Film Prices put Economics on its Head

As Drake discusses in the article, the price to see a film in movie theaters is set at the same price for all individual films. This is a very interesting point that is made by Drake because economics in a capitalistic market would say that the individual films should be able to control their prices for viewership. In terms of  the risk it is pretty obvious that these movies released at the same time have up to hundreds of millions of dollars invested that are at risk. In the modern age of film making there is a struggle to decide on whether the studio should spend this large amount, or make it a smaller budget and risk making a movie with less quality.
With this becomes the important part of the consumer. With an industry that offers heterogeneous products for the same price, that also have different sunk costs, it will be driven by the consumer. There is no other market, other than in the media, that sets up their pricing model this way. This leads to a lot of risk where a few films can essentially have an oligopoly over the entire market. Investopedia.com describes an oligopoly as two or more "firms" controlling the market. In this case the firms are films but I truly believe that is what we are seeing in today's movie market. Go here to see what the box office numbers are for the past weekend along with their total gross revenue on the right side. As you look at the numbers you can see that, as movies are not allowed to price discriminate based on their demand it creates an equal opportunity for consumers to choose which film they want to see.
Although there is this peculiarity in the film industry, marketing can play a very large role in reducing this risk of a film "flopping" in an oligopolistic market. One example that I can think of comes from a few years ago when Will Ferrell made a string of movies that were questionable to say the least. When he made the films Land of the Lost and Super Pro there were a lot of skeptics that said these films would not do well. Just by putting Will Ferrell in these films and marketing them for countless times on TV and in the media they were able to have successful box office revenue. A more recent movie that I can think of tailored more towards the younger college aged generation that did this was well was Project X. They created a movie with a small budget, and marketed it to our demographic to the extreme. With this model they were able to see quite a lot of success as well in the box office. So, although the economics of the box office film industry are upside down to an extent, it allows it to be a true market run by the largest movie critic that is the consumer.

Differentiating Suncreen and Pixar's Cars

I believe Drake’s most profound point comes from his discussion about the “high concept” and the way that marketing and film production have recently become intricately intertwined. He argues that “film marketing began to feed directly into production and aesthetic decision-making” (Drake, 2008, p. 69) which contributes to the “total look” of the product. What he is arguing here is that filmmaking, even in its earliest stages, no longer precedes or is independent of the marketing and publicity strategy, but rather the two are so deeply connected that all films are conceived with marketing in mind. If an idea is good but is difficult to market there may not be much incentive to produce it in the long.

            Therefore, it’s about “the hook, the look and the book,” which essentially break down into how can the film be branded, what elements can be utilized to hook audiences and where are the potential ancillary markets and synergies for larger revenues (Drake, 2008, p. 69). Such practices operate to reduce the risky nature of filmmaking and reinforce Drake’s second peculiarity of films as cultural products: “films are product differentiated in more complex ways than other categories of product” (Drake, 2008, p. 64). In comparison, sunscreen is differentiated fairly simply: Neutrogena emphasizes that it does more than protect against sun burns but via integration of “helioplex” technology helps fight skin cancer, aging and damage, whereas Coppertone emphasizes that its new spray can is easy to use and good for active children. Thus sunscreen in differentiated simply by the differences in what the product does for the consumer—films need to do more though.

            Films as we said are risky endeavors though, so the complexity of differentiation starts with the hook, the look and the book. Cars, one of the most lucrative films for Disney/Pixar yet arguably the worst of their films, is a perfect example to consider in the ways that marketing helped reduce risk. In terms of publicity, the film had the Pixar name for support and credibility in addition to high profile voicing such as Owen Wilson and Larry the Cable Guy. But, the Cars franchise was perhaps the king of ancillary marketing in terms of merchandise. Mom, please can I have Cars Monopoly????

            Differentiation becomes even more complex when we consider the potential for market the experience of the film outside the theatre through attractions at Disneyland, where they are developing “Cars Land.” Disney/Pixar are thus trying to make Cars an experience which transcends just the theatre, reducing the risk by increasing revenue possibilities. Children will demand the toys but also demand to go to the theme parks to literally experience the movie. I can almost certainly say that the film was conceived with these potentialities in mind since they will all serve the financial aspect reciprocally to create hype for the film but also create demand for the spinoff products as well. This is why marketing may be more complicated for films than sunscreen—I don’t think I would go to “Sunscreen Paradise Park though; sounds a bit too slimy.” 

