Alternative Funding Sources

As this is my very last month in the Entertainment Business Master’s of Science program at Full Sail University I thought it would be best to talk briefly about alternative funding sources for start-up businesses. The instructor in this class mentioned something that resonated with me. He said that “there is more money out there in the world than there are ideas.” Even though there are many people that might have the same idea as yours, it is all about how your idea is executed. However, in order to make any business plan a reality, it is imperative to obtain financing. There are many different ways to obtain these funds such as traditional methods (bank loans, equity financing, etc.), private investors and alternative funding sources. For most, a bank loan will not satisfy the amount desired and a private investor may be hard to come by. Alternative funding sources can be a great resource for those individuals who are seeking financing and have no other place to turn.

There is a bunch of alternative funding sources available on the Internet. Some examples include: www.opportunityfinance.net, www.miroenterpriseworks.org, www.cfed.org, www.eda.gov, and so on. A majority of these sites describe organizations that believe in opportunity financing and the goal of allowing aspiring entrepreneurs to claim their right to living the American dream. One main type of these alternative financing sources found on a majority of these websites are CDFIs. According to the cdfi.org website, “CDFIs are private-sector organizations that attract capital from private and public sources.” These CDFIs are then broken down into different types of categories. For instance, there is a “Microenterprise Development Loan Fund” that is only available for new businesses that foster social and business development. This type of funding is only available for low-income people that are small business owners or self-employed who are unable to access conventional financing. Ultimately, it depends on the impact your company has on your community and the amount of funding you are seeking.

In addition to finding funding sources on these websites, there are also plenty of other types of information. Since there are so start-up businesses trying to enter the marketplace, these sites offer insight into other success stories, global conferences and databases of CDFIs in your area. Furthermore, there is information on how to apply to these types of loans. Overall, these sites are great resources to utilize for when it comes time to financing your start-up business. There can be many advantages to this type of funding such as obtaining lower interest rates or even grants. However, there are some disadvantages. If your business does not contribute towards adding jobs or helping out your local community, it may be hard to gain approval. It all depends on your business plan and the products you are bringing to the marketplace.

The Value of a Business Plan

No matter what industry you are in, it is key to develop a business plan before starting any company. What a business does is provide an overview all of the things you would not normally think of when starting a business. It is important to write everything down in an organized format so that you are able to put all of your thoughts on paper. Not everyone does this and it becomes apparent when a company ultimately fails. There are two professionals that have provided a wealth of information on this topic. Steven Gedeon is an entrepreneur educator who has developed and established many different businesses in his life. Kevin Geiger, on the other hand, is an artist and filmmaker who is an advocate of film business plans. Both of these professionals have provided a lot of information regarding how important it is to create a business plan.

In order to get any business’s feet off the ground, it is key to find investors who are willing to provide the necessary funds to start your business. Both Mr. Gedeon and Mr. Geiger have stated that it is extremely important to understand where you will generate “revenue.” You cannot start a business in any industry without having a clear idea of how you generate revenue. Mr. Geiger, in particular, states for an indie feature film that “if your plan is to break even or more ambitiously, come out ahead on the financial side of filmmaking, a small business-style plan can help to understand what the opportunities and realities are while there is still a chance to cash in.” Therefore, there is a very small chance that you will be able to find an investor for your business if you do not have a plan as to how you will generate revenue.

Overall, there are many suggestions to take into consideration for when it comes to my own business plan. I feel that Mr. Gedeon’s suggestion of creating a business plan that is “exciting to YOU!” is one of the most important key elements. If you are not excited about your business, it is going to very hard to get others to jump on board. Mr. Geiger points out that it is important to establish which particular part of the indie film business you are going to participate in. He points out that there are film production companies that focus on development, producing and distribution. Having separate divisions or companies handle different aspects of your project give you the ability to split the liability. This can be beneficial should any legal issues occur. In the end, I know that it will be important to create a business plan that gives me the ability to produce the films and TV pilot shows that are important to me. It will be a very exciting time for when it comes time to open the doors of my own production company.

