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Netribution's submission to House of Lords Select Committee on Film & TV industry

document Crowd Creativity, Distributed Knowledge, Open Innovation

Netribution's submission to House of Lords Select Committee on Film & TV industry
Written by Nicol Wistreich Wednesday, 25 March 2009 15:55

It's easy enough to criticise the government for being out of touch with the web - I frequently do - but without the industry explaining to them the needs and issues at play, it's hard to blame them entirely. In other words democracy only really works if we all play our part in contributing to it (or attacking its weak points, such as these brilliant spoof paranoid transport police adverts over on BoingBoing and right ). With this in mind I rushed a rapidly written response to the recent call for evidence for the House of Lords select committee enquiry into the film & TV industries. In the interests of openness (and perhaps debate?) I reprint it here. (Please don't take too much time to tell me about typos and grammatical errors - I wrote this in a rush on a train on my birthday!)
How do the current UK arrangements for distribution and exhibition of films affect the commercial success of the film industry? How might long run changes in international film production and

Distribution and finance

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Netribution's submission to House of Lords Select Committee on Film & TV industry
Written by Nicol Wistreich Wednesday, 25 March 2009 15:55 distribution affect the UK film industry and its export potential over the next decade? To what extent is the raising of finance an inhibiting factor in UK film projects?

Distribution and exhibition in the UK has long been weighted against non-US films, making it prohibitive for all but the biggest Working Title / BBC Films / Film Four projects. A classic example would be FilmFour Lab’s Jump Tomorrow – a quirky, intelligent, feelgood and funny feature, as accessible as US indies such as Being John Malkovich or Little Miss Sunshine , yet which vanished without a trace upon release. However, the question of whether the blame for this lies with the cinemas, distributors, marketers, filmmakers or simply a lack of British pride is moot in the face of the current shake-up within the film industry.

While cinema revenues are rising in the economic downturn as expected, aspects of multi-party finance are massively in trouble: - Banking and gap finance has become much more difficult during the credit crunch - Pre-sales from distributors are harder than ever to sell as uncertainty over online revenues make territorial pre-sales illogical (ie if you want your film on iTunes, then pre-selling UK rights to company A and French rights to company B is meaningless as the online rights may turn out to be the most valuable, yet cannot be tied to one company). - Private equity. The downturn has of course effected the number of investors looking to back films. - Public finance. Other than the 100% backing of schemes such as Film London’s microwave, public funds are rarely more than 30% of the total budget (50% including tax breaks). As other sources of funding fall through, the public investment becomes less valuable. - Most mini-majors – small independent divisions of the studio – have shut down in the last 12 months, taking away the majority of US wealthy indie acquisition and production houses from the marketplace.

The British and independent industry is ever adaptive – with an increased prevalence of deferred payments and profit share for production teams, cheaper production techniques and micro-presales (aka ‘crowdsourcing’ / ‘crowdfunding’) for fundraising. Franny Armstrong’s Age of Stupid

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Netribution's submission to House of Lords Select Committee on Film & TV industry
Written by Nicol Wistreich Wednesday, 25 March 2009 15:55

is a perfect example of a film which raised its £400,000+ budget through small, micro-investors, and continued to mobilize the community of supporters through production (asking for help and volunteers) through to a major and well publicized cinema release on 70 screens.

But overall, with such continued uncertainty in the marketplace about the revenue models future film business plans can be built on, Britain is left almost beholden to the US as it waits to see what agreements are made between the major content owners and the major digital marketplaces (iTunes, Amazon, etc). It is, for instance, at present very difficult for an indie producer to get their film listed on iTunes – which strengthens the other major competitor after free and user-generated content – piracy. With the launch of Spotify, the music industry has finally caught up with the pirates and, effectively, out-competed them at their own product – easy access to all the music you could hope for. Sadly the film and TV world is many years behind, giving the pirates a further head start.

Instead of this, a proactive British creative sector could make a few smart moves now and position itself ready for the coming changes, rather than playing catch up with the US. The real sea-shift at present is less about technology, and more about changes to the financing, and costs of producing, distributing and marketing content.