It's Not Easy Being Green

In the months leading up to the release of "The Muppets," you couldn't turn on a television without seeing a myriad of (rather clever) ads for the upcoming movie.  These ads ranged from the typical movie trailer to  spoofs of Bollywood movies.  Marketing for this hit is easy to understand.  Publicity, however, is a little bit harder to grasp.  According to Drake's article, publicity of a film refers to all of the media coverage it receives without payment.  Examples include news stories, interviews, and the like.  So for a film like "The Muppets," when your stars are literally puppets, how do you publicize?

The solution is pretty ingenious, actually.  The publicity department decided to treat Kermit and the gang as real life Hollywood stars.  And, thankfully, interviewers and the public go along with the gag.  In the interview Ellen did with Kermit before the release, she comments, "This is the first time I've ever had a frog on the show!" No kidding.

These appearances are obviously unique, and, therefore, stick to the audiences mind.  For a publicity team, that is all you can ask for.  "The Muppets" was a smash hit.  By its third week in theaters, these puppets had made over $67 million, surpassing all other previous Muppet movies.  This seems to be a pretty big feat to me, considering how long it had been since our furry friends had made a film.  It appears that the "standard rich and famous" contract for Kermit the Frog and Co. won't be expiring any time soon.

Questions:

1. Did you always know you wanted to work for Disney? What drew you to the company, and, specifically, to the Studios portion?

2. How did you first get involved with the company?

3. I really enjoyed "The Muppets." Can you describe how doing publicity for a film like that was different than ones without puppets? Were there challenges that normally don't occur with your other films?

The Lengthy Process of Hyping a Movie

Drake’s third peculiarity of Hollywood states that film revenues are streamed across a long span of time.  In essence, movie marketing is essential in the continued strive for public consumption.  To begin, marketing is paramount in attracting the public to see the movie in theaters.  Drake explains that opening weekend is now huge, accounting for nearly 50% of the movies revenue during its time in theaters.  Furthermore, a successful opening weekend likely ensures a lengthier stay in theaters, which in turn continues to help ticket revenue.  That being said, the movie must have thoughtful and well-planned marketing, advertising, and publicity to generate a “buzz” for the film.  Whether this is through hyping a particular star like Brad Pitt, another film in a series such as Toy Story, or promoting an acclaimed director, there is an obvious necessity to generate a public excitement toward the release of the film.

The importance of movie marketing doesn’t end after opening weekend.  After the first four days, almost every movie changes their marketing strategy to reflect either the success of the film or critic’s reviews.  I can’t think of seeing a movie that didn’t have a commercial stating it was, “now the number one comedy in America”! Or “Roger Ebert calls this movie a timeless classic”.  No matter the case, each film attempts to continue to get the public in the theater through this second-round advertising.

Still, advertising and publicity attempts do not end when the plug is pulled on movie screenings.  After this stay in theaters, the publicity and marketing team must discover the best way to develop excitement for the DVD release, or movie’s soundtrack.  DVD revenue accounts for a bulk of the success of the film, and successful marketing is likely to lead to a more successful revenue stream.

Quite clearly, choosing the correct marketing strategy is very important to establishing a successful film.  Using a solid strategy such as publicizing the known stars of the film help to minimize the risk associated with a film’s production.  In this regard, the die-hard followers of this actor or actress will be likely to attend the theater, no matter what genre of film it may be.  However, there are certainly some risks that still hold true.  For example, the 2005 average cost of marketing was nearly 36 million.  It is important to be able to manage this money in an intelligent way.  If you market the movie in a way that generates little buzz, you will have wasted that money without generating success at the box office.  Furthermore, there is also the prospect of under-marketing.  Some films hit theaters with relatively few ads, and few interviews with popular TV shows or magazines.  That can be equally as troubling, as the public may be less inclined to see a movie they have heard almost nothing about.

Therefore, it is truly a balancing act.  The publicity and marketing team must analyze the framing of the film and determine the best way to market the picture to the public.

I thought this link was perfect, as Will Ferrell recently went on Conan to announce Anchorman 2.  Fit perfectly with trying to already generate a "buzz" for the film.

Anchorman 2

1.) As a publicist, have there been any stations or people in particular that you or the production crew has steered clear of?  Was there ever a time when the publicity department knew to stay away from a particularly hazardous interview or one that could generate negative buzz?

