Ford created more consumers for cars by doubling wages

Joining the debate whether private equity capitalists should create jobs

By Robin Rowe

HOLLYWOOD, CA (Gosh!TV) 9/12/2011 – In an op-ed piece at PEHub, editor Jonathan Marino argues that, “Private equity has a primary commitment to limited partners to generate returns.” Marino is advising private equity investors to steer clear of jobs creation. In fact, he recommends that capitalists slash more jobs through mergers and acquisitions, that the survivors will be better for it. This at a time when President Obama is asking Warren Buffett and Ford CEO Alan Mulally for help creating jobs. Who’s right?

Henry Ford doubled wages in 1914. He called it “one of the finest cost-cutting moves we ever made.” Most of Ford’s workers couldn’t afford to buy cars before that. The increase in wages created more buyers of Ford automobiles. Ford increased profits by increasing mass production. In two years the company’s profits doubled. More consumers is more profits.

The capitalists chasing the short-term bottom line today by slashing jobs are impoverishing the American consumer, driving everyone but the rich to subsist on peasant wages. The result is less buyers who can afford products.

Marino states a hypothesis that 20% of the middle management and workers in a company deserve to lose their jobs.  He gives hypothetical examples of middle management incompetence squandering company resources. However, Marino’s theory of bad middle management seems to assume that the senior management of the company isn’t managing the company, that there’s no oversight of middle management. If that’s true, why keep the senior managers? And if management can be assumed to be incompetent, why entrust them to decide which employees are the right ones to fire?

Incompetent senior management won’t fire itself. Things have to get so bad that the board (capitalists) removes them. Until then, companies lay off good people from the middle and bottom rather than address the problem of incompetent management at the top. Is it any wonder that companies decline after removing competent employees and keeping bad management?

American companies have outsourced workers so much that they now need to outsource buyers too, must look for buyers in other markets like China. America needs more worker-consumers and it’s in the interests of capitalists to help.

HOLLYWOOD, CA (Gosh!TV) 10/6/2010 - DreamWorks president and COO Jeff Small joins a distinguished panel of finance and distribution studio executives speaking at the American Film Market on November 8th. The panel, which includes Fox SVP of domestic distribution  Chris Aronson, Summit Entertainment CFO Ron Hohauser and others yet to be announced, is chaired by ScreenPlayLab co-president Robin Rowe.  The purpose of the panel is to discuss what’s working in film finance and distribution and emerging industry trends.

For more details see:

http://www.screenplaylab.com/afm-studio-finance-and-distribution-2010-panel/

By Robin Rowe [Note: Robin Rowe is the organizer of the panel]

Hulu offers last 5 episodes of Glee free, more for paid subscription

HOLLYWOOD, CA (Gosh!TV) 5/5/2010 – The business of television content on the Internet. “Build it and they will come” is the new digital age web business model. The question is, is there any money in it?

“It’s interesting to see how many people will actually tune in more with video ads on content they want to see,” says Mingle Media TV executive producer Stephanie Piche. “In our case it’s live web TV broadcasts so the complaints we do hear are due to missing part of the show waiting for the ad to finish. We produce live video broadcasts with either a 15 or 30 second pre-roll before the live airing.”

“Finding that tipping point of retention is key,” says Slebisodes president Patrick Bardwell. “The pre-roll must retain its brevity or the viewer will click away. The lower thirds ads [that YouTube runs at the bottom of some popular videos] are annoying and take away from the video experience.”

“Advertising is going to have to become more like content,” says Comedy.com SVP of Content and Marketing Josh Spector. “It’s going to have to be more targeted, and actually needs to be re-created from the ground up in many ways. Increasingly viewers want to watch stuff that’s real as opposed to dramatic. I think editorials and interviews have a much easier chance of success than many narrative video series.”

“Traditional video advertising is not working as well as it should,” says digital media guru Todd Greene. “Pre-roll is flawed in that the consumer clicked to do something specific…watch a video, play a game.” Video advertising techniques can take the form of pre-roll, lower third, post-roll, or a video banner outside the video playback window.

Sometimes the video promotional message is the message, blurring the line of what’s advertising. “A client had edited a collection of consumer experience videos they were going to use on their site,” says Greene. “Their corporate partner, a major media company, said heck no! They wanted that for our sites…and paid them a handsome sum for exclusive rights.”