Inevitably some of the loudest voices advising about these changes come from those with the most to lose if their own skills base is made redundant by a new way of working. However, so seismic are the shifts that it is inevitable that old business models will be replaced, and with them will fall the companies which cling most tightly onto redundant models. But amidst the hyperbole it is important to remember that the shifts don't mean the end of a financially sound model for content creation, just a rewriting of the rulebook as the walls surrounding the production centres of LA, Mumbai, Hong Kong and London crumble. It must also be remembered that the technological solutions bring with them challenges in equal measure, not least with regards civil liberties, the potential for censorship (not just from governments, but from foreign companies) and the surrender of human and civil autonomy and expression to automated computer processes.
What do the UK film and television industries currently contribute to the UK economy and British culture? In what ways might this contribution be enhanced?

The UK film & TV industries

Britain’s film & TV industries are blessed with two strengths. They are highly respected in the US, the world’s largest TV & film market, and are both regarded and used as a regular provider of talent, formats, ideas and content. More significantly, in a world where the revenue models for new media are uncertain, and advertising revenues in general are falling, the BBC’s constant

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Netribution's submission to House of Lords Select Committee on Film & TV industry
Written by Nicol Wistreich Wednesday, 25 March 2009 15:55

and dependable income allows it to invest billions annually in content within the remit of ‘inspire, inform, entertain’ as opposed to the commercial agenda of advertisers.

As a global brand for news, nature footage and a few formats, the BBC has barely flirted with its full potential on the world stage. The ability to distribute a huge archive of content globally at a time when those who are producing and giving away content for free are the most successful would let a globally focused BBC rise to world leadership. While most commercial ‘free’ content online has been crudely ad supported, often appealing to the lowest denominator of sex and shock, the BBC can freely distribute targeted high quality documentaries, dramas, comedy, news and lifestyle in a way which extends the BBC’s brand and further promotes British talent overseas. Putting management of these assets in an unfettered, global-facing, agile and lightweight sister organization could let the BBC rebrand itself as vital a global player as YouTube and MySpace. It could, for instance, structure this content offering around a social network and invite users to remix its content and source files and upload it – legally – to the service (as countless bedroom creatives already do on YouTube). In the course of this it may form links and bridges with creative organizations and talent around the world who in turn would sign up to the BBC’s founding and driving cultural mission. With all other TV majors tied overwhelmingly to advertising, such a global BBC could pick up considerable momentum and drive new revenues that can eventually subsidise the licensee fee. Offering subscription access to iPlayer for non-UK residents could raise considerable sums, even more if (and when) iPlayer offers full archive access.
Have the 2006 changes to the tax credit system been of benefit to the UK film industry? Have they had a perceptible effect on UK film production? Are the qualifying conditions, including the “Britishness” test, for the tax credit appropriate? Are any types of film or types of commercial arrangement unreasonably excluded?

Tax credits

This question demands an essay for an answer – for the moment I can simply say that the legislation is too complex – it is perhaps the most complex film tax rebate legislation in the world (we studied over 30 system for the Film Finance Handbook) and makes entry prohibitive to those not wishing to spend too much money on legal services.
Is the UK Film Council meeting its objectives of giving support to production and export of British films? Could it do more to assist the UK film industry’s contribution to the UK economy?

The UK Film Council

The Film Council’s biggest problem, besides its size, is a view of the UK’s film and video products with the lenses of the 20th century. A focus on features, and short films as an entry point to making feature,s disregards the vast quantity of British film and video talent that exists

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Netribution's submission to House of Lords Select Committee on Film & TV industry
Written by Nicol Wistreich Wednesday, 25 March 2009 15:55

outside of this space. One of its fund heads openly admits to hating short films. Live audiovisual, interactive narrative, VJ, web viral, mashup, audience responsive, machinima and live visual music using video games technology are all major new areas of film culture, many of which are far less threatened by piracy because of the nature of their technology or delivery. Britain could be a world leader in these areas, giving its high technical and artistic skillsbase. However I’m not sure how many of these terms are even on the radar of the UK Film Council, let alone eligible for funding.

