As with many industries that have emerged from a post industrial centralized system where power is held by the few and organizational structures were designed to control the people dividing the work into tasks that needed to be done, the film and entertainment industries will not escape the wave of change from Blockchain technologies that is almost upon them.
From every angle the once invincible industries are being reinvented - whether they like it or not. Of course the music business is leading the charge with Ujo Music and Mycelia, led by the rather impressive Imogen Heap, an English musician who is an advocate of using technology to interact and collaborate with her fans.
And there are many artists now breaking ranks and wanting a direct relationship with their fans and control over their content.
Nick Ayton, co-founder of The 21Million Project, a blockchain-based startup seeking to disrupt the film business, said: “The platformification of film, music and media (Spotify, iTunes and now Netflix) was seen by consumers as a step forward. But for the artist this meant the attribution they deserve a reward for their talent is further diluted, and for some their margins shrank to a point where many artists just don’t bother anymore.”
In an industry rife with counterfeit and fake content spread across the Internet and where copyright and IP is neither respected nor adequately protected by the people that make the most money from it, they just cannot be asked to put the effort in.
“The industry is rapidly becoming a farce. The industry isn’t working to support the ‘creatives’ without which everything we watch becomes bland, boring and predictable,” asserted Ayton, a serial entrepreneur and Blockchain evangelist, who is involved in an Initial Coin Offering (ICO) in 21Million that launched this Monday (June 12, 2017.)
The Englishman added: “With the odd exception this is exactly what has happened, as Hollywood ‘whitewashes’ cultures and histories where the good guys always see the US Government always win...to support the political agenda of the moment.”
The film and entertainment industry according to Ayton is a “self-serving protectionist industry” that has done little to protect and service the important ones - the artists - the creative people that are treated appallingly by the fat cats, and where the link between their songs, scripts and videos is lost and they start to see less and less income in their bank accounts.
Tinseltown Economics
Countless examples of pay inequality can be found, from men getting paid more than women to cast and crew receiving less than they deserve. Or, not getting what they were promised because their content is held on centralized systems (alongside byzantine accounting systems used by the main studios), controlled by a few people - and remains wide open to tampering and where the deal can change at any time.
This even though the central strategy seems to be how to make a net production loss conveniently covered up by some opaque accounting behaviours.
In the film business, accounting practices and layers of middlemen are reflected in low profits and too often losses that nobody can fully understand.
Highlighting these opaque accounting practices, just take a few well known films in recent years that on paper were smash hits as cases in point.
Let’s first take the 1983 film Return of the Jedi. According to Lucas Film this movie “has never gone into profit” despite having earned almost half a billion dollars ($475 million) at the box office against a budget of $32.5 million. However, Return of the Jedi, Inc., was reported not to have made a cent of profit yet as the movie corporation paid a bundle of its revenue to the studio for distribution fees.
Then there is Dark Knight. Batman producers Michael Uslan and Ben Melinker were paid, in an out-of-court settlement, “two popcorns & two cokes” in respect of their claim for net points, despite the franchise grossing over $2 billion (bn).
One could also cite Lord of the Rings film series, directed by New Zealander Peter Jackson, which generated around $6 billion. His Wingnut Films firm sued New Line Cinema after an audit, regarding “certain accounting practices.”
Back in late 2013 Bob and Harvey Weinstein sued New Line and Time Warner over the decision by these companies to split the Hobbit movies into three parts and the studio’s refusal to pay them profits for the second and third films. As reported by Variety this resulted in a fierce rebuke from New Line’s parent Warner Bros. At the time, the Weinstein brothers were cited saying that this case was about "greed and ingratitude” in a legal suit filed on their behalf by Miramax LLC.
According to a recently published whitepaper on the 21Million Project written by Ayton, in response New Line stated that their rights in a film of The Hobbit were time-limited, and since Jackson would not work with them again until settlement he would not be asked to direct.
Fifteen actors sued New Line claiming that they’ve never been paid their 5% of the revenue from film-generated merchandise containing their likenesses, while the Tolkien estate also sued New Line, claiming that their contract entitled them to 7.5% of gross receipts from the smash movies. However, according to New Line’s accounts, the trilogy made “horrendous losses” and no profit at all.
Command & Control
The entire industry runs from a command and control structure comprising of layers of middlemen, agents, and according to Ayton, “famously agents of agents that all feed on the creative people and led by 'King Makers' as studio heads that decide on who wins and who loses.”
A central validation system where all decisions come from the same place, resulting in frequent court cases for inequality, sexism and discrimination, where only a few come forward as they need to earn a living and simply put up with the abuse - or be ostracized. It all gets rather a tad nasty.
“It’s a culture of fear and greed that drives Hollywood, it’s not sex, drugs and rock and roll, as these are the tools of those in charge to control the talent, to keep them off guard and wanting more, feeding the ego, creating the greatest dependency drug of all - the need for fame and recognition,” Ayton contended.
Let’s face it, you also need to be “an addict to put up with the culture of continual abuse and manipulation now synonymous with the Hollywood system,” according to Ayton, which in his opinion is “an antiquated and inefficient operating model and cannot continue.”
