Monday, December 03, 2007

Financial and Emotional Investments

There was a time when U.S. networks would buy programming from independent producers. Then they got greedy and had the rules changed so that they could create and own their own programming. That pretty much killed the independent producers and should have led to a happy ending for the networks.

That wasn't the case, though. They faced increased competition from cable, including channels that they owned or shared an owner with. One result was that Saturday morning kid shows became less profitable. Fox ended up leasing out its entire Saturday morning to 4Kids Entertainment. CBS leased out their Saturday mornings to Nelvana and more recently to Discovery Kids. Both Fox and CBS decided that a small, steady profit for Saturday morning was better than risking losses on shows that they created or bought.

That's now spreading to prime time. The N.Y. Times is reporting that NBC is buying a block of programming from Thom Beers, who has had success with cable series such as Deadliest Catch and Ice Road Truckers.

So far, this is limited to the old networks, not newer cable channels, but there's no reason that this won't eventually spread. Networks lobbied hard for the opportunity to own the programming they broadcast and when they won it, they realized that they weren't particularly good at creating shows, especially in a more competitive environment. Now, while the law hasn't changed, the networks are at least partially in retreat. Power is useless if you don't know how to wield it to your own advantage.

Beers got the nod for two reasons. His programming cost $500,000 an hour as opposed to the network reality shows costing at least $1.5 million per hour. Also, his Ice Road Truckers finale garnered an audience of 5 million viewers, proving that Beers knows how to attract eyeballs. NBC is in business with Beers to cut its costs and for the audience they think he'll bring with him. While you might expect that NBC would own the programming outright, they're only taking 50% of it. Beers' company will keep the other 50% and control international rights.

I keep hammering on this point in this blog because I think it's critical for people who are starting out in the animation industry. The old business model is faltering. It may never disappear entirely, but the fragmentation of the audience and the increased number of distribution channels is weakening it and presenting alternatives.

Corporations are businesses. Their concern is profit and return on investment. They have no emotional attachment to their products and services. When those products and services are no longer in demand, corporations discontinue them and move on to something else. Because the corporations have money, marketing and distribution, creative people orbit around them hoping to sell their ideas. These corporations need product and as they have the money to buy it, they become magnets for hopeful creatives.

There are only two reasons why a corporation would do business with you. The first is that they have a specific need that they think you can fill. The second is that they think they can make money from you. The first situation is the average job. They need an animator, storyboard artist, etc. so somebody gets hired to fill the need. It may even include buying a show idea to fill a time slot or satisfy a demographic. When the need no longer exists, the person is cut loose. The second situation is when a corporation hires a person with an independent reputation and hopes to benefit financially from it. This is why DreamWorks hired Jerry Seinfeld to make an animated feature. DreamWorks hoped that Seinfeld's TV and stand-up audience would pay to see the movie and buy the DVD. This is also why authors like J.K. Rowling and Stephen King are sought after for adaptations of their work.

The vast majority of people in the animation industry fall into the first category and it's one with a limited future. It will pay the bills (sometimes generously), allow for developing skills and occasionally someone will achieve a measure of control. Because corporations only have financial, not emotional investments, when they are looking for properties, they will look for what (or who) has already been successful before they look at their own employees. The irony, of course, is that the corporation is responsible for their employees' lack of success in the wider market because they've limited the employees' contributions. The corporation doesn't care that the playing field isn't level; for them it's all about minimizing risk and maximizing return on investment.

Creators, regardless of what they create, have an emotional investment in their work. When creating on spec they have to, as there's no motivation but the hope of future reward. Putting in the necessary hours to solidify an idea into a tangible form requires commitment and the thing that sustains a creator is a belief that the work has value, not necessarily limited to financial value.

A problem results from the gulf between financial and emotional investing. Corporations don't have a sentimental attachment to product; it's only a means to a profit. Creators generally have a strong emotional attachment to their ideas, and are not willing to bend them out of shape simply because someone requests it. Many creators have suffered while an idea has been refashioned against their wills.

Another problem is that creators often sell their ideas outright. The sale may come with assurances that the creator will have a part in the ongoing production and will be consulted, but even if the corporation lives up to its promises, eventually the product will no longer be lucrative enough to continue. At that point, the property dies (except for reruns or re-issues) and the creator is severed from the property. The creator may have ideas to regenerate the property, be convinced that there's still income to be made from it, or may just want to keep it going out of love for it, but usually the creator's relationship with the property is over.

