May 04, 2006

• Negative cost is what it actually costs to make the film. The examples they used were shooting and editing. As for Soderbergh's suggestions, I am interested in seeing a detailed explanation of how it would all work. I do freelance work in the art department for television and film, so this is a topic that caught my eye. Downloading is something that the film industry will have to accept. It will happen, no matter how bad they don't want it to. The only thing to really do is find a way to legally regulate it, as Napster and iTunes have done with music. I definitely feel that a salary cap for actors would be nice, since I have taken a pay cut before because the project's budget went almost entirely to the familiar actors. Soderbergh has caught my attention before for being a bit more aware of the outside world than others in his field, so I hope he accomplishes something good with this. As for what is wrong with the film industry? The list is far too long.
• well one of the obvious failings is coming up with dumbass terms like 'negative cost' they just mean 'negative' as in you have to subtract it from the balance sheet because it is a 'cost'...remember: hollywood people are DUMB and need to be told everything twice. they also call clothespins (for holding gels in front of lights) C-47s ...and wtf is a Best Boy?
• Wonder how long before internet advertising overtakes TV completely. I'd think that, what with the lightning-fast word of mouth advertising that is hotlinking from blog to blog, it'd drop their advertising costs by a lot. But now it occurs to me that the makers of shit films would have to hire people to spam/astroturf/etc. their crap everywhere. So probably not.
• they also call clothespins (for holding gels in front of lights) C-47s A friend of mine who works in TV actually explained that to me once. (possibly apocryphal, take with shakerful of salt:) Evidently it came down to a question of taxes -- the IRS wouldn't count them as a legitimate business expense when they were listed as "clothespins," not believing they had a legitimate professional use. But then some genius had the idea to rename them c-47s, which the IRS accepted without question.
• Best boys are the right-hand folks of certain department heads on a film crew. C'mon, if you had a fun term like that, wouldn't you keep it? The c-47s is just ridiculous however. I put that in the same category as "negative cost": needless jargon created to confuse reality. I could go on, but suffice to say Enron looks absolutely responsible with their accounting compared with Hollywood.
• I predict that within the next five years or so that movies will be released on dvd one to three weeks after being released in theaterss. There are people who still like to see movies in theaters and they will do so no matter what. But people forget movies and releasing them on dvd so quickly will only increase the dvd sales.
• They just mean 'negative' as in you have to subtract it from the balance sheet because it is a 'cost'... Really? I always assumed it was because the negative cost is the cost of getting to the point where you have a negative of the film... Negative cost does not include things like advertising, or making prints to distribute to theaters. I believe it also excludes "above the line" costs (that is, the salaries of the stars, the director, and the writer.)
• OK, I've written a really long answer, but I can't seem to paste it all at once. So I'm going to post it in chunks. Written By (the official magazine of the Writers' Guild of America, west, had a detailed article on film costs in their April 2006 issue. I wish I had saved it. They had a detailed breakdown of a how a movie can make $300 million at the box office and still not generate profits... ...or, at least, profits that the writer could get a share of. It would certainly generate profits for the studio and its shareholders. From memory, here are some of the factors: • It costs a few thousand dollars to make the physical roll of film that a given theater will screen. If a movie opens on 3000 screens, and it costs $3000 per print, that's $9,000,000 right there. Maybe that's insignificant for a film like Mission Impossible III, but for a film with a smaller budget, that's a lot of money. Digital distribution would obviously slash that cost dramatically. One of the tricky things, though, is that studios pay the cost of making prints, but movie theaters have to pay to install digital projectors (or satellite movie receivers, or whatever new technology digital requires.) If you're a movie theater owner, are you going to want to spend your hard-earned money installing new equipment in order to save the studios millions? Presumably this will be resolved by studios subsidizing the conversion to digital, but for now, it complicates matters.
