[parallelist]

The Internet broke the whole idea of charging for a digital copy of something. We’re seeing a struggle of powers as old power tries to cling on to the idea of charging people for digital copies but it will end sooner or later. One needs to think outside the box of capitalism being an appropriate system for all aspects of society.

[anigbrowl]

Well do get in touch when someone sets up a postcapitalist film company that's willing to pay for camera rental, meals, wages and all the other expenses that go into making a film, because the fixed costs of making the original work haven't gone away. I find discussions like this one really aggravating to read because there seems to be total indifference to the fact that producing a movie to entertain you for two hours while you sit on the couch or wherever involves a massive amount of time, hard work, and risk from a large number of people.

[yellowapple]

And the hand-over-fist profits from box office earnings, merchandising deals, content/trademark licensing, etc. have been insufficient since... when, exactly?

Those are the places that the Internet Age hasn't really usurped yet. The old "record a theater showing with a camera" trick is nowhere near desirable quality for most people, and piracy does nothing for those hoping to use a particular trademark in order to make money on some product based on Elsa the Snow Queen or Luke Skywalker or Winnie the Pooh or whatever other character one wants to plaster on a backpack or notebook or turn into an action figure. Those are the realms where the future of capitalist film production lies (TV is a slightly different story; merchandising is still an effective monetization strategy, but box office earnings are nonexistent unless you make movie spinoffs (se also: My Little Pony), yet are replaceable with ad revenues in both online streaming and conventional broadcasting, both of which are incredibly popular).

[anigbrowl]

Hand-over-fist profits? Only at the very top of the market. If you're producer of one of the top 50 or so films, yes people are shoving money at you. In the top 100, you probably broke even and people will be shoving money at you when it hits the home video market. In the top 101-200 films, You'll most likely make your money back and enjoy a modest profit.

Outside of the top 200 films? Then your box office takings were certainly under $1 million (except for about 10 films), and more to the point most people haven't heard of your film. Have a look at yearly box office #s on a site like boxofficemojo, and look at some of the other 6-800 films that get a US theatrical release each year. Many good films have box office numbers that are measured in thousands, and remember that box office numbers are gross - as a rule of thumb, only 1/3 of the box office goes back to the distributor, the rest stays in the theater.

What you seem to be overlooking here is that while some films do indeed make money hand over fist, for the many more than don't, piracy is just as big a problem - not because so many people are pirating an obscure or somewhat unpopular film who would otherwise have paid for it (although this is a problem for quite a few films, eg Terry Gilliam's last film had dreadful box office because they didn't have much money to advertise, but was very popular on file-sharing sites), but because piracy makes it increasingly difficult to come up with any kind of meaningful estimate about a film's long-term earning potential. that in turn makes it much harder to raise financing for a film. It's definitely tougher than it was 10 years ago when I got into the business.

http://www.boxofficemojo.com/yearly/chart/?page=1&view=relea...

[yellowapple]

Right, but it's the makers of the big, top-50 films that are the ones that are ridiculously vocal about piracy, not the ones making the small top-200 (or less) films (unless they're flops by the big filmmakers). And the makers of those films can still monetize by licensing broadcast/distribution rights (i.e. to Netflix or to a non-profit for its "Movie Night" or what have you); from there, one can still get a very good estimate of an earning potential that's actually reliable, rather than one that's entirely dependent on an obsolete business model that's crumbling right before everyone's eyes thanks to the Internet.

[anigbrowl]

OF course it is, they're the ones with the big platform to tell people about it.

And the makers of those films can still monetize by licensing broadcast/distribution rights (i.e. to Netflix or to a non-profit for its "Movie Night" or what have you); from there, one can still get a very good estimate of an earning potential that's actually reliable, rather than one that's entirely dependent on an obsolete business model that's crumbling right before everyone's eyes thanks to the Internet.

That's a nice idea, but you're putting the cart before the horse. You can't license a film that hasn't been made yet unless you have a very bankable package(of stars and other talent), and you can't easily get estimates of earning potential for other films because Netflix and other digital distributors don't publish that stuff - it's much harder to get information about the home video market compared to box office data. Licensing to broadcast or other distribution channels isn't something that just happens automatically - there's a huge, exacting, and expensive list of deliverables requirements, and it costs money to go to a film market or work through a sales agent. Even when everything goes smoothly, it usually takes a small picture a couple of years from when it starts looking for money to when it gets sold, and the sale often simply covers the costs of production.