Where advertisers are not paying handsomely for web content, which is mostly everywhere, one solution is to produce the content cheaper. Video blogs are editorials and interviews typically captured on a digital flipcam set up by the interviewer on a little tripod. There’s no cameraman.

“Vlogs are a game changer,” says Piche. “User-generated content is accepted with the bloopers and no one is complaining about it. If it’s content you want to see, hear about, it doesn’t matter if the lighting is the best or the video isn’t framed perfectly.”

Besides commercials, potential revenue sources include subscriptions, and sponsorships that often include product integration.

“Product placement is the best bang for the buck,” says Piche. “When brands figure out they can get more mileage with content that is indexed and searchable…brought to you by BRAND X…they will start pouring more money in.”

“Micro-transactions like iTunes or YouTube rentals make perfect sense for episodic web programming,” says Greene. “Combine that with advertising and sponsorship and you have a winning model. Content has to be extraordinarily compelling. Look at Ok Go videos. Because their videos are so go, their videos sell music. While you can’t make a viral video, you can help a video go viral by making sure the right people see it and share it with their sphere of influence. Digital PR is the key.”

“In order for a video to go viral, it must have a launch pad,” says Spector. “It must initially be exposed to enough people that it gets the opportunity to go viral. You can’t just upload it to YouTube and pray it gets found. It never will, without some platform to launch it from.” That platform could be an email list, a popular Facebook page, or shout outs from bloggers.

“The key to making money on the web is attracting a loyal audience that others will pay to reach,” says Spector. “The more creative and integrated the ad campaign, the better. We’ve come to believe that the money is actually in marketing and distribution. We get paid to drive clicks and views as opposed to serving up generic ad impressions.”

“You need to have a tribe,” says Piche. “Know who your fans are. And if you don’t have any, create your online social networking persona and start connecting.”

Monetizing Original Content is part of the Digital Hollywood conference at the Loews Santa Monica Beach Hotel. Slebisodes president Patrick Bardwell, digital media guru Todd Greene, GoDigital Media Group president Jason Peterson, Mingle Media TV executive producer Stephanie Piche, and Comedy.com Content and Marketing SVP Josh Spector will answer questions during their session on May 6th at 2:15pm. The session is chaired by Gosh!TV managing editor Robin Rowe.

• http://www.screenplaylab.com/2010/digitalhollywood.html
• http://slebisodes.com/
• http://www.godigitalmg.com/
• http://www.minglemediatv.com/
• http://comedy.com/

Producers, social media experts and a distributor reveal secrets of using Facebook, Twitter and email for TV and film projects during session at Showbiz Expo on Sunday, April 25th

By Robin Rowe - Note: Rowe is one of the panel organizers

Heroes, Facebook and Twitter engage audience

HOLLYWOOD, CA (Gosh!TV) 4/24/2010 – “At Heroes we use social media sites to engage our audience,” says NBC-TV Heroes executive producer Adam Armus. “We give them details about characters and plots that they can only get if they log on.  It makes for a more interactive experience. Television plots and television characters are getting richer and deeper thanks to social media. We created a Twitter account for The Sullivan Brothers Carnival this past season on Heroes. It was great to see the audiences’ immediate feedback to a new element to our show. “

MTV-TV The Buried Life is being written into a textbook as a textbook example of how a show that starts as social media can become series television. Funny or Die is now a series on HBO. William Shatner will be starring as the dad in SH*T My Dad Says, a new series based on a hilarious Twitter feed.

“These young men took a two-week trip around British Columbia and came back to their email boxes filled with mail from fans,” says MTV-TV The Buried Life executive producer Jan Coleman. “We went into Hollywood and did the usual soliciting of production companies. That The Buried Life was already in 140 countries with Facebook validated the show. We have 360,000 fans on Facebook.” Where there are already fans, such as from a best-selling book, the Facebook numbers can reach even higher.

“The Twilight fan page from Summit was up over 5 1/2 million fans in just a few months,” says Buddy Media CRO Jeff Ragovin. “Twilight growth has been so impressive. It’s one of the largest Facebook pages of all time.” Buddy Media has helped Summit Entertainment use Facebook to promote many of their film releases including Twilight New Moon, Remember Me and Letters to Juliet. Buddy Media also works with ABC-TV shows Days of Our Lives, The View and General Hospital.

