USEDCARSALESMAN

-The Passion- Involved With Entertainment Production Financing

The Passion of The Christ, Mel Gibson's 2004 film, grossed 610 Million in international box-office returns. And this was prior to its March 200 re-release!

         

Passion wasn't backed by the major Hollywood studios or nominated for any Oscars. But audiences in the US and internationally went to see the film by the tens of millions and will likely buy the heck out of the DVD's. Furthermore, The Passion will probably be syndicated on television forever, thus yielding Gibson's production company a ludicrous return on its investment.  To some extent The Passion may serve as evidence that sometimes the supply of entertainment from Hollywood and the entertainment demands of the viewing public are not necessarily well synchronized.

       

Usedcarsalesman can imagine some of the following trends resulting from The Passion's out-sized success:   

• It might serve to stimulate investment from a growing class of Hollywood "Outsiders" in entertainment projects that have otherwise been figuratively "shot down" by Hollywood "Insiders."
• Rejected Hollywood film-makers might look to sources outside of Hollywood to finance pictures with rather size-able budgets, pictures that may not have earned a "green-light" from studio executives. Makers of smaller, more unconventional projects may do the same. 
• You you may even have area-specific projects (a film set in the Southern U.S. financed by people in the Southern U.S.). When securing financing for a film from outside Hollywood, fund-raisers will point to -The Passion- and say "hey, look, we want to see this proposed film ourselves and we have good market research to show that there are probably millions of people just like us, therefore lets get some money and put this production together and get it distributed."
• It does not seem unreasonable to believe that film financiers could use a web site on the Internet to float a project idea to the public and recruit legions of small and large investors in the production. The benefits of doing so might include greatly distributing the risk of financing a film and promoting a film project well in advance of release (If you have invested 10k in a film, naturally you are going to tell 100 friends and family members and business people about your investment; as such, the film could open with a built-in market).
• As this type of entertainment investment becomes a reality for a greater number of people, new organizations will emerge to monitor this method of film financing. For example, just as you have analytical firms -- Forrester Research and others like it -- that monitor stocks for the investing public.  You might see a new breed of entertainment analyst who monitors potential film/TV ideas and then perform due diligence regarding the parties floating the idea and regarding the security of the investment. 
• Usedcarsalesman would also say that when new outside investors -- again, emboldened by the success of The Passion -- participate in the financing of films, you are going to see people put their money behind the projects that most reflect their own interests. Since the entertainment product (film, television) often reflects the predilections of its financiers, you are going to see a range of productions will likely encompass a broad, A-Z political spectrum.

So, it is somewhat ironic that the business success of The Passion of The Christ may not necessary unleash more religiously-themed productions.  Instead its success may show viable, new ways to advance the creative "passions" of the typically more secular people who make film and television productions.

Technology Could Drive Growth In The Business of Talent Agencies

Talent Agencies such as The William Morris Agency (WMA), have represented "talent" -- professional actors, screen-play writers, directors, musicians -- since the end of the 19th century. 

      

This business of representing talent continues today, even with the advent of the World Wide Web and other advances in telecommunications. And for doing work such as submitting their clients for auditions, putting together entertainment projects involving multiple talents they represent ("packaging") and negotiating their clients' employment contracts,  Agencies intrepidly continue to earn 10% of their respective clients' gross earnings from a particular booking. 

             

10% sounds like decent money, especially if you are an agency with a client roster with the size and depth of the one maintained by The William Morris Agency.  These guys represent literally 2000 talents, many of who are "big-name," Film and TV actors earning several hundred thousand to 30 million+ a job.  When he does the math, Usedcarsalesman sees that an agency like William Morris with its world-wide presence is probably doing 500 million to maybe a billion + a year just in their talent representation business alone.

                

WMA's earnings are not bad, but they are not that great.  Keep in mind that we live in a day and age in which single individuals  -- hedge fund managers, investment bankers -- are earning billion dollar bonuses for one year's work.  There are dozens of unglamorous, gray-suit, U.S.law firms with multi-national presences that do as much business in a year. The 500 million to a billion in business a world class talent agency -- William Morris, Creative Artists Agency, Endeavor -- does a year is just not large potatoes anymore.   Usedcarsalesman, however, says that the good news for the major talent agencies is that they may soon may be on the receiving end of a windfall.

