Money for nothing

Some of my photographs have been on sale at Getty Images for a few months now. The other day I received my first royalty cheque. Like Facebook, I finally have a revenue stream, if not a profit margin.

I’m not about to give up the day jobs. Putting most of my pictures online for free, then selling a few of them isn’t really a business model. As Will suggests here and here, it’s hard to see how you can sustain yourself purely through creative / artistic activity. In the case of photography, cheap digital hardware has democratised picture taking, but also flooded the market with images. Sites like Flickr function as a kind of Long Tail art gallery – nothing in the vaults, everything on the walls. And IP is all over the place.

I use a Creative Commons license for most of my pictures, largely because I want to encourage people to use them (with credit) rather than just steal them. So far it’s worked out quite well. Various shots have appeared on sites like Londonist, and on random photo blogs, bringing people back to my Flickr pages. That bumps up my stats and my place in the Flickr universe, which makes me more visible when people like Getty come calling.

As I said, I couldn’t live off this. But most creative people don’t survive purely on their creative work. For example, as part of this report for NESTA, I interviewed various fashion designers, all of whom had a portfolio of fashion-related activity – modelling, consulting, organising shows, lecturing, even some sewing – as well as designing their own collections. The pro-am economy argument has always felt a bit specious: looking back at the history of music, for example, ‘amateur practitioners’ have always been the norm. And the chance to move from ‘am’ to ‘pro’ is going to stay vanishingly small.

For bigger companies the challenges are different. As Matt Mason suggests in The Pirate’s Dilemma, the toughest issue is IP. He suggests companies find ways to embrace ‘pirates’ – by which he means both actual copyright breakers, and people doing radical innovation in the same marketplace. Getty has done this quite neatly. A company selling pictures at a premium is faced with a universe of free or cheaper online content, some of it done by professional photographers. Rather than trying to close down the internet, it imports some of the free content, exploiting its brand power and creating a (fairly) exclusive members’ club [group link]. Those 60,000-odd images then get sold through one of Getty’s existing royalty regimes, giving them a fat 80% of the selling price. Trebles all round!

High speed train-spotting

California is the same size as the UK, but its public transport network is a lot worse. So perhaps it’s not surprising that High Speed Rail is a big deal here. What’s more surprising is how similar the debates seem to be turning out.

The California proposals seem further ahead than High Speed Two. In both cases there’s strong political support. Ex-Hummer driver Arnie is less evangelical than Lord Adonis, but he has put up serious money to push things forward. The California High Speed Rail Authority has a definite route, a start date – 2012 – and a slick website with impressive 3d fly-throughs. Meanwhile, the austere HS2 team is still ‘weighing high speed rail’s benefits against costs’, and only ‘where existing capacity is likely to be most constrained’. Set against Golden State optimism, it’s almost a parody of British bureaucratic restraint.

But elsewhere, there are clear parallels. First, how to pay for the thing? Both Labour and Conservatives will make high speed rail a manifesto pledge. But with the UK down £26bn a year, £34bn-worth of bullet trains seems a far-off prospect. California’s trainline is projected to cost a similar $45bn (£29bn). So far the State has committed about $10bn via a bond issue. Sacramento is now bidding for $4.5bn of Federal stimulus money: with matching local funds, that takes California towards the halfway mark. But it’s still nowhere near enough – something no-one seems that keen to talk about.

Second, the real costs of both projects will be much larger. None of these figures appear to factor in optimism bias, the tendency to under-estimate the costs of major projects, which suggests the true numbers could be two thirds as higher again.

Third, who’s on the line? California’s planners have made everyone happy by including almost every major settlement on the route, from Sacramento down to San Diego. But some stops could get chopped in future budget cuts – in which case, expect similar reactions like those in Newcastle recently.

Finally, who gains? The California plans emphasise the environmental benefits of HSR – reducing pollution and congestion. Economic benefits are almost an afterthought – apart from 400,000-odd construction opportunities, cutting congestion will improve productivity, ‘creating and sustaining high skilled jobs’. But it’s unclear how this will happen, or where these jobs will go.