Frankly, I don't think you grasp the economics here very well at all. Everyone knows the existing industry paradigm is on the way out, and has known that for a good long while. The problem from the industry standpoint is that the internet/tech sector loves disrupting things but is not that smart about monetizing them - witness the large number of tech companies that don't make a profit, and the fact that the main revenue stream for internet companies that do make a profit is from advertising. You know who has taken that to heart and uses that business model in the movie world? Adam Sandler. His films involve a bunch of highly-paid famous people, very cheap production, and crappy wrote-in-a-weekend stories with massive product placement opportunities, for which he takes a salary of about $20m a picture. Unlimited distribution works fine there because the film is basically an elaborate commercial, but it's hardly a good industry model.

[tomjen3]

How much is the Frozen franchise worth in terms of merchandise? Much more than the tickets, no doubt.

For the normal movies, perhaps move to a prepay model.

[anigbrowl]

Good grief you guys. How many films do you think make that kind of money? Billion dollar film franchises happen about as often as billion dollar startups - often enough to be something you might get lucky with, but the odds of that happening for you are staggeringly low. And even then, those films have as much or more spent on advertising as on the production, which is part of why it's such a high-risk business and major studio offerings are so conservative in terms of storytelling, casting etc..

A prepay model is what we have now. The largest 6 studios have the resources to open a film globally if they really want to (eg this will probably happen with the new Star Wars movie, and most likely the new Avengers one coming out in a few days), but generally international distributors sign contracts to buy a film in advance at a certain price and those are used as collateral in obtaining financing, but this model is falling apart under pressures from piracy, Netflix, and other factors.

If you mean prepay as in Kickstarter, that model doesn't work for features. Well, I should qualify a little - it can work for feature documentaries, because there is an existing community for many interests and people are very interested in seeing their pet interest/issue treated in movie form, without being too picky on quality. And of course it works well if you have a book or a comic or an unfashionable old TV show or something that has a small number of very dedicated fans, eg the Veronica Mars project last year, or fans of a particular actor. I call these 'fanservice' films - they're basically franchise properties, but franchises too small for Hollywood to care about. You can also get some mileage out of community fanservice, eg if your story appeals to people of an under-represented demographic like people from a particular country, LGBT people, or similar.

But if you just want to make an ordinary narrative film pitched at a broad audience - a drama, thriller, whatever - it doesn't work well at all. Dig through the major (and some minor) crowdfunding sites, and you see hardly any feature projects meet their funding targets. This should (I hope) change a bit later this year or early next, when the SEC finally opens up the possibility of crowdfunding equity under title III of the JOBS act, because while the risk is high at least there's an incentive to invest, whereas under existing crowdfunding models you have to come up with a mix of merchandising swag (which is not free to provide) and weird high-ticket rewards like getting a hot air balloon trip with the lead actor or something to land a couple of big donations.

[tomjen3]

I was refering to what you call "unfashionable old TV show". Specifically I was hoping somehow to use this model to resurrect firefly...

That said if that model cannot sustain huge movies like we see them today, that may mean we end up with smaller movies.

[anigbrowl]

Ah, this model works very well for that use case, and you should definitely read this: http://www.buzzfeed.com/adambvary/joss-whedon-on-kickstarter...

It is easier to do a feature film and a whole TV series, because while your props, costumes, sets etc. can be reused and things do speed up a bit with familiarity you're still looking at spending maybe $200,000/week in salaries and overhead. Drop me a line if you really want to know more about the production side. I'm thinking of writing up an e-book or something, partly in anticipation of the SEC opening up proper investment-style crowdfunding and partly to put together cash money for a film I want to do.

On smaller films, yes and no. What you'll see is more of a bimodal distribution - the big megastar films like the Avengers or anything with an A-list cast (eg 2 big stars and a few small ones) are not going away - those people know what they are doing in terms of story, production, marketing and so on and the people that work on them are the cream of the industry. Even when the results feel forced (eg some of the Star Wars prequels) they still make their money back many many times over.

And there will still be lots of small budget films, partly because it's more accessible due to technology, partly because people need some way to get onto the industry ladder, and partly because it's addictive. But times are tough budgetarily; to quote on industry exec overheard at the last Sundance, 'what used to be a $10m film is now $5m, what used to be $5m is now $3m, $1m is the new $3m....').

