Indie Film Is Dead
Producer Ted Hope diagnoses the current business climate for independent film.
By Ted Hope
This article was originally published in our Fall, 1995 issue.
It may look easy but sometimes it’s pretty hard to keep coming up with the inspirational success stories we usually pack into Filmmaker. Credit card-financed movies leading to three-picture deals; Sundance hits transformed to Fox sitcoms; domestic box-office failures rescued by ticket-buying Parisian cineastes – there are only so many of these tales to go around. That’s why we welcomed this opinionated piece by producer Ted Hope lamenting the downside of today’s indie film scene. Hope is co-president of New York’s production company Good Machine and, along with his partner James Schamus, has produced or executive produced such films as The Brothers McMullen, Safe, and The Wedding Banquet. Hope also produces Hal Hartley’s films, including his new Flirt.
Hope’s candid diagnosis prompted Schamus, who is currently adapting Rick Moody’s novel The Ice Storm for Ang Lee, to pen a piece of his own, a reply which amplifies the terms of Hope’s argument. We hope both pieces spawn some debate and we look forward to running more essays on the state of the current indie scene in future issues.
The marketplace is nasty and brutal, remembering only the latest successes and never forgetting its failures. It allows no room for taste beyond the mainstream. Truly unique films cannot get screens, let alone hold them for more than a week or two. There is virtually no American audience for art films, political films, or non-narrative films. The specialized distributors have morphed into mass marketers, not niche market suppliers. Monopolistic business practices drive most corporate strategies.
Whether we view ourselves as producers, directors or moviegoers, our options are limited by the structure of the industry, and if we do not act soon, we will lose our ability to choose the films we want to make and see.
Sure, the trade papers may paint a rosy picture for the future of indie film. New outlets and delivery systems proliferate daily. New revenue streams emerge with reassuring regularity. The audience for "specialized" films is at an all-time high. Every month another studio posts a press release about their new specialty division. Every city has a film festival. Film school enrollment is booming.
But the real news has been quietly taking place in those back room corporate board strategy sessions. Anti-trust laws are a thing of the past. Today’s new media giants are embracing the independent film but as a marketing concept only; every day they bring more and more of the production, distribution and exhibition apparatus under their control. Although we celebrate our independent "spirit," the logic of the studio film – its range of political and social concerns, its marketing dictates, and even its narrative aesthetic – is slowly colonizing our consciousness. The screens are controlled by the studios and sooner or later every filmmaker winds up working for the studios.
We all must get real and face the facts: independent filmmakers are currently standing on a precipice. It’s jump or get pushed. We are overdependent on the Hollywood studios and their far reaching apparatus. If we want Indie Film to survive into the next millenium, if we want it to expand our artistic horizons, we must start to grow truly self-sufficient.
In order to recognize the desperate situation we currently find ourselves in, all one has to do is take a look at the current state of the industry and it’s different arms, and try to imagine one thing: Where does that truly unique first feature without an accessible marketing hook fit in?
YOU CAN FORGET ABOUT A DISTRIBUTION DEAL
Acquisitions are driven by marketability, and marketability alone. Art has no value. Sure a film has to be "good" to be picked up, but what does a distributor truly look for when it acquires a film? Uniqueness of vision? Independent spirit? Discipline? A controlled or unique aesthetic? Try again. Like their Hollywood counterparts, the first item on their menu is a marketable concept, one they already know how to package. They look for the promise of fun, albeit intelligent fun. God forbid, a film breaks new ground – if it does, it better do so while still satisfying other proven commercial desires – otherwise no one will know how to market it. In the current marketplace, fewer and fewer distributors will take a risk on a great film if its marketing potential is not immediately identifiable.
The major specialty distributors only seek films they believe can gross $2 million at the US box office. There is no small acquisition anymore. When a distributor offers a minimum guarantee of $300,000, they are essentially stating that they believe the film will gross over $2 million at the box office (the MG is nothing more than an advance against future profits – the size of the advance is in direct correlation to a distributor’s conservative estimate of the film’s future revenues). If the distributor is strong enough to demand (and collect) 50% of the gross from the exhibitors and spends no more than a minimal $700,000 prints and advertising investment, then it can recoup the advance. Forget about the days when an independent film was applauded for reaching the $1 million mark. Now it’s $2 million or bust.
