For London's new-media sector, image is everything

London's new-media industry pays an average Pounds 25,000 salary to staff who are predominantly non-graduates. It prefers trendy areas to those where rents are low. Little wonder that many companies are barely breaking even.

A survey by the University of Westminster offshoot New Media Knowledge depicts an industry of small companies, with 20 staff on average. A headcount of 50 puts a firm in the top 7 per cent classed by the report as "major players".

Over 63 per cent of staff were educated to below degree level, with A levels the most frequent qualification. But the industry can hardly be considered underqualified when more than 16 per cent have doctorates. The PhDs are thought to have entered the industry via spin-offs from university research work.

Image-conscious firms may be paying rents beyond their means. Those in central London admitted that suitable facilities and image and credibility were more important factors than affordability.

Soho, in the heart of London's West End, is home to the biggest cluster of new-media businesses. Other clusters near the centre are in the Hoxton-Shoreditch area, the Farringdon-Smithfield area and Southwark. Farther out are healthy clusters in Brixton, Kingston-upon-Thames and Harrow.

Clusters are forming around successful firms. Clarity moved to Smithfield from Oxford. Razorfish left Southwark to become its neighbour. Another cluster is forming around the canals north of King's Cross. The industry avoids the area east of Canary Wharf. "I would not consider the East End of London because of the image," said one interviewee, despite the availability of cheap premises.

The average salary of Pounds 25,000 is not bad given that 64 per cent of industry staff are under 30. But the report's authors suspect that many firms cannot afford the salaries they pay as average revenue per head is only Pounds 42,667. "It is reasonable to conclude that a large number of the businesses in this industry operate below or near break-even," the report says.

New-media businesses in the United States pull in more money than their London peers. Average revenue per head is Pounds 61,600 in New York and Pounds 53,000 in San Francisco, the report says.

But international differences are slight compared with the wealth gap that exists in London between the new-media industry and established media sectors such as advertising, publishing and broadcasting. Average revenues per head are Pounds 97,877 in television and radio, Pounds 100,758 in publishing and Pounds 138,542 in advertising businesses.

London's young web designers and multimedia producers can only watch in envy and wait until their industry loses its thrill and joins the media establishment.

On the other hand, how long is it since an advertising or publishing executive could say, like one interviewee, that "it has been an amazing adventure for us all"?

www.nmk.co.uk