Category Archives: Internet

Got Props!

Everyone likes getting attaboys, including me. So I was thrilled that Wahab & Mednica’s Bizmedia Law Blog reviewed Dealfatigue in a recent post.

I’ve been out of pocket of late but I will be posting soon. Until then, please check out the Best of Dealfatigue in the upper right of this blog.

Full Disclosure: Bizmedia Law and Dealfatigue posts regularly appear on the IP law web aggregator, entmedialaw.com.

Loose Lips Syncing Shifts

"Wax Lips" courtesy of Red Clover

Back in the 80’s, MTV was cutting edge. To many of us growing up back then, music videos were as much a part of the soundtrack to our lives as the music itself.

Inspired, my high school class produced its own music video; a lip syncing production of Devo’s We’re Through Being Cool which was seen by less than a thousand people at my school’s annual musical revue. [Note to Roslyn High alums, please send me a copy and I will post it here!]. Today, kids produce lip dubs in just a few hours and mass distribute them to millions worldwide through viral video websites like YouTube.

Here’s a lip dub of I Gotta Feeling by The Black Eyed Peas. A couple of kids from the University of Quebec, Montreal (UQAM) shot this video with 172 students in one take and one rehearsal.

Here’s “the making of” video of the UQAM lip dub [Subsequently blocked by UMG. I can’t figure why of the two, Universal Music Group chose to block the “making of” footage and not the lip dub itself. Updated: January 21, 2012]:

Here’s the original music video produced by The Black Eyed Peas.
I prefer the UQAM students’ take.

Of course, lip dubbing raises all sorts of legal issues concerning copyright, fair use and commercial exploitation of works owned by others. Apparently, the students didn’t clear the music though I suspect the cost of doing so would have been prohibitive.

So are mass distributed, viral lip dubs bad or good for the music business? The band? Do they cut into or promote market share? Do they dilute the promotional power of the band? [Ed. Note: Don’t ask me about this last one. I hear this argument from label reps every time I negotiate with them.]

With over 3 million hits on YouTube and publicity from news outlets and blogs like this one, The Black Eyed Peas could never have garnered that kind of exposure on their own. YouTube’s Audio ID program can link lip dubs and other user generated content on its website to online buyers of the band’s music. That kind of Internet exploitation should be music to the industry’s ears.

[UPDATE: January 18, 2010:] As reported on The Trademark Blog, Capitol Records sued Vimeo in Federal Court on December 10, 2009 for copyright infringement from the site’s exploitation of lip dubs.

Complaint Capitol v Vimeo

According to The Trademark Blog, Capitol needs to persuade the Court not to follow Io Group v. Veoh or UMG v. Veoh. These cases held that file sharing services like Vimeo are not liable for the creative (and arguably infringing) activities of their users.

As I wrote earlier, the music industry needs to have an honest and public discussion about whether such uses actually promote or dilute the value of their works. So far, I haven’t seen any proof one way or the other. In the end, it might not matter. People will continue to find creative and novel ways to exploit existing works despite the risks. It’s incumbent on the music industry to figure out a way to squeeze some profit for themselves out of that.

Quantum Mechanics

Pipe Wrench courtesy of Scott Arch

Despite all of the self-help books preaching the contrary, people have a hard time living outside the moment. So, it’s difficult for them, let alone a whole industry to shake the mindset that the current ecology of the business will continue to be bleak forever. But this sour economy is just a part of a normal business cycle which will pass.

Eventually.

If we’re willing to wait. And survive while we’re waiting.

Will the business be the same? I doubt it. It will be continue to evolve as it always has in the film business. A decade ago, insurance-backed financing was all the rage. Then came sale-lease back deals from the UK, investment from German film funds and most recently, private equity and hedge fund financing. Those were good times. Good times.

However, dramatic, paradigm shifting change – the kind of change required to modify an outmoded, global business model created decades ago and move entrenched players with special interests – requires what Nassim Taleb calls a Black Swan event. Like a rare black swan, nothing less than an impropable sequence of events like limited access to credit, labor unrest, rampant piracy, the rise of the Internet and the collapse of distribution windows and the pre-sales market can bring about meaningful change to this business.

