Hot Topic: Tumblr, Yahoo and Profitability. And Stoya. (Very NSFW)

When I set out to make a filmmaking blog over three years ago, I had an important choice to make - what platform would host it? In the years before I actually had a successful blog on MySpace (whoa) and I quite liked that I didn’t have the burden of ads on that site. At the time there was this little upstart called Tumblr, which had the ad-free ethos of MySpace, which has since disintegrated into the oblivion of ads and revenue streams after its acquisition by NewsCorp.

Tumblr had several things going for it. The first was an easy and intuitive interface, ‘tumbling’ if you were, that allowed for quick and easy access to a variety of topics and individuals that you curated on your own - you really didn’t have to search for things that interested you, they just sort of arrived on your doorstep. That was a completely new way of thinking, of processing information, and I liked the idea of being a part of that. The reach for any given piece of information was multiplied tenfold.

The second was Tumblr’s eschewing of ads. There would be no annoying banners, pop-ups, etc. - unless you wanted them, and that would remain your choice. That’s empowering in terms of your content and the overall personality of your blog. A quick kerfuffle with Google Ads and I was forever divorced from the idea of ad revenue, because the minute we are bound to ads, we are subject to regulation and filters of taste. For those who don’t want to read the post I linked to above, Google accused me of posting ‘lewd or provocative images’ and being a ‘sexual fetish site.’ Uh, okay. So I torpedoed my tiny ad and donated the revenue to Doctors Without Borders, which apparently was also against the rules.

I didn’t want restrictions of what I could and could not post on this blog. Film and art is about expression, about tacking difficult subjects, and to have an ad company dictate what you can and cannot post is ridiculous. Tumblr allows me to post what I want. If I want to post this, I can:

Or in the same breath I can post this, to simply make an important point:

I still so very much want to work with Stoya, she’s absolutely brilliant - read her blog and you’ll understand.

Tumblr always allows adult content, and ‘adult’ content is not limited to pornography, as the geniuses at Google Ads would like to boil it down to. ‘Adult content’ is also challenging topics like body image, sexuality, freedom of expression, depression, anxiety, death, infidelity, violence, doubt and self-worth amongst many others. If we place limits on one, we no doubt infringe upon the others, as it is all inextricably tied into one another. I think Tumblr fundamentally understands this, and is one of the few major online entities that does.

It was for these two reasons that I chose Tumblr as my blogging platform of choice, and I’ve been loyal ever since, and the fans of this blog have been loyal to it in return. We have a relationship that is outside of revenue creation, which is something that business-folk don’t seem to really understand. When the Lilith blog really started catching on a few years ago and surpassed 40k followers, I was asked why I wasn’t running ads or why I wasn’t making the switch to a more profitable platform that could generate money for me. I responded with the aforementioned two reasons, and made the point that my Tumblr blog does generate revenue for me, but in the form of patrons of my work, of people who buy my films and help spread the word of my work on my behalf. It’s a mutual exchange, one that does not involve the direct exchange of money. But it is profitable - not for the blog, but for everything that the blog supports.

It’s a concept that I fear will fall upon deaf ears at Yahoo, which if you haven’t heard by now, has acquired Tumblr for a paltry $1.1 billion in cash. IN CASH. I don’t fault Tumblr for this move - it’s their god-given right to make money, and would you turn down $1.1 billion? You’d be a fool if you did. So bravo, David Karp. You did the right thing.

But the onus (anus? - god bless you, Tumblr) is now upon Marissa Mayer and the Yahoo staff to really see Tumblr for what it is, which is an aggregator of people and ideas. The billion dollar question with social media has always been how do we monetize it, how a social media company can make a profit. And here’s my assertion, which is that a social media company is not supposed to make a profit. It’s job is simply an extension of marketing, a driver of revenue, and not a source of it.

Oh this is just too easy.

Given that Yahoo has paid such a pretty penny for Tumblr, their board and investors will want to see revenue - after all, the goal of any business is to maximize shareholder wealth. But Yahoo has to see Tumblr as wealth in a different sort, as a source of social revenue, and not as a potential goldmine for ads. By going the route of ad revenue, the company will put the burden of revenue upon its audience, which will alienate the audience and ultimately be counterproductive to what Tumblr is even about.