2.)  How much say does the talent actually have in the publicity department?  Specifically, do the stars of the film get to decide whom they want to be interviewed by, or how much they want to publicize the movie through TV shows, magazines or newspapers?

3.)That being said, is there one particular medium that you prefer to channel your publicity through?  Do you think magazines, per say, are better publicity than TV or is it all relative?

A Film Can Never be Fully Consumed

The Hollywood film industry is often seen as being an extremely risky business.  This is partially because the market for Hollywood films operates under what economists refer to as, “asymmetric information”.  What this means is that the film industry runs on incomplete information between producers and consumers which in turn leads to problems in predicting the success or failure of a film.  This often leads to a film being either a hit or a total disaster. 

Marketing and advertising are crucial to the success of a film.  Over the past two decades there has been a substantial increase in the amount of money spent of marketing and the creation of a film release schedule in order to reduce being forced out by other films or products. 

In the reading Distribution and Marketing in Contemporary Hollywood, Philip Drake presented five peculiarities of Hollywood films as cultural goods.  The point that I find to be the most fascinating is that the consumption of a film does not exhaust it.  A film can be watched a million times over by millions and millions of people and the film will never ‘deplete’ itself preventing other viewers from watching the film.  I believe this peculiarity causes the most stress on film makers.  A majority of our cultural products have the potential of eventually being used up, therefore preventing other people from using the product.  For example, toothpaste.  A person goes to the store buys a tube of toothpaste and within a month or so the toothpaste is all gone and the person needs to go out to the store and buy another tube. 

A lot of products we have in our society can be used up and prevent other people from using them, however, this is not the case for films.  Because of this, Hollywood has to pour billions of dollars into the marketing and advertising of its films.  Without the use of marketing and advertising, urging people to be at the cinema on opening day, a majority of people would not see the need to go see the films because the film will always exist and the person can just see it some other time.  Hollywood needs to spend a lot of money in order to create hype around the movie to get people excited.  It’s a very tough job to create hype, but one way or another Hollywood manages to do it.  According to The New York Times, last weekend, “The Hunger Games” raked in $155 million in North America and according to The Movie Banter, only spent $40 million on marketing.  That’s pretty good if you ask me!

Questions for Kacey Hagler

1) Many of the Fox Searchlight films you have worked on started out as independent films, as far as I know, and most of them became huge successes! What kind of publicity went into making them so successful?

2) When you work on publicity for films, such as The Help, do you focus on targeting a specific audience?  And if so, how do you select the audience you want to target?

3) Is doing publicity for a movie that is a sequel (Cars 2) a lot harder than publicity for an original movie?

The Emotion Work of Reality Television

Television producers of reality shows are responsible for guaranteeing that over the course of filming there will be dramatic and emotional encounters to become the core of an on-screen story. Grindstaff says that the normal route of manipulated situations to create a more stressful interaction is problematic because there are limits as to what contestants would be willing to do and they always have the ability to quit during production. Instead, producers must create an emotional connection and build a relationship with each guest or contestant on their show.

 Grindstaff explains that, in general, most females and men in lower economic classes use ‘emotion work’ – meaning they use emotions to not only build relationships but also provoke desired reactions from their peers. These slight manipulations are often used to maintain normalcy, but can be used by producers to inspire more emotionally charged reactions from individuals on reality or talk shows.

Personally, I am unsure how necessary this tool of emotional manipulation is. I believe it is important for producers to build good relationships with the contestants so that everyone feels comfortable during the filming process, but I do believe that the situations themselves create high levels of stress and therefore heated reactions from the contestants. However, in a talk show or a confessional situation, it is important for the producers to know how to bring down emotional walls. By this point, the participants will have emotional guards in place about what is being discussed and producers have to build a trusting relationship to break through.

While I do believe these types of relationships are useful in creating dramatic reality television, I wonder how ethical they are. Contestants know to question the tasks they are assigned and their fellow competitors when they agree to appear on a reality how. However, most do not think to question the production staff of the show – the producers are supposed to be on their side. While I do feel somewhat uneasy about the imbalanced relationship if contestants are aware of their situation and lack of power, and producers do not overly abuse it these emotional connections help create good reality television.

Questions:

-How do producers approach the participants of a reality-competition show differently than an average reality show?