But wait a minute. There is another side to the film and entertainment system of which Hollywood is half the global market.
These are the genuine artists who love what they do despite it all, despite the abuse, lack of attribution, the manipulation and the opaque accounting methods designed. But many of the artists and creatives don’t get what they deserve.
It would appear they suck it up because they love their art, have a need to get what is inside them out there for all to see and enjoy. “It is these people the centralized system hurts most, but the good news is it doesn’t have to be this way,” Ayton posited.
Decentralizing Film, Music & Entertainment
Fortunately the cavalry is on hand, led by SingularDTV visionaries Zach LeBeau, Arie Levy-Cohen and the Libertarians at The 21Million Project David Lofts and Nick Ayton, bringing change and seeking to decentralize the film, music and entertainment industries.
As to the backgrounds of the team involved with the project, serial entrepreneur Ayton has a background in computer science. 21Million is his ninth startup. For his part, Lofts is a Libertarian musician and writer.
They are joined by LeBeau, CEO of SingularDTV and an Evotion Media executive, and Levy-Cohen, founder and CFO at SingularDTV and ex-Morgan Stanley banker, who has also founded Blockhaus AG that spans a blockchain investment bank and financial smart contract systems.
So, how does this process of decentralizing the film, music and entertainment business work and what does it look like.
Well, the protagonists heading the charge - LeBeau, Levy-Cohen, Lofts and Ayton - are creating ecosystems that decentralize both the film production process and the management of content where all artists and owners can control their IP.
Specifically, the 21Million Project consists of :
- A movie, pilot and follow-on TV series that tracks the libertarian emergence of cryptocurrencies - the 21Million story line.
- An innovative libertarian, fair, open, transparent approach to finance and production of high-quality film and television content.
- An open, transparent platform for managing the distribution of copyright assets on behalf of copyright owners.
By stripping out the middlemen the film budget amazingly goes much further under the 21Million schematic, perhaps “by a factor of 5 or 6” according to Ayton.
“One needs $100 million in Hollywood to make a film and grease the middlemen,” he said. “In a 21Million production there are no middlemen to grease the palm of, so a $5 million budget for 21Million delivers $30 million, if production value and staff and crew, suppliers are also paid in 21MCoin...that extends the budget further.”
Smart Contracts, Fairness & Transparency
A revolution is happening where the film process is fair, open and transparent (trusted). This is a place where artists gain the money they rightly deserve and are due, where they control access, freeing the industry from the wasteful and inefficient "middlemen" culture that pays for the film, TV and entertainment court jesters, who do their bidding and help keep the artists - the real talent - increasingly dependent.
The arrival of Blockchain technologies is a liberating new direction for the industry where the ownership of content is known and decisions are decentralized.
Smart Contracts remove the human element and ensures everyone gets the income they are due, no matter what. Smart contracts are the secret sauce of fairness and they are trusted. They allocate the token to investors and control all aspects of 21MCoin management.
At 21Million they take matters a step further, whereby fans as investors can contribute to film and TV production in new ways. For example, they can make a direct contribution of ideas for the script, or they can become an extra or even get an opportunity to visit the set and get involved.
As Ayton explained: “Fans can become investors. They can influence what gets made (funded) and can enjoy the benefits of success receiving royalties, knowing too the production process was gender equal, pay equal, fair and transparent, which will become the new libertarian ‘Kite Mark.’”
He added: “This shows fans as investors the content they are creating is free from Hollywood hogwash, that staff will get paid and people are treated with respect. That profits have not been diverted to pay for layers of unnecessary pointless and ineffective ‘middlemen’ who drink from the creative trough.”
Decentralization means just that. Where the film, TV and music content is produced in a transparent manner, where costs and activities are known, where the cast and crew receive their share of benefits, creatives get their attribution of all parts of a contractual right delivered by crypto Royalty Coins, the new currency for funding content and distributing benefits and rewards.
It’s time to “pull the plug on Hollywood,” Ayton argued and “Drain the Swamp,” with the way forward being the decentralization of everything.
As he put it: “21Million is a fundamental shift that changes the structure of film, TV and entertainment industry from a closed, elitist, sexist approach to where the people, the fans, the crew, the investors control the content and not just the few at the top of Hollywood.” Carpe diem.
Smart Contracts
The 21Million Project has committed 80% of profits to be returned to holders of 21MCoin who will receive royalties. Distribution and marketing costs will reflect what is needed to get the 21Million story told and onto the big and small screen, with help from social media channels, support groups and their partners. Among the latter are some big brands that have lent their support to the project.
The 21MCoin Token entitles the owner to a share of royalties in perpetuity, whereby owners of 21MCoin and the activities of the project are written to the public Ethereum Blockchain.
Those who invest in during the ICO period will have entitlement to royalties form the intended movie and the TV series.
Specifically, each token is linked to the value of the content created – the 21Million movie and a 12 episode TV series - that is syndicated and sold to TV networks. It will be available for download on pay-per-view. