance of the need for the Centre (work with public opinion and the target groups;  stimulus of the market):
•	Hold forums, round table and other meetings bringing together representatives of the Centre's target groups.
•	Work with the media (public relations)
•	Devise educational programmes aimed at promoting world trends towards intellectual and economic links and partnerships between business, the creative industries and not-for-profit cultural organisations, and also social and economic forms and methods of collaboration involving business, the creative industries, not-for-profit cultural organisations, the public, and central, regional and local government.  
Inaugurate the first phase of the Centre's functioning:
•	Provide advice on marketing, business planning, finding sponsors, securing loans and investment, integrated public relations, legal issues, fund-raising, etc.
•	Organise seminars and training programmes
•	Lobby the Centre's interests (hold meetings and discussions with representatives of local, regional and national government and other organisations influencing economic and cultural policy in the city and region).
•	Take on functions to represent the creative industries sector as a whole (ie represent the interests of it and its sub-sectors in inter-sectoral contexts).
•	Support project development.

Who is responsible?  The project's initiators are:
Centre for the Development of Museum Business, a not-for-profit partnership
Cultural Industries Development Service (Manchester, UK)
Prince of Wales International Business Leaders Forum

Contact:  Dmitry Mil'kov dmmilkov@mail.wplus.net.

(ii) Innovative Funding for Stable Cultural Development in North West Russia

Problem.    Research carried out during the Tacis project revealed that the majority of cultural organisations depend on state funding and international foundation grants.  Culture is still viewed as a loss-making section of the state budget and no account is taken of its potential economic impact in a contemporary city, where it may stimulate investment, the development of tourism and the forming of an attractive environment for businesses.  In order to ensure cultural organisations'  stable development, it is therefore necessary to promote an entrepreneurial approach:  both to managers in the cultural organisations themselves, but also to the civil servants working in the relevant regulatory environments.

Although the recent period has seen a shift in favour of enterprise in the cultural sphere, organisations such as design studios, art and craft galleries, etc, are not seen as entrepreneurial structures and are therefore unable to look for the state support offered to small businesses.  On the other hand, these organisations are not large and not in a position to make use of existing loan-provision schemes, being unable to satisfy bank requirements.

Due to lack of understanding of this type of organisation's economic potential, it is difficult for entrepreneurial cultural organisations to attract support from private companies.  They need more innovative, flexible forms of support and the kind of relationship provided by rare venture capitalists of the 'business angel' type, ready to enter into partnership arrangements in exactly their sphere. 

Purpose.   As this pilot project builds on earlier programmes focusing on the development of self-help and entrepreneurial approaches and organised by the Leontief Centre and the Prince of Wales International Business Leaders Forum, it is part of a wider strategic programme, and has both short-term and long-term goals.

Long-term goals.  To provide for the stable development of cultural organisations by influencing cultural policy through the development of different accessible financial instruments and services, including partnerships between state and non-state organisations.

Short-term goals.  To research and identify a number of innovative forms and models for funding and investing in culture, but also to provide for the continuing professional education of cultural organisations' managers - to ensure that effective and efficient use is made of these models.

Project method:  
•	Raise the standard of professional skills in cultural organisations and establish their needs for funding (micro credits, mutual loans, venture capital, etc) and advice.
•	Create a database of existing funding organisations (both state and non-state) with detailed information about target groups, policy, priority areas and forms of work.
•	Develop feasible models of financial support based on international experience and taking account of local specifics.
•	Develop recommendations to the state organs responsible for policy in the cultural sphere, with the aim of removing administrative and fiscal barriers to the operation of the proposed models.
•	Hold a concluding seminar to discuss the chosen models and schemes with representatives of cultural organisations, funding bodies, government and business organisations.
•	Disseminate the results via publication on the Internet and in a report to cultural organisations in St Petersburg and North West Russia.

For whom?   The project's target groups are:
•	Committees for Culture of St Petersburg, Leningrad and Arkhangelsk oblasts, and Karelia.
•	Creative industries cultural organisations in the spheres of architecture, design, fine art, music, museums, multi-media, craft, theatre and dance, photography.
•	Financial establishments:  banks, investment funds, international donor organisations, and private investors.
•	Business:  large Russian enterprises and international companies such as Pervomaiskaya Zaria, Ikea, Lomo, Leningrad Farforny Zavod.
•	The media.

