Making Innovation Flourish

On Evidence-Based Policymaking

We take it for granted that a solid evidence base is a key requirement for government interventions. The Department for Business Enterprise & Regulatory Reform’s (BERR) five principles of good regulation state that any regulation should be “transparent, accountable, proportionate, consistent and targeted”.

Yet the European Commission – in its proposed Term Extension Directive – is calling for an extension of the European copyright term for sound recordings from 50 to 95 years, which all the independent evidence suggests would be bad news for emerging talent and for consumers.

The theoretical trade-offs are well-known: an extended term of protection, it is argued, provides incentives for musicians to create new recordings, but it also prevents artists from innovating on the back of published music and diminishes the choice of music available on the market. Which effect dominates, and the case for term extension – should rest on a careful consideration of the empirical analysis.

Happily, an international group of 50 leading academics has done just that in the Bournemouth University statement submitted last month to the European Commission.  The academics have carefully reviewed the available independent evidence and have shown overwhelmingly that the proposed term extension would be bad for Europe’s creativity (though good for a relatively small number of long-living performers and their estates).

The academics wrote to The Times earlier this week to call on policymakers to examine the case in light of the evidence.  Three cheers for the academics!

Our education system needs to change - a Provocation

I'd like to draw your attention to our latest Provocation - a thought piece on the subject of creativity, innovation and education.  These are free to download from the NESTA website and include extended essays by key thought leaders working in innovation. They aim to foster debate and new ideas, and showcase thought-provoking work on innovation.

Beginning at the Beginning: The Creativity Gap was written for NESTA by Anthony Sargent, General Director and Katherine Zeserson, Director of Learning and Participation at The Sage Gateshead.  The essay argues that to unleash the innovative capacity of the UK in the 21st century, our education system needs to nurture the natural creative innovator in all children and ensure it is protected, nourished and stimulated into adult life.  It critiques many aspects of our current approach to education, and outlines a vision of a creative education system that operates as a whole community process.  This essay was launched in Gateshead last week and was also the subject of our latest policy breakfast in London last Friday.

I welcome your comments.

Internet radio: how regulation could impact online innovation

Today internet radio stations in the US are observing a day of silence to protest the Copyright Royalty Board (CRB)'s decision to hike royalty fees for internet radio stations - a hike of 3-12 times the fees currently being paid by stations. Small stations have complained that the fees would be more than their annual revenue, and many pundits argue that this could effectively 'kill' streaming internet radio in America. Even non-profit radio, such as NPR (National Public Radio) would be severely hit by the hike.

Roughly 1 in 5 Americans listened to internet radio regularly in 2006, so the potential impact shouldn't be underestimated. For reference, on this side of the pond, the picture is much the same: BBC's internet radio doubled its listenership in 5 months, and a year ago reported over 32million hours of net radio consumption (I'm sure it's doubled again by now).

To me, the tragic irony in this story is the fact that the proposed royalty fee model could never have existed without the online medium itself. The fees are per song, per listener - something which could never be accurately measured in the old broadcast model, but suddenly is possible for online stations due to the trackable nature of streaming media. Net radio campaigners say this is an unfair model, as it penalises online radio unjustly compared to satellite or standard broadcast radio fees.

Internet radio is the epitome of The Long Tail at work: thousands of small, non-commercial niche stations sprang up as an alternative to mainstream commercial stations littered with ads, churning out the same playlist over and over. A thriving new business model emerged based on broadband penetration, streaming media technology and consumer demand; a perfect example of innovation at work.

Looking at the bigger picture, this is a case in point of how something like regulation could seriously impact the growth of an innovative business model. What nascent markets like these need is not overbearing regulation, but forward-thinking. Of course I'm not saying they shouldn't pay (fair) fees, but this was a missed opportunity for the CRB to demonstrate leadership in the way intellectual property should be managed in the digital age. Instead, they opted for an approach that exploits the nature of the new medium to line the pockets of the record companies: none of the proposed fees would go to the recording artists.

Reaching out from the creative silo

Our latest policy briefing (Reaching out from the creative silo: the arts, creativity and innovation) calls for an updated policy debate on the creative industries. As a mature sector, these industries must face up to the challenges of their low productivity growth and of ensuring that the benefits reach out from the creative silo and influence wider creative contributions in the UK's economy and society.

Research in this area must treat the arts and creative industries with the same degree of rigour as traditional industries. By applying existing models of innovation that are known to work in more traditional sectors, policymakers can develop a richer set of interventions than public funding alone. In our view, supporting creative enterprises as they identify and adopt new technologies, helping them think through the IP implications and supporting collaborative networks are high priorities.

We'd welcome your thoughts...

• NESTA Policy Briefings
• NESTA Creative Pioneer Programme