Dams and Water Wheels

A story is told of three monks in the Middle Ages wondering about the number of teeth in a horse's mouth. One suggests their answer must lay within the greatest authority on all topics, the Holy Bible, and a long discussion then ensues about which passage in the Bible would contain the answer they seek. After much debate, one monk simply says, "Why don't we just go look at a horse to see for ourselves? There's a horse right there in our stable." Though shockingly pragmatic, the idea is also heretical for its inference that the Bible cannot be the authoritative source on all topics. The other two monks become violent and beat up the third monk for such outragous "arrogance."

This story sometimes comes to mind when I discuss my (allegedly radical) ideas about digital content distribution to old saws within the industry. For many people already well vested in their livlihood (or about to be well vested, or even hoping to be well vested), they put far too much energy in defending their version of the world as they wish it to be... at the expense of really seeing at the world as it currently is.

Of course, this is all my opinion, but it's worth emphasizing—and re-emphasizing, over and over, ad nauseum—that it took me ten years to change that opinion. I didn't merely flip a switch one morning and suddenly begin spouting radical ideas about digital distribution. Ten years ago, I began with a staunchly traditional position that DRM should be authoritarian and infringers of digital rights should be subject to harsh prosecution. Ten years ago, I felt piracy was ethically wrong, that piracy could be stopped, that piracy should be stopped, and that all those those millions of people around the world who used BitTorrent and Pirate Bay were thieves. Ten years ago, I felt the prices for movies, music, and software should only be set by content producers and if consumers didn't want to pay that price, they shouldn't pay. Ten years ago, I felt piracy would tear the system into shreds and consumers would be the only ones to blame. Ten years ago, I felt that if only producers could convince consumers that what they were all doing was wrong, things might turn around. If only producers could show the world the consequences of what they were doing would end with a wave of bankruptcies across all content creation industries... if only, if only, if only. That's how I felt ten years ago.

But a lot has happened in ten years. I've seen businesses adapt to change and thrive, and other businesses not adapt and fade from view. I've also seen that, in the right circumstances and despite what I want to be true, piracy can help as much as it can hurt. Thus, I have gradually changed my position from an arrogant (and financially dangerous) attitude of, "This is the way the world should be and if the world doesn't fit into my inflexible and narrow vision, I'll use every tool in my moral and legal arsenal to stop those who endanger that world vision." I consider this attitude arrogant because it's a not-too-distant grandchild of those monks saying, "The answer must be in the Bible. It has to be. To suggest otherwise is heresy." Whenever any radical and innovative business model threatens the status quo, the orthodoxy never waste time calling proponents of these "uppity" new models as "drinking the Kool-Aid", "careless", "foolhardy", and "devaluing the legacy". Sometimes, those recriminations are even justified, but sometimes they're not, and the diamond in the rough is being shaped before their very eyes... if only they could expand their worldview enough to see it.

Fortunately, I'm able to observe the world objectively. I have no vested interests clouding my judgment. I haven't pumped millions of dollars into a movie studio or a record company or software company, so I have the luxury of making predictions with zero financial benefit whether I'm right or wrong. One could argue that, because I have nothing to lose, my assessments and conclusions carry little weight. However, I feel exactly the opposite is true: because I have nothing to gain by my predictions and because I once held a contrary and traditional position—i.e., that "piracy is wrong"—my assessments and conclusions should carry even more weight than the arguments made by the establishment to conveniently maintain their current livelihood. To be honest, I don't want my conclusions to be right. I hate the conclusions I've arrived at. My conclusions point to a world of more effort and less money for content creators, where newer and more reliable revenue streams are frustrating to identify and exploit. Nonetheless, what I want or don't want doesn't make my conclusions feel any less true. I would hope others keep that clearly in mind whenever they are eager to discount my position.

Most people with vested interests try to force the rules of this new Digital Age onto an analog world ("This is the way the world should be."), but I prefer to look at the rules of the Digital Age as they actually exist ("Why don't we just go look at a horse to see for ourselves?") and draw conclusions from those observations without any specific end goal screaming to be met. What does the world actually look like? What are these new tools? How can they best be applied to maximize their usefulness? What can be accomplished with all these crazy new options? This means I don't start with a $15 million movie and say, "how can we bring a budget up to that amount by cracking down on piracy?" Instead, I ask, "Can we even crack down on piracy? If not, how do we use piracy to our advantage, and can a $15 million film be made? If not, what budget could be made with piracy? How can piracy help us?"

I don't feel the way I felt 10 years ago about digital content for a few reasons:

• I no longer feel piracy can be stopped.
  
• I don't see piracy as the threat I once thought it was. On the contrary, hyperdistribution could herald a new age of content distribution if we can ever shed our fear of it.
  
• The Digital Age has a new set of ground rules most of us don't fully understand and, thus, we haven't completely embraced.
  
• Instead of looking at the world by defending it as we think it ought to be, we should be thinking of how quickly we can adapt to it in order to minimize disruption.

When people don't seem to get what I'm saying, I sometimes shift the situation to a different timescape to illustrate the concepts in play. Let's rewind the clock to 1950:

Jobs were aplenty in America. You got a job, you worked for a corporation, you punched your card for forty years and left with a fat retirement check. If you were to transport those 1950's workers into today's fluid economy, they'd be shocked to see how company loyalty has evaporated and how commonplace it is for Americans to work three or four jobs in their lifetime. Of course, we live this reality. We grew up in it. It's normal. So we've already come to accept it all as a fact of life and dealt with its nasty implications. Unfortunately for our wayward time travelers, they'd decry this "injustice", call it unfair, and insist it be immediately rectified. And then we'd laugh at them like we would have laughed at horse-and-buggy drivers insisting we bring back the horse and carriage. Or typewriter manufacturers insisting we bring back typewriters. Or handwriting teachers insisting we bring back the quill. You can't put the genie back into the bottle.

We are in precisely such a situation now. We stand amid a swelling floe of evolving content distribution channels. Nobody has a crystal ball, including me. But history teaches us that the ones who always lose these sorts of battles are those who resist newer and more efficient technologies. Whenever more efficient technologies emerge to threaten the status quo, we always see same phases: vilification and violent intolerance, contempt and disparagement, reluctant acceptance, and inclusion into the orthodoxy. So doesn't it make more sense to start viewing newer technologies without bias and adopt them early on in order to maximize their intrinsic strengths before the competition does? Does it really make sense to apply Analog Age rules to a Digital Age?

This is why I became such a huge fan of Techdirt, which does a superb job by explaining basic economic principles, and how the Digital Age is simply acting out those basic economic principles. After a few months of reading Techdirt, I got a clear grasp on how to build a new business model following the new rules of the Digital Age:

• Leverage the internet to distribute content as widely as possible.
  
• Don't confuse price and value.
  
• Use infinite goods to increase the price of scarce goods.
  
• Connect with fans.
  
• Give fans a true reason to buy by offering a non-copiable "generatives" like convenience, patronage, authenticity, exclusivity, personalization... and charge a premium price for those generatives.

By understanding how the world works in the Digital Age—and I mean by really looking at how the internet is used without bias for how it ought to be used (including a bias about how content has been previously paid for, what Marc Cuban calls "legacy delivery")—I firmly believe a powerful and unbeatable business model can be built. Why? Because instead of spending your resources trying to dam up a river, you're spending resources building a water wheel to harness the inherent power of that river. You can pay lawyers to fight the unwinable war on piracy, or you can spend that same money to connect with your customers more and create better scarce goods that are tailor-made for a Digital Age. Which approach seems to have the better competitive edge?

Feel free to ignore this last part, but if you don't embrace the internet's inherent power, you can be sure your competition will.

Jawbone.tv — The Biracy Project: Filmmaking as Social Capitalism

Below is an article I wrote for Jawbone.tv last month, which you can see on Jawbone or download the PDF. The article is based off of an interview I did with David Geertz, which I'll also post in the near future. The interview is just over a half hour long and goes into many details only hinted at in this article.



The Biracy Project: Filmmaking as Social Capitalism
BY ROSS L. PRUDEN | FEBRUARY 09, 2010

Synopsis: Discussing the Biracy Project and its platform SoKap, which could revolutionize how indie films are produced and distributed. (Guest contribution provided by Ross L. Pruden, filmmaker, blogger and lover of submarines. Find him at rosspruden.blogspot.com.)

Disclosure: After researching The Biracy Project, the author bought a basic membership.


