Park City Climate: Sundance Infographic 2017, Million $ Piracy Losses, Distribution Changes, and Slamdance Stats

Originally published in Cultural Weekly on January 18, 2017.

Park City has a change in the weather this year. For the first time in along time there will be snow, and, as if to counter deniers, Sundance has programmed a special section on climate change films. The festival will also be marked by social actions directed toward President Trump’s inauguration. As always, though, the action in the cinemas, events, parties, gifting suites, crowded restaurants, five-to-a-room-and-sleeping-on-couches rentals, and late-night negotiation sessions will not all be political.

Using Sundance data as a bellwether for the independent film industry, ground-truthed through interviews with producers, distributors, and sales agents, and, this year, also adding some data from the Slamdance Film Festival, which runs concurrent with Sundance’s opening weekend, here is our weather report on the independent film business. (Scroll to see the infographics at the bottom of this article.)

CLICK HERE TO SEE ANIMATED SUNDANCE 2017 INFOGRAPHIC
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$2.3 billion

Annual spending on independent films has remained fairly constant at $2.3 billion. This is because the number of submissions to Sundance seems to have plateaued. Our estimates of average budget levels are based on discussions with indie movie producers and sales agents. These estimates, too have remained constant since last year.

Piracy is worse than expected

The cost of piracy for independent films is significant. Working with Tecxipio, we are publishing the actual number of torrent illegal downloads for 14 films from Sundance 2015 and 2016.

To understand why our piracy numbers are probably low, I need to get geeky about piracy. There are two kinds of illegal downloads: torrents and streams. Torrents are able to be monitored and quantified; that’s what Texcipio does. Streaming illegal downloads, which in some cases comprise more than half of all pirated downloads of a film, cannot yet be reliably quantified. We are therefore only publishing torrent data.

In making our calculations for the amount of revenue piracy costs each film, we are assuming that only 5% of the people who did an illegal download would have actually purchased the movie, and that their purchase price would have been $3.

Our 5% figure could be a *very* conservative number relative to how much pirated downloads actually cannibalize sales. For example, peer-reviewed academic studies of sales displacement tell us that the rate of piracy displacement is in the range of 14% to 20% at the lower end, up to 100% on the higher end. To be conservative, let’s go with 5%; but I really think the lost revenue is much, much worse.

It’s interesting to compare pirate download numbers for 2015 Sundance films over a full year. For example, Brooklyn had an additional 4.3 million illegal torrent downloads in the past year. Nor are movies for older demographics immune: A Walk in the Woods has had 2.4 million torrent downloads. The film with the most illegal downloads from 2016 is Swiss Army Man (over 7 million torrents); by our minimal estimates that represents a loss of over $1 million in revenue, and based on the peer-reviewed studies cited above, that number could be $3-$4 million in losses.

Virtual reality

VR has fully come into its own, largely due to Sundance and Slamdance’s support of the emerging artform over the past several festivals. For the first time this year Sundance has an official virtual reality section; it received a whopping 346 submissions.

Distribution and sales

We also traced how many Sundance and Slamdance films got distribution – although I refrain from calling every instance a “distribution deal.” For our purposes this year, I am defining distribution as having the film available for sale on a legitimate and public platform – iTunes qualifies, as does traditional theatrical distribution. It costs more money to put a movie up on a major digital platform than it costs to press DVDs; that’s why not every film can get onto iTunes, as they and other platforms have become more selective.

Most of the films at Sundance will be distributed, and about half of Slamdance’s selections will achieve this milestone. However, the sales prices – when there are actual cash advances (or minimum guarantees) – will vary widely. Last year, Sundance saw a record sale of $17.5 million for The Birth of a Nation, an investment that proved ill-advised for Fox Searchlight. In contrast, the highest sales recorded at Slamdance was Batkid Begins (2015) for $1 million to Warners, primarily for remake rights. Last year, Slamdance’s Million Dollar Duck sold to Animal Planet and Lionsgate for a deal worth $350,000-$500,000. (The Slamdance infographic is right below the Sundance infographic.)

The Netflix of it all

Continuing a trend that began five years ago, streaming services like Netflix, Amazon, and iTunes will continue to be the dominant platforms for independent films. Netflix has four original features, one original documentary feature, and episodes from two documentary series screening in the festival.

In addition, the festival has fully acknowledged that some of the best “film” work is now done in episodic television. This year is the first year that episodic content has been eligible, and 403 episodic films were submitted. Nineteen episodic films will screen, including premieres from Netflix, Amazon, and YouTube Red.