“Producers are turning to social media networks, both open like Facebook and MySpace, and closed self-developed networks the studios create, to shape and define their product,” says social media consultant Todd Greene. “For the first time in the history of development, producers and studios can get real-time, authentic feedback. It increases loyalty exponentially when fans see their opinions in action.” Greene has created and executed digital programs for Coca-Cola, Philips, Nestle, Universal, Paramount, Gillette, Disney, Apple and Mattel.

“Because social media platforms like Facebook actually engage fans and are a two-way conversation, film and TV content creators are able to truly understand their fans motivation for watching,” says producer-distributor Linda Nelson. ”Huge communities are being built around content.  The earlier that content creators tap into this concept and start building their communities, the better.” Nelson is a producer at Nelson Madison Films and a founder of the distribution company Indie Rights that distributes films digitally through iTunes, Hulu, Snag, and Amazon VOD.

Social media is making a difference in how films get made and distributed. “We were the first company to successfully cast part of our film using Facebook,” says Nelson. “We were able to save a huge amount of money producing our film by making use of social media to develop and produce our film. Since we have built a community of fans with social media, we’re being sought out by festivals and corporate sponsors.”

“I was working with a client on a branded entertainment project and we needed Gene Simmons,” says Greene. “Trouble was, I didn’t know him. But using LinkedIn and Facebook, my phone rang two days later. The caller was the master of disaster himself.”

“I like the concept that people can connect,” says Gosh!TV producer Gabrielle Pantera. “Im one of the few people who removed herself from Facebook. With Facebook you get emails. I still get emails that say Facebook, but I know it’s spam. I Twitter. I like communities to be self-contained.” Pantera produces entertainment and fashion news stories distributed on YouTube.

A typical social media plan includes Facebook, YouTube, Twitter and email. “The Buried Life is getting 800 to 1,000 emails a day,” says Coleman. “People are telling us deeply personal stories that we feel obligated to respond. It’s disturbing and shocking that young people are writing to say that the inspiration of our show gave them a reason to live.” It takes about three hours a day for the stars of the show and staff of four to handle all the email. Coleman uses a system of separate mailboxes for each star, press and speaking inquiries along with a set of mail templates to automate as much as possible the task of personally responding to that much email.

“Online networking sites amp up the gossip factor that’s always been important in our business,” says writer-producer Bonnie MacBird who teaches at UCLA Extension.

How is social media used to launch or build community for TV series and feature films? How do agents, networks and studios discover new TV shows or films using this medium? To find out more, come to the session tomorrow.

The Showbiz Expo panel “Social Media for Film and TV” is Sunday, April 25, from 3:30 to 4:30pm at the L.A. Convention Center. The panel includes Adam Armus, Jan Coleman, Todd Greene, Linda Nelson, Gabrielle Pantera, Jeff Ragovin, and Robin Rowe. Rowe and Pantera are co-presidents of the 4,000-member TV and film industry association ScreenPlayLab.

http://www.screenplaylab.com/2010/showbizexpo.html

]]> http://www.goshtv.com/2010/04/24/social-media-rocks-film-and-tv/feed/ 2 http://www.goshtv.com/2010/02/14/money-dove-chocolate-parties/ http://www.goshtv.com/2010/02/14/money-dove-chocolate-parties/#comments Sun, 14 Feb 2010 23:39:21 +0000 rower http://www.goshtv.net/?p=990 Looking for an unconventional work-from-home business? How about Dove chocolate?

By Gabrielle Pantera

Dove chocolate candy, a delicious home business

HOLLYWOOD, CA (Gosh!TV) 2/14/2010 – Mars, one of the largest candy companies in the world, has a secret. They can put you in the chocolate business with Dove Chocolate Discoveries, a venture that intends to make direct-selling a sweet experience. Hosts of the chocolate parties are “chocolatiers” who serve Dove chocolate or make it into special treats.

“The biggest financial advantage of becoming a chocolatier has been being able to pay a few of our monthly bills myself and having the ability to travel and see my friends and fellow chocolatiers,” says Dove chocolatier Ruth Miller. “Whether it’s a girls’ night out, a couples’ wine and chocolate evening, a moms’ play group breakfast or a child’s birthday, we have the entertaining idea to fit. No cooking experience necessary. But if you are able, you can experiment with new recipes until your heart is content.”

“With minimal startup costs, it’s the only direct-selling chocolate company and is perfect for stay-at-home moms or dads looking to make some extra money,” says Overcoming Underearning author Barbara Stanny. “In a time of such financial uncertainty for so many, I am truly blessed to be able to have a means to an end, for my family,” says chocolatier Sally Valenti.