2007 marked the beginning of the end for the international pre-sales market. At one film market, David Geertz was commiserating with a pre-sales agent about how film piracy was (apparently) gutting pre-sales. The pre-sales agent said, "If you could somehow turn those pirates into buyers..."

"Yeah," said Geertz, "like a birate, or an act of biracy." Then Geertz continued his thought, "But if I can perform an act of biracy, then what do I need you for? Isn't that your job? To perform risk mitigation by attaching pre-sales?"

The agent replied, "But I can't do that anymore."

Which got Geertz thinking... what if you could go straight to the buyers themselves and completely bypass all pre-sales risk mitigation?

BIRACY
Geertz realized that "crowdfunding", as the term is now called, could be just the first step of a more expansive model to entice donating fans to become project collaborators as well, known as "crowdsourcing". By developing a web site to track everyone's activities, and clocking their time in a virtual web site currency called "Krill", members would feel their input hadn't been wasted even if their work didn't get used in the film. Finally, collaborators become the perfect vehicle for promotion since they'd tell their friends and family about their project... from the first day they donated to Biracy until the Biracy film's premiere, and long after.

Three years later, Geertz is finally unveiling the fruits of that fateful conversation—The Biracy Project and its platform SoKap, which could revolutionize how indie films are produced and distributed in the digital age.



Biracy lets users participate in their film by offering membership in four tiers, with increased benefits for progressively higher tiers. A $25 Player membership gets you a pre-purchase of the film's DVD, a $50 Icon membership includes the DVD from the Player membership plus a feature length "making of" documentary, the $100 Mogul membership includes everything from the Player and Icon memberships plus the musical score, and the $200 Titan membership includes a book explaining the upcoming SoKap platform. Members can start at the lowest tier and upgrade to a higher tier whenever they wish. A free membership tier is also in the works.

SOKAP
The beating heart running Biracy is its platform, SoKap (sokap.com). "We've lost sight of how important it is that artists get paid for their work," Geertz explains, "and that we can make money doing what we love." Early in the process, Geertz realized Biracy was trying to instill in people an act of "social capitalism", thus the origin of the loose acronym.


"The biracy project" Geertz explains, "and the platform it's built on—SoKap—is really just the beta test of all the tools we're actually building. Once we're out of beta, other filmmakers, people in the media, and other entrepreneurs will be able to use the tools we've built for them. You're not entitled to use the tools that we are using on Biracy—it'll be an à la carte thing, use as little or as much as you like."

THE SEC & BLUE SKY LAWS
Because Biracy is using crowdfunding, Geertz has to work extra hard to show how it's all legal—crowdfunding has legal constraints in the U.S. under the SEC's strict regulations. In Spain, fans can invest in film projects for financial gain, as is being done with The Cosmonaut (thecosmonaut.org), but in the U.S., the Securities and Exchange Commission's "blue sky laws" have clear guidelines for compliance (called being "on-side"): to offer a loan or security investment, the SEC requires you have no more than 35 "unsophisticated investors", meaning someone with a $200,000 annual income, a $300,000 joint annual income, or a net worth exceeding $1 million. Breaking these guidelines puts your company "off-side" and subjects you to civil or criminal penalties.



It's no surprise, then, that Geertz is abundantly clear on this point: "Biracy is not an investment—it's a donation and pre-purchase of a product with benefits." Nevertheless, Geertz says, there are plans in the works to legally define the term "crowdfunding" so companies like Biracy don't get into trouble because of one SEC regulator's overzealous interpretation of the law. With a smile, Geertz adds, "We'd like to see those legal efforts paid for by crowdfunding."

THE VERDICT
Biracy is a rather appealing model to all sorts of filmmakers. Because of Biracy's ability to efficiently gather funding, build an interconnected fan base, and coordinate the outsourced work from fans, The Biracy Project has a massive potential to finance and streamline many parts of the filmmaking process. To boot, Biracy offers members a 15% referral commission for enlisting other members. Though that's a very clever way to help spread the word, one has to wonder if it undermines the validity of the referral... i.e., are Biracy members enthusiastic about their project because they really believe in it, or because they're getting a kickback?

Like other crowdfunding platforms (Kickstarter, IndieGoGo), Biracy offers the golden ticket to filmmakers in the digital age. Of all entertainment media, films have the highest fixed costs, so funding a film entirely from fan donations—not from financiers expecting to recoup their investment—leaves producers free from worry about piracy gutting their box office revenues. For producers who feel piracy only increases buzz, there's nothing to stop them from releasing their film under a Creative Commons license and leverage P2P networks to drive DVD sales for their "pre-paid" film.

Learn more at biracy.com or at youtube.com/biracyproject.

Ask The Right Questions

Justin Timberlake has over 120 revenue streams—only one of them is selling recorded music.—Matt Mason (link)

Jackie Barbosa wrote an excellent blog post yesterday which kicked off a flurry of Tweets between us about piracy in the entertainment industry. Jackie is smart enough to get that the publishing industry's claim that ebook piracy is costing the publishing industry "as much as $3 billion" is a bunch of hooey. An illegal ebook download is not equal to a lost sale—readers simply downloaded the ebook. Who knows if they would have actually paid for that download if they had been offered no other choice?

While Jackie ultimately concludes that she doesn't get too concerned when she sees her ebooks on a torrent site, she lays a harsh judgment on ebook pirates:

...these people are thieves, plain and simple. And just like a thief won’t buy the diamond bracelet because he can’t knock over the jewelry store, the ebook pirate won’t go and buy a legitimate copy if she can’t get it for free.

I get where she's coming from. It can be frustrating when you put a lot of work into something, put it up online... and then watch it get taken out of your control and given to the world in perpetuity.

And that's exactly where I think Jackie is seeing everything from the wrong perspective. She's seeing the world through a pre-digital lens. In a digital world, things get copied and with P2P networks, nothing can be effectively done to stop it. You can commiserate about it, reproach, bemoan, and even try to legislate... but you cannot enforce laws against it. For every P2P network you shut down, two more rise in its place. It is a losing battle. Do you want to go the rest of your life living in resentment and bitterness? Or do you want to accept that the world is changing around you, that your presumptions about how things ought to be might have to change accordingly, and upgrade your business model to leverage the internet's unique properties of infinite distribution to work for you rather than against you?

Jackie and I had the following conversation over Twitter:

Ross: Piracy is a market force saying, "the price for content is too high." When the price comes down, pirates turn into consumers.

Jackie: So bank robbery says bank fees are too high? Sorry, no.

Ross: The difference is whether piracy adds value—robbing banks removes value, pirating books increases their popularity.

Jackie: I'm sure piracy does increase some book's popularity. But unless that popularity leads to more $ sales, it's not adding value. Even the music industry hasn't given up the notion of charging for music in favor of ONLY other revenue streams.

Ross: ...which begs the question, what are you really selling—books or stories?

Jackie: That's like asking whether you're selling music or songs, in my opinion. The "book" is just how the story is delivered. A novel cannot be delivered by a live reading via the author (or anyone else). At best, only PORTIONS can be delivered that way.
Jackie: What I'm asking is where the viable revenue streams are if not from sales of books themselves? Show me the money.
Jackie: Even in the industry you cite as "proof" sharing is good (music), publishers still put a PRICE on their product. Books are the same as movies: they're entertainment. But I don't see how that relates to the discussion (unrestricted sharing).
Jackie: If all books are free, where is the revenue stream? WHEN/HOW does the author/publisher get paid for creating the entertainment?

Jackie's asking some well-intentioned questions, but they're mostly the wrong ones. She's still focused on the selling of a tangible—her books—rather than the intangible—her stories. When Jackie finally gets that she is a storyteller and not a bookseller, she'll start to mold a more sustainable business model around that concept.

Her question, "WHEN/HOW does the author/publisher get paid for creating the entertainment?" is foremost on the minds of all producers in the entertainment industry. How is what we're doing sustainable? How do we make money at this? How do we survive and thrive?

Counter-intuitively, when content is allowed to be free in the digital realm, it seems to bolster sales. Why? That doesn't make sense, does it? Consider the story of Matt Mason who wanted to release his book online for free alongside the hard copy version, but Matt's publisher denied his request. When Matt saw his ebook was being pirated, he again approached his publisher and said, "Look, it's already out there. At least if we release our own ebook, we can control it a little more. Maybe we can even find out something about our readership." His publisher agreed and released the book as a free PDF. A while later, a music bigwig heard about Matt's book, went to Matt's site and downloaded the PDF... and he was so impressed with the ebook, he went down to a brick and mortar bookseller and not only bought a hard copy for himself, but for everyone he knew. Without the free ebook available, Matt would have missed out on those sales.

