How the ‘Free’ Market Ruins the Entertainment Media

Posted on February 6, 2005 by Dave Pollard

There’s a fascinating article in this week’s New Yorker by Louis Menand about the history of the US film industry. It describes what’s happened to the industry since its #1 year, way back in 1946:

	1946	2004
Studio films released	700	200
Number of screens nationwide	19,000	36,000
Average weekly tickets sold, all screens	100 million	24 million
Average weekly tickets sold, as % of population	72%	8%
Average tickets sold per film	7 million	6 million
Average tickets sold per week per screen	5,000	700

So now you know, if you didn’t already, that the ‘box office records’ routinely reported to be broken are all dollar records, and that actual attendance and popularity of films, by any measure, are in a long-term and steep decline.

sideways There is no great conspiracy to dumb down the industry, or to turn out less and less product each year, or to make more sequels and re-releases than original scripts, or to hype films so that most people who go at all rush out to see them before the unpaid critics, and actual movie-goers tell them how bad they really are. It’s a perfect example of the ‘free’ market in action, and the excesses it leads to. Today between 25% and 40% of the total attendance at a new release is rung up in its first weekend. And on average 60% of the revenue comes from overseas, because, well, because there are more people and hence more undiscerning moviegoers overseas. And 35% of movie-theatre revenue comes from overpriced concession food.

The economics of the industry are now such that, in order to make money, you must have a blockbuster that will bring in hundreds of millions in its first weekend. To do that you need to ‘open’ on at least 15,000 screens worldwide, you have to pay at least $50 million in advance marketing worldwide, and you absolutely have to feature one or more of the “handful of stars who can open a movie worldwide”, and pay each of them $25 to $150 million to do so. The margin of error is small, so you cannot risk a failure, and hence every blockbuster must follow a proven formula, like a comic book.

This hyperbolic model would be fine, for those foolish enough to continue to sustain it, if it weren’t for the fact that, as Menand puts it:

Blockbuster dependence is a disease. It sucks the talent and the resources out of every other part of the industry. A contemporary blockbuster could almost be defined as a movie in which production value (sets, costumes, special effects etc.) is in inverse proportion to content. The talent, knowledge and ingenuity required to make just one of the battle scenes in ‘Troy’, or one mindless James Bond chase sequence, would drain the resources of many universities. But why doesn’t anyone put more than two seconds’ thought into the story?

The answer to Menand’s question, of course, is that they don’t have to. Why spend money on a well-crafted story, as director Norman Jewison said when receiving a recent life-time achievement award pleaded the industry to do, when it merely distracts from the ‘production values’ and needlessly reduces the bottom line? Why write a script at all when you can create a movie which makes hundreds of millions of dollars even though the star speaks only 17 lines in two hours of action (Schwarzenneger in Terminator)?

To those that think all this is just envy, Menand tells the cautionary tale of one non-blockbuster that merely attempted to present a good story with a competent ensemble of non-big-name actors, Sideways. This film, #189 of IMDb’s top-rated (by audiences) movies of all time, has been a critical smash as well, but it was made for a mere 16 million dollars, excluding marketing costs, and despite all the help from critics, Oscar nominations and viral marketing, has brought in a mere 22 million dollars in ten weeks. That’s a fifth of the marketing budget alone for each of the Matrix sequels, which brought in half a billion dollars each. [The picture above is a scene from Sideways].

The ‘free’ market has basically determined that if you want to make a quality entertainment product you have to do it as a labour of love, and if you want it to be seen you have to be willing to lose a lot of money on it (which means you need to find someone with both taste and money to underwrite it) or else let it wallow in obscurity, unknown to the millions who would appreciate it if only ‘the market’ would allow it any visibility. In other words, the unrestricted ‘free’ market in entertainment produces less, of lower-quality (according to both critics and customers). In the process, just like everything else in George Bush’s America, innovation is discouraged and a tiny handful of people and corporations get obscenely rich while the rest struggle their whole lives.

And this isn’t true just in the film industry — it’s true of every aspect of the ‘entertainment industry’ in America: Television (remember when we got 39 quality episodes a year of a well-written series like M*A*S*H?), music, publishing, ‘professional’ sports. In each we get less and less product, hyper-marketing, flagrant ‘product placement’, spin-offs and sequels, a dearth of innovation, and a handful of privileged billionaires working alongside millions of starving peers. Blockbuster dependence, thanks to the unhealthy working of the ‘free’ market, is making all of these wonderful trades and crafts into manufacturers of overpriced mediocrity.