Dove chocolate brownies

“I’ve been a chocolatier just over one year,” says Valenti. “I enjoy sharing my passion and love for chocolate and food with new people. A friend of mine attending a business conference and happened to sit next to a chocolatier. When my girlfriend found out that Shelly did chocolate parties, my friend called me immediately, because she knew how much I loved chocolate.”

“I’ve always been adventuresome,” says chocolatier Lisa Pagano. “I traveled around the world for a mail order catalog, was a retail buyer for a major department store and now I’m a chocolatier with Dove Chocolate Discoveries. “When I exceeded my sales goals in the first month, I thought, ‘This is my best job yet. If I make a mistake I just eat the evidence!’”

“My best party yet has to be my Le Cirque tasting party,” says Pagano. “I dipped inflated balloons into tempered chocolate to create delicate individual bowls, then filled each one with mousse and topped it off with raspberries. My neighbors are still talking about it.”

Not every party is perfect. “I remember one party where I popped out a tray of chocolate candies and none of them had the transfer designs,” says Pagano. She’d put the transfer sheet on backwards. “I showed the guests what the chocolate should have looked like and told them to eat the mistakes quickly since we needed to hide the evidence. My experience goes to show that anyone can be a chocolatier.”

Chocolatier Kim Sprague tries to have at least four chocolate parties each month and is building a team of chocolatiers. “I’ve recruited 21 chocolatiers since I got started,” says Sprague. When not hosting chocolate parties of her own, Sprague is busy leading training parties for new team members. “I really didn’t think it would be possible to find a job that was enjoyable and would bring in extra money while still allowing me to be a great mom.” Sprague says the business has had a significant impact on my family. The money has helped pay the medical bills for her son who has recovered from an aggressive form of cancer.

Chocolatiers make a base commission of 25% of sales, with additional commissions up to 40% based on monthly sales. They also get bonuses and commissions on the sales of the chocolatiers they recruit to their team. Holding two tasting parties every week with average guest sales of $375 earns about $1,000 in a month.

There are some start-up costs. The basic Dove starter kit contains Dove’s signature heart fondue set for delectable dipping and the most popular quick desserts that are easy and impressive to demonstrate. It has what’s needed to hold four to six tasting parties including chocolate covered almonds, the popular Truffle Fudge Brownies, and chocolate martinis at a cost of $149.

The deluxe master chocolatier kit includes the basics and everything necessary to demonstrate candy making. Participants create homemade chocolate gifts. The kit includes twice as much chocolate and mousse, and crowd pleasing easy-to-make desserts and drink mixes and ready-to-eat items. Cost $449.

Perhaps the most important detail of all, how does the chocolate taste? We sampled the chocolate gingerbread cake, dark chocolate-covered almonds, cinnamon chocolate-covered almonds, chocolate martini chocolatini mix mudslide, and the merlot fudge sauce.

The chocolate is phenomenal. The chocolate gingerbread cake is moist and chocolaty with hints of ginger, so it’s not overpowering. Cinnamon, chocolate and almonds are a great combination. The chocolate merlot sauce is great melted over vanilla ice cream, offering just a hint of merlot flavor. It would also be great over peaches. For the mudslide I would suggest using less vodka than recommended. However, the mudslide mix is so sweet it must be cut with alcohol. It’s not for chocolate milk.

The chocolate is so good that chocolatiers must be careful not to eat all the inventory.

New chocolatiers are connected with a local chocolatier to act as a mentor. Mentors hold regular team meetings, and the company hosts monthly training conference calls that last about an hour. There’s an annual national sales meeting in the summer and a leadership meeting at the beginning of the year. The online portal Chocolatier Connection provides ongoing support, the latest sales tips and party recipe ideas.

by Robin Rowe

Greycroft Partners VC Dana Settle, anticipating more IPOs in 2010

HOLLYWOOD, CA (Gosh!TV) 1/11/2010 – “With a large number of companies in the IPO pipeline, if the market remains somewhat stable or improves there will probably be more IPOs than we’ve seen in quite a while,” says Dana Settle, the partner who oversees West Coast investments at early stage venture capital firm Greycroft Partners with its $75 million fund. Settle, along with Redpoint Ventures general partner Greg Martin, are moderating a breakfast panel of start-up CEOs at an event hosted by LAVA, the Los Angeles Venture Association.

