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New technologies in cultural institutions:

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Article in International Journal of Cultural Policy · March 2012

DOI: 10.1080/10286632.2011.587878
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New technologies in cultural

institutions: theory, evidence and
policy implications
a b
Hasan Bakhshi & David Throsby
a
National Endowment for Science, Technology and the Arts , 1
Plough Place, London , EC4A 1DE , UK
b
Faculty of Business and Economics, Macquarie University ,
Sydney , NSW 2109 , Australia
Published online: 27 Jun 2011.
To cite this article: Hasan Bakhshi & David Throsby (2012) New technologies in cultural institutions:
theory, evidence and policy implications, International Journal of Cultural Policy, 18:2, 205-222,
DOI: 10.1080/10286632.2011.587878
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International Journal of Cultural Policy
Vol. 18, No. 2, March 2012, 205–222
New technologies in cultural institutions: theory, evidence and

policy implications
Hasan Bakhshia and David Throsbyb*
a
National Endowment for Science, Technology and the Arts, 1 Plough Place, London, EC4A
1DE, UK; bFaculty of Business and Economics, Macquarie University, Sydney,
NSW 2109, Australia
Downloaded by [Macquarie University] at 23:26 11 September 2014
Publicly-funded cultural institutions such as theatre companies, symphony

orchestras, museums, libraries and so on are increasingly engaging with new
technologies as a means of improving their operational efficiency and extending
the range of ways in which they pursue their cultural missions. For example,
opera companies are broadcasting performances by satellite to cinemas, and art
museums are using the Internet to show virtual exhibitions. These developments
have implications for funding authorities who need to update their policy
approaches to encompass a range of new technological phenomena. This paper
provides a framework for assessing technological innovation in cultural institu-
tions, and discusses the ramifications of such a framework for cultural policy.
The paper is illustrated using the results of a recent research project that evalu-
ated the UK National Theatre’s NT Live experiment and the Tate Gallery’s use
of a web-based exhibition as strategies to expand their audience reach.
Keywords: cultural policy; innovation; new technologies; theatres; art galleries;
cultural value
Introduction
The emergence of the creative industries as a central element in cultural policy for-
mation over recent years has been importantly driven by the application of new
technologies in cultural production, distribution and consumption. Attention has
focused particularly on the ways in which the digital environment has enhanced the
economic potential of the cultural sector through the creation of new cultural prod-
ucts and new modalities for the distribution and reception of cultural experiences.
Further benefits may be reaped from knowledge transfers and other spillovers from
a technologically dynamic creative economy.
The arts sector is an important component of the creative industries1. It ranges
from small one-person artistic firms to large-scale cultural organisations operating in
both the commercial and non-profit sectors. Policymakers increasingly recognise
that these enterprises are a key part of the creative industries, both in their own
right and as a source of ideas and talent feeding the wider creative industries and
beyond (Andari et al. 2007, KEA European Affairs 2006, Throsby 2008b, 2010).
*Corresponding author. Email: david.throsby@mq.edu.au
ISSN 1028-6632 print/ISSN 1477-2833 online

Ó 2012 Taylor & Francis
http://dx.doi.org/10.1080/10286632.2011.587878
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206 H. Bakhshi and D. Throsby
In this paper, we consider the role of new technologies in the arts, with particu-
lar reference to publicly-funded cultural institutions such as theatres, opera and bal-
let companies, orchestras, museums, galleries, libraries and so on. Such institutions
comprise a substantial sub-group within the arts and the wider creative sector, nur-
turing and advancing art and culture at local, national and international levels and
creating significant public value. For much of the post-war period these organisa-
tions have operated in a reasonably benign climate, with stable consumer demand
and relatively secure public funding. But this is changing. Cultural consumption
patterns are being radically re-shaped by the digital revolution, obliging arts organi-
sations to re-think how they relate to their audiences. Financially, they face greater
accountability for government funding, with increased emphasis on public value
and efficiency, as well as growing pressure to find new ways to exploit their
earnings potential. The economic crisis has also made it more difficult to attract
sponsorship and philanthropic donations.

We focus in this paper on digital technologies for several reasons. First, these
technologies are primary drivers of change in consumer behaviour; thus, strategies
for innovation in cultural institutions are likely to look particularly to the use of
new technologies in dealing with their audiences. Second, digital technologies have
the potential to allow arts and cultural organisations to achieve a step increase in
the audiences for their art and, in some cases, become major distributors of public
service content in their own right. Third, since many creative products are easy to
reproduce, store and transmit through digital means, digitisation has created unprec-
edented uncertainties for many creative enterprises, making it imperative that they
find ways to reinvent their business models to capitalise on the opportunities and
avoid the threats that the new environment brings.
This paper is structured as follows. In the following section, we propose a con-
ceptual framework within which to interpret and analyse the adoption and use of
new technologies by publicly-funded cultural institutions. The framework draws
upon the theory of the non-profit firm and theories of organisational innovation to
construct a characteristic set of institutional objectives and to develop a working
definition of innovation applying to cultural institutions across the creative arts
within which new technologies can be placed. In the context of this theoretical
framework we then proceed to look at some empirical evidence, asking how tech-
nologies are being used by cultural institutions in the contemporary world. Our dis-
cussion is illustrated by reference to case studies of technological innovation in two
leading UK cultural institutions, the National Theatre and the Tate Gallery. Finally,
the paper considers some policy implications. Are there lessons to be learned by
institutions in dealing with the rapidly evolving technological and financial environ-
ment in which they now operate, and how might public funding authorities
re-calibrate their arts support strategies to keep abreast of these changes?
Conceptual framework
In order to analyse the ways in which new technologies are adopted and utilised by
cultural institutions, we need to construct a conceptual framework within which
technological innovation in such institutions can be understood. Since the great
majority of publicly-funded arts and cultural institutions operate as non-profit firms,
we can begin by referring to the economic theory of non-profit behaviour. Some of
this theory is concerned to explain why such firms arise in a market economy
International Journal of Cultural Policy 207
(Hansmann 1987, Rose-Ackerman 1996, Weisbrod 1977), whilst other writers have
paid attention to the structure and mode of operation of non-profit firms, especially
those producing arts and cultural services (Hansmann 1981, Luksetich and Lange
1995, Netzer 2003, Throsby and Withers 1979).
A concern of non-profit theory has been to articulate the objectives of organisa-
tions in the non-profit sector, given that they do not conform to the conventional
theory of the firm which assumes that businesses aim to maximise profit. For our
present purposes, we propose a generalised model of the behaviour of a non-profit
cultural institution that specifies the following five dimensions to the objective
function:
objectives relating to artistic or curatorial quality or standards, sometimes