I know, I know. I feel the same way.

In a perfect world, Yahoo should see Tumblr as a gateway of access, and profitability must be measured in tertiary purchases and traffic, and not in revenue derived from ad placement. It’s job is not to make money, its job is to expose new things to the world - it is an ad in and of itself. Yahoo just purchased a $1.1 billion dollar ad, one that is constantly evolving and is honest and unfiltered. I’m hoping they see the value in that, and not as just another Flickr, or just as another popular website that is populated with a desirable demographic. Having gone through business school, the possibility of the latter is unfortunately very high.

In this regard, Yahoo paid way too much for Tumblr, but I’m happy for Mr. Karp and Co. for their big payday. They earned it. He will likely be retained as CEO but for the first time in his life, he will now have a boss, and his autonomy, no matter how it’s phrased to preserve it otherwise, is forever gone. This is the bed he’s made, and I’m curious as to how it will all play out. The questions of this move loom - will my work on this blog be plied with ads against my choice? Are my efforts now simply to make Yahoo money, and my benefit is simply the right to exist? In the future will it cost us money to share media deemed unsuitable by some vague board who want to keep their sponsors happy?

Sharing is fun.

This is definitely a case of Big Brother is watching, and the ball is in Yahoo’s court. Time for them to make the right decisions - the future of this blog, Stoya’s blog, and countless other creative and important blogs depends upon it. It’s a pretty big deal.

Tumblr - where cats and artists can peacefully coexist and be themselves.

Sorry.

It’s been a very rough spring. Just when I thought I was making headway with my own personal grief, last week we suffered another tragic loss. My wife and I lost a dear friend a few days ago, and we’re simply out of tears.

Between personal loss, Roger Ebert, and now the passing of my dear friend, I’m really struggling to find the words and the focus to finish my posts for this blog.

It’s just a matter of finding that new normal, of a life without our loved ones. I will keep trying, but it’s hard. I’m just so incredibly sad.

Thank you for your patience.

For our dear Stephanie, we hope you are no longer in pain and that you have found peace. We miss you, your smile, your warmth, your creativity and your kindness so very much. The hole in our hearts has become a chasm. I chose this song for you, for your family, for all of us who are poorer for your being gone. Rest in peace.

New Personal Website!

So I’ve created my own personal directing website that has a ton of my filmmaking info, my bio, my reel and other cool stuff like storyboards, concept and comic book art, and some photography. There’s also a link to buy the Lilith DVD or download. It’s a work in progress, but it’s pretty fun.

sridharreddy.squarespace.com

And don’t worry, this doesn’t mean I’ll be posting less on this blog. Getting ready for the next business plan installment tomorrow. Thanks for your support!

Coming back.

I’ve had some time to think things through and decompress with the events in my life, and I think I’m ready to start writing again. It really is amazing how life can change within a matter of minutes, how our fortunes can shift in the blink if an eye. We’re processing our loss the best we can, creating small rituals and symbols to deal with our grief.

Grieving is something that we’re never really taught how to do. It’s a subject we’d rather not face, and frankly I don’t blame anyone for not wanting to face our mortality in such a way. It’s really painful, there is sadness mixed with anger, an anger that has no outlet and no focal point. I can be angry at God but then I’ve recently realized that’s just wasting my time. I can ask why these things happened and I will never receive an answer. There is a hole in our hearts that will likely never be filled, only built around and buttressed.

The importance in grieving is allowing ourselves to be be sad, to be angry, to just sit in a catatonic stupor. We need an outlet for these emotions, and to keep them bottled inside in a vain attempt to “get over it” or “move on” is just building a pointless powder keg of damage in our souls. We’ve cried until our eyes became sore, we’ve shouted at the sun and moon, we’ve held each other without saying a word. Our beautiful family and friends have allowed us to grieve and have shared our pain with us, the ultimate act of compassion. Because of them we will be fine, and we are on the positive path to healing.