The "Big Little" distributors have a surplus of films; they don’t want yours (particularly if it’s an art film). Miramax doesn’t even try to hide the fact that they have over 40 films on the shelf – they promote it. If one of the larger specialty distribs were to pick your film up today, you’d be waiting a year for your premiere. Granted, some of the wait has to do with the mechanics of publicity, but you can’t get around the surplus of good films available for acquisition. With such a backlog, there’s tremendous pressure to get everything but the big money makers off the screens and the shelf sitter up and out (but only for the minimum time required under that pesky video output deal, of course).
Acquisitions has become a presale and production game. There’s no room for your beautful little hand-crafted film gem (please close the door when you leave). Face it, distributors know what they want and they are tired of waiting for the indie sector to come up with it. As the big little distributors move fully into a production game they have a lot more money at stake. The coming disaster is easy to anticipate. How many films like House of the Spirits, Even Cowgirls Get The Blues, and The Perez Family can these companies afford to make before they go under? Unlike a Hollywood hit, an art film smash will rarely replenish the corporate coffers enough to compensate for a string of failures. This trend towards production is not only going to destroy companies, but it will also restrict anything but the surefire hits from getting picked up.
Small distributors are doomed to failure. The options are limited to begin with and they are only going to get smaller and more limited. The little distributors lack the muscle to book good screens, let alone hold them beyond a two-week engagement. And these microdistributors are overextended. As many great films do not get picked up by The Biggies, the small companies can acquire a year’s supply of product for a song. Temptation is too great a force, and they inevitably pick up too many films, fail to properly capitalize their release campaigns, and, with little invested in each film, quickly drop those films that don’t immediately perform.
The distribution business is actually a game of collections. It’s one thing to get a booking, but quite a different thing to get paid in full. Outside of the calendar house exhibitors, one can’t bank on an exhibitor returning more than their automatic 25% payout. The rest is up to "negotiation" and "settlement". Yeah, right. "Let’s see what other films you have up your sleeve next month and maybe then we can pay you what we owe."
SALES AND REVENUE: THERE’S NO WAY YOUR FILM WILL EVER MAKE MONEY ANYWAY
Filmmakers are always last in line for the revenues. When sales agents, producers’ reps, exhibitors, distributors, and all the various distribution, marketing, and publicity costs come off the top, can you really hope to have anything left? Hollywood spends $17 million on the average publicizing a film. In the specialized market, you can anticipate $300,000 in P&A for every $1 million a distributor hopes to gross until $3 million and how many specialized films do better than that in a given year? Do you really expect to see a bloody red cent?
There are not enough specialty ancillary distributors to create the competition needed for there to be a fair market value set and paid for acquisitions. You can dream all you want about the Sundance Channel and Independent Film Channel getting into a bidding war for your film. Even with Cinemax’s Vanguard series in the mix, current licensing fees won’t even pay for a minor P&A campaign. In the home video arena, the big indies go Chapter 11 on an annual basis. What does that leave you? Pay per view? Video on demand? Unfortunately, Shannon Tweed and Lorenzo Llamas are worth more viewers than a calvacade of festival accolades, particularly on a rainy night.
Indie film is forced to look overseas for its revenues. It’s been the rule that Jarmusch and Hartley turn more wickets in Paris than they do in all of the US It was once the norm that when you licensed your film to a distributor, you could expect half the budget from the US deal. Current wisdom would place it closer to 30%. Indie films typically make their money by licensing rights to the major foreign territories. But the bad news is that foreign distribution options are narrowing.
The trade press made a big deal about Miramax’s recent "output" deals with foreign distributors. New Line towed a similar line, handing off their product to select distributors territory by territory. The premium foreign sales agents all have their favorite buyers, and those not included within the circle have little hope of acquiring any product from these agents. The true foreign indie distribs are thus being shut off from their former suppliers. If the foreign indie distribs bite the bullet and pay the amount the large sales agents demand for the big titles, they won’t have the money to pay for your film anyway.
The real catch-22 though is the foreign market’s reliance on a US deal to drive advances. If your American Indie effort failed to ignite the screens stateside, expect lackluster advances when the time comes to sell overseas. Without the right US deal, you’re going to be hard pressed to squeeze a healthy return on foreign soil too.
Backend is bullshit. Go ahead, name the films that paid overages from domestic distributors to their producers. The distributor has to be able to collect from the exhibitor if you are ever going to see something. If exhibitors are only paying 25% of the gate now, regardless of whether or not they’ve agreed to more, and the distributor is taking 30% off the top of that, you can only expect 16% of gross theatrical revenue to return to the producer – before the deduction for publicity and print costs the distrib is piling on. With licensing fees for the ancillary markets so low, the only hope of an indie film turning a profit is having nothing to recoup to begin with. With backend being nonexistent, you better get your money upfront – but then again no one’s going to give you money upfront unless everyone is willing to.