-Is the main goal in creating a show always to create the most dramatic story or is there a benefit to creating a simpler and more realistic plot line?

-How much do contestants personalities versus talent influence their ability to join or remain on a reality-competition show?

Reality Television or Conflict Television

Without a doubt there is something compelling about watching reality television. The constant twists and turns as well as the drama that occurs is ideal for television audiences  but there is also an art to making 'ordinary people' into entertaining people. In her article Grindstaff answers the question of "How, then to guarantee good (that is, dramatic) television using ordinary people?"by emphasizing producers role in cultivating conflict situations. Now a days, many reality shows are formulated around situations of conflict between characters and I agree with Grindstaff's point.

An example of this constant need for 'drama' to be at the center of reality television is the emphasis of women as the main characters of reality television series. From the show Sorority Life to the Real Housewives series, it is evident that producers are constantly creating and glorifying conflict television and producers guarantee this quality reality television by strategically picking the people involved and fostering situations. Through the use of 'emotion work' producers are able to influence ordinary people, usually women, to perform their lives in front of the cameras. It is the conflict that reality stars experience that draw us in to reality television shows and it is this real yet entertaining experience that producers  use to draw viewers in.

Overall, producers try actively to create situations in which these ordinary people who we see as reality television stars can perform. Despite being ordinary people, as seen with the young women of Sorority Life, once you are placed before the cameras with the influence of producers it is difficult to not 'perform', in reality I doubt any ordinary person's life would be worthy of television without a little drama.

Questions:
What is the most significant difference between producing 'reality' television and scripted series?

Can a producer do both or is it easiest to pick a type?

Do all reality shows include/ need the same type of influence and guidance from producers?

What is Ordinary?

"Ordinary" means something different for everyone; it has roots in individual experience, socioeconomic background, upbringing, and countless other factors which determine our worldview.  The diversity of ordinary makes the world of reality TV complicated because the producers have to find "ordinary" people and create dramatic television out of their lives.  How do producers create good dramatic television using ordinary people; according to Grindstaff "reality TV and talk shows create dramatic (good) television through creating surprise conflict situations.  Grindstaff says they "rely on the everyday life skills of emotion management to create strong dramatic TV."

Grindstaff hits the nail on the head; reality TV revolves around conflict and the story lines that evolve from that conflict.  The conflict of reality TV creates strong dramatic television because of its apparent authenticity; the authenticity of a reality television show stems from the use of "ordinary people."  As Grindstaff points out, these people are not ordinary people selected at random; they are chosen because they have a conflict or issue.  This conflict gives rise to good "authentic" dramatic TV.

The world of reality TV and its presentation of normal is problematic because of its dramatization of life.  These shows say they portray reality when in fact they create an abnormal scenario through emotion management and situational conflict.  they use elements of surprise and confrontation to ensure these conflicts arise and come to fruition.  I believe the use of conflict and emotion management while it creates dramatic TV skews reality even more than some fictional shows and characters.

THREE QUESTIONS:

1. What qualities do you search for when producing or reviewing a reality TV Show?

2. What is the most difficult thing about working in reality TV?

3. Grindstaff talks about the strategies of making "good reality TV" does Magical Elves have a certain strategy when they attempt to produce "good TV?"     

  

The Unreality of Reality TV

            Her response is that both reality TV and talk shows production staff facilitate situations in which ordinary people are thrust into conflict situations in order to facilitate a “good or dramatic” performance.  I think that it is important to understand how producers do this in a way that Grindstaff says will not create a situation in which the cast members quite or leave the show.  I think this is important because much of the appeal of reality TV is the drama.  The cast are people that the audience can relate to because they are considered ordinary, and having them in dramatic situations creates appeal for audiences.  I agree with Grindstaff in that this is important in order to create good TV, and think that is the main reason reality TV has been so successful without the use of paid actors.  The way to create good TV is to make it so that the situations seem as real to the audience as possible and therefore the emotions of the cast are as unscripted as possible.

            Producers of reality TV have kept the secrets of creating drama on shows as secret as possible in order to have audiences think that the drama on the shows are real and in order to keep the cast members emotions as real as possible.  However, it has been admitted through the media that much of the drama created on reality TV is done so by the producers in order to make programming interesting.  A show about actual normal people would not sell well because its not that interesting which is why producers create drama on shows.  The funny part of reality TV is that it is not actually real, but instead scenarios created by producers in order to make drama that will be appealing to audiences.
Questions:
What are your interactions with cast members as a producer?
Do you manipulate actors at all during their on screen performance?
What are your responsibilities on the editing side as a producer?