Urban economics can help here. We now have robust techniques for modelling the full economic impacts of transport investments. These suggest that direct benefits from time-saving and reduced congestion are actually fairly small, and may not offset build costs. But new infrastructure also brings more people into cities, increasing the effective density of urban labour markets. This pushes up labour productivity, which in turn raises wages and helps employment growth.

As Henry points out, the environmental benefits of high speed rail are not that clear-cut. A modal shift from cars or planes could cut CO2 emissions and congestion, but not if spare landing slots or road capacity are then used for something else.

Unfortunately for both countries, the economic outcomes aren’t clear-cut either. Agglomeration modeling suggests that the major benefits accrue to large urban centres. Cutting travel times by 10% across the UK would raise London’s productivity more than in most Northern cities. So in California, workers in the big urban cores – the Bay Area, San Diego and LA – will probably have most to gain.

In the UK, that calculus suggests some Northern cities might actually be better off investing in local or city-regional links, rather than pushing for high speed rail. Similarly, better connecting Liverpool, Manchester and Leeds might do more for local people than faster links down South. And in California, less glamorous but more useful local infrastructure projects – like extending the BART light rail system from San Francisco to San Jose – might do the job for less.

Devolution on crack

Ten days in at Berkeley and I’ve already had my first walkout: picket lines went up last week to protest against University budget reductions.  Spending cuts have already arrived here. Most buses now run only once an hour; bins are collected once a month. And Governor Schwarzenegger has announced a giant fire sale of state assets (an idea suggested to him via his Twitter feed).

For urban obsessives like me, the California fiscal crisis is fascinating (and depressing) stuff.  The politics of cuts is highly localised. American states and cities have a range of tax, spend and money-raising powers (in 2005-6 California and its cities raised $200bn in bonds [pdf]; in 1916 a bond issue financed the Golden Gate Bridge). Washington’s willingness to bail out localities is also limited: since 1937, at least 543 American cities have gone bankrupt.

So there’s been an intense debate here about the mix of tax rises, borrowing and spending needed to balance the books. But the state’s unique system of direct democracy make it much more fraught.

Since 1911 California has used three types of referendum to decide major issues, or ‘Propositions’. The State Legislature in Sacramento can pass proposals, which citizens then vote on. Citizens can propose new laws; if they can raise signatures for 5% of registered voters, the proposal goes to a referendum. Voters can also recall elected officials via a petition of 12% of voters (this happened to Gray Davis in 2003, bringing Schwarzenegger to power).

The Economist calls these ballot initiatives ‘the crack cocaine of democracy’. As my Berkeley colleague Malo Hutson told me earlier, it’s an apt comparison. If Propositions with spending implications pass, Sacramento has to find the money. Conversely, it’s tough to pass anything perceived as raising taxes (only about a quarter of bond issue propositions succeed). Worst of all, while most Propositions need a simple majority to pass, a 2/3 majority is required for any tax increases or other revenue-raising measures. This is the notorious Proposition 13, itself passed by referendum in 1978.

The results are dire. California’s main revenue streams are choked off, with a heavy reliance on volatile local income and sales taxes. Long term planning is very difficult, with only 25% of the budget under legislators’ direct control. But repealing the measure is seen as political suicide: after one kit-flying exercise, Arnie famously told supporter Warren Buffett to do 500 sit-ups if he mentioned it again.

This also means some very peculiar tax laws survive – for instance, local property taxes are based on initial purchase price, not the current value. (Malo explained that when his girlfriend bought a 50% share of a house, the two halves of the property were taxed at different rates.) Since land value is not properly captured, the result is a massive transfer of wealth from young to old, and huge windfall gains to property owners.

Some policy innovation arises from all of this – it turns out Tax Increment Financing was invented in California in the 1950s. But right now, extreme devolution is making it almost impossible to solve the State’s budget crisis. Voters have rejected everything proposed by Sacramento, forcing the State into emergency service cuts.