described as pursuit of ‘excellence’
objectives relating to access – making their output available to as many and

as wide a range of consumers as possible
objectives relating to educational services, often through specific programmes
to engage and educate young people or to enhance the learning experience of
their consumers more generally
objectives relating to knowledge – for museums, galleries and libraries this
typically refers to a range of research and informational functions in the fields
of archaeology, history, cultural and social theory, anthropology and conserva-
tion practice; for performing arts companies it usually relates to developmen-
tal work on repertoire or performance practice
objectives relating to social goals, for example, community-based organisa-
tions with a mission to promote social inclusion and participation, or organi-
sations devoted to arts in health care.
Within this generalised model, the pursuit of these multiple objectives – however,
they are weighted in terms of overall decision-making – must still be seen to be
subject to a set of financial constraints that ultimately require revenue from all
sources over a given period to be equal to or greater than expenditure. In other
words, there is an overriding requirement that an organisation must aim at financial
sustainability if it is to remain in business.
The pursuit of all of the above objectives can be enhanced in one way or
another by technological innovation. But how is innovation as a process to be
understood? Historically, the discourse on innovation has assumed it to be of a
functional, scientific or technological nature, reflected in indicators such as invest-
ment in formal R&D or the number of patents awarded (NESTA 2007). But it is
now widely acknowledged that innovation is much broader than this, and that tradi-
tional measures ignore innovations in sectors such as services which account for a
dominant and growing share of overall economic activity (Abreu et al. 2008,
Department of Trade and Industry (DTI) 2007). Nevertheless, whilst an increasing
number of studies point to distinctive innovative behaviours in the creative indus-
tries (Handke 2008, Miles and Green 2008, Potts et al. 2008), there is little focus
specifically on organisations in the arts and cultural sector.
For our purposes in analysing new technologies as innovative practice in cul-
tural organisations, we identify four broad categories of innovation that are common
to cultural institutions across the creative arts:
Innovation in audience reach: this relates to the generation of new audiences,

including through use of digital technologies such as live high-definition
(HD) broadcasts in the case of theatre and opera companies, and providing
online access to collections in the case of art galleries and museums. Cultural
institutions may also innovate in the depth of their engagement with audi-
ences, for example, by using knowledge resources online to inform and edu-
cate their consumers, by interacting with audiences on social networks, or by
providing opportunities presented by digital technology for audiences to get
involved in artistic creation itself.
Innovation in artform development: one of the most significant innovative
contributions cultural institutions can make is to the development of the art-
form in which they operate, through the encouragement of new and experi-
mental work in their programming.
Innovation in value creation: cultural institutions are searching for new ways
to measure the economic and cultural value they create for audiences and
their wider group of stakeholders, and to translate these into terms that poli-
cymakers, funding agencies, donors and private investors can relate to.
Innovation in business management and governance: cultural organisations
face challenges in strategic management that are peculiar to the artistic or cul-
tural area in which they operate; dealing with these challenges requires a con-
stant review of the organisation’s business model and a search for innovative
financing strategies in response to a changing funding environment.
We take these categories as definitive of the concept of innovation in cultural institu-

tions, and use them in conjunction with the non-profit objective structures outlined
above as a framework for considering some empirical evidence in the next section.
Evidence: how are new technologies being applied?

Although the term ‘new technologies’ in the cultural field could be used to describe
any form of technical advance affecting cultural production from the invention of
the printing press onwards, it is used nowadays as shorthand for new information
and communication technologies arising from two related late twentieth century
sources: the explosion in computational speed and capacity that has transformed
day-to-day life in countless ways, and the advent of the Internet. These technologi-
cal revolutions have affected the operations of cultural organisations in a number of
ways. In this section, we consider these effects in terms of our above innovation
classification.
Audience reach
Apart from standard applications that have been adopted by businesses across the
board such as word processing, computerised accounting methods, etc. the first and
most obvious use of new technologies in cultural institutions has been the develop-
ment of websites as a means of providing information for consumers and, where
appropriate, online booking and ticket handling facilities. For example, national
museums in the UK have used their websites effectively to increase access (Loran
2005), and a recent report by the Arts Council England (2009) indicates that 94%
of the Council’s 869 Regularly Funded Organisations (RFOs) have websites with
either basic or ‘rich’ marketing functionality.
However, the more profound innovations come through the far-reaching poten-
tial of new communications technologies that are constantly being introduced. We
can interpret these developments in the first instance as relating to the first of our
innovation categories – expanding the audience reach. There are three dimensions
to this sort of innovation (McCarthy and Jinnett 2001):
audience broadening – capturing a larger share of the population already