Controlling Emotions is Helping Reality Television Control Air Time

First, a producer guarantees good reality television by selecting an "ordinary” person” who has an issue, is experiencing a problem, or is stuck in a crisis.  Their problem should be compelling, have conflicts or be likely to create conflicts, and maximize the probability of emotional expressiveness.  The second step is for the producer to participate in emotional labor.  Emotional labor is where the producer influences and controls the feelings and emotions of the “ordinary” person, convincing that person that social guidelines tell them they should be emotionally responding in a certain way to their situation.  They do this for multiple reasons.  First, in a conflict with a high probability of intense emotion and the stressful schedule of reality television, emotional labor must be used to keep the “ordinary” person dedicated to continued participation.  They must secure the cooperation of the “ordinary person.”  Second, the producer must alter their emotions in a way that is favorable to creating drama, which leads to good television.  Grindstaff uses a pornography shoot as a metaphor for this transaction.  The producer “fluffs” the “ordinary” person, in order for them to “show wood” to the audience, and then after delivers a “money shot,” which could be “soft-core” or “hard-core”.  In this metaphor, “fluffing” is where the producer plays with the emotions of the “ordinary” person,” leading them to develop certain emotions that are desirable to the producer and make them easily visible, “showing wood,” and the money shot is where the “ordinary person” takes action based upon these emotions that the producer instilled in them.  This action, if the producer instilled the correct emotion, will guarantee drama and a good reality TV episode.
My take on this is that is incredibly manipulative.  This causes individuals who don’t have experience with the television industry on air, with millions of people watching, to act in ways that they never would if the producer, or an expert at emotional labor, wasn’t manipulating and amplifying their emotions.  However, due to the cheap production, great success of emotional labor, and the incredibly popularity of reality television it will remain a very popular form of television for years to come.

Three Questions
1) Does being the producer for "reality" shows require lots of the same skills as producing television for "scripted" shows (such as emotional labor)?
2) Have participants on reality shows ever complained to you or someone for your company about how they felt misrepresented by the final product, with the editing and presentation of the final show?
3) Reality television seems to spread across a ton of topics and genres, from love shows, to game shows, to extreme stuff.  What do you suspect the future of reality television to look like and why?

Magazine Publishing

  According to the annual State of News Media journalism report, magazine revenue have been declining tremendously since 2007.   Magazines rely heavily on advertisements but with growth in technology, the fate of ads in magazines is uncertain. I think its important to focus on how and what ideas magazine companies have been coming up with to increase revenue on how to get consumers to buy the magazine, which will piggyback new revenue stream idea for ads in magazines.

 In a blog written by Amanda Lucci, New York Mag Picks New Revenue Stream, she explains that magazine companies like the New York Magazine have decided to move the classified sections from the back of the magazine to the front, therefore people will be able to see opportunities they could participate in as soon as they open a magazine. This idea was incorporated by placing dating websites in the front of the magazine, which promoted a growth in the dating website being advertised.  Another idea that has been added to pick up revenue stream for print magazine is creating DVD's with archives of magazines from years ago. The article, Repurposing Magazines A New Revenue Stream, explains two magazines that are in the process of being transformed, which include Playboy and Rolling Stone. These two ideas for creating more revenue in the magazine industry are not the only ideas but have caused great shifts in the content of what magazines produce.  Magazine companies are now requiring to hire a web designer and a good publisher to work together to create both print and digital apps, according to an article published in Forbes.

 The future of  magazines looks a bit grim but to increase the revenue stream, I believe magazines should package their products differently. In other words, I think a way to boost revenue is to put a code on the back of every magazine to type into your electronics where you then can download a free copy of that issue you just bought, therefore you have a digital copy and a hard copy.  What happens if someone decides to buy a digital copy instead? Well, the same option is presented to the consumer you will pay the same price you would at the store and the magazine will be sent to you in the mail. This could be one way magazines could increase their stream of revenue.