So the questions Jackie should be asking herself is, what is she actually providing her readership? Is it the book, or is it the story in the book? What are the infinite goods and scarce goods in her business, and how can she leverage those infinite goods (the ones that can be copied infinitely on the internet) to increase the value of her scarce goods (the ones that cannot be copied on the internet) so that revenue streams flow to her and/or her publisher? How can she employ generatives to her maximum possible advantage?

Perhaps the hardest question of all: if Jackie can't find a sustainable business model for being an author, what does she do next? This is an extremely volatile question which I hate asking because so few people are willing to examine with unflinching honesty whether their business as it currently exists deserves to survive. Nobody wants to hear their business is slowly dying, but history is littered with businesses who were too stubborn to accept the decline of consumer demand for tangibles that no longer met the market's needs:

1. The need for personal transportation is perennial, but the method shifted from horses and carriages to automobiles.
   
2. The need to watch audiovisual arts is perennial, but the method shifted from film to VHS to DVD to P2P & streaming.
   
3. The need for listening to music is perennial, but the method shifted from live performance to records to eight track tapes to tape cassettes to CDs to MP3s.
   
4. The need to share news is perennial, but the method shifted from town criers to the printing press to desktop publishing to the internet.
   
5. The need to read stories is perennial, but the method shifted from illuminating manuscripts to book printing to ebooks.

If you had built your business on any of those shifting methods, and only provided a tangible product or service ["tangible service" is an oxymoron] to the market, then your business was in danger of extinction (manuscript illuminators, town criers, horse and carriage drivers, typesetters, record makers, tape cassette makers, VHS makers, etc.). Yet if you build your business on a perennial market need and shift with current methods to fulfill the market need, then your business will be around as long as that need is around.

The good news for Jackie is that authors are in the business with the lowest possible fixed costs of any entertainment sector—compared to movies which have to employ up to hundreds of people to create that first unit, authors are the definition of svelte: 1 person, 1 room, 1 laptop. It can't get much easier, or cheaper, than that.

So I do think a sustainable business model for authors in the digital age exists, although those models may be so radically different from the current model that authors may not feel like they are "purely" authors anymore. Authors like Jackie complain that their primary revenue stream is being "stolen" by pirates, but look at Justin Timberlake: the guy is a musician who has secured over a hundred revenue streams which do not involve selling recorded music. Instead of resting his entire livelihood on one revenue stream, Timberlake is almost certainly hoping his fans pirate his music because the increased exposure will only make his other 100+ revenue streams increase in value. Can authors do likewise? More to the point, can they afford to not do likewise?

I've already done the broad sketches for a filmmaking model. I'd like to flesh that out more before speculating on other models so I won't offer my thoughts (yet) on what new revenue streams for authors might be. Nevertheless, I'd like to see somebody take a stab at coming up with new models for authors because the digital age isn't going away—in fact, the next generation will likely make that logical leap which we, fettered to our pre-internet analog childhood, are unable to stomach: that file sharing is easy, unstoppable, and commonplace. As long as artists find ways to thrive in the digital age, will it really matter to their fans how immoral file sharing might be?

Biracy & Crowdfunding—Peril or Paradise?

While researching possible avenues of funding for a feature film, I've heard about crowdfunding over the years. Crowdfunding is fundraising from a large group of small donations instead of a small group of large donations. Several companies do crowdfunding now, and a few specialize for filmmaking. Here is an excellent collection of short videos of the top 15 crowdfunding companies in their own words.

I was recently contacted by David Geertz from The Biracy Project (@biracy) in my role as moderator for the Infinite Distribution Panel to help generate questions for a Biracy video Q&A. The panel had several great questions and Geertz personally responded to them. It was so helpful, Geertz said, that they might even do it on a weekly basis.


Crowdfunding has obvious advantages over traditional film financing, chiefly among them that filmmakers are able to find and connect directly with their fans even before they roll film. Whenever others are invited to come on board to have a say in which direction the ship is heading, it bestows ownership to them... which in turn sparks the sort of emotional investment to a project that advertisers salivate over. People who join crowdfunding projects want to see that project succeed—they have a natural incentive to participate in and promote their project. Anyone who understands the power of networks realizes that as the size of a network grows, its reach and influence increases geometrically. Crowdfunding locks in your funding and your audience at the same time. You can't really ask for a better scenario.

The question is—is it legal?

NOTHING BUT BLUE SKY
I'm not addressing the question of whether crowdfunding should be legal—I already feel strongly that it ought to be. Fans want to invest in films like buying stock in the stock market, and reap the same benefits as multimillion dollar film financiers, so why shouldn't fans be allowed that option? Unfortunately, America has a formidable legal obstacle—state laws called blue sky laws which "regulate the offering and sale of securities to protect the public from fraud." These laws were designed to protect unsophisticated investors from scam artists trying to swindle grandma out of her life's savings. For crowdfunding, the law seems not to fit anymore, but that's irrelevant—if the SEC decides you're violating their regulations, then it really doesn't matter how outdated the laws are. Are you able and willing to afford a proper legal defense to keep yourself out of orange overalls?

So the central issue to consider is whether crowdfunding is, in its current incarnation, legal under today's laws. If I join a crowdfunding operation, could I be involved in a class action lawsuit one day and/or criminal charges? Are all current crowdfunding operations simply a ticking time bomb? Whenever a new business model first emerges, existing legal codes often don't understand how to interpret legal code to accommodate the shifting market. Is this the case for crowdfunding?

THE CAUSE FOR CONCERN
I posed those questions to Biracy's Geertz on Twitter and I feel he answered them to my satisfaction. Before you see Geertz's reply, you ought to have a proper context of my own concerns because these kinds of articles made me extremely paranoid about crowdfunding. From Mark Litwak's site:

Question: We have a project and are interested in soliciting investors without violating SEC rules. What can we say that's legal but still gets the point across, and what is illegal?

Answer: The most important thing to say is that you are not making an offer. You are simply having a preliminary discussion with people. In order to take money from investors, you need to either register your company with the SEC, which costs a considerable sum, or fall into one of the limited offering exemptions. A major restriction on these limited offerings exemptions is that you cannot do any public solicitations like mass mailings and cold-callings. And you'll be limited to thirty-five unaccredited investors. An accredited investor is essentially a wealthy, sophisticated investor. Everyone else is an unaccredited investor. If you can live with those restrictions, the cost of complying with securities laws is considerably less but still significant. If you violate the securities laws, you can be subject to civil and criminal penalties. Link.

Another article:

In general, under the Securities Act of 1933, entrepreneurs who seek to sell stock in a business should register the securities with the Securities Exchange Commission plus comply with other often complex federal and state regulations. While this may seem daunting to a startup company like yours, the SEC provides some exceptions. One of the ways to bypass some regulatory requirements is by soliciting wealthy accredited investors, also known as "qualified investors."

Regulation D of the 1933 Securities Exchange Act defines accredited investors as individuals who have a net worth of $1 million or income of at least $200,000 in the two years prior to investment. For couples, the prior income requirement is $300,000. The SEC notes that income requirements are met only if there is a reasonable expectation that income levels will be maintained in the future.

Accredited investors can also include banks, insurance companies, small business investment companies and corporations, charitable organizations or partnerships with assets exceeding $5 million.

The thinking behind the financial means test is the presumption that wealthy investors are sophisticated about the risks associated with privately-held company investments and can "afford" to lose the entire investment.

Granted, families of more modest means invest in startup restaurants, retail establishments and service companies all the time without meeting accredited investor tests. They can without attracting regulatory attention because companies are generally permitted to raise money from up to 35 non-accredited investors, plus an unlimited number of accredited investors. Still the SEC does require that companies reject non-accredited investors who are not financially sophisticated and understand the risks associated with the investment. Link.

...and another article:

If a small contribution obtained via crowdfunding is actually an equity investment or even a loan, then crowdfunding companies may soon run afoul of securities laws. I forget the details but if you raise money from over a certain number of investors, you start being subject to all sorts of securities laws that are a pain.

If you ask me, those laws should be completely recrafted to allow crowdfunding and kick it into high gear. To me, crowdfunding is fuel for human capital and great projects that is currently untapped but has enormous potential to change the world as we know it. I'm sure there are some advocated at the SEC, the SBA, the Federal Reserve but, no doubt, bureaucracy is frustrating the heck out of them right now. Hopefully, we'll figure out how to tap into the power of crowdfunding soon.

