| You have to beat the man to be the man

A while back you might have read Y-Combinator’s Paul Graham calling for entrepreneurs to “Kill Hollywood,” soliciting ideas on how to eat the film industry’s lunch. Coming out following the backlash against the MPAA led bid to pass SOPA, it was a novel war cry but I believe inherently misguided. The arrogance in which the call and the approval that flowed from it through the Hacker News community made pretty clear a fundamental lack of understanding as to what game Hollywood is playing, and how one can hope to one day beat them. In the post itself, Graham writes “What’s going to kill movies and TV is what’s already killing them: better ways to entertain people. So the best way to approach this problem is to ask yourself: what are people going to do for fun in 20 years instead of what they do now?”

To me that statement provides a great way to deconstruct what I see as Silicon Valley’s continued failure to make inroads into the world of film and television. At the very heart of the film industry’s longevity is the art of narrative storytelling which has been refined continuously into a unique visual language very much its own since the days of Adolph Zukor and the birth of the feature film. It’s easy to take a short sighted perspective towards the current rut Hollywood is in with the collapse of DVD sales and continuously lackluster tent-poles bombing at the box office, but you have to remember this is a sixty-five billion dollar a year industry that has survived multiple world wars and the great depression.

Viewing the battle through the metrics and methodologies often employed by internet firms such as eye-balls and ad displays seems ill fitting, mainly because it assumes a zero-sum game where one doesn’t exist. The existence of Youtube and other sites that could be seen as stealing audience share from Hollywood does not negate the power of Hollywood’s main assets, namely star power, storytelling, and inherent cultural influence. If that were the case, an endless stream of sneezing pandas would have sealed Hollywood’s fate long ago, but instead we see Youtube desperately trying to go Hollywood, offering lucrative contracts to production companies and celebrities to create branded content for the site. Obviously online distribution and alternative forms of entertainment are not the inroad that will seal Hollywood’s fate. That this should be obvious seems to be lost in the desire to see Hollywood burn. At the end of the day content is and will always be king.

More stars than in Heaven

To understand modern Hollywood you need to understand the functioning of the star system and how it was born and subsequently monopolized by the talent agencies and managers that run Hollywood today. In Hollywood’s earliest days when filmmaking itself was still monopolized by Edison’s Biograph Studios, actors went unbilled in the films they graced as the fledgling medium’s inventors desperately wanted to stake out their own claim to legitimacy first and foremost. Known simply as the “Biograph Girl,” the first modern media star, Florence Lawrence went uncredited until she was stolen away to a rival studio by Carl Laemmle who would go on to found Universal Studios. Once actors were billed and a cult of celebrity began to form around them driving audiences to see recognizable faces in films, studios began competing amongst one another to sign and develop stars which they could build films around. Perhaps the most accomplished studio of this early era in Hollywood’s history was MGM, lead by the legendary film producer Irving Thalberg who at the young age of twenty-six headed up all of production for Metro-Goldwyn-Meyer after learning his craft from Laemele at Universal. MGM proclaimed at the time to have “More Stars than in Heaven,” and Thalberg proved more adept than any at finding talent and building careers for them with his studio’s properties to drive audiences to the theatre. Though not well known outside of the film industry, Thalberg personally was responsible for cultivating the careers of Hollywood’s then biggest stars such as Norma Shearer, Joan Crawford, Greta Garbo, Jeanette MacDonald, and Clark Gable. Known for his ability to develop stars, his real talent was developing stories, and it was his writers he guarded the closest of any Hollywood executive of the era. For Thalberg it was always first and foremost a question of story. Everything else followed. “If it isn’t for the writing, we’ve got nothing.”

