The role of IP in assisting the economic recovery – case study: cultural heritage companies evolving products to suit the new norm

(C) Naomi Korn Associates & Mathys & Squire 2022. Some Rights Reserved. These case studies are licensed for reuse under the terms of a Creative Commons Attribution Share Alike Licence.

The following case study has been taken from the “Implications of Covid-19 on SMEs – reassessing the role of IP in multiple sectors and industries” report written by Naomi Korn Associates and Mathys & Squire Consulting, November 2021. This case study reviews the impact on SMEs (small, medium enterprises) of the COVID-19 pandemic since its appearance in early 2020 through the first quarter of 2021. It focuses on the industries most affected by the crisis and whether intellectual property (IP) and IP management may have helped mitigate its impact through adaptation and change.

Sector overview

The impact of COVID-19 on the cultural heritage sector will most likely permanently affect it, changing cultural practice and engagement as we know it.

Cultural organisations and the arts in general faced unprecedented challenges, forcing sudden and widespread closures, with almost 80% of UK heritage organisations, for example, experiencing a sharp decrease in visitor numbers[1] and many fearing permanent closure due to the loss of fragile income streams. Creative industries in the UK alone are estimating a turnover loss of £74 billion in 2020, with job losses of over 100,000 as well as almost 300,000 job losses amongst self-employed workers from supporting industries. Thus, the impact of COVID-19 on the cultural sector will bring about long-lasting changes in cultural practice and engagement as we know it.

Analysis

During the coronavirus pandemic, many cultural institutions and museums made an increased amount of cultural content freely available[2]. Exemplifying an increased awareness of the benefits of digitisation, including the building of a digital strategy into business models, by taking advantage of new or existing digital assets, has played and will play an important role in the survival of cultural heritage institutions. While digitisation efforts by small and large heritage organisations may differ widely due to funding, large organisations which already had a digital footprint and plan in place before the pandemic were better placed to modify their operations and to push more of their activities and their collections online. Unfortunately, many smaller and rural heritage organisations have neither the facilities, nor skills or finances to put them in place[3]. Ultimately, digitisation and the pro-active creation of new digital content may be the route for survival for impacted cultural heritage organisations. Digital assets will, broadly speaking, be protected by copyright, and in specific cases these organisations may have opportunities for patent or trade secret protection and the incorporation of VR and AI into experiences. As an example, ‘Inside Bruegel’ is an online experience developed by the Kunsthistorisches Museum Vienna (KHM) to share digital photography and the findings of scholars. Another example is the 360-degree virtual tour of the Bode Museum, Berlin.

Following coronavirus lockdowns and restrictions, museums used digitised assets to pivot creative digital programming including online exhibitions, virtual tours, livestreams, and even VR games, to reach their audience remotely. As a result, their reach in terms of diversity and inclusion was in many cases increased despite social distancing. Many museums have switched to producing video content. The Stedelijk Museum in Amsterdam is just one example of a museum that offered live tours with the museum director or curators, or even ‘silent tours’ (the Metropolitan Museum in New York City) through the collection galleries of their museums.  Some of the most creative museums combined dance or music in a gallery setting, demanding the creation and strategic management of new forms of IP, as well as exploration of licensing opportunities for copyright protected content. Likewise, musicians and performing arts organisation have seized upon the online video format to remain relevant and reach both their traditional audiences and new ones globally.

In addition, arts organisations and museums have had to rethink revenue models like memberships and subscriptions, considering how membership can relate to an organisation’s digital programming, making it relevant locally and globally.

Interestingly, the closure of heritage and performing arts venues along with the increasing demand for digital content, benefited some areas of the broader entertainment industry.  For example, Netflix gained as many as 16 million new subscribers during the COVID-19 lockdowns. Large film and TV businesses with their own distribution channels and those with richer catalogues of digitally distributable IP faced less severe economic loss, particularly valuable at a time when new production wasn’t possible.  Smaller, independent production companies suffered because they typically had fewer accumulated IP assets to fall back on. Given the disproportionate importance of microbusinesses to the creative industries (94.7% of the sector in 2018), a significant loss of these businesses would be extremely damaging to the sector.

