A Response To Felicia Day On How Video Gets Funded In A Fragmented, Digital World

from the all-sorts-of-ways dept

Thu, Aug 18th 2011 2:23pm — Mike Masnick

Mark asked us to weigh in on an interesting post on Google+ by Felicia Day, wondering about the future of video content. Day, of course, has been quite successful in embracing the online community as well as new and different business models. She lays out the question in response to the news of Fox and others deciding to delay legal options and how that's likely to drive more people to unauthorized file sharing. She notes that, from a business perspective, this seems scary, but she also seems to recognize that it's reality (rather than denying it, as some people do):

There is a basic principle working here (scary, if you're in the TV business) that I've personally been dealing with on The Guild with a mere 2 DAYS! delay of releasing content: People want content immediately, wherever they like to view things. They don't care if you're trying to pay production bills, they don't care if it's the only way to fund things, they want it NOW, they want it CONVENIENT to them personally. Whether this is a reasonable attitude or not, it's what people are used to in this day of streaming on demand, and it's only going to get worse, because cord-cutters are getting more and more common. Long view=not good.

From there, she picks up on the trend of cord cutting we've been discussing, echoing to some extent Wil Wheaton's recent comments about the backwardness of many in the TV business today:

To me, the cable box seems like Tower Records 10 years ago, or Borders just 2 years ago. Look at how music and books have shifted to digital, on-demand purchasing. Cable companies are the "brick and mortar" place for video, and that business is dying. People don't have enough time for 140 channels, they have enough time for maybe 10 shows, that's it. Why pay 140 bux a month to watch that many shows when you can buy them individually? Or stream The Wire on Netflix for 8 bux a month, because you missed it the first time? Or play a video game? Or just surf the net?

But then she asks a final question, which is basically, "but how will we continue to produce videos" in this world? I should be clear: she doesn't seem to be doing this in the same "but you must save us" way some in the industry have done. She's just asking an honest question she has about where the world is going, because she's unsure:

So my question is: What happens to all those shows when they fragment like that? Who is gonna pay to produce them? What is the future? (And "funded by viewers" model is not the answer, only 1% of people ever really contribute, and the up-front costs of producing video are WAY higher than making a record or a book, etc. Believe me, I understand this personally.)

First off, one quick point before delving into the larger question: the whole "only 1% of people ever really contribute" claim is a common one, but I think it's a misleading one. While it lets some people write entire books on evil free riders, it's really meaningless. If you can get more than production costs out of that 1%, the fact that it's just 1% really doesn't matter, right? And, no, I'm not saying it's easy to cover production costs from 1% -- it's not for most productions. But I'm just showing that 1% by itself, without context, is meaningless. What if, for example, that 1% is made up of super wealthy patrons who are happy to fund the full production? Or, more realistically, what if those 1% are people who represent companies willing to buy advertising? Just because it's 1% doesn't mean you can't have a viable business model. The % is meaningless. All that matters is the absolute dollars.

But on to the larger point of what happens to video in a fragmented world? Well, I sense that it's going to be awesome. As with music and books, it will allow all kinds of niche productions to show up, which would simply never make it at all in a "network" world. In fact, this is already happening -- and Day's been a part of some of that with things like The Guild and Dr. Horrible. As for how to fund it, well, again there are a variety of options. One of the things that changes is that there's no longer "one clear path," but that hardly means there's no way to make money. It may take more experimentation, but there are all sorts of options, mostly involving a hybrid of models.

For years, of course, we've talked about how the new business models are built off of the formula of connect with fans, while giving them a valuable scarce reason to buy, and that certainly applies to video as well. In the past, for example, we've listed out 10 forms of scarcities that can help you figure out good "reasons to buy," and most of them apply to video as well. Let's take a look:

Access: This remains a huge one, of course. We mentioned a study in the past where 19% of music fans said they would pay anything to meet their favorite star. That's hyperbole, of course, but people are willing to do crazy things to meet their favorite stars. With a video, you could make it even more interesting by doing things like offering up the opportunity to be "an extra" on a shoot or something. How much would fans of The Guild pay to show up in an episode, even if briefly?
Attention: Here's an obvious one. When you have an audience, their attention is a scarcity that can be sold. Day, for example, has had success selling sponsorship deals for The Guild. That's an example of selling attention, and is basically the way lots of video (hello, network TV) has been funded for ages. Just because that attention is now online, it doesn't mean that the value of that attention goes away. Yes, it's absolutely true that online video attention isn't valued nearly as high as attention on TV, but it doesn't always have to be that way. And, there are even a few examples of shows online being able to command higher rates than shows on TV.
Authenticity: This isn't necessarily something you sell directly, but the more authentic you are, the more people will respond to that. Again, it's something that Day has mastered as well (as you can even see in the post that she wrote and her discussions on the matter both on Google+ and Twitter). Follow Day on either platform and it's just oozing with authenticity, and what that does is really build up her core and loyal audience. While she may say that only a small percentage will actually pay, never underestimate the ability of truly loyal "true fans" to help you figure out how to make money. Authenticity has a way of increasing such fans.
Exclusivity: This can be a tricky one, because some people think it means "locking stuff up" to make it exclusive. But we're talking about other forms of exclusivity, which don't involve pissing off other people. How about the ability to buy an old prop from a show? Or a chance to play WoW with the cast of The Guild. These are things that can very reasonably be exclusive. Day has done some stuff with offering The Guild slightly earlier, and as she notes in her post, that just seems to upset people. Doing anything that involves this kind of artificial exclusivity can be tricky -- especially when it's something that has a social component. While The Guild is a broadcast video, part of any really successful cultural content is the fact that you share it/discuss it with others. That's what makes it culture. Limiting when people can see content can actually take away value in that it harms that form of "sharing" (no we're not talking about "piracy" here). The ability to discuss a favorite show with others is, in many ways, part of the appeal. Taking that away through fake exclusivity can backfire.
(New) Creation: Any work before it's created is still scarce. Another way of looking at this is effectively the ability to do custom or commissioned creations. Imagine an offering where you could write a "fan" script of your favorite shows (within reason, of course). How many people would jump at the chance?
Tangibility: A scarcity that still sells. Never doubt the potential for tangible merch to sell. While it's something of a joke that people (falsely) claim that the business model we suggest for everyone is "sell t-shirts," that doesn't mean you should ignore the potential of t-shirts. They can be quite lucrative (and, yes, for all the people asking, we really will be restocking our own t-shirts soon).
Time (saving or making): If you can help people save time or make more time, people will often pay. This is one that may be a bit tougher to apply to TV, but I'd be interested in hearing suggestions. I know that some podcasting products have things like "double time" that let you listen to the same podcast at a (pitch-corrected) sped up pace. I wonder if there would be a market for "sped up" video too? Perhaps not, but just tossing it out there for brainstorming.
Convenience: Day mentioned this in her post. People want convenience above all else. This part is less about what an individual show can do, probably, and more about the platforms. If Netflix/Hulu/YouTube/BitTorrent/some-other-platform can make a work more convenient, then it becomes important to figure out how to embrace it... or else your fans will go there without you.
Belonging: Never, ever underestimate how important a sense of belonging can be to a group. This can be manifest in a variety of ways (including some listed above). But it certainly opens up opportunities for things like fan clubs, where a small subscription fee gets you cool "extras." This also goes back to the tangible merch as well. One part of belonging is showing off that group you belong to.
Patronage: This one is still looked down upon by some, and it's rarely a good option if you're betting entirely on it, but serious opportunities can come out of just asking people to support an artist -- especially one who really connects with the fans in an authentic way. Sure, perhaps only 1% of the people will be willing to act as patrons, but combined with other things listed above, you can build a really strong business model.

That's just my quick pass on thinking through some ideas for where video goes. Will some video productions fail as the market heads in this direction? Absolutely. But that's the nature of what happens when platforms and markets change. Radio stories more or less went away in an age of television, and TV found certain types of stories worked better on TV than they did on radio (and some worse). So things changed. And that will certainly happen online during this transition as well. But I can't see how it's likely to be worse or more limited. There's a ton of opportunity out there, and I have no fear that all sorts of unique and workable solutions are coming about for video.

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Filed Under: business models, felicia day, reasons to buy, video

58 Comments

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HothMonster, 18 Aug 2011 @ 2:36pm

Mike you can't just complain about they way things are being handled without ever offering any suggestions as....to...ho

shit wrong article
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sehlat (profile), 18 Aug 2011 @ 2:39pm

Patronage isn't a bad model, when it works
As an example, I regularly send $100/month to my two favorite webcomic artists. One of them, Bill Holbrook of "Kevin and Kell", "Safe Havens", and "On the Fastrack" fame, has a patronage program for Kevin and Kell. Donate certain amounts, and get extra goodies, including appearing as a character in the strip. My guest appearance will be on August 24.

The other artist, Howard Tayler of Schlock Mercenary doesn't have a patron program, but I donate anyway, and hope the support will encourage him to make PDFs of the collections available for purchase.

I consider these donations as nothing more than saying "Thank you" for work well done and hugely enjoyed.
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vbt (profile), 18 Aug 2011 @ 2:40pm

1%
I have often worried about whose going to pay to get things created too. The content production and distribution system is super complicated and so interwoven with traditional television, but i think some frustration comes from not being able to give money. When HBO Go was released, there seemed to be lots of traffic in my twitter feed begging HBO to let individuals pay HBO directly for the streaming. The delay sometimes between the airing of something on tv versus being available for purchasing on iTunes or elsewhere also creates frustration. I have always assumed that this was about contracts between distributors and the networks. But the notion that we all want something for free is mostly wrong - we want to pay to get content where we want to get it from. As a cord cutter, I didn't want to pay money to my ISP who constantly provides bad customer service.

