Jon M. Garon, Wiki Authorship, Social Media and the Curatorial Audience, 1 Harv. J. Sports & Ent. Law 95 (2010).

Wikis have become an important source of information and a go-to destination on the Internet. The shared authorship and social editing represent an increasingly influential model for content creation and dissemination, which will continue growing in prominence for education, training, newsgathering and entertainment.

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The Wall Street Journal today reported that Disney is providing stock and cash to acquire Marvel Entertainment, in a deal reported to have a $4 billion total value. The transaction, which will garner antitrust scrutiny, will likely be one of the largest realignments in tent-pole film production.


Marvel has been the inspiration for summer blockbusters for at leas the last decade, and it owns thousands of characters with potential for films, television, Internet, theme park and product lines. Disney has done a better job than any company in maximizing the return for its copyrighted characters, so the combination will reach much further than the slate of the summer blockbusters.

Though not discussed by the Wall Street Journal is the extent to which Disney hopes to use the Marvel content to redevelop its web strategy, including a pay model for premium content on its exclusive pages. The ownership of the popular Marvel characters will shift Disney's median demographic up to the peak Internet age, adding content to its delivery system.

Marvel already has licensing deals for a number of its characters with Fox, Sony and Paramount. The existing relationships will slow regulatory approval, but are unlikely to halt the transaction, given the level of competition in the industry and the lack of market power held by any of these companies.

The full impact of the transaction will take years to play out on the silver screen, but Disney has been very savvy at maximizing value from lesser characters and ancillary markets. The potential is for web-based content and merchandise to begin appearing later this year.

Not only has this increased the value of Marvel, but it is likely to be a boost to its competitors as well. Interesting how the comic book is the one publishing sector growing in the Internet age.

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According to a report in today's Wall Street Journal, Metro-Goldwyn-Mayer Inc. has replaced Chief Executive Officer Harry Sloan and hired restructuring expert Stephen Cooper. Cooper joins two other MGM executives in an office of Chief Executive: Mary Parent, the chairwoman of MGM's motion-picture group; and Bedi Singh, the company's chief financial officer. Ousted CEO Sloan will remain as chairman.

Nothing good can come out the latest management shakeup. For a studio which has made so many history and toga movies, it should know better than to be ruled by a triumvirate.

Worse, as reported by the Journal, "The 62-year-old Mr. Cooper's most recent assignment didn't work out well. Carlyle Group hired him last year to rescue Hawaiian Telcom, a land-line business the private-equity firm had acquired from Verizon Communications Inc. Those efforts failed when the company filed for Chapter 11 bankruptcy protection last December."

MGM has a fantastic and valuable film library, but its only active franchise is the James Bond films. The return to the Pink Panther has had limited success. It will be producing Fame for this fall and extending the Stargate franchise with another television series, but frankly it has a weak, recycled slate and crippling debt, generated by the purchase from Kirk Kerkorian. A history of bad financing has bloodied what was once the best Hollywood has to offer.

If MGM hopes to overcome its financial woes, the Triumvirate needs to kick open the doors to the vault and encourage a wide array of filmmakers to explore how best to revitalize these properties, perhaps taking a back-end participation so that new voices and new media can be added to the mix. If MGM follows the same old rules, it will be managing its assets through Chapter 11 in no time.

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In a fight reminiscent of Sony v. Universal, Universal and now Fox are trying to control the sales of their DVDs to Coinstar's Redbox DVD kiosks. Despite a pending lawsuit between Coinstar and Universal regarding the legality of the limits, Fox just demanded that it receive a 30-day delay in kiosk distribution. 

The idea certainly is not new. The movie industry has long used distribution windows to protect the pricing of its entertainment product. First run theaters which charged the highest ticket prices (and were often owned or operated by the studios) received licenses to exhibit films before the small theater chains had access to those films. Later, the studios briefly tried to control which video stores had access to video releases.

But the legality of controlling the content has also been well established. The tactics used by the film industry to protect the first run theaters were declared an antitrust violation which was upheld by the Supreme Court in 1948 in U.S. v. Paramount Pictures. Sony v. Universal, which focused on the fair use of recording over-the-air broadcasts for time shifting, was as much about whether the studios could demand a license fee from the sale of the playback machines as about video taping. By losing the fair use claim, the studios lost the leverage to demand those licenses.