known to be audiences
audience diversifying – attracting new groups of consumers that do not cur-
rently attend
audience deepening – increasing and/or intensifying the engagement of audi-
ences. The latter may be achieved through enhanced interactivity between arts
organisations and audiences on social networks and creative websites on the
one hand, and technological convergence, which is allowing audiences to
access cultural experiences any time, any place and in any form on the other.
Looking specifically at the performing arts, we can see that one of the most signifi-
cant forms of innovation in extending audience reach is the recent move towards
the live broadcast2 of productions to audiences viewing the performance on televi-
sion, in a cinema or online. Whilst the audiovisual recording of theatre productions
has been around for some time, enabling the selling of videos or DVDs of produc-
tions, or their broadcast on television, the emphasis on live transmission direct from
theatres is more recent. It has evolved as technology itself has evolved, enabling
high-definition high-fidelity transmission via satellite or the web to audiences.
Examples include the National Theatre’s NT Live project discussed further below,
the Metropolitan Opera’s transmission of its performances to cinemas, and the
Berlin Philharmonic Orchestra’s Digital Concert Hall project, whereby concerts are
streamed live or made available as video-on-demand on the web.
In museums and galleries, an important line of innovation to increase audience
reach has evolved through the services provided to visitors, for example, through
the conversion of standardised interpretation materials such as wall texts into per-
sonalised presentations using mobile hand-held devices. The technology for convey-
ing such information has advanced rapidly with the introduction of specialised
audio functions, speech-activated devices, and so on (Rocchi et al. 2004, Stock and
Zancanaro 2002). More widely, the web is being increasingly used as a means to
extend access to collections and special exhibitions. A recent example is the Google
Art project, a website enabling the visitor to take a virtual tour of some major art
museums in Europe and the US and to view high-resolution images of works in
their collections. These developments lead to concepts such as the ‘museum without
walls’ (Hooper-Greenhill 2000, pp. 152–153) and indeed to the idea of an entirely
virtual museum, which visitors attend only in cyberspace (Styliani et al. 2009).
Artform development
New technologies also contribute to innovation in artform development in various
branches of the performing and visual arts. In the theatre, for example, directors
and designers mounting plays for the live stage are employing a variety of
audiovisual technologies to expand the expressive potential of their work. Some

theatre companies and groups have been using video and other audiovisual methods
in performances for some time. More experimental developments are exploring the
use of virtual realities and other technologies in theatre production. For example,
the Pilot Theatre company based at York Theatre Royal has built a production of a
play on MySpace, and has a theatre hub in Second Life. Another example is the
‘Adding Machine’ project at Bradley University in Illinois, which in March 2007
merged real-time performances with the virtual to put actors from Florida and
Canada on the stage in Illinois without their having to leave their university cam-
puses. The production also involved virtual scenery, broadcast and recorded video,
and avatar performers.3 Clearly, there is a great deal of potential for new technology
applications in the theatre, although many such innovations are still very much in
their infancy.
The influence of new technologies in advancing an artform is particularly