So what to do? NBC's latest move is a reminder of how the industry is shifting. Creators need to move from filling a need and being discarded when the need no longer exists to creating something that generates its own audience. The web provides that opportunity.

Opportunity is no guarantee of success. The emotional investment that creators make often blinds them to the true viability of their ideas. The saying that "love is blind" refers to creative work as much as it does to romance. Just as romantic euphoria might blind you to a partner's shortcomings, not every idea you have is worth pursuing. While you may take great personal satisfaction from it (which is enough justification for creating it), it may have no appeal to an audience larger than one. The low cost of distribution on the web is way to determine if an idea has wide appeal.

If it does, work it for all it's worth. This doesn't necessarily mean that you should give up your day job and invest all your money in it, but keep working to build up the audience. If you can get it sufficiently large, instead of you pursuing the money, the money (in the form of corporate interest) will pursue you. When that happens, do not, under any circumstances, sell the idea. No amount of money will compensate you for your emotional investment. Maintain ownership. License your idea. That way, when the corporation loses interest and drops it, you'll still have it. Maybe there's not enough juice left in it to satisfy a corporation, but there's likely enough to earn you a living while you're developing further ideas.

And history shows, unfortunately, that even people who produce a hit don't always produce a second. Siegel and Shuster never again created anything as popular as Superman. Harvey Kurtzman created three humour magazines after creating Mad and none of them had the success or the staying power of his biggest hit. If you are lucky enough to create something that generates income, it may be your only success. Why sell it?

You have the possibility now of reaching an audience without gatekeepers in the way. The financial rewards may never come or they may come more slowly than by selling your idea, but by owning your creations, you control how they'll be used and continue to profit from them. Your chances of making a deal with a large corporation are better if you have an audience attached to your idea. Finally, you'll protect your emotional investment. The best ideas are highly personal and suffer the most in a corporate environment. If this whole, overly long essay can be boiled down to one thought it's this: Work to develop your own audience and then don't sell your idea, license it.


Steve Schnier said...

"Maintain ownership. License your idea."

Mark, no truer words were ever spoken. Here are some more: If you bring on investors/partners, have them share in the property's revenue stream -- and not in the property itself.

Don't share your copyright.

S. Stephani Soejono said...

Thank you for this entry. I appreciate it, it's very eye-opening. :D

Mitchel Kennedy said...

Very informative! Licensing an idea vs selling an idea is something I've been aware of since reading about Grim's loss of Betty Boop (a little different situation, but the same outcome).

Great great article! I'm a fool for not asking you about this stuff already.

Anonymous said...

Mark, entries like this one is precisely why I love your blog.
This is hitting the nail on the head and please, keep doing it!

Steve Schnier said...

Actually it would be difficult to license an "idea". You would have to create a unique and physical expression of the idea in order to have something to license.

Example #1: "I have an idea for a show about..." No good. They can borrow (steal) your idea.

Example #2: "Here is my script/storyboard for a show about..." Good - but they might option it, then purchase the property outright as part of the terms of the deal.

Example #3: "Here is my movie/TV show. It's in HD and runs 72 minutes. Would you care to discuss the terms for a 7 year license?" Best - you're in the driver's seat. You have a physical property that can be licensed in multiple markets.

Anonymous said...

God, you're a good writer, Mark. I'm very impressed.

Mark Mayerson said...

Mitch, the Betty Boop issue is very different in that Grim Natwick was on staff at the time the character was created. It's universally acknowledged that if you're being paid a salary, whatever you create on the job belongs to the company. Grim claimed that when the Boop series ended, Max verbally gave ownership of the character to him. To quote Sam Goldwyn, "a verbal promise isn't worth the paper it's printed on."

Steve, you're right that I was imprecise with the use of the word "idea." I should have said "property."

Dancin' Dave, however good I am as a writer, I've come to the conclusion that my writing skills are better than my art skills. For me, that's a tragedy and don't think I haven't considered giving up the blog and forcing myself to use the time to draw. If I was smart, I'd figure out a way to do both.

Steve Schnier said...

Hi Mark,
The other consideration about properties - it has to be good enough to command market interest. A mediocre property (conception, execution or both) will not find a place in the market.

This is where it gets tricky. If you're willing to commit the resources to create a property, there must be evidence that there is a demand for it.

rafianimates said...

Mayerson, you are so on point with this one. You've summed up everything I've been feeling and thinking lately on the subject and backing it all up with strong, well articulated points. thank you.

J Caswell said...

Once again excellent analysisad sound investment advice.