Marketing, Social Media and Television

Over the course of the past few decades, we have seen the dawn of a new age of social media and how it impacts marketing across all businesses. In the television industry, especially, there have been some major changes as to how television shows are marketed to audiences nation wide. Social media has forever changed how these producers are able to track ratings, start conversations and obtain financing through sponsors and commercials. According to Teddy Hunt’s article (http://www.socialmediaexplorer.com/social-media-marketing/has-social-media-changed-television/), he states that “the Internet and social media have actually enhanced TV viewing in many ways without negatively affecting its popularity as a pastime.” Here is a great video essay on social media’s impact on television:

Television ratings are now easier to track through online social media platforms. Facebook, Twitter and YouTube have now become a new avenue for producers to see exactly how many people “Like” a TV show, how many viewers are watching and what market they are in. These sites are connected to online profiles of the people who are watching and, thus, allowing analysts to not only see who is watching but what else they are watching. Twitter, on the other hand, allows viewers to chat in real time. It is great resource for producers to use in an effort to understand what people like and dislike about a particular show. However, there are countless ways social media can be used an asset to the television industry.

There are many television shows that are now using social media as a part of its programing. Christina Gleason, of ignitesocialmedia.com, describes some great examples in her article entitled “5 TV Shows That Integrate Social Media Effectively” (http://www.ignitesocialmedia.com/social-media-examples/tv-shows-integrate-social-media/). The Voice, a television show similar to American Idol where contestants perform for the chance of a music contract, uses Twitter as a way for contestants to tweet with their fans to ask for their votes. Another television show, Bones, uses Twitter to promote what is going on in the show while also showing “users where they can download music from each episode on iTunes.” In the end, social media is allowing the content producers and providers to directly communicate with their audiences. This not only gives the audience a way to voice their opinions about their favorite TV shows but it also gives them an opportunity to be a part of the production.

Publishing and Distribution in Today’s Digital Era

After completing a work of art, whether it be a book, film, TV show, video game, etc., comes the time to make back the initial investment. Over the past few decades, Publishing and Distribution within the entertainment industry has drastically changed due to the “third wave,” a.k.a. “The Information Era.” Today’s society is one that expects information to be made available almost immediately. Decades ago, these entertainment products were only available via physical mediums. This included books, CDs, VHS, DVDs, Video Game cartridges, etc. Today, on the other hand, everything is moving to the digital platform. This has, unfortunately, opened doors to piracy and set the expectation to consumers that they can find these products at a much lower cost, sometimes even free.

Since piracy has had such an impact on the industry, it has caused a trickle-down effect to which all members of the industry have had to make cutbacks. For instance, “An 11-employee Independent U.S. film distributor, Wolfe Video, has had its profits halved due to piracy and costs to mitigate damages from piracy” (Strauss, 2013). This has led to slower wages and salaries across the board. The real issue is that, currently, there are too many people committing piracy and there is no way for the content providers to keep up with the convicts. Every time a site a closed down, due to piracy, there are more that takes it place. The ability to shut down these sites can be difficult if they are located in other countries. In the end, what content providers should be doing is to provide their content in a much easier fashion.

The birth of instant streaming has allowed members of the industry to recoup their losses due to online piracy. Netflix, Hulu and Amazon are great examples of companies that have successfully changed the direction of the industry. In the same article, Mr. Strauss states that “the rise of streaming video content hubs like Netflix and Amazon has, to a certain extent, recaptured some users that may have resorted to piracy because in previous years there was no other way to find an instant feed of a movie or show without resorting to piracy” (2013). Eventually, this could be the perfect way to retain audiences and re-engineer how money is made (i.e. physical sales vs. subscriptions). This is good news for indie filmmakers, on the other hand. Since self-distribution is slowly becoming more and more popular, this has become a great way for the indie filmmaker to promote and distribute their films. It will be interesting to see what will continue to happen going into the future.

References:

Strauss, K. (2014). TV and Film Piracy: Threatening an Industry? Forbes.com. Retrieved from http://www.forbes.com/sites/karstenstrauss/2013/03/06/tv-and-film-piracy-threatening-an-industry/

Advanced Entertainment Law – Film/TV Liabilities

In the entertainment industry, especially, there are many issues that can arise as a result of copyright, trademark, patent and trade secret infringement. Since we now reside in the digital era and with everything being transmitted via cable, satellite, etc. the ability of intellectual property being misused has become that much greater. In an effort to obtain a better understanding of how large of an issue this has become, let’s take a look at a couple recent examples. These examples will give us some insight as to the issues many individuals and companies face on a day-to-day basis within the industry.

One of the most talked about new franchises within the film industry has been Lionsgate’s The Expendables. This movie franchise is well known all over the country as being action-packed films comprised of some of the most extraordinary and popular stars in the genre. Sylvester Stallone, Jason Statham, Harrison Ford, Arnold Schwarzenegger and Mel Gibson are just few examples of the highly regarded actors in these films. Unfortunately, the company, Lionsgate, is currently dealing with a fairly large intellectual property issue, a stolen high quality digital file of the third film circulating the torrent sites. Mr. Gardner, of Hollywood Report Esq., writes in an article that the company in an effort “to counter the Expendables 3 leak in advance of a Aug. 15 release for the film, Lionsgate's outside vendor MarkMonitor has sent about 2,770 take-down requests covering 10,846 unique host URLs. The film studio told the judge that it wasn't merely concerned about the amount of potential revenue lost at the box office, but also its relationship with theatrical exhibitors” (more info here). Per copyright law, once any film has been completed and exists in a tangible format (physical or digital), it instantly becomes copyrighted. However, this is something that is not new to the industry as this occurs almost too regularly. These torrent sites have become a major problem amongst all of the entertainment conglomerates. What people do not realize is the harm that downloading an illegal file has caused to the industry overall.

Another great example on the topic of intellectual property issues would be yet another recent case between the creator of an animated short film and The Walt Disney Company. After reviewing this article, Kelly Wilson, the producer of the short film The Snowman, felt that the teaser trailer of Disney’s movie Frozen infringed upon the copyright of her work. The overall story and sequence of events found in the trailer seemed to match almost exactly the story she told in her short film. From Mr. Gardner’s article, he writes that “in a ruling on Disney's motion to dismiss, California federal judge Vince Chhabria writes, "The sequence of events in both works, from start to finish, is too parallel to conclude that no reasonable juror could find the works substantially similar."” When a small producer goes against a fairly large company, such as The Walt Disney Company, it is going to make headlines and be a fairly large topic of discussion among those in the industry. In this case, Miss Wilson’s lawyers are going to need to prove, if this goes to trial, that The Walt Disney Company did in fact infringe upon her copyright. This will entail making sure that the Miss Wilson can prove the date that her work was created before the release of Frozen and whether or not it had been made public. If Miss Wilson had already registered her work with the United States Copyright office, she may be able to win this case.

Finally, there is one last case that is worth discussing and that is between the producers of the TV show ‘Southland’ and Hilda Abarca and Jessica Abarca, the relatives of man who was murdered. Within the opening credits of the TV show, there is an autopsy photo that is displayed which is the son/brother of the Hilda and Jessica Abarca. As one could imagine, the display of this photo has caused severe grief and hard ache to these women. Thus, both women have filed a lawsuit against “Warner Bros. Television, producer John Wells, NBC, Turner Network Television, the city of Los Angeles, the County of Los Angeles and Warner Home Video.” According to this article, “the suit says this has impacted their health, strength and activity and caused injury to their nervous system and person. It means they will have to incur expenses to treat psychological injuries using drugs and others “sundries” required in the treatment.” It is unfortunate that something like this happened to these women; however, this could have been avoided. When one produces film and television it is extremely important to verify the source of all materials used for production. It will be interesting to see the outcome of this lawsuit and whether or not both Hilda and Jessica Abarca will obtain justice.

Overall, intellectual property will always be an issue for all of those working within the entertainment industry (film and TV, especially). Since the products of the entertainment industry are, for the most part, not something tangible (in light the digital era) like other industries, it is extremely important to have a firm understanding of the concepts behind obtaining permission if you decide to use someone else’s work in your production. By being able to recognize all aspects of intellectual property law, one can safely avoid ever having to deal with these types of issues.

Current Challenges of Product and Artist Managers

The current state of the entertainment industry is constantly changing and with that comes many challenges along the way. Product managers, and even artist managers, are constantly having to adapt the ways they execute their plans to penetrate their desired target markets. Through my own person experience, I have seen some of these problems firsthand. While working at my prior employer, Testronic Labs, I would often times find myself engaging in conversations with product managers that would explain some of the difficulties they have had trying to figure out ways to bring digital products to market. Since there are so many different avenues, nowadays, to distribute film and TV shows, product managers are faced with the task of monetizing various physical and digital formats.

Film and TV shows are not the only two facets of the entertainment industry that are going through major struggles in the globalization of the digital era. Recently, I was in contact with a colleague of mine that is a product manager for a company called Ematic. The company creates and markets their own version of Android tablets for specific niche markets. Within the past year and a half, the company released a product called “FunTab Pro” which is a tablet that is designed and marketed towards a younger audience. When speaking to the product manager who designed the product, he described the experience as being a very “challenging and rewarding business venture.” In a brief interview I had with the product manager, we talked about all of the different obstacles he had to overcome in order to make this dream a reality. One of the biggest problems he faced was trying to make sure that everyone involved with production was on the same page. The entertainment industry, as a whole, is faced with many new struggles almost daily.