As moving image as an economic asset continues to evolve, this disconnect risks leaving the UK wasting investment on aging models. Beyond the structure of cinema as a 2hr story with beginning middle and end, moving image is now unfettered from the temporal constraints of TV or cinema schedules. Snakes on a Plane might have bombed but the creative assets - video clips of Samuel L Jackson, and the logo - were used, watched, shared and engaged with more than a conventionally successful film would be.

In an environment were copyright owners are earning from only the advertising revenue associated with their free online streams, remix and reuse is as valuable as the original product. Remixes to German arthouse film Downfall are a good example of this - the remixes have been seen an estimated 100 million times, which in conventional terms is blockbuster status. A wiser indie film sector backed by public agencies would be able to get rapid P&A funding in the event of a web viral sensation so they could cash in on such success. At the moment they are more likely to phone their lawyers and see if there is a way the remix can be stopped (which is technically impossible).

If a British filmmaker pulled in 10m viewers for one of her films on YouTube the UKFC’s likely suggestion would be to apply to a short film scheme and work her way up the industry. A regional agency may offer more targeted support, but a fully wired organization would be ready to advise her how to transform her audience into a supportive crowd of fans who could fund, promote, co-produce and help distribute her follow up films.

Similarly web projects, such as MyFilms.com, have shared qualities with the worst of government web investment – being over-expensive, using outdated software (usually Microsoft based), out of touch, slow to adapt, and largely devoid of users. The UKFC have been slow to engage with the UK’s leading film web organizations and have been, in short, badly advised – choosing established agencies and organizations over the young blood who may not know how to work the corridors of power, but at least understand the web and its audience.

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Netribution's submission to House of Lords Select Committee on Film & TV industry
Written by Nicol Wistreich Wednesday, 25 March 2009 15:55

Other than this the UKFC is a driver for a wide range of smart investments and good projects – and is a vital part of the British film provision, It is, however, excessively bureaucratic – for example last year I submitted a one page application for £15,000 from the Technology Strategy Board and a 35 page application for £20,000 from the UKFC (of which around £5,000 of the spend was required just to meet the criteria for getting the money). I heard back successfully from the TSB within three weeks – from the UKFC after over two months, and I ultimately turned down the UKFC investment as it came with such an intimidating contract. Ultimately the TSB’s light touch better supported the innovation and flexibility that my business demanded, and led to an increase of in-kind investment in the project from £5,000 to over £25,000 during its six month period. The UKFC required everything fixed in great detail before the project had even begun, which may be a consequence of either too much demand for funds, or fear of public attack in the event of a bad investment. The Infrastructure
Is the current business infrastructure in the UK conducive to the acquisition of the managerial and technical skills required by the film and television industries? Is the business environment conducive to the emergence of entrepreneurial talent, which can take advantage of opportunities in the creative industries?

Unfortunately, resolutely not. As an entrepreneur who has tried long and hard with the UK’s institutions for support over nearly ten years since setting up a web film business (with shifts in attitude only coming in the last 14 months), I have long been tempted to move to the US where almost every meeting, email and phone call is met with a positive, helpful and can-do approach. I have come to live with the UK’s ‘can’t do’ attitude towards entrepreneurs (at least those who do not have a socially excluded background), but am increasingly frustrated with the lack of understanding of the needs of the IT infrastructure for creatives which the US is continuing to lead – and hence dominate.

Media conglomerates ultimately offer infrastructure and finance. The finance is falling apart, and the infrastructure is beginning to be replaced with open access tools. In short – the independent producer today – be they a book publisher, designer, musician or filmmaker – is beginning to have at their disposal on the web much of the infrastructure which connects people, products and services that was previously the preserve of major international conglomerates.

