The Film Industry In The New Millennium

This article was originally part of the Insider Cinema guide to Hollywood, a website from the mid-2000s. We are reposting it here as both a writing sample and a guide for those seeking to get their foot in the door in Hollywood.

Many ask, “how bad could file sharing and internet piracy really be?”  Bad enough to impose massive fines on the downloaders, and for the justice department to initiate a massive offense against it.  In 2004, then-Attorney General, John Ashcroft, came to Hollywood to announce his backing for what he labeled, “the most aggressive, ambitious and far-reaching effort to protect intellectual property and counter intellectual property theft.” (Fritz, Variety)  This announcement was made partly in response to the recent Grokster ruling by the Ninth Circuit Court of Appeals that file sharing is not a copyright violation.  Why is this threat so serious?  Because according to John Ashcroft as quoted in Variety Magazine, the process to create intellectual property such as films (or music and video game) is so large, that it accounts for 4% of U.S. employment, and 6% of the United States gross national product.  

File sharing does pose a valid threat to the economy and social values.  Because a culture’s art, whether it be film or music, is what society builds itself on, it is imperative that they protect it, and the use of file-sharing takes away resources from the potential artists of the future.  By downloading copies of films, individuals are robbing from studios, robbing jobs from American craftsmen who make movies and robbing from society by decreasing the likelihood for well-made films in the future.

Not only does piracy threaten the entertainment industry, but also the economy.  The draining of funds from the process of creating these works could lead to the end of moviemaking as we know it for the worst, both financially and artistically.  As we will examine the flow of funds, internet piracy is affecting the production and content of movies:

  • Who Does File Sharing Affect?
  • How Studios Counteract File-Sharing
    • Runaway Production
    • Dividing A House: Spectacular vs. Small Stories
  • Social Value
  • Michael Moore and Beginning Filmmakers

Who Does File Sharing Affect?

File sharing poses a serious threat to major movie studios (the primary financial backers of motion pictures) because films are already frontloaded with costs.  At the beginning of the process, a film must be completely financed, with huge sums going to actors, directors, and special effects gurus (normally referred to as Above The Line Talent).  This is all done before its quality can be guaranteed.  Because a studio invests so many millions of dollars into one film, every film becomes a major gamble, like each film is its own business.  Moreover, if the financiers lose a certain amount of money based on downloads; they are less inclined to make movies, especially certain types of movies.  Unfortunately, this causes a ripple effect, rising unemployment, and decreases the value of the movies in the marketplace.  

Considering these dynamics, some filmmakers are searching for cost-cutting solutions.

Cost-Cutting Solutions to File Sharing

Because of downloads, and the huge investment needed in Above The Line talent salaries, many studios have sought financial alternatives.  This has been done in two ways:

  • Runaway Production

1.  A primary alternative is outsourcing of productions to Canada, Australia, and Eastern Europe.  This process of filming overseas in order to save money has been nicknamed runaway production and has only been curbed in recent years due to the War On Terror, and the outbreak of SARS in Canada.  This takes away jobs from American workers: not just actors and directors, but editors, electricians, and film students looking to be Production Assistants based in Los Angeles.  While keeping the costs down, the unemployment rate of American filmmakers goes up.  This further dilutes the market, because, in the absence of solid work on good projects, many technicians will work on whatever comes along, no matter how poor the quality, and so there will always be available resources for bad films.

  • Dividing A House: Spectacular vs. Small Stories

2.  Studios have delegated small sections of their distribution division to
seek out independent films that have already been completed, while the major resources of the studio are put to work in producing giant action spectaculars based on star talent such as Troy (2004).  Studios will often turn to this high-budget, star-driven vehicles because it is an unwritten rule in Hollywood that formulaic action spectaculars bring in big bucks.  However, this is a self-defeatist mentality, because creating giant action spectaculars that have no story can leave an audience feeling betrayed by film advertising, and so they will become jaded, and turn to other forms of entertainment such as dance clubs, stadium events, or just stay home.  This further hurts studios because it loses them money in the long run, and small films that have already been finished outside the studio also drag them down, but indirectly.  The independent films being sought out are not as good as they could be because there was not enough time or money to nurture the project independently.  There are no stars to bolster the independent film status, and Above The Line, talent consists of first-time directors and very bad actors.  Conversely, if the film was taken under the studio’s wing from the very creation of the script, it would have been better developed, funded, and had better actors to play the parts, and as a result, made more money.

  • Social Value

However, one cannot look at only the monetary loss of file sharing, but also the loss within the social structure.  Films are and have always been one of the things we base our lives around.  As Frank Capra once said, “Film is one of the three universal languages, the other two: mathematics and music.”  If people are given bad movies with nothing but explosions, what will they see?  What will they learn?  By making bad films in order to pander to those who will not download them, you are restricting the artistic value, and narrowing the audience.  

Michael Moore and Beginning Filmmakers

At the same time, a new enterprise could be opened up if file-sharing were properly exploited for the film.  With the recent release of Fahrenheit 9/11 (2004), Michael Moore publicly consented to allow the film to be illegally downloaded online so it could reach as many people as possible.  Because the film had a strong political message and was well-made, it had a large number of downloads on the internet and was also the first documentary to reach box office status by grossing over $100 million at the box office after only five weeks (see below chart).  

Weekly Grosses for Fahrenheit 9/11 (2004)  (IMDB)
$103,115,645 (USA) (25 July 2004)
$93,984,261 (USA) (18 July 2004)
$80,121,002 (USA) (11 July 2004)
$61,118,488 (USA) (4 July 2004)
$24,078,959 (USA) (27 June 2004)

Many might argue that this shows file sharing is not a serious threat, but the only reason the movie achieved such phenomenal success was because of the strong political message.  Were this to be attempted with a formulaic film like Resident Evil: Apocalypse (2004), it would have obliterated its box office gross, and lost the full investment.  The new enterprise of file sharing lies in finding new directing talent, with first-time directors utilizing the same tactics Michael Moore did.  However, this leads to another dilemma.

If undiscovered filmmakers began making numerous films and releasing them on the internet, it would require the creation of small, local, independent production companies.  Regardless of where they found the financial backing, there would still be a need for organization and distribution, and the creation of these companies would breed many different avenues for people to make films.  However, would these companies give the same nurture and care to a product to ensure its quality, or would they be more concerned with quantity, and just put as much product out there to make the company’s name better known.  The formation of these independent small-town productions dilutes the market, and thus cheapens the overall value of motion pictures as an art form.  

Do you have your own thoughts?

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