When I thought I lost my techdirt sweatshirt, I panicked. I told my friend it was a $50 sweatshirt and she looked at me like I was crazy. Then I pointed out that I gladly paid it b/c it was a way to pay for the time Techdirt saved me in doing research for telco policy papers in grad school.
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fogbugzd (profile), 18 Aug 2011 @ 2:44pm

It surprises me that the TV networks have not figured out how to do commercials on their streaming sites. Typically there is one extremely obnoxious commercial that runs every few minutes. Each series will have its own commercial and it just runs over and over and over if you try to watch the program. Very often the commercial is at a much higher volume level than the show itself, just to add to the annoyance. (NBC seems to be the worst at doing this).

If you are in the business of selling attention (as the networks are supposed to be) you would think that they would know that showing the same obnoxious commercial over and over is the best possible way to get people to tune out the commercials, or stop watching the program completely.

The networks don't seem to spend much time thinking about how to do network delivery. They put a lot of time and energy into designing the web site around the videos, but then they totally ignore how the content is actually delivered. And after the first week of the season you will typically find that there are a lot of non-functioning links. It appears that management spends a lot of time designing the site for each season, but then abandons all interest in the site after the season starts. I am guessing that the network executives never try to spend an evening watching their on-line content.
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jupiterkansas (profile), 18 Aug 2011 @ 2:44pm

The truth is a lot of content won't get made because money was the only reason it was made in the first place.
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HothMonster, 18 Aug 2011 @ 2:49pm

Re:
"The truth is a lot of shitty content won't get made because money was the only reason it was made in the first place."

FTFY
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Bill W (profile), 18 Aug 2011 @ 2:50pm

Kickstarter?
I've helped sponsor a couple of videos on Kickstarter as well as a couple of other things. Some don't make their funding goal but that's OK. I suppose that falls under the patronage model but usually brings in more also. My name in the credits, or two thing-a-ma-bobs ordered in advance, an autographed copy of the DVD, etc. I don't usually kick in more than 50 bucks and if the funding goal isn't met then it doesn't cost anything at all.
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fogbugzd (profile), 18 Aug 2011 @ 3:02pm

The movie industry and video producers want on-line to generate the same income stream that they are accustomed to, and it probably isn't going to happen. They say things like "How is online going to support a $200 million movie?"

There isn't really a social purpose for $200 million movies or TV shows that cost $10 million per episode. That didn't happen in the 1950's, and there were still some fantastic productions.

The video production industries are going to have to find ways to cut costs. Yes the ending production might not be up to the high technical standards we have become accustomed to, but if the market does not support high production costs, then we will have to get used to lower standards.

A lot of the astronomical production costs are self-inflicted by the industry. If you pay actors a million dollars and episode or fifty million for a movie then, yes, it will be expensive to produce videos.

The movie and TV industry got fat and happy in the 1970's and 1980's because the public didn't have many options for entertainment. Times are getting leaner, and the industry is going to need to find ways to trim the excesses from production costs.
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Anonymous Coward, 18 Aug 2011 @ 3:04pm

Re:
Thankfully a lot of that content won't be made, in particular the content that was made only for the money.

Those who have something to show or tell with substance will continue to share with the world. Those who hope to make a few bucks by tricking people into buying lackluster content have numbered days.

This may also allow for more time being spent with the masterpieces that have been created thus far, which get brushed to the side for reality TV, soap operas, the same re-packaged movies and propaganda.
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sehlat (profile), 18 Aug 2011 @ 3:10pm

Re:
The problem with the networks is the same problem every other old-line business seems to have when they dip their toes into a "not the way it's done" business model.

Barnes and Noble's eBook selling mechanism is shoddy and slipshod. They bought into "click on EACH book to buy," just like Amazon, while I've been buying books in bulk from Fictionwise and a shopping cart for ten years. You have no idea how nice it is to say "give me all the books in a series" and then be able to check them out with a shopping cart.

The networks still have their eyes on the "captive audience" they used to have, where there were three big networks and effectively nobody else. An audience with *choice* is just not something they think about. Or want to.
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Richard (profile), 18 Aug 2011 @ 3:16pm

Dear Felicia Day
I guess a lot of content won't get made in the future - but I also guess that you'll be alright - since you seem to be thinking sensibly about the problem - which a lot of producers aren't

Personally I think the public does need to be re-educated for the new world - I'm sure we can get that 1% up a lot higher.
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Derek Kerton (profile), 18 Aug 2011 @ 3:23pm

1%...Not True
"only 1% of people ever really contribute"

That whole notion is also incorrect. I, for example, participate in many forms of media consumption. I currently do not "flattr" or provide patronage to any modern business model of film production financing. So that, I assume, would put me in the 99%.