As finance and revenues models change, structures best suited to the new order will survive and grow. The current studio system is expensive, slow to respond to change, frequently disconnected from its audience, and for the most part culturally monotone, lacking the diversity which is central to much of the British government’s position on culture. In short if it fails to adapt in time will become little more than a licensing and rights house, maximising income from existing creative works, and for as long as the British infrastructure models itself on this studio

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Netribution's submission to House of Lords Select Committee on Film & TV industry
Written by Nicol Wistreich Wednesday, 25 March 2009 15:55

system, it will fail to benefit from the emerging culture.
Evolution of infrastructure

Like all art forms, Film and TV is built, primarily on talent. The skills of the writers, technicians, directors and marketers - of which Britain is bountifully blessed with - are the bedrock on which any successful entertainment or artistic product is built on. The infrastructure holding together these people through production and distribution has been formed in response to a number of factors: - the cost of production – traditionally film is the highest of all artforms, with the cost of 35mm prohibitively expensive for the majority of producers - high skills requirement - while anyone can pick up a paint brush or guitar, until recently the challenge of filming, editing and doing sound to a professional level has created a limited skills base, which in turn is centered around nexus of academic excellence, such as London, Pune, LA, etc. - required gatekeepers of distribution - in all parts of the film and TV distribution marketplace, in broadcast, cinema, Blockbuster, DVD retail - a limited shelf space, screen space has both limited access and encouraged a culture averse to commercial risk, regularly choosing films of questionable quality over great films for financial security.

In the current environment, these three 'walls' have crumbled: - the cost of production - consumer HiDef video cameras and desktop video editing have put Hollywood quality production within the budgetary grasp of anyone with the talent. - high skills requirement - the tools have become easier to use and the web has made the sharing of knowledge and skills instantaneous, and far more up to date and relevant than many academic institutions, given the pace of change. The developments of the AV / live visual community, for instance, are progressing so rapidly that few at any agency or academic institute have begun to keep up. They are not simply teaching old software - they aren't even aware such software exists. - the gatekeepers of distribution - as the walls have fallen the gatekeepers protect an ever smaller and less vital window - iTunes is limited in its success as a film download service by its shortage of content from indie producers. Over 50% of content viewed online is 'user generated' according Screen Digest - giving the content majors a cut in market share of nearly 50%. The number of clubs, bars and public venues with high quality video projection facilities,

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Netribution's submission to House of Lords Select Committee on Film & TV industry
Written by Nicol Wistreich Wednesday, 25 March 2009 15:55

coupled with the success of forum such as Brave New Theaters and MovieMobz in Brazil, suggest the final gate - exhibition – could soon open fully.As exhibition opens up, following the ‘democratisation’ of production with digital in the 90s, and of distribution, with the web in the 00s, we believe that the revolution of the film, video and TV industry will be complete, leaving those savvy enough to pre-adapt standing amidst a brave new world. As filmmakers across the world join the global conversation on an equal footing with producers in LA and London, Netribution firmly believes that through this more open, equal and level communication, the cultures of the world will be able to begin to better understand each other's problems and needs. Again this could be supported by the BBC taking a position of cultural leadership to counter balance the vast quantities of pornography and inflammatory material that will otherwise drive broadband uptake in the developing world.
Evolution of copyright.

The challenge for legislators is to balance the need to protect existing copyright owners while not preventing the innovation which drives the next generation of content producers. From Picasso and Pulp Fiction to Harry Potter and HipHop – allusion, remix and re-use has been a major part of the creative worlds, with ours the first generation that can actually prevent such new works ever being viewed through purely technical controls on distribution. As copyright law evolves it needs to take account of several areas: - Non-commercial use. The fair use principle supports a wide range of US innovation in media. The rapid uptake of Creative Commons shows the value and hunger for works that can be used for non-commercial (ie personal, educational, charity, research) purpose and have fueled a big increase in innovation which, as with the Open Source industry, is supporting a wide range of profitable activity. - Copyright Markup Language. There is a strong argument for supporting an XML datatype for copyright which can recognise and track authors and owners through a remix process. So Producer A releases film B onto the web, and Creative C remixes it and puts it on his blog. Curator D places it in his popular forum, where it gets 1m views, and earns D £5,000. A system such as the Open Digital Rights Language (ODRL) , rather than DRM, would let D instantly calculate how much money should be repaid to A and C, who both are cultural authors. Likewise, if the clip in questions includes just actor E, it could recognise that A needs to share his royalty with actor E by a pre-agreed proportion. - Relative usage. If three actors are each offered a 5% share in revenues from a feature film, and a clip where one actor turns a remarkable performance gets remixed and reused, earning the producers £100,000 over a year, the possibility to assign a greater proportion of income to that actor will doubtless be attractive in future negotiations, especially with the use of celebrity cameos, or songs (ie why clear all 20 songs on the soundtrack for unlimited web use, when only the one scene featuring a Bob Dylan song is going to end up being heavily shared