You better be ready to dedicate the next ten years to that one film if you want to get what is owed to you. A film’s revenue life is usually close to ten years. If you want to make sure you’re not getting ripped off, you better examine those statements carefully. You better be prepared to look at how many admissions you got at every theater in every territory. You better keep track of video release dates and shipments in each territory and what channel puts it out for broadcast. Don’t lose those publicity stills because every three months or so some distributor will need them, regardless of how many times you’ve given them to your sales agent. It doesn’t matter how many territories accepted your video transfer, somewhere it won’t be up to snuff.
DISTRIBUTION AND MARKETING: IF YOU THINK PEOPLE WILL EVER SEE YOUR MOVIE, STOP DREAMING.
Platform releasing is becoming a dead language. Gone are the days when a distributor would work a film one city at a time. All the big little distributors look for 200 print releases now and it costs to blitz. An idiosyncratic film that doesn’t hit a clearly definable demographic can’t legitimize the cost of hitting the top 50 markets simultaneously. However, in an oversaturated market, platform releasing is an impossible strategy. Platform releasing was based on the concept of word of mouth being able to compensate for less costly marketing campaigns. But word of mouth requires a film to be able to hold a screen and takes time, five weeks or so, to kick in. To hold a screen that long these days, you have to be turning the wickets pretty consistently from day one. When October Films released Mike Leigh’s Life is Sweet, its eighth week grosses were the highest. But today, if a microdistributor’s little sleeper is doing $9,000 a screen at the six-plex in its third week while the Miramax flick is hovering below the nut, say, at $6,500, who is the concerned booker going to drop? Your film or the one by the guys who’ve got the new Tarantino coming out?
Distributors still believe that independent film is entirely review driven. If the New York and the LA press don’t support it, you better pray Mr. Ebert wants to make a campaign of it. There is no second chance. Sure, they’ll publicize a film to its "core" audience, but in most distributors’ minds, "core" is defined by skin color and sexual orientation, and aren’t we all just a wee bit more complex than that?
Film criticism is at an all-time low, but distributors still rely on it. Somewhere along the line someone decided that reviews are nothing more than publicity. We’ve long been recognized as a nation of sound bites and pull quotes. The critic’s job is now simply to synopsize the plot and let ’em know whether it’s five stars or just four this time around. And distributors of art films won’t spend money unless these critics proclaim it a sure fire hit. If the lead reviewer doesn’t get your film because you are trying to do something new or maybe because he was hungry and cranky, you can see your ad shrink before your eyes. If the distributor took the risk on your little gem because they thought they could platform it, and that reviewer you dissed way back when remembers you now, kiss a multiple city playdate goodbye.
Distributors will not push a picture if they don’t have a lot of money riding on it. The reason you want a distributor to put up a hefty advance isn’t because of the money, but because it’s your only hope the film will get the push it needs. All of the big little companies can afford to take a $200K loss; it ain’t pretty but they can keep doing it if they have the hope of a cash cow by year’s end. This problem gets truly serious when all the distributors can have their pick of the majority of Sundance alumuni with no money down.
They are right when they tell you that indie films are sold on the back of the director (and they’re willing to break it). If you direct an indie film, you better be prepared to publicize it for the next year and a half. That next feature can just go on hold for all anyone else cares. If the distributor has any money they are going to spend it to put you on the road. All the press will be about you, not the film. You’ll be talking the film up in your nightmares (and then some if you are a first timer). You need to get in the papers to get the audience in their seats. And an article is a hell of a lot cheaper than an ad. The real rub is audiences could care less about the director. Features on film directors only preach to the converted. And the killer is that all this publicity sets the filmmaker up for a fall. Second time around, critics love to skewer last year’s discovery. Nevertheless no one’s come up with a cheaper, easier or more thoughtful way to get publicity for an indie film.
DEVELOPMENT AND FINANCE: YOU’RE GOING TO HAVE TO SELL YOUR SOUL AND YOUR CHILDREN TO GET YOUR FILM FINANCED.
Industry financing options are diminishing. Miramax still finances edgy projects by directors without names perpetually set in bold type – but then you’ve got to wait until Harvey figures out who’s the right one to star in it. There once was a day that New Line/Fine Line did too, but those days now seem long gone. American Playhouse is now a severed arm of PBS, and it’s got to get a grip on films that could do boffo box too. (To add further bruises to brutal injuries, the financing scheme they engineered had it’s legs chopped out from under them with the recent demise of Goldwyn, their cherry-picked distributor).