The thing is, it does have to be regulated. I mean crowdfunding scams will be huge, once crowdfunding grows in popularity. When there's money involved, scammers will come.

There also needs to be some liquidity to crowdfunding shares. If people are going to make microinvestments, they will want to be able to profit from their investment. It will be a great day when a firm that raised $100,000 from 20,000 $5 investors sells out for a few million and everybody gets a tidy, albeit little, return on their investment. Link.

And a super recent article from Boing Boing:

Donors can get a little something in return through these sites if the projects they fund come to fruition, like a signed copy of a book that's produced (Kickstarter), or reimbursement in credit if a news organization buys the story (Spot.Us). But what if a crowdfunding site could offer donors a piece of the action, not just some thank-you goodies? That's what I would want, and I don't think I'm alone. I want investors for my schemes, not patrons, and if people support me to do something that flies, it would only please me to give them a cut.

But then I started talking about the scheme with lawyers, including Boingboing counsel Rob Rader, who has been extremely helpful. The legal terminology for my notion, it turns out, is "patronage-plus ex ante crowdfunding," at least in a recent article by Tim Kappel in the Loyola of Los Angeles Entertainment Law Review The short answer is, such a site would probably be illegal under U.S. federal securities law. "Securities" are defined as any investment whose return is dependent upon the effort of others. It's a one paragraph definition, very broad, hard to get around, and there's no de minimis dollar cutoff below which the regulations stop. A lemonade stand venture could be subject to SEC regulation.

Securities regulations don't apply if the investors are genuinely active in the day-to-day management of the venture-- but it isn't enough to just give them access to a project wiki and consider their suggestions; you must demonstrate that they are all critical to the venture's success. So much for that loophole.

Another possibility is the SEC's "Private Placement Exemption" under Regulation D, which allows unregulated investments if the number of investors is limited. Specifically, you can sell shares to at most 35 regular individuals (and an unlimited number of accredited investors, i.e. various institutions, plus people who have a net worth exceeding $1 million, an annual income over $200K, or a personal trust exceeding $5 million).

But Regulation D also prohibits any "general solicitation or general advertising" to let people know about the venture. The only published announcements of such investments are the cryptic "tombstone ads" that you sometimes see in the print versions of the Wall Street Journal or New York Times business section. These ads, which AFAIK have never been published online-only (although this might be possible) must be very limited in their disclosure. It might be OK to say "Paul Spinrad offers shares in a graphic novel based on the life of Elliot Smith" but that's about it. The announcement can't include anything that makes Kickstarter and Spot.Us so fun to browse through-- no details of the project, no wish lists, no video clips of people saying, "I'm so excited about this project-- it's got great indie film potential-- all I need is 4 months time and a round-trip ticket to Portland!"Link.

If you aren't a little nervous by now, then you have a heart of stone. Violating SEC regulations is serious business and could land you a princely fine and/or time in jail.

BIRACY: "IT'S NOT AN INVESTMENT"
Geertz provided two Q&A videos and kicks it off by saying clearly that Biracy is not an investment, and thus should not be confused with a security—money given to Biracy is a donation, a membership fee, and a pre-ordering of a product. There is no financial remuneration as you would receive with an equity investment, be it stocks, company shares, or real estate. Thus, you don't fund films like multimillion film financiers for a jackpot if the film is a hit... instead, you get something called Kaps, a virtual currency. This is the key distinction—you don't get real money in return for your donation, just benefits with the company, like store credit. You can, however, earn money from commissions by referring others to Biracy, like a multilevel marketing company. It's clever.

If Biracy proves itself to be a sustainable crowdfunding model, then its founders will soon launch SoKap.com to let other producers benefit from Biracy's model. As I understand it, the only danger in violating SEC regulations is to the company, not its donors, so I think I'll invest in donate to Biracy today. However, were I to use Sokap as a Producer, I'd feel obliged to run all this through my own lawyer before committing any resources to it. Why? Because you never really know how governments react to radical new business models. Once crowdfunding begins to become popular, all it takes is one egregious crowdfunding scandal to push the SEC towards clamping down on "risky new businesses using securities law loopholes to rip off unsuspecting victims". Then it all turns into a make or break acid test on how clear the law is about crowdfunding. Bunch of hooey if you ask me, but it wouldn't surprise me in the slightest. If I were a crowdfunding company, I'd probably approach other crowdfunding companies and pool our resources to get a lobbyist in Washington to update SEC blue sky laws so crowdfunding isn't just legal, but actually fulfills the promise of film investing—to make real money on films like multimillion dollar film financiers... but on a micro level.

Here are Biracy's two Q&A videos by David Geertz:
Q&A: Is it an investment? Part 1
Q&A: Is it an investment? Part 2

Take off your glasses

In 1994, I sat in the office of a New York City typesetter. This guy was one of the old saws who'd been around when typesetters were laying out type with cold lead. He was running a small imagesetting shop in midtown Manhattan and was offering me leads on where I could find work.

The desktop publishing revolution had been kind to me. I had been taught the rudimentary aspects of QuarkXPress to lay out our college newspaper and soon went on to master every aspect it, nearly devouring Quark's manual back to back. I loved typesetting. It was fun.

As sat in this guy's office, I remember getting caught up in how useful DTP was, how much more efficient its workflow was to what had come before it. No need to set physical type anymore—you just typed it into a computer. Wasn't that cool? This guy's take was quite the opposite: "I hate what desktop publishing has done to this industry." I can't remember his exact wording, but the gist was, I remember the old way. I liked the old way. But the old way doesn't make money anymore and I hate being forced to change.

I wasn't unsympathetic—everything he had known and loved about his industry had shifted underneath his feet. I felt sad for him, but... wasn't he able he see how much easier his life could be? Did he really want to return to a less efficient system simply because he wasn't as comfortable with newer methods? Instead of doing half as much work under the old system, he could do three times more work with the new system. As with any new tool, there was a learning curve, but wasn't there an intrinsic value from having access to better tools?

This resistance is typical across any profession undergoing change. The digital age affected typesetting in the '90s, the music industry in the '00s, and now it's hitting the movie industry. Unsurprisingly, my last article on how to make money even if you give your films away for free hit some resistance some filmmakers. Miles Maker had the most eloquent response:

To steer the focus away from making memorable movies and toward merchandising sickens me. Indies are already struggling to complete their beautiful little films to pay people and achieve higher production values. Where does the manufacturing revenue come from? And yes products are replaced by better products, but a film is a unique visual journey; an original experience all to itself... my body of work must hold value to sustain growth, or I will be forced to churn out lower quality FREE content at a hellish pace to support my life's endeavors.

I don't disagree on any particular point. Merchandising has taken a more prominent role, perhaps even in competition with a movie's unique visual experience, and that also sickens me. It's already hard enough to pay cast and crew to make movies, and now the possibility of offering up our films for free doesn't seem to make any sense at all. We all want consumers to pay for the experience of the film, and it feels like long-term growth is unsustainable under a FREE model.

In this whole debate, my own feelings on the matter have been drowned out: if I could wave a wand, I would never make films free. I think piracy has been enormously disruptive to the entertainment industry... however, despite my strong personal convictions, I also realize that stopping piracy is a Sisyphus-tic pursuit and the only way forward is learning how best to adapt to the changing market, i.e., how to compete.

I also feel strongly that anyone refusing to acknowledge the direction of the wind will be blown out to sea, and rightfully so. Pay American workers too much and American companies will outsource to cheaper foreign workers. Yes, it's tragic, it affects lives, it's awful. But it's also how a free market economy functions—those who don't adapt quickly enough perish.

To address Miles' point, long-term growth might very well be unsustainable under a free model... if we assume a very narrow definition of what is trying to be sustained, i.e., producing and selling feature films at their current budgets for current prices. That may very well be unsustainable (though a free model might be more profitable if we figure out the right formula). The variables, however, can be changed—cheaper movies can be produced and movies can be sold for less. Yes, American filmmaking might be unsustainable, but the ludicrously inexpensive filmmaking industry in India will thrive unabated. If America's film industry cannot sustain itself in its current form, it will either adapt by lowering its costs, by dropping prices, or it will stop.