Californians seem confused about how to fix things. According to a 2008 survey, 64% favour some reforms to the system, and 78% think ballots are often too complex to understand. But 60% believe they make better public policy decisions than elected officials.

There are some resonances here for British debates about localism and public spending cuts. As Dermot points out, Labour and the Tories are still playing chicken on spending reductions. Tony Travers recently suggested that Whitehall should ‘delegate the axe’, avoiding the blame for cuts by giving local authorities the power to make their own. But centralism is so engrained in the UK that in the short term, Ministers would still face the kind of protests we’ve seen in Berkeley.

As Tim Williams argues, ‘casting off the Whitehall shackles’ should encourage British cities to develop more innovative ideas. But unlike America, I don’t think Brits would be up for city bankruptcy. There are cultural, as well as practical limits to localist self-reliance.

The California crisis also highlights the importance and limits of strong leadership. The Governor really has to direct the public conversation, but even popular leaders like Arnie have found it hard to push their favoured measures through. Still, if The Governator might be running for President in 2012, Californian  democracy is clearly a gateway drug to something much harder.

Berkeley

I’m off to California until the new year. I’ll be based in the Institute of Urban and Regional Development at UC Berkeley, where I’m now one of the (many) Visiting Scholars.

I’ll be working on the second part of my PhD research, doing a couple of projects on cultural diversity, innovation and ideas generation. Berkeley has some of the best researchers in the world [al-s link] in this field. And I hope to be taking a look at high-tech firms in Silicon Valley and the wider Bay Area.

Bloggage will continue as normal. I’ll see some of you in November at the NARSC Conference. If you’re passing through, please look me up and say hello …

Sleep Walk, Sleep Talk

My friend Suki has made a new film / installation about life in the city, using footage from around London and interviews with various urbanites (including me – fame at last!). Sleep Walk, Sleep Talk is part of Free To Air, a four-year programme of commissions and events loosely organised around the idea of urban freedom.

The installation is showing at 198 Contemporary Arts in SW9 from 14 September to 19 October. There’s a private view on Monday night – email me if you’d like an invite.

The gallery says:

A London of fast-blinking lights and speeding commuters, where cars and trains leave luminous comet-trails marking their passage through the night, and where individuals reflect on freedom in the urban metropolis, or seek escape from the repetitive habits and conditions it enforces.

Inspired by ideas of freedom of expression in contemporary society, Suki Chan’s new video installation is an impressionistic study of London’s diverse population … Chan’s work weaves together a series of evocative video portraits highlighting people’s different responses to the hubbub of London life. Groups of skaters, unimpeded by traffic, move freely through the twilight city, tracing an intuitive map of the metropolis. Nigerian security guards gatekeeping a deserted high-rise office block compare the ‘freedom’ of London with their rhythms and aspirations of their former life. While city commuters embody the regularity of everyday urban existence.

I’d recommend going even if I wasn’t in it – Suki’s film work is always very beautiful to look at. In the meantime, or if you’re not in town, you can watch some excerpts here.

UneasyCouncil

As someone in Spinal Tap said, there’s a thin line between clever and stupid.  I’m still trying to work out which category Barnet Council’s ‘EasyCouncil’ proposals belong to.

Barnet has unveiled some pretty radical ideas on local services. The Guardian-dubbed ‘Tory test-pilot of no-frills government’ wants to shrink the council, outsourcing most tasks via a for-profit joint venture company. In future people might have to buy in ‘premium’ services, or make do with cheaper basics.

As Tony Travers suggests, we might see a lot more of this if David Cameron wins the next General Election. So will it work?

Future Shape is a work in progress. The Council’s latest thinking is here; the original plans are here. Some immediate challenges emerge from these.

First, the ‘budget airline approach’ doesn’t really transfer to local government. The typical local authority provides hundreds of goods and services. Airlines typically offer four or five – flights, insurance, car rental, hotels, meals (plus optional customer service). And shouldn’t I be able to set up a rival Council offering a better deal – free bus tickets or lower taxes, maybe? Plus new and improved Councillors?