However, I DO give Comcast $110 a month for content I barely watch. I watch 5 hours of TV a week, my 2 kids the same, and my wife, 0. We also occasionally go to the cinema, often go to live theater, and support fundraisers for the arts. I buy some licensed merch for my kids (ex: Nemo dolls, Disney clothes). I've bought plastic media. It seems I'm funding production quite a bit, but current measurement tools would put me in the "free rider" camp. BS!

If there were a better-established business model around patron-funding for content that I wanted to view, I'd probably be there with my wallet, too.

But for now, the $110/mo nut I pay through Comcast leaves me with a big fat "I gave at the office" feeling.
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Derek Kerton (profile), 18 Aug 2011 @ 3:35pm

Pre 1970 Content
I've been thinking about films pre 1970. You know, the special effects just weren't in that many films. Car chases were fewer, explosions were way down. Films like 12 Angry Men, or To Kill a Mockingbird looked like they could have been filmed on a few cheap sets.

Does this mean that there was no entertainment back in the 40s, 50s, and 60s? Hardly. The people loved their movies back then. Perhaps more (on a relative scale) than today. Art seemed to flourish, and writing was possibly more important than pyrotechnics. Yet these kinds of films, today, could be produced for a few grand.

So, would we, if patronage were the only funding scheme, return to an era where writing trumped ILM? Would that be a shame? And, what's more, I think that if the public bemoaned the lack of high-cost (boom, CGI) productions, the market would find ways to fund them. You see, the SCARCITY of those productions, if mated with some demand, would necessitate a payment scheme. I'd bet that far greater than 1% would participate.

I'm not saying a world with fewer big budget films would be better. I think "more art means some better art" and less funds means less art. But it doesn't sound much worse to me.

And the fact that we don't need government regimes to prop up economically-unsound business models, extend monopolies, and outlaw technological efficiencies seems pretty good to me. In fact, leveraging new efficiencies and reducing regulatory interference often results in better outcomes, in ways that people in the current timeframe can't yet envision.
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:Lobo Santo (profile), 18 Aug 2011 @ 3:38pm

Re: Pre 1970 Content
"I'm not saying a world with fewer big budget films would be better."
Fine, if somebody needs to say it I'll say it: "A world with fewer big budget films would be better."
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Anonymous Coward, 18 Aug 2011 @ 3:46pm

If shows like Two and Half Men and and American Idol disappear and are replaced by shows like Dr. Horrible and The Guild then I'm all for it.
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ronfingers (profile), 18 Aug 2011 @ 3:50pm

Bad stuff will continue - sorry
I still think that the terrible/crappy/bad quality shows will be made, I am just happy that I won't be forced to watch it. I think people forget that a lot of people really do enjoy those shows because they have different tastes then I do (I almost wrote "lacked taste" but did not want to sound like someone who only appreciates the finest of quality programming).
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Chris Rhodes (profile), 18 Aug 2011 @ 3:56pm

Re:
The video production industries are going to have to find ways to cut costs.

The easiest way would be to not pay tens of millions of dollars to actors.
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Mike (profile), 18 Aug 2011 @ 4:31pm

Patronage
I have to say that patronage is useful for new video producers, but once you've got fans, you've got potential patrons.
I really believe that there are some canceled shows that could use something like kickstarter to get $10 million for 5 new shows. That's only $10/fan if there are a million fans.

I'd pledge $25 for 5 new episodes of Firefly!

As long as they get produced and I can obtain them (on DVD or download) for my patronage, it doesn't matter to me if the producers can get more money from those episodes. Actually that can only benefit me by creating more fans and lowering my needed contribution to additional episodes.
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That Anonymous Coward (profile), 18 Aug 2011 @ 4:41pm

I'm just happy to see someone who makes the content that disrupts the old model admit she is unsure how the hell to make it work sometimes.

Rather than curl into the fetal position and cry for someone to lock it down and make it like it once was, she points out her big issues and is looking for some thing(s) to try to make it keep going.

This is way better than what we see from the old content producers who have to make everything the way it was back when the tvs were huge, the screens were small, and color was some crazed imaginary dream.

No one has the answer just yet, and even if she finds her answer - it might not be the answer that works for another content producer. The idea of the one size fits all content release system is dying. People want things in ways that work for them, not some bygone era of the world stops at 7:00pm because everyone is home watching Uncle Milty on the magic box.
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Anonymous Coward, 18 Aug 2011 @ 4:50pm

Re: Pre 1970 Content
In 1970 they didn't had seamless cloning, people can put anything on film today and greenscreen may not even be a problem anymore.
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Gumnos (profile), 18 Aug 2011 @ 5:09pm

T-shirts
[T-shirts] can be quite lucrative (and, yes, for all the people asking, we really will be restocking our own t-shirts soon).

