Hollywood - It’s Not What You Think

I read many articles about advertising these days.  Most are about how it is declining. It is like any other investment of company funds. Just that, an investment. In any investment the one spending the money should have a clear idea on what it is they are investing in. If they are clear they know what they are buying with their advertising investment then they should be equally aware of what they are giving up when they decide to drop it. 

I am always amazed at how easy it is to drop advertising. The net result is always more money for the bottom line. That presumably is a good goal. If so, why did the money get spent in the first place? If companies spend on advertising only because times are good then they are clearly wasting their money. If, on the other hand, they have a goal with their advertising investment, can articulate and measure it, then they know what they are getting, or at least hope to get. So when they decide to drop it they should be meeting to decide how the loss of whatever they expected to get will affect them going forward.

I believe if more companies could actually clarify what they were getting with their advertising they would be more able to clarify what they were losing by giving it up and would be far less willing to drop it. Don’t forget buying advertising is an exchange in value. I give you my money you give me the promise the value I buy is worth more than what I spent. If so when I get the money back for my bottom line it is clearly worth less than what I gave up. Is that really such a good exchange in value?

For more than 40 years I worked in “trade” publishing and loved every minute of it. Over that span of time  I came to believe the people in the “trade” publishing field would settle for any description other than trade. When you publish a magazine for people in various trades you include farmers, retailers, medical specialties and on and on. If you can conceive of a job it has its “trade” publication, regardless of how small or remote the business.  Sadly for many trade publishers the only people who knew what you did were those who worked  in that specific trade. If, on the other hand, you worked for Sports Illustrated or Newsweek, or The Economist etc, you would be more recognizable because they were and  I guess that made you more important. 

When the internet came along all the new sites focusing on the enormous number of trades in the world chose the expression, business to business, or B to B. Somehow it made them seem more serious.

When I became publisher of The Hollywood Reporter to me it was a trade publication.  We were constantly compared with the other trade, Variety. We were so closely aligned that two of us  were often referred to as “the trades” almost as though we were just one publication.

For the past several months the “trades” have taken it on the chin. Their advertising business is collapsing, they are in massive layoff mode and everyone is attacking them from every quarter. Why? for no real reason that seems apparent other than new sites have gained in popularity and may feel the need to elevate themselves at the expense of the trades. Another reason is that media people are continually under the impression that the world is more concerned about them than what they cover. And, if not, they should be. The fascination and pre occupation media people have with themselves borders on a sickness. I agree the trades are woefully thin. That is what happens when you lose a third or thereabouts of your business. You don’t publish those missing ad pages and the issues are by simple arithmetic, all slimmer. Should they be attacked because their business is down? Pretty dumb reason. What about the other complaints? The trades pander to the advertisers, publish press releases, fail to go negative, avoid the controversies are all among several other criticisms of “the trades”. I cannot speak for the trades today as i am not involved in them but for 18 years I was and I can tell you there is no single criticism going around today that has a shred of truth to it. I know what we covered, who did the covering  and how what was covered was presented. Collectively the reporters and editors on the trades were among the most serious, ethical, aggressive and honest professionals in the business. Why else would so many of them be working as professional journalists in other media today? For those doing the criticizing take a look at who is writing for you? Recognize any trade reporters there?

What we did was understand what a trade is. A trade by dictionary is “any occupation that is pursued as a business or a livelihood” Sound like anyone you know? The “trades” covered the trade. The trade was the business of entertainment. The show part was left to the tabs and weekly consumer pubs. The trades covered the trade. And what exactly is the trade interested in that we focused on every single day? WORK. Recall that word livelihood? Everything in entertainment is about work. If we could help someone find a job, get involved in an on going project, find funding for a project, get a script in front of the right folks, etc,  then we were doing our job. There are so many unpredictable vagaries associated with getting a job in Hollywood any publication working on behalf of the working folks was respected and read. Not just for the “working stiffs” but for everyone. George Clooney is a professional actor as is Russell Crow and Angelena Jolie. All famous people in Hollywood are famous everywhere else. In Hollywood they are all professionals seeking work. Anytime we could offer information that might lead to someone as well known as Tom Cruise to new and interesting project was worth the investment of their time. After all Julia Roberts, Tom Hanks, meryl Streep are all in the entertainment trade. 