“Capital will continue to be scarce in 2010 with a large number of venture funds raising their own funds,” says Settle. “But as always, there will be capital available to great new companies. Keeping focused with an eye toward profitability gives a CEO the greatest number of options.” For their investments, Greycroft looks toward ad technologies, online marketing, next generation e-commerce infrastructure and to a lesser extent cloud computing and wireless applications. One of Settle’s profitable start-ups with Greycroft investment is United Sample based in Encino.

“2009 was a strong year of growth for us,” says United Sample CEO Matthew Dusig, who’ll be speaking at LAVA.  Dusig says his company has experienced strong growth, despite the economy, with triple digit growth year after year. United Sample provides relevant panelists to research firms like J.D. Powers that conduct consumer marketing surveys.“I no longer have the worries of meeting payroll, or sales, or getting traffic to the website.” However, success doesn’t mean Dusig can relax. His next target: “How do you take a business and double the revenue while keeping the quality?”

“In the tech sector where we focus, we’re seeing a ramp up of spending in the online advertising space in the last quarter or two and for the types of companies that we invest in,” says Redpoint Ventures partner Greg Martin. Redpoint invests in information technology, digital media, next generation advertising and clean tech investments. “We have a government and social will pushing us to greener alternatives. Where green lowers costs you’ll see it do quite well, such as in lower cost building materials.” Red Point invests in companies expected to have hundreds of millions of dollars in market capitalization in a five to seven year period.

In addition to Dusig, the other LAVA panelists are: Go BIG Network CEO Wil Schroter, LeadPoint CEO Marc Diana, and Break.com CEO Keith Richman.

Go BIG Network (goBIGnetwork.com), an on-line portal connecting tens of thousands of startup companies to investors, job seekers, advisors and service providers. In addition to founding Go BIG Network, Schroter is the CEO of GotCast.com, a Web-based television casting service. He’s the author of the book Go BIG or Go HOME! and a nationally syndicated columnist.

LeadPoint trades hundreds of thousands of voice and data leads monthly to over 2,000 customers across North America and Europe in the first online lead marketplace. Before launching LeadPoint, Marc Diana worked in business development at LowerMyBills.com was a vice president of the early stage investment company Innovent Group.

Break.com, based in Beverly Hills and funded by Lionsgate Entertainment, is an online entertainment destination with more than 13 million unique visitors and 600 million page impressions per month. Prior to co-founding Break.com, Keith was the Director of Business Development for Billpoint Inc. He was director of corporate planning at the Walt Disney Company.

“For 25 years, LAVA’s monthly breakfast meetings, annual conferences, and co-produced events have created an unprecedented platform for innovation and financing in Southern California,” says Los Angeles Venture Association executive director Leonard Lanzi. He says the hot L.A. start-ups today are in clean technology and energy, digital media, software, and online.

The Internet, software as a service, online advertising and next gen advertising are investment areas where Red Point partner Greg Martin sees opportunities. “That’s extending to mobile that ‘s becoming everyone’s personal computer, driven initially by the iPhone and now Android and others.” Martin serves on the board of LAVA and is an advisory board member of the Tech Coast Angels and the San Diego Venture Group.

Martin says the LAVA panel of start-up CEOs will share what it’s like to navigate in an environment of massive changes and uncertainty. “We have a great panel of four experienced entrepreneurs who are doing great things with their companies,” says Martin. “It’s rare that you can get such high quality together in the room given their schedules.”

• LAVA Breakfast Meeting
• CEOs Talk Start-ups
• Tue Jan 12, 2010
• 7:00am – 9:00am
• Skirball Cultural Center
• 2701 N Sepulveda Blvd
• Los Angeles
• $85

On Thursday, January 21, 2010, LAVA holds its 7th Annual Venture Awards Dinner at the Skirball Cultural Center.

www.lava.org

By Dennis Toth R&R Consulting

HOLLYWOOD, CA (Gosh!TV) 12/22/2009 – The year 2009 is nearly over, and not a moment too soon. After exhaustive studies, scientists have firmly concluded that 2009 is the crappiest year in living memory. Undoubtedly it is the lousiest year of the 21st Century. It is barely equaled by 1914, 1918 and 1929 in the 20th Century. Heck, it’s almost tempting to say that 2009 is the worse year since 476 (that’s the rough date for the fall of the Western Roman Empire).

