Here’s a dose of REAL industry transparency

February 3, 2014
posted by sheric

You say you want transparency in the entertainment industry? Many of us say we do, from Ted Hope to John Sloss to Liesl Copeland. But you know who is REALLY serving up some transparency in the way his company operates? Joseph Gordon-Levitt and HitRecord!

Transparency on HitRecord

I must admit, I was intrigued when Gordon-Levitt launched HitRecord at Sundance 2010 and I had dropped in on the site a few times since then to see what was happening. I just didn’t get it. It seemed to be a site for collaboration much like Wreck a Movie or Talenthouse.  A fine concept for those who want to do projects with like minded people for fun, but not a place where anyone would get a project out in the world and certainly not be paid to do it. To my knowledge, most are built on donating talent with no compensation promised. But now that HitRecord has a TV show on Pivot, I went back to have a look at what that entails and how an open, collaborative community could pull it off without devolving into one big “he’s stealing our work and making money off of it” fiasco.

The show itself revolves around one main theme each episode. For its inaugural episode, also on Youtube, the theme was ONE. 426 contributing artists were part of the first episode. Pretty amazing to think of the complicated process that went into choosing from thousands of submissions and keeping track of how much each artist contributed. Now, why does it matter how much they contributed? Because that is how they get paid. There is no flat fee system with HitRecord.

Their payment terms and conditions can be read in entirety HERE, but this is a synopsis:

-If you have contributed a RECord and it is selected by the Operating Committee as a Production to be commercialized in accordance with the rights granted in the TOS, you will be deemed a “Contributing Artist” for such Production;

-Each Contributing Artist to a Production shall share in an applicable Contributing Artists Profit Pool;

-The Contributing Artists Profit Pool is 50% of the Profits from a Production and any pre-determined amount allocated for productions sold or licensed to third parties for distribution on any form of linear or on-demand television or amounts negotiated by hitRECord.org for allocation to Contributing Artists as part of a line item in an approved budget for any programming incorporating the Production;

-Profit allocation is at the discretion of The Operating Committee and based on feedback from the hitRECord.org community of users through the use of a comment system.

In other words, the company publishes a FULL profit statement online for everyone to see with preliminary allocations to each contributing artist of the project. These are called profit proposals drawn up by the community director, the software engineer and the financial comptroller and they can be changed based on feedback from the HitRecord community. Have you ever heard of such a business model in the entertainment industry?? If you know of an open, collaborative community for artists that is actually paying the artists, please speak up because we need to hear WAY more about this than any lip service about reporting on VOD numbers! Business models that take into account how to deal with intellectual property and revenues need a lot more coverage than they are currently getting in the industry press. That could be because of the lack of real researching journalists in the current media landscape. Apparently, it is so much more attractive to report on the glamorous actor Joseph Gordon-Levitt rather than his complicated business model for HitRecord.

The other thing I find extremely refreshing in this approach is the truth he tells on revenue in his model. Right upfront on the home page, he explains that HitRecord is primarily not about making money. It is a for profit company, but that doesn’t mean it is making millions nor does it exist for that purpose. This is a good thing to acknowledge because far too many independent filmmakers and film investors have unrealistic expectations of what working in the arts really means. As is mentioned on the site, you make money to make more movies, not the other way around.

Anyone with a modicum of business knowledge will know it is extremely rare for a company to show much profit in its early years. The trick is to make enough to get to the next year, and the next, until finally (or never) sustainability is found.  In 2010, HitRecord paid out $39, 651 to contributors. In 2011, that amount had climbed to $109, 695. In 2012, they paid out $399, 289. It is a remarkable year over year jump! Then comes the process of calculating the pay outs and I don’t know of ANY company that would go to this kind of tedious work. They go frame by frame in each episode and breakdown the contributions and decide amongst themselves on the percentage allocations first, then send it out to the community to give feedback as to its fairness.

If you would like to know more on how the payment process for HitRecord on TV works, check out this video

YouTube Preview Image

Big props to the whole team at HitRecord and I hope they get a lot more worldwide attention for the work they are doing and compensating contributing artists. Getting artists paid fairly should be paramount!

 

 

 

My friend and founder of Techdirt and Floor64, Mike Masnick, has started a new venture called Step 2, a community brainstorming platform for asking about, suggesting, creating, and building models for success meant to be a place for sharing ideas, knowledge and real results of experiments from artists in the digital landscape. According to their website, “it’s not just about the ‘business’ model, but the overall ‘success’ model. How do you create that connection with the marketplace? How do you offer something worth buying? Step2 is here to help.”

I’m really proud and inspired by what he is trying to do with this. Rather than spending time focusing on what went wrong, more legislation, tighter controls, and whining, Mike and his team want to show and hear about what is going right, what experiments are happening and their outcomes (good and bad), and provide a forum where questions can be asked, ideas can be shared, and knowledge based on fact (instead of speculation and theory) can be found.

In order to spur the conversation, Step 2 is running a contest for the next 15 days for a chance to win $1,000 ($10,000 to be given away total). Here is what they are looking for according to Techdirt:

We’re looking for case studies from content creators in music, movies, books and video games and will award $1,000 to each of the top two vote getters who qualify in each of those categories. Separately, we’re also looking for fan case studies of how artists in any of those fields connected with you. Again, the top two vote getters will get $1,000 each.

The kinds of case studies we’d love to see:

  • Done an interesting/different/unique promotion? Tell us about it and share the results in as much detail as possible
  • Tried an email marketing campaign? What worked and what didn’t? Any key metrics?
  • Attempted crowdfunding? How did you set the rewards? What did people like/not like?
  • Used new or different platforms or technologies? What kind of results did you see? What could be improved?
  • Attempted something different — like a house concert tour? ebook-only release? letting fans take part? releasing unfinished works? What worked, what didn’t, what did you learn?
  • Experimented with “name your own price?” How did it work? What prices worked well? What efforts did you make to trigger certain price points?
  • Set up a tiered pricing model? How did you choose the tiers? What worked? What did you learn?
  • How are you connecting with fans? Facebook, Twitter, Podcasts? Google Plus? What works, what doesn’t? What really seems to energize fans? What doesn’t? Any empirical data that shows how your fans reacted?
  • Surprise us!

If you’re a content creator in any of the qualifying categories, please consider taking part. Some creators are always afraid to share too many details of their “secret sauce,” but many who have done so have found that the transparency itself leads to greater connection with fans and — perhaps more importantly — getting detailed info out there will help inspire others to do cool things too. Step2 is about learning and helping each other succeed in a rapidly changing world.

We are thinking about submitting a case study on Selling Your Film Without Selling Your Soul, if for no other reason but to share what we’ve learned through self publishing, sponsorship, giving away free copies etc. Of course, we won’t turn down an additional grand! :)

Even if you don’t submit, keep an eye on the site and add to the discussions. I would like to see people who have constructive things to say contribute, but there is quite a lot of fear in the film community and the most fearful are unfortunately the ones who just want to criticize and ridicule with comments on these sites. Prove me wrong, guys.