Second, there are well-known drawbacks to outsourcing as a business strategy. Direct costs are likely to fall. But principal-agent problems – like contract-setting and monitoring – may then raise indirect costs, particularly if privatisation is part of a money-saving drive.

Third, there are some unworked-out tensions. How to achieve ‘shrinking the organisation’, ‘more personalised services’ and behaviour change? How much say do I get about improving my health  if the Council has already cut back on fitness centres, for example?

It’s not clear if Barnet is trying to do more with less, or less with less – in other words, whether this is a pragmatic strategy or an ideological one. The council faces a growing, ageing and more demanding local population, all of which puts pressure on services. At the same time, council tax and development receipts are falling, and public spending is getter much tighter. But there also seems to be a strong preference for contracting out, encouraging self-reliance and keeping council tax low.

More broadly, should Councils have more freedom to do this kind of thing? In theory, devolution allows agents to exploit local knowledge, promote policy innovation and match local services (and taxes) to preferences. Citizens express choice through voice and exit (voting or moving to a preferred authority, as in the  Tiebout model). So devolution also leads to greater competition between Councils.

In practice there isn’t clearcut evidence that devolution pays off. And in Britain policy innovation has mostly been incremental, not radical. Part of the problem here is a lack of strong local leadership. The obvious solution is more powerful Mayors, which both main parties now favour (to differing extents).

The bigger unsolved issue is fairness. Technically, postcode lotteries are a red herring – the UK is highly centralised but public service quality is still uneven across local areas. Besides, differences in services can also express local choice. But both voice and exit are limited. Turnout in local elections is low, and so are levels of domestic mobility. So spatial sorting may not always work out as theory suggests.

And politically, fairness is the crux of the debate. Barnet has a majority of wealthy people, and those opposing Future Shape worry about the poor. Nationally, Conservatives and Labour agree that councils need more freedom over means – via general powers of wellbeing or competence. But neither is very clear on freedom over ends.

Labour wants both ironclad national standards and devolution – but is tripping up on what devolution really means.  David Cameron wants localism – potentially, much more freedom for local authorities – but also national targets and a progressive direction overall. I’m not sure he can have all of this. For starters, in some policy areas (like welfare to work) the evidence suggests local authorities would be better off collaborating, not competing. And what if some Tory councils go further than Barnet? It will be interesting to see how bright the blue flame of localism really burns.

Ground control

I’ve finally got around to reading Anna Minton’s excellent new book on space, fear and happiness in British cities.

For a self-proclaimed polemic on the urban renaissance that puts the boot into just about everybody, it’s generated an amazing amount of agreement. At the ICA recently Anna, Liz Peace (Head of the British Property Federation), Nigel Coates (RCA) and Daniel Moylan (Deputy Leader of Kensington and Chelsea Council) [link] barely exchanged a cross word.

This is testament to the book itself. Minton takes aim at the privatisation of the urban public realm. She attacke the ‘pseudo-public space’ of big shopping centres like Liverpool One and the ‘pseudo-private space’ of Business Improvement Districts. Landlords increasingly run the public realm for profit, she claims. Instead of functioning spaces we have sterile deserts: Minton quotes one city centre manager who actually talks about ‘importing vitality’. Worse, pervasive CCTV and an obsession with safety actually make us feel less safe and more unhappy. Privatising public space ends up damaging everyday life.

What is to be done? Councils should open up ’shared space’ at street level (as Kensington and Chelsea have done successfully), should allow flexible uses of abandoned buildings and urban places, and need to play a stronger ledership role. Meanwhile Whitehall should re-engineer our risk and litigation systems (in Sweden, if you cross the road and a car hits you it’s the driver’s fault) and review compulsory purchase rules.

Most of this is dead on target. The clue’s in the name, I think – public space can be managed like a commodity, but ultimately it belongs to us. We should have rights to it as citizens, not selective access as consumers. Private sector management of public spaces has to reflect this. Equally, shopping centres that look like streets will inevitably get treated as public property. Trying to police this out is clearly counterproductive.