The way things are going, I suspect the American film industry in its current state is indeed slouching toward unsustainability. This is why I feel the definition of what is sustainable is too narrow—regardless of what we want our role to be as filmmakers, the market is telling us all that it doesn't just want films, it wants stories. The market wants storytellers. Feature films are but one product fulfilling that market need.

Many average filmmakers will be too obstinate or unwilling to see the glaring truth: the traditional role of filmmaker is expanding beyond its current skillsets to pave the way for a hybrid filmmaker/producer/publicist/storyteller. Only the most astute among that group will flourish in the coming years... and we'll hear Old Guard filmmakers whine more frequently about how they can't seem to compete with free (a red herring—the bottled water industry does quite well competing with free). The period of vetting is already upon us as some big studios close up shop. Independent filmmakers, already pushing their fixed costs as low to zero as they can, will migrate toward wikinomics-style filmmaking where many cast and crew volunteer their time for its own sake, perhaps preferring to take percentages on the back end instead of a basic salary. Yes, that will devastate the industry as we know it now, but it seems to me that the writing is on the wall.

No matter what my own personal feelings are about piracy or how the entertainment industry has changed for the worse, nobody can legitimately condemn a future they don't yet know: horse and buggy drivers would have been astonished at how much more efficient (and "better") transportation is today. Likewise, the next generation will likely one day say to us, "You used to PAY for movies?!?" and then laugh themselves silly. We'll all pine about a childhood as alien to them as living without electricity is to us now. The future of entertainment will not always be as it currently is, but its next iteration—perhaps weaving interactive narratives across multiple media to create fascinating stories—could be far richer, more engaging and even more meaningful than a feature film could ever do by itself. That might mean feature films become less ubiquitous in the entertainment spectrum, but that's not really up to filmmakers. Only the market can decide something like that.

The Future of Movies: Machinima

It seems like whatever happens in the music industry (MP3's starting to make CDs obsolete) always affects the movie industry a few years later (iTunes starting to make DVDs obsolete), so I always pay very close attention to the music scene as a crystal ball in which I can peer into the near future of the movie biz.

A friend of mine forwarded me this article about Peter Gabriel and how he's been on the cutting edge as an entrepreneur of his own music. Gabriel has been known to do some cool stuff over the years, especially his brief foray into computer games with Eve, which wasn't a "hit" game but had such striking imagery and sounds that it still resonates with me today.

Anyway, in the article, this part in particular grabbed my attention:"[Gabriel] foresaw the time when the public would be able to take music and mix it the way they wanted to hear it."

As I gaze into the crystal ball, I see the future of filmmaking as something quite similar to this, startlingly interactive compared to today's films, where users will have more freedom to sculpt their own film, including even the way stories unfold. Google Wave is already hinting to us how filmmakers could be collaborating in the future. In the same way musicians are shifting towards creating and offering multiple overlaying tracks for users to mix and match their own tracks, computer software will simplify the process for users—either solitarily or collaboratively—to create machinima-like films with total control over every filmmaking aspect: music, actors, story, dialog, setting, etc. This will result in an explosion of shoestring budget home-made videos entertaining in themselves, the most popular of which might even be made into conventional films since these cheaply made machinima would essentially be a feature-length polished pre-vis storyboard. We'll start to see this in the mainstream in the next 5-10 years, but in 20 it will dominate global culture, even to the extent of having a cable/internet channel of nothing but machinima films. I'd bet money on it. The programmer or software company who devlops a machinima producing program that's intuitive, capable, and fun will make money hand over fist.

The animated film Renaissance was an eye-opener for me. Its motion capture technology let the actors record a scene... and then, afterwards, the director chose whichever angles he wanted the camera to render for his final cut. That's 100% the opposite of how films have been made in the last century—first plan the scene, then shoot the actors. This new, inverted workflow is highly adaptive and will become very popular because users can create infinite variations of scenes and generate fantastical settings constrained only by the user's technical mastery of the software. At some point in the development of these new "mo-cap" films, even the actors will become obsolete, or effectively so since computerized actors will become realistic enough for mass consumption. We can already see the beginnings of this with Afterworld, a 100 part series of 3 minute animated storyboards.

Low budget projects allow for wider experimentation and the most creative of those experiments can sometimes become the most popular... so the question at hand is how to monetize this emerging industry. It could be through ads, it could be through donations, or it could be through investment. The advantage machinima has over all other forms of cinema is that it's so cheap to make that it won't need much to break even. And, if it's a labor of love, any extra profit is just gravy. In the Brave New World of free, homemade high-quality machinima will dominate.

Here's a professionally made machinima short to promote Team Fortress 2. Funny stuff. We'll be seeing a lot more of these in the coming years.

The Filmmaker's Roadmap to Free

...nobody knows what to do right now, me included. The music business model is broken right now. That means every single job position in the music industry has to re-educate itself and learn / discover / adapt a new way. Change can be painful and hard and scary. —Trent Reznor, Nine Inch Nails, July 9, 2009

Chris Anderson’s latest book, Free: The Future of a Radical Price, set off a fevered discussion earlier this year among many in the entertainment and investment sectors. When this all erupted, I collected the book's most cogent replies into one long file and pored over them during a few hourlong jaunts to the gym. I don’t remember too many of those workouts because my mind was racing to imagine how any business could possibly function in a world of free products, especially films.

I’ve already reached some conclusions about piracy and I have some other thoughts the ‘free’ debate as well. However, it seems... well, incomplete to state my own opinion without quoting all the other amazing articles so pivotal in forming that opinion. So I’ll dedicate a series of posts to each of these authors’ articles with links back to their original web sites.

Articles I’ll be listing in the timeline:

1. Free: The Future of a Radical Price by Chris Anderson—The book that kicked off the debate.
   
2. Priced to Sell: Is free the Future by Malcolm Gladwell—Malcolm’s review about Free.
   
3. Dear Malcolm: Why so threatened by Chris Anderson—Chris’ reply to Malcolm.
   
4. Malcolm is wrong by Seth Godin—Notable blogger picks a side.
   
5. Free vs. Freely Distributed by Mark Cuban—Owner of HDNet and Landmark theatres weighs in.
   
6. Chris Anderson, Malcolm Gladwell And A Look At Free by Michael Masnick—A superb overview of the debate.
   
7. Freemium and Freeconomics by Fred Wilson—VC guy, referenced in the final article by Burnam.
   
8. Chris and Malcolm are Both Wrong by Brad Burham—Great piece about the whole debate, Fred Wilson’s article, and the free economy.

At the end, I’ll list my own thoughts in nine sections over nine days:

1. OK, it's wrong... so what?
   
2. The Moral Issue
   
3. Feedback from Pirates: A Case Study
   
4. Digital Theft, Oxymoron
   
5. It's all Fixed
   
6. Creating Value
   
7. The Way Out
   
8. The Key is Generatives
   
9. Acknowledgments & Further Reading

Showrunning

Today we shot the second webisode—W102—for a series I developed. I'm very happy to say that everything went extremely smoothly. We had a late start from miscellaneous technical issues and had to improvise by striking a few shots from the shot list, but once we rolled camera, the team snapped into one cohesive whole. We got some great shots, and as a bonus, we were all clearly enjoying ourselves. What a great crew!!

For me personally, the shoot was an odd (but pleasant) experience: I wasn't directing this episode, but I ended up doing two jobs at once—showrunner and script supervisor. At first, I thought I'd want to foist all the scripty work onto another capable soul so I could concentrate on my supervising duties as showrunner. (As a creator of a series, it falls on the showrunner to offer creative guidance if an episode falls outside the vision of the series) I had thought taking copious scripty notes would detract from my role as showrunner, but as a scripty—i.e., being at the Director's side to assess each shot for continuity gaffes—gave me the perfect excuse to also offer any showrunner feedback to the director (of which there was almost none, I might add!). Naturally, there were a few times I was taking notes when I'd have preferred just watching the monitor, but overall, it was a very good fit.

Day two for this shoot is coming up fast. Although the pilot I directed two weeks ago was dialog-heavy for exposition, this second webisode is far more intense, and better drama overall. Can't wait to get W103 and W104 in the can, too!

Red Letter Day

Can't say much, but today's a big day. After a year of writing and months of pre-production planning, I finally get to direct the pilot webisode for my TV series about the end of the world. We've already lined up the next episode and have two more slotted after that. All different directors, different writers, and different characters. I know the idea is highly scalable because everyone I speak to about it gets excited about their own take on the concept. When we get enough episodes in the can and launch our web site, I'll lay it all out. Until then, I'll be posting production pics from the set on this blog, on Facebook and via Twitter.