marked in the field of music and audio production; innovation in both composition
and practice has been significant across all genres in recent years as a result of the
arrival of new means for musical expression. Composers in classical, jazz, film and
rock/pop music genres use digital devices such as synthesisers, samplers, virtual
recorders and computer software such as MaxMSP to create complex and multilay-
ered textures and to manipulate sounds from a variety of sources in their composi-
tions. The availability of these technologies has extended musical boundaries,
leading to the emergence of new genres and sub-genres, cross-cultural musical
forms and new modes of performance.
In the visual arts, new technologies have had a profound effect on an entire gen-
eration of artists who practise in digital media and who have used a range of new
forms of expression to transform visual culture. Although traditional modes of
drawing, painting and sculpture are still widely pursued, visual artists have increas-
ingly turned to the creative opportunities offered by video, sound, image manipula-
tion and other technologies to produce works in forms and in media far removed
from past practice. This has posed a challenge to which contemporary art museums
have responded, making them primary vehicles for conveying this aspect of artform
innovation to the public. Coping with these new modalities for contemporary art
has also required a reorientation of galleries’ functions as collecting and archiving
institutions.
Value creation
Have new technologies contributed to innovation in value creation in cultural insti-
tutions? Addressing this question is difficult because of ambiguities in defining how
value is to be interpreted in this context. Cultural institutions create value in many
ways and for many beneficiaries. The standard approach to interpreting such value
within economics is to distinguish between the private-good benefits that consumers
derive from their own consumption of the goods and services produced and the
public-good benefits that cultural institutions provide for the community and society
at large (Van der Ploeg 2006). But the interpretation of the value created by cultural
enterprises has been placed into a wider context more recently as a result of the
promulgation of the concept of public value as a means of representing the value of
publicly accountable organisations (Keaney 2006). It is clear that such organisations
create value for the community through the aggregation of the individual cultural
experiences they provide for consumers, and this could be taken as one dimension
to the public value they create. Another dimension to their public value that has
attracted attention has been their role as agents of social inclusion; pressure has
mounted on museums, galleries and performing companies to demonstrate their
impacts on a range of social indicators in the communities that they serve (Belfiore
2004).
Yet, despite the clear role that cultural facilities play in building social capital,
disquiet has been expressed that emphasis on the instrumental functions of arts and
cultural organisations tends to overshadow their fundamental purpose – the creation
of cultural value. Debate stimulated by John Holden’s and Robert Hewison’s work
on the value of culture for Demos (Hewison 2006; Holden 2004) raised questions
about the growing prominence of instrumental criteria for public-funding alloca-
tions, at the expense of the essential artistic objectives of organisations seeking sup-
port. This discussion was also raised in the context of cultural policy in the United
States in the RAND Corporation’s report on public funding for the arts in America
(McCarthy et al. 2004). In this study, the authors identified the intrinsic value of
the arts as the missing link in assessing the value of artistic activities.
Hewison and Holden use the term ‘cultural value’ to describe all the types of
value generated by cultural activities including their economic benefits. A more pre-
cise approach is to make an explicit distinction between economic and cultural
value (Throsby 2001). Economic value is defined in this approach as the benefit
that can be measured in financial terms by the methods of economic analysis; it
includes both the private benefits enjoyed by cultural consumers that they pay for
through the market, and the public-good benefits or positive externalities that are
enjoyed by the community at large and that can be measured as aggregate willing-
ness to pay (O’Brien 2010). Cultural value on the other hand refers to those aspects
of cultural life and experience that are important to people, but whose value to them
cannot be expressed in monetary terms. The distinction between economic and cul-
tural value thus defined is one that has been recognised in one way or another in a
number of disciplines in the humanities and social sciences concerned with the con-
trast between the aesthetic and the commercial dimensions of art and culture (Hutter
and Throsby 2008).
New technologies applied by a cultural organisation may open up new ways in
which both the economic and the cultural value yielded by the organisation can be
presented to the funding agencies and the public at large. If such new technologies
enable the development of new revenue streams, the added value of the technolo-
gies might be seen in an improvement in the organisation’s financial sustainability.
More importantly, the technological innovation might itself generate new forms of
cultural value, providing wholly new cultural experiences to consumers. We shall
see an example of this in the case studies discussed below.
Business models
The changing environment in which cultural institutions operate has led to the
development of new business models – the ways in which cultural institutions iden-
tify their customers and their products, generate value, attract and keep their con-
sumers, and define the services they perform (Falk and Sheppard 2006). Greffe
(2008) points to digitisation, new consumption spaces and changes in the means of
cultural production as leading to the emergence of very different business models
from those that were characteristic of traditional forms of artistic organisation.

These developments parallel the ways in which new business models are being put
forward and adopted in the wider spheres of commerce and industry (Johnson et al.
2008).
In the cultural arena, impetus towards the search for new business models arises
from both the demand and the supply side. With demand, the shift from an
organisation-centred to a more customer-centred orientation in business strategy
(Andreasen and Kotler 2002, McNichol 2005) leads to new ways of interpreting
value within the business model, promoting an approach that engages the consumer
more. This move parallels a trend in cultural organisations towards audience devel-
opment rather than product development in directing their resource allocation deci-
sions (Rentschler et al. 2002). Such a move has been described by Weil (1999) as a
shift from being about something to being about somebody.
On the supply side, it is primarily the advent of new technologies that has
prompted the growth of interest in restructuring traditional business models. In the
case of museums, for example, Minghetti et al. (2001) discuss the re-engineering of
the role of museums in the cultural value chain; the engagement of such organisa-
tions with new technologies has evolved from the provision simply of an electronic
brochure to their functioning as a multi-media platform serving a much wider com-
munity of potential visitors. Indeed, the use of the value chain as an appropriate
concept for interpreting business models of cultural organisations may itself be
changing in the digital environment. Keeble (2008), for example, suggests that in
this environment, the idea of a value network is a more appropriate representation
of the interrelationships between firms and individuals involved in the supply of
cultural goods and services.
The need for arts and cultural organisations to experiment with new business
models requires new funding streams with an appetite for risk (Smith 2010). In
cases where there is a strong commercial prospect this may involve arts organisa-
tions working out new project finance structures which compensate private investors
for the risk they take. Where the risks are too great to attract private financiers, but
the sector stands to gain from the experiment (through wider lessons, for example),
cultural organisations need to negotiate new funding streams with arts funders
(Bakhshi et al. 2009). Bolton and Carrington (2007) argue that arts and cultural
organisations should import innovative debt and equity instruments, such as patient
loans, quasi-equity and venture philanthropy, all of which are increasingly common
in the social enterprise sector. In order to do so, organisations will need to over-
come problems caused by lack of financial planning skills and the paucity of data
(Bolton and Cooper 2010).
Case studies
In a recent research project, the present authors examined the use of digital technol-
ogies in two leading publicly-funded cultural institutions in the UK, the National
Theatre and the Tate Gallery (Bakhshi and Throsby 2010). One was the NT Live
experiment at the National Theatre, in which live performances are transmitted by
satellite to multiple cinema screens in the UK and Europe. The other was the use of
the web by the Tate to provide access to a virtual presentation of an exhibition run-
ning in one of its four galleries. Specifically, we studied the showing of a perfor-
mance of the Racine play Phèdre by the National Theatre on 29 June 2009, and the
Tate’s web-based exhibition accompanying the Colour Chart show that ran at Tate
Liverpool for four months in the second half of 2009. In our research we undertook
comparative surveys of audiences at the showing of Phèdre both in the theatre and
in cinemas, and of visitors to Colour Chart both in the gallery and online. The
results of this research provide a case study of the way in which these new technol-
ogies are contributing to innovation in these institutions. In the following, we
outline our findings under the four headings corresponding to our innovation classi-
fication put forward above.
Innovation in audience reach

