Tell it Like it Is

As I’ve mentioned time and time again, our business (entertainment) is in a rocky period of creative destruction. I believe this is good for culture and society, and probably less good for loads upon loads of highly paid execs – but oh well.

The best quote I’ve seen in a long time was a comment on this Digg submission today:
(emphasis mine)

Dear Hollywood,

We aren’t making money from downloading, we are sharing copies of stuff we have gotten through renting or borrowing from friends.
You wont make any more money by shutting down the Internet.
The only reason you don’t make as much as you would like is due to the quality of most of your product. The Dark Knight made money, it was good. The Love Guru didn’t as it sucked big time.

Start believing in vision and stop believing in focus groups.
Take a risk, make entertaining art or get the hell out.

Or just keep trying to remake the world the way you think it should be, ie the 1980’s.

Welcome to the 21st Century, torrents will never die, and you cant put the genie back in the bottle.

Get over it, shut up and hang on, its gonna be a bumpy ride.

This is spot-on. We’ve had a media culture for a very, very long time where the hits (Dark Knight) subsidize the losses (The Love Guru). As the safety net disintegrates for the losers (and there’s a LOT of bad, awful, terrible movies); of course there’s going to be a lot of rancor and squealing.

In the old media model (still very much in existence, but fighting for its existence); A studio producer can easily collect a 6-7 figure producing fee for a film. You get paid most of this upfront. And there’s too many variables to “know” if a film is going to be good or bad at the end. Directing, casting, writing, exec notes, cutting, scoring, acting – all things that can go badly after a film has been greenlit. It’s not easy.

At the same time, we’re quickly moving into an age where if your media sucks, the only $$ you will have made are the crazy upfront costs we all acknowledge hurt profitability – but lots of producers can’t (or won’t) work on a film for years (often the case) without being able to pay their bills at the very least.

Interesting times we live in – but the commenter above is generally right. The large studios will become more and more risk averse – leaving independent producers trying to figure out new business models (which they are not largely very good at…)

It’s Not a Revenue Crisis

Some minimal coverage of topics at SXSWi today over on CNET.

For those who don’t follow the business, SXSWi is the “digital” portion of the South By SouthWest arts conference that happens in Austin, Texas. I wish I could have attended this year, but alas, no such smiling luck upon me this time. I’m sure I would have loved such provocative forums as “Old Media Finds New Voice Through Twitter.”

Anyone want to put odds on the more proper title of that forum being “Old Media PR Hacks Find New Medium to put out Old Message?”

But, the point is not to complain or make fun of, the primary thing in the article that caught my eye was this:

But however edgy some of the thinking may be at SXSWi, and however much its demographic may deviate from the U.S. population as a whole, the revenue crisis is real, and this is one of the places where it takes center stage. According to Avner Ronen, the sense of uncertainty over profits is what’s holding back some of the innovation that SXSWi’s masses are so eager to set in motion.

“That’s what’s scary for the media companies dealing with Boxee,” he said. “They saw what happened with newspapers. It’s unlike the record industry, it’s not like they fought it. They endorsed it, they executed very well against it, it’s just…the analog dollars to digital pennies thing.”

Here’s where things become… well, wonky. It’s NOT A REVENUE CRISIS. It’s a crisis of profit margins, and confidence in the product.

For big media companies with millions of dollars in executive overhead, the crisis isn’t that they’re not making enough, it’s that their overhead costs are too high in a market that is just now starting to more accurately reflect the world.

It wasn’t that 50 million people tuning in to watch M*A*S*H was because they all loved the show; it was also partly because it didn’t have much to compete with. I don’t even want to use the term “fractured demographic” because that implies that 18-49 Males is even a realistic map of that world. That is a REAL demographic measurement still in use today.

How many of you think that all 18-49 males are all the same, raise your hand. That’s what I thought. Mass media worked because of limited choice, not because it reflected the makeup of the audiences.

And we built infrastructure and command and control systems to support a fictional market; and now that we’ve finally started to see the amazing diversity of interests and groups in the world, you can’t cost effectively create content that large enough audiences will like; and generate enough revenues to spend $15-30 million a year just on your creative “overhead.”

One company I know, for instance, just hired it’s FIFTEENTH (15!!!) Creative exec. This is a company that develops primarily one kind of programming, and has only three shows on the air in the US. Just doing the math makes me ill. That’s well over $2.5m in salaries alone, and on shows where they make a production fee of maybe 10%… it’s just not good.

This scenario plays out over, and over, and over again at media companies. These kinds of structures will not stand the test of time. And it’s not like these huge overhead expenditures are “what you have to pay to keep top talent,” to use a phrase we keep hearing. Take a look at track records. Seriously, look. We have a “hit” subsidized business model at the large networks, studios and prodco’s. Those huge overheads still result in many a failure each year. And time and again, the same companies will hire people they “like” or have worked with and schmooze well with, regardless of the fact their last show was an utter disaster both in production, and in ratings. Just because you’ve “done” something, doesn’t mean you’ve done it well. We would do well to remember that.

There’s plenty of opportunity out there for leaner, meaner, just as creative and able to execute and make healthy profits off of revenues that the large companies say “isn’t enough.”

