Wednesday, April 02, 2008

Creators and Entertainment Economics

Steven Grant, a professional comics writer, writes a regular Wednesday column for Comic Book Resources where he discusses a range of things including the comics industry, politics and the wider world. This week, in discussing the Superman copyright case, he talks about a larger truth about the nature of entertainment economics.
Look at it this way: money is how we measure value in our society. With media properties, it's often difficult to determine value up front, and if value were determined up front there would be almost nothing put into production in any medium, because full payment of possible value would be almost prohibitive. Look at the money machine STAR WARS turned into; nobody guessed that in advance, which is why it had no notable stars (except for Alec Guinness and Peter Cushing, and neither were exactly the king of Hollywood at the time) and a relatively low production budget. If George Lucas had known what revenues the property would eventually generate and had asked for all those up front, it never would have gotten made because no one could have afforded to meet the price.

So in media the initial payment isn't the total payment (though it sometimes ends up that way), it's the down payment. Publishers and producers don't "buy" properties so much as place their bets; they secure the cooperation of talent. "Value" isn't determined in advance, but as it accrues, and as the established value of a property increases, so does the amount paid to those who generate it, according to whatever contract is in place. There is the common belief, for whatever reason, that the publisher/producer is the one taking the risk and therefore the rightful end point of all profits. But by choosing to work with them, and the operations they represent, we take a risk too. We are risking that they will make the right decisions along the way to public release, that they will be able to intelligently and fully exploit the property for the fullest short-and-long term profitability. And you know what? More often than not, they don't, even though that's their job.


Mitch K said...

Insightful. Thanks Mark!

Kevin Koch said...

It's all too true. Not enough of us take look at the big picture.

Rafi animates said...

always on point. nice one.

Steve Schnier said...

Hi Mark, good post. Regarding STAR WARS, the old adage "buy low, sell high" comes into play. No one knew how much STAR WARS would gross, so it was done on the cheap. Even though a $200 million return is great - it's better when the film cost $8 million to make, rather than $100 million. Although its a pain to scrimp on production, the end returns can justify it - especially with an unknown property.

As far as the comment that the people who's jobs it is, to market the film, don't know what they're doing -- really, show me anyone in ANY business who does. As William Goldman said about "showbiz", "Nobody knows anything" - which is true about EVERY business.

Wanna buy a mortgage, cheap?

Floyd Norman said...

I've always felt that "Star Wars" lack of money is what made the film work.

Sometimes, big stars and big budgets are the kiss of death. It's been my experience that the most cool projects always had the least money. And a lack of cash always fuels creativity.

Perfect example? The last three Lucas prequels. Awful, just awful.

Steve Schnier said...

Hey Mr. Fun,
I have to agree with you. Sometimes throwing more money at the problem just makes the problem worse.

If you go into a project with the attitude, "This is IMPORTANT" -- it sucks the fun out if it. If the attitude is "Let's give it a shot..." my guess is, there's a better chance it will be a fun project.

I wouldn't know - I haven't been there, but what's the attitude like on PIXAR movies?

Floyd Norman said...

Hey Steve, I confess we never felt we were doing anything all that important at Disney. Sure, we knew people loved Disney animation, and we wanted to make a good movie, but that was about it.

When I was at Pixar there seemed to be a determined effort to make a good movie because Pixar was such a young untried studio trying to prove itself. However, I found it a great place to work.

I think there's way too much pressure today. Everybody wants a blockbuster every time.