With a few highs, and a lot of lows, the year mostly had the bad feel of a roller coaster ride to hell. Even for a decade that may yet be dubbed The Age of Gilded Nitwits, ‘09 was extremely worrisome, sometimes heartbreaking, and mostly full of no fun. Within the film industry (which is suppose to be the source of some fun), there was little mirth to be found. The independent film business was even worse, and a lot of filmmakers found themselves in the awkward position of forgetting to even bring a knife to a gun fight.

The year began with virtually every major studio in town telling small budget productions to go take a hike. 2009 was officially the year of tent pole movies and 3D madness. The theaters would go digital and nobody would mind paying an extra $4 to $5 dollars for a cheap pair of glasses that they don’t even get to keep. The economic recession was going to be good for business because people were too broke to do anything else, which was a reminder of how the movie industry has a strange habit of advertising itself as a bad date (“Hey, honey, let’s stay, in if you know what I mean”). 2009 was going to be a golden year for a screw job.

Instead, most of the budget-busting productions largely succeeded in busting their budgets. The digital conversion process is moving at a very slow pace. Meanwhile, most of the successful movies of the year were small to modestly-priced items. Recession has not been good for business, and 3D is still widely viewed as a dumb gimmick that causes headaches. Pressed to the wall, Hollywood began to reinvent math. Accounting figures have always been a tad magical in the film business. Now, they became mythic. For example, take Avatar. It has a production budget somewhere between $200 million and $5 trillion dollars (depending upon the mood of the publicist). Most likely, its real cost is somewhere around $350-$400 million, based on some educated guess work. But it’s a hit. It made $73 million – oops, now it’s $77 million – on its opening weekend. Too bad the original hopeful estimate for its opening was actually higher. Much higher. While bad weather is partly to blame, the movie will undoubtedly follow what has become the standard model (the high side of the standard model) that has come to dominate this type of film. It will be that and nothing else.

While independent American filmmakers are practically being forced to sell their movies from the trunks of their cars, this has also been the year that the international marketplace has become powerful. Inglourious Basterds proved that bad spelling is no detriment to overseas success as it earned the majority of its box office in the foreign market. The same is already true of Avatar (which earned twice internationally what it made in the States). The noticeable imbalance is getting very wide, and eventually you have to wonder why anyone would bother releasing a film in the States.

But this hasn’t stopped foreign filmmakers from seeking connections to Hollywood. In the wake of Slumdog Millionaire, Bollywood has sought various partnerships with American companies. The first real test of this bi-cultural approach will be Disney’s impending US release of the 2007 Hindi film Like Stars on Earth.  I personally suspect that more success will be had with the curious YouTube popularity of Jingle Bell – Punjabi Tadka.

The other major invasion starts in January when Korean independent movies storm New York, courtesy of the Korean Cultural Service and Tribeca Cinemas. Since tickets are free, they should find an audience in Manhattan. Otherwise, I doubt the invasion will make it very far inland. But I sort of like the attitude in their publicity, especially the part about their plans to “liberate Americans from their current system of entertainment.” We need this type of thinking out there.

This was also the year that the real digital revolution appeared like the Ghost of Christmas Future. For better or for worse, movies are in the process of moving beyond the studios, the distributors and the theaters in a downloadable direction that is already rewriting the rules. Well, actually, it’s throwing the rule book out the window and steering everyone into uncharted waters from which there is no return. Perhaps a promised land awaits us all. A new future, both bright and clean. But this direction is inevitable, and while Hollywood stumbles about in confusion, the ship sails on.

At least 2009 is nearly over, and few, if any, will feel the slightest hint of nostalgic yearnings as the year slips away. Whatever 2010 shall bring, it will have to do, for there is no desire to return to this past. May the future be ours.

By Dennis Toth R&R Consulting

HOLLYWOOD, CA (Gosh!TV) 12/15/2009 - As far as Hollywood is concerned, the red menace is back. Last week, the Los Angeles County Economic Development Corporation released its report on the impact of low-rent DVDs through the Redbox system, and guess what – Redbox will result in the complete end of civilization. Like a biblical plague, the pesky little vending machines are in the process of unleashing death, chaos and total economic collapse across the land.

Yes, it’s the worse red menace since Stalin. Odd, those little kiosk machines look so, well, benign (I often confuse them for Coke machines). Never mind that the basic issue involving low-cost movie rental applies to Netflix, Blockbuster and every other DVDsystem, and that the actual business model used by Redbox is nothing new (much the same was tried years back with videotapes – these rental systems come and go like the ever-changing seasons). The core economic argument against Redbox applies to every emerging system out there. But Redbox has gotten under the skin of many of the major companies for reasons that actually defy rational explanation. And I suspect that the irrational issue is what it’s really all about.