Chillier

Like the weather, I expect a somewhat chillier buying season than in 2016. There will be even more responsibility put on producers and directors to deliver audiences for their movies, down-shifting traditional marketing efforts from the distributors to filmmakers. I suspect that buyers will be more cautious, and that even Netflix with its trumpeted $6 billion content-acquisition budget will be judicious. There is simply a glut of great content, not all of which is feature films, and Peak TV is already becoming a factor.

We can soon expect a cyclical downturn in our business, and we may see early signs of it in Park City this year, where the weather will be cold even while the politics will be hot.

Sundance Infographic

Sundance Infographic

Slamdance Infographic

Slamdance Infographic


Top: Jason Segel appears in The Discovery by Charlie McDowell, an official selection of the Premieres program at the 2017 Sundance Film Festival. The film will stream on Netflix in March. Courtesy of Sundance Institute.

Will the Movie Industry Contract in 2017?

Originally published in Cultural Weekly on January 4, 2017. 

Movies are going gangbusters, and one studio—Disney—achieved a record-breaking $7 billion global box office last year. What could possibly go wrong?

According to my analysis of historical patterns, we’re due for a downturn.  The film industry is often likened to a roller-coaster because we experience it as having surprising ups and down. The analogy is even more precise than we would like to think. Just as a roller-coaster rises and falls on a fixed and predictable track, so too the film business has an uncanny, regular pattern of peaks and valleys.

I first became aware of this pattern in 1988 as a junior executive at Walt Disney Studios when the Writers Guild went on strike. The strike lasted 155 days, during which time no new screenwriting took place, and even after the strike was over it took years before movies and TV shows achieved full levels of production. I imagined this was an unpredictable economic event. But when I talked with some of the old-timers, people who had been in the financial offices of Disney and other studios for decades, they told me it was to be expected: they didn’t know the writers would go on strike, but they had been certain the movie business would have a downturn in the late ‘80s. They had seen the pattern before.

How could that be? I started to do some research, going back to the beginnings of filmmaking in 1891, when Thomas Edison patented the kinetoscope, the precursor to the motion-picture projector. I discovered that innovations in technology and distribution have been driving the movie industry through rising and falling economic cycles, and that the cycles happen in a predictable, ten-year pattern.

I first wrote about this phenomenon in Screen International magazine in December, 2009. My editor dubbed my observations “The Leipzig Hypothesis.” At that time the movie business was in a downturn, and I predicted that the cycle would start to turn up in 2012. It did.

My hypothesis states: The film industry’s expansion and contractions — based on known milestones — for the last 120 years has followed a wave pattern which peaks with uncanny regularity in the middle years of each decade, then bottoms out in the decade’s last years, only to rise again from the ‘0’ year driven by new innovation. It looks like this:

movie decade

According to the ‘Leipzig Hypothesis,’ the film industry experiences a regular expansion and contraction cycle every decade.

I admit that the Leipzig Hypothesis is somewhat impressionistic. It relies, in part, on verbal data I got in conversations with finance people who had been in the movie business since the 1950s. It’s difficult to evaluate the entertainment industry’s profitability from the outside; studios play fast and loose with the numbers so it’s been hard to measure historical ups and downs. Box-office numbers, even when adjusted for inflation (which they usually aren’t) account for only a fraction of a film’s revenue, and today box office revenue matters less than it ever has before, because of the films being financed by streaming services Netflix and Amazon.

In addition, domestic numbers often seem to show patterns that alter radically when currency-fluctuating (and poorly counted) foreign sales are thrown into the mix. So the movie industry, unlike more numerically minded businesses, is never really sure whether its economic viability is rising or falling; it has always seemed more of a gut feeling, at least to people outside the highest levels of the industry.

However, based on my nearly three decades in the business, my knowledge of studio balance sheets, and my interactions with the financiers who keep this industry spinning, I’m ready to go out on a limb once again and predict that a contraction will happen starting in late 2017 or early 2018, and filmmaking will feel an economic downturn. If the hypothesis holds, it will make the movie business a bit more quantifiable for everyone. If the hypothesis fails – which it may, due to significant changes in business models – we can put it to rest as a historical artifact.

Here is how the hypothesis has functioned historically. (See infographic below.)