According to its press statement, "Redbox is available at more than 17,000 locations nationwide, including select McDonald's restaurants, leading grocery and convenience stores, and Wal-Mart and Walgreens locations in select markets."

Universal demanded a 45 day release window, revenue sharing and the destruction of previously purchased DVDs, all steps designed to support the sales price of DVDs. Fox is demanding the 30 day release window or "agree to better economic terms" according to newspaper reports.

The attempts by the studios to force other distributors not to sell to Redbox looks to be a violation of the Sherman Antitrust Act as a conspiracy or contract in restraint of trade. Moreover, the Copyright Act specifically provides that the owner of a particular copy of a copyrighted work has the right to resell or dispose of that particular copy as the owner sees fit, without any obligation to the copyright holder. Known as the "First Sale" doctrine, the U.S. law denies publishers and distributors the right to downstream control over copies of the work.

So where is the need to increase rental prices coming from? Blockbuster is certainly hurt by Redbox. Blockbuster is owned by Viacom, the parent of Paramount Pictures and a number of cable channels. (Paramount has not made the same demands as Universal or Sony, perhaps out of the more obvious antitrust concerns.) More generally, as the prices for videos in kiosks drop, the price pressure will increase on video-on-demand through iTunes or other retailers. Even more broadly, $1 video rentals make waiting until a movie comes to video more appealing than going to a movie theater. But the $1 movie also makes the idea of video piracy economically stupid and indefensible.

In the short run, the limits on Redbox actually hurt the DVD distributors because it reduces a revenue stream. It also paints the industry as greedy at a time of deep economic difficulty. It is likely to violate the antitrust laws and runs afoul of the copyright laws.

The studios should look at the big picture and rethink their kiosk strategy before real harm is done.



behind creating a 30-day window for

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On July 22nd, the 40th anniversary of Comic-Con will grace San Diego with its assortments of Wizards, Warlocks, Elves, Demons, Vampires, Warriors, along artists, writers, software programmers, and filmmakers. A funny thing happened to the costumed prom for geeks and freaks - the event has grown into the cultural touchstone of new media.

The film program feature over sixty films - not counting the special screenings and other film events outside of the competition. (Self-interest disclosure: My client, Derrick Comedy will be presenting a panel and more regarding their upcoming release of Mystery Team.)

The striking aspect of Comic-Con's breadth is the way in which Internet culture has shifted towards Comic-Con's agenda. Comic books are not necessarily a larger industry than at other times in history. Comics have waxed and waned in different eras. But comics do not lend themselves to e-book readers and may have some resilience to avoid digitization. At the same time, comics have come to dominate epic film making. Comic books are inherently visual and easy to conceptualize on the big screen. Filmmakers should never give screenplays to prospective investors. They are simply too difficult to translate into the finished product and tend to read very flat. Comic books, on the other hand, translate the power and pacing of film on the page.

In addition to film, comic books translate elegantly into video games and virtual worlds, an increasingly critical aspect of modern culture. Comic book characters have come alive on game consoles and computer screens for years. With better avatar software and increasingly interoperable software platforms, the superheros, villains, monsters and myths are freeing themselves from their creators' formats to populate computers and devices of the audience's choosing.

So look to Comic-Con as a the new harbinger of taste. And remember to sharpen your broadsword.

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According to a report in the L.A. Times, the upcoming British release for Bruno, the Sacha Baron Cohen mockumentary, will be released with both an 18+ rating and a 15 certificate, which allow those over 14 to see the film. The 15-certificate version will remove certain sexually explicit scenes identified by the British Board of Film Classification as inappropriate for the younger audience.

The L.A. Times points out that the British Board of Film Classification is a governmental rating board rather than the MPAA's CARA system which is voluntary for film distributors and technically voluntary for the exhibitors as well. The discretion of exhibitors makes this distinction largely illusory, however, since failure to abide with a company's adopted voluntary rating system is illegal in various jurisdictions.