The fact is, the $$ can be enough in a well-managed enterprise (even though it may be “less than before”), you just have to be willing and able to adjust your cost and overhead structure to make the $$ work, and that’s a painful and difficult process. It’s especially terrifying for companies that are used to being big enough that they can point fingers at someone else in the company when one of their decisions goes wrong.

It may also mean you end up doing a lot of things yourself that in the past you would hire out while you sat in the corner office. Suck it up, rock at it, and keep moving.

Oh, and by the way, the Renaissance wasn’t the greatest period in arts in history because it made the most amount of money for it’s artists. It was because they were creating great art, and trying new forms of expression.

I firmly believe the “Golden Age” of artistic media lies ahead of us, not behind us.

Connect With Fans

And now, back to the stuff I more regularly blog about, the entertainment business.

One of my favorite blogs is run by the guys over at Techdirt, and in particular, Mike Masnick. Most of the posts are insightful and deal with a lot of stuff that we in the Producers Guild (as producers) are not dealing with in any meaningful, proactive ways. Specifically, a lot of the posts about the state of copyright, and Big Content’s utter failure to adapt business models to social realities are spot on in my opinion.

Masnick recently gave a presentation at Midem that he posted online that I believe is profoundly relevant to the survival of creative professions. I highly recommend taking 15 minutes to watch it.

The “profound” parts I’m referring to are two salient points that reflect the world we live in today.

  1. Connect With Fans
  2. Reasons to Buy

In the past, film & television production were socially-exclusive enough (means of production and distribution were limited); that simply by their nature, producers could make something, then put it out do a little marketing, and expect to have an audience (connect with fans).

Those days are rapidly falling into the sunset, but Producers haven’t changed their mindset. We are largely, willfully ignorant.

There is a big hurdle to overcome in changing this mindset, and that is the assumption that as “creatives” that whatever we make deserves to have a profitable audience by the mere act of creating it.

Coming back to Mike’s presentation, which is crafted around the changing music business; applying his two points to any creative content reveals a great big gaping hole in what we do in the content creation business.

Besides just creating the content, how do we Connect with Fans, and what added value do we offer? There are precious few examples of this in the media business (yet).

One great example, however, are the fan communities that Peter Jackson consistently builds when he does a film. He lets his fans into the process with tons of behind the scenes footage, AND allowing fans to ask questions and then answers them. He builds a conversation.

But far too few producers, directors, and content creators take this kind of approach. We cannot mistake a “behind the scenes” video website for conversation. The fact that he answers fan questions is the primary value.

Adding value, however is something we’re even worse at. We don’t offer special editions (that ARE really special, other than in label only), signed by cast members. We don’t offer chances to meet cast or crew or come to set, or anything special. We just make, and say “here ya go, now pay me.”

One interesting and innovative example of “adding value” to creative content comes from Josh Freese, drummer for Nine Inch Nails. Freese recently released some new tracks and is selling them in packages that range from $7 for the album and three music vids all the way up to $75,000. What do you get for $75,000?

$75,000 (limited edition of 1)

-Signed CD/DVD and digital download
-Go on tour with Josh for a few days.
-Have Josh write, record and release a 5 song EP about you and your life story.
-Take home any of his drumsets (only one but you can choose which one.)
-Take shrooms and cruise Hollywood in Danny from TOOL’s Lamborgini OR play quarters and then hop on the Ouija board for a while.
-Josh will join your band for a month…play shows, record, party with groupies, etc…. -If you don’t have a band he’ll be your personal assistant for a month (4 day work weeks, 10 am to 4 pm)
-Take a limo down to Tijuana and he’ll show you how it’s done (what that means exactly we can’t legally get into here)
-If you don’t live in Southern California (but are a US resident) he’ll come to you and be your personal assistant/cabana boy for 2 weeks.
-Take a flying trapeze lesson with Josh and Robin from NIN, go back to Robin’s place afterwards and his wife will make you raw lasagna.

Ok, maybe a bit extreme, but it makes a point, right? And someone might just buy it. That’s like selling almost 11,000 albums in one fell swoop, but without the cost of … um, 11,000 albums.

You know, that if you’re a good enough producer, and you treat people right, you could easily set up a dinner with 2 or 3 of the stars from your movie, and one lucky fan (make sure you get a few promotional days with your talent included in their contract, and that something like that could be considered promotional – guaranteed to get a bigger bang PR wise out of that than to hold a PR conference…). Of course, you’ll also have to pay for the dinner, and security and whatnot to make sure the winning bidder isn’t a crazy nut bent on hurting anyone, but hey, that’s manageable.

At any rate, I think Mike is dead-on, and content producers really need to start thinking of better ways to connect with our fans, and giving them reasons to buy. One side effect of this, I believe, is that when we make something fans do connect with, we’ll have a much more satisfying work experience as producers than we currently have when we get our Nielsen numbers or box office reports.

I, for one, would love to get to sit down with a few fans who really enjoyed our work and share a meal. That’s a whole lot more positive reinforcement than we often get from our creative execs or distribution partners.