I'd be up for the paywall shirt. How about a less disjoint range of prices? There's a vast gap between $25 (for a t-shirt you can't have because it's currently sold-out) and $1000. Perhaps past experiments have shown this to be a ghost-town of a price-point. Also, details on the Crystal Ball would be nice: I tend to read via RSS, but without a "Crystal Ball" RSS feed, it wouldn't do me any good.
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Anonymous Coward, 18 Aug 2011 @ 6:14pm

These business models would have existed a long time ago if it weren't for the FCC handing exclusive public airwave use over to private entities and the govt handing over exclusive cableco use over to private corporations. and, before FCC regulation, public airwaves were socially beneficial in many ways. It's a shame the only business model the govt wants to allow revolves around the government establishment of monopolies. Abolish the FCC!!! Abolish IP!!!! Abolish all government established monopolies.
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Anonymous Coward, 18 Aug 2011 @ 6:27pm

About Felicia Day
She's a hottie. I don't care if she understands business models, math, or even how to spell her own name. I'd drink her bath water.
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out_of_the_blue, 18 Aug 2011 @ 6:57pm

"Who is gonna pay to produce them? What is the future?"
Okay, you're at last beginning to dodge the real questions. I don't consider your boilerplate solutions at all likely to work.

Not clear from Day's quotes and Mike's first paragraphs is my major thesis: that the advertising revenue model is necessarily falling apart. Getting your content NOW from "pirate" sources almost certainly ensures NOT seeing any advertising.

So now even commenters here are beginning to grasp that we're in for a lot less content, much less lavishly "produced". See, you can't get people to throw money in for your benefit unless they're reasonably assured of getting it back.

Kind of a schizoid view of capitalism going here: you WANT good products but won't pay for them, just expect people to invent some marvelous new way in face of obvious problems. -- I don't expect them to, and think that less mass entertainment would be a good thing, but you people think you're going to have cake without allowing the cooks to live it up with the sherry in the kitchen.
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out_of_the_blue, 18 Aug 2011 @ 7:22pm

Patronage: you mean fund shows that you KNOW you like.
"once you've got fans, you've got potential patrons" -- This is not only a chicken and egg problem, but is QUITE similar to Masnick's view of "sunk (or fixed) costs": take an /existing/ product, forget how it got financed and recovered those up-front outlays, just pretend that the marginal costs of distribution are /all/ that matter. -- That's not reality, people. You can't get shows beyond cocktail napkin level without BIG money, and who's going to contribute big to amateurs? Even with a bootstrap production already done. "Crowd sourcing" of a complete unknown will almost certainly not cross the crucial threshold of to allow enough production values to attract (future, remember) viewers.

Those with the "patronage" notion, just put your money where your typing fingers led: be easy to find some aspiring producer, writer, etc, who'll take all the money that you have, with the most lavish promises in exchange.
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Derek Kerton (profile), 18 Aug 2011 @ 7:23pm

Re: "Who is gonna pay to produce them? What is the future?"
How the hell is that "boilerplate"?

Those ideas are radical to this backwards-looking industry. They have been extensively mocked because they are too forward-looking.

RE: cooks with sherry. Do you think we could not find any good actors if we didn't pay them $20 million for a film? Would JK Rowling not write her books if she didn't have a muti-million dollar deal? She famously wrote them just so her kids would have something to read. We could drop the costs of lavish productions significantly, and still have the same production values. Now, less ILM type of work would reduce the visual richness of the films. That might require us to use a little more of our imaginations. That might be OK, too.

Either way, less of something good isn't necessarily the wrong outcome. If that thing has been overcompensated for decades, we might be facing an oversupply (over optimal) right now.
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chris, 18 Aug 2011 @ 8:22pm

Did she say bux? Really?
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Alex Austin (profile), 18 Aug 2011 @ 8:34pm

Re: About Felicia Day
That is a disgusting image. Eew.

/me injects soap into his brain.

But, yes, she is hot; and have you heard her sing?
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thejynxed, 18 Aug 2011 @ 8:48pm

Felicia Day and Funding Videos...
All of you commenting and I only see one other person even vaguely get close to the most important question.

"Does the rug match the drapes?"

(If you know what this references, then enjoy the LOL).

Outside of that...well...I saw several low-budget online videos already that were more impressive content-wise than the shit parade that gets shoveled down our throats every day on television, so...
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Anonymous Coward, 18 Aug 2011 @ 11:43pm

Re: About Felicia Day
Eew!

(Barfing!)
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Anonymous Coward, 18 Aug 2011 @ 11:44pm

Re: Re: "Who is gonna pay to produce them? What is the future?"
You don't need to have that much imagination today.
http://www.youtube.com/watch?v=4mJ1wcn2N-M
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Derek Kerton (profile), 18 Aug 2011 @ 11:54pm

Re: Patronage: you mean fund shows that you KNOW you like.
Lots of wrong in there.

