Who’s not wearing swim trunks, or: Film is a bad business

You can spend a lot of time online and off keeping up with all the changes being wrought by all things digital. You know, it has pretty much ruined the business models for print, music and now film and all that (I’m going to refer to digital as an it for the sake of this post). It’s also been responsible for new production methods, new distribution methods and is likely changing a bit about how we can tell stories. That’s cool and all (or horrific, depending on your vantage point), but to me the single biggest effect of digital has been the transparency it has brought to everything. Warren Buffett has said, regarding the economic collapse, that one doesn’t see who’s really wearing the swim trunks until the tide goes out.

Well folks, digital has behaved like the Moon and brought out the tide in the film world and we can now see that pretty much the entire business is naked as a jaybird. More importantly, however, it always has been this way, especially for indies. As a noted filmmaker once said to me in regards to all of this - well, yes, it’s always been rape and pillage, but now it’s much more apparent.

The film business is a bad business. Yes, some people have made money from it - and people still will as we go forward. I’m not arguing that, but I think there’s always been this myth that if you do certain things you’ll make money, maybe not a killing but enough to live comfortably. Whenever you speak with an up & coming filmmaker, you get a sense of this myth. Sure, most people don’t get their film even accepted to any film fest, but they will not only be different, but through persistence they will make it. They can point to several examples, and I think they should keep their head at least partially in this cloud or they’ll never muster the energy to make that film, but for every example of success, I can point to hundreds, if not thousands, of counter-examples. I don’t mean filmmakers who failed miserably, those are in the tens of thousands now, but rather filmmakers who have some modicum of success in festivals, theaters and on DVD, VOD, etc but are still struggling to make ends meet or make the next film. For years, these filmmakers were able to survive by either having another job, teaching, directing or writing for TV or Hollywood (if they were lucky) or they simply came from money or were capable of living without much of it. Well, it’s hard to have another job, teaching gigs are scarce and it’s a decidedly lucky few who get the John Sayles-type writing gig.

I get engaged to speak a fair amount, and I often show a set of slides, which you can see on Slideshare, where I point out that the traditional narrative of a film’s life is a myth.  In summary, I expose that most films, even if they play a festival and get picked up, get very small advances, make little money for the filmmakers and they often don’t even own their film anymore, having sold off the rights for many years. I’ve lately added a few slides, because I think they are important. One slide shows that these distributors aren’t (usually) ripping you off. People can, and probably will, argue with me about this in the comments and elsewhere, but I happen to also speak with many distributors and for many of them it’s a tough business as well. Even if you don’t believe that, and conceding that some don’t have the filmmaker’s best interests in mind, you have to understand that given the reality of today’s film marketplace, they have no incentive to pay more - they can get all they can feasibly show for cheap. This won’t change.

The second slide I’ve added is much more important - that this is nothing new. Nope, not at all. I had to add this slide because of the other slide where I mention that you can consider yourself lucky to get an advance of $15,000 for your film today, and that you probably won’t get significant royalties beyond that. People gasp, audibly, every time I’ve shown it. It’s true, unfortunately, but it’s also nothing new. I’ve been somehow involved with the film business for about fifteen years, and in that time I’ve worked with a variety of filmmakers, either through festivals or giving them grants. Most of them are pretty open with me about how their films have performed for them, especially financially. I also see this info often when I read grant proposals and reports.

I’m sure many of you filmmakers and distributors out there can give me lots of stories of better payments, and I too can give lots of stories of better results, and of people who 10 years later are still getting checks. I also know that in the late 80s to early 90s we had a golden age where many films made money (those same films probably couldn’t get made today). Many of these filmmakers and producers will report that there was a time when they could make some money and make a living, but now it’s different, now they simply can’t make that $2-million film and make enough money selling it to make a living. These people are also part of that earlier lucky few, and it’s painful for them, but it’s not new for the majority of filmmakers out there. The majority of filmmakers - successful by all other accounts - share this same financial picture.  I also know lots of filmmakers who have self-distributed and done pretty well, but most of them wouldn’t say they’ve done as well if they were to count there hours expended on the film, and those that can still say they did well - again, the lucky few. Why would anyone keep making films? Lots of reasons, but that’s for another post. In summary, the success stories have generally always been the exception to the rule.