An article I found online describes the some of the key challenges almost all members of the entertainment industry are currently being faced with. It describes that “not only do companies need to shift from physical to digital technologies and change their business models to include all the new digital platforms, but these new challenges imply that companies must change the way they manage their workforce and the way they function to meet even greater consumer expectations.” Within the article, it describes four key challenges: “Extra effort to stay competitive in a globalized marketplace, An added challenge in maintaining leadership, Extra vigilance for the public (and published) opinion and A new kind of workforce = new pipeline challenges.” All of these give a great example of the kinds of things both product and artist managers need to be aware of for when it comes time to promote their products, services and artists.

Negotiation and Deal Management – Michael Amato (Feature Film Producer)

When you are a film producer there are many things that you must plan, organize and negotiate. From budgets, to royalties and even schedules, everything involves going back and fourth between different people with varying personalities. Mr. Michael Amato is a feature film producer best known for his films Dead Man’s Curve and Supercross. Both films were able to obtain worldwide distribution and he considers them to be some of his greatest accomplishments to date. Currently, he produces films primarily for the Lifetime television network and still today has to negotiate and make deals between investors, distributors and the like. Over the past two decades, he has been able to master his negotiation skills by separating people from the problem, using objective criteria and always aiming towards mutual benefit.

During our interview, Mr. Amato discussed in great detail how important it is to make sure to focus on the problem at hand. He said that sometimes “there are times it is incredibly difficult to appease everyone involved in the initial planning stage of a production. The director might have a vision that is very different from the writer and, being a producer, you must be the facilitator between them.” However, everyone involved in any given project has the common goal of wanting to see it all the way to the end. Often times he has had to objective criteria to make sure that nothing gets out of hand. He will have to approve and deny certain shots due to costs and must present enough material to prove his point. Directors always want every shot to perfect and it is Mr. Amato’s job to make sure that he/she stays within the budget.

While on set and during production, Mr. Amato’s job is to make sure that everyone is happy and everything is running smoothly. He has to make sure that the actors have everything that they need, the crew has all of the tools and equipment necessary to set up shots and make sure that there is enough food to feed the entire cast and crew. One of the hardest parts of his job is maintaining a comfortable and efficient work environment. He has to make sure that everything is running on time and within the confines of the budget. In the end, he very much enjoys the everyday challenges that producing brings and the feeling of accomplishment when he finishes each project.

Entertainment Business Finance: Are Film Remakes a Necessary Evil?

Over the course of the few years, I have noticed a fairly significant trend from a majority of the major film studios. It really hit me the other day while I was reviewing my The Hollywood Reporter alert e-mails and found out that Warner Bros is remaking Flintstones while Lionsgate has a new Power Rangers movie in the works. I have often wondered why? Why do they need to remake these films and not focus more on original ideas and stories? Then, I reviewed the amount of money these remakes pull in. For instance, the Hollywood remake of War of the Worlds produced by Steven Spielberg and starring Tom Cruise made over $592 million in the box office worldwide. That is stunning when you look at other films, those having original ideas, turn into flops.

The film business is all about taking risks. Knowing and recognizing a trend seems to be the primary basis behind the reasoning for these major studios to green light certain productions. According to Ross Miller of screenrant.com, “no one can say that remakes and sequels are a new thing – it’s a notion that has been around for almost a hundred years. But lately (perhaps over the last 15 years or so), they have come not only to full fruition and thus extremely noticeable as a trend – but also they seem to be getting made left, right and center.” Out of all of the genres of film, on the other hand, Ross makes a relevant point in the same article that most remakes are within the Horror category. The Amityville Horror, The Hills Have Eyes, The Ring and The Texas Chainsaw Massacre are just some examples of the films we have seen follow this trend again and again.

Now that we have established the success of film remakes and its impact within the Horror category, does it mean that this trend will spill over into other genres of films? The answer: It already has. Just over the course of the past few years we have seen a major increase in the amount of remakes in other genres. The new updated versions of RoboCop, Batman and Superman seem to state the obvious that the major film studios are now exploring their options to remake adventure, Sci-Fi and superhero films. In the end, it is inevitable that box office breaking films will eventually be remade. However, according to Ben Kendrick, “the time between reboots and remakes has become shorter than ever (with only five years between the release of Spider-Man 3 and The Amazing Spider-Man).” The success of these remakes is ultimately determined by how well they are produced and whether or not they pay homage to the original.