Crossing my fingers that all goes well today, especially the air conditioning. Nothing's more miserable than working on a film without functional AC between takes...

Selling Digital Content in The 21st Century (Fans are key)

Below is one of the most astute lectures I've ever seen on how content providers can make money in the changing economy. It's a keynote speech by Mike Masnick on Trent Raznor's (from Nine Inch Nails) creative approaches to making money by simply connecting with his fans... and then giving them a damned good reason to buy from him.

As I've said before, piracy is not a technological problem, and thus cannot be stopped in the long-term by making it illegal. Pirates will always outnumber policing agencies and the swiftness of digital transfers will always favor pirates over content providers. No amount of locks will keep someone from breaking into your house if they want to. Piracy is really a social problem—people pirate because they're frustrated with being gouged by $30 DVDs or $20 CDs (just to buy 1 song), or the content can't be seen or heard yet because the movie or song is (pick one: still in theatres, still on pay-per-view, not being broadcast locally, too old to find on DVD, only on a non-US region DVD, being sold for outrageous prices on Amazon due to it not being a US region DVD, not something you would usually see or listen to but are curious to sample it, etc.) Ultimately, piracy is simply a free market force in the hands of pro-active consumers. Consumers want the content and if it's easier to get that content from a pirated copy, they'll do it.

However, if you give consumers a true reason to buy your product (e.g., DVDs specifically made to glow when they spin, treasure hunts & Alternative Reality Games found on T-shirts sold at your concerts), piracy quickly becomes moot. Consumers want to experience creativity from their artists and they'll gladly reward the most creative artists with cashey money if given a chance.

Embedded here is the 15 minute (trust me, it goes by quickly) presentation I did at MidemNet on January 17th in Cannes, France. If you're reading via RSS or another site like iGoogle, click through to see the full presentation. Sorry it took so long to get the video up. There were a few minor technical difficulties. Anyway, the presentation garnered an interesting reaction and a whole series of fascinating discussions over email, in person and over the phone since I presented it, and while I don't want to repeat what's in the video, I did want to discuss a few points raised by the presentation. The core of the presentation is the following simple "formula" that is the basis for making money in the music business (and, I'd argue, many other businesses) in the digital era:

Connect With Fans (CwF) + Reason To Buy (RtB) = The Business Model ($$$$)

There are many artists—famous and not so famous—who have been making use (on purpose, or not) of this formula to create successful strategies for building up a stronger fan base, creating wonderful new works of art, distributing them out to the community and getting paid for it at the same time. What made Reznor so interesting as a case study was the fact that he's done it so many times in so many different ways that he, by himself, represents a great example of how you can approach this simple formula in an infinite variety of creative ways.

One of the issues I've had in discussing recording industry business models is that we always hear excuses for why a, b or c won't work. "Well, that guy can make money selling t-shirts, but this guy's fans aren't t-shirt types." "That guy will sell concert tickets, but this guy doesn't like to perform." "Maybe some fans will pay upfront, but people are so greedy that most will just free-ride." It's all excuses. They all want a simple model that everyone can follow, but the point here is that while the model itself is simple, executing on any business model is difficult.

It's about applying that "simple model" in a variety of different creative ways—which Reznor has done time and time and time again. Hell, I couldn't even include all of the examples of Reznor's successes in this single presentation, let alone successes by other musicians who have executed differently—but all of whom connected with fans (CwF) and then gave them a real reason to buy (RtB).

A second point that needs to be discussed is that a true reason to buy (RtB) is a voluntary transaction. Too often we've seen musicians or other content creators think that there is some sort of obligation to buy. And, so they put something out with a price tag, but without doing a very good job convincing fans why they should buy. There was no real reason—and then they seem to lash out at their fans for hurting them. The fault, however, lies with the musician (like any business) who failed to give a proper reason to buy, and falsely assumed that fans had some sort of obligation to buy. If an artist believes there's an obligation to buy, fans will often educate the artist very quickly.

One final point on this is the last question that people often raise: why should the musician be involved in any of this? Shouldn't they just be creating music. There are two answers to this. First, this is exactly where a smart record label, agent or manager can come in and be quite helpful. Let the musician create the music and let the "business guys" focus on applying this business model. Second, however, is that due to the way the industry is these days, the musician does need to be somewhat involved. You cannot connect with fans if you're in seclusion. If you don't want to make the effort to connect with fans, then that's fine: you won't have that many fans. It's a choice you make.

That said, there are tremendous opportunities allowed by new technologies, new communities and new methods of communicating today. They all enable better ways to connect with fans, and better ways to offer real reasons to buy. Those who look at the past and complain about what's been lost need to turn around and look at the vast open fields of opportunity in front of them. There's a lot more music to be made, a ton of new fans to make very, very happy—and, yes, through it all, an awful lot of money that can be made as well. You just need to stop worrying about what was lost and recognize all there is to be gained. Link.

Trailer: Bram Stoker's Dracula

Last month, I worked as a script supervisor on a shoot for Bram Stoker's Dracula. This shoot wasn't for a feature film, but one part of a multimedia production. The idea is to intersperse a stage production of Dracula with about 20 minutes of filmed scenes.

Everything on the shoot was top notch—the costumes, the locations, the crew, the actors, the makeup... everything. Although we only got about half of what we wanted to get due to rain (and we still plan on shooting the rest later this month or next), the teaser trailer our director put together looks fantastic (pecial kudos to editor/CGI master Matt Baker for pulling an all-nighter to get the trailer done on schedule):

The stage production will premiere in February 2010 at the Imagination Theatre in Placerville, CA.

Dance, Mumble!

Parenthood has its drawbacks, like being induced to watching the same movie ad nauseum. Sometimes, though, that can work in your favor since many of the animated children's movies made these days are spectacular and well worth watching repeatedly. Shrek. Kung Fu Panda. Anything by Pixar. Fortunately, as each year passes, animated films only get better and better.

One film stands above the rest—Happy Feet. When this film came out in movie theatres, I hadn't even heard about it despite the deluge of ticketbuyers. When it finally arrived on DVD, we were eventually forced to watch it. Happy Feet has a lot going for it that I hadn't anticipated: action, adventure, romance, stunning scenery, comedy, story... but the shining star at its core is its music, song and dance. Happy Feet is about a tap dancing penguin amidst a community of singing penguins, and thus, it is almost literally a fish out of water story.

Regardless of the dramatic implausibility of musicals, I have a deep fondness for the musicals genre. Man of La Mancha, Guys and Dolls, and 42nd Street are among my favorites, and newer musicals like Rent, Chicago, and Moulin Rouge! are on the list, too. I'm also drawn to anything involving percussion—the broadway show STOMP was riveting. Tap dancing, I realize, is essentially percussive dance.

If you combine my love of musicals and percussion, it's not a stretch to see why I'm already predisposed to like Happy Feet. Even so, it's hard to do a musical and tap dancing well, and Happy Feet simply knocked my socks off. It clearly earned its Oscar for Best Animated Feature in 2006.

Below is what I consider as among the best musical and performances ever. If you can get past the central conceit of penguins dancing and singing (which already happens after seeing the first 10 minutes of the film), then you start to appreciate some incredibly well thought out choreography, singing and musical arrangement. It came as no surprise to me to learn this on wiki:

The animation in Happy Feet invested heavily in motion capture technology, with the dance scenes acted out by human dancers. The tap-dancing for Mumble in particular was provided by Savion Glover who was also co-choreographer for the dance sequences. The dancers went through "Penguin School" to learn how to move like a penguin, and also wore head apparatus to mimic a penguin's beak. Link.

In the clip below, pay special attention to the music's pacing, and the musical and dramatic intensity of each moment within the scene—to create a sharper and more dramatic impact, a long and quiet intimate moment precedes a massive performance with lots of noise. Additionally, the entire film sets up this one scene—Gloria spends the first part of the movie repeatedly singing the opening stanzas to a popular song from the 70s, so her lyrics nag at you the whole time... where have I heard that? So when Gloria finally sings that song (in this scene)—with a full orchestra and a chorus of hundreds behind her—it's the emotional equivalent of feeling a dam burst.

Some dramatic setup: Gloria is the pretty girl courted by every suitor because of her enchanting voice. Mumble, her childhood sweetheart, has been outcast because he's tone deaf and has "bizarre" tap dancing skills. Desperate to win Gloria over, Mumble returns with some new friends to sing Gloria a song she's never heard before... and fails miserably. Equal parts astonishing and comical, what happens next is the best scene film:


I wish someone had forced me at gunpoint to go see Happy Feet when it was in movie theatres.