The answer is the same as the solution to any other aspect of the economic, political, social or educational system that has become utterly dysfunctional — as producers we need to establish our own parallel industries, and as consumers we need to withhold our money from from the blockbuster industry, walk away from it, stop funding it, and instead direct our business to new enterprises that enable, support and sustain entrepreneurship, innovation and craftsmanship. In the entertainment ‘industry’ that means supporting independent filmmakers, studios, theatres, media, musicians, publishers, and ‘amateur’ sports leagues. It means helping artists break free of the stranglehold of the blockbuster machine by encouraging them with our consumer dollars, and helping them organize a new, quality-oriented network of production and distribution companies.

And it means one more thing, something commonplace (though constantly threatened) in Europe and Canada, but anathema in the US — encouraging government investment in entrepreneurship. We realized in Canada that, being so close to the US and overwhelmed by the hype of its blockbuster entertainment industry, we simply could not compete for the youth market and for space in the bottom-line-oriented movie theatres and the bottom-line-oriented commercial TV stations’ schedules. So we have heavy government investment in our ‘cultural industries’, despite the outrage of America’s NAFTA supporters. The government invests heavily in film and television production, and in supporting the publishing of Canadian musicians and authors. It has quotas on ‘Canadian content’ in the media. And it has whole networks paid for substantially or completely by the taxpayer, with a charter to provide an avenue for Canadian and quality foreign content. It’s not a perfect solution, but the difference between the content quality on Canadian and American television, at least on a per-dollar investment basis, is startling, and a testament to the fact that, as with anything else, a balance between markets and government investment and regulation works better than either an untrammeled ‘free’ market or a government monopoly.

Some of the best US television, like the CSI series, originated with partnerships with Canadian companies that depend on government support, and repay it with extraordinary creativity. It would be nice to believe that indy producers and catalysts like Sundance Institute could compete with the blockbuster industry without substantial government assistance, but the evidence suggests otherwise. The business model is stacked against them. And the US has moved so far right from the days of the New Deal in its conception of the role and value of government that I wouldn’t hold my breath for anyone in power to advocate a government role in funding innovation for anything except military applications. We’ll have to look elsewhere for working models.

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15 Responses to How the ‘Free’ Market Ruins the Entertainment Media

Rayne says:

February 6, 2005 at 09:33

I agree wholeheartedly with the point here, but it’s a considerable flaw to compare 1946 — pre-television — with 2004. There are an enormous number of entertainment outlets competing for dollars as compared to 1946, post-WWII, when the U.S. and world economies had not yet begun to regroup investment towards peace-time activities. I’d be far more comfortable with a comparison of 1966 or 1976 to 2004, post-television. But this is still a flawed comparison, as evidenced by the flight of entertainment dollars to on-line media (take note of the moaning of programming folks over the loss of young adult males from television audiences). Only the largest creatures will survive the coming onslaught, benefitting from economies of scale.But that’s probably what did in the dinosaurs…given time, the small and fleet will win out if they can take advantage of the internet and speed, getting inside the OODA loop of large entertainment media. NetFlix-podcasts, anyone?
Jon Husband says:

February 6, 2005 at 12:19

A good argument for addressing the long tail, no … and finding ways to distribute lesser-known films to the almost-endless micromarkets ?Downloading indie films from blogs that focus on a given or several genres, or niches or sub-niches ?I’ve often thought of a net-based business that would offer downloads and/or dvds of all the films offered at all of the film festivals around the world. I imagine that the biggest hurdle to overcome would be obtaining the rights to do so from so many producers … but given a clear win-win business case, perhaps they would come seeking the possibility, rather than the creator of such a business having to go seek them all out.
Derek says:

February 6, 2005 at 13:17

> It has quotas on ‘Canadian content’ in the media.I find it amusing that SCTV created “Bob & Doug McKenzie” skit for just this reason. With no other constraint than to fill up several minutes with canadians “eh”, they took a couple of lawn chairs, a cooler of beer, and made something out of it. Eventually this all led to “Strange Brew”, a full length feature film (not an academy award or anything, but still entertaining).Talent, in the absence of contraints, can make the most out of almost anything.
Justin Kownacki says:

February 6, 2005 at 13:36

As an indie filmmaker, I concur with the general assessment here. Somewhere along the way, the blockbuster culture swallowed up the innovation of filmmaking. Once Hollywood realized it “could” make obscene amounts of money from a film (“The Godfather,” “Jaws”), it became obsessed with replicating that success, turning the creativity of filmmaking into a calculated formula.What I find ironic is that The Godfather and Jaws, as two examples, were primarily “new ideas” in their day, which goes a long way toward explaining their successes. Why anyone would try to replicate that “formula,” when it was the new ideas themselves that people were paying record amounts of money to see, is confounding.The internet is a great opportunity to host niche content for a low cost and make it available to the millions of individuals looking for something alternative to the mainstream. But again, ironically, it’ll take a mainstream success to alert the bulk of the world to the potential of the internet as a new entertainment medium. “Homestar Runner” hasn’t done it yet, though it’s come close. Our series hasn’t done it yet, though we’re aspiring.Who’ll be the internet innovator that everyone will try to imitate?
SB says:

February 6, 2005 at 14:00

Oh dear — is the CSI series our ‘best’ television? More let’s gratify ourselves with violence against, mostly, women; decorated with, mostly, women? And the Miami series, more flesh! more sex! (and I don’t mean erotic, sensual, feeling-imbued sexuality.) Let’s pretend that we really do throw these resources at crime solving; lets pretend that virtually thousands of rape kits do not sit unexamined on police evidence shelves around the country because we are unwilling to commit the money to DNA test them.Oh yes.Our best television.
Dave Pollard says:

February 6, 2005 at 19:51

Rayne: I think it will all come down to the quality of the writing/composition, no matter what the media, but only as a survival game, not a money-making one. Entertainment is becoming information, and as McLuhan said “Information is always trying to be free.” The challenge will be finding better ways for people to find quality online — good writers will be famous but not rich (like they were in previous centuries to the 20th). I’m watching to see whether Reality TV crashes — if it does it may bode well for the future of quality of writing. If good quality is available free online, I’m hoping the market for blockbuster hype will crumble.Jon: Not only how to distribute them, but how to fund their creation, and how to find them when they are not advertised. Possible, but a challenge. Anything can be done if we don’t insist on it being profitable.Derek: Yes, absolutely,and the model, perhaps ironically, was the Europeans, who have made some amazing films in many countries for years with tiny budgets. The Europeans outgrow blockbusters more quickly than North Americans, for reasons that I would be embarrassed to admit.Justin: Your question is extremely important — anyone want to have a stab at answering it? My guess would be that the first to do so (probably someone making an animated feature and releasing it online) will be coopted by the blockbuster machine — they’ll use the Internet as the proving ground and then make blockbuster sequels once the market is guaranteed and risk is zero. Then what?SB: Maybe I’ve watched the wrong episodes of CSI. What I’ve seen has been murder mysteries with a high-tech twist — quite well-written and neither pornographic nor exploitative. I watch TV rarely so maybe it’s deteriorated. I’ll confess the acting and character development is thin, but it is also thin on Law & Order, which is (was?) also generally well-written. And CSI (unlike Law & Order) doesn’t pretend to be realistic, any more than the British murder mysteries featuring crotchety old characters that somehow amazingly solve mysteries that confound the police are realistic. But I do think they’re well-written. Maybe I should ask — if CSI isn’t the best of American television drama, what is? But that might just be even more depressing.
Mikhail Capone says:

February 6, 2005 at 21:38

I have just discovered this weblog and I must say that I am overjoyed by the insightfulness of this first post that I have read.I am also Canadian, supporter of the arts and very sad by the dumbing-down of our civilization. Keep up the good work, Dave.
Jon Husband says:

February 7, 2005 at 00:29

Have any of you folks seen thisIt evidently took $218.32 to make (plus a long part of the creator’s life), plus now an additional $400,000 or so for distribution readiness. It seems as if it is being hailed as an *early weak signal* of what’s possible. It also seems only to be making the rounds in the US, although it was a selection at the Toronto Film Festival. I wonder how someone might be able to get it into distribution in Canada ?
tommy d. bergeron says:

February 7, 2005 at 10:19

you make it seem as if hollywood or movies in general have good merit. On the contrary most movies are lies (well thought out) with professional liars who produce nothing really and yet get paid millions of dollars. I’m sorry these last two sentences were somewhat made in anger. Without anger, the entertainment industries aren’t benificial overall and don’t produce much of lasting good consequence. It’s purpose is money through pleasure. Maybe we shouldn’t care about or pay attention to this industry akin to brothels.
Jon Husband says:

February 7, 2005 at 13:07

Interesting and useful point, tommy, and yes, I think Hollywood movies often contribute to the unusual human values that seem to be gaining ground in many areas of North American life. Indeed it is telling that in the mainstream VHS/DVD renatl outlets (Rogers/Blockbusters, etc.) the foreign film section is pretty small and limited. I have found much more interesting in general films from France, Holland, Spain, Central Asia, Germany, South America .. .and there are many many fine documentaries. Clearly, movies can be very powerful ways of telling human stories.Mainstream tv in North America pretty much sucks, too. In a number of other countries, there is still at least a semblance of public television, that is, supported by the government at arms’ length.
Rayne says:

February 8, 2005 at 13:20

I don’t know, Dave; there’s probably a correlation between the point of a particular medium’s life cycle and the quality of product it creates. But there’s always quality writing to be found somewhere (you know that, take a walk around our neighborhood). Does it get a fair shake in an easily-gamed, highly-corruptible mature medium? McLuhan also said the medium is the message; in the case of movies, distribution is tightly controlled and hierarchical. Theatre owners were gatekeepers. Television’s distribution is looser, given that nearly anyone can acquire television, but still quite hierarchical. Internet is flat and wide-open; Jon points to “Tarnation” and it could be this is the beginning of the coming of P2P entertainment in the truest sense. It mirrors changes we see elsewhere in society (politics, for example, as it moves from traditional insider-dominated stovepiped hierarchies to netroots-driven MeetUp-enabled P2P). The short-term challenge is the lack of a business model; how does a P2P entertainer make enough money to support themselves?
Ken Hirsch says:

February 8, 2005 at 13:53

Do you mean “less product” literally? Because that’s not true. There are more books, music, and movies than ever. The decline in theatrical releases is solely because of television. There is way more content now than before. Even when there were only three commercial networks in the U.S., the amount of new content created (25 weeks * 7 days * 3 hours * 3 networks = 1575 hourse) was more than the output of Hollywood in 1946.According to my search of the IMDB, there were over 1200 TV movies, special events, mini-series and new series produced in the US in 2004. That doesn’t count the thousands of hours of new episodes produced for already existing series.There are certainly huge amounts of money made by the top stars, authors, and producers, but that doesn’t mean that there’s less money, in absolute terms, for others. The number of artists and entertainers has been increasing. Search for “artists” on this page: http://home.nc.rr.com/kenhirsch/occupations.htmlThere are over 75,000 new book titles published each year and over 30,000 new music releases.Misc: The gross on Sideways is now over $46 million, and there will be more with DVD/video and cable revenue. No season of M*A*S*H had more than 26 episodes.
Ray says:

February 10, 2005 at 10:25

I don’t see any problem in capitalism demonstrated by the Sideways story. According to this post Sideways was made for $16M and earned a “mere” $22M in 10 weeks. Assumming it took 3 years from the time the money was allocated to the end of that 10 weeks returned back its original investment, plus 25%. A 25% return over three years looks pretty good to me, labor of love or not.Maybe I’m in the wrong business.
Dave Pollard says:

February 10, 2005 at 14:11

Thanks for your comments, everyone. Ray: the $16M was just salaries and location fees — the marketing will be, if normal ratios for nonblockbusters apply, close to twice that, so breakeven will be around $50M — unlikely to be achieved unless it’s lucky enough to win a major Oscar.
Carolyn Allen says:

February 26, 2005 at 10:14

Fascinating article and discussion. Thanks for adding a few dots to the impressionistic painting of the storytelling industry, Dave. May I quote you on my website Movie Industry Marketing? Living in the heart of the Hollywood industry, I’ve observed a number of intriguing quirks of the industry. First, it is highly testosterone driven. Women have a tremendously difficult time breaking into anything other than ingenue roles in the industry. Second, there is a general concensus that all scripts are bad… with one exception in a million. I have read a lot of really good scripts — but as a writer, I know that the script is just a blueprint and a lot of craftsmen follow who dumb down, confuse and over-develop the scripts before they reach the screen. And third, where is the “love” factor in the industry? Without respect and appreciation for one’s fellow workers, one’s audience and one’s investors, the result will be upchuck. Indies could provide an innovative renaissance of the storytelling function in our society — but I’ve seen as much testosterone and as much disrespect in this part of the industry as in the studios. Frankly, I don’t see as much character and integrity in society as we see on-screen, even in the blockbusters — and that pains my heart. Maybe we are getting what we deserve because we are putting our emphasis on the output of society rather than the input. Wouldn’t that be an eyeopening discovery? Dave, may I quote from your article on http://www.movieindustrymarketing.com