1) "just pretend that the marginal costs of distribution are /all/ that matter."

OK, so you didn't study econ. Let me help you out. For market pricing, marginal costs ARE what matter. In fact, they are all that matter. Here, don't take my word for it:

http://www.investopedia.com/study-guide/cfa-exam/level-1/microeconomics/cfa14.asp#axzz1VSGO1R H0

You don't have to like it, but it's mathematically proven, it's economic fact, and it turns out that it matches the markets behavior almost perfectly. To argue anything different is a fool's errant...but you're welcome to it if you must continue.

2) "You can't get shows beyond cocktail napkin level without BIG money"

Really? Did you even read the article under which you are posting? Have you heard of YouTube? Blair Witch? That Rodriguez director? These are sources of good content with little or no money. Then there are the "Big network" productions like reality shows, which suck, but are cheap to produce.
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Anonymous Coward, 19 Aug 2011 @ 12:06am

Re: Patronage: you mean fund shows that you KNOW you like.
Thousands of people already do.

http://vodo.net/pioneerone

Want to be one that helped donate more than 70K(at the moment $77,231) to Pioneer One?

http://www.kickstarter.com/projects/1871013314/season-two-of-the-jeff-lewis-5-minute-comedy- hour?ref=category

Season Two of The Jeff Lewis 5 Minute Comedy Hour.
Season Two? WTF?! The Guild is producing stars already.

Youtube and other video platform also are starting to generate wealthy people.

http://www.huffingtonpost.com/2010/08/30/top-youtube-earners-revea_n_698809.html (People earning 6 figures who knew you could earn 300K from silly videos)
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Ed C., 19 Aug 2011 @ 12:12am

Re:
I saw a talk once about how a low-budget film (~$250,000) that was already in the can ended up with $26 MILLION tag that took ~7 YEARS to pay back out of his company's royalties from the studio. The breakdown he gave was: $1 million advance, $5 million in placement and distribution, and $20 million in advertising. Yep, he had to pay $25 MILLION that the studio billed to themselves out his meager percentage of the profits. Sure, there's some real cost in doing national distribution, and yes some actor's really are paid too much, but much of their "cost" is really inflicted upon themselves by their old Hollywood style of business.

It's obvious that the internet doesn't have a lot of the cost associated with their legacy distribution models. Without that, they could easily cut a big chunk of their cost--which they've been passing off on the productions anyway. Hell, there's tons of extra expenses that are simply tied to their old way of doing business. Without them, productions could be done for much less. Since they just simply refuse to change, the easiest way to cut those cost would be to have the gluttonous studios, with their expensive exclusives and legacy distribution networks, taken out back and shot. If you don't think that the interenet is a viable alternative, just consider the fact that they're also some of the biggest opponents to affordable national broadband.
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Ed C., 19 Aug 2011 @ 12:25am

Re: Patronage: you mean fund shows that you KNOW you like.
Of course, the reason the BIG studio productions cost BIG money is mostly because of the BIG cuts they take from the profits.
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Mike Masnick (profile), 19 Aug 2011 @ 1:09am

Re: T-shirts
I'd be up for the paywall shirt. How about a less disjoint range of prices? There's a vast gap between $25 (for a t-shirt you can't have because it's currently sold-out) and $1000.

If you scroll down to the bottom, you can see that we've had products at many in-between prices, but are sold out. We'll be offering a variety of price points going forward.
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Blatant Coward (profile), 19 Aug 2011 @ 2:04am

Re: Patronage isn't a bad model, when it works
Tarol Hunt creator and artist for Goblins raised $45,000+ this year.
Chris Muir creator of Day by Day gets all his funding from a yearly donation drive. I can't find the target amount, but it was reached and passed this year as well.
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Richard (profile), 19 Aug 2011 @ 2:25am

Re: Re: Pre 1970 Content
Yes - it alway amazes me (as a Computer Graphics Professional of 25+ years) the costs that the film industry (claims that) it pays for special effects. Frankly either they are being fleeced or they are inflating the costs deliberately for accounting reasons.
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Derek Kerton (profile), 19 Aug 2011 @ 2:54am

Re: Re: Patronage: you mean fund shows that you KNOW you like.
Thassright.

Didn't Justin Bieber start on YouTube?
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Hephaestus (profile), 19 Aug 2011 @ 7:39am

You are probably going to see multiple business models running all at once, all released at once.