• • The traditional model is that, in the first weekend of a movie, most of the price of your ticket goes to the studio. Let's say 90% goes to the studio, and 10% goes to your local theater. The second weekend it might be 80% to the studio and 20% to the theater, and so on. This worked fine at a time when films would play and play, but nowadays--when many films do huge opening weekends and then drop off dramatically--it can leave theater owners feeling pretty unhappy. It also encourages them to make their money from overpriced concessions and pre-movie advertising, which makes people more likely to watch movies at home. • Still, on balance, roughly half of the ticket sale price ends up in the studio's pocket--the rest goes to the theater owners (and possibly to distributors and other middle men--I'm not sure about that.) According to the IMDB, for example Ocean's 11 made $183 million at the US box office. That means the studio took in about $91.5 million from the US box office. (Obviously, they took in more from international box office, DVD sales, pay-per-view, soundtrack sales, etc.) • As a rough rule of thumb, a studio is going to spend about as much money on advertising as they spent making the film in the first place. One of the reason advertising is expensive is that you have to buy at least two rounds of it--first when the film is released, and then when it comes out on DVD. If you release the DVD at the same time as the film, some people will just see the DVD instead of buying tickets--but you can combine the advertising campaigns, and you don't have to worry about pirate DVDs beating the legit ones to market. • Writers, directors, actors, and producers all usually have a contractual right to share in a film's profits. However, each of their contracts will define profit differently! What you really want to get is "first dollar gross." If you have 10% of the first dollar gross, and (as in our Ocean's 11 example) the studio takes in $91.5, then you get $9.15 million. This is the definition of profit that big-name actors, directors, and producers get. Writers (and lesser-known actors, and possibly lesser-known directors) get a percentage of "adjusted" or "net" profits. This means that, when $91.5 million comes in the studio's door, they subtract the negative cost (that is, the cost of shooting the film), the "above-the-line" costs (that is, the salaries of the stars and the director), the advertising costs (remember, probably equal to the entire budget), the costs of printing up 3000 copies of the film, the interest on the money they borrowed to make the movie (even if they borrowed it from themselves), the money they already gave to the first-dollar profit participants, etc. In the unlikely event anything is left after that, THAT's what the "net" profit participant gets a share of.
• I can't figure out what an elimination of pre-screen advertizing would accomplish. Yes, it's annoying, insulting even, and I'm no fan of it, but how would it positively affect the bottom lines of the studios and theatres? Are people really staying away from theatres because there are slideshows and powerpoints of dancing bowls of popcorn and nachos, or big-screen car commercials? I take it as a simple fact of life that any time I am a captive audience (even at the bank now), I'm going to be subjected to advertizing, as loathesome as I find that idea. And are trailers included in that pre-screen advertizing? I've always found trailers to be an attraction to the movies, rather than otherwise. Saved me quite a bit of cash over the years... Maybe that's their plan -- eliminate trailers, so you can't realize how sucky the movie really is, and then everyone will have to go see it for themselves... Hmm...
• Without going too much into it, the detractions of advertising are they they advertisements themselves suck. But when you have advertisements of the quality of, say, the Spike Jonze GAP ad, people's antipathy drops precipitously. Cheap, crappy ads are rapidly becoming a self-defeating endeavor - but people will watch and remember good advertising. The kicker is, as always, cost. You hire Spike Jonze to direct your commercial, it's going to be a great commercial. But it's also going to be so expensive your ass will pucker up like someone smeared lemon juice and Liquid Bandage on it.
• "your ass will pucker up like someone smeared lemon juice and Liquid Bandage on it." Finally -- someone explains it to me in language I can understand!
• Evidently it came down to a question of taxes -- the IRS wouldn't count them as a legitimate business expense when they were listed as "clothespins," not believing they had a legitimate professional use. Kinda like our college won't pay for us to buy Ziploc Baggies (for use in soil testing) at the grocery store, even though they're much cheaper than from the science supply catalog.
• Are people really staying away from theatres because there are slideshows and powerpoints of dancing bowls of popcorn and nachos, or big-screen car commercials? If that's all it was, it wouldn't bug me either. But the last time I went to the movies, there were a couple of car commercials, an ad for M&M's, ads for three TV shows, a Coke ad, an Coast Guard recruiting spot, and an ad for a theme park ride, all before the movie trailers. It's reached the point of obnoxiousness. And the ticket price also has gone up a dollar in the last few months. ON the plus side, they've gotten far less stringent about not allowing large purses in the theater, so smuggled snacks are back on the menu.
• It's reached the point of obnoxiousness. True, but you can always show up ten minutes late. In fact, aren't some Moviefone-style services giving actual film start times now?
• True. But I'm the type of person who gets easily annoyed on principle. *sips Maalox from china teacup*
• thanks for posting that comprehensive answer, jacobw!
