Two years ago, in the infant days of video-on-demand, a representative of a major film studio reacted quite violently to a mention that a European telecom was hoping to get the studio’s movie catalogue on a revenue share basis, with no money upfront.
“Do they think Julia Roberts works for free?!” squealed the executive in horror. Needless to say, the telecom got no films, until a very expensive Los Angeles consultant negotiated a deal on its behalf, which included a gigantic down payment. The telecom did not make any money on the pictures it bought, because most of the titles were old and easily available for rent, and no budget was left to make the VOD offer any different from the local video store.
The money the studio got from this sale was a tiny speck in the overall flow of production budgets, theatrical distribution deals and promotional costs. Heck, it probably did not cover Julia’s salary for a day – but there was a satisfaction in making the new guys “play by the rules”.
The issue becomes more complicated for programs that by no means get an efficient distribution, such as documentaries, or concerts. The budget of a classical music program – which the latest fashion requires to be produced in HD, even though almost no one can see the final product in this format – might run into hundreds of thousands.
The producer will get subventions and other types of institutional funding, but he is still likely to be broke and scraping for his next shoot, when an unshaven VOD entrepreneur will knock on his door and inquire about the Internet rights for the latest show. The entrepreneur will come from the world of geeky arrogance, which assumes that a program playing at 2am on Mezzo should be easily available to his state-of-the-art VOD portal. The producer, on the other hand, has been too busy since the 90s to notice that Internet money had dried up – he took the meeting expecting a fat down payment he can use towards his next production.
“But I will never make any money on this program if I give you so much in advance!” laments the Internet entrepreneur, feeling that the producer is taking out on him all the cruelty he had to suffer from the world of mass media. “ But I will never recoup the money I spend in production, if people like you don’t pay in advance” sobs the producer. They have not even gotten to the part where they both find out that the Internet rights for the show are not available, because no one bothered to deal them at the time – and that clearing these rights will cost much more than the program can ever hope to make.
And so we live in times of great inefficiency and greed. They feed off each other to create a vicious circle where films go unseen, consumers bored and talent undiscovered. The tiny David of on-demand distribution may fight the Goliath of mass-media production, studio budgets, and marketing extravaganzas—but can he win by following the old rules, or will he go bust “paying by the book”? Can an online distributor build the world’s largest documentary library and offer the most intelligent way for audiences to see documentaries – if he has to pay TV prices for every one of them?
An unexpected force is tipping the scale. For a year now we have been looking to program a certain artist on our on-demand concert channel. But the few thousand that a small VOD network can generate won’t even cover the phone time for the artist’s manager to discuss the issue. Then, the other day, I typed the artist’s name on YouTube – and there was his latest show, presented in the poorest quality imaginable of image and sound, offered for free by an anonymous hack to the insatiable sensationalism of the new Giant – a “user-generated” website.
Machiavelli, who admired David for sticking to his guns (stones, that is) — and not borrowing the weapons of the “big boys”, — would have found pleasing irony in such a situation. While the two Goliath are fighting each other, David can finally take a breath and go about his business.