-pay per view, iTunes for $?? USD, facebook, amazon, etc
-Vodo With Ads
-embedded advertising (actor sits in restaraunt "Can I get a Pepsi?", etc)
-Some minimal payment system from NetFlix
-embedded ads on youtube
-etc

After the first show is produced it should pay for itself, you need to release on multiple platforms with multiple income sources.
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RobShaver, 19 Aug 2011 @ 9:30am

Re: Re: T-shirts
Well if I can buy then then I'll have to find a pirate version.
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Derek Kerton (profile), 19 Aug 2011 @ 10:50am

Re: Re: Re: T-shirts
...or make your own. That would only be "infringing". Either way, you'd just make Masnick happy that you are a fan.
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Onnala (profile), 19 Aug 2011 @ 11:28am

Re: Patronage: you mean fund shows that you KNOW you like.
Look up a film called Iron Sky. Its not due out tell next year, but it has been paid for with patronage. They originally did a trailer for their 'idea' and then pitched it to the world.

They got enough funding that the film will come out. Should be fun!
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anothermike, 19 Aug 2011 @ 11:49am

Re: About Felicia Day
I think we've found our new business model.
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Androgynous Cowherd, 20 Aug 2011 @ 5:53pm

Artificial exclusivity
Day has done some stuff with offering The Guild slightly earlier, and as she notes in her post, that just seems to upset people. Doing anything that involves this kind of artificial exclusivity can be tricky -- especially when it's something that has a social component.

How ironic, seeing as your own CwF+RtB offerings have included the "Techdirt Crystal Ball", which sounds an awful lot like offering some content slightly earlier to some people.
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Androgynous Cowherd, 20 Aug 2011 @ 5:55pm

Sped up video
I know that some podcasting products have things like "double time" that let you listen to the same podcast at a (pitch-corrected) sped up pace. I wonder if there would be a market for "sped up" video too? Perhaps not, but just tossing it out there for brainstorming.

Not naturally scarce; only the first sped-up copy is naturally scarce, much as only the first normal-speed copy is naturally scarce.
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Derek Kerton (profile), 20 Aug 2011 @ 7:59pm

Re: Artificial exclusivity
"can be tricky" ≠ "cannot be done well"

For example, the invention and production of antibiotics can be tricky. But it can be done, was done, was done well, and was a good thing.

Ergo, not ironic at all. Logic, we learn from you, "can be tricky" too.
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Derek Kerton (profile), 20 Aug 2011 @ 8:02pm

Re: Sped up video
I agree with Androgynous here.

What's more, that function seems to me to be better suited as a feature of the player software.

I use a player on my Android phone that offers sped up video. It's useful on a short flight with a long movie.
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Androgynous Cowherd, 21 Aug 2011 @ 8:00pm

Re: Re: Artificial exclusivity
But it is ironic when someone does something, but warns others that that something "can be tricky".
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Derek Kerton (profile), 21 Aug 2011 @ 9:55pm

Re: Re: Re: Artificial exclusivity
Nope. I don't think so.

I had a ski instructor who would look at a steep couloir, tell me the approach he suggested, then say "careful, it can be tricky", then nail it.

It was tricky, but it was not ironic. Painful, yes, ironic, no.
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Eric, 22 Aug 2011 @ 10:21am

Unions and Actors must go
From what I've heard, one of the big costs are just in production and what the unions demand be on set and how much they want to charge.. if it's done by the studios'.

If I'm not mistaken, Porn doesn't cost that much to make and they are putting out tons of video's.

It's a matter of simple economics that several people have pointed out here in the comments: People in the video industry will not be able to make as much money and production costs will have to be cut.

It's really as simple as that I think. A advertiser will be much more likely to swallow $5k for a show, then over $100k.
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Derek Kerton (profile), 22 Aug 2011 @ 12:10pm

Re: Unions and Actors must go
Perhaps union actors get paid pretty well. Certainly, the minimums are really high for a 2 minute part.
http://www.sag.org/digests-and-rate-sheets

However, like the teachers in Wisconsin, I'm not sure the unions are truly where the bulk of the money is wasted.

On the truly high-budget films, it is the $15-20 million required for the leading actors that eats up the actor budget, not the $700 for the bit players. Also, the $20M for screenplay rights to a best seller, when that occurs.
http://www.culture.com/news/item/4854/jackie-chan-joins-20-million-dollar-club.phtml

Als o, the method of production that has a bit player come in 5 days to film for 2 minutes each day could probably be altered to make more efficient use of HR and lower cost. I guess I'm no expert, so I shouldn't argue that too much. But I do know business, and there are normally operation efficiencies that can be found when budgets get cut.

For anyone economist (like myself) who would argue that the supply of actors would dry up if we didn't remunerate them well, I simply need to point to the droves of amateur actors in local productions, ALL willing to work for free. But I suppose we might not have talented stars like Jennifer Simpson or Lindsay Lohan if we didn't offer the big bucks! Ha. Sure, actors should get paid for their work. I'm not saying they should work for free. I'm saying there are thousands willing to work for free, and we might be overpaying the stars.