Joining The Conversation

I heard about The Conversation this summer and immediately bought a ticket:

[P]ioneers at the forefront of change in cinema, video, games, media and technology are coming together to share ideas, insights, and innovations. Our focus is on new tools, new distribution channels, and new rules.... The format of the gathering will be experimental: rather than a traditional conference, short talks and demos, "fireside chats," and roundtables will spark a dynamic series of overlapping conversations.

Their guest list is enough to make any independent filmmaker salivate—Peter Broderick, for instance. His recent article in Indiewire about the New World of Distribution for indie filmmakers is germane to how (I think) digital entertainment will be distributed. Hunter Weeks is another gem on the list—he's one of the co-creators of 10 MPH, a documentary about two guys crossing the United States on a segway. Week's movie home page is an exquisite example of how to use the internet to market your own movies. Other notable invitees hail from Netflix, Createspace, Filmbaby, JibJab, Lucasfilm, ILM, The Webby Awards, and YouTube. See the complete list of speakers at the bottom.

One really appealing part of The Conversation—you can throw out your own ideas. I thought about it for awhile and this forum seems ideal to mention some of my own predictions on the future of digital entertainment. Frankly, in one form or another, I've been observing, discussing, and molling over the movie industry for three years and have a pretty well-informed opinion about it. So I decided to make a presentation of my own about license-based entertainment which will be a riff on a recent article I wrote about iTunes' Death Knell. My ardent hope is that my presentation isn't eclipsed by someone else's brilliant 90 minute lecture. I do hate redundancy.

The Conversation takes place all day this Friday and Saturday. Tickets are still on sale, but a little steep now at $150. But if you have nothing to do, come be my own peanut gallery!

COMPLETE LIST OF SPEAKERS

• Alex Afterman, Founder, Heretic Films
  
• Alex Lindsay, Founder, Pixel Corps
  
• Arin Crumley, Director, As the Dust Settles and Four Eyed Monsters
  
• Barbara Robertson, Journalist, CGSociety, Computer Graphics World, Digital Production
  
• Chris Thilk, Director of Marketing, Spout LLC
  
• Cliff Plumer, Chief Technology Officer, Digital Domain
  
• Dan Gregoire, Founder, Halon Entertainment
  
• Dana LoPiccolo-Giles, Co-founder, CreateSpace (formerly CustomFlix)
  
• Danae Ringelmann, Co-Founder, IndieGoGo
  
• Dean Valentine, CEO, Comedy.com and Founder, Symbolic Action; former CEO of UPN and President of Walt Disney Television
  
• Diana Barrett, Founder, The Fledgling Fund
  
• Evan Spiridellis, Head Art Guy, JibJab Media
  
• George Strompolos, Content Partnerships Manager, YouTube
  
• Graham Leggat, Executive Director, San Francisco Film Society (Moderator)
  
• Gregg Spiridellis, CEO Guy, JibJab Media
  
• Hunter Weeks, Director, 10 Yards and 10 MPH
  
• James LeBrecht, Berkeley Sound Artists
  
• Jason Harris, President, Mekanism
  
• Jeremiah Birnbaum, CEO, SF School of Digital Filmmaking
  
• Jesse Keane, Chief Technology Officer, CinemaNow
  
• Jim Sommers, Senior Vice President, ITVS
  
• John Batter, Co-President of Production, DreamWorks Animation SKG; former Group Studio General Manager, Electronic Arts
  
• John Gaeta, Visual Effects Designer, Speed Racer and the Matrix trilogy
  
• John Knoll, Visual Effects Supervisor, Industrial Light & Magic
  
• Jonathan Marlow, Executive Director, San Francisco Cinematheque; formerly at Vudu and GreenCine
  
• Josh Wiggins, Senior Director of Global Strategic Sales, Ascent Media
  
• KC Blake, Anywhere/Anytime Content Lab, Entertainment Technology Center@USC
  
• Ken Eklund, Writer & Creative Director, "World Without Oil"
  
• Ken Goldberg, Director, Berkeley Center for New Media
  
• Lance Weiler, Filmmaker & Editor, The Workbook Project
  
• Michael Ferris Gibson, Director, 24 Hours on Craigslist & Producer, Truth in Numbers: The Wikipedia Story
  
• Michealene Cristini Risley, Independent filmmaker, Tapestries of Hope
  
• Mike Curtis, HD for Indies
  
• Mike Shiley, Director, Inside Iraq: The Untold Stories & Dark Water Rising
  
• Nick Braccia, Creative Director, Deep Focus
  
• Peggy Weil, Artist & Game Developer, "Gone Gitmo" and "The Redistricting Game"
  
• Pete Ludé, SVP, Sony Electronics
  
• Peter Broderick, President, Paradigm Consulting
  
• Phil Tippett, Founder, Tippett Studio
  
• Reed Hastings, CEO & Founder, Netflix
  
• Rich Bradway, Associate Dir. of E-Commerce & New Media, Boston Symphony Orchestra
  
• Richard Kerris, Chief Technology Officer, Lucasfilm Ltd.
  
• Scilla Andreen, CEO, IndieFlix
  
• Scott Kirsner, Editor, CinemaTech
  
• Ted Hope, Co-Founder, This is That
  
• Tiffany Shlain, Filmmaker & Founder, The Webby Awards
  
• Tim Napoleon, Chief Strategist for Digital Media, Akamai
  
• Wendy Levy, Director of Creative Programming, Bay Area Video Coalition
  
• Woody Benson, Managing Partner, Prism VentureWorks

In Dutch in Lake Tahoe

Wednesday was a small milestone for me. In Dutch, a film I directed last year for Meaghan Sinclair, was shown to a group of strangers in Lake Tahoe. I've premiered films I've written myself, but when you work on a film which isn't your own passion project, it's natural to feel a little differently about it. Still, I'd be lying if I said I didn't get a thrill when I saw a In Dutch's onesheet magically appear on the Valhalla At Tahoe web site. (You can read all my posts about In Dutch here.)

Tahoe's gorgeous and I loved the drive in this time. I snapped this pic from my iPhone as soon as Tahoe appeared around the bend:



The Valhalla Boathouse is located right on Lake Tahoe (maybe you caught the bit about it being a boathouse?) and reminiscent of a smaller version of Yosemite's Ahwahnee Hotel:


The inside has a nice cozy feel, too:



Because it was a last minute thing, the Producers really didn't have a chance to do much publicity for it. We had a small gathering, but I was thankful. Had there been 100+ people, I think I might have been in the back vomiting uncontrollably. A small crowd feels less like a festival screening and more like a party. Rob and Meaghan and I had a lot of fun introducing the film and doing a Q&A afterwards.

The reactions were favorable. One can never be absolutely certain how an audience feels about a movie, but any unsolicited praise goes a long way to show at least one person enjoyed themselves. One older gentleman commented how great the sound was, which was extremely gratifying—I had lobbied hard to hire the Emmy award-winning Dave Losko as our Sound Mixer. Another audience member lauded the acting, which I also worked extra hard to achieve. Of course, there's no way I could take credit for the acting itself, but the coaching I gave the actors—in fact, they're the first ones to say this—had a substantial difference on their final performance. For me, acting and sound are usually the two weakest links in the chain for any short film, so I chalked up the evening as Mission: Accomplished.

Regrettably, due to scheduling and geographic constraints during post-production (I had a newborn at home last year, and lived 50 miles away from the editor), this cut of the film was not my edit. So I was delighted the producers offered me a chance to recut In Dutch into a version we'd all be happy with. Though the current cut is already quite good, the sound design still needs a little tweaking and some insert shots weren't done because we ran out of time on the day of the shoot. Realistically, I'd estimate the final cut needs another 20-40 hours of work to really make it shine. Why is it always the last 5% the bit which takes 90% of the effort?

O blog! I still love thee!

My poor business partners. I don't think they had any idea what they were in for when they asked a writer to help found a film company... because dude, have my digits been churning out the words!

I also noticed that my blog posts have been dropped substantially, and that's a direct result of spending time starting up a company. All my mental energies have been redirected towards hammering out our business plan and although my inclination is to discuss each step of the plan which would be immensely educational to all, I simply can't; there are too many sensitive issues being discussed. To riff off Maximus, once you post something online, it "echoes throughout eternity".