While writing this post, someone emailed me another Buffett anecdote: "Supposedly, when he & Charlie Munger studied the airline industry, a sector that Berkshire Hathaway has assiduously avoided, they found that if you added up the entire profit & loss for all companies in all of that industry's history from the very beginning, it zeroed out."  My friend added the following: “And hasn't it long been bandied about that even a film studio's average profit margin is less than the 8% of a grocery store chain?” I’m not sure if this is true, but I do  think it would be fascinating if some think-tank (like the one Ted Hope proposed) studied the independent sector this way. Whew boy, maybe not, makes my head spin wondering whether we’d add up to any collective profits!

What digital has done is allow us to connect and share these horror stories more easily. It used to be that when filmmakers told me how little they got paid, it stayed in my office, or perhaps I would share it confidentially with a few others and compare notes. Now, I can blog about it, tweet about it. More importantly than me doing this, other filmmakers can do this - and have been now for long enough that it’s less of a secret. This knowledge is no longer trapped behind doors, in spreadsheets and on festival panels. Yes, it’s still hidden because there’s a lot of vested interest in keeping this reality secret - harder to buy films, harder to raise money from investors, harder to take advantage of the obfuscation that any business needs to survive. That said, it’s much more readily available, at least anecdotally, than ever before.

That’s what digital has done, and it’s arguably the most important thing it has done. It has pulled back the covers and exposed that which we’ve most sought to hide. This is not just true in film. It’s true in television, advertising, news media, publishing, religion, bad economic policy - the list goes on forever. Guess what - people don’t like advertising, so we invented TiVo and skipped it. Half of it doesn’t work, which advertisers always knew, but now we know which half. A famous television executive complained to Sergey Brin of Google that by making advertising so easy to track they were stealing the magic of the business (this was in some magazine, but I can’t remember which one, sorry) - they were exposing what worked and what didn’t. People were never really paying for content in newspapers, they were paying for delivery, and now that delivery is free, that printing press model is exposed as bad business.

Outside of the media, this phenomenon is being felt more profoundly now. Riots in Iran can now be fed and spread by Twitter. Medical fraud can be found by connecting the digital dots. The abuse scandals rocking the Catholic church are old news, but the first time it was uncovered in Boston it was only read locally in the Boston Globe, the second time around, we had the internet which allowed it to spread virally into a global crisis (this insight comes from Clay Shirky). Our private lives are exposed willfully and not online, and our credit histories (or criminal, or...) are easily found online. I’m very interested in exploring this further, but I think you get the point (and I’m hoping to write the bigger picture into an article or book soon) - digital reveals that which was obscure, and it’s going to continue to have big effects on our lives and livelihoods.

This is especially true with my main concern in this blog - filmmakers and media arts. There are negative sides of this, all of which are getting spoken about aplenty, but I think there’s also a lot of good. Michael Tully commented on this aspect in a post over at IndieWire, responding to a post of mine. He said, and I think it’s worth quoting in full:

"Another thing that seems to be missing from all of these discussions is the hard truth that INDEPENDENT FILMS NEVER MADE ANY MONEY. This, to me, is the biggest delusion of the moment, and it’s why my instinct is to simply ignore so many of these panels and pow-wows. So much of the talking seems to be about how to not make a hearty profit, per se, but to at least persist and continue. Yet hasn’t this always been a freakish lottery? Hasn’t it always been a once-in-a-lifetime three-quarter quart buzzer beater (sorry, it had to be done)? I’m not desperately clinging to the past, but if someone—ahem, Mr. Newman? are you reading this?—wants to pull together a symposium in which the aim is to respect the film festival’s role in this crazy equation and that understands the importance of a traditional, steady word-of-mouth campaign in ensuring a film’s longevity and success, well, then, I might actually sign up for that one. (ed. note - yes, and thinking about it - anyone who wants to join, chime in.)
As I stated above, I certainly don’t have any solutions to this quandary. Except to say, is it even a quandary??? Is the world really that different? Maybe, for just a few moments, we should stop and look around and imagine—go with me here—as if it’s the same ol’ world we were living in yesterday, before all of this “sky is falling!” business began. Maybe we should shut up and worry about making good movies."

I agree wholeheartedly, but with a twist. Digital let’s us see that this is nothing new, but it also gives us potential new tools. I don’t think we should shut up - I think we should keep talking, but with less sky-is-falling mentality, coupled with less utopian visions that maybe, just maybe, now is the time for indies to rule the world. Neither is true. What is true is that we live in a great moment where we can finally get a sense of what works and what doesn’t. We can communicate about it better than ever before and we can collaboratively work to try and build something better. Do I expect that will mean that suddenly, magically, indie filmmakers will start to get rich. Not at all, but perhaps with all of this digital unveiling, we can see through the bullshit (from all parties) just enough to start a slightly more interesting conversation that might lead to something better than what we’ve had thus far.