• In the unlikely event anything is left after that, THAT's what the "net" profit participant gets a share of I make a hobby of reading reliable reporting on the finances of Hollywood, and it appears clear that everyone in the industry with a lick of sense knows that a 'percentage of net profit' is worthless. No one ever gets paid 'net profit' by the big studios because according to the black art of Hollywood accounting no film ever makes money. Furthermore, apparently even a percentage of 'gross profit' is worthless unless the studio has an interest in keeping you happy. Big name director, movie star or producer? You get your contracted gross profit percentage. Also-ran or first time producer who just happened to have a big hit film? Forget about it, you'll barely see a dime if you're lucky. And forget suing, because the studios hold a united front on the issue. You make waves and you'll never work in Tinseltown again.
• he recommends capping actor salaries I would love to hear how he proposes to do that. Studio business types are incredibly greedy, ruthless, short-sighted, fearful people. They would be happy to slash Tom Cruise's salary to $0, but they'd pay the moon to steal Brad Pitt from the neighbouring studio in order to insure their own new summer release is a hit. And every time actors' salaries go up it merely makes the business types more desperate and willing to sign that check for some perceived security of a mega-hit. Meanwhile, you can't possibly imagine that the young hungry hordes of Hollywood stars and starlets dreaming desperately of being the next mega-celebrity would give up their paychecks, do you? And don't forget the agents, who are the chaperones to this marriage of actor and studio. The agents know exactly how greedy and ruthless the studios are, and the agents get paid on a percentage basis. They have exactly zero incentive to allowing actor salaries to drop. Cut out the agents? Then we're back to contracted actors, historically often miserably exploited by the studios. Ah, the 'good old days'.
• I can't figure out what an elimination of pre-screen advertizing would accomplish. Yes, it's annoying, insulting even, and I'm no fan of it, but how would it positively affect the bottom lines of the studios and theatres? Are people really staying away from theatres because there are slideshows and powerpoints of dancing bowls of popcorn and nachos, or big-screen car commercials? This is EXACTLY why I stay away from traditional theatres. These days, my movie-watching dollar goes into the pockets of these fine folks, who recognise that audiences go to the movies to be entertained, not marketed to. The best part about this theater chain is that during the 20 minutes prior to film when other houses are blasting you out of your seat with Britney Spears coke commercials and shrill clarion calls to see the latest inane reality television show, the Alamo instead shows relevant movie clips, archival film strips, cartoons, interviews with the actors in the movie you're about to watch, etc. etc. etc. In other words, material that's geared toward the audience's entertainment, as opposed to simply trying to squeeze another buck out of a captive demographic. Interesting to note, the Alamo Drafthouse is actually doing quite well financially, despite the rest of the industry's downturn. Oh, and they totally serve beer.
• To lower the cost of making a movie, he recommends capping actor salaries, releasing movies in multiple media at the same time, and no "pre-screen" advertising. Given the suck that was Bubble, I'm guessing this won't be happening any time soon.
• Long story short: Soderbergh is a douche-lord. Video sucks compared to film, no one makes movies on video unless they are forced to economically or are a douche-lord.
• Writers, directors, actors, and producers all usually have a contractual right to share in a film's profits. Just skimming here but that is factually wrong in the case of writers. It happens, but is extremely rare. Check the WGA contact (www.wgaw.org) There are a few pennies on sales of DVDs and paper scripts (oooh!) but nothing for theatrical profits.
• oops that's www.wga.org. And dont go and read the contract, it's boring.
• there are legitmate, impt reasons to chose video (aesthetic, narrative, and even cost)---i love film deeply, but for example festen, needed to be on DV
• Video sucks compared to film, no one makes movies on video unless they are forced to economically or are a douche-lord. Yes, that Robert Rodriguez is such a douche... Sorry, film is for losers who sit around lamenting 78 rpm records. Digital is where its at. The film industry is basically an investment firm. They don't actually make anything any more, but agree to distribute and give partial financing for films in return for raping the creators by taking the intellectual property rights so that they can make money off of it for the rest of all time. Why any of the big directors or music acts continue to sell their souls to the companies by signing away their intellectual property for an ad in Entertainment Weekly or Rolling Stone is beyond me. Of coruse this isn't unique to film or music. Academia has the same form of organized crime. As an academic, part of what the university pays me for is to publish research articles. To publish those research articles you typically have to join the organization that publishes their journal. The organization which is allegedly in existance for the purpose of aiding academics in a given field then take your copyright. They take it and then sell reprint rights to academic databases to which the universities have to pay to access. So the university pays me to write, then they have to pay again to get access to the very same paper they paid me to write. I pay the journal to be allowed to publish and then they get paid to sell the articles. Screw the mafia and protection money. Publishing and distribution is the racket to be in...