Creatives Can Beat the Studios at Their Own Game; And Should

Creatives Can Beat the Studios

But will they?  The only obstacle to equity in the Media & Entertainment industry is a mindset carefully cultivated by decades of corporate control that is today a mere illusion.

The internet ushered the world from an Industrial Age and into an Information Age.  As with most of the “Ages” of humanity, the habits of the old carry forward into the new.  At least for a while.  The Industrial Age was forged in a factory.  Workers toiled.  Bosses managed.  Families spent.  Owners invested, and drank Champaign.  Some may say that not much has changed.

But, so much has changed. 

The Information Age has slowly generated an evolution in productivity.  Factories now require a tiny fraction of the workers once needed.  Most of those in the “working class” are now thinkers with available leisure time.  Our growing human population is now able to harness the information superhighway to work from nearly anywhere, with anyone on nearly any project they can dream up.

SAG-AFTRA President, Fran Drescher.
SAG-AFTRA President, Fran Drescher, on the picket line. The actor’s union is offering an “Interim Agreement” for its members to work on content that is independent of the Studios. (Image Credit: Getty)

What the internet also did was accelerate the consumption of content and proliferate electronic methods of distribution and delivery that once required physical infrastructure and even government license.  That infrastructure and government license had once been owned by publicly-listed conglomerates now in control of what many today still call the “Studios”.  Those “Studios” stopped being producers of content in the 1950s.  Rather, they are today’s landlords to third party producers and are entirely concentrated on being the middle-man in control of distribution.

The myth that maintains such control is that no one else can deliver content to consumer audiences. Delivery of that content is lucrative, far more lucrative than its production. Which is why the “Studios” maintain an arm’s length relationship with the production end of content. It helps to perpetuate the myth.

More often than not, the money for production is not even provided by the “Studio”, but rather borrowed by a contracted  producer against the distribution agreements signed.  They neither create, produce nor shoulder the full financial risk of the content they sell.


“The business model is wildly successful. PwC estimates that the Media & Entertainment industry will exceed US$2.5 trillion in revenues this year.

That is more annual revenue that the world’s top 100 arms manufacturers, combined.”


By purchasing the right to distribute content, once completed and delivered, the “Studios” claim ownership over its creation.  By owning the means to deliver content to audiences, iconic films and television shows created by third party producers are labelled as a Universal Picture, a Paramount Picture or a CBS television show. 

Crumbled Barriers to Entry

In 2007, Amazon and Netflix began delivering films and television shows without any need for broadcast licenses from government agencies or the need to physically deliver print and advertising to cinemas.  Between then and now, every one of the “Studios” has followed suit, shedding the heavy costs of expensive delivery infrastructure along the way and managing distribution of content entirely over the internet, even to cinemas. 

Today, there is only one thing preventing an independent producer from delivering content directly to audiences themselves.  It is not money.  There is a lot of money out there.  It is not talent.  Consider who is on strike right now and the multitude of technical production professionals now out of work as a result.  It is not distribution.  Emerging FAST channels and Web3 platforms, or any website for that matter, can offer access to just as many viewers as all of the streaming platforms combined.  Plus, almost anyone can create a steaming platform of their own with readily available software and rented servers.

The only thing preventing an independent producer from delivering content directly to audiences is belief. 

Creative Power

Creativity and the technical skill to produce high-quality content are the real power within the Media & Entertainment industry.  For decades, the Media side of the equation has co-opted that power by locking in the rights for distribution and delivery with licensing agreements or outright acquisition of copyright to scripts. 

In effect, the “Studios”, acting as distributors, create a bottleneck in the delivery of content to audiences.  They limit supply to the end user and exercise control over expectations.  They corral audiences within their brands, then charge audiences for access to their “exclusive” content and charge advertisers for access to the audience. The business model is wildly successful. PwC estimates that the Media & Entertainment industry will exceed US$2.5 trillion in global revenues this year.

That is more annual revenue than the world’s top 100 arms manufacturers, combined. 

Compare those revenues to the cost of producing that content, which globally is estimated at a maximum of US$250 billion last year.  That is a 1,000X multiple on invested capital.  A phenomenal, unimaginable return on investment in any other industry.

Bog Iger, CEO of Walt Disney Company.
Bog Iger, Disney CEO. One of the world’s highest paid executives with a compensation package of US$27 million a year. (Credit: Shannon Michaelson)

It is this financial and economic power that attracts the world’s largest institutional investors to the Media & Entertainment industry with some of the largest capital allocations in recent history. 

Now add the influence that content wields over the human population.  News coverage, documentaries, scripted films and television shows and social media discussions act on global public opinion and collective common knowledge more than any educational curriculum, religious doctrine or political messaging. 

All of that power, both financial and social, is generated from the product of creative minds that benefit least from it. 


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Equity

The term equity is not synonymous with equality. 

Equity is a concept of vested interest in the ownership of an enterprise.   It is what the multi-national, multi-billion dollar publicly-listed media conglomerates will deny to any content creator willing to sign it away.  That is how they became multi-national, multi-billion dollar publicly-listed media conglomerates in the first place. 

If you have equity in a company, you are a stakeholder; a shareholder.  You benefit from the net profits of the business and growth in the value of its assets while risking its failure.  A shareholder has a say in a company’s strategic direction, composition of its management and the ethics expressed in its corporate culture.

A company’s management team is charged by shareholders to maximise and protect the value of a company’s assets.  The management team establishes objectives and the strategies to achieve them, often working with investors to ensure that sufficient capital, often in the form of money, is available.

Investors expect a profit.  They receive that profit by either purchasing shares in the company or taking fees and interest payments in exchange for lending the money.  Either method is often referred to as “risk capital”.  If an investor chooses to provide money to the wrong management team, they risk loosing it all.  A fool and their money are easily parted, so the adage goes.  So, successful investors that manage the world’s largest pools of risk capital tend to be anything but fools. 

According to the Media C-Suite’s ongoing survey of Professional Investors, the world’s largest pools of capital know that the Media & Entertainment industry is ripe for disruption.  Those Professional Investors believe that disruption is likely to arise out of opportunities the internet provides to compete directly with the existing system of distribution and delivery of content to growing global audiences with a voracious appetite for more.


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Web3 startups are benefiting from this investor interest.  So are emerging FAST channels, generative AI companies and owners of sports franchises and independent content production companies. Each of these beneficiaries of risk capital have one thing in common.  Entrepreneurs.

Mentality

Unless employed on a permanent basis, every writer and actor is already an entrepreneur. 

Those entrepreneurs who identify opportunity, assemble a management team to exploit it and articulate a strategy on how it will generate revenues attract Professional Investors.  Convincing them to invest takes some effort.  Professional Investors ask questions.  Answering those questions improves the investment proposition.

But shifting a mindset from worker to boss is not easy.  This is particularly true when everyone says that change is impossible, that challenging the Studios is impossible and that there are no alternatives to the way things are. 

Professional Investors know that change is constant.  They are looking for entrepreneurs who accelerate change.  They know that the internet provides ready opportunity for alternatives to Studio distribution and that the world’s growing consumer audiences want new stories and more diverse content than Hollywood is designed to deliver. 

The writers of the WGA and the actors of SAG-AFTRA are already challenging the fictional reality being insisted on by the “Studio” bosses.  They are one business plan away from disrupting it.

If ever there was a time for the workers to seize control of the factory, it is now.

Professional Investors are watching, and waiting.

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