Public funding options are all but non-existent. The NEA has abandoned film. They’ve abolished the AFI grant. The government and the politicos alike have stated very clearly that they do not feel film has any cultural worth and is solely a commercial pursuit best handled by the private sector. Never mind that the average taxpayer’s allocation to the arts is only about $2.47. You can kiss that chump change goodbye now and with it all the voices in the niches.
The "filmmaker-friendly" studio-backed production shingles rarely yield much fruit. The development and acquisition execs would rather keep their jobs than risk their necks on your little labor of love. Here’s the story:
The worst thing that can happen to a development or acquisitions exec is for a film they passed on to become a hit. They get fired for less. Consequently, expect them to take reasonable precautions. If they are going to pass on a film, they are going to make sure that everyone knows they have passed. They’ll pass loud and often – whatever is needed to taint the product and make sure no one else will ever make that film.
The next worst thing is to acquire a film that someone else passed on and for it to flop. Consequently, the smart exec won’t pick up a project that’s already been passed on by another entity. The only film they can truly support is one that already has a groundswell of support or one that nobody has seen.
If a film they champion fails, even telemarketing positions will start to look sweet. If a company develops a project, everyone’s a genius until the film’s released. And then only the numbers tell the truth.
So what’s a poor old executive to do? 1) Try only for films that everyone else wants. 2) Avoid films that don’t resemble previous hits. 3) Do like everyone else because they can’t fire you for imitating your colleagues. 4) Pray that nothing you develop ever gets made and the finished films you acquire gather moss on the shelf.
Finishing funds are designed to exploit filmmakers’ desperation. It may seem nice that such funds exist to bail out films in need, but under most of their current incarnations they exploit and encourage filmmakers’ desperation. Since filmmakers just want to be able to finish the film, the funders usually play fire sale, taking advantage of filmmakers’ ignorance and desire.
Filmmakers are not blameless here. With every tale of success these funds help furnish, fiscal irresponsibility is encouraged. All a new filmmaker wants to do is shoot film and shoot film soon. Never mind that the long drawn out process of financing often helps a filmmaker consider and reconsider the script and ultimately make a better film, these kids have just gotta shoot. If they have the money to get it in the can (and the investors that will let them), they usually are willing to shoot now and worry about paying for post later. The price they pay is that they are already over the barrel before they have a finished film to show. Unwittingly, desperation creates a buyers’ market and ownership soon is lost, but what other financing options are there?
Financing small films through presales is too costly and time consuming. It’s virtually impossible to finance a first feature through presales, but it can be done. Usually it requires casting names, but it can be done on the strength of the creative team alone, but then you better have a serious body of work and it might take a good three years or so. This time lag may well serve to distance all creative elements from the material at hand, but the real suck is the cost. Presales are contracts that have to be converted into money and that process ain’t cheap. It also means a completion bond at a minimum of 3% of budget. It means interest payments on the loan and high legal bills besides. When all is said and done you can watch at least 20% of the budget being spent on the money. You might as well give away the rights to Italy instead.
There’s no support system or infrastructure to speak of. The IFPs & Sundance are the lone beacons but even these not-for-profit groups are reliant on corporate dollars from the distributors for survival. Given this fact, can they really fulfill our need for a true ombudsman for the independents? But where are the alternatives?
The film industry, like all others, mystifies by design. All industries create their own vernacular, keeping the have-nots clouded in confusion. Variety takes this talent to an art form. The neophyte needs a class in how to read the trades, let alone understand them. Where is the information when you need it? Whether it’s a rolodex or a financial chart, good luck in getting up-to-date info. The industry promotes a paranoia and close-to-the-chest confidentiality in all its’ parishioners, whispering that if you don’t leap in, you’ll be out forever.
Film schools produce directors and not producers. Conspiracy theories, as comforting as the are, can stretch only so far, but it is curious how embraced and weaved into the industry the film schools are, yet how limited their curriculum is. By ignoring the business aspects of an art form driven by commerce and promoting "auteurs" and "masters of light," the film schools assure that there is a constant and overabundant supply of lambs trotting towards the slaughterhouse. USC’s Peter Stark Program shapes producers for the studio system, but there’s no academic institution seeking to prepare indie producer wannabes for the outside world. Of course one could easily say, as independent producer Jim Stark has quipped, "It doesn’t make sense to educate people to go into a business that they are bound to lose money in!"
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