In the early years of each decade, as an innovation takes hold, the business tends to expand. There’s a sense of renewed optimism among industry executives and bigger movie budgets soon follow, along with higher salaries and richer deals for the talent. The expansion generally peaks around the sixth or seventh year of each decade, when higher spending has taken its profit-reducing toll.

Then, pessimism sets in, and industry leaders call for the business to be reined in. Budgets become smaller and negotiations become tougher amid prognostications about the ill health of the industry. In the final few years of each decade, which we are entering now, the business contracts, reaching its nadir at decade’s end, when, almost miraculously, the next innovation is born that will start the cycle anew.

Each innovation is an advance in technology or a new distribution market. For example, in 1900, the size of each reel of film doubled, allowing longer, more complicated takes. In 1910, black-and-white movies were enhanced with two-color tinting.  Technicolor was chartered in 1921 and the first film in Technicolor’s Process 2 was released the following year. Synchronized sound technology started in 1927; silent movies ended in 1929. Then 1940 saw the advent of multi-channel sound; the screen image became much wider in the early 1950s with the innovation of CinemaScope; and special effects took a leap forward in the late 1950s and early 1960s.

New distribution markets have been the drivers for the past 40 years, beginning with the first multiplex cinemas in 1970, and the creation of HBO and cable television in 1972. Then, in 1976, VHS and Betamax videotape appeared, starting the trend towards in-home entertainment, which became widespread by 1980. The foreign markets exploded in 1990: films began making more money overseas than from the domestic market, and a new internationalism began to take hold in Studio-land. DVDs began to explode in 2000.

The most recent expansion was due to wide adoption of another new technology: streaming video services. Although Netflix began its streaming service in 2007, it really took off in 2012 when it went public and was able to grow exponentially. Since then, Netflix has grown from 27 million subscribers to more than 86 million today, and has a presence in more than 190 countries. Amazon Prime began streaming original content in 2013 and now has nearly 70 million subscribers.

I feel it is an open question if the hypothesis will continue to hold.  For the first time, it is hard to quantify exactly what the movie business is. When Netflix and Amazon finance or acquire feature films to exploit their value on their streaming services – not at the box office – and further, not reveal how many people are watching (which they don’t) there is no way to tell if movies are economic success or failures. As Michael Smith and Rahul Telang posit in their book Streaming, Sharing, Stealing, the power-center of the movie business has moved from companies that create content (studios) to companies that own their audiences (Netflix, Amazon, YouTube, iTunes). This shift is fundamental, unstoppable; we may need a new model to predict expansions and contractions.

On the other hand, the cycle may hold. For one thing, the U.S. dollar is at record-level strength against other currencies, which means that international revenue will be lower than projected – this alone could incite a contraction. Also, the content acquisition budgets for Netflix ($6 billion) and Amazon ($3 billion) are unsustainable and both companies will probably begin to ratchet back their spending in the next couple of years.

My conclusion? Let’s find out together. I’ll meet you back here at the beginning of 2018 to take the pulse of our business again and see where we are on the roller coaster.

Film Industry Cycle Infographic

Leipzig hypothesis

According to the Leipzig Hypothesis, the film industry expands and contracts each decade with uncanny regularity. Expansions are driven by a new technology or distribution market.

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Top image: Concept art for Captain America: Civil War, which earned over $1.1 billion in worldwide box office in 2016. Courtesy Marvel Entertainment/Walt Disney Studios.

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Theatre Does Not Apologize

Originally posted in Cultural Weekly on November 23, 2016.

Dear Mr. President-elect,

I’d like to explain something about the theatre, because you seem to misunderstand what theatre is all about.

You recently asked the cast of Hamilton to apologize to the Vice President-elect, Mike Pence. You tweeted:

The Theater must always be a safe and special place. The cast of Hamilton was very rude last night to a very good man, Mike Pence. Apologize!

You tweeted that because, at the end of Friday night’s performance, with Mike Pence in attendance, cast member Brandon Victor Dixon read this message from the stage:

You know, we have a guest in the audience this evening. And Vice President-elect Pence, I see you walking out, but I hope you will hear us just a few more moments. There’s nothing to boo here, ladies and gentlemen. There’s nothing to boo here. We’re all here sharing a story of love. We have a message for you, sir. We hope that you will hear us out.

