Aug 7, 2023Liked by Sean McNulty

Great piece. And fabulous writing. She clearly understands exactly what has happened to this critical artistic industry: Wall Street finally figured out how to subject it to their special form of 'discipline'. The only point I wished she made more clearly is that one dynamic at the core of all this destruction was the way in which Wall Street valued entertainment companies; when Netflix came on the scene Wall Street valued it at 100x earnings, like tech companies, even though it was hardly a tech company, and actually, unlike Google or Apple, actually made very little money. But for every dollar they made, Wall Street multiplied it by a hundred, so a billion dollars in earning made it a $100 billion dollar company, etc. Meanwhile, Wall Street continued to value legacy Hollywood companies at a meager 8 or 15 times earnings, sometimes a little more. So the studios all looked over eagerly at Netflix, trying to figure out how to get a bigger multiple for their earnings, until, inevitably they all simply cast everything overboard to imitate Netflix's streaming business. Recall that Disney, when it first jumped into streaming a couple of years ago, was finally rewarded by Wall Street with its biggest valuation ever, 60% more than it currently trades at. So in other words, at the very moment when Disney--the biggest and most successful studio--was literally committing financial suicide, Wall Street gave it it's highest and most meaningful praise. Such is the destructive wisdom of Wall Street. Everywhere.

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"We need a political coalition to break up the studio-streamers, or we will lose the ability to sustain the TV and film industry that has been the beating heart of our culture for over a hundred years."

This is nonsense.

Hollywood only profited and survived for so many decades BECAUSE of too much regulation on who can create, distribute and speak.

The agenda is over. The audience is speaking clearly: they do not care about the newer stories, and they all want to be famous.

This is why YouTube and TikTok are crushing it.

If you want to regulate creation more, you will only fall into dust faster. Mark my words, set a reminder.

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I’m not sure about this, Adam.

The relationship between regulation and creation is complicated for sure, but it’s quite clear that the golden age of Hollywood was roughly between the mid 50s in the mid 90s when antitrust laws prevented vertical integration of producers and distributors.

That ended when Bill Clinton signed legislation that eliminated the financial-syndication rules in 1994. By 2000, networks were extracting (extorting) ownership of shows from studios and consolidation cycle had begun, with the result being more and more of the profits from media production and distribution going to large companies instead of artists, labors and independent producers.

Alena’s description of the Silicon Valley playbook is right on. What masquerades as creative or business model innovation often turns out to be nothing more than regulatory and financial arbitrage that, in act three, leaves labor, consumers and society worse off for the benefit of a very few. Good regulations preserve competition and innovation.

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Aug 8, 2023·edited Aug 8, 2023

Appreciate the thoughts, Tom...

"Good regulations preserve competition and innovation."

Oh, like copyright lasting 70 years + life of author? That's a GOOD regulation? Please.

I don't see any additional/new regulation stopping the bleed-out. It's going to be massive in 2024, and a lot of audiences are going to celebrate watching huge names fall.


The distributors are the problem, not the networks, IMHO. And modern day popular/viral media doesn't rely on IP -- it relies on continuous stream of new and fresh short content.

Barbie went viral because of hundreds of millions of dollars spent on marketing -- and I am fairly certain it was more than that on street team marketing, but we'll never know.

I love watching what Ai does for indie short form media already. There is no possible way that Hollywood can distract audiences from what is working for the indies. How many influencers are SAG? Way way way way fewer than even SAG wants to admit. How many TikTokers are WGA? None? 4? I doubt it's 3 figures.

The entire Hollywood system is collapsing, because of 5 specific things Hollywood can't fix:

1. Real people -- a lot of influencers aren't attractive, either. I remember watching some chefs on YouTube with 5 million followers and thinking "this would never happen on TV". Chef John Mitzewich (Food Wishes) is one of them.

2. Lack of IP -- the Marvel cinematic universes are getting a bit long in the tooth. Even Star Wars and LOTR and other cinematic universes are starting to chug. The successful influencers are mostly IP free -- MrBeast is one who is lateraling into candy bars and fashion, but he's a rare one.

3. Massively underproduced "reality" -- Hollywood's average reality TV show has like 30 cameras on set. Folks know it feels fake but they watch it, but The Bachelor had 16 million views on the finale in 2009 and in 2023 they barely had 3 million. Tragic? No -- the audiences are now watching "real feel" reality TV -- on TikTok and IG and YouTube. High production value seems to turn off casual (ad-receptive) audiences.

4. Extremely distorted actors -- nobody believes in celebrity anymore. It's almost like rubbernecking a car crash. The Oscars and the Emmys are basically over.

5. Agenda -- Hollywood is so one dimension it's remarkable even those on the left coast watch the nonsense they're pushing.

My money is that the strikes wipe out a lot of gatekeepers, and the employees of gatekeepers, and I for one will be happy to see it.