Tomorrow i will tell you how we did it and why those who criticize are so wrong and why if the trades don’t survive the loser in the long run will be the trade itself

There is a new sitcom that has a completely original and amusing approach. It is called Better Off Ted, on ABC on Tuesday night. The characters are terrific, especially the female lead.  I really enjoy it and love its originality. I worry that it will be cancelled before it has a chance to build an audience, as it is number 78 for the week. I RARELY watch anything on ABC as it seems to me they broadcast mostly  reality based shows. The people who enjoy the types of shows don’t strike me as the same people who might enjoy something as different as Better Off Ted. So if ABC is using their own network to promote BOT, then i think the show has little chance for success. I, for one, have never seen a single promotion for it, and only learned about it from a small piece i read in The LA Times.

i missed an episode so I decided to watch it on HULU. After downloading a different software program to accommodate the concerns of ABC I watched the episode I missed. There was a commercial to start off, then was followed by three more commercials during the show. That about killed it for me. I have a DVR at home and use it to avoid commercials. I wonder why anyone thinks I would go on line to watch a show and waste the time watching commercials when I am paying to avoid them on television.

Finally BOT is a FOX show and might have a better chance to build an audience over there. I hope if ABC decides to kill it FOX will put it on and count me as a new viewer

Reed, owner of Variey, announced a 7% cut in staff  according to The Wrap. it is due, they say,  to poor financial results. Well, duh, where have you been all these months? The advertising business has been in the tank for at least two years or more. So why cut now and why at all?  Too many companies are looking to their expense lines to keep them afloat. True, costs have to be trimmed when conditions warrant but how many can, or should, one make? Is there a limit to how much one can cut before they show the white flag? Do you cut until there is nothing left? 

From all i read and hear cuts are the only choices being made. In my opinion cutting costs is a lot easier than building revenue. I have yet to read about a strategy for how to invest more resources in something new, or a  strategy  to increase staff to go after another area of opportunity.  Strategies for growth must be forthcoming or all businesses will be on the ropes. There are still billions of dollars being spent on advertising. There are still thousands of companies looking to increase share of market in their field. Is there nothing a company can create  that will not improve their customers bottom line?  Every day there are countless stories about new businesses being launched on the internet or using the new media or technologies to a better use. If young people see the opportunity why then not the legacy companies?  Is it a lack of imagination or maybe it was the imaginative employees that were let go in the last layoff? What a mistake that would be. If these legacy companies don’t learn how to compete in the new world they will forever be a part of the history of the old one.

I read and listen to all the bad news coming out of Detroit and have to feel for the people who live and work in Michigan.  For how many years has Detroit been a symbol of  America? The auto industry is as American as apple pie. As GM goes so goes the nation, the refrain goes. Well based on what is happening in Detroit I would say America is in trouble. Did we see this coming? Were we able to something about it? Did anyone do anything, other than talk? The answers are yes we saw it coming, did nothing and now we are all making excuses for the past irresponsibility. Detroit is a company town. That company is AUTO. Everyone in the world knows that and we let it die, right in front of our eyes. Detroit and bankruptcy are now synonyms.

My point? Hollywood is a company town. Do i have to explain that Los Angeles is the home of entertainment and people from around the globe come here to visit Hollywood, which doesn’t even exist as a geographical location for film making? The entertainment business represents more than $30 billion dollars to the Los Angeles area and the business is migrating out of here faster than auto making moved to Japan. Why? Simple. Locations around the world and in the states have found out how valuable it is to have film, television and commercial production in their hometown. In Los Angeles legislators and politicians are allowing this to happen, unions are allowing it to happen and the industry is allowing it to happen. I know a producer who will shoot a film in Los Angeles. I asked him if it would be less expensive to shoot here than somewhere else. He said no, but he wanted to shoot it in his home town. A few years ago LA at least had a reputation for the most skilled crews in the business, but now that other locations are so aggressive chasing our  business they too are developing qualified and available technical skills in movie making. What to do? Get a dialog going with those who have a stake in keeping the industry here in Los Angeles. Stop all the strike rhetoric, the union bashing, the studio criticizing. Put serious people in the room, put the dire news reports of Detroit in front of the participants, hang enlarged banners with the words BANKRUPTCY, BAILOUT and UNEMPLOYMENT on all the walls and then open the meeting with “Gentlemen, and ladies, this is us in a few years if we don’t do something about it, NOW”.  

Don’t waste time articulating the problem, we all know what it is. No one leaves the room unless there is an action plan for everyone in the room. An action plan that has quantifiable benchmarks and time lines for success. If this does not happen right away the inevitable is right around the corner. The words on the wall will be about the film business in Los Angeles and another company town will have disappeared from America.

The problem with  the front page ad on  the Los Angeles Times yesterday is more fundamental than whether it is a good financial idea or  a breech  of editorial philosophy. True there is a premium paid by the advertiser, but at what cost and why?  Media people think about media all the time. Most outside of media, don’t. Many people might see this ad and  think it was part of the paper’s editorial. Why shouldn’t they? Nothing like it has ever occurred before.  