Even so, the fundamentals of the film business remain. People like good movies, especially those with good stories and high production values. And there remain untapped distribution channels in emerging markets and emerging technologies. Where there’s a demand for something, there will always be a business.

Bill Mechanic, a key player in the studio world and now, the independent movie business put it best in his keynote at the IFTA’s annual Producer’s Conference back in September:

The independent world, which should be aiming to do things better and different from the studios, doesn’t have that as a mandate at all. If anything, the only thing that independent distributors and financiers look for is the same. Maybe costing a little less than the majors, but they want what the studios want, or in Fight Club-speak, they want copies of a copy.

* * * * * * * * * * * * *

In that way, Hollywood in the broadest sense of the word is much like Detroit. It’s a manufacturer’s mentality that reigns, seemingly indifferent to the consumers it serves. Ignore whether the consumer likes our product as long as they buy it.

* * * * * * * * * * * * *

The next 2-3 years will be even worse, not because of the flood of new releases, since that is already abating, but rather due to the effect the over saturation has had combined with the economic downturn. New money is going to be hard, if not impossible to find. Ad sales are down, so TV networks around the world, other than cable, aren’t buying. Add in a confused video market, and it’s going to be tough. To my mind, the next few years will be about survival.

* * * * * * * * * * * * *

. . . [A]lot of waste is going to be cleared from the marketplace. Excess product will go away, the people who don’t take the business seriously will go away. Hopefully those who make crummy movies will also go away, but that may just be a personal wish.

* * * * * * * * * * * * *

[The film business] is a game for winners. And those who win today will win to an even greater extent than at almost any point in the past. . . . Those who will win will be smart about what they make and how they sell their films. They will hopefully make good films but perhaps even more key they will make unique films that stand out, which means they will not have to compete against the bulk of the films for talent. They won’t look like all the other films so they won’t have to spend as much money marketing them.

It’s not that the buyers aren’t there. Consumers, TV outlets, retailers and, yes, even pirates want what works. Don’t believe me? Ask Summit about Twilight. Ask Searchlight about Slumdog Millionaire. Ask Screen Gems about District 9. Ask Focus about Coraline.

The takeaway? To get through this down period, be good, be different and as Tim Gunn says, make it work!

To read the complete transcript of Bill Mechanic’s keynote speech and some really informative reader comments click here to Nikki Finke’s blog.

Waiting For The Dough

"Commute, N Judah" courtesy of Heather

I decided not to attend the Cannes Film Festival back in May because of the dismal economy and what I expected to be a poor showing there. I learned things were even worse than expected when my colleagues in distribution reported from the near-empty beaches of the Cote d’Azur that the bottom had fallen out of the pre-sales market.

The Toronto Film Festival was supposed to be different. Four months after Cannes, with the banks flush with TARP funds and individual investors reportedly swapping oil and gas investments for classic cars, surely an uptick in motion picture finance had to be right around the corner.

I thought that Toronto would present a sea change in the degrading economics of the business; that the credit markets would thaw; and the cash equity of retired Silicon Valley and Wall Street insiders, the Chinese, the Indians and institutional investors would make the trek up to Canada in droves.

But Toronto felt like a bad dream about a big party that everyone attends but the host forgets to cater. People took meetings, did lunch, partied, went to screenings and generally did the things one does at a film market except buying, selling and investing in films. All of the elements for a successful market were there except cash. The money, it turned out, stayed at home.

Looking back at it now, I was overly optimisitic but hardly alone in my rosey outlook.

Yes, there were well-publicized exceptions to the lack of a market at the market. However, to the rank and file independent producer, the prospects remained bleak. Although the independent film business has been subject to business cycles in the past, many I spoke with in Toronto believe that business won’t bounce back to pre-recession levels.

The Internet is the double edged sword at play in any recovery. On the one hand, the Internet provides new sources of distribution revenues through streaming and digital downloads. On the other hand, the Internet’s ability to stream content is eroding traditional exploitation windows and risks shortening the profitability period for the typical commercial motion picture.

Still, the credit markets continue to thaw, albeit slower than many anticipated. New distribution models are rapidly evolving and with it, new deal points in the licensing of distribution rights.

And . . . the American Film Market is less than two months away. Maybe, just maybe then, producers will finally be able to get the money shot that they’ve been waiting for.