My emails between my partners have been long, numerous, and thoughtful... perhaps one day when the business is more mature, I'll come back and publish them. The most useful thing I've found in this process is that a lengthy discussion with one's business partners (whether it be verbal or virtual) is surprisingly useful in clarifying a company's goals. Anyone can say, "let's start a film company." But the when, where, how, how much, and why are deceptively difficult to define

What I can tell you about the company is in the broadest of strokes:
1) We are assembling a slate of many narrative feature projects.
2) On average, each film will have a 7 figure budget.
3) Each film will include named talent.
4) Some, if not all, of the projects will have award potential in U.S. and foreign markets.

The most exciting stuff, however, is in developing a competitive distribution plan amid global movie piracy. There are several interesting ideas we're experimenting with... and I'm sitting on my hands not to tell everyone about them all.

Stay tuned.

The Poetry of Fear

Hollywood big budget films are at a disadvantage in making horror films. Here's why:

Big movies demand big explanations, which are usually tiresome, and big backstories, which are usually cumbersome. If a studio is going to spend $80 or $100 million in hopes of making $300 or $400 million more, they feel a need to shove WHAT IT ALL MEANS down the audience's throat. Is there a serial killer? Then his mommy didn't love him (insert flashback). A monster from outer space? Its planet exploded, of course (and the poor misunderstood thing probably needs a juicy Earth woman to make sexy with). But nightmares exist outside of logic, and there's little fun to be had in explanations; they're antithetical to the poetry of fear. Link.

There's consensus among Ron Moore and the Battlestar Galactica writing staff that the most terrifying episode of the BSG series was "33" in which the cylons keep reappearing every 33 minutes without any explanation. We don't know how the cylons know where the fleet is, and since they obviously do know, why wouldn't they jump sooner? 33 minutes feels eerily related to the cylons being machines, not humans. So neither the characters, nor the audience, know anything about the cylons—a mammoth question mark hovers over their relentless attacks.

And whenever there's a huge void like that, the brain works double overtime to fill it with every type of childhood fear possible. I'm certain this is why films like The Blair Witch Project, whose miniscule budgets don't pressure the filmmakers to leave the viewer with an adequate explanation, are so wildly popular.

(Thanks to Alex for the link.)

Zak Penn's 8 lessons

Some useful movie tips from a guy I sat next to in 6th grade English class:

Zak Penn's Incredible Journey
by Zak Penn | Published June 13, 2008

Sure Zak Penn can write you a surefire blockbuster. He has proven that time and again with X-Men, Elektra, Fantastic Four. But that’s not all he can do. The Grand, an improvisational comedy set in the world of competitive poker that he wrote and directed, contains neither a superhero nor a highfalutin special effect, and is on DVD now. And with his long-awaited adaptation of The Incredible Hulk in theaters now, MM asked the in-demand scribe to share the “things he’s learned” in the business.

1. On the blockbuster summer movies, writing subplots that intersect with the main plot in the third act can be the difference between a good script and a bad one.

2. One of the most important qualities a director needs to have is stamina. Physical and mental stamina. Someone who knows him once commented that Peter Jackson’s ability to work effectively 16 hours a day is what separates him from his contemporaries. All the skill and intelligence in the world won’t help you if you are sick or asleep when the production needs you.

3. Comedic actors need not know they are funny in order to be funny.

4. Always stop arguing when someone says “yes.”

5. Directors are often better at taking notes than writers are. “That’s a good idea, I’ll do my best to address it” is a far more effective response than arguing.

6. Having a respected director on your set as an actor helps keep the cast and crew in line.

7. Directors should be good at firing people quicker. The faster you can pull the trigger on someone that’s not working out, the better off you’ll be.

8. The first 30 pages are the most important part of a screenplay, but the last 30 minutes are the most important part of a movie.

Business Plans

If you're wondering why my blackout as of late, it's because I've been incredibly busy. I'm keeping most of the details hush-hush for now, but broadly speaking, my work has involved:

• developing a feature screenplay for production early next year
  
• developing another feature script for production after that
  
• writing 15 loglines, then two synopses for an WGA-affiliated agent (they loved one of the synopses, so now I have another script to write)
  
• laying the groundwork for a million dollar company, including writing a 30 page business plan, carefully selecting a company name, and navigating the complexities of who does what and how much everyone gets for their work
  
• editing a fundraising mini-documentary
  
• finishing the editing of my last short, My Shortest Apposition (Sorry, Ana! I promise it will get done!)

I must admit, business plans are a strange beast. They're like paintings in that each one is unique and its effectiveness depends how much effort you put into it. You could spend months aggregating research and still not come close to being finished.

Last night, as I was educating myself on business plans, one thought in particular hit me like a bullet: my god, I'm studying for a final exam. To wit, when I hand in my business plan to an investor, if I "pass" the exam, they give me money.

The difference, of course, is that the date of this final exam is a time of my choosing so I get as much time as I need to prepare my final essay.

Motion Sketches

Yesterday, I heard about Celtx's Motion Sketches series, care of Elver. Here are some gems I gleaned:

We like movies because we like to worry. The story can be comedic or dramatic, but the principle is the same.

Dramatic action is when a character wants something and takes action to get it. Conflict is when an obstacle or antagonist gets in the way. The clearer and more focused the obstacle or antagonist, the more acute the conflict will be.

Drama is conflict in the present. Tension is conflict in the future.

The episode on sound, which I've embedded below, should be required viewing for all filmmakers. What I liked was how the Sound Designer preferred being involved in casting to help choose actors based on how they sound together. This is a nuance of filmmaking overlooked almost all the time and thus raises the caliber of filmmaking to a whole new level.


You can find the rest of the episode links on Elver's post.

Taking Notes

You write your script. You measure out each word. You get the flow just right. Finally, when the spell check comes up clean, you scan everything to make sure each page contains a delicate balance of colons, semi-colons, em dashes and ellipses. You're done. Your script is a masterpiece.

You print and bind the crisp white pages, present them to the director, who has them forwarded along to the actors.

And then the lead actor throws your script in the trash.

As a writer, you like to believe you have grokked your characters better than anyone. And as a screenwriter, you're especially sensitive to lesser-than feather merchants trying to improve on what already works. Unfortunately, because the film business is political, you will usually have to choose your battles. But when a lead actor throws your script in the trash, it's time to pay attention because—guess what?—the actor has to say the lines you've written and, nine times out of ten, probably groks your character even better than you think you do.

This happened on Iron Man, in fact:

Q: Robert, is it true you threw the script against the wall a lot?
Downey Jr.: Sometimes the writers wrote stuff that was smart and cool and perfect, and other times I would go to them with ideas. By the time we got to act three I was like, I can't have this confrontation scene with Pepper: "But Pepper, can't you understand that I've changed? I've got to do right!" Unh-uh. We rewrote the scene, and I was scribbling it out on cue cards.

Gwyneth Paltrow: Robert would saunter in with his 88-liter coffee and his sunglasses, take the [pages], and literally ball them up and whip them against the wall and be like, "This is the worst scene I've ever read. We're not doing this." Robert cannot say something that he doesn't feel.

Q: How did the writers react to all that?
Downey Jr.: My thing is we should all feel free to ball each other's junk up and throw it against the wall because we're not here to serve a legal document, if you ask me. I don't care who you are or what you just won or what you just wrote. I don't think "genius" and "superhero script" belong in the same sentence. That said, those guys are awesome, and I really learned a lot. Link.

That's the right attitude, in my opinion (albeit it might have been done more diplomatically). As a screenwriter, your master is not the director, producer, or even the financier—your master is the audience. Your duty is to do the best work possible and if that means rewriting something on the fly by collaborating with a lead actor, so be it.

Anthony Simcoe, the actor playing Ka D'Argo on the sci-fi TV show Farscape, once asked series co-creator David Kemper if he would mind if Simcoe changed a line in the script. Kemper smiled and said, "Only if you make it better." Simcoe was impressed—in most TV shows, any line change would have to have been approved up and down a network's hierarchy. On Farscape, Simcoe's suggestions were approved 7 out of 10 times and when you watch the series, Simcoe's character is by far one of the most entertaining.

The point is that the (screen)writer doesn't/can't always have the best ideas, and writers should always be open to others' suggestions as opportunities to improve upon the initial concept. If you don't like the "stupidity" of outside interference, you might be happier self-publishing novels, writing for the theatre, or creating machinima.