Publishing is not a partnership between editors and advertisers. The customer is not the advertiser, the reader is the customer. The reader pays with his money and more importantly with his time. If, and when, the editors succeed in capturing the time and attention of the reader the advertiser can then exploit that readership with their advertising. The advertiser pays the bills but the ads are of no value whatsoever unless they get seen by the readers. It is the job of the editors to satisfy the interest of their target constituency. It is the job of the advertising department to convince advertisers their prospects and customers are reading the paper, the whole paper, everyday. When an advertiser wants to buy something on the cover they fear no one goes inside the paper, where their ad also has a chance to be seen.

The front page of the paper becomes simply a billboard, nothing more, nothing less.  When an ad is placed in a section that subdivides the readership by specific interest, such as food, sports, entertainment etc.  the advertiser can place their ads in front of those readers who have chosen to read that section of the paper that is consistent with the advertisers message.

If the reader likes what they read in their paper, trust what is written and value the opinion of the columnists, then that is the proper environment for advertising, an environment that is serious, involved and constant.  The  relationship that exists between the editors and readers, built over a long period of time, is essential to the continuation of the paper. It can never be tampered with or the reader begins to lose trust, stops reading and then everyone loses. 

There are countless advertising ideas out there and advertisers should continue to push the creative envelope to develop them, but they have to realize the editors  job is to put the readers on the page everyday, so the advertiser has access to them whenever they want to send a message. For an advertiser to have too much leverage with the paper only means in the long run they will kill the very foundation of the media for which they depend: trust.

The change in editorial management at Variety once again has activated opinions from many. Peter Bart was an icon at the trade paper for 20 years. He had his fans and he had his detractors but everyone who writes anything faces the same fate. What intrigues me more is how the coverage of his leaving his post dove tails into why he did not skewer the business like others are doing on line. Maybe that is the coverage lots of people want, and for the most part, it is out there. In some ways the coverage  is about how unsavory the business is and how many people in the business are simply reflections of it.

Here is my issue. Forget about celebrity. Think only about work. At the conclusion of a film the credits role for what seems an eternity listing the names of people, companies, services and facility providers. Those are the real readers of the trades. For every name listed there is a story. A story of a professional hired in the business to perform the task they are qualified to do. The work they perform puts food on their table, puts their kids through college and pays for the house and the car. Trouble is when their work is finished, and it always is, they have to go out and find another job. The last job no longer exists, it is gone forever. The next job is no easier to find than the last one and since they have been employed for the last several months, they are totally out of contact with what is currently going on.Who is hiring, what films are being made and what work is available for their services are questions that demand answers. The business is unpredictable, without seasons and without any clear cut route to new production, nor who will be hired to work. Unless these professionals know what is going on they have no chance of getting more work. The trades tell them day in and day out who just got a green light to begin production, who lost their jobs, who  got funding, who just got cast in a role, when a project will begin filming, who got distribution. Every fact can be turned into work if you know how to do it. The information about projects in the trade papers is endless and vital to anyone looking to work in the business. If you don’t work in the business you have no understanding of the sheer volume of project churn. What gets made is never certain but the competition to get the one time only jobs is more than intense and can open and close almost instantanously. If you don’t know about it you will not work there. Those working in the business need the trade papers to keep them current. They read the papers and make phone calls to anyone they know that has any connection to what they just read. Their question is always “can you hire me?” The folks who don’t understand the emptiness of that feeling everyday should live in a world where they are never sure where their next paycheck will come from. Then those who are quick to criticize the business, its practices and its people  will have a true understanding of how hard it is to stay employed and how important a life line the two trade papers are to that livlihood.

I am constantly amazed by what anyone cares about what “wall street” thinks or says. In an article today in the New York Times the film UP from Disney’s Pixar Studios is being questioned by  ”wall street”, whoever they are, on the basis that the main character in UP is an old man and that there is little if any merchandising interest from retailers. By contrast to what others say, look at the past history of Pixar.  You will find an organization devoted to making quality films. They take as much time as they want, tell the story they want and always push the envelope of technology. The results are clear. They know what they are doing. And, have a success rate that surpasses anything in any business.

When i think about what wall street thinks it seems to me they lost their right to be heard. Their clarion call is for the shareholders. They see themselves as protectors of the share price, yet over the weekend i read a summary of the CEO compensation formulas alongside the corporate results for the companies they represent. It is appalling to see how much people were paid to do such a terrible job. Where was wall street for the last couple of decades?  Maybe they were complicit in gaining the sysyem.

As movie goers we should consider ourselves lucky that companies like Pixar focus on producing a quality product without regard for what others, not in the  business think or say. It is refreshing to read the comments of Bob Eiger, Disney’s CEO. He feels making a film by filling in the check off boxes of those not involved in the process has little to do with the success of the film. It is the creative talent that is supported, not the outside, out of state, talking heads that have never had to produce anything themselves, let along something as creative and dangerously risky as an animated feature film.  Those on wall street, full of themselves and their opinions should just go and see the film and enjoy it like the rest of us. If it does not work as well as others did, so what. We will all be the beneficiaries of the willingness of the film makers to take the chance on entertaining all of us. Pixar does that every time they deliver a film to the world.

