Too big to fail? Not so fast. A showrunner's cautionary memo
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.
"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.
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?
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!
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.
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.
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.
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
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.
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.
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.