Vice President-elect Pence, we welcome you, and we truly thank you for joining us here at ‘Hamilton: An American Musical.’ We really do. We, sir, we are the diverse America who are alarmed and anxious that your new administration will not protect us, our planet, our children, our parents, or defend us and uphold our inalienable rights, sir. But we truly hope this show has inspired you to uphold our American values and work on behalf of all of us. All of us. Again, we truly thank you truly for seeing this show, this wonderful American story told by a diverse group of men and women of different colors, creeds and orientations.

Here’s the thing about theatre. It is not a safe place. Theatre is dangerous. It challenges the status quo. All good theatre confronts its audience. That has been true since Aeschylus and Shakespeare, Molière and Beckett, and for Hansberry and Albee, Wilson and Pinter, Parks and LeCompte.

Theatre, good theatre, makes its audience uncomfortable. And theatre does not apologize for that. Theatre never apologizes.

As Mayakovsky said, and Brecht said after him, “Art is not a mirror held up to reality, but a hammer with which to shape it.”

This, Mr. President-elect, is the hammer of theatre. We, all artists, all culture-creators, will not apologize for what we do.

Sincerely,
Cultural Weekly

 

Image from the official Instagram feed of Hamilton: Actor Brandon Victor Dixon reads a message to Vice President-elect Mike Pence.

The Other Movie Industry

Originally published in Cultural Weekly on September 28, 2016.

Every morning when I wake up I drag myself over to my laptop and methodically delete 150 emails that have come in overnight, advertisements and spam my junk filter didn’t catch. Then, just as methodically, I study 50 important emails about independent film projects at various stages of their hectic, insecure lives, and respond to every one.

Except when I am traveling. The experience of travel throws me off my body-clock and game. I arrive in a distant city, schedule as compact as the clothes precisely rolled in my travel bag; I am somewhere else! I want to enjoy the people, take advantage of the place! I experience my new surroundings from morning ’til late night when, spent, I fall into the hotel bed. I yell at myself, inside my head, knowing the emails are piling up, until the yelling becomes white noise and I find myself awake the next day.

So it was in Helsinki, Finland, this past week, from where I have just returned, refreshed despite being burdened with 2,000 emails, most of which I will, of course, delete. Because the Finnish film industry has moved to an exciting place in only the past few years, and I wanted to learn as much as I could while I was there.

Why was I in Helsinki? It was the week of Love & Anarchy – The Helsinki International Film Festival, and, embedded within it, the Finnish Film Affair, three days devoted to movie industry professionals. For the Finnish Film Affair, I had put together a dream team of a panel: Mike Goodridge, CEO of Protagonist Pictures, the UK-based production, finance and sales company; Claudia Lewis, who served as President of Production for Fox Searchlight Pictures for 10 years; Laura Munsterhjelm, the talent agent and founder of Actors in Scandinavia agency; and Mike Runagall, Managing Director at Altitude Film Sales. We’d been asked to talk with Finnish film professionals about finding movie stories that travel. How could Finnish films go beyond the borders of Finland and find audiences around the world?

Finnish Film Affair

Our panel at the Finnish Film Affair. Photo by Petri Anttila.

The question, in fact, does not apply only to Finnish filmmakers. It is hard to get an accurate count of the number of films made each year — I have heard estimates as high as 10,000 and more when Nollywood and Bollywood titles are added to the mix — and few of them capture global audiences. By and large, worldwide audiences are the domain of big studio ventures, movies that come from comics, pre-aware titles, and well-traveled franchises. Only big studios can commit the marketing resources, often topping $200 million, to open a movie everywhere. Other than big studio movies, most film distributors are only interested in locally-produced product: Indian movies in India, Chinese movies in China. Few distributors anywhere showcase “foreign-language films.”

Therefore, our panel concluded, there are two challenges Finnish films need to address: the worldwide disengagement from international cinema, and the fact that, outside of Finland, nobody speaks Finnish.

Could Finnish films travel better if they were made in English? In some cases the answer is yes, but I certainly would not want to see that happen at the expense of quality. During the festival, I had the pleasure of seeing The Happiest Day in the Life of Olli Mäki, directed by Juho Kuosmanen, which won the Un Certain Regard jury prize at the Cannes Film Festival and is Finland’s entry for the Oscar’s Best Foreign Language prize. Olli Mäki tells the story of the lead-up to the 1962 world featherweight boxing match. No rational sales agent would have wanted the film if it had been pitched before it was made: It is in Finnish, a period piece, shot in black and white, about a person few outside Finland have ever heard of. But the resulting movie is a grand happy surprise, deftly made, funny and charming, authentic and true to itself. Made in English, the film would not have worked.