Let’s just look at the big picture for a moment. The economic system is already in a state of near collapse. Unemployment is officially over 10 per cent (unofficially, it is closer to 20 per cent). Hunger and homelessness are now so widespread that even in Los Angeles every campground for 100 miles is packed with people who have nowhere else to go. We’re living through the single worse economic crisis since the Great Depression. Virtually every business in the country is being gutted and changed. Fear has become the common currency.

Except in Hollywood, where senior executives manage to walk around with their heads up their derrières and insist that everything is fine. The entire world is changing and they think they have it all in hand, despite all evidence to the contrary. They may even think that the tent cities surrounding Los Angeles are just people waiting to see Avatar.

At least that seems to be the gist at the Variety Future of Film Summit held last week in Santa Monica. The keynote speaker was Paula Wagner, who half gets it and half doesn’t. She emphasized the need to rein in development and production costs, then argued that more money needs to be spent on marketing for mid-size productions. OK, to be honest, every marketing rule known is currently being thrown out the window (along with most distribution models), and it’s highly unlikely that throwing more grease onto a broken wheel is going to do any good. But that’s the direction Wagner is talking about. Obviously, Paranormal Activity took off with a marketing strategy that still defies description, while The Blind Side fell back on the lost art of word-of-mouth publicity. In neither case was increased spending an issue. Most likely, increased spending on a more traditional marketing campaign would have failed in each case.

Wagner noted that the film industry was in the midst of a “revolution, not evolution.” Again, she’s half right. It’s actually both. As the technology evolves, there is a complete revolutionary change within the business that is moving everything toward a digital domain of non-centralized production and distribution, which increasingly operates in total indifference to the traditional top-down management structure of the business (Rupert Murdoch: Please take note). That is why the studios are losing control and they don’t know what to do about it. Which is also why — I suspect — they’re in attack mode against Redbox. They can’t even slip out of their supermarkets without that evil machine thumbing its nose at them.

Which is also why the hype surrounding the release of Avatar has become such a surrealistic dance of the dead. It’s big, it’s expensive, it’s loaded with more technology than it took to get man to the moon. It is the movie that many people in Hollywood hope will be the game changer. Not everyone shares that view. Amy Miles, CEO of the Regal Entertainment Group, took a more rational wait-and-see attitude when interviewed by New York Magazine. Her rough estimate of what the movie will make ($250 million) should prove to be pretty accurate.

Since Avatar has a production cost greater than the GDPs of most Third-World countries combined, the only thing that might bring in a profit is the video game version, and that is already getting negative reviews from the gamers.  It’s possible that the only game change will be folks switching back to another round of Halo. The rest of this debate is simply gibberish.

And once again we are reminded of how Redbox is threatening to destroy the American way of life. After all, a movie like Avatar can only begin to recoup its bloated costs through massive DVD sales (first the theatrical, then the extended play, and finally the director’s cut). Since DVD sales are down (like everything else), it will still be a pitched battle for this movie to hit the profit mark. An extremely bloated budget requires a ludicrous, and near impossible, amount of profit. So anything, no matter how small, that threatens this beast must be crushed.

To be honest, I suspect that if the Redbox business model were simply left to its own progression, it wouldn’t last too long. None of the previous attempts at this form of rental system has ever lasted long. Besides, even Redbox is being rolled over by the continuous state of change within the industry. These operations tend to be effected by many of the same forces that are driving Blockbuster into the ground. But Hollywood has to have something to blame, even though the only red they truly need to fear is the color of the ink in the ledger book.

By Dennis Toth R&R Consulting

HOLLYWOOD, CA (Gosh!TV) 12/8/2009 - Like any sane person, I hate to keep beating a dead horse. So why does Pamela McClintock at Variety keep propping up the same smoldering corpse. OK, it seems to be her job to keep insisting that Hollywood is having a swell year despite all obvious signs to the contrary. But you would think the swarm of flies covering this beast would at least dampen her enthusiasm.

As you may remember, this past August McClintock did an article explaining how the domestic box office for 2009 was up by just over 5 per cent. Since the report didn’t seem to fit the observable data, I did a quick check of her own figures. It turned out that she had some problems making needed adjustments to these figures, and once the adjustments were made, the actual box office for 2009 was running behind 2008.