NT Live most obviously expanded the audience reach of the National Theatre
by expanding its ‘virtual capacity’. The total audience for Phèdre in the
National’s Lyttelton Theatre on London’s Southbank over the play’s whole run –
around 50,000 – was doubled in a single night through the screening of the per-
formance on 29 June 2009 in cinemas throughout the UK and Europe. Almost
one-third of cinema audiences in the UK gave the National Theatre’s location
being too far away as the main reason for why they had not seen Phèdre at the
theatre. A further 13% suggested that they had tried but been unable to get the-
atre tickets.
That this expanded reach was achieved through audience broadening is sup-
ported by the fact that only 41% of cinema audiences had been to the National The-
atre in the previous 12 months, even though 91% had been to the theatre during
this period, as indicated in Table 1. This compared with the vast majority of the in-
theatre audience who had already visited the National in the previous year. But NT
Live also allowed the National Theatre to diversify its audiences in several ways. It
is known, for example, that audiences for live theatre tend to be concentrated in the
middle range of the age distribution; young people are more likely to go to movies
or other entertainments, whilst older age groups may find it more difficult to access
theatres in central-city locations. In the case of the NT Live experiment, the data
shown in Table 1 indicate a marginal increase in the proportion of under-25s in the
Table 1. Audience characteristics for Phèdre production in theatre and cinema.

In-theatre audience In-cinema audience
(%) (%)
Proportion of audience who have
Been to the theatre in last 12 months 96.4 91.3
Been to the National Theatre in last 12 94.1 41.3
months
Proportion of audience in age group
Less than 25 years 2.4 3.5
25–44 years 21.3 19.5
45–64 years 56.9 51.6
65 years or more 19.5 25.4
Proportion of audience in income group
Less than £20,000 p.a. 21.4 33.2
£20,000–49,000 p.a. 44.1 49.4
£50,000 p.a. or more 34.6 17.5
cinema compared to the theatre audience, and the proximity of cinemas to home
undoubtedly played a part in leading to a substantially greater representation of
older people in the cinemas.
A more striking aspect of the audience diversification generated by NT Live is
seen in its effect in drawing lower income individuals: one-third of cinema audi-
ences had incomes of lower than £20,000 per year, compared with one-fifth in the
case of the theatre. No doubt the competitively priced £10 cinema tickets – signifi-
cantly lower than tickets at the National Theatre – played a role here.4 Whilst most
of the cinema audiences had some experience of theatre-going, a small but signifi-
cant minority – almost 10% – had not been to any theatre in the previous year.
The Tate’s online operations also allow it to broaden and diversify its audience
reach. Like NT Live, the Tate’s website increases its four galleries’ virtual capacity,
allowing the public – as long as they have access to an Internet connection – to
engage with the Tate’s cultural offer regardless of where they live. Over Colour
Chart’s four-month run at Tate Liverpool the website attracted 66,190 unique visits
from visitors throughout the world, compared with just more than 19,000 visitors at
Tate Liverpool.
Most of the expanded audience for Colour Chart was drawn from regular visi-
tors to art galleries – over 87% of online visitors had attended a free exhibition at a
gallery somewhere in the previous 12 months, although only one in five had been
to Tate Liverpool (Table 2). Nevertheless, almost two-thirds of the online audience
had been to one or other of the Tate’s four galleries, indicating that visitors access-
ing the website were significantly drawn from the gallery’s existing clientele. Most
of the online audience was derived from the young to middle-age range (25–44 year
olds); the youngest age group (less than 25 years) is well represented in the gallery
audience because of the attendance by school groups at the exhibition.
Echoing NT Live, probably the most striking example of audience diversifica-
tion in the online audience for Colour Chart is evident in the proportion of lower
income individuals amongst visitors to the website. The online offer attracted a sig-
nificantly larger proportion of visitors earning less than £20,000 per year than did
the gallery exhibition (37% compared with 27%) and a correspondingly much lower
Table 2. Audience characteristics for Colour Chart exhibition in gallery and online.
In-gallery audience Online audience
(%) (%)
Proportion of audience who have
Been to an art gallery in last 12 months 86.5 87.3
Visited the Tate Liverpool in last 12 months 63.8 21.1
Visited another Tate Gallery in last 12 62.5 64.8
months
Proportion of audience in age group
Less than 25 years 15.6 6.8
25–44 years 36.1 47.1
45–64 years 40.0 40.6
65 years or more 7.7 5.6
Proportion of audience in income group
Less than £20,000 p.a. 26.6 36.6
£20,000–49,000 p.a. 50.0 49.5
£50,000 p.a. or more 23.4 13.9
share of highest income earners (14% of online visitors earning more than £50,000
compared with 23% at the gallery).
Innovation in artform development

