The death of Miramax and the demise of the indie cinema model

Drew Barrymore, Robert De Niro and Kate Beckinsale at the premiere of “Everybody’s Fine” in New York. Source: Paul Kramer/AP/New York Times

Continuing this week’s cinema theme, today I’m looking at one of the micro-economic reasons for the struggles of Australian cinema: the demise of the US independent cinema model, made famous by film festivals such as Tribeca and Sundance.

As we’ve explored before on this blog, the nature of cultural production makes selling cultural and symbolic products like books, movies or records inherently risky – much more so than selling simpler goods and services like lemonade, flatscreen TVs or lawnmowing. One popular explanation for the enduring importance of stars and genres is their role in reducing this risk – or at least giving producers and investors a reason to believe a particular project is less risky. You can see this strategy at play in the growing use of computer algorithms (like the one developed by Relativity Media) to try and model the projected earnings of a particular movie, based on variables. According to SBS blogger (and all-round nice guy) Craig Mathieson:

The algorithm – which really needs a catchy name based on an acronym – was originally designed to evaluate financial instruments (nice work spotting those mortgage backed securities), but it now uses 65,000 rows of a Excel spreadsheet to consider everything from an actor’s box-office draw in France (apparently Natalie Portman is the go) to whether it would be better to have an R or PG rating or more fight scenes.

Another trope of this “nobody knows” principle can be seen in the reluctance of big studios to finance independent cinema, particularly in the wake of the global financial crisis.  Now, once-famous indie producer Miramax is being dissolved, and indie production more generally is in the deep doldrums. According to the New York Times’ Carpet Bagger blog,

Kirk Jones, the British writer-director of “Everybody’s Fine,” said he worried about the future of adult drama.

“It seems to me that people at the top are saying we don’t want to do adult drama, there’s nobody that wants to be reminded of the real world, they want escapist cinema,” he said. “I love watching sci-fi movies and romantic comedies and teenage movies as much as anyone else, but I think it’s about balance, and you have to have adult drama because that’s often one of the few categories that makes people leave the cinema thinking about their own lives and reflecting on who they are and how they are in the world.”

In a previous post, the Carpet Bagger reported on how the big studios are shuttering their specialist and boutique production houses, while the smaller indie production companies are struggling to find finance. Independent cinema appears to be moving to a model similar to indie music, where word-of-mouth and guerilla marketing are the mainstay of low-cost, low-revenue artist-distributors.

Here is how it used to work: aspiring filmmakers playing the cool auteur in hopes of attracting the eye of a Hollywood power broker.

Here is the new way: filmmakers doing it themselves — paying for their own distribution, marketing films through social networking sites and Twitter blasts, putting their work up free on the Web to build a reputation, cozying up to concierges at luxury hotels in film festival cities to get them to whisper into the right ears.

The economic slowdown and tight credit have squeezed the entertainment industry along with everybody else, resulting in significantly fewer big-studio films in the pipeline and an even tougher road for smaller-budget independent projects. Independent distribution companies are much less likely to pull out the checkbook while many of the big studios have all but gotten out of the indie film business.

Lyndon Barber has also written about the issue extensively. Here’s a post on his blog from last year in which he explains that:

the Australian scene is over-saturated with distributors trying to grab a small slice of an ever-decreasing pie. Britain is clearly similar. The result is likely to be a few more failing companies before a serious change in the way cinemas and distributors release films.


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