I’m less convinced by some of the detail, though. Anna mainly relies on a few high-profile examples, and admits she can’t quantify the privatisation of public space. She then claims ‘a huge shift in land ownership has taken place’. But then we don’t know if this is true. And are design and space management really driving fear – rather than, say, media coverage of crime?

Does the recession allow us to rethink urban space, as Anna suggests? Perhaps. The HCA’s emerging regeneration strategy [link] puts the public sector in the driving seat, masterplanning and – crucially – controlling land sales. But there’s almost no money: over 80 councils are competing for just 12 Accelerated Development Zone pilots and HCA budgets are tight. Fundamentally, authorities in deprived areas may have little leverage over developers – who can always walk away.

And the book is weak on the dynamics of urban change. Anna wants fluid cities which evolve and surprise. But sometimes she also wants to block change she doesn’t like. It’s hard to have it both ways.

When Liverpool One was built, the independent Quiggins Centre was demolished – sure, the building should have been saved, but the new L1 is clearly an improvement on what was there before. And is the creative core of Shoreditch really ‘under threat’ from rich incomers? Parts of the neighbourhood are changing. But the artists are simply moving up the road to Dalston and Hackney Wick. As a whole, London’s creative community is as active as ever. We do know that cheap workspace and social infrastructure – like restaurants, bars and clubs – can help support creative activity. But we can’t – and shouldn’t – be using these tools to freeze neighbourhoods in time. Cities are too rich and complex to be pinned down in this way.

Talentopolis

What on earth has happened to Richard Florida? A few years ago he was encouraging cities to invest in skate ramps and get on-trend. Now he seems to have forgotten about that and is writing sensible, even boring features about the geography of the recession. He has even remembered that parents and older people exist. Sorry Richard, perhaps I misjudged you …?

Anyway, this piece for McKinsey on ‘Talentopolis’ is worth a read. Florida argues that highly paid, highly skilled people are increasingly clustered in a few big US cities (such as New York, DC, San Francisco). Less well-off and less-skilled households are priced out and moving out. America is becoming divided between Talentopolii (?) and everywhere else. Florida argues that ‘a geographic sorting of people by economic potential, on this scale, is unprecedented.’

Could this be happening here? At first glance, yes. Neil Lee and I put together the graph above from State of the Cities data, which shows that a few British cities are accounting for a bigger and bigger share of graduates.

Why is this? Technically, we are seeing the selective urbanisation of high-value services and high-skill workers on the back of a growing service sector. Thanks to cheap transport and better ICT, manufacturing firms are now less location-sensitive. Some back-office activities are leaving the UK altogether. But knowledge-intensive firms like cities. These firms offer high salaries to smart people. Over time, the urban share of skilled workers and skilled jobs tends to rise.

So far, so Florida. But there are some important differences. Take another look at the graph. Florida is depicting a spiky world, with a number of big city peaks around the US. But the UK ‘means migration’ is dominated by both London and some much smaller Southern cities. (More recent data would probably put Leeds, Manchester, Edinburgh and York on the right hand side.)

Florida seems to assume that cities are basically self-contained (though elsewhere he highlights the huge sprawls on the Eastern and Western seaboards). But Britain is a small island where most places are close together. In many ways the Greater South East is a single ‘mega city region’. So in many cases mobile workers are opting for partial displacement and commuting, rather than a total change of place. Manchester and Leeds are now drawing commuters from a wide hinterland. Edinburgh and Glasgow exchange thousands of workers a day. Cities like Oxford and Cambridge are now part of the Greater London system and urban centres in their own right.

It’s also unlikely that lower-skilled workers will get displaced in the way Florida suggests. The UK is still a less mobile society than the US. And Britain also has a much bigger social housing sector, much of which is in inner urban areas and is increasingly likely to be occupied by poorer people.

Still, there is something to the Florida analysis. Central Government needs to think about whether its happy with the national dominance of our own Mega City One – London and its hinterland. And other parts of the country, rather than chasing after a fixed pool of skilled labour, should be trying harder to grow and keep their own.

