the choir has been preached to....now what?

The production industry was out last night. 

A town hall meeting in Livonia (and a simulcast of the event in Grand Rapids) brought out a couple of thousand folks, most of whom have benefited from the huge increase in the volume of production work that has come to the state since the production tax incentive legislation was signed into law in April, 2008. 

There were great stories told, and passionate points made--mostly to crowds that overwhelmingly support the continuation of the tax incentive program that has sparked significant economic development to Michigan.  The program was slated for significant changes/reductions as outlined (albeit briefly) in Governor Rick Snyder's budget proposal that the executive branch introduced last week.  There are certainly questions about the program's effectiveness, but the most recent study was done by Ernst & Young, and it shows a great return on investment.

So now that the production community's support is galvanized--across the state--what is next?  If the past week is any indicator, the coming weeks will certainly see extensive debate about the governor's budget.  And while the production tax incentive is a huge issue, it is an issue that has to be taken in the context of some sweeping changes to how Michigan deals with taxation and economic development across the board.  We're looking forward to the discussion, and to finding ways to continue sparking opportunities for our entertainment industry clients working in Michigan.

We hear each other loud and clear.  Now is the time for the rest of the state to hear how a thriving production industry in Michigan can help us all.

the data makes all the difference

Reading this blog post by Jason Spitz at Topspin Media got us clicking back to the discussion about the project that the Future of Music Coalition is doing to study artist revenue streams and aggregate some of the data in new and useful ways.  Looking over the methodologies and structure of this study, it is clear that some very valuable work product is being generated here. 

Our artist clients are engaged in the constant search for new (and robust) revenue streams, and are working hard to live the dream of eating off of what their music generates financially.  To the vast majority of artists, it remains mostly that: a dream.  But it's a dream that is born out of passion and art, so somehow- for a while at least- it is pursued honestly and with hard work.  The same observations we have been making for years- the music business model is broken, no one knows what to do- are just boring observations now.  Statements of the obvious even?

So how do we move beyond stating the obvious and get in to working towards making music work for the people that make music?  One key way is to know how the money flows--and the FMC revenue project does that, but from the perspective of the artist rather than the balance sheet jumble of labels, publishers, etc.  It is likely to be a very helpful study.

And for the record, we were really happy to have helped out (in small, lawyerly ways) on some of the collaborations between Topspin and Air Traffic Control last year.  Forward thinking projects = fun.

production incentives and subjectivity

Production tax incentive programs are definitely taking fire as we come to the close of 2010.  Nevertheless, the soft money that tax incentives bring to production budgets continue to help get projects that otherwise might languish in development limbo off the ground.  As many states and jurisdictions (including our home base, Michigan) debate the sustainability of production incentive programs, there are still a lot of options for producers seeking government help to get from limbo to lensing. 

One of the challenges that face producers seeking tax credit support is that the application and administrative processes for the programs vary widely.  It takes some concerted effort to evaluate not only the bottom line benefits of each jurisdiction's program, but all of the nuances of participating in those programs as well.  And then there are the true variables: the subjective criteria in each of the programs that can be impossible to predict.

In Michigan, projects have been denied tax credits because of concerns about the content of submitted scripts and because the Michigan Film Office determined that there were not sufficient economic development benefits to the state that would result from bringing the denied projects to the state.  Michigan is not alone.  This week we learned that Robert Rodriguez's most recent release, Machete, was denied incentive support in Texas because it portrayed Texas in a negative light.

There really is no escaping subjective criteria in the administration of the production incentive programs.  The key to successful utilization of incentive financing is working with professionals that have frequent interactions with the administrators of the programs in the jurisdictions that productions are considering.  While no one can predict an outcome when it comes to subjective criteria, it helps to know what has happened in the past and to have some insight into how decision makers approach each project as the applications come in. 

Update on December 14, 2010 by Joe Voss

The actor that played the title role in "Machete" has weighed in on the Texas decision....

Fighting to keep runaway productions from running away....

So The Hobbit films are staying in New Zealand.... Without knowing the inside details of how this all played out, this was still a very interesting journey.

Set aside, for now at least, the long saga of how Peter Jackson ended up as the eventual (and logical!) helmsman for these films.  And even set aside the guilds' boycott of the project that was only recently called off.  What is really interesting to me here are the events that transpired to keep New Zealand as the location of these films.

The thumbnail of the story is that New Line and its parent, Warner Bros., threatened to move the production of the films as a result of fracas surrounding the labor issues.  Then, people rallied around the cause (check out the promotional trailer for the demonstrations), and protested in the streets when WB execs were in the country for meetings to convince the New Zealand government and the producers to keep the films in New Zealand.

Now, it's pretty clear that the studio was just doing what studios do: negotiating the best deal for the production of what promise to be huge films for them.  So, what can we take away from this?  A few things:

1.  Productions of major motion pictures are major economic events, and around the world, they inspire public and political action to attract and retain them.

2.  Studios are always going to work for the best deal on physical production to maximize returns on investment.

3.  Labor issues are a critically important factor in steering production work.

4.  Currency fluctuations and government incentives/subsidies are (still) critically important factors in steering production work.

As things settling down with the planning of these films, we can now look forward to them taking shape as Jackson and his team work to dazzle the world with their movie magic.

Featured Venture: Dear New Orleans

In late August, 2005, nature dealt a striking blow against the city of New Orleans in the form of a storm called Hurricane Katrina.  Debate over whether the chaos that ensued was the result of a freak/unique natural disaster or the failure of systems designed to protect the population from just such occurrences still rages on.  No matter where people come out on that question, one thing is clear: one of America's urban jewels was--and in some ways, still is-- devastated by the storm.

New Orleans is a music town, and in the years since Katrina, musicians have rallied around their brothers and sisters, musician and non-musician alike, to help with the recovery.  Air Traffic Control Education Fund, a national non-profit, has collaborated with the Future of Music Coalition to facilitate directed assistance to the people of New Orleans by musicians in the years since Katrina.

Their efforts have culminated in this project, Dear New Orleans - A Benefit Album, that was released last week.  Learn more about what artists have been doing to help in New Orleans by checking it out.  And get a great record while you're at it.  The work isn't done, but after five years, it helps to slow down and enjoy the music that helps tie New Orleans to the rest of America and the world.