Which brings me to the process by which Finnish film currently operates. If you want to make a movie, and you can do it for around 1.4 million Euros, and you can get a bit of money from the government’s cultural arm, as well as a commitment from Finland’s film distributor and broadcaster, you are done: You will have your costs covered. For the people who get their movies made, this creates a regular opportunity for work and creative output.

U.S. indie filmmakers would love to have so straightforward a process. Our movies would be less hectic and insecure. I found a rare, unaffected enthusiasm for film and storytelling among the Finnish filmmakers I met. They have a system, which works in its way; theirs is, fundamentally, the Other Movie Industry, one that does not play by the rules to which we Americans have become accustomed. The Other Movie Industry, versions of which exist in many countries, especially in Europe, allows filmmakers to make movies on a regular basis and, therefore, lead more sustainable lives.

Of course, there are limitations on the closed-loop of the Finnish system: budget limits, obviously, and also limits if you are not among the filmmakers blessed by official process. Therefore, the potential of expanding to audiences in other countries, as well as the game-change of a filming financial incentive that will go into effect next year, will allow for a greater diversity of films and filmmaking talent. That will benefit everyone, and up-level even the filmmakers who stay within the existing system.

Finnish filmmaking is quite accomplished, and is poised to expand and flourish in the next few years. Of that I’m certain. I’m also certain of one unintended consequence: Finnish filmmakers will have to deal with a whole lot more emails.

Image from The Happiest Day in the Life of Olli Mäki, directed by Juho Kuosmanen.

If You Want to Run an Entertainment Company, Here is Your New Bible

Originally published in Cultural Weekly on September 5, 2016.

I read just about every book that analyzes the entertainment business, both because it’s the business I’m in and I love to learn new perspectives. Streaming, Sharing, Stealing: Big Data and the Future of Entertainment, by Michael D. Smith and Rahul Telang (MIT Press), is the best book on the subject, bar none. Every entertainment executive who hopes to have a job in coming years should read it and follow its prescriptions.

I met Michael Smith, who’s a professor of information systems and marketing at Carnegie-Mellon University, at Sundance in January, where he gave a riveting presentation on digital piracy at the Sundance Institute. We struck up a conversation and, full disclosure, have become friends.

One of the things I most admire about Smith and Telang’s work is that they do not come from the entertainment business at all, and therefore have no axe to grind, no jobs to protect, and no legacy business models to justify. All they care about is data, and they collect lots of it.

Their data leads to conclusions that may not seem shocking to people who follow digital content enterprises, but will certainly upset traditional entertainment companies.

Some say that it’s inevitable for longstanding film, music, television, and publishing companies to survive as they have for many decades. Smith and Telang counter this viewpoint because, they contend, the fundamentals of the business have changed permanently. Where once it was enough to make and own great content — the province of movie studios, record labels, and publishing houses — now that is no longer sufficient. Today it is possible to own the audience, and massive amounts of audience data represent a near-insurmountable competitive advantage. The big question is whether large companies will take this information to heart and change their business models before it’s too late and data-driven companies, like Netflix, Amazon, and iTunes, leverage their understanding of the audience to topple a century-old hegemony.

As Smith and Telang summarize their thesis:

“In recent years a perfect storm of technological change has hit the entertainment industries. It involves the convergence of user-generated content, long-tail markets, and digital piracy, and it has diminished the profitability of these industries’ traditional business model.

“At first glance, none of these changes seems to pose much of a threat. User-generated content, after all, is amateur fare: videos of cats riding Roombas and kids playing Minecraft. Long-tail markets, for their part, are full of products that can’t compete: old, failed films and television shows, say, that don’t stand a chance against new blockbusters such as Avatar or The Sopranos. And digital piracy, while certainly harmful to sales, impacts all of the studios equally and therefore shouldn’t upset the competitive balance.

“But in fact this perfect storm has changed everything. Content is no longer hard to produce or easy to control because of the technological revolutions in hardware and software that we’re now witnessing. Distribution is also much easier now: long-tail markets make it possible to allow everything to be put up for sale, a big shift from the limited capacity in movie theaters and limited space on television broadcast channels. And thanks to digital piracy, it’s much harder to maintain the profit from the staggered release windows that are fundamental to all of the entertainment industry’s existing business models.”

