Tag Archives: hollywood

Blogs, Digital Downloads, Internet, Streaming, UGC

Yet Another Post On SOPA

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[Ed. Note: Cross-posted in part from my tumblr blog. See the additional note at the bottom of this post.]

I generally don’t blog politics. It can be bad for business. However, the SOPA/PIPA legislation, which pitted new tech against old media, requires a response.

Piracy is a serious problem that may or may not need additional attention (we already have the DMCA to protect copyright interests). However, the legislation as drafted is bad law. While hardly scientific, most if not all of the entertainment lawyers I discussed the bills with agree – even the ones who work at the studios.

If these bills became law then it would be legal for the government to shut down sites without due process. In effect, fair use can be ignored and sites are guilty until proven innocent. Litigation can be costly and few would opt to fight in the face of substantial legal fees and an unprofitable victory.

The clip above is a parody using someone else’s copyrighted work. It’s likely that such works – notwithstanding what you think of this particular parody – could survive on the net.

That’s not how our country is supposed to work and that’s certainly not how this law should work. This legislation can be redrafted to stem piracy without sacrificing our core values.

If you haven’t already, I urge you to read the current drafts of SOPA and PIPA and tell me if you still support these bills.

[Ed. Note: Prior to posting here and on Tumblr, a music executive friend of mine and I debated the merits of the bills on Facebook. Much of what I wrote above was part of that debate. After I blogged about it, my friend posted a link on Facebook to a blog post in favor of the legislation. You can find that here. In essence, the post in support argued that those in opposition – even those that took the time to read the bills – were misinterpreting the language and intent of the legislation. However, the fact that the language may be open to misinterpretation or, as many believe, exposes the true intent of the legislation, proves my point. If this legislation is broad enough to be misinterpreted by so many people, including intellectual property/entertainment lawyers, law professors, media executives and politicians, then they certainly can be and will be used for unintended or nefarious purposes if they become law. As I write this, I am sure my friend is formulating a response. I will keep you posted.]

Agents, Career, Lawyers, Litigation, Negotiations, Notable, Reading List, Representatives, The Culture

4 Movies That Every Rep Should (And My Intern Must) See

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Good repping is the art of persuading people to agree to your terms. Not all salesmen are lawyers but all good lawyers (and agents) are salesmen. You can sell hard or you can sell soft. Over time, many Reps develop a belligerent or schmoozy negotiating style because it works for them (or it doesn’t and they’re just built that way).

However, situational awareness is key to achieving consistently good outcomes in negotiations, regardless of leverage. The savvy Rep modulates her negotiation approach to conform to a given situation rather than the other way around. See my post on the importance of regularly watching Animal Planet here to learn how animals (including humans) instinctively do this.

What follows are a number of movies that portray agents and salesmen in roles a Rep typically confronts (or becomes) during negotiations. The movies are all critically acclaimed and enjoyable to watch. For our purposes though, the story lines are secondary to the archetypes of the characters.

1. Glengarry Glen Ross

Here’s Alec Baldwin’s motivation by dominance. “Always Be Closing”:

Contrasted with Al Pacino’s softer, I feel your pain and you feel my empathy approach:

2. What Makes Sammy Run?

Sammy must win even if he loses:

3. Broadway Danny Rose

Our instincts naturally pick up on Danny’s desperation vibe which only serves to work against him:

4. Swimming with Sharks

The Alpha in the room. Win by domination and dominate to win:

These archetypes shouldn’t be viewed as role models though I have to admit a fondness for Pacino’s portrayal. However, Reps (as well as principals) like those above abound in different permutations in the negotiation culture.

You need to be prepared to deal with them as the situation requires.

Career, Debt, Digital Downloads, Distribution, Equity, Film, Financing, Guilds, Hedge Funds, Home Video, Independent Film, Internet, Markets, Notable

Quantum Mechanics

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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.

