Commentary: Upending Hollywood's traditional business model

Steven James Snyder, Time Magazine, 10/28/11

Last weekend, Margin Call opened in 56 theaters [and] the indie drama grossed a total of $561,904; on average, that adds up to a whopping $10,034 per screen (any movie that registers $5,000 per screen is generally considered a smash hit). But many of those who went to the theater on opening weekend also had a choice: Margin Call was simultaneously available for discounted purchase via Time Warner Cable, Blockbuster On Demand, iTunes, Dish, etc. In some markets, the Video On Demand option was nearly 40% cheaper than the cost of a movie ticket. The conventional line of thinking among theater owners appears to be that if you offer moviegoers an alternative, they will abandon the multiplex. But the success of Margin Call raises the prospect that theater owners have it all wrong, that alternative ways of watching a movie actually increases the number of people who will pay to see it without subtracting from their coffers. Of course, Margin Call's VOD release wasn't heavily publicized, and, at only 56 screens, it is competing in a different league than a wide release. [But] the film's considerable success does leave one wondering if theater owners are operating under a flawed assumption. Is it all that difficult to imagine an independent release finding success both via VOD in markets where it would never normally open theatrically and via major market art houses, where cineastes are committed to upholding the theatrical experience? And isn't it possible that a blockbuster would find similar success? After all, there are those moviegoers who demand big screens, loud speakers and the opening night buzz of the theater, and then those who wait the 90 days for the DVD, in a bid to avoid the chaos and costs of the cinema. Now all eyes shift to Nov. 11 and Melancholia. Lars Von Trier's new film has been widely available via VOD since Oct. 7, but if its opening weekend theatrical receipts hold strong despite this unprecedented pre-release, Melancholia may be the strongest counterpoint yet to conventional VOD attitudes.  


Commentary: $10K offered in search for alternative arts business models

Greg Sandoval,, 10/12/11

If you believe consumers should be allowed to freely share music, movies, and books over the Internet, then you've probably read Mike Masnick. He's the founder and operator of Techdirt, a blog that champions the search for alternative business models for distributing songs, books, and movies. In that vein, Techdirt [launched] a new message board [to] pool the ideas and experiences of musicians, filmmakers, and writers who are experimenting with new ways to support their art. Masnick is offering $10,000 to people who submit the best case studies, or "success stories," they've had in building an alternative business model. While Masnick is known largely as a proponent of free content, he doesn't believe content should always be free. He said part of the trick to online distribution is figuring out when to charge for content and when not to. He says, however, he believes more than ever that the Internet has produced new ways for content creators to distribute their own work profitably without inviting the influence of big studios, music labels, or book publishers. Some copyright owners, however, have argued that Masnick's ideas are wrong. Rob Levine, author of Free Ride: How Digital Parasites Are Destroying The Culture Business, argues the pursuit of alternative business models, those who attempt to give content away and try to generate revenue with merchandise and ad sales, have been around for 10 years. He asks where, after so much time, is this market? Masnick said he's more encouraged than ever about alternative business models and says that the market has arrived but has grown slowly largely because of a lack of infrastructure. More importantly, he said artists have lacked the knowledge and understanding of these business models until much more recently.


Commentary: Alternative business models for visual arts
Jennifer Markas, Damsels In Design blog, 10/2/11
General Assembly, the collaborative workspace for start-up technology companies, and Active Ideas Productions have partnered together to launch a new series of educational events for the art novice and expert alike. [At the recent "Art Outside The Gallery" discussion, a panel] divulged the secrets of success for launching and running non-traditional venues for art. World-renowned artist Richard Phillips, who has exhibited paintings at White Cube Gallery in London and Gagosian in New York, discussed the notion of not only creating art, but also creating "your own media." Whereas art in a traditional business model waits to be picked up by the press, Phillips has turned the model upside down with the release of his short films, Lindsay Lohan and Sasha Grey, on YouTube -- reaching nearly 2.2 million viewers worldwide. Christina Tonkin grabbed the audience's attention with her insider knowledge of the hit show Gossip Girl for which she is the set decorator. Tonkin engaged us with anecdotes about which artists works she chooses to display on set and why. Television and film epitomize a non-traditional venue for art and is most definitely an alternative outlet for aspiring curators and artists to keep in mind considering more opportunities exist nowadays for self-released film and multi-media production. Gagosian employee by day and independent curator by night, Jill Murphy launched AD Projects [to exhibit] up-and-coming artists in alternative venues such as empty commercial buildings and warehouses. Their success is partially due to a revenue model based on low-overhead where exhibition space is fully sponsored by the property owner, a definite advantage when curating in an economic recession. Lastly, Carter Cleveland's business,, is "an ongoing study of the characteristics that distinguish and connect works of art. evaluates artworks along 500+ characteristics to create a powerful search experience that reflects the multifaceted aspects of works of art." It is said to be a 'Pandora for art,' which Cleveland hopes will not only engage people with art, but also educate them about the art.

Commentary: Adapting to change in your underlying business model

Seth Godin on his blog, 10/24/11

When the form changes, so does the underlying business model, which of course changes the function as well.

Mail ---> email

Books ---> ebooks

DVD ---> YouTube/Netflix

1040 ---> Online taxes

Visa ---> Paypal

Open outcry ---> Electronic trading

Voice call centers ---> forums and online chat

Direct mail ---> permission marketing

In each case, the original players in the legacy industry decided that the new form could be bolted onto their existing business model. And in each case they were wrong. Speed and marginal cost and ubiquity and a dozen other elements of digitalness changed the interaction itself, and so the function changes too.  The question that gets asked about technology, the one that is almost always precisely the wrong question is, "How does this advance help our business?" The correct question is, "how does this advance undermine our business model and require us/enable us to build a new one?" There are projects that are possible with ebooks or Kickstarter or email that could never have worked in an analog universe. Most of the money made in the stock market today is via trading approaches that didn't even exist thirty years ago. When a change in form comes to your industry, the first thing to discover is how it will change the function.

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