TV industry in the digital age

Broadcast television relies primarily on advertising for its revenue stream. However, with technological advances in the television industry, this revenue channel is being threatened as more and more people are beginning to adopt alternative means of consuming TV. However, broadcast television has seen ad revenues decline at an increasing rate. Primary threat to ad revenue comes from various media options available to the consumers. Online TV is becoming increasingly popular, as TV audience no longer has to follow the broadcast TV schedule, and watch the TV content on their portable device. Moreover, to add to that, digitalization of the industry has not only made piracy easy, but pirated contents are also fairly easy to find today. Shifting to this form of TV has allowed consumers to enjoy television content without any advertisement disruptions. In addition, things like Google TV that provides free access to content only intensifies the challenges for broadcast television. DVRs are another means through which broadcast television ads are being threatened while giving more power to the consumers. More ad-free media technology such as Netflix and iTunes are also hampering the broadcast television business.

Due to various factors, broadcasters have had to adopt alternative means to continue a profitable business. Retransmission fees is one such way that they have tried to do this so that broadcast television can take advantage of the cable operators and try to gain back some of the loss in ad revenues. Moreover, with the technological advances, interactive tv has also become increasingly popular. Through this, broadcast television can try to get some of the advertisement revenues on this “second screen” that consumers are increasing along with their traditional television. Another way they can adopt to the change in this industry is by integrating advertisements within the show that won’t disrupt the viewers. They will also need to look for additional platforms to provide reruns of their show so that they can make up some of the loss in revenue. Time warner has embraced this idea of “TV everywhere to adapt to the economic threats provided by the loss in ad revenues.

These economic shifts have also impacted the content in this industry. Because content producers now have to compete with the free content available online, their incentive for creative content has been decreasing. Because, their profit is being challenged, they have to avoid taking excessive risks, thereby playing safe, often compromising creativity. In addition, this has also led to an even more “consumerism” within television. Farrell illustrates how branded entertainment and branded content are being integrated in the television industry these days.

Due to these various factors, the TV industry will have to change their model to adapt to the economic and technological shifts. One such way that they can do this is to add a "merchandising" aspect to this model, where they could sell small artifacts such as coffee mugs or t-shirts that feature the TV shows. They could also have "live shows" that audience can buy tickets for. For example, if there is a show like Glee or American Idol, they could have live concerts featured by the artists in the respective shows. They could also have ticket shows for talk shows or other reality shows for which the audience would pay the extra $ to see the artists outside of their TV screens. Therefore, as illustrated in the diagram below, the TV industry will have to move beyond the 3-party model to accommodate to the changes in the industry.

Video Game Industry

Unlike the other industries we have discussed in class, the video game industry has maintained considerable growth by tapping into new and re-articulated media forms. Whether it be through a traditional console, the internet, or mobile device, the video game industry has been able to commodify the consumers experience. The primary revenue streams that support this model are through in-store sales, digital subscriptions and advertising placement. A major threat that is posed to this this model is the greater influx of social media and mobile application platforms offering games/services for free. However, that harm is mitigated for those companies by offering advertisement space much like the three-party model of network television.
However, the traditional business model of high cost barriers of entry for creation and distribution associated with the industry is reworking itself in order to adapt to such changes. First, video creators are looking to merge pre-existing media forms with their technology in order to garner a competitive advantage. This is demonstrated by Mötley Crüe who released their new single in 2008 on iTunes and the "Rock Band" platform; sales on "Rock Band" outweighed iTunes 5:1 according to Billboard. Moreover, the mergers of not only content but businesses has allowed many new technologies to emerge and become  vertically integrated within the industry (Example: Activision & Vivendi). What is also interesting is the shift to a non-cyclical business model for many companies as the virtual reality created by video games becomes more and more life-like that the habitual attitude and competitive nature of playing requires daily use.
As I see the industry, the commodification of the experience will most likely make a greater shift where activities performed in these virtual worlds will produce rewards in the physical world. I would suggest that brands and consumer products utilize the mobile geo-location capabilities and the fanatic fandom of video game platforms to reward customer loyalty by awarding gifts or coupons within the virtual space that can be redeemed in real-life. This has been done for many of the female video games and big brands such as Procter and Gamble available for fashion and cultural purposes but I foresee an even greater profit margin to be made when brands can find greater synergy between the virtual and real worlds by using virtual distribution in order to lower costs in the front end.

