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The NYU Cinema Research Institute brings together innovators in film and media finance, production, marketing, and distribution to imagine and realize a new future for artist-entrepreneurs. 


Qualifier to Thoughts on "the Third Way"

Michael Gottwald, Carl Kriss & Josh Penn

In our interview with Chris Dorr here, he made an interesting observation that we might be wrong-minded to think about things like the modern independent film industry as needing a non-profit (or for-profit) model, that successful sites like Kickstarter represent a "third way" that is neither non-profit or for profit. He posited that it was all a kind of subsidy anyway, in the same way that ad revenue subsidizes what you watch on television. A recent article in the New York Times by Planet Money host Adam Davidson talks about how the prison industry violates standard economic practice by having someone other than the customer determine what product the customer gets. This is not really relevant to what we've been talking about, but Davidson does draw a comparison to the TV market that the show about prison he's using as a reference -- Orange is the New Black -- participates in:

“Orange Is the New Black” coincidentally reflects the television industry’s shift away from the third-party-decider economy. In the traditional broadcast environment, the customer is not the viewer but the advertiser, the one fronting the cost. The viewer’s attention, in effect, is the TV network’s product and the programming itself is a form of distraction to lull viewers into watching. This model often creates incentives for broad, unobjectionable fare that will appeal — or at least not repel — the largest number of viewers. Netflix, however, predicates its model around the actual end-user, or the person watching the show. As a result, the company needs to provide content that the viewer deems worthy of $7.99 a month.

In other words, while sites like Kickstarter may represent a third way that has actually been existing in capitalism for a long time in the form ad-supported television content, the new distributive platform of NetFlix takes the third party out of the third way and goes back to plain old "customer pays for what it gets" Adam Smith style economics. Furthermore, what's also interesting is that Davidson points out that advertisement-subsidized content might have to be broader in scope by nature of what companies are backing it; NetFlix can get very specific with who can target its show at... They don't have to appeal to everyone to justify to some users that Orange is the New Black is worth 8 bucks a month.

This ability to narrowly target must have some effect on the ability to limit production budgets as well (see our post on how the Obama campaign spent less money with more effect through targeting their TV ads), which is where there might be room for growth for the independent filmmaker. If he or she knows exactly who their target audience is or could be, there is no need to bloat a production to try to appeal to everyone. Independent can sometimes mean niche, and with the rise of the myriad television options (both on NetFlix and on your old appliance), we are in the age of niche. Ted Hope gets into a similar idea of how independent filmmakers can take advantage of the ability to target in his radio interview here; it's a topic we hope to explore more in the second half of our year-long study.