Both the National Theatre and the Tate are in the forefront of their respective fields
in advancing their artforms. In the case of the National, its commitment to extend-
ing the boundaries of contemporary theatre is evident in its programming decisions
– between 2003 and 2008, 56% of all the plays it produced were written after the
year 2000, and around 45% of its productions were of plays by lesser-known con-
temporary playwrights.5 Moreover, the National is able to apply innovative design
and staging methods, especially through the work of its NT Studio operation which
acts as a development laboratory not just for the National but for the arts more
widely. Work at the cutting edge is encouraged, including exploration of the use of
new technologies in sound, film and video in live drama.
Of course, setting the pace in artform development can be a risky business.
Plays by ‘innovative’ writers are likely to be less popular amongst theatre audiences
than is conventional drama, and revenues from staging such work will be more
uncertain. The National’s capacity to produce new work is facilitated by its size,
which enables it to operate a repertory system with up to seven or eight productions
running in its three spaces at a given time. Commercial companies rarely stage
innovative drama by unknown writers; thus, advancing the theatrical artform
remains by and large a responsibility to be shouldered by the subsidised sector, in
which the National Theatre is a leading player.
Turning to the visual arts, we note that the Tate extends the boundaries of con-
temporary art through the showing of work by innovative artists who are constantly
exploring new forms of artistic expression. The Turner Prize is one highly visible
process for a critical public assessment of current trends. New technologies used as
innovative means of artistic expression figure prominently in these trends – a num-
ber of artists shown in exhibitions or acquired for the collection work with video,
sound and mixed media, moving beyond traditional modes of practice in the direc-
tions noted earlier.
More generally, the Tate’s commitment to extending the artform can be seen in
the extent to which it programmes exhibitions of contemporary art in its two
London and two regional galleries. As in the case of theatre, the showing of inno-
vative work is a riskier proposition with lower revenue potential than is the case for
more traditional programming. Nevertheless, 44% of the special exhibitions6
mounted at its two London galleries between 2003 and 2007 were classified as con-
temporary, i.e. showing work produced since the 1970s.7
Innovation in value creation

We pointed out above that the analysis of value creation in cultural institutions can
be clarified if a distinction is maintained between economic value and cultural
value. Our case studies illustrate how new technologies have contributed to innova-
tion in both of these value formations. We discuss new sources of economic value
in the section below dealing with business model innovation. Here, we consider the
generation of new forms of cultural value through the broadcasting of live theatre
to cinemas or through online art exhibitions.
Table 3. Expectations and actual outcomes: audiences for Phèdre.

Expectation/outcome In-theatre audience In-cinema audience
Expected Actual Expected Actual
(%) (%) (%) (%)
To have an immersive experience 51.6 66.7 28.1 85.3
To have an emotional experience 68.9 85.3 47.4 95.3
To enjoy a social experience with 24.3 80.0 26.2 81.2
others
Turning first to NT Live, we find that live broadcasts appear to have evolved
the theatrical experience and to have created cultural value in ways that were
not anticipated by the National Theatre. In our surveys, we asked both theatre
and cinema audiences a range of questions about their expectations of the pro-
duction and compared these with what they actually experienced. Table 3 com-
pares the proportions of the two audiences who had certain expectations and the
corresponding proportions who actually experienced these outcomes. As might be
expected, theatre audiences were significantly more likely than cinema audiences
to have expectations of an emotional or uplifting experience, to be absorbed in
the production and escape from the everyday. Yet, along all these dimensions it
was cinema audiences that more frequently claimed to have actually had these
experiences.
Table 4 documents the corresponding results for the Tate case study. Here, the
expectations are not very strong for the gallery attendees and even weaker for the
online visitors. Of the three expectations listed in the table, only the hope of learn-
ing more about art figured at all prominently. For both audiences, the actual experi-
ence turned out to be more positive.
The results from this part of the surveys can be probed more deeply in terms of
the theory of cultural value (Connor 1992, O’Brien 2010). Given the multi-faceted
nature of the value of culture, whether to individuals or to the society as a whole,
Throsby (2001) has suggested disaggregating it into its constituent elements, includ-
ing aesthetic, symbolic, spiritual and social components. If this is done it may be
possible, for a given cultural phenomenon experienced by a particular individual or
group, to attribute a value to the experience under each of these dimensions. In the
present study, audiences were asked about their agreement or disagreement with a
series of statements describing the experience they had in seeing the play or the art
exhibition. Some of these statements can be taken as broadly congruent with differ-
Table 4. Expectations and actual outcomes: audiences for Colour Chart.

Expectation/outcome In-gallery audience Online audience
Expected Actual Expected Actual
(%) (%) (%) (%)
To have an immersive experience 12.2 28.2 5.6 18.3
To have an emotional experience 10.9 52.6 2.4 39.6
To improve knowledge of 45.7 50.3 19.0 34.9
contemporary art
ent dimensions of cultural value. For example, if aesthetic appreciation and enjoy-
ment is seen as an emotional experience, the statement ‘I had an emotional
response’ could be interpreted as a reaction to the broadly defined aesthetic content
of the relevant show. Likewise, the statements ‘I found new ways of seeing things’
and ‘I was transported’ could be linked to symbolic and spiritual aspects of value,
respectively, whilst social value is reflected in the benefit derived from experiencing
art in the company of others.
Transformation of qualitative data into quantitative form is a common problem
in research in the social sciences when attitudinal data are involved. A standard pro-
cedure is to attach numerical values to responses to questions that have been
designed using a Likert scale, assuming equidistance between items in the scale.
Applying this approach to our statements relating to cultural value, we assign scores
of 2, 1, 0, 1, 2, respectively, to responses ranging from ‘strongly agree’ to
‘strongly disagree’ for each statement and calculate the mean score for that state-
ment. The results of this exercise for several representative statements are shown in
Table 5.
For the National Theatre these results confirm the observation made above con-
cerning the capacity of cinema transmission to generate new forms of cultural value
for audiences, or at least to intensify existing forms of value creation. The aesthetic
value experienced by cinema audiences was especially strong; this appears to be
due in part to the fact that close-ups in the screened version of the play enabled a
more immediate impact on audiences in all parts of the house, a degree of proxim-
ity to the performers that is not available in the live theatre. This aspect of the
screened performance probably helps to explain the fact that a stronger emotional
impact was felt by the cinema audience than by those in the theatre (Table 5); such
a result does not altogether undermine the view that being in the physical presence
of the actors is essential to the theatrical experience, since apparently the liveness
and immediacy of the transmission made it seem to cinema audiences that they
were indeed in the same space as the performers on the stage. Not surprisingly, the
social value derived from attending the respective performances was closely aligned
between the two audiences.
By contrast, accessing an art exhibition on the web does not appear to open
up such opportunities for the generation of cultural value, emphasising the fact
that in the case of visual art, being in the actual presence of the art object is
an overwhelmingly important aspect to the experience of it, and seeing the work
Table 5. Indicators of cultural value: audiences for Phèdre and Colour Chart(a).
Statement Cultural National theatre Tate Gallery
value
indicated In-theatre In-cinema In-gallery Online
audience audience audience audience
Emotional response Aesthetic 0.85⁄⁄⁄ 1.29⁄⁄⁄ 0.31⁄⁄ 0.11⁄⁄
New ways of seeing Symbolic 0.11⁄⁄⁄ 0.54⁄⁄⁄ 0.65 0.56
Transported Spiritual 0.31⁄⁄⁄ 0.74⁄⁄⁄ 0.23 0.34
Seeing with others Social 0.50⁄ 0.58⁄ 0.66 –
Notes: (a) For calculation of scores, see text. The levels of significance of the differences between the
pairs of means are indicated by ⁄p < 0.05; ⁄⁄p < 0.01; ⁄⁄⁄p < 0.001.
on a computer screen is no substitute for the real thing. As Table 5 shows,