For the benefit of existing entertainment companies, Smith and Telang provide a series of well-thought-through recommendations in their closing chapters. As someone who has been in the entertainment business for 30 years, it feels clear to me that Smith and Telang’s data are excellent and their conclusions are inevitable. Will movie studios, broadcast networks, music labels, and publishing companies view this book as the new rule of the road or the raving of Cassandra? Time will tell — and for legacy companies, time is running out.

Image: The cast of ‘Arrested Development,’ a series Netflix picked up after it was cancelled on Fox’s broadcast network. Why did Netflix do that? They had the data. Image courtesy 20th Century Fox TV.

Do the Poor Make the Rich Richer?

Physically removed from us in their multi-billion dollar lairs, the rich take on the aspect of gods. In Alex Garland’s film Ex Machina, Caleb (Domhnall Gleeson) is helicoptered across wilderness and glaciers to the estate of Nathan (Oscar Isaac), who is wealthy beyond imagination because he has invented the world’s most-used search engine. “When do we reach his property?” Caleb asks the helicopter pilot. “You’ve been flying over it for two hours,” the pilot replies.

Nathan has much and Caleb, who works for him, has little — no family, no friends, just a small apartment and a few possessions. It’s a metaphor for the distribution of wealth, and how we conflate money and power. The film turns on Nathan’s latest invention, a humanoid robot named Ava (Alicia Vikander) with potentially perfect artificial intelligence. Nathan has been conscripted to test Ava. “If you succeed, you’d be like a god,” says Caleb. Nathan hears the remark his own way and repeats it back: “You said I am a god.”

Such are the differing perceptions of reality between the rich and the poor. The poor say what they can; the rich hear what they will.

Warren Buffett recently spoke out in the Wall St. Journal about the growing income gap between rich and the poor. Buffett is progressive for a multi-billionaire, and he’s concerned. Education, he wrote, can’t fix the problem quickly enough, and raising the minimum wage may lead to greater unemployment. Instead, Buffett advocates an expansion of the Earned Income Tax Credit, the Federal program that gives financial incentives to low-income workers.

In making his case, Buffett made the most quotable statement in his article:

No conspiracy lies behind this depressing fact: The poor are most definitely not poor because the rich are rich. Nor are the rich undeserving. Most of them have contributed brilliant innovations or managerial expertise to America’s well-being. We all live far better because of Henry Ford, Steve Jobs, Sam Walton and the like. Instead, this widening gap is an inevitable consequence of an advanced market-based economy.

“The poor are most definitely not poor because the rich are rich.” In large part, he is correct. The rich do not make the poor poor. To believe otherwise would be to believe that the amount of wealth in the world is fixed, and if you have more I must have less. That is not reality. The amount of wealth in the world increases every year; the size of the pie is not finite. According to Credit Suisse Research Institute, global wealth today is now approaching $250 trillion, a number that has more than doubled since 2000.

The poor are not poor because the rich are rich. However, the reverse is not true. The rich are richer because the poor are poor.

Labor is the greatest cost of any enterprise. Therefore, if labor costs are low, a business can make more margin, hence more profit. In Ex Machina, for example, Nathan labors for a pittance. When there is a poor workforce, they will be more willing to take jobs at lower wages. That increases a business’s profits; the fact that there is a large body of poor people allows businesses to keep wages low, and does, in fact, make the rich richer.

While low-paying fast-food jobs have become America’s emblem of this disparity, the most extreme example occurs in the creative industries, when creative artists are paid nothing and companies make money off their work. That happens with piracy sites (I won’t give them publicity by mentioning their names here). Indeed, one of the most pirated movies in recent weeks has been Ex Machina, according to TorrentFreak. It’s impossible to know how many times Ex Machina has been downloaded illegally (pirate sites don’t share that info), but based on comparable films where data has been collected, I estimate it is north of 1 million. That’s an $8 million hit to the film’s box office revenue, and a nice boost for the pirate sites’ advertising income. A report from Digital Citizens Alliance, conducted by MediaLink LLC, found that in 2014 nearly 600 pirate sites generated an estimated $209 million in advertising revenue by streaming stolen creative content.

The Wall St. Journal reported on this study. Not only are the pirate sites making money, but major brands advertise on the pirate sites, so these brands are further profiting — by increasing exposure and sales — by keeping creative artists poor. These brands included Lexus, Sprint, Verizon, Banana Republic, PayPal, Zappos, Amazon, Adobe, and Office Depot.

In the creative industries, like the rest of the world, the poorly-paid seem to get poorer and the rich richer. And it’s important to see the causal connection: wealth increases at the top because there is a lack of wealth at the bottom.

