The Independent Media Thesis

My thesis has had a shift of focus. While I still enjoy considering the possibility of creating a system to quantify the financial prospects of a creative product, the reality is I don't have the time or resources to pursue such an involved task. Consequently I will no longer be exploring this topic in depth.

My new realm of interest will be more general: independent film making and the changing marketplace for film.

Truly independent media is a hard thing to find these days. For all intents and purposes 5 multi-national corporations control nearly all widely distributed media. Through the continual consolidation of media by publicly held companies such as GE and Viacom, independent media has been able to survive for one simple reason: it's often a better business model. For my MEIM Capstone project I will examine the independent media business model.

Successful independent media firms spend less, are (arguably) more efficient with the money they do spend, and have a better relationship with their labor and customers than big-media. Take Touch and Go records, for example. While the rest of the music industry has been reeling due to digital music-downloading and a sharp decline in CD sales, Touch and Go has steadily increased their sales and revenue year to year. While major labels have seen their numbers plummet as fans go explore the wide world of music they never knew was available, Touch and Go's customers have continued to buy Touch and Go's product.

While independent media producers like Touch and Go records have been viable in the past, their success in the future is not guaranteed. Trends may change too quickly for anyone to adjust. Small companies and organizations might not have the money needed to make the changes needed to stay competitive. American’s may start spending their entertainment dollar on movies and music. Ultimately there might not be an economically viable way for independent media producers to continue doing business. It’s hard to say because media is changing at a remarkable pace. What is certain, though, is the changes the music industry faced with MP3s and cheap bandwidth will soon confront the movie industry. How independent film will weather these changes is still unknown.

Independent film making faces challenges and opportunities in 2 broad areas. The first area of interest is economics. There has been a flood of cash into Hollywood and films as Investment Firms, Hedge Funds, and High Net Worth individuals look for ways to partake in the multi-billion dollar movie industry. Whereas investors were once scared of placing money in the notoriously risky and unpredictable single film, new methods of investing have arisen, including film funds which invest in slates of films and co-financing deals, to spread risk, allay fears, and allow Hollywood to tap into a new source of capital. Large amounts of private equity may provide options to filmmakers that were once only available through large studios. Of course the influx of cash will surely flood the market with those seeking to spend it. It may not be long that the currently glut of money flowing into Hollywood will be used up by a corresponding glut of producers. A surplus of cash may turn into a surplus of filmmakers.

At the other end of all this investing is the return. Success for a movie can be measured in many ways, but profitability is certainly one of the most prominent. Blockbuster movies may no longer be the goal or even desirably from a profit maximizing standpoint. The tent-pole feature requires a massive number of ticket-buyers to break even, a proposition that becomes even riskier in light of the audience's increasingly divided attention. In contrast, a studio could develop a slate of 10 smaller movies for the same price, target the marketing to the appropriate audiences, and end up with an equal or greater profit than the tent-pole movie for much less risk.

This change in audience dynamics is a direct result of the second area where independent film (and the movie business as a whole) will face massive uncertainty - the digital realm. Information is cheaper, faster, more plentiful, and more useful than ever before. This is going to cause changes in every single aspect of the film business, from production to marketing to distribution. Film makers will face reduced costs, but this will likely be a double edged sword. The prices studios pay are largely based on budgets, and if budgets go down then so do prices paid for the final product. The reduced cost and increased ease of creating media could create a larger supply of content than is demanded, resulting in fierce competion for sellers and reduced prices paid by the buyers. The means of distribution will be radically different, from movie theatres that can customize their programmnig in real time to the ability to download whole movies wihe greater ease than going to the video store. No segment of the industry will be immune to the transformation. For any entertainment company to be successful they will need to address these changes in innovative ways, possibly even creating new business models.

My new thesis will explore these new models. I'm sure with time and research I may focus in more tightly one specific area (e.g. marketing independent film in light of social networking and specialized audiences).

I found a good starting place for my research - not suprisingly others have considered such topics before me.