imputed aesthetic value created by the online show was significantly smaller
than that for the viewers in the gallery. Note, however, that online visitors to
Colour Chart had access to, and made use of, a much wider range of informa-
tion and services than was available to gallery-goers; for example, they could
follow links to other artworks or access information about the artists, download
or stream multimedia content, upload their own photographs on Flickr, or play a
related game. These opportunities offered new forms of cultural experience to
these consumers.
Innovation in business models

For the theatre, the capacity of new technologies to create new sources of economic
value is clear from our results. The ticket prices that cinema audiences were happy
to pay for the theatre broadcasts, and their assertion that they would be willing to
pay more – in some cases substantially more – is a testament to the economic value
created through the National Theatre’s NT Live broadcasts. But it is too early to
say whether live screenings can be a sustainable, self-financing component of the
National’s business model. Nevertheless, the signs are good. Management hopes
NT Live will break even by the end of its second season. Following the first season
of five broadcasts, the NT Live initiative is going from strength to strength, with
the National announcing a second season of broadcasts for 2011. In due course, it
is likely that these transmissions will provide a secure revenue stream for the
Theatre.
The potential for art galleries to generate direct revenues from their online
operations over and above online ticket sales and shop purchases is less certain at
this point in time. It is true that online operations do create indirect revenues inso-
far as they draw in visitors to the galleries, something we found evidence of in
our Colour Chart case study. Moreover, they provide scope for raising revenue
through sale of advertising, and at a broader level they promote the gallery brand
with possible commercial payoff in the longer run. But no major art gallery in the
world is charging online visitors to access the sort of content offered by the Tate
in its Colour Chart exhibition. Consistent with this, the great majority of online
visitors to Colour Chart did not think it appropriate to pay to visit this or any
other exhibition website. However, an invitation to online visitors to make a dona-
tion to the gallery presents a different picture: around one-half of online visitors
said they would in principle be willing to make a donation to the Tate after seeing
an exhibition website. Yet, despite this apparent willingness, when given the
option on the Colour Chart website to make an actual donation online, no visitors
did so. Understanding this sharp difference between what online visitors say they
are willing to do and what they do in fact do should be a high priority for further
research.
Notwithstanding the apparent differences that currently exist between the theatre
and the visual arts in the potential for new technologies to generate new revenues,
in both cases the pursuit of innovation in the production and distribution of their
product will require re-calibration of organisations’ business models to enable inte-
gration of the new initiatives into existing business planning and to maximise the
potential for taking up new technological developments as they arise.
Policy conclusions
The link between new communications technologies and cultural policy has been
acknowledged for some time. It formed the basis for the cultural policy put forward
by the Australian Government in its manifesto Creative Nation in 1994, for exam-
ple, and underpinned the definition of the creative industries that was adopted by
the UK in 1997. Since then, cultural policies all over the world have moved
increasingly to recognise the potential of digital technologies in the creative econ-
omy. For cultural institutions, as we have shown, new technologies open up possi-
bilities for more effective pursuit of organisational goals. To the extent that the
objectives of arts funding bodies are congruent with those of cultural institutions –
expanded audience reach, continued development of the artform, the creation of
public value and novel business models – there is scope for co-opting innovation
into the policy agenda.
Although cultural institutions require a somewhat different understanding of