The strategy of releasing multiple versions of the film theatrically is something that will be watched. The combination of "R-Rated" and unrated films is quite common for DVD release and adding both "R" and "NC-17" versions to a release for select markets is a strategy that could further entice audiences and erode the market barriers that exist for NC-17 films in the U.S.

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Endgame Entertainment leader, Jim Stern, took the stage of the Indie financing panel during the LA Film Festival to remind filmmakers to pay attention to the business.

First he delivered the bad news:

"An astonishing 9,293 films were submitted to Sundance last year. Of those nearly 10,000, only 218 were screened. Of the lucky handful to get bought, so far only three have been released theatrically. It’s pretty obvious: Indies are in a world of hurt. When the financial crisis hit, any awards that independent films were winning suddenly were not enough to appease corporate paymasters, who in turn severely damaged labels like New Line, Warner Independent, Paramount Vantage, PictureHouse and so on.

"With fewer U.S. distributors, financiers were badly burned when the financial crisis turned global, and foreign markets no longer could be relied on to mitigate the risk of not having U.S. distribution. Those markets used to be the backstop of smaller films. But they started choosing to run their own affordable domestic movies instead of independent American films. And since those markets need big studio titles to drive ratings and ad revenues, what suffers is… the indie."

Worse, Stern explained that while $100 million films were up, comparing January to May 2008 to 2009, "the number of indies that grossed over $1 million dollars went from 16 to six. Less than half."

Then he gave some sage advice - lifted from Patrick Goldstein:

“The real problem with the indie business isn’t quality, but discipline. We have a generation of
filmmakers who feel entitled to make personal films and a generation of executives who’ve been
willing to essentially use specialty films as a loss-leader to launch their division or win awards. If
people in the indie world want to start making money again, they have to start treating their
investment like a truly precious natural resource, not like Monopoly money. Discipline is not
antithetical to art.”

Stern's Endgame advise is simple: Make smarter movies, with tight discipline and a focus on the specific target audience. Stay on budget. Don't compete for cast or effects. When Stern derides filmmakers who take financing and deliver different films or shoot over budget, his advice to work more professionally is well said. Independent film is more than a business. Those with the precious opportunity to make films should respect the opportunity to make successful films that open doors for new projects rather than treat the opportunities for self indulgence or vanity projects.

But knowing the audience is a much trickier task.  Filmmakers couldn't have predicted that Juno was a cross-over hit for adults, and it is highly likely the film would not have looked the same had demographers or statisticians predicted what should have appeared in a teen pregnancy film. Slumdog Millionaire is a highly unlikely success. And even A Chorus Line would never have been made if "follow the audience" was the mantra of Michael Bennet - as becomes clear from Stern's own moving documentary, Every Single Step.

Stern misses the point when he talks about the audience. Kurt Vonnegut's rule for writing is that the writer must write for a particular reader. Not an audience or a market, but a reader. He wrote for his sister. Filmmakers should do the same. Kevin Smith writes to make Jason Mewes laugh. More often than not, it works.

The same lesson should inform the casting. A-list talent will help sell an indie film, but it isn't necessary. On the other hand, writing characters so well that A-list talent will work for scale to play the parts sets a script apart from the rest.

With the financial crisis still in full bloom, the movies being made are more carefully selected than ever. Entitlement has toned down (for now). But actors are still searching for meaningful roles, writers continue to tell powerful stories, and the audience remains ready to be swept away. Directors just need to listen to the person on the other side of the silver screen.

And so it goes.

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Earlier this month, California asked the United States Supreme Court to hear a case concerning the constitutionality of its statutory prohibition to the sale or rental of violent games to minors.  At the district and federal court level, the case law has been uniformly against the position taken by Governor Schwarzenegger. In each case, the courts have found that video games are entitled to First Amendment protection and that the exceptions to the free speech rights of the video game producers (and their users) simply do not extend the concept of obscenity to obscenely violent games.

