How Australian filmmakers can benefit from sharing information

Australian producers are struggling to face challenges imposed by a changing screen industry – and greater transparency will benefit everyone. AAP Image/Gaye Gerard

The film industry is known for conspicuous display. Actor Tom Hardy has described its endless “white smiles and six packs. Long lines of beautiful people lining up to be incredible on film.” But when it comes to money and business, the industry is conspicuously modest – all buttoned-up and locked away. It is as though a switch were flipped, from Tell All to Say Nothing.

Now some filmmakers have begun to weigh the costs of too much secrecy. There is an emerging push for greater transparency in the industry. Below we report on this push and its implications for Australian filmmakers.

Privacy, confidentiality, secrecy

There are many reasons for the industry’s secrecy. There are the normal expectations of people doing business, that others will respect their privacy. There are also contractual obligations, where parties undertake to keep their terms of trade confidential. For Australian filmmakers there is a further constraint imposed by the Tax Act, which lays a veil of secrecy over transactions involving the Producer Offset — the centrepiece of most film-financing plans.

Beyond these constraints lies another, subtler inhibition.

The film industry is relatively small and densely networked. Its members share a sense of professional identity and tend to close ranks against outsiders, who may not understand the industry’s particular complexities. Indeed there is almost a culture of secrecy.

This was graphically illustrated in the United States when, in 2010, a respected financial services firm sought to offer a new futures contract based on movie box office earnings. The contract would have allowed investors to hedge their investments in movies, reducing their well-known riskiness. But the Hollywood studios rapidly mobilised to block the new contract, arguing that it would give rise to “unbridled gambling”.

No matter that such contracts are commonplace in business and a standard tool for risk management. Hollywood made the defensive choice to wall itself off from futures trading and the outside scrutiny it would have brought.

The problem with secrecy

For a Hollywood studio – a big, well-funded organisation with a long trading history – the market holds few surprises. The studios have done every kind of deal and seen every kind of outcome. They operate around the world and have a hundred years of data to draw upon. They have a massive information advantage.

For ordinary filmmakers the situation is very different. According to the Australian Bureau of Statistics, 85% of Australian video production and post-production businesses have only 0-4 employees; many are just one person.

Working thus alone or in small teams, filmmakers have few past films to guide them and limited capacity to gather the global market intelligence they need — who’s buying, what they’re buying, how much they’re paying and indeed whether they are paying; likewise who’s investing and on what terms; and what release strategies are working (or not working) in the ongoing “creative destruction” of the media landscape.

For these filmmakers there’s no hundred years of data to draw on, no network of market contacts. For them every new film is a foray into the unknown. They are information-poor and too often their information poverty leads to wasted time and effort, poor decision-making – and eventually, in too many cases, to business failure.

It is these adverse consequences that filmmakers are seeking to correct in the push for greater transparency.

The transparency project

Earlier this year the US-based Sundance Institute announced the Transparency Project, a non-profit project that will collect and share financial and other data “to help filmmakers be more creative and efficient in funding, marketing and releasing their work”.

Sundance was founded by actor Robert Redford in 1981 and has become an important platform for independent (non-studio) films. Its backing for the Transparency Project is significant; already nearly 100 films have submitted data and the project team has developed an Analytics Tool that allows filmmakers to compare their films to other similar films and ask questions such as:

Where are the revenue streams coming from? What costs does it take to get those revenues?

How valuable is a theatrical release, and what is the tipping point in terms of overspending on theatrical?

How does box office correlate to VOD (video-on-demand) or other online digital distribution?

While the project is at an early stage, it clearly has the potential to aggregate data on an industrial scale. It will thus empower independent filmmakers, lifting them from information poverty and giving them tools to compete more effectively with the major studios.

Sundance has secured the backing of key players including sub-genre Cinereach, the Independent Feature Project, Tribeca, Vimeo and the Writers Guild of America – and now is seeking overseas partners.

Australian filmmakers, like their overseas counterparts, face splintered markets, runaway piracy and “disrupted” business models. The Australian industry is getting weaker over time and small independent producers are the most vulnerable. There are no easy answers.

Finding means of survival will require strategies of self-reliance and collaboration. Information sharing along the lines being tested by the Transparency Project might be a good place to start.

The early steps might be:

  1. A small group of like-minded filmmakers agree to collaborate

  2. They devise an information-sharing protocol and decide what information to share

  3. They reach out to others with useful information such as distributors and funding agencies

  4. They team up with Sundance and other international partners to share resources and internationalise the project.

Filmmaking is an activity that teeters at the edge of viability; sharing information is an incremental reform that might tip it back into the black.