Lastly I want to give my heartfelt thanks to the hundreds of you on this blog who have sent me amazing messages of strength and support. It’s fair to say that we are strangers bound by digital threads, but for someone I don’t even know, who knows nothing of my predicament, for them to pour their heart out to me and support me in my grieving is the mark of exceptional character and humanity. You are incredible, and I don’t know how to repay you other than express my gratitude. Gratitude for not only your support and words, but for also restoring my faith in people and the kindness of strangers. I am blessed.

I’m going to get back on my business plan posts, so read up on the past posts and refresh your mind. My world and this blog may have stopped, but time never does, and life goes on. Let us embrace it and celebrate it.

Thank you from the bottom of my heart.

Your humble director,
Sridhar.

Taking a break.

Dear Readers,

It’s with a heavy heart that I have to put the blog on hold for some time. My family has been beset with a devastating tragedy and it is going to take me some time to recover and be clear of mind to keep valuable contributions to this blog going.

I know so many of you were looking forward to the next business plan posts, and I am so sorry that I won’t be able to provide those now. I promise I will continue, we just need some time to heal.

In the meantime it’s a great time to go back and read old posts. We’ve been on a long journey, and there’s a ton to rediscover.

Thank you for understanding. I’ll be back in a week or two.

Your humble director,

Sridhar.

Business Plans, Part 3: THE NUMBERS - COMPARABLES.

If you want to catch up on previous installments, here they are:

Business Plans, Part 1: THE BIG IDEA.

Business Plans, Part 2: READINESS.

______________________

I’ve already written a piece on finding comparables for your business plan in a previous post, you can read it here. In essence what you need to know about comparables is that they are, first and foremost, absolute rubbish. It’s impossible to predict how a film is going to do on the basis of performance of films before it. Different scripts, directors, casts, timeframes, etc., there are so many different interlocking factors that contributes to a specific film’s success that to compare it against something that hasn’t even been made yet is, when you really think about it, quite ludicrous.

So why even bother doing a table of comparables? Why does every business plan have them, knowing that they’re an exercise in empirical futility?

The first and most important reason is to display your passion for the project. In this sense, comparables aren’t even really about the numbers at all. It’s more about putting your film in the same air of other well-made and well-received films, and it’s essentially you saying that you can make a film like that - or better yet you can make a film that’s even more polished and marketable. It’s making a prospective investor excited in the possibility of what may be.

Which leads into the second reason to do comparables, which is to demonstrate your integrity and thoroughness as a businessman. Think of it this way - would you give millions of dollars to someone to say, build a home, and all they told you was “numbers and plans don’t matter, you’ll just have to trust me, I’m good.” I know I wouldn’t. I’d want to know that they did their homework, that they know what they’re doing, that they’re diligent and hard working, and that they fully understand their field. “Comps” should stand for “competence,” and not “comparables.” It shows some integrity. Passion. Wherewithal. I know - I sound like a fucking used car salesman.

On to the research. For each film you select, you will need to find out the following information:

Domestic Box Office Gross. This is how much money the film made in theaters in the United States. This information can easily be found on websites like Box Office Mojo or IMDB Pro. (If you are a serious producer, then pony up the money to upgrade to IMDB Pro, it is an essential tool).

Home Video, VOD, Streaming / Ancillary Revenues. This is monies brought in by DVD/ Blu-Ray sales, Video-On-Demand, airline and cable sales, and any television deals if possible. This information is notoriously difficult to find, as studios like to keep these numbers hush-hush, because studios are shady fuckers when it comes to accounting. You can find a lot of DVD sales figures on The Numbers. I dig as much as a can, but when there’s a film I absolutely need to use as a comp and that I have very little information on, I purchase a report. I use services like Baseline Intelligence, who charge on a report-by-report basis. THESE ARE VERY EXPENSIVE, can can amount to $100 in expenses PER FILM that you select. Plus, there’s no guarantee (especially for films before 1996, when records on DVD sales and other rentals weren’t prevalent) that the information you want will be in the report. So spend cautiously and wisely.

