Making Events Matter for Documentaries

This weekend (on 4/20/12), Magnolia Pictures released "Marley" in theaters and through video on demand services. The film performed pretty well at the box office, at least by documentary standards ($260,000 gross on 42 screens, for an average of $6,190 per screen according to the early Box Office Mojo estimates for the weekend).  Compare that to the Michigan-shot "Touchback",  which had a 50-screen opening weekend (April 13-15) with a $66,998 gross for an average of $1,340 per screen, and it gives one reason to think that there may be more than hope and education to gain from well-executed theatrical distribution plans for documentary films. 

Comparing a long-form narrative sports drama to a highly-anticipated documentary about one of the most beloved figures in music is definitely not an apples-to-apples exercise, but at least it gives occasion to wonder what the key to financial success for documentaries might actually be.  Until "Hunger Games," Lionsgate's highest grossing project was a documentary (Michael Moore's "Fahrenheit 9/11").  Disney (through it's distribution arm Buena Vista) has done quite well with its documentary projects over the years too, with four films in the top 20 of the best-grossing documentary list.

But Marley didn't have the wide release and marketing muscle Disney lets loose for its nature films, so why did it have such a great weekend?  I think it has something to do with efforts to secure strong, meaningful connections with the places where it screened--particularly outside of the NYC/LA/Chicago arthouse markets.  In Grand Rapids, Wealthy Theater showed the film on Friday.  In the week running up to the screening, the local connections started to come to light, and localized social media efforts made the film feel like an event.  This presents a win-win for the distributors and the local exhibitors, and engaged audiences win as well.  

Digital Music Royalty Dispute Settled

A settlement of a long-running dispute being handled by the Copyright Royalty Board (the CRB) at the Library of Congress was announced this week, and if the proposed agreement is accepted, it stands to clear up substantial questions about royalty rates for digital music licenses.  The Recording Industry Association of America, the Digital Media Association, and the National Music Publishers' Association came together and proposed a royalty rate framework that addresses five different models for delivering digital music content:

1.   Mixed service bundles
2.   Paid locker services
3.   Purchased content lockers 
4.    “Limited offerings”
5.    Music bundles 

It is not exactly clear if all of these services are actually available in the market right now, but the intent of the parties is to be out in front of future royalty issues.  Once the agreement is made available it should be easier to match the new royalty categories to actual services, and one has to believe that the trade association members that participated in construction of the agreement had specific services in mind, whether they exist now or will emerge in the future.  The proposed agreement will cover 2013-2017.

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....