Beyond Warren Buffett’s plan, what’s the solution? In the economics of creative industries, we know that most people will pay for content if it is easy to access. We also need to enforce policies against supporting intellectual property theft with big-brand ad dollars. Oh, and artists should stop giving it away for free, because that only encourages the pirate culture.

In the macroeconomic world in which we all live, the solution to income inequality comes with the realization that wealth trickles up from the poorer and lower-paid, and that’s what makes the rich richer. Like Nathan at the end of Ex Machina, we are left to wonder if it is a trap from which there is no escape.

Top image: Nathan (Oscar Isaac) in front of a painting by Jackson Pollock in the film Ex Machina.

The Making of Donald Trump

Originally published in Cultural Weekly on June 29, 2016. 

David Cay Johnston is the best investigative reporter I know. I first became aware of his work at the LA Times when he did exposés on the LAPD’s covert operations, and I have followed his writing since, at the New York Times, Reuters, and, more recently, Politico. He’s won the Pulitzer Prize plus (disclosure that we’re friends) he’s a really great guy.

For the past 30 years, David has been covering Donald Trump. Now David is racing to complete The Making of Donald Trump, his newest book which will be on sale August 2. It’s sure to contain detailed reporting and a host of revelations.

I’m encouraging all Cultural Weekly readers to pre-order this book right now, so it has strong initial sales at Amazon, which will boost awareness of it even more. In fact, order two copies: one for yourself, and one to give to someone who is undecided about how to vote.

Pre-order here:

Top image from Donald Trump’s campaign website.

In Praise of the Non-Academic Sabbatical

As I frequently cross between business, art and academic worlds, I notice one major advantage for people in academia—the sabbatical. For professors seeking tenure, the promise of a period, from months to a year, of paid time away from routine work appeals to their inner visionary. If you wonder what more you could do beyond the boundaries of the everyday, you might consider creative ways of incorporating the non-academic sabbatical into your own career.

The concept is simple—just as the Sabbath is every seventh day, the scholarly sabbatical is anticipated every seven years. The idea is that one would take months to a year, depending upon the institution, away from teaching, either to travel or complete a major project. The gains brought by sabbatical leave cannot be ignored—the countless books penned, courses developed, service projects completed and research performed by professors who spend time away from their teaching responsibilities while involved in the serious pursuit to further their field of study.

A survey of sabbatical year projects reveals a system with applications and reporting. It’s a far cry from a practice encouraging mere idleness, though perhaps a few programs may offer no-strings sabbatical leave. Far from the boondoggle it appears to be, a sabbatical is an enriching, fruitful period to make achievements that would be difficult to manage otherwise.

So what are those of us outside the academy, green with envy for this career-development time, to do? For those of us who don’t have the benefit of a sanctioned workplace sabbatical leave program, I suggest the DIY sabbatical.

  • Consider the micro-sabbatical. If development is your focus, regularly schedule time to perform “research and development” activities that inform and improve your work, even if they do not contribute directly to a project. Ready for a big goal? Assemble a committee of peers and mentors to keep you on track for accomplishing it. Use small amounts of time to accelerate you toward your goals.
  • Have more latitude in your schedule? Consider developing or contributing to a program with a nonprofit organization that works in a field strategically aligned with your primary area of focus. For example, an artist might partner with a nonprofit to writing a grant for a special, time-bound project educating the nonprofit’s target audience. Much mutual benefit can come from such a curated partnership, and a long term relationship can lead to other opportunities.
  • Would your employer consider a special arrangement for sabbatical leave? Investigate options, appeal to management, and use your review as an opportunity to demonstrate how your targeted extra-vocational work will benefit the organization.
  • Can you delegate? If you’re an entrepreneur, consider committing a portion of your time to a particularly visionary project, while replacing some of your day-to-day efforts with a temporary replacement, such as an operations manager.


I hope these ideas spark an opportunity for your own DIY sabbatical!

The Power of the Personal Committee

Tips for Assembling and Using a Personal Committee to its Full Potential

As your work takes you to new places, there are more reasons than ever to gather early feedback. For this purpose, I propose what I call the personal committee. The committee has gotten a bad reputation recently, so let me explain how this is better than abhorred concepts such as “design by committee”. A personal committee is a group of people who, separately but simultaneously, act as a sounding board for a project. The project can be anything from a new business or new market to a career change.