Which leads to my next point, which is how many comparables should you choose? My rule of thumb is five. Going on a statistical model, you choose one high, one low (both of which get thrown out in any kind of number crunching), and three inbetween. Of the three, you’ll want one higher earning, and two healthy successes. Before you order any reports or spend any money to gather information, make sure you know absolutely which films are the best for you to choose. In my much earlier post about choosing comps, you’ll read the criteria that I use. In fact you should mandatory read it, as I think it’s that important. It’s also very important to note that many of the films that you choose are films that you might personally hate. Don’t only choose films that you like - I can’t go putting Tarkovsky and Bergman films as comps just because I think they’re art and those are the kinds of movies I want to make. Instead I’ll be wise and choose something like Malick’s Tree of Life or Cuaron’s Children of Men - both films which did relatively well at the box office and yet were considered nuanced and well-crafted. We have to be sensible!

Foreign Box Office. This number will be found on any of the previous resources, and it’s likely one of the most important because so much revenue is coming from the foreign box office, and in most cases of studio films, the foreign box office is almost double the domestic take. Of course if you’re planning a micro-budget indie relationship drama (that’s not a musical), you probably won’t make much to any dent in the foreign box office, but to have it in your comps analysis means that you are aware of it, would like to tap it, and demonstrates to any investor that you understand how the markets and revenues work today. You’re demonstrating your competence. The more information you have, the better.

Production budget. This is also called negative cost, and is what it cost for the film to be cast, shot, and put in the can. It does not include marketing/ PR expenses. It’s simply the amount of money it took for the film to be made, including pre-production (but not development) expenses.

Prints and Advertising Expenses. This is also called P&A, and is the amount of money that a distributor spends on advertising, marketing, promotion and manufacture/ distribution of the film. It does not include the exhibitors fee, which is the cut of money that goes to the theater owners. In any business plan, the exhibitor’s fee is roughly 45% - that’s a safe number to use. P&A budgets tend to range anywhere from 50% of the negative cost to double the negative cost - the latter is quite common for major studio films. Say a film cost $100 million to make, it’s safe to assume that after its P&A expenses, it will need to make about $220-250 million to just break even. I don’t want to play those kinds of odds, no thank you. Keep those budgets down, folks. It’ll lend you more creative freedom and lateral movement.

So now it’s time to take this data and put it into a chart that lays out how much investors made off these films. Open up an Excel spreadsheet, and you’re going to make a spreadsheet that looks like this one (this is a spreadsheet I made for this post, click on the pic for a larger version):

We’ll go through the categories on the left hand side. Goddamit this has turned into a long post, thanks for bearing with me.

Box Office Gross - as before, this is the total revenue from a US theatrical run.
Less Exhibition Fee - my rule of thumb is to calculate this at 45%. If you can get exact numbers then all the better, but you can’t go wrong at 45%.
Gross Film Rentals - this is the gross revenue when you minus the 45% from the Box Office Gross.

In the next section you will enter in all other forms of revenue in their respective column. Some business plans go into every detail here, I try to avoid that because a business plan is not there to engage the analytical mind, you’re there to deliver the big picture and engage the animal brain, so keep it simple. Your Gross Ancillary Revenue is the total of these alternative revenues.

Domestic Gross - this is the total/ sum of the Gross Film Rentals and the Gross Ancillary Revenue.

Now you have to subtract the Distributor Fee which is the cut the distributor takes from the Domestic Gross. This fee varies, but a generally accepted percentage is 35-40%. I like to use 35%.

Now we enter the distributor expenses (Prints and Advertising/ P&A and Other Expenses such as DVD manufacture, packaging, etc.), add that to the Distributor Fee and then subtract it all from the Domestic Gross to arrive at the Net Domestic Receipts, which is the total monies taken from US sales.

Now moving on to the Foreign Revenues. Your Foreign Gross is the total revenue (in all media forms) from territories outside of the domestic market. There’s a bit of discrimination here in that ‘domestic’ is almost universally determined to be the United States, which is the biggest film marketplace in the world. If you are making films in Nigeria, the UK or any other country, you can choose to make your local market the domestic and place the United States as a separate category in your Foreign breakdown. It’s up to you.