            

In the early 21st century, a new technology has emerged that enables a greater number of individuals to work as "on-camera" talent and a greater number of businesses to employ on-camera talent directly to advance their interests; the specific technology is nothing more than high-quality web cams coupled with Macs or PCs, broadband Internet connections and streaming video.  Usedcarsalesman sees this technology enabling millions of gutsy salespeople, teachers, seminar-givers, religious persons, exercise instructors and other professionals -- a new category of "talent" born of this technology -- to "present" on-line to audiences.  The best of these new talents could earn 6,7, 8+ figure incomes reaching millions of people world-wide. 

         

Smartly-run Talent Agencies may get in -- or buy-in through mergers and acquisitions -- to this new "game" of representing the best of this huge field of high-earning, new talent versus its "employers;" the "employers" could be big businesses selling products by video on-line, newer web-based information clearing-houses, or institutions, universities, and religious organizations that may present to large numbers of people on-line by video and generate revenue based on the effectiveness of the presentation.  In doing so, Talent agencies such as The William Morris Agency could multiply in size, even evolving from large, privately-held firms to large, publicly traded companies.   

      

Usedcarsalesman also sees a couple of collateral effects potentially caused by this development: 

• Since this new class of on-camera talent will be located all over the globe, major U.S. talent agencies (once isolated in entertainment centers like LA, NYC, Memphis, Miami, London, or Paris) may expand to cities not thought of as entertainment centers.  You could soon have an office of William Morris in Cheyenne, Wyoming or Baghdad, Iraq!
• If web-cam sales professionals, for example, are represented by talent agencies, then you could see something happen that was once unthinkable: the unionization of video sales professionals in a manner similar to SAG actors or professional athletes!

In conclusion, Usedcarsalesman predicts potentially massive change and growth in the talent representation business born of global advances in telecommunications technology.  It is a change that talent agencies such as The William Morris Agency may simply not anticipate, but could gain greatly from.

Yahoo Could Do Big Things For Hollywood (continued)

Ok.  Usedcarsalesman says that Yahoo -- given its on-line audience, cash reserves and broadband holdings -- is in a good position to set up shop in Santa Monica and begin to successfully lay siege to the film and television markets that consume the "Hollywood" product. And he says that Yahoo will likely produce content and then distribute it through broadband on the web versus by film or television or DVD. 

    

But you still might ultimately end up wondering the following:  "why will Yahoo and broadband help Hollywood do more business?" Usedcarsalesman has a few answers: 

• Hollywood may do more business simply because Usedcarsalesman speculates that the global market for entertainment is willing to support a lot greater variety of programming and gaming than is currently provided;  Usedcarsalesman personally knows that he would support a greater variety and it seems that subscription-based music downloading is headed in this massive-variety direction already. Using broadband, Yahoo and others like it will simply begin to bring this "variety" to the public and "show business" -- the business of Hollywood -- will correspondingly expand.
• Usedcarsalesman says that since there are a lot of different types of users of this broadband distribution channel, there may be a corresponding variety of entertainment "demands." One could reasonably conclude that there are going to be a lot greater variety of programming available to support these "demands" and a distribution channel to provide it to them.  Producing more programming for a paying audience ultimately means more business for Hollywood, since studios and other organizations will most assuredly follow Yahoo's expansionist path.
• The broadband distribution channel can support these demands.  Unlike with satellite television, cable, broadcast or movie theaters, limits on a user's content-choice don't really exist with broadband.  The broad-band web-user makes the programming decisions, not service providers, cable companies, etc. This means the distribution channel -- the DSL/cable connection -- to the user is only occupied with what its "user" demands.  The nature of this distribution channel means that it can pull content from a nearly limitless number of computer servers hosting a correspondingly limitless variety of videos or network games. Effectively, broadband puts Hollywood to work.

This is great for the actors, writers, directors, cinematographers and production people who make the film and television. Right now, for example, only about 5% of members of the Screen Actors Guild (SAG) earn more than $50,000 a year from acting (with SAG, the 95/5 Rule is in effect, not the 80/20 Rule)and only a few hundred members earn the major portion of the 7 or 8 figure paychecks that the public hears about in the news. SAG is an organization with about 120,000 members, which means that only about 6,000 of its members earn 50k during any given year. The others are usually unemployed, severely underemployed, or otherwise paying rent by waiting tables.

    

Usedcarsalesman speculate that Yahoo's moves could initiate a change in Hollywood that would allow at least 20% of SAG members (hopefully 100%), up from the current 5%, to earn at least a middle-class income from acting work. He thinks the same would hold true for writers, directors or other Hollywood talent that are typically underemployed.

Note:  If Usedcarsalesman was looking for an analogy to describe Broadband/Yahoo's potential affect on Hollywood, he'd probably consider the fuel efficiency of a Toyota Prius Automobile. Just as the batteries, electric motor and regenerative braking of the Prius help it to get 2, 3, or 4x the mileage from a tank of gas versus an average car, Broadband/Yahoo will help Hollywood get 2, 3, or 4x as much business and as many employment opportunities from the current Hollywood system.

Yahoo Could Do Big Things For Hollywood

Usedcarsalesman read recently that Yahoo -- the Internet search engine company -- signed a lease for Santa Monica office-space that can accommodate up to 1000 employees. Further investigation of this matter yielded published rumors that Yahoo is looking to get into the business of video content distribution to broadband Internet users. 

            

If this true, Usedcarsalesman says, well, "Yahoo!" He thinks it's about (blankety-blank) time that a web company finally sized up broadband Internet video for what it is for its users:  low resolution, small-screen-only, cable TV, but with the potential to provide users with an almost unlimited content variety.  He thinks Hollywood needs a web company like Yahoo to show the show-business world how to use broadband to do more business, a lot more. 
                      
Yahoo isn't the first "representative" of the tech industry with a presence in Hollywood.

Paul Allen -- one of the founders of Microsoft -- uses his Vulcan Ventures company to control half the shares of Dreamworks (the Steven Spielberg, Jeffrey Katzenberg, David Geffen-founded studio).  There is also the ubiquitous presence of Apple hardware/software in every entertainment industry-related office in LA County. And companies like Pixar Animation -- another Steve Jobs company like Apple -- have greatly enhanced the quality of animated films produced in Hollywood . So, Hollywood is not totally foreign to some of the tech magnates in Northern California, Redmond Wa. or elsewhere.

            

But Yahoo looks like it is in good shape to use new technology -- Broadband for home use --to increase the number of Hollywood productions being made (much as television began to do 50 years ago).  Here's why:

• First off, Yahoo has decent resources for an Internet company founded during the 1990s: it has been fielding a growing, targeted Internet advertising business, with profits roughly doubling annually over the last 4 years; it also had about 1.5 billion in cash on hand at the end of last year (not the 38 billion Microsoft has, but not bad).
• Second, it has a large audience: Yahoo apparently handles 28% of Internet searches (forgive the 1990s expression, but "that's a lot of eyeballs," hundreds of millions of pairs, in fact);
• Third, broadband Internet has grabbed hold of the consumer market: roughly half of all home Internet users employ a broadband DSL/Cable Internet connection that can handle the download of large video files rapidly.
• Fourth, Yahoo is already in the broadband business: it acquired DSL provider SBC several years ago (Usedcarsalesman uses SBC/Yahoo DSL service).
• Fifth, Yahoo apparently sees broadband Internet the way Usedcarsalesman sees it: as a business to distribute specific video content to specific audiences worldwide.

Usedcarsalesman believes that Yahoo's general broadband strategy -- if embraced by Hollywood content producers across the board -- could double or triple (or more) the annual revenue of the entertainment industry.  So, like the title says, Yahoo could do big things for Hollywood.