Fortunately, many cultural heritage organisations throughout the UK have received grant aid through the £50m National Lottery Heritage Emergency Fund, and with this critical help have sought to pivot their activities towards producing digital content, benefiting from their established brand presence and essentially reminding the public that they are open for business albeit in a new format.  Without such a revised approach and without the necessary financing, many heritage organisations, closed for months, will struggle financially throughout and after the pandemic.

It is also important to remember that the cultural heritage sector naturally attracts innovators, who have developed new innovative technologies and have protected those intellectual assets accordingly. Companies that succeeded in the area include Milan-based Junior, Dexibit, Clio Muse Tours in Greece, and Cuseum.com in the U.S., the latter holding patents for smartphone memberships management and location-based media delivery systems facilitating a more interactive museum experience. By partnering with companies like these and with other cultural institutions that have high-quality image, video, and other content collections, the creation of new programming and opportunities can be achieved relatively quickly. 

A crucial factor discovered by cultural heritage institutions too often and too late is a lack of orderly recording of collaboration agreements, contracts and content licensing for past productions, preventing their reuse or reinvention in a timely manner.  While the creation of copyright-protected content and the use of digital content by culture and arts organisations is likely to be the best route to their continued survival and a source of potential revenue, it is important to remember that many heritage organisations such as museums and galleries have very well-established brands with significant goodwill attached to the brand internationally, including the British Museum, the Rijksmuseum and MoMA. For such organisations, the arrival of the pandemic required rethinking and pivoting of their brand strategy and an appraisal of their use of brand assets, including trade marks, designs, domains and associated reputation. For example, Guinness used its connection with Irish culture and heritage to encourage people to celebrate St. Patrick’s Day in their own way while obeying national pandemic regulations. Similarly, many museums produced free online content such as lectures and workshops aimed at global community service, while maintaining and strengthening brand recognition and loyalty: the Frick Collection in New York City began hosting Cocktails with a Curator, inviting the public to a virtual happy hour once a week as a Frick curator offered insights on a work of art. Brand heritage foundations and exhibition spaces have been a highly effective way to use IP for communicating a company’s legacy connection with the arts and social causes.  Exhibiting their collections has supported visibility and reputation by emphasising history and dedication. Examples include Armani Silos, as well as the Burberry Foundation, with its emphasis on brand and heritage and partnerships with The Royal College of Art, Oxfam, and others.

The global licensing industry was worth US$292.8 billion in 2019, and although dominated by character and entertainment licensing, it was encouraging to see that the fastest growing licensing sectors last year were Art (+10%) and Non-Profit (+18%). The licensing industry started 2020 with a strong, profitable business model, and it is confident that it will weather the current storm. Brand licensing has seen positive growth and looks set to become more desirable as licensors look for ‘evergreen’, trusted brands which consumers want to support. For SMEs, branding licensing revenue can be a valuable income stream at a time when every penny counts. For example, the “I love NY” slogan and logo was developed to promote tourism in New York State. Created by graphic artist Milton Glaser, it was first used in 1977. It is owned by New York State Department of Economic Developmentand generates about $30 million annually. Even when physical sites are closed, the I Love NY registered trade mark in association with products, provides valuable income during the COVID-19 crisis.

Realisation that the proper management of IP assets will prove to be a clear advantage for organisational survival during and after COVID-19 shut-downs will be an advantage, as will an entrepreneurial mindset and a willingness to fund and staff the exploitation of existing content. 

[1] ONS (2020): In the last two weeks how has Covid-19 affected your businesses footfall compared to normal expectations for this time of year, ONS

[2] (European Parliament, 2020)

[3] Europa Nostra (2020): Covid-19 & Beyond: Challenges and opportunities for cultural heritage, Europa Nostra