Limitations in scale, infrastructure and business opportunities in combination with a greater sense of community in small centres require a more diverse understanding of the small city creative economy. Entrepreneurship and business development builds on non-capitalist resources, creative community initiatives, volunteers and community networks. Fostering the creative economy in small cities requires a rethinking of creative narratives that iterate the key role of non-capitalist community resources. I illustrate this argument via a case study of the Blue Mountains Music Festival, in New South Wales, Australia. It examines the gap between creative economy aspirations of a small city government and the reality of creativity 'on the ground'. The City of the Blue Mountains is a small urban centre on the fringes of metropolitan Sydney and regional New South Wales. Its council has recently adopted a creative industries approach to enhance local employment in line with national and metropolitan creative agendas. The Blue Mountains Music Festival was launched in response to creative economy policy more than 20 years ago, but has now lost this connection as it fails to fit current policy aspirations. The festival is, however, an effective example of how creativity in a small city unfolds, demonstrating that beyond jobs and growth are key matters of non-capitalist community networks and resources.