It's important to remember that costs don't scale linearly, but they go up in fits and starts, depending on which guilds and unions the production company has signed contracts with. So if I'm doing my first feature film, I can pay some writer a few thousand for a screenplay, or better, write it myself. But if I want a budget above a certain size I'd be better off with a Writer's Guild of America member (not least to tempt investors, who don't actually know from reading a script and a budget whether a film is going to be any good), and the minimum price for a WGA to turn in a feature script is $92,000. That's even if you write it yourself, eg Quentin Tarantino gets paid to write the script, direct the film, and produce the movie (as he should, because each of those is a full-time job in its own way). So when you make films in the tens or hundreds of thousands budget range, it's OK to ask people to work for free or pay minimum wage and buy worker's comp insurance, but once your budget is over a million your crew costs jump substantially because now the unions want a piece. And while I'm not that big a fan of unions it's mainly because they bring a lot of extra administrative bullshit and some obstructive work rules. The jump in expenses because of extra pay is just what people deserve, because of the inherently unsteady nature of the work, the very long hours and elevated physical risks, and the fact that virtually everyone in the industry does a huge amount of work for free or stupid cheap.

The basic problem from internet distribution, legal and illegal, is not so much the actual downloads in many cases as the fact that it makes revenue very unpredictable for producers and investors, and so the lower end of the market faces constant economic pressure because investors are understandably wary. I expect this to stabilize a bit as Netflix, Amazon, and others start doing more global buys, and equity crowdfunding is finally allowed to take place. But the practical reality for people in the industry has been that internet distribution and the culture of working for free that goes with it have broken a lot of the lower rungs on the ladder. I expect to see demographics within the film industry skew a bit older over the next decade because of this.

[peatmoss]

Mosfilm--back in the USSR

[anigbrowl]

Hehe. I have a quasi-nostalgia for the Soviet film era.

[manigandham]

What does that even mean? We have to switch the entire economic paradigm we live in so that people can be paid for their work?

[camgunz]

The problem is having to be paid at all. There ought to be a system whereby people can exist at a reasonable standard of living and still do the work they want to do, i.e. Basic Income. There's enough food, shelter and medicine to accommodate everyone on the planet right now, but the top 10% hoard way more than their share. Do they deserve it because they work harder? No, they're just born into luxury, and there's nothing capitalistic or meritocratic about it.

You ought to be able to make a show or a film without having to leverage everything you own. You ought to be able to work on making cameras and stages if you like to do that stuff. You ought to be able to watch one of these shows/films made using those cameras/stages for free, and then go to your house and work on a project of your own, and not worry about whether that project will be profitable enough to allow you to eat or be housed. The key point is we have the resources.

Eventually we'll get there, but it's gonna take a long, long time.

[manigandham]

I'm not sure where to begin with your comment and all the strange and inaccurate things it says... but this kind of idyllic utopia (which to me seems like some horrible mind-numbing lifestyle) will never exist. Economic incentive is the cornerstone of modern effective society.

Basic Income might work but it's far more complicated than you make it seem and it's not something that just lets everyone do whatever they want, it's a way to raise living standards and equalize some of the disproportions in power and wealth but there will need to be industry and incentive to create the income in the first place.

[camgunz]

Well yeah I mean, I'm not gonna write a dissertation on HN. I like to think the future is more Star Trek (do whatever you want, free food/shelter/awesomeness) than Star Wars (pretty much what we have now with some new toys and psychic powers).

But I disagree that "there will need to be industry and incentive to create the income in the first place". I think people largely just do stuff because either they're coerced, they need to survive, or they think it's cool. Open source is a good example of #3, and I think that's gonna be the chief motivator as the world continues to develop.

[ohitsdom]

I did immediately think "Star Wars" when I read your original comment. This is very off topic, but something I've been thinking about lately. Will basic needs ever be taken care of for everyone, so we can work on whatever we want? I get that economic incentive is the "cornerstone of modern society", but what about the society of the future? It's hard to imagine, but then again I also have a hard time imagining only 150 years ago (in the US) we were lining up and shooting each other for the right to own other people.

[camgunz]

Yeah it might happen sooner than we think. Maybe with the advent of really cheap power (fusion) we'll start to let up on things... but I'm guessing all that will mean is the rich will get richer. The problem, unfortunately, is both technological AND political, so that's why I'm leaning towards "long time".

But you're right though, 150 years ago the world was unrecognizable so, who knows what will happen in just the next 50?

[ohitsdom]

Excuse me- Star Trek.

[yellowapple]

This wouldn't be the first time. It probably won't be the last.

All that's required in this case is a shift away from traditional per-copy earnings toward more modern earnings via content/trademark licensing and streaming/broadcast rights, supplemented with box office earnings (for movies) and ad revenues on free streaming/broadcast services (for television shows).

[manigandham]

That I'm fine with, and consider more of a business model change.

I'm taking in regards to the other comments with the "capitalism is no-good/evil" nonsense.