By the end of the fifties the Hollywood system that had been dominated by eight major studios since the twenties found itself in dire peril. With the loss of a major anti-trust case that outlawed the practice of block-booking in which studios could sell films in bundles to exhibitors they had lucrative distribution deals with, often times with only one of the bundled films being more than mediocre filler, a major change to the way in which films were selected for development was set in motion. Films could not be made as quickly or cheaply, requiring named talent and known properties to guarantee their financial success absent block booking. In addition, the rapid penetration of television frightened the studios with the new medium reaching half of american living rooms by the end of the decade. The speed at which this new medium rewrote the game can not be discounted.

“The rapidity with which television became the dominant force in American culture is unparalleled. It took eighty years for the telephone to reach 35 million households. Radio was around for a quarter of a century before it achieved the same penetration. With TV, it took a decade. Contributing factors to the medium’s outrageous success included the nation’s sudden shift from a wartime economy to a consumer economy; the ensuing rise of a consumer culture in which, more than ever, you were what you owned; the nesting impulse of millions of young Americans newly safe from overseas threat; and the related mass exodus from cities to a newfangled idea called the suburbs.”

- Ty Burr, “Gods Like Us: On Movie Stardom and Modern Fame”

After several large box office flops against falling theatre attendance, studios could no longer maintain the star system as it had previously been arranged, forcing their contracts with major stars to go unrenewed transformed the landscape of content production. Studios began functioning largely as financiers and distributors of films shifting the industry from a vertically integrated business to a horizontal one in which independent production companies played a much larger role.

It’s against this shifting terrain that the studios quickly took a love to television’s seemingly limitless need for content. Suddenly the major networks were in need of round the clock programming, and it was the studio’s rich film libraries that would go on to provide content for the network’s airwaves. But even more fundamentally, television rewrote the balance of power upon which Hollywood functioned. With the star system all but dismantled, power shifted towards the talent agencies who now controlled the actors and actresses, bundling projects for their client list of writers, directors, producers, and talent much in the way studios once had before the studio system began to collapse. With studios floundering, they were quickly absorbed into conglomerates, their libraries leveraged by their new owners to feed the appetite of television networks. Talent agencies were in a new position of leverage to generate properties and programming for studios and networks alike.

Easy Riders Raging Bulls

You’d be forgiven to write the Hollywood system off by the sixties, its glamor sucked dry by its resort to formula and safe bets, not unlike the position we find ourselves in now, but then something strange happened. Amidst the cultural upheaval occurring through society at large, a new generation of filmmakers were given a rare chance. Their films were inexpensively made, but they were given the freedom to make films that connected with the young audience Hollywood had long lost and for a brief moment a renaissance took place in the history of American film.

“In 1967, two movies, Bonnie and Clyde and The Graduate, sent tremors through the industry. Others followed in quick succession: 2001: A Space Odyssey and Rosemary’s Baby in 1968, The Wild Bunch, Midnight Cowboy, Easy Rider in 1969, M*A*S*H and Five Easy Pieces in 1970, The French Connection, Carnal Knowledge, The Last Picture Show, and McCabe & Mrs. Miller in 1971, and The Godfather in 1972. Before anyone realized it, there was a movement – instantly dubbed the New Hollywood in the press – led by a new generation of directors. This was to be a director’s decade if ever there was one. Directors as a group enjoyed more power, prestige, and wealth than they ever had before. The great directors of the studio era, like John Ford and Howard Hawks, regarded themselves as nothing more than hired help (over-)paid to manufacture entertainment, storytellers who shunned self-conscious style lest it interfere with the business at hand. New Hollywood Directors, on the other hand, were unembarrassed – in many cases rightly so – to assume the mantle of the artist, nor did they shrink from developing personal styles that distinguished their work from that of other directors.”

- Peter Biskind, “Easy Riders, Raging Bulls”

And like that, until Steven Spielberg invented the modern blockbuster with Jaws and the studio system learned a new formula that they could bank until only recently, there was a moment when young voices had a chance and they produced some of the quintessential works of American Cinema in the last century. Young folk flocked to the theatre, and seemingly overnight the power of films to once again speak to its audience was rediscovered, a new generation grasped the medium’s true power. Susan Sontag writes “It was at this specific moment in the 100-year history of cinema that going to movies, thinking about movies, talking about movies became a passion among university students and other young people. You fell in love not just with actors but with cinema itself.”