Digital Distribution

The primary revenue stream for the film industry today is based on how much money they can get off movie theaters, DVD, cable TV, and other ancillaries sales.  This means that most of the money made is after the movie has been released.  However, because of some recent hiccups in the film industry, such as online piracy, social networking, and movies on demand, Hollywood has slowly been losing its audiences to the computer, the iPhone, or the iPad.  With the rise of home cinema, high quality video streaming, and faster connection speeds, the future of the Film Industry all comes down to the economics behind it.  What this means for Hollywood is a change in distribution.

Where we used to go to the movies and sit in the theater, we now have a new and different way to experience a movie.  This is what we call Digital Distribution.  Digital distribution has been difficult for filmmakers because they now must deal with the "free versus pay" issue, which often is more complicated by online piracy.   There are some digital distributors out there who believe that economics of the film industry has been completely threatened, and may never come back from it.  Netflix, for example, has recently said that they are going to be focusing more on having a vast amount of TV shows.  They believe that the real money lies in the television shows because it enables audiences to watch one show after another.  Through subscriptions and things like Netflix, the movie industry may be on a slow decline.

However, sometimes the new way of distribution has helped certain people within the Film Industry.  For example, Passion Films was shocked when they saw how many times their movie "Inside Iraq: Untold Stories" had been illegally uploaded.  However, they gained a very high audience through digital media as well.  By being free online, the buzz around the film increased its DVD revenues when people could no longer see it online.

Because of the rise in digital technology, most movie studios are moving to replace film and move toward smaller projects.  This would mean lower costs, and the change in content would be seen in the rise of more sequels and franchises.  Most film industries are changing into companies that try to reach its audiences in different ways in order to drive revenue, and the content change is their way to do that.

If I were an executive in the Film Industry, it would definitely be extremely difficult to adapt to the new economic shifts within the industry.  While online piracy is a shame, it is impossible to avoid.  With the increasing advancements in technology, the way we watch movies is going to continue to change.  The fact of the matter is people don't want to go to the movies as much as they used to, and instead they would rather be in the comfort of their homes than paying $10 to see a movie they are unsure of.  I would suggest doing MORE online subscriptions, and creating a Netflix-type place for each studio.  If Universal had an online subscription, once the movie is released, people would be able to pay a certain amount to be able to see that movie for free.  It is hard to say if this would work, but I think that the studios could make money off of advertising in this way, while proving lower costs for the movie theaters.

Youtube Video:
The Future of the Film Industry

Other Related Articles:
http://bzfilm.com/articles-notes/u-s-movie-industry-hurt-with-poor-distribution-logistics/
http://bzfilm.com/tips-sources/film-financing-in-hollywood-past-and-present/past-and-present/

Magazine Industry

In 2011, 41.3 % of magazine publishing came from print advertising; however, although print advertising is still the most primal revenue, according to the online article written by Kaufman (2011), she says “Not surprisingly, publishers expect less of their revenue to come from print advertising and more from web advertising or online sponsorships”. Online advertising or online sponsorships have become more important recently because of the emergence and increase of online magazine and publishing thorough apps.  From my research, I have discovered that development of technology, specifically the emergence of iPad recently, has changed and influenced on magazine publishing industry enormously. Since iPad and tablet has become more popular, more people start purchasing apps or online magazines recently as Smith (2011) says “Whether on or odd the traditional web browser, many of the revenue-generating ideas are being influenced by a new age of apps”. It is important for the publisher to adapt themselves into this new technology because the more customers have started purchasing magazine online.  To fail to this adaptation is a fear for publishers and it is necessary for them to follow with this development of new technology.

One of the adaptations to the emergence of new technology magazine industry has done is, of course, creating their app so that more readers can reach through the app. Now it is their challenge for publishes to maintain the balance between online and print publishing, as Pytlak says, “Our publishing partners are trying to find, for their unique audience, what’s the right combination of print/digital, or what a price points – and what does a subscriber to one or the other, or both, actually have access to “. Some magazines even have chosen as their only digital content option (other than their websites), and it means that the reader has to visit the app store for his or her device (ex. iTunes Store) to download the app, and then likely will purchase the subscription to the magazine’s content though the app (Sivek, 2011). Because of this change, the content of magazine has to make adaption as well and it is becoming more important for the publishers to be familiar with new technology to make their content more appealing to the audience. The author of the article I found (“One Model for the Future of Magazine Publishing Holds Forth in Portland, Maine”) says now it requires for the publisher to be a good developer and also web designer as well and he or she says, “It is telling that in this new world of content production, print is just another “screen,” albeit a privileged one with very high-resolution (but low interactivity)” (2011).

