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The Current State of the Creative Economy

The creative economy refers to artistic‑oriented jobs. Learn about the current state of the creative economy and how you can leverage it for your business.

The creative economy is a strong and growing sub-economy that's driven by artists engaged in the creation of products that represent their personal vision. Buyers purchase these works via direct sales and third-party vendors. Governments at all levels provide support to artists through grants, loans, and community outreach programs to help artists get their work to the public at large.

The creative economy uses elements from the traditional economy at various points of the cycle but is considered its own economy by and large. It's also referred to as the creative industry due to the fact that a majority of the output is in the form of physical goods that people purchase for their own purposes. Some of the goods produced by the creative industry include t-shirts, clothing, painting, jewelry, photographs, digital artwork, games, performances, and more.

Art plays a role in everyone's daily life, whether they realize it or not. It's found in industrial design to the practical shoes on your feet and the kitschy paintings on your wall. However, its role in people's lives, much less ease of access to it, has been downplayed and viewed as not overly important until recently. The rise of the internet has helped the creative economy grow, given buyers more access to artists across the spectrum, and made it easier for consumers to get their hands on unique items while supporting artists in their endeavors.

The following is a look at how the creative economy functions, how it's one of the different types of entrepreneurship, and its impact on the economy as a whole. Read on to learn more about how your purchase of artwork from your favorite artist helps drive the creative economy.

What is the creative economy?

The simplest way to explain the creative economy is as follows: It's an economy where artists and creatives start a business, sell their work to the public at large, and are supported by local and federal governments.

Artists, who work in all kinds of mediums–-from performing arts to handcrafted goods—create and finish their work, then sell it on the open market through various outlets. People and organizations buy the work. Governments provide support for the arts at the individual, group, and community levels through various programs.

creative economy makes up 3% of U.S. jobs

How big is the creative economy?

The creative economy makes up 6.1% of the global economy.

In America alone, the creative economy contributed a total of $876.7 billion to the U.S. Gross Domestic Production in 2020. In the same year, the creative industry was responsible for 4.6 million arts and culture jobs, $446 billion in wages, and made up 3.1% of all American jobs.

Is the creative economy currently growing?

The creative economy was experiencing strong economic growth prior to the COVID-19 pandemic, but it took a hit, as did all other businesses, due to the restriction of movement as governments worked out a response. Creatives took the opportunity to refine their work, come up with new and novel ideas, respond to the demands of the pandemic, and bring their finished work to the public at large.

Consumers have also changed their buying habits as a result of the pandemic. While they still purchase mass-made goods, they've found an appreciation for the quality of the items they can buy from makers and the fact that the money they spend stays in the local economy while supporting small business owners.

Overall, creative industries and cultural industries are expected to thrive over the next decade.

Graphic titled “Creative Economy Growth at a Glance” with an icon of an up arrow with text underneath it that reads “Projected to grow 40% by 2030” and another icon of a briefcase with text underneath that reads “Could create 8 million+ jobs”. Source: Deloitte

How does the creative economy work?

The creative economy functions in much the same way as the traditional economy but is a little more difficult to pin down in terms of definitives. The traditional economy follows economic laws that are somewhat predictable. In contrast, the creative economy relies on a meeting of the mind between creators and buyers, and sometimes government support, to drive sales.

Here are the key players in creative industries:

Creators

Creators, or artists, create finished works, including intellectual property, that are then sold to interested buyers. A creator can specialize in one type of medium or have proficiency in multiple types. They sell their finished works through direct sales, third-party sellers, websites, art fairs, and anywhere they can display their work for sale. Many creatives start out with one or more online business ideas for selling their goods, then may expand to in-person sales at weekend art fairs or pop-up shops depending on the types of products or services they offer.

Oftentimes, a creative gets into their business by engaging in one of many hobbies that make money. That can be anything from learning how to self-publish a book to getting into woodworking and coming up with a unique product.

