COVID-19: Economic effects on the creative industries

Since the second week of March, it has been clear that the global spread of the corona virus is also leaving serious economic scars in the creative and cultural sectors: In particular, actors whose business models rely on the organisation and implementation of events, including performing artists, or who depend on visitor flow in their galleries, shops, cinemas, etc., are suffering from the economic consequences of the pandemic.

Cultural institutions are closed

At the end of last week, the health authorities issued a general decree which resulted in the cancellation or postponement of all events in Hamburg with more than 1,000 participants.  Public theatres and concert halls such as the Schauspielhaus, the Elbphilharmonie or the State Opera ceased operations. On Saturday, the remaining state cultural institutions in Hamburg also closed their doors to visitors. Museums, the planetarium and the public bookstores, for example, were affected.Many private companies moved with them - for example, the music and nightclub Uebel & Gefährlich postponed or cancelled several planned events as a preventive measure.  On its Instagram channel, the company spoke of a situation that would mean massive financial losses for the entire cultural scene "and all those involved in it, and thus also an acute threat to their existence". On Sunday, March 15, the local health authority tightened the restrictions again: from April 16, all public and non-public events and meetings will be forbidden, regardless of the number of participants. The order is expected to remain in force until 30 April.

Massive loss of turnover

The situation is particularly problematic for solo self-employed persons and micro-enterprises without monetary reserves or supportive governmental agencies behind them. For them, the pandemic is becoming a crisis that threatens their very existence. The losses in turnover are mainly due to:

• the postponement or cancellation of events without substitution and the associated loss of fees or ticket sales
• limited travel ability of organisers, staff and visitors
• Massive uncertainties in planning, as it is not possible to reliably predict when events can take place again

According to a representative survey conducted by the Federal Association KREATIVE DEUTSCHLAND and the network of public funding agencies for the cultural and creative industries (PCI - Promoting Creative Industries), national and international market development and order acquisition in the creative sector has largely come to a standstill.  The implementation of already planned and ongoing projects is also stagnating. Just under a third of the respondents expect a drop in turnover of about 30% or are already experiencing this. Many companies are preparing for significantly higher losses in the future.

DOV publishes guide for freelancers

The German Orchestra Association (DOV) published a guide for freelancers with regard to the corona virus. In this document, the DOV gives advice and recommendations for dealing with concert cancellations as a result of the epidemic: According to the DOV, organisers may cancel or postpone concerts and similar formats without official order after a risk assessment. In case of a cancellation, freelancers will receive a remuneration / cancellation fee according to the individual contract conditions, or in case of an ordered quarantine, compensation for loss of earnings. More detailed information, the DOV guide and the contact details of the association can be found here. 

Federal government plans immediate measures

The German government plans to take measures worth billions of euros to protect employees and companies from the economic consequences of the coronavirus across all sectors. The steps that have been decided include the extension of short-time work compensation, liquidity assistance and deferral of tax payments. The measures will also benefit the cultural and creative industries. In addition, the following immediate measures by the Federal Government Commissioner for Culture and the Media to cushion the burden of COVID-19 have been announced:

• Financial security for spent funds: In the event of premature discontinuation of funded cultural projects and events due to the corona virus, it is possible to refrain from reclaiming funds already spent for project implementation in the context of an individual case examination under public budget and grant law. Funding that is not required by the grant recipient due to saved expenses as a result of cancelled events must always be reimbursed.
• Sharpening of existing programmes: The existing funding programmes of the Federal Government Commissioner for Culture and the Media are to be sharpened in such a way that the measures benefit both cultural institutions and freelancers in need in the cultural and creative industries.

The Federal Government Commissioner for Culture and the Media has announced that she intends to work towards making additional funds available for culture and the media as emergency aid in order to alleviate the burdens that have already arisen and are still arising. 

Digitalisation as an enabler

In regard to the massive economic disruptions and the generally prevailing uncertainty, it is difficult to find anything positive in the corona crisis. Nevertheless, when such things as unrestricted mobility, which are supposedly taken for granted, become impossible and traditional, analogue business models and processes no longer work, the question of alternatives arises. Digital technologies offer considerable opportunities in this context.

The Staatsoper Unter den Linden in Berlin showed how the distribution of creative services can also succeed via digital (distribution) channels: the actors performed Georges Bizet's opera "Carmen" on 12 March in a hall without an audience. Viewers could follow the performance on the Internet via free livestream or on radio at rbbKultur. There are also suitable opportunities for other sectors and business models: Some conferences and congresses have been held (exclusively) online for years. Many small shops have partially converted their sales in recent days and are expanding their online shops. Necessity is the mother of invention - as hackneyed as this sentence sounds, it shows just how much truth there is in it in the face of the challenging situation. 

We are working at high pressure to maintain our offer despite the cancellation of all events and workshops and to stand by your side in this exceptional situation. We will share news and tips regularly on the social media.