Now she is back with a new report, and guess what – the figures for 2009 are fantastic. Through the roof! Hollywood is breaking its own record! Ticket sales have shot to the moon! The money is rolling in and everything is beautiful. I don’t know why so many people are getting laid off and fired at the moment. This year has been great.

OK, let’s put aside for the moment any questions about what they’re smoking at Variety(but it has to be some really serious, heavy shit). As you can see from my previous blog piece on this issue, there are a couple of key figures completely omitted in her analysis. First and foremost, the actual cost of tickets has risen this year by an average of 28.2 per cent. So the current claim of an 8 per cent increase in box office is pretty meaningless once you adjust it for this increase in admission. Due to this sharp increase in the ticket price, the income level should have spiked in a similar manner. There is only one reason why it didn’t. Because the increase doesn’t really exist. The exact opposite is actually the case.

Neither Hollywood nor Variety likes to make adjustments to these figures. I fully understand how they feel. I don’t like to make them either. The work is no fun and the results are often pretty grim. Every time I deal with this issue, I can only think of that line at the end of Planet of the Apes (the original one with Chuckie Heston), when the head honcho orangutan warns Heston about the Wasteland: “You won’t like what you find.” I don’t think the hairy son-of-a-gun was talking about the Statue of Liberty. He was really referring to Hollywood budget figures.

Which is the other problem that nobody is talking about in these reports. The evidence does not support the claim that the box office has actually gone up, but production costs have skyrocketed. The average major movie now costs anywhere from $200 to $300 million. Basically, they’re averaging about $150 to $200 million at the box office (domestic). I’m not really a math whiz, but there’s something here that’s not adding up. Granted, a lot of extra profit is garnered through DVDs (though the sales and rentals are currently in steep decline) and foreign release (which in some cases is actually producing better results than the current US market). But the math still doesn’t really work in any rational, sane manner.

The current situation is pretty straightforward. The box office is basically hovering around a flat line position (at best) and has not received the intended boost from the increase in admission price. In turn, the soaring cost of major productions is not really returning the overall revenue that the studios expected. Oh sure, not every tent pole movie was going to make the kind of high returns they wanted. But the majors thought that the overall average would balance out. The current data simply does not support this idea. Granted, the tent pole movies have fiscal figures with so many zeros attached to them that most calculators blow up trying to do the math. But it’s a safe bet that once these figures are calculated (which we will do at the end of the year), the loss column will be long.

Meanwhile, the majors are slipping, and they seem genuinely mystified by the process. Universal has a long slate of future titles (gee, right through 2012), but they’re also undergoing a form of corporate restructuring that could easily turn the company on its head. Fox is tied to the increasingly strange ways of Rupert Murdoch and what is starting to appear as his gradual unraveling of various key parts of his global empire. Only Warner and Disney appear to be basically sound. So why are there so many rumors circulating at Disney about more impending layoffs and a season of bad tidings? Much the same is true at Warner. My basic hunch suggests that only Paramount and Sony may actually be positioning themselves for survival (by accident if not by strategy). My innate cynicism suggests that they still have a chance to blow it as long as they follow the Hollywood model.

There’s that old Chinese proverb about living in interesting times. It’s more of a curse than a blessing, since the interesting times tend to be filled with chaos and turmoil. Where Hollywood is concerned, 2010 is promising to be an extremely interesting time.

Bankroll by Tom Malloy, raised money to star in a film with Amy Smart

HOLLYWOOD, CA (Gosh!TV) 10/26/2009 – Bankroll book author Tom Malloy presented a seminar on how to bankroll your own film to a packed house at the 99-seat Lost Studio in Hollywood on October 24th.
Malloy described his experiences as an actor-producer financing his own films. Rather than wait for a casting director to cast him and the studio to greenlight the picture, he’s reached out to high net worth investors to back his films. His latest film, Love and Dancing, stars himself and Amy Smart.

Malloy says he likes to have film projects in the $250k to $6M range, that less than $250k would mean he’s working for free and that over $6M is unlikely to be profitable without studio backing. In pitching individual investors, Malloy says a key technique is to pitch to the vested interest. For example, a major investor in Love & Dancing is the owner of a chain of dance studios. And, Amy Smart loves to dance. Accepting the role meant she’d receive weeks of training from a top ballroom dancer.

http://bankrollthebook.com/