While creators are in the pursuit of creating completed work to sell, they also play a role in the traditional economy in the form of buying supplies, tools, and materials needed to make their art. They buy everything from paints and fabrics to computers and cameras as they seek to put together various elements into their finished work.

Distributors

Distributors are third-party sites or sellers that operate in the creative sector to sell artists' and creators' goods or provide a place for artists to list or otherwise show their offerings. Online examples include websites such as Etsy, Instagram, Facebook, and eBay. Other types of distributors include galleries, pop-up shops, co-ops, and art fairs. These modern art business models make it easier for a creative to control their output, generate new ideas, and make a plan of action for distributing their goods.

Artists have the option to use distributors that take over the sale of their goods, enabling them to keep working with minimal disruptions. Alternatively, artists can retain control of the sale of their goods by utilizing websites and selling directly to consumers. Another benefit of using online sites like Etsy is the fact that customer reviews can help creatives build a reputation and help with grassroots marketing efforts.

Buyers

Buyers are the key "cog" in the machinery of the creative economy. The creators start the process by turning their vision into a finished product, but it's the buyer that enables them to produce more work and support themselves. Creators and buyers come together when a buyer is interested in something a creator has made and feels a need to own what the creator is selling.

Buyers frequently return to the same creator to purchase more because they develop an affinity for the creator and their work. This has the effect of supporting the creator financially, enabling them to grow, make a profit, and support their lifestyle so they can keep creating.

Enterprise and philanthropy

Patrons have been supporting the arts for thousands of years, and little has changed in modern times apart from the entities that partake. Corporations and private individuals engage in donating to non-profit foundations that distribute the funds to artists via grants or awards. Philanthropists, both corporate and private, typically set terms and conditions on the donations that recipients have to abide by in order to use the funds.

Sometimes philanthropy goes directly to a given artist or collaborative, again with terms and conditions, to help that individual or collaborative perform or create in an unfettered fashion.

Graphic of a bag of money with text underneath that reads, “In 2020, the creative economy contributed $876.7 billion to the U.S. GDP. Source: NASAA”.

How the government impacts the creative economy

The government has a multitude of programs that help the creative economy thrive. Some of them include community outreach for Native Americans and programs to help them create and sell their art, grant programs that are targeted at art pursuits of all types, and lifting barriers to the sale of art across national borders.

The overall goal of government support for the creative economy is to push industry growth and help improve the quality of life for everyone engaged in the sale of their art.

How to engage with the creative economy

Engaging with the creative economy is as easy as going online and creating a website that sells your art or goods, submitting to a distributor, or visiting and participating in an art fair. You can also participate in the creative economy by purchasing art from others.

Creatives of all types sign up and pay for booths at physical events to sell their wares. Some art fairs are aimed at a certain type of finished goods, while others accept a broad range of artistic disciplines in order to appeal to a variety of consumer tastes.

Oftentimes, creatives make their living from selling at physical outlets and supplementing their income with online sales. Going online and to events such as makers’ markets, pop-up shops, and regular artisan fairs is a great way to get the most out of what's available from your favorite artist or maker, as well as find new artists to buy from.

Participating and engaging in creative economies is easy, especially in the digital age.

How is the creative economy changing?

The creative economy is projected to grow by as much as 40% by 2030, a relatively short amount of time in terms of economic growth.

This suggests that consumers are looking in their own backyards for items to brighten their daily lives, deliver a novel solution to a common problem, and reduce the amount of money that goes towards large corporations. It's a good time for creatives to shift into turning their hobby into a business and market their wares to the world at large.

Help your creative business thrive

The creative economy is here to stay, and it's open to any creative who's looking to start their own small business. Mailchimp can help you build your e-commerce website and give you the tools you need for finding potential customers when you’re ready to get started.

We help you with targeting smarter, seeing your site metrics at a glance, and keeping in touch with your current customers all in one place. At Mailchimp, we want you to succeed as a creative, and we've got the tools you need to become a successful entrepreneur.

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