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This is short term thinking. TikTok and YouTube are both less than 2 decades old. It’s not the place for cinema, just RealityTV on steroids. There’s a reason why social media stars mostly try to transition to the stability of more traditional media. They know it’s only a matter of time before their “influence” fizzles out on these platforms. Let’s see what happens when their audience grows up.

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I honestly would be surprised if aging will have any effect on consumption -- mostly because the "kids" who got hooked on short form content are now young adults who are hooked even more on short form content.


Even Netflix has been steadily losing the youth -- 38% in 2015 to 30% in 2022, that's a scary figure.

YouTube went from 21% to 30% in the same time frame.

The biggest demographic, age-wise, using YouTube is 25-34: https://www.oberlo.com/statistics/youtube-age-demographics

They love short form fast content, blips of dopamine they can consume all day long without long term investment. https://www.engadget.com/social-media-teens-pew-resaerch-youtube-tiktok-instagram-facebook-twitter-snapchat-tumblr-twitch-164456016.html

I'm sure Netflix and the rest of the studio cartels know about this and are trying to steer the youth towards longer form content, but I'm not convinced it's working.

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I think it’s too short a time scale to draw these conclusions. I also think a lot of folks fall into the Quibi trap of thinking the form factor and length are what’s engaging these kids. For instance, we can look at platforms like Twitch as a counter factual. Length of content, I think has little to do with it. Bigger, as a factor, I think are the network effects these platforms have and the community aspect around social media platforms, YouTube included. Funny, that’s the thing the studios have invested very little in from my perspective.

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Quibi was terrible because they used Hollywood actors to make shorts.

YouTube has almost NO Hollywood actors who are popular.

I watched Quibi, it was horrible. It was as bad as a lot of Hollywood features that came after it.

TikTok had no network effect. It was not unique when it launched. It just gave audiences what they wanted, and had a stellar algo.

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the algo

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These business practices have always existed in Hollywood. The Internet has made these business practices happen at light speed with even more camouflage. Our movie Smoke Signals, made in 1998, has never stopped streaming and being played worldwide on TV and other venues. Right now, on YouTube's official channel, you can watch it for free. I wrote the screenplay based on my book, and over the last 25 years, I've made less than $1,000 in residuals. In contrast, I co-wrote five of the songs on the soundtrack and have made approximately $10,000 in those residuals. Yeah, in this case, the music industry has been more honest than Hollywood. Crazy, right?

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🎶 @PureFe

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Great article. Not sure if I’m optimistic about the viability of the proposed solutions. Regulation could help, but I don’t see our current generation of political leaders being motivated to drive these solutions forward…our own mayor seems uninterested in offering anything more than non-statements and platitudes. Ultimately, Hollywood isn’t likely to draw much sympathy from the general population to force the necessary political action but I hope I’m wrong!

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A brilliant essay. All the solutions are there. Artists matter. Culture matters.

YouTube and TikTok are not cinema. Not narrative TV. 60 seconds of an influencer post is not where it's at.

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Getting the POV of the folks that actually participate in the "creative" end of our business is one reason why I appreciate this platform. There's so little transparency anywhere else, it's refreshing to hear what everyone in the trenches is experiencing.

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The FTC is in the hands of Lina Kahn, appointed by Biden, confirmed by the Senate. She wants to hear from us how bad it is. Take her up on it. The public comment period is open.

My view: ask her to focus on mergers and corporate actions that facilitate the conjunction of production and distribution. That’s a chain around the neck of everyone who creates in the industry.

That topic was the centerpiece of the writing that made her name, and got her the job she’s in. It resonates.

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Here is something we can do. The Justice Department and the Federal Trade Commission (FTC) are releasing a draft update of the Merger Guidelines (Draft Guidelines) and the public is invited to provide comments. They have set up a site where we can tell them about our experience with mergers, or offer thoughts on antitrust law, mergers, big business, or unfair methods of business. There are already over hundreds of comments, many from writers. The deadline is Sept. 18


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Perhaps time to call in Teddy Roosevelt for another round of trust busting. Monopolies like big tech are as American as apple pie. On rare occasions either the courts, government or pressure by the people manage to break them up. Examples are steel, oil and the railroads. And the movie studios. Sometimes this is horizontal integration. Not sure what the solution is, rather a historical perspective.

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Great article. Why do we allow them to keep the power, when we are in the drivers's seat? This is one area that is worth fighting for.

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This piece does the service of neatly describing the cord-cutting streaming industry that has savaged the creative nature of the entertainment "industry." That said, the author's proposed resolution is out-of-reach I fear. Wall Street - as termed here - serves the interests of the of the economic upper 1% in the US. This group is analogous to the Borg: "You will be assimilated; resistance is futile." See Supreme Court justices Thomas and Alito as Exhibits A and B. For historical reasons there will never be another Progressive Era in the country that will better level the playing field and so the political resolution proposed here would work - if it was achievable.

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Um, boom.

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Nailed it.

So many people confuse the technology with the financial structure. And Big Tech uses the smoke and mirrors of their new technology to obfuscate basic math.

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