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Netribution's submission to House of Lords Select Committee on Film & TV industry
Written by Nicol Wistreich Wednesday, 25 March 2009 15:55

online).

If the UK were to spearhead the adoption of such a language on an open, opt-in, basis, in full consultation with creatives, media companies and users, it could provide a seamless system to insure that revenues are shared on any profitable clip, and allow a creative to progress from non-commercial level use, which should have no restrictions, to a system where all the correct parties get paid, as pre-agreed and encoded in the ODRL in the event of a success. The implications
How will the structural changes facing the UK television industry, and particularly the public service broadcasting component, affect UK originated television content? To what extent are these effects irreversible? To what extent are they being offset by changes elsewhere in the creative industries sector? What are the implications for television content creation of digital switchover and widespread broadband availability?

Civil society is built so firmly on the idea of shared and common resources - be it parks, museums, roads, hospitals, public libraries or schools - that it is unfortunate that the discussion has only recently extended to the digital domain with the governments reappraised support of open source software.

In a digital environment, the possibilities for making a one-off investment which supports an unlimited number of small and creative businesses or individuals are many. At a simple level, the UK Film Council's FilmFileEurope and Scottish Arts Council free download list of Scottish arts journalists, illustrate the concept - that government support for the creative industries can come in many forms other than cash.

Extending this idea further, spend once / return many investments could include: - Building a Creative Commons digital repositary of creative artefacts. Film footage, photos and scans of public owned artworks and photos, audio recordings, archive materials and even films where the public owns the rights because it funded the content in the first place (ie BBC). The BBC's Creative Archive, spearheaded by Greg Dyke, but sadly abandoned under Mark Thompson was a brilliant step in the right direction. Opening up such a rich collection of content would be of indescribable benefit to creative businesses, students and individuals in the UK. The bandwidth costs could be removed by using a closed, monitored, legal only P2P network – which in turn might discourage some users from exploring pirate trading networks. As remix and 'clip hop' culture continues to dominate YouTube, a legal source pool of copyright free clips will also remove the current incentive to use easily found copyrighted content beyond

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Netribution's submission to House of Lords Select Committee on Film & TV industry
Written by Nicol Wistreich Wednesday, 25 March 2009 15:55