Read all about it

New book chapter alert …

During the 2006 Liverpool Biennial, light and sound artist Hans Peter Kuhn projected a gigantic question mark over the Wirral suburbs (above). Everybody hated it. But in fact it’s an (accidental) artistic masterstroke asking the big questions about suburbia. What is it? What is it for? And if there are problems in suburban areas – and parts of Wirral are pretty deprived – how can we fix them?

The Smith Institute, the  Homes and Communities Agency and CABE have just published a new collection of essays that aims to answer these questions. Housing and Growth in Suburbia is edited by Peter Hall and includes contributions by Nick Falk, Vesna Goldsworthy, Yolande Barnes, Will McKee, Sarah Ganventa, Jim Bennett and Ben Kochan, as well as yours truly.

My chapter, ‘Fixing Broken Suburbs’, looks at suburban deprivation and the prospects for renewal through the downturn and beyond. It’s worth reading this alongside Jim’s essay on ’suburban renaissance’, which sets out some of the HCA’s early strategic thinking.

For the moment you can download the whole collection here.

Update: Tristram Hunt – who chaired the launch event last week – has done a nice piece on suburbia in today’s Observer.

Flat earth thinking

It’s intuitive that the architecture and layout of a city make a difference to our everyday lives: how easy it is to get about, and whether it feels like a nice place to live. In 1961 Jane Jacobs laid out the template for mixed-use neighbourhoods. We now know that well-designed buildings and public spaces contribute to wellbeing and social capital.

But what are the economic impacts of ‘quality of place’? Last week CABE and the RDAs organised a seminar to try and find out. The morning session had excellent presentations from my colleague Ben Rogers at CLG, Jim Bennett at the Homes and Communities Agency and Paul Hildreth from SURF. More on these in a moment.

Does ‘quality of place’ have anything to do with urban economic performance? Many superstar cities are bad places to live – like Hong Kong, LA or much of Silicon Valley. Equally, when cities like Liverpool and Manchester lost up to half their manufacturing jobs in the 1970s and 1980s, it’s unlikely that poor design values were to blame.

But these cities’ recovery in the 1990s was clearly helped by the remodelling of their city centres. This has attracted investors and new residents – although it’s been no substitute for good fundamentals. The ‘place offer’ is part of the story here – but how much?

The evidence tells us that human capital, innovation by firms, urban critical mass and economic diversity have the single biggest impacts on cities’ economic performance. And they are linked: cities make innovation easier, and have bigger, more diverse labour markets. The physical environment helps all this along (and lack of decent housing raises the local cost of living). But the evidence does not suggest it’s an active driver of growth.

‘Quality of place’-based regeneration also has winners and losers. Investing in design can help raise local house prices. This is good news for land and property owners – but not if you’re renting and get priced out, or if your home is demolished and replaced by somewhere more expensive. These are real risks in some Housing Market Renewal areas. Pathfinders are needing to deal with the problem by offering guaranteed homes, or cheap finance to buy a new one.

Fundamentally, I think the jury is still out on quality of place. Its importance often comes down to definition. CLG define quality of place as ‘built environment environment factors affecting life chances’. This involves only a small set of policy levers – design, planning, construction, space management.

By contrast, Paul defined quality of place as ‘what makes places work’ – ideas flow, infrastructure, big markets, skills, business-to-business links and so on. At a stretch, we could label this ‘quality of place’. But we now have an official definition that is much tighter.

Paul also highlights a bigger challenge, which is to get Government as a whole to improve its spatial awareness. Thomas Friedman was wrong: the world is spiky, not flat. Now that the Nobel Prize in Economics has gone to Paul Krugman, for his work explaining why place matters, it’s increasingly hard to pretend that it doesn’t.

But many Whitehall departments still take a flat earth view. There is little understanding of what makes different places work. Too many services are still delivered in silos, with little joining up. There is good evidence that investing in city-regions could help achieve national goals.  And more urgently, it is already clear that the recession is having very different effects in different areas. That underlines the need to junk flat-earth perspectives.