James D. Stern: “Making Smarter Movies” or “I Need the Eggs!” - Now What?

Patrick is absolutely right.  We need discipline, starting with costs.  Without it, our resources will dry up.  We need to trim away anything that doesn’t strengthen the content.  From the days of Homer, that’s what people have paid for.

That’s why I’ve never been a big believer in spending heavily on the technical aspect of movies.  I know that’s counterpoint to what a lot of people say, but I think movies can look terrible and get an audience, and movies can look terrific and not.

On Broadway we had a saying, if you’re talking about the sets after the show, you’re dead.  Well, if people walk out of a movie saying, “I didn’t really buy that relationship between Julia Roberts and Clive Owen - but wasn’t that tracking shot fantastic?”... you’re gonna be dead anywhere in America except maybe at Hollywood ArcLight.

When I started Endgame I told everyone I wanted to make movies I would pay to see twice.  Give me “Slumdog” over “Transformers” any day.  Give me movies with stories and ideas that people care about.

You say, yeah, but kids today expect SFX.  Well, my kids are 9 and 13.  My daughter has watched “Twilight” seven times.  It has the worst special effects in the world.  The ridiculous way that guy runs looks like the track star with blurry legs in that Verizon commercial.  But does she really care that the special effects in the next Twilight movie will be any better?

As if.

What she cares about is how Robert Pattinson fights off the werewolf guy for Kristin Stewart.

For studio films, I’ll concede that 3-D could well be a happy exception, and that’s a different discussion.  But I can’t see anyone making a 3-D version of Rachel Getting Married.

The rule is, don’t compete where you can’t.  Don’t worry about SFX in small movies.  You’re not going to blow holes in Avatar.  Don’t try.  The Coen Brothers used shopping carts as dollies in “Blood Simple.”  Guess what?  That’s a movie I remember.

Rule Two:  Respect the money!

Not just the talent.

There’s some good to be said for the auteur culture in filmmaking.  But like it or not, making a film is not just a collaborative art.  It’s also a business - a matter of finance, logistics, planning and execution.  What Orson Welles said is truer than ever - a painter needs a brush, a writer a pen, but a filmmaker an army.

For a long time in Hollywood it’s been hip to disrespect the money.

A director told a friend of mine, “You know, when they decided they had to make money, they screwed the whole thing up.”  This attitude plays out every day.

Here’s a recent scenario I observed.

The director describes one type of film to the financier and goes off to make another film altogether.  The cut comes in and the financier says, “This isn’t what I signed on for!”  Whereupon the director informs him it’s the movie he wants.  Heavy hitters on the management side of course stand by their client.

A movie becomes a war.  Disaster ensues.

The point is, talent and money have to be on the same page.  If you as a producer buy a giraffe and the director brings you a giraffe, it’s your fault if you decide you now want a zebra because market conditions have changed and zebras are in.

But if you’re a director, don’t sell a giraffe, deliver a zebra - and think that’s okay.
Another example.  A really good movie went way, I mean way, over budget not too long ago.  And when the financier said he could no longer fund it, the director - quite famous - said, no worries, I quit.  Now try finishing and promoting it without me.  The financier caved, the film was finished; it was great - and guess who lost a boatload of money.

And that - a good movie losing money - is the one unpardonable sin in our business.  Everyone’s going to make mistakes and occasionally make bad films.  But if a movie really works - but then people don’t get their money back - financiers don’t understand.  We have to make sure that, especially when we get it right, everybody gets paid.

Here’s an absolute truth - any financier who tells you he cares only about your vision, your story, your movie; that he doesn’t care about the money…

Is lying.

Here’s the dirty little secret.  Money doesn’t need the eggs.  Money has options.  Lose someone’s money on a movie deal and they’ll take the option of never coming back.  To them, it will never be, “That was a bad deal.”  To them, it will forever and always be, “That’s a bad business.”
On the other hand, in Vegas, no one leaves a table when they’re winning.  If a project is structured and financed so everyone wins, they’ll all come back again.

Mistrust has been built up over the money for decades in this town, with legitimate concerns on both sides.  We could use a little of that Obama-in-Cairo spirit around here.  And we’d all better get on the same page right now, because for the next couple of years, all of us - talent side, money side - are going to need success where we find it.  Things are gonna be tight.  Which leads us to…

Rule Three:  Before Rolling Cameras… think ‘Market.’

Most businesses have a complete plan from the start of a project, which includes the whole chain from manufacturing through distribution.

Ours typically does not.  It should.  And it should include marketing.

Years ago, Francis Ford Coppola predicted a day when anyone could make films because technology would lower the barrier of entry to practically nothing.  He was right.  And he could say the same thing today about marketing.  Technically, there’s nothing standing in the way of my nine-year-old son making and marketing a movie today.

I was blown away when I found out that the # 32 film on the all-time documentary box-office list is a little 2005 film I’d never heard of, called “The Wild Parrots of Telegraph Hill.”  (It’s about wild parrots living on Telegraph Hill, by the way.)  Can you imagine how tiny the market sliver is of people willing to take a night out to go see this peculiar-sounding film?

Well, the filmmaker did imagine them.  Rather thoughtfully, in fact.  And then proceeded to use viral marketing to rally those people into the theater, by making the film an event for every bird-lover on God’s green Earth.

Audubon Society members.  Bird-watching clubs.  Breeders.  Veterinarians.  Humane Societies.  Feather-fancier magazine subscribers.  There are a lot of people out there who really love birds.  And I think every last one of them went to this movie.

And, I’m happy to say, number 72 is a movie called “Every Little Step,” which I directed and produced, still in release so we hope it’ll climb higher.  Maybe even past the parrots.

In that film, we juxtapose the original construction of A Chorus Line, the musical, with the 3,000 dancers who auditioned for the revival on Broadway.  Now, 16 million people have paid to see that play on Broadway.  No telling how many more have seen - or been in - productions at community theaters and schools.  Not just here.  Japan has a community obsessed with that musical.  UK, Germany, same thing.  So we had a desirable, targeted brand for that movie before we started shooting.

Our job was to first make a movie, and then drive people to see it - social-networking sites, building word-of-mouth with targeted email blasts.

You can go on Facebook and see how many people love “A Chorus Line.” And we did that.  But why stop there?  We also saw who listed Chicago in their top fifty films and targeted them, too.  And so on.
I remember not too long ago on Broadway, we used to send out volleys of expensive fliers that mostly ended up in the trash.  On the flip side, sending an email is practically free.

And it works.  Facebook and e-mail just got a dark-skinned guy with the middle name of Hussein elected U.S. President.  I don’t know about you, but I was getting about four emails a day from the gentleman.  Also his wife, his daughters, his friends and, if I recall correctly, a Portuguese water dog looking to be adopted.

You can target market segments as long as you’ve created something appealing to them.  Bob Berney has been brilliant at this, honing in on audiences of all kinds, from “The Passion of the Christ” to “My Big Fat Greek Wedding,” which he made a destination for Greeks everywhere.  Both were targeted destination movies.

At the other end of the scale, Laika Studios made “Coraline,” and with the intricate details of her button eyes, and stitched nose, it was first marketed to sewing and knitting clubs!  It’s going to be Focus Features’ second all-time top performer behind “Brokeback Mountain.”

You can also consolidate these slivered segments, by the way.  Ira Deutchman at Emerging Pictures says his network of theaters does well with Jewish, gay-themed and French films, plus those that are spiritual and have “Wedding” in the title.  That’s why I have great hope for our upcoming film, “The Holy Unsanctified Parisian Wedding of Yitzhak & Muttle.”

Point is, when industry produces a firehose of content, we have to be smart in other ways to get the word out so our little droplet gets noticed.  For those of us who can’t afford to blast TV ads like a blunderbuss, it takes a bit more thought, but with new media comes new ways for a small film to connect.

One thing my 13-year-old actually might care about is a short form of the next Twilight movie.  She might care to watch that scene each time a particular ringtone hits her iPhone, for instance.  Or use some bitstream subscription to watch her favorite scene over and over and over and over and over and over and over.

Already today, our kids spend a third of their time interacting with electronic devices, mostly online.  Filmmakers need to recognize and in the future be able to take advantage of it, looking for what David Pogue of The New York Times calls the “AppStore effect.”

When programmers write iPhone applications, Apple encourages them to set a low price - like one dollar.  So the huge majority of programs in the online AppStore are impulse buys.  As Pogue says, nobody blinks at a buck.

In the past nine months, iPhone and iPod fans have downloaded more than one billion apps.  These huge numbers revealed the App Store Effect, which says:  If you cut the price of a software program by half, you sell a lot more than twice as much.  If you cut it to one-tenth, you sell a lot more than ten times as many.

And so on.  It’s counter-intuitive, but this principle has paid off beyond anyone’s wildest dreams.  Some iPhone programmers have become millionaires within months, one buck at a time, because of this powerful math.

In the case of films, the AppStore Effect will have you buying a title at home, or even on your iPhone, for, say, four bucks a pop.  Four dollars.  Four dollars.  Four dollars.  It adds up.

No one knows where this will lead, but it doesn’t sound bad to me.  In fact, it reminds me of Malcolm Gladwell’s observation that the greatest concentration of wealth in history occurred in the 1860s and ‘70s - when the American economy went through its greatest transformation yet.

The railroad was built - the Internet of its day.  Wall Street emerged - better access to capital.  Industrial manufacturing started in earnest - plenty of jobs all around.  In those twenty narrow years the rules that governed how the economy functioned were broken and completely rewritten.

Here’s something amazing.  Of the 75 richest people in world history, 14 were born within nine years of each other during this span.

Rockefeller.  Carnegie.  Morgan. Eleven others.  They built fortunes and empires almost beyond comprehension, in some cases in fields that didn’t exist when they were born.

Gladwell says that if they’d been born in 1840, they would’ve lost out by being too young; they couldn’t make anything happen.  If they were born in 1820, they would’ve been too old; they wouldn’t be open to big new ideas.  So those 14 folks were lucky to be born at just the right time.

I think we’re that lucky.  Are we going to be the next robber barons?  Probably not.  But the economy is going through a huge upheaval because of technologies that didn’t exist when we were born - or even when my 9-year-old son was born.

The opportunities are - to use a word that’s almost never used right - awesome.  I don’t see anyone in this room too young to take advantage of them.  And because in this business we tend to be unafraid of new technology - in fact, we like it - we’re not too old, either.

In the meantime, we need to cut costs.  Mitigate risks.  Target our audience.  Watch where the deals are taking the industry.  Experiment intelligently.  Basically, learn to use new muscles.  And we’ve got to do this together, not at cross-purposes.

We also need to keep our perspective.  Things are rarely as bad or as good as they seem.  When he was head coach of the Chicago Bulls, Phil Jackson told me he’s made it a principle not to get too high in victory or too low in defeat.  He says that’s the way to get through a season.

In the 1990s, The New York Times declared Broadway dead.  It’s doing pretty well for a corpse - the past nine years have been some of the best in its history.

Making films is no different.  We’re cycling through a tough period.

But it’s a point of creative destruction, which almost always ends up improving things, sometimes dramatically, as Malcolm Gladwell pointed out.

So:
        -If we stick to the basics - good business, smart movies…
        -If we learn from the past and welcome the future…
        -If we gather the eggs we need where we find them…

We’ll be better than fine.

James D. Stern is Chairman & CEO, Endgame Entertainment and director of the films “Every Little Step.” These were his remarks as prepared for delivery to the Los Angeles Film Festival for the keynote speech at the 2009 Film Financing Conference.

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James D. Stern’s keynote speech in LA:

	On the money.
	Off the mark.
	Nobody knows anything.

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