Agent Fees/ Expenses - these are the fees and expenses incurred by sales agents, whose job is to sell the film to foreign markets. A generally accepted rate for the purposes of a breakdown is 35%.
Net Foreign Receipts - this is the Foreign Gross minus the Agent Fees/ Expenses.

Total Producer’s Rep Gross - this is the sum of the Net Domestic Receipts and the Net Foreign Receipts.
Producer’s Rep Fee is 10-15% given to a rep who secures all the deals for the producer. To be on the conservative side, go with 15%. The Total Producer’s Gross is the Total Producer’s Rep Gross minus the Producer’s Rep Fee, and is the total money that comes to the producer when all revenues have been collected.

Negative Cost is the aforementioned cost to make the film, from pre-production to final delivery. This is subtracted from the Total Producer’s Rep Gross to arrive at the final number, the Net Profit. This is the final money - before taxes - that is pure profit.

Over on the far right of the spreadsheet you will find that all of these numbers will have to be averaged, and then the averages are calculated to the Average Net Profit in the corner on the bottom right. This is likely the only number that someone will look at when they quickly read your comps table.

So if you haven’t ascertained by now, this is all a shit ton of work. And you’ll likely remember that I said at the beginning of this long post that comps are for the most part bullshit. But you have to do it, and do it right, because you are establishing your integrity and credibility. A financier has to be reassured that you’re committed to making this film, that you’re willing to put in the sweat and tears towards the details. It’s showing that you know the film can be a success, and you’ve done the study to back that feeling up. It’s about the act of doing the work, which in the case of business plans, is as important as the work itself.

Whew. This was a long post, and if you’ve made it this far down, that means you’re committed to being a producer. Congrats!

2013 Resolution: Movies Watched This Week (4.21.13)

Continuing with my resolution to watch more movies, here’s what I took in this past week:

Through the Weeping Glass: On the Consolations of Life Everlasting (Limbos & Afterbreezes in the Mütter Museum), dir. by The Brothers Quay, USA, 2011.

A couple of weeks ago my wife and I made a quick weekend trip to Philadelphia, for no other reason except that we’d never been, and that ever since we’ve known each other, we’d both wanted to visit the famed Mütter Museum at the The College of Physicians of Philadelphia. After seeing Independence Hall and the giant fucking bell, we walked across town to the Mütter, which houses one of the most comprehensive and exhaustive collections of medical aberrations, abnormalities and deformities ever collected. It’s far from a freak show, and is in fact quite educational. One emerges from the museum appreciating how far medical science has come along, and one appreciates their own good health, fortune and mortality.

I had also heard word that The Brothers Quay, whose short film The Street of Crocodiles is one of the two most important films in my life (the other being Mattieu Kassovitz’ La Haine), had been commissioned by the Mütter Museum to do a film about the collections. Indeed at the museum there was a smaller, separate exhibit dedicated to the work of the Quays, they themselves being Pennsylvania-bred and whose work is fascinated with decay. The commissioned film was called Through the Weeping Glass - I picked up a copy at the museum gift shop, and it was the most exciting purchase I’d made in a long time. I hadn’t seen a new Quay film in years.

The film is, as with any Quay production, a visual marvel, a microscopic look at macro subjects like death and mortality. It documents the collection just as described, moving from exhibit to exhibit with gorgeous detail and macabre fascination. But the film does something very interesting, which is to turn the camera on the people who pay to see the exhibit. It asks us why we are so fascinated with these grotesque mutations and seeing fetuses preserved in jars. The Quays’ camera lingers on faces and eyes, and lets us write our own theories. There is an exquisite morbidity to it all, and I would expect no less of the Quays. It’s a fine addition to their canon, and a wonderful experience for me as a fan and student of two masters of cinema. If you can’t make it to the Mütter Museum, you can also find the film on iTunes.