Of course, it was not all that long ago that the First Amendment was even applied to mere entertainment. (See,  Playing in the Virtual Arena: Avatars, Publicity and Identity Reconceptualized through Virtual Worlds and Computer Games, http://ssrn.com/abstract=1334950.) But as video games have become more realistic, the distinctions between games and other traditionally protected forms of speech - novels, music, photography and film - have dropped away, providing video games the same level of protection as other forms of entertainment.

To enable the cities, counties and states to regulate the video games, clever politicians drafted statutes that closely mirror obscenity laws in crafting anti-violent game laws. California's summary is typical:

California Civil Code sections 1746-1746.5 prohibit the sale of violent video games to minors under 18 where a reasonable person would find that the violent content appeals to a deviant or morbid interest of minors, is patently offensive to prevailing community standards as to what is suitable for minors, and causes the game as a whole to lack serious literary, artistic, political, or scientific value for minors.

As explained in California's brief before the Supreme Court, "[t]he respondent industry groups challenged this prohibition on its face as violating the Free Speech Clause of the First Amendment. The court of appeals affirmed the district court’s judgment permanently enjoining enforcement of the prohibition."

Similar statutes have been struck down in every case. Instead, the industry relies on voluntary labeling. As an alternative, voluntary labeling is little more than a political figleaf.  Voluntary labeling restrictions do little to discourage the purchase or rental of these games. Increasingly, the point of purchase for these products is through a computer download which gives parents little opportunity to review the content or discuss the appropriateness with their children.

So this returns us to the core question: should there be a legal standard for obscenely violent content, either for adults or for children? In my earlier article, Playing in the Virtual Arena, I made the following comment:

“[The Appellate Courts refuse] to label graphic content “obscene” to minors, finding that historically only sexual content can be deemed obscene. In doing so, the [courts reject] the attempt to make a new category of unprotected speech for violent content that is sold to minors, despite the lawful regulation of non-obscene sexually explicit content sold to minors and commercial advertising directed at minors. …

 

“While it is axiomatic that obscene materials (which have no constitutional protection for any reader) can be banned for children, the Supreme Court recognizes the state’s interest in protecting children from harmful speech that is beyond regulation for adults. While a modern court may demand a more substantial standard than that of Ginsberg, the interest in protecting minors from harmful content has not been repudiated.”

The simply phrased question presented to the Supreme Court is asking that this question be revisited. When California asks "Does the First Amendment bar a state from restricting the sale of violent video games to minors?" it is asking whether violence can ever be treated the same as obscenity.

As a frequent world traveler, I see media from across the globe. Many countries are much more comfortable with nudity and sex than we in the United States. Those same nations are shocked at the level of violence in our media.

I hope that the Supreme Court looks carefully at the question. I am distrustful of any government regulation of content and believe in a very expansive First Amendment. But the notion that violent content, no matter how repugnant is protected speech, while judicial panels can draw distinctions regarding levels of pornography simply makes no rational sense.

The question should be brought to the attention of the public. Certiorari should be granted and the debate engaged.

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In its weak quarterly earnings report, Blockbuster blamed some of the weakening sales declines on improved movie house attendance.

As reported in the LA Times, Blockbuster said "we estimate nearly 3 million more people are going to the movies each week in 2009" than in 2008, he said on a conference call with analysts. "This has been pulling traffic from Blockbuster stores."

The same article noted that Netflix revenue has not been damaged by the 14% increase in movie ticket sales. Netflix gained almost one million new subscribers.

The business model is shifting. People do not like to be reminded of costs each time they listen, read, or watch. Netflix understands the changing market. Blockbuster is tied down to a retail infrastructure that will not help them without dramatic restructuring.

For all its size, Blockbuster reports only $27.7 million net income on $1.12 revenue. Stock prices are tumbling.

Blockbuster needs some quick innovation. Perhaps becoming a retail showroom for Amazon as it launches its Kindle 2 and Kindle DX, or Sony and its stuggling line. Better yet, add a subscription model that is more generous than Netflix and add an e-book subscription service as well.

The time for incremental change is gone. Blockbuster must cannibalize itself or prepare to join the list of nostalgic names that people used to visit when getting their entertainment.

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In a New York Times article, "Movie Makers Appeal to the Crowd, for Money," the newspaper reminds us that a direct appeal by filmmakers or musicians to their fans known "crowdfunding" can be used to raise considerable funds in support of a project.