Back to the rut

This brief trip through Hollywood’s history is important to understand where we’re at today and offers telling parallels as new distribution platforms once again threaten to steal theatre goers from Hollywood’s embrace. The fundamental lesson I take from the introduction of television as it relates to the disruption underway through Video on Demand is that while the screen may change, the basic formula of pairing known stars with compelling stories has not and will not change. This is the fundamental flaw I see in Silicon Valley’s endeavors to penetrate the film industry. Thinking that creating new forms of entertainment will diminish the primal need to tell stories that underly the power of filmmaking is a fools errand. Few have a grip on how to win the battle for online video distribution, but knowing what parts of the equation will and won’t change is the first step in formulating a new vision of what the future of filmmaking will ultimately become.

Looking at the current landscape the major players to take note of I believe are Netflix and Vice. I say this because these two groups have harnessed the benefits of web video better than Hollywood, though in my opinion neither provides the platform for what will come next. Netflix currently is in the position the original networks from the early days of television found themselves, desperate for content, its offering only as valuable to customers as the content they can secure licensing to from third parties. Their forays into original programming ultimately will not be their saving grace as relying on current production methods involving costly show runners and stars gives them no more competitive advantage than current industry players such as HBO which have far higher subscription costs. Should they become too successful, it is wholly conceivable that studios and licensors will not renew their streaming contracts, much like what we saw with Stars which with one announcement dropped Netflix’s share price by ten percent in a single day when it pulled its programming or how Amazon poached Netflix’s valuable licensing rights for Viacom’s children’s programming. While Netflix attempts to roll the dice on original programming, their current strategy and cash position is wholly unsustainable by a simple look at the numbers.

On the flip side, Vice which evolved out of a small but fiendishly influential magazine at the advice of Spike Jonze reinvented itself through its original online video offerings. Dominating the sought after eighteen to twenty five demographic, its been able to leverage its relatively inexpensive programming into immensely lucrative advertising and branding opportunities with any corporation desperate for an infusion of cool. Vice thus far has leveraged this position to great success, with Rupert Murdoch this past week acquiring a five percent stake in the group for a cool seventy million. This year saw the launch of Vice’s latest endeavor, a partnership with HBO which is already garnering Emmy nominations. Having spent some time with the folks at Vice, their success is well deserved and clearly displays the viability of inexpensively produced content relevant to targeted niche markets. The folks at Vice are given the chance to take the risks necessary to create relevant risque content that has proven to resonate with a younger generation to whom blockbuster films forced to resort to formula in order succeed in the global market absent DVD sales simply are no longer relevant.

While Vice has thus come the closest other than perhaps HBO to owning the whole stack from content creation to distribution, what we’re left with is a still an undeveloped VOD landscape. From my perspective, the only way to really eat Hollywood’s lunch is to crib notes from its golden era, and do what it used to best but no longer can in the current era of conglomerate controlled filmmaking. We know the formula, it’s worked before and can work again but it will take going against the herd. Irving Thalberg in the twenties, and the Auteurs of the sixties and seventies have given us the blueprints on how to recover from the current rut we’re in, and with the technology currently available making films cheaper to produce and distribute than ever before, it’s the only means I see to killing Hollywood as it exists today. The internet has paved the way once again for a vertically integrated system of production and distribution, and we know that today’s youth is hungry for stories that matter to them. Whomever is the first to put that together will win. But if you discount the power and raw human need to find meaning and beauty in storytelling, you’ve already lost. Y-combinator will never fund the Hollywood-killer it would like to, but whomever can take the best of Irving Thalberg’s MGM and Paul Grahm’s Y-Combinator and meld them into something Hollywood hasn’t seen since its golden age, someone just might.