In the Sunday business section of the Los Angeles Times, David Lazarus writes about Kodak beginning to charge their customers a fee for the service of on line photo storage. As he points out, to save the fee, consumers might consider storing their own photographs, something they could easily do. For me the take away was the word service. He uses the word service 10 times in reference to many other potential services that currently are free, but someday they conceivably could  be offered for a fee.

The word service is what is at the heart of any fees charged on line. We are told we live in a service economy. What then is a service? You could clean your own home, cut your own lawn, do your own taxes etc. They are all services we willingly pay for. There are countless number of other things we could do on our own but choose to hire someone else because the time to do them could be better spent doing something else. Or so we conclude. And we don’t hesitate paying the going rate because we calculate the cost of doing them ourselves and conclude it is in our own best interest to pay someone else to do them. The thought of paying is never an issue.

So why would we hesitate to pay for the service of knowing what is going on in our world?  I am referring to the news and information that is coming across our desks and into our homes from multiple sources and in a never ending stream. No one feels compelled to pay for news. It is free and virtually everywhere, so why pay?

Here are a few good reasons:  Compare the various sources of  news and information that are currently offering free on line news services. How long have they been in business? Who is doing the reporting? Is it reporting or is it opinionating? How many people are out in the field doing the reporting?  What is the brand recognition for the reporting organization? How credible is it? For many of the sites the answers are totally unacceptable. For those news sites that are high quality and  branded  consider what your information flow would be if they, like Kodak, all decided to charge for the service of collecting, editing, styling and prioritizing the information, before it got to your desk. 

The job of collecting information is an expensive, time consuming and in some cases a dangerous profession.  For major news organizations collecting and distributing information  for a subscription or newsstand fee has been going on for decades. Yet, since the Internet came along we all think news and news related information should be free. Why? Just because it has been.  True, news is a commodity and once you know it, it is no longer news so why pay for it? But what is news and what news is valuable? The answer to that lies with the individual. What news do i want might be different from the news you want. We currently have many different sources of news that accommodate those personal interests, but what happens if they go away? Well we could find what we want on our own. After all the Internet has everything. True, but like all other services that require our time, do we really want to surf the net all day long looking for what we want and need to know, when there are editors working in credible news organizations willingly providing that service for us? The value equation of our time versus their time is not even close. 

If the high value news sites  all decided to charge for what we wanted, then we would pay.  But it is important to realize in the “everything is free” era we now live in,  it is not the end product we are paying for, it is the service of a well qualified, someone else doing it for us. And for a price.

Last summer as i sat at the Hollywood Bowl enjoying the Bowl orchestra play some of my favorite composers,  i realized i was watching the concert as much on one of two  giant screens as i was  watching the orchestra. It occurred to me, if the screen was in 3D and i was anywhere else in the world i would enjoy the concert as much as i was sitting here at the Bowl.  Maybe even more, without the thought of all that Hollywood traffic, i was about to encounter.  3D can bring to consumers some of the most interesting and unavailable entertainment right in the comfort of their local movie theaters and eventually right into the comfort of their homes. 

But theaters are going to have to get going. Time can be their enemy if the digital rollout does not happen and happen quickly.

At the most recent SHOWEST  convention, an annual meeting of theater owners and movie distributors,  held  in Las Vegas, the discussion again focused on 3D. Everyone was in agreement  that 3D can bring to the theater owners, as well as the film makers, a new and exciting revenue producing, consumer experience. Based on the opening weekend results for MONSTERS VERSUS ALIENS it is clear consumers like it and are willing to pay extra to experience it. 

However it is not going to be effective until there are a sufficient number of available 3D screens and right now that is not the case. 

The theater owners need to complete the digital installation in their theaters.  With only around 2,000 screens 3D ready they are really about 3,000 shy of a critical mass of theaters. Until that number is reached the film makers cannot recover the extra costs associated with 3D production and the theaters will not be able to add the premium for the 3D experience.

When the rollout is complete then the true benefits will accrue to the theaters.  First they will be able to offer more than 40 amazing, new 3D films set for release in the next 24 months, to an audience  looking for reasonably priced, family oriented entertainment. 

Second,  theater owners can then begin to really understand the true value of digital distribution.  Keep in mind all live entertainment is local and to make it international the experience has to be as real as being there.  3D is as close as we will get to being there. International events can be local events. Through imaginative deal making there is virtually no form of entertainment available anywhere in the world that theater owners cannot offer to their markets. 

However none of the benefits of 3D will accrue to the theaters until they complete their digital rollout. And time, as i said, is not in their favor as the Television industry is also desperate to offer the consumer something new and exciting, for home consumption and 3D has an awfully attractive ring to it for home viewing as well.

 o