innovation from that which has evolved in scientific discourse, the innovation
dilemma facing policymakers in all fields is the same: they want to know which
innovations are worthy of their support, but the only sure way they can do this is
to establish which ones are most likely to be successful. However, by the time suc-
cess is assured, the innovations by definition do not need policy support to come to
fruition. Policymakers have historically responded to this dilemma by enabling, and
in some cases making, direct investments in innovation, accepting that some of
these investments will fail. Intellectual property rights like patents and copyright are
awarded to provide an incentive for the creation of new ideas, not all of which will
be commercially exploited. Tax credits are offered in many countries as a way of
encouraging scientific and technological research and development (R&D), and pub-
lic agencies like the Technology Strategy Board in the UK work with universities
and industry in conducting collaborative experimental R&D. Such policies are argu-
ably part of a wider approach to innovation policy where the state works with
groups such as business and civil society to identify bottlenecks and barriers to
innovation and, where needed, makes financial contributions to enable experimenta-
tion. But whilst this approach may be adopted in the economy at large, it is not
how public funders have traditionally seen their responsibility to the cultural sector.
In our view, funders such as the Department for Culture, Media and Sport and
the several Arts Councils in the UK, and the equivalent cultural funding agencies in
other countries, should actively develop a learning culture where institutions are
encouraged to publicise the findings of experiments which address questions of
interest to the wider sector. This requires investment in the capacity of cultural insti-
tutions to engage in what has been described as arts R&D (Bakhshi et al. 2009).
In order to encourage the pursuit of innovation in the arts along the lines dis-
cussed in this paper, new public funding approaches will be required, such as the
establishment of an innovation fund specifically targeted at innovative projects to
be undertaken by cultural institutions. There are avenues for the inauguration of
such a fund in most developed countries, whether the initiative were to come from
the arts and culture ministries or agencies, or through broader innovation and indus-
try development mechanisms that typically exist in different parts of government
administration. In England, for example, such a fund could be set up by Arts Coun-
cil, England, for this purpose, in partnership with the research councils; in this con-
text, the knowledge transfer arms of the Arts and Humanities Research Council and
the Economic and Social Research Council have particularly important roles to play
in connecting cultural institutions and researchers and in building research capacity
in the cultural sector more generally. Mindful of the constrained financing environ-
ment in which most funders are currently operating around the world, targeted
investment in R&D is also a cost-effective way that public funders can invest in the
long-term health of the cultural sector, supporting the sector’s capacity to innovate
through investing in open prototypes and trials of the sort we have investigated in
the UK with the National Theatre and the Tate.
But to achieve this, arts funders need to adapt their own cultures too. First, they
need to accept that some of the projects they invest in will appear to have ‘failed’
when research questions are answered in the negative. Second, they must elevate
the status of research to a core function of their funding operations, rather than
regarding it as an ex post evaluation tool as at present. And third, funders must rec-
ognise the processes of convergence that are leading institutions like the National
Theatre to work closely with the likes of digital cinemas, and the Tate with produc-
ers of multimedia content. These shifts will require traditional boundaries between
funders of different artforms to be broken down.
Acknowledgements
The research on which this paper is based was financed by a grant from the National
Endowment for Science, Technology and the Arts. The authors express their gratitude to the
National Theatre and the Tate Gallery for their cooperation in enabling this research to
proceed. We also thank Melanie Pitkin, Nick Vanderkooi and Anita Zednik for research
assistance, and Mark Evans, Nobuko Kawashima, Juan Mateos-Garcia and two referees for
comments on earlier versions of this paper. The views expressed in this paper are solely
those of the authors and do not necessarily reflect those of any other individual or
organisation.
Notes
1. There has been considerable debate in cultural policy circles as to the appropriate way
to conceptualise the role and function of the creative arts in the cultural economy; see
for example Garnham (2001), Hesmondhalgh (2007) and Throsby (2008a).
2. The term ‘broadcast’ to describe satellite transmissions of live performances to cinemas
is commonly used, but strictly speaking such transmissions are not broadcast but nar-
row-cast, since only intended recipients are able to receive them.
3. For further details, see http://addingmachine.bradley.edu
4. Note that tickets to some National Theatre shows are priced at £10 when offered
through the Travelex scheme; however, this scheme did not apply to performances of
Phèdre.
5. More detailed data are contained in Bakhshi and Throsby (2010).
6. That is, for which an entry fee was charged.
7. See further in Bakhshi and Throsby (2010). It may be noted that in the visual arts,
unlike in the theatre, the promotion of contemporary work is not undertaken only or
primarily in the subsidised sector; commercial galleries and events such as art fairs are
prominent in presenting work by innovative artists.
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New technologies in cultural

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New technologies in cultural institutions: theory, evidence and

Publicly-funded cultural institutions such as theatre companies, symphony

*Corresponding author. Email: david.throsby@mq.edu.au

ISSN 1028-6632 print/ISSN 1477-2833 online

sponsorship and philanthropic donations.

 objectives relating to artistic or curatorial quality or standards, sometimes

 objectives relating to access – making their output available to as many and

 Innovation in audience reach: this relates to the generation of new audiences,

We take these categories as deﬁnitive of the concept of innovation in cultural institu-

Evidence: how are new technologies being applied?

 audience broadening – capturing a larger share of the population already

audiovisual technologies to expand the expressive potential of their work. Some

The inﬂuence of new technologies in advancing an artform is particularly

from those that were characteristic of traditional forms of artistic organisation.

Innovation in audience reach

Table 1. Audience characteristics for Phèdre production in theatre and cinema.

Innovation in artform development

Innovation in value creation

Table 3. Expectations and actual outcomes: audiences for Phèdre.

Table 4. Expectations and actual outcomes: audiences for Colour Chart.

on a computer screen is no substitute for the real thing. As Table 5 shows,

Innovation in business models

Although cultural institutions require a somewhat different understanding of

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objectives relating to artistic or curatorial quality or standards, sometimes

objectives relating to access – making their output available to as many and

Innovation in audience reach: this relates to the generation of new audiences,

audience broadening – capturing a larger share of the population already