Expected results.   Taking account of relevant international experience (especially the creation of the Loan Fund for Cultural Development in Bulgaria and Hungary) it is hoped to prepare the ground for the creation of a similar infrastructure and financial mechanisms to support cultural organisations in St Petersburg and the North West Federal Region of Russia.  

Specifically, results will be:
•	Schemes for funding and investing to provide for the stable development of cultural organisations, which have been discussed and agreed with representatives of the target groups ('menu' of different types of scheme).
•	Professional networks of cultural organisations, schooled in the knowledge of how to make effective use of the opportunities for receiving funding and investment.
•	A catalogue of 30 projects by cultural organisations in St Petersburg, Leningrad and Arkhangelsk oblasts, and Karelia for distribution to businesses and business associations.
•	A constantly updated database of existing funding programmes and establishments (their criteria, priorities, methods and forms of work).
•	Dissemination of the project results among representatives of the target audience via web site (www.creative.leontief.net) and a publication.

Who is responsible?  The project's initiators are:
Leontief Centre for Social and Economic Research
St Petersburg Corporation of Direct Investors
Prince of Wales International Business Leaders Forum

Contact:
Elena Belova, Leontief Centre;  tel/fax: (812) 319 9626; e-m: belova@leontief.spb.su.
Elena Korf, PWIBLF;  tel: (812) 325 8100; fax: (812) 325 8101; e-m: elena.korf@iblf.spb.ru.

(iii) Creative Industries Forum:  Development of Associations of Entrepreneurs in St Petersburg and North West Russia

Problem.  St Petersburg has great potential for developing enterprise in the cultural sector.  The Tacis project demonstrated that the further development of the city's creative industries requires clear understanding of the possibilities of the sector and consciousness of common interests.  Only if this is achieved will the creative industries become a real sector of the economy, able to articulate its problems and needs, and to produce its own leaders to represent these interests vis-à-vis higher levels of government.

The process of consolidating the sector on the basis of common problems and interests, using principles of strategic partnership, is the main undertaking of this project.  Its successful implementation will provide the foundation for further development and realisation of a support strategy in St Petersburg.

Purpose.   The aim is to create an infrastructure to stimulate entrepreneurial activity, strengthen horizontal production links and lobby joint interests.

For whom?  The project's target groups are existing associations and nascent associations of different creative industries practitioners, such as furniture-designers, music promoters, fashion designers. It aims to bring them together in a working relationship as a sector, but also to stimulate the creation of other sub-sector networks.  

Expected results.    A St Petersburg Creative Industries Forum will be created in the course of the project, which will:
•	Represent professional associations of cultural producers vis-a-vis the authorities and donor organisations in the process of dialogue relating to practical measures for enterprise development and the promotion of more creative industries organisations and businesses.
•	Establish the many-sided process of exchanging information and experience between organisations defending the entrepreneurial creative industries sector (a series of working seminars and sessions of the Forum, where the participants will discuss the sector's key problems and needs, transforming these into practical recommendations and measures).
•	Create an internet alliance of the main associations in St Petersburg, but also publish a catalogue of associations and professional unions of creative industries entrepreneurs (around 50).

Project method.  The project will achieve its purpose in three stages, by a team formed during the Tacis project, becoming members of the Initiative Group, in which they took leading roles.
•	Stage 1:  Make an inventory of the existing and functioning associations, evaluating their main problems and needs and identify pilot projects.
•	Stage 2:  Hold a series of working meetings/seminars with the aim of strengthening relations and the exchange of experience via monthly working sessions of the Forum.
•	Stage 3:  Create a mechanism for collective promotion and lobbying;  hold the Forum's final session;  create the internet alliance of the Creative Industries Association on the basis of the web site: www.creative.leontief.net;  publish a catalogue of associations.

Who is responsible?  The main project partners are the Festival Ekspo association, whose team are the staff of the St Petersburg Centre for Enterprise Support, with a number of years experience in creating business associations and providing them with advice, but also with experience in managing and developing large-scale projects in the creative industries sector; the second partner is Art Sessions/Foundation for the Support of Creative Initiatives in Contemporary Mass Culture.  Together these two involve key representatives of the sector (in advertising, architecture, art, art galleries, craft, design, fashion, photography, cinema and video, music, theatre design, publishing, multimedia, tv and radio), but also representatives of the Administration and not-for-profit organisations.

Contact:
Marina Lebedeva, lebedevamarina@hotmail.com	
Felix Naroditsky, JFC@mail.wplus.net; or gotama@yandex.ru