standard fair use provisions (which vary between 6secs and 30secs depending on which country your video is hosted in!) - Open sourcing web investments. If, for example, Northern Film & Media invest in a video sharing website with YouTube functionality, there is no logical reason why they shouldn't stipulate that the software is developed and released under an open source license so that other regional screen agencies could adapt it for their own video sharing site. It is unlikely to add much to the cost - and these services regular use many open source tools in their construction. Furthermore, if the 'video sharing network' software is a freely downloadable public-funded GPL-licensed tool, it will attract other volunteer coders and investment. If another screen network, for instance, decided they wanted to have more social network features, or better rights management, they can spend the money they would have spent rebuilding the software from scratch on making the software do more. If the starting point is an already open source project, such an injection of public cash will double as investment in the UK's technical infrastructure and know-how for that project (be it Joomla, Drupal, WordPress, Eclipse, Apache, PHP, MySQL, Wiki, or whatever framework is being used.) - Intranet and company management tools. The main reason small and creative businesses make mistakes with tax, employment law, health and safety and equal opportunities is because of a shortage of time and knowledge. As with online filing of tax info, web tools can make aspects of the process far easier. Netribution has begun to use open source tools to build an extranet / social network for company management, and has found a huge increase in productivity, information sharing and speed of response. There is no reasons such software couldn’t be released into the public domain for creative, SME and non-profit organisations, as simply bundling together a wiki, blog, social network and video sharing site has made aspects of management far more streamlined, especially over long distances. - Shared data. With so many aspects of running a business or marketing a service replicated across public bodies, the keeping and maintenance of certain data centrally is a simple and cheap way of increasing the efficiency and bottom line of many small businesses. For example an up to date press mailing list that could be sorted by region and genre, and included the main bloggers - would be great for companies who cannot afford PRs or commercial databases. RSS feeds of new funds as standard on all public funders' websites would make access to information more effortless than ever, and allow other sites to aggregate relevant data.

In short the rate of change at present is so rapid and massive that it is tempting to stand back and wait for the dust to settle five years from now before restructuring the way we finance, produce and distribute content. At the moment, for once, British producers have as much an advantage in this space as those in the US – or indeed anywhere, and with the powerhouse of the BBC and screen agencies financing content, arguably far ahead of the rest. However without beginning an urgent dialogue with the UK’s web and IT entrepreneurs (and resident pioneers such as Cory Doctorow), this advantage will be wasted. A few simple investments – an Open Source Software Agency for creative / social and small business which could make

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Netribution's submission to House of Lords Select Committee on Film & TV industry
Written by Nicol Wistreich Wednesday, 25 March 2009 15:55

targeted investments – would make a drastic difference, while the UK Film Council can no longer justify ignoring the Internet - a platform which is already the number one leisure activity of 28% of all UK adults. ENDS Nicol Wistreich is co-founder and director of Netribution Ltd, a film industry web magazine, research consultants, print publisher and web developers since 1999. Co-author and editor of Netribution’s How to Fund Your Film, the Film Finance Handbook (currently 4th edition, over 10,000 copies sold to date in Europe and North America), and regular speaker/writer on new media implications for the film industry (including Film London, New York Film Academy, The Times, BBC Online) as well as author of the first executive report in Europe on managing rights in the multi-platform, multi-channel world (Digital Asset Management, Informa Media, 2001).

A six month research and feasibility study, funded by the Technology Strategy Board, 'A Living Cinema' has just concluded where Netribution, in partnership with companies and organisations across the UK, researched and produced an original live event where short films, food and a big brass band were mixed with live interactive 3d graphics, produced using video games technology, which responded to interaction and audio from audience and musicians – in a deprived south London community. The research set out to explore new ways exhibition may evolve in the next decade.

He is a web consultant and developer for people including the Satyajit Ray Foundation , Cont emporary Films (UK's oldest indie film distributor), Friends to the Stars (new music industry venture from music industry veterans) and ArtsBeyond.org (a blogging & new media skills for parent and child education pilot from Creative Partnerships London). Since directing the premiere of Simon Armitage's first play in Harrogate as a teenager, taking it to the Edinburgh Fringe in the summer of 1997, Nicol has been drawn to live and social events, building a cinema in a transformed underground car park for the launch of Publicis's award winning HyPe campaign, and a new interest in developing a more social cinema with the Living Cinema Project .

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Summary This detailed post addresses some of the challenges facing UK Film and TV Industries, especially in terms of distribution, finance, tax credits and infrastructure etc. It also talks about their contribution to UK’s economy.

Description A good read on UK Film and TV industry- discussing its drawback, infrastructure and finance models.

Tags: BBC Films, Crowdfunding, international film, Media, MyFilms.com, Open sourcing, P2P network, Samuel L Jackson, UK economy, UK Film Council

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Netribution's submission to House of Lords Select Committee on Film & TV industry

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Netribution's submission to House of Lords Select Committee on Film & TV industry

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