AFM, Debt, Distribution, Equity, Film, Financing, Hedge Funds, Independent Film, Markets, Notable

The Film Industry Is In A Pickle

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Pickle Magazine, a film industry publication based in India about all things Bollywood and now, Hollywood, recently asked producer and sales agent, Ron Lavery to interview me and ten others for its American Film Market edition. After reading all eleven interviews, it’s clear that none of us agree on what the long term and short term effects will be on the film business given the latest seismic shocks (and those to come) to the overall global economy. Here’s my take:

Lavery: How do you think the current economic situation will effect AFM business this year?

Me: The entertainment business, like most businesses runs on credit. Although there appears to be a credit thaw . . . if the financial environment gets worse or even if it continues to improve at its current pace, the credit freeze will definitely affect AFM business this year. With limited access to the credit markets, buyers will be less inclined to close deals and will have limited buying power in the short term. Over the longer term though – and I’ve already witnessed it first hand – private equity will step in to do more traditional debt financing (albeit at a premium) if the banks are unable to do so.

Lavery: Do you foresee any mergers between distribution companies?

Me: Yes. Although mergers are already a part of the overall trend towards the consolidation of the business, the current economic climate will only accelerate this process.

Lavery : Are there any news ways of financing films on the horizon?

Me: Over the last decade and longer, people have been and continue to try to build a better film financing business model as the economics of the film business shift. This process will likely [continue to] shift at a tectonic pace especially if credit remains tight, the costs of production continue to rise and equity sources dry up. With the Internet as a potentially new distribution platform with untested sources of revenue based on either a subscription model (which won’t work) and advertising (which might work if the revenues become more meaningful), Internet exploitation windows may become a more significant revenue source for producers and distributors.

This is especially true now that that the technology exists to “geo-filter” the exploitation of films on the Internet on a territory by territory basis.

Electronic sell-through of video units of films may increase the value of minimum guarantees since the Internet will allow producers to have greater access to mass markets for their films during the video exploitation window. In some cases, producers may be able to directly distribute their films without an actual distributor just as artists have in the music business, thereby saving on costs by eliminating the middleman.

What is even more interesting is that short films are rising in commercial appeal.

Long relegated to film festivals, new distribution opportunities have developed on the Internet and on mobile phone and Ipod technologies for shorts. As a consequence, producing shorts are good for business since they have lower budgets and can now attract marquee talent who view internet exploitation as a cutting edge business opportunity that provides potentially great exposure with minimal effort.

Lavery: Will the economic crisis effect government subsidies and tax credits?

Me: With the drop in income here in the United States (and a corresponding drop in tax revenues), each locality is looking for new ways to attract revenues, jobs and new industry to each of the States but [they are also] forced to contend with a corresponding drop in tax revenues by virtue of providing the tax subsidy itself.

Meanwhile India, the Middle East, Eastern Europe and China will continue to be appealing places to produce films which might not provide tax credits per se but . . . increase the potential bang for the buck.

Lavery: Any thoughts on the enormous impact Indian film companies seem to be having on American film companies?

Me: While the current economic climate is adversely affecting the global economy, India is viewed by many in the entertainment business as a potential source of new financing as opposed to talent. The good news for Indian film companies is that if India is the source of financing, then there might be increased leverage to utilize Indian talent in American films.

The other factor is the increased reliance on foreign sales of American films which right now hovers around 60-65% of the budget of the typical mainstream American film. This in turn requires . . . increased reliance on foreign talent in an effort to increase the appeal to foreign audiences.

Lavery: Any thoughts on Indian financing opportunities like the recent Spielberg-DreamWorks deal?

Me: The Spielberg-Reliance deal is viewed by many as the high water mark of Indian investment in film. The good news is that other film funds do not and will not require market capitalization to this extent. I expect the formation of several Indian and Asian based funds with more modest capitalization ranging from US$35 million to US$80million in the near term provided economic conditions do not seriously deteriorate.