If I were a CEO of magazine publishing company, I would also develop an app of our magazine. Since it is a digital form, it makes it more possible to actual interact with customer. I think it will utilize the customers if we utilize its function of touch-screen for the app so that the digital and print publishing can maintain its balance since their content become different and it attract different customers. For example, I would make it possible to touch on the product in the magazine on the screen, and it will show to the customer which store around him or her has the product with how much of the price now.

How do you make music into money?

It is no secret that the music industry is struggling as of late. With the advent of the digital technology age its entire business model is under serious revision so that the industry can maintain its revenue stream. The revenue that the music labels rely on comes mainly from the copyright contracts that they maintain with artists signed to them. Originally, this also included record sales which started off as 8-Tracks, Vinyl, Cassettes, CDs, and Videos. However, now with digital music as accessible as it, there is much less profit to be made because people have stopped buying CDs, and instead either buy songs separately or download them illegally.

Record labels have responded to this by altering the contracts that they have with artists so that they can optimize their profits. (http://www.freakonomics.com/2011/08/31/the-music-industry-copyright-battle-when-is-owning-more-like-renting/) This is further being threatened by recent legislature with copyrights which is giving back artists their rights to songs after 35 years. Record labels previously were able to make a profit on the distribution and production of different songs that they had the copyright to. So how will they be able to maintain their revenue within the industry? With artists also losing profits, the two need to revise the business plan for each so that they both profit jointly together instead of in ways that cheat one or the other out of profits. The content of the music itself is even being threatened because music labels are looking for the most profitable types of music that will make them the most money in the end. Ultimately, with youtube and iTunes, record labels will need to change their relationship with the artist and what they profit from in terms of the music that is recorded in their studios.

If I was a executive in the music industry, I would focus on the concert and touring industry which seems to be losing steam because of the internet and digital era. People can see their favorite videos and listen to their favorite songs quite literally immediately after they are released. The concert experience is one that shouldn't be lost and is one that does make a lot of money when it is executed properly. I also think that there needs to be a settlement when it comes to copyright because too many artists and record labels lose profits from the illegal downloading that has become so prominent in our digital era.

Can the Magazine Industry Make the Change?

The print magazine industry has had a very grim last couple of years with a serious decrease in revenue.  The industries main source of revenue comes from advertising and distribution sales.  eMarketer stated that, “Overall ad spending on magazines declined 7.1% to $13 billion last year and will shed another 16.2% this year, bringing the market down to $10.9 billion. We will not see an incremental increase in the market until 2012, when eMarketer expects a meager 4% rebound” (http://www.minonline.com/news/10535.html).  The print magazine industry had to make a serious change in order to survive the growing age of technology. 

The industry is being threatened by the 180 degree turn towards the digitalization of media.  The majority of media content can now be easily accessed online and has made it much more convenient for consumers to access content whenever they desire.  Print is not nearly as accessible and easy for consumers to obtain now that they have internet access at their finger-tips, be it a laptop, smartphone, iPad, or e-reader.  Another issue the industry is facing is that although online magazine versions do not accrue the cost of paper, ink and distribution, they now have new costs to deal with.  Havens and Lotz(2012) explain how many print media sources struggle to develop a profitable internet strategy.  However, at the same, advertisers have not moved into the online space with fees adequate to support these new costs or fully compensate for the decrease in readership of the physical print forms.

Although the transformation from print to digital has been a struggle for many print magazines, many are continuing to try and break into the digital world.  One method of success is through the use of ‘Single-Story Sales’ (http://www.pbs.org/mediashift/2011/02/how-the-kindle-made-single-story-sales-a-reality-for-magazines-047.html).  With the growth of e-reading on tablets, smart phones, etc. the emergence of Single-Story sales has been enormously popular.  In addition to this many magazines now have an app that consumers can download and access available content whenever they so please.  If I was an executive within this industry I would continue to move full speed ahead with the digitalization of content.  Personally, I still love having a hard copy of a magazine, but with the rapid increase in technology and the movements towards sustainability and being Green, I truly believe the print industry will eventually cease to exist.