The concept and its practice are very flexible. Personal committees can function by formal or informal arrangement; communication can be virtual or in person, and members can include mentors and peers. The committee is comprised of individuals you consult at the same time, but they need not know or interact with one another. The magic of the personal committee is twofold–it can serve to keep you on track and provide early and frequent feedback in an otherwise lonely endeavor.

Here are some tips for assembling and using a personal committee to its full potential.

Select. Choose candidates for your personal committee who have some knowledge, experience or connections relevant to your goal. Look for individuals with whom you are already acquainted, and to whom you do not report in your day job, if your endeavor is outside it.

Pitch. Thinking like a recruiter, craft an introduction that crows your past accomplishments, and gives a compelling case for the purpose and benefits of your next project. Think through the committee process, and provide a general scope (such as frequency of contact and the number of project milestones). Your recruit will be in a better position to consider the commitment with knowledge of the undertaking.

Engage. Begin with a live meeting, if possible. Discuss your goals, strengths and weaknesses, as well as what you are looking for from a personal committee. Based on the immediate feedback, move forward with a suggested touchpoint cadence.

Collect feedback. Find ways to report updates, provide project artifacts and collect feedback on a regular basis. Revealing your work will likely push you into uncomfortable territory, since your project is large and challenging. Be realistic about the volume you plan to complete for each milestone, and monitor your own B.S. meter if you find yourself delaying. Be aware of twin schedule tensions. Give yourself too much time, and you may be too paralyzed to complete anything. On the other hand, if you try to compress work that requires a great deal of consideration by promising it too early, you may cause yourself stress. As a rule, rather than trying to “perfect” your work and deliver it all at once, share well thought-out chunks frequently. That way, you’ll get the most benefit from feedback.

Appreciate. Find ways to thank your personal committee members. Write them recommendations, include them in your dedications, thank them in your speeches, and provide professional referrals in your day-to-day. These gestures will go a great distance to demonstrate the value peer committee members contribute to your work.

Ready to give it a try? I’d like to hear about your personal committee experiences!

4 Innovation Strategies Learned from Elon Musk

Few people have made the as much impact in such a short career as Elon Musk, arguably among the greatest business people and inventors of our time. What makes him so successful? Below I share thoughts on four observations of his career over time. Follow his lead, and you too could be innovating like Musk.

  1. Make cool stuff. Without a doubt, one of the most significant things about Musk—he ships. He envisions, executes and delivers one project after another, and often with some more in between. He has established a pattern of joining teams and seeing delivery through to the finish line. From his first product, a video game he coded and sold before entering high school called Blastar, to his most recent concept-driven organization, OpenAI, Musk has delivered product after product, some of which have sold for mind-boggling sums (examples include Zip2 and PayPal).
  2. Help the competition. While it goes against the grain, Musk has pioneered the idea of benefitting the competition in more ways than one. Perhaps most significantly, he has gained long term investment in his supply chain by selling into the other OEMs. Namely, he provides electric powertrain components to other automakers, a relationship that has helped him make Tesla more viable. As another example, he has adopted open source methods for product development, namely with the Hyperloop concept and Tesla patents. Rather than developing and hoarding knowledge, he has provided a framework to the development community so it can realize industry-wide innovation at a faster rate. Sharing hard-won knowledge is an excellent ways to gain support and buy in, and can be used by any innovator seeking to disrupt the status quo.
  3. Develop a vision and share it. Musk has an uncanny ability to forecast what will be important in the future. In 2004, he began working with Tesla, even as the idea of electric vehicles had been sidelined as a niche market by major auto manufacturers. His goals aim high, focusing on sustaining the environment for generations to come through innovations such as those tied to energy sustainability and interplanetary colonization. Another Musk trademark is efficient transportation, such as his Hyperloop and Musk electric jet projects. To innovate like Musk, curate a range of projects that contribute to your vision, and make others take notice.
  4. Find inspiration around you. Reportedly the inspiration for Musk’s SolarCity concept was at Burning Man, the desert arts festival. Musk takes in the environment, sees opportunity, and expresses concepts that fulfill wants and needs. His style is an excellent example of finding and making great use of the inspiration that’s all around.

Consider adapting some of Musk’s signature strategies into your toolkit for bringing dramatic change to your industry. If you can ship, pull in supporters from all corners, crystallize and share a vision, and draw on your environment to continue generating new ideas, you are well on your way to innovating like Elon Musk.