Gone With The Wind, a bestseller, sold screen rights for $50,000. It was the biggest blockbuster production of its time, costing over $4M to make.
http://www.filmsite.org/gone.html

A history of amounts paid for scripts:
http://en.wikipedia.org/wiki/Screenwriter's_salary

Tupac Shakur's screenplay, written in prison, just sold for $11M.
http://dimewars.com/HipHopNews/Tupac-Shakur-s-Screenplay-Sold-For--11-million-.aspx?PressRele aseID=afa9f5ac-9948-4b15-bc13-a1680cea5b69

I personally value writers above actors, but with time on his hands in the tank, it seems like Tupac would have written the script with or without an $11M incentive to his estate.

My conclusion is, Hollywood is drunk on funding. With this much money around, they spend it. They pay the execs massive salaries, and they bid up star actor and screenwriter fees. Do they scout out the best actors and screenplays? Nah, they have to find the bankable stars, or else they'll never get their investment back...the investment they had to make to get the bankable starts. Kind of a tautology.
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jupiterkansas (profile), 22 Aug 2011 @ 1:30pm

Re: Unions and Actors must go
The amount of money spent on films has absolutely nothing to do with their quality. To argue that piracy means good movies (which is what Hollywood calls expensive movies) won't get made is a lie. It simply means a specific financial structure in which hundreds of millions of dollars are funneled into a single production will no longer be financially viable.

It means they can no longer guarantee the return on investment they could once easily project when they had absolute and total control over the industry from production to marketing to distribution. Consider that the majority of the U.S. population almost never sees a film that isn't made or distributed by one of the five major studios, largely because no other film can afford to advertise their film on television, and people only go see movies that are advertised on TV.

Basically it means that the movie business is becoming too risky for the corporate environment it currently exists in. Movies have always been a risky business but the corporations think they can tame the beast by pumping up budgets on increasingly bland material.

A small part of the problem is piracy, but there are dozens of other factors, including that the internet has made marketing cheaper films outside of Hollywood can get noticed, and masses of people turning away from new films (and cable television) in favor of Netflix and other forms of entertainment (abandoning movies as an artform altogether for comics and websites).

The best thing that could happen is for the corporations to bail out and leave filmmaking to the artists who care to make quality pictures who will do it for any price, not the suits who only make films so they can finance a second yacht.

We need dozens of feature film companies across the country, not five big ones in Hollywood. The studios successfully destroyed the indie film movement by maintaining strict control over distribution (by making it very expensive) The internet is threatening that control, meaning there's no reason most movies should cost more than $20 million to make, market, and distribute - and most films should cost less.

Hollywood isn't interested in making movies at this level because the return on investment isn't as great and the only marketing they rely upon with their blockbusters is their dollar figures - production costs, box office - if it doesn't break records, the film is a failure (and records are easy to break when ticket prices keep rising, meaning every year a new record is broken).

Movies have become a sporting event where dollar signs determine the winner rather than quality, and the audience is to blame for that. We need an audience willing to seek out quality movies and champion anything that's daring, original, controversial, artistic, and challenging. That's almost impossible with the anemic stream of garbage that Hollywood pumps out designed to offend nobody and please only the simple-minded, but all I see is people lining up slavishly for their next superhero fix.

I think movies are dead in the U.S.

I'm going to go watch something from Korea on Neflix.
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Derek Kerton (profile), 22 Aug 2011 @ 2:06pm

Re: Re: Unions and Actors must go
To your point, Netflix's recommendation engine is a powerful competitor to the classic method of promoting films.

Classic: huge budget production, huge budget advertising, strong-arm control of what plays on the nations cinema screens

Netflix: you liked this, so it is highly likely that you will like that.

Which one do we think is more effective at correctly informing people of, and helping people see films they will like? Gee, I dunno, do you have more faith in collaborative filtering or in advertising?
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jupiterkansas (profile), 22 Aug 2011 @ 2:23pm

It's true. I've rated over 3000 movies and I trust Netflix recommendations over any film critic.
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Androgynous Cowherd, 28 Aug 2011 @ 9:26pm

In this case, though, "can be tricky" was a euphemism for "is based on artificial rather than real scarcity".
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mars, 1 Sep 2011 @ 4:08pm

Nobody watches indie movies. The netflix selection is awful and im not alone in this. Your free to watch your obscure crap if you want but the millions of people are clearly arent going to.
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jupiterkansas (profile), 1 Sep 2011 @ 9:28pm

Re:
It's true there's a lot of bad movies on Netflix, but there's just enough good movies to keep me entertained for a long time. Maybe after I watch the 300 or so movies in my streaming queue, I'll consider going back to the theatres to see what Hollywood has to offer, but I'm sure when that happens I'll just shrug my shoulders at the crap Hollywood is making and go back to Netflix.

Then again, it's the movies that make the most money that I often find the least interesting. Quality is subjective.
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