The Art of the Steal, dir. by Don Argott, USA, 2009.

Keeping on the Philadelphia theme, my wife and I also visited another world-famous museum in Philly, the famed Barnes Collection. The Barnes is the single largest private collection of post-impressionistic art in the world, featuring numerous works of Renoir, Matisse, Cezanne, Picasso and Modigliani among others. Perhaps more interesting is the way this art is displayed- Dr. Barnes, who had made his fortune in pharmaceuticals, displayed his collection as ensembles, putting them together by theme, color, line and feeling as opposed to schools of art or time periods. In any one ensemble you will find a Renoir canvas placed right next to an African tribal mask, or a Picasso flanked by Pennsylvania iron teapots. It’s a entirely new way of looking at art in a structural functional manner, and honestly it was one of the finest and most satisfying art experiences I’ve ever had.

I was interested in the history of the collection, and came cross the film The Art of the Steal on Netflix. The documentary opened my eyes to the politics behind the Barnes. The collection was originally in a private estate that was open to the public - Barnes insisted on fine art being available to the common man, and he strategically built a beautiful, serene compound near the Villanova campus to display his collection. Through a loophole in the agreement between the Barnes Foundation and the city, the government engineered a hostile takeover of the collection and moved - some would say stole - it in its entirety to a new location in the city center, where it would draw more tourism revenue. The move - and the costs associated with the new complex, which is gorgeous, is antithetical to Dr. Barnes’ original vision. The film documents the battle to preserve the Barnes legacy, the failed campaign to keep the Barnes in its original home, and the subsequent financial burden passed on to the Philadelphia public. It’s engrossing and infuriating all at the same time - a true window into the business of art - but highly, highly recommended nonetheless.

Repo Man, dir. by Alex Cox, USA, 1984.

I saw Repo Man when I was twelve, four years after it’d been released. My sister and I picked it up at our local grocery store which had a small video rental section (remember those?). We both got the film for different obsessions - my sister was obsessed with Emilio Estevez and I was obsessed with the soundtrack, which had tracks from bands like Black Flag, Iggy Pop and The Circle Jerks. When we watched the film we didn’t really pay attention to what it was about - it totally went over our heads and we weren’t actively trying to engage with it.

This week Criterion released the film and I was very anxious to give it another try. Alex Cox - who now teaches film at my alma mater, The University of Colorado - also directed one of my favorite films in Sid & Nancy, which my wife and I used to watch every Valentines Day. His films are imbued with an eccentric energy that’s hard to describe, and is really quite unique.

Safe to say that Repo Man is still bizarre and weird, and the soundtrack still kicks ass. Now that I’m a filmmaker I really appreciate the insane risks that this film took, and even more puzzling is that it was bankrolled and released by a major studio. The Criterion release is ace as always, but the real star of the package is the liner notes, which goes into extensive detail as to the financing of the film. It’s as inspiring and entertaining as the film. Don’t miss it.

Archive:

April 4-14, 2013 - Gate of Hell, White Mane, The Holy Mountain, Scenes From a Marriage, Homeland

March 31, 2013 - Room 237, Strange Circus, The Darkest Hour.

March 24, 2013 - Spring Breakers, The World According to Dick Cheney, Hope Springs.

March 17, 2013 - The Loved Ones, Pink Ribbons Inc., The Seducers.

March 10, 2013 - The Master, Sound City, Perks of Being a Wallflower

March 3, 2013 - Holiday, L’Enfer d’Henri-Georges Clouzot, The Woman in Black, Savages, Red vs. Blue: The Blood Gulch Chronicles

February 17, 2013 - Les Miserables, Ai Weiwei: Never Sorry, Don’t Let Our Youth Go to Waste; Galaxie 500 1979-1991,

February 10, 2013 - La Marge (The Margin), The FP, Kill Bill V2

February 3, 2013 - The Night Porter, Gantz, Bitten

January 26, 2013 - Eames: The Architect & The Painter, Luck By Chance, School of Rock

January 19, 2013 - Silver Linings Playbook, We Are Legion, Zero Dark Thirty