Paying for digital

Most cultural organisations in the UK have a mixed revenue stream, which includes earned income, sponsorships, memberships and donations, and local and national funding. 

Historically, funding for digital has come from ring-fenced funding pots that sometimes led to the development of websites or apps without an ongoing plan for updating and maintaining them. 

That’s not likely to be a problem for an R&D project, or one whose primary purpose is to test and learn. But we all know of projects with websites, apps or other digital platforms which were abandoned once funding came to an end. 

With new digital things emerging at the pace and volume that they do, it’s easier to adapt, react and keep up with these changes if costs have been factored into a 3-5 year business plan. 

Digital upskilling initiatives

In recent years, funders have recognised the importance of supporting work behind the scenes. Whether that’s infrastructure, training or projects that encourage collaboration and pooling of knowledge or technology. 

In 2018, DCMS published Culture is Digital, saying ‘technology offers unprecedented opportunities for the UK cultural sector’. However, it also noted: ‘Our consultation and research have shown that the cultural sector currently lacks the infrastructure and the operating and funding models needed to thrive in a digital landscape.’

As a result of Culture is Digital, significant funding was allocated to support the upskilling of the sector. That included initiatives such as Arts Council England’s Digital Culture Network – recently extended until 2024 – and Digital Skills for Heritage from the National Lottery Heritage Fund (NLHF). 

A recent report by NLHF suggests that this programme increased the heritage sector’s confidence. And anecdotally we know the sector has collectively become much more knowledgeable in areas such as digital marketing, analytics and (thanks to Covid) online workshops and events. 

Difficulty in monetising streaming

Culture is Digital also included projects encouraging technical experimentation, innovation and exploration. The Royal Opera House set up Audience Labs while the Royal Shakespeare Company worked with creative technology company Magic Leap. It’s not clear how these types of initiatives benefitted the sector collectively, but it has provided inspiring and ground-breaking work, such as Current, Rising.

Regardless of the progress made, it’s still the case that cultural organisations struggle to fund some types of digital work, particularly projects that aren’t directly linked to core business. (This is much less of a problem for things like websites that bring in revenue through ticket sales.)

The pandemic led many organisations to experiment with activities such as live streaming and, while undoubtedly a huge amount was learned from this process, it also demonstrated the difficulty in monetising streams. 

Research published at the end of last year indicated that many theatres were planning to drop digital performances, with one of the reasons cited as money. As a sector, we clearly need to find a way for digital to sit alongside in-person events as part of an overall business model. 

Rethinking the business model

Perhaps we need to think about streaming differently. Rather than thinking ‘it cost x to produce so we need to recoup x’, it should be seen as part of a business model that contributes to a variety of outcomes such as widening access and increasing brand awareness as well as events. 

Of course, it takes time for new business models to demonstrate profitability and it’s important to understand that pivoting to this sort of digital activity requires patience – it’s unlikely to immediately recoup its investment. 

There is online work that has attracted a paying audience although, as has been identified in research, this has tended to be more workshop or learning formats. Opera North’s Couch to Chorus is one such example.

Another common issue for smaller organisations is how to ensure the quality of digital content, whether artistic work or marketing. There is an opportunity here for greater collaboration across the sector, in sharing knowledge, technical skills or even equipment. 

This idea has been identified several times in recent years – and one we’ve heard first-hand from our conversations with cultural practitioners and administrators across the sector over the past two years – but it has never quite materialised. Despite the many challenges of a collaborative model, it must be worth further exploration.  

Getting the foundational stuff right

Any discussion of finance and digital needs to address investing in getting the foundational stuff right, such as having a website which supports the work you want to do now and in the future. Fortunately, most senior management teams and boards now recognise how critical it is to have an effective website and they allocate budget accordingly. 

Having said that, it's not uncommon for the budget to dictate the website requirements rather than the other way around, which can lead to problems and frustrations. We recommend mapping out the priority objectives for your website – using the MoSCoW method – and then getting a number of quotes to understand the cost implications of your plans. 

And it’s not just building the site that needs budget, ongoing maintenance and future development needs factoring in too. Technology moves fast and organisations evolve, so in two or three years you will probably need additional functionality or changes to how the site looks or works. These costs should be factored into your 3-5 year business plan.

Typically, we recommend setting aside 15%-20% a year of the cost of rebuild for maintenance, including tweaks and small updates, and 40%-50% over a 5 year period for larger scale development. This level of ongoing investment will ensure that your website – your most important digital platform – evolves and improves in step with your organisation.
 
There is no magic wand for funding digital work, but it is heartening to see moves in a positive direction – whether that’s funders accepting that money is need as much for infrastructure as for the shiny front end of a digital project, or internal budget holders understanding that a website is a business critical tool and needs resourcing accordingly. 

Collaboration remains open to further exploration as collectively the sector has gained a huge amount of knowledge and learning, in particular from the experience of the last two years. We hope to explore how this might work through our Digital Works programme and Venues of the Future Research & Development project (we will be starting to share insights from this work soon).

Katie Moffat is Head of Sector Engagement (Europe) at Substrakt.

 www.substrakt.com
 @substrakt

This article is part of a series contributed by Substrakt exploring the many ways in which arts and cultural organisations can embrace the world of digital.