But the article does not explain how these filmmakers are going to bridge the other ninety percent budget gap or the details of crowdfunding and federal securities laws, so here are a few pointers.

Crowdfunding works by selling something directly to the public. In the case of buyacredit.com, the item sold is the purchaser's name in the end credits. That's it: £1 buys you your name on the list. The purchaser is not an investor in the movie.

The more traditional method of publicly funding a project is known as a public offering. In a public offering, a filing must be made by the seller of the securities with the Securities and Exchange Commission that provides an extensive amount of detail regarding the seller and its key executives, the use of the funds, and the financial risks associated with project. The purchasers are then entitled to an ownership interest in the seller - in an amount explained in the securities filing and the prospectus provided to every buyer. Selling film stock or other company stock can be done directly over the Internet, but it is a very detailed process and requires the guidance of securities laws experts. There are stiff civil and criminal penalties for getting this wrong, and I think the government has gone back to enforcing these laws again.

So if the buyacredit.com project is ninety percent short and the sale of corporate securities is too difficult, what should an aspiring filmmaker  or musician do? The answer, my friend, is presell!

Crowdfunding is a great idea, but in most cases it provides too little value to the public, so it fails to raise sufficient funds. Instead, project funders should consider preselling the DVD or CD along with the special thanks credit. For $50, a supporter receives a credit in the film and an advance copy of DVD prior to its general release. Depending on the nature of the project, filmmakers could also consider adding a copy of the screenplay or production tee-shirts into the package (necessarily at a higher cost). Only 20,000 purchasers are needed for a $50 purchase to get the $1 million needed to produce the film. Add ticket sales at advance screenings and the income can really make a difference.

There are details that need to go into the sales contract to protect the filmmaker or musician and make clear precisely what the purchaser is receiving. But combining a creative sales package with a good crowdfunding appeal can move many projects along.

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The buoyancy of the video game industry may be over.  In March, the market research firm, NPD Group has reported a 17% drop in video game sales. This comes after thousands of job losses in the motion picture industry, and dramatic losses in the music industry.

The decline suggests that the constricting economy has slowly reached teenagers and college-aged consumers, who had been relatively immune from the first waves of the mortgage and banking collapses. The economy has trickled ever downward, reaching into the dorm room.

But there may also be other powers at play. The pricing of video games has been growing ever higher. The iPhone has become an excellent, a cool, high quality gaming platform (that happens to be a phone, music player and video player, etc.).

Pricing models should mirror the economy, not try to ignore them. The video game industry has just received a wake-up call. Expect to see some creative pricing in certain segments of the market. And some refusals to acknowledge the drop in sales by others until it is too late.

Posted by Jon M. Garon at 08:55 AM | Permalink | Comments (0) | TrackBacks (0)

 

I discovered the Te Tumu Whakaata Taonga or  New Zeland Film Commission Guide-- Backend Money - A Guide to Movie Money Flows. The New Zeland Film Commission explains the purpose of the Guide:

This report was commissioned by Investment New Zealand to illustrate how money flows from a movie or television programme back to those involved in its production. The media are constantly reporting multi-million dollar box office successes, million dollar-an-episode fees for cast members on US series like FRIENDS or an A-list star's valuable piece of the "back end". The dollars being generate by film and television, especially large studio productions, appear to be making a lot of people very rich. But what do these figures really mean? What exactly is the 'back end' and who gets a share of it?

This report, written from the perspective of industry knowledge of both industry members and policy makers in New Zealand, is designed to guide the reader through this maze of players and shed light on the roles they play and the way their involvement influences the 'back end'.

The report does not offer a definitive description of how the global industry works. Nor does it purport to represent all the permutations and combinations of the commercial deals and legal arrangements existing within the industry that can improve a 'back end' deal.

 I have never found a better outline. And that's hard for a book author to admit. The Guide should be reviewed by every filmmaker before meeting with sales agents. 

Good Luck!

 

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For those of you who could not make it to Sundance and have not been to New York lately, you may wish to check out the special preview of Mystery Team.

 

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