The creative economy is growing quickly, and that raises demands for new business models in the old and traditional economy's companies and organizations. Read about what the Crafter Economy is and why it is a growing part of the economy - and how it will affect your business.
By Sally Khallash Bengtsen and Peter Khallash Bengtsen
A "crafter" is a creative person - a Creative (Wo)Man - who doesn't want to adjust to existing boundaries, and who would rather create the world. In the Crafter Economy, or creative economy, money and profit are not driving forces. The driving forces are the satisfaction of creating and exchanging ideas and knowledge. As Ulla-Maaria Mutanen, one of the Crafter Economy's pioneers, explains it in an interview with us "Although money doesn't move crafters, crafters are moving increasing amount of money." You can read more about Mutanen in the box.
The Crafter Economy is the creative economy. "Crafting" means "creating," and the most important thing about crafting is the inherent creativity in people. It is the same view of people that the Copenhagen Institute for Futures Studies takes in its book Creative Man.
According to Mutanen, the core of the Crafter Economy is that certain groups - crafters or creative people - have different reasons for creating and exchanging than profit. A crafter is not driven by "doing business," even though it is an obvious advantage if she can make money to support her activities. Instead, the crafter derives a greater personal satisfaction by creating something rather than buying the same product. The product she creates reflects a part of her identity and a hidden magic value because of the story behind the product's creation, appearance, etc. It gives her a feeling of empowerment, a sense that she has control over her life and her ability to create things for herself. Through crafting, she can create products in line with her personal values, instead of adjusting herself to products that represent external norms. In the best case, the crafter finds she gains greater self-confidence by creating unique products, because she thereby feels her own individuality and uniqueness.
In a time when we are confronted with so many new economic terms such as learning economy, innovation economy, knowledge economy and experience economy, the term crafting points to new trends in society. The Crafter Economy is a new type of economy in which the exchange need not be about money. Crafters exchange inspiration and recognition for recognition and inspiration. There are no patents, just more exchange in cooperation and competition that can best of all be termed as play, according to Mutanen.
Crafting as a creative and nonprofit-seeking process can be coupled with the other economies mentioned. Crafters who are simply interested in the creative process can create knowledge and experience. Crafting is, in fact, innovation and learning in one, but without the necessary coupling to profit. The Crafting Economy thereby manages to release potential in people who are beforehand filtered out by the profit-based filters of other innovation processes.
The Crafter Economy is based on the individual - on the crafter and his need to create. A need that Karl Marx recognized in people and that has a central place in his philosophy. But where Marx used the need to create to criticize the market economy, because the employer unfairly took the product from the worker, the Crafter Economy accepts the market economy system. In the Crafter Economy, the crafter chooses if she wants to give up her product or craft for a company like LEGO. Free creative development is the ideal in the Crafter Economy and, as you read this, it is being realized in more and more crafter communities around the world.
The Crafter Economy is not an anti-capitalist trend, but rests on the dominant capitalist system in which consumption is essential. Consumption is, however, replaced by another status-giving activity: mastering skills. In an economy that increasingly rests on creative thinking, well-known status symbols such as owning or consuming material goods and services will be competed with by "status-giving skills."
In practice, it can be illustrated this way. Let us assume that two friends each buy a beautiful vintage dress. While one of them gladly uses the dress as it looks, the other has the skill and ideas to redo the dress so it looks even better and more unique. This gives her greater social recognition and status, because she has a skill that makes it possible for her to get more out of the same product than her friend.
According to Mutanen, the desire to learn new skills is an inherent human trait because it makes life more interesting. But there is also a social dimension that is to the advantage of clever people: to learn new things and have the possibility to share the learning with others makes you more socially attractive. The satisfaction of creating and identifying yourself with your product is, though, only half of what the crafter gets out of her work. It is through the friend's recognition that the creative seamstress understands that she is able to create something original. So a person can have as many skills as she wants, but the "showing off" factor is decisive. If others don't see, taste, hear or smell your skills, and without the unavoidable story telling, you won't gain much status.
This opens up new markets both for the supplier of skills and for clever consumers, who can be competitors by producing the same goods and services as companies and organizations. Seen in this light, it is hardly surprising that so many contribute to Wikipedia, PureVolume, Flickr, etc. We all want to show that we are authors, musicians or photographers, and we all want to share the fruits of our labors with an interested public. Companies can learn from this. It will be a basic element in the business models of the future to give consumers the chance, in addition to building their skills, to tell, show and brag about their skills.
According to Mutanen, the idea about the market in the Crafter Economy is broader than the current economic market system. For example, when a crafter puts a photo of a homemade jacket on her blog, is the jacket on the market? Or does it depend on the jacket having a price? If the jacket is not for sale, but inspires other crafters to make their own versions, which inspire even more crafters, and some of these crafters begin to sell their creations, which products are part of the market and which are not?
The homemade jacket is a part of an exchange system - a market - that consists of users, creators, buyers and sellers. But profit does not necessarily drive the market. The goal of the crafter in showing the jacket on the net is not money, and there is no money used on the market.
The market in the Crafter Economy consists of products, concepts and ideas, of which some are for sale, some are offered in exchange for other things, and some are free. It is a broader market, where primarily ideas and inspiration are exchanged. The profit in that sense is the inspiration one gets from moving around on the market.
Before the Internet, the Crafter Economy was primarily locally based, but the Internet has quickly made it possible for people to be far more creative about how they sell, trade and share the product they have made or own. The possibility of exchanging ideas and inspiration is now far greater.
Mutanen believes that learning, recognition, acknowledgement and reciprocity in the Crafter Economy motivate at least as much as economic profit. The American Association of Hobby Industries reports that only 15% of crafters are interested in selling their products for economic profit. The rest have other reasons for making their things. At the same time, exchange and discussion are more important that monetary transaction. It is more important that you can exchange your knowledge for another's recognition and advice, or trade an item for another. Selling is just one of many possibilities, in other words.
For crafters links - or stories - determine an objects value. Crafters value products that can tell and teach them something new and that are rich in stories about the product's creation, creator, material, etc. For a crafter, an object with no links is dead. The demand for a product shows itself as recognition - and not (just) the sale of the product - and is based mainly on recommendations, not advertising and PR.
The Crafter Economy is growing dramatically, and much indicates that the preference for, for example, tailored home decoration, cars and electronics will most probably continue to grow. In the US alone, the craft and hobby industry grew 50% from 2000 to 2004: from US$ 20 billion to US$ 29 billion
We meet crafters all over the world in open source environments that are based on the idea that all knowledge and all ideas should be accessible to all who have an interest in developing ideas. This trend shows an enthusiastic, passionate and, most of all, open attitude to problem solving and development. It is based on participation, creativity and (knowledge) sharing.
While crafters are mainly motivated by the desire to experiment together to develop and create, professional organizations and companies associate to a great degree the chaotic, fun and experimental game with something that is opposition to serious, economic and rational work. So companies that are trimmed to maximize profit are often not environments where the best new ideas can grow.
Crafters and hobbyists follow their passion and do not think in dollars and euros, but meet with others in experimental networks and communities on the Internet, and develop products together. Because they do not have a commercial interest in the products, they are honest about the product's shortcomings and about what they expect the product to do. The cleverest work together on problems and solutions that companies have not approached yet. Eric von Hippel, a professor at MIT and one of the leading researchers in user-driven innovation writes: "A growing body of empirical work shows that users are the first to develop many and perhaps most industrial and consumer products."
For example, dedicated crafters, through communities of practice, have developed sports equipment, successful Internet services such as Skype, leksikon.org, Habbo Hotel for Internet gambling, etc - all products and services that started as leisure projects.
Because of their expertise and (time) resources, more and more crafters can offer serious competition to the established companies because they are together able to produce products that are competitive in the traditional market. The question is how companies will meet this challenge.
The answer could be simple: companies can make alliances with crafters and open-source users where opportunities exist. Many already are. In the best case, "non-institutional developers" and hobbyists can become important partners for companies because they have the freedom to conceptualize, test and find new ideas. These are important resources that companies possess limited amounts of, since they are bound by time and budget concerns for development projects, and so are more reluctant to use existing company technology on new products. On the other hand, crafters and open-source developers have limited resources for following development from concept to finished product - aside, naturally, from products like Linux - and through cooperation with companies, they have the chance to fully develop their ideas. In this way, open source can be used to create successful, commercial products such as the aforementioned Flickr, Habbo Hotel, Skype, YouTube, etc. This creates a good environment for what von Hippel calls democratic innovation.
An example of a successful relationship between company and crafters is LEGO, a Danish toy maker. After a recruiting round, four out of 9000 users and fans from around the world were chosen to help LEGO develop their new Mindstorm robot. The users spent countless hours developing the robots computer system, and LEO is fully convinced that the robot is now exactly how users want it. All programs and code for the Mindstorm robot are accessible to users, so the can freely update and further develop them in the future. In this way, LEGO is sure that the Mindstorm robot will be a competitive product that can remain on the market for many years and ensure LEGO a good earnings source.
And what did the four users get for their efforts over and above the satisfaction of developing the Mindstorm robot and the recognition from other crafters and users? A bag of LEGO bricks.
Sources: Creative Man, Instituttet for Fremtidsforskning, Gyldendal 2004 and the newly edited English edition of Creative Man at www.iff.dk/creativeman/issue1/index.html. Eric von Hippel, Democratizing innovation, MIT Press 2005. Ulla-Maaria Mutanen, hobbyprincess.com. Craft and Hobby Association Attitude & Usage study 2005.
Sally Khallash Bengtsen is a political science student and intern at the Copenhagen Institute for Futures Studies.
Peter Khallash Bengtsen holds an M.A. in idea history and public administration, and works in the Office for Lifelong Learning in the Danish Education Ministry.
Ulla-Maaria Mutanen (M.Sc Econ.) is a researcher at the University of Helsinki's Center for Activity Theory and Developmental Work Research. Here she is gaining her Ph.D. on new forms of design possibilities in organizations. Since 2004, Mutanen has been a prominent speaker and writer about design, craft and technology related subjects on her blog, hobbyprincess.com. In 2005, she developed thinglink.org, an open database that offers free "product codes" for creative work such as art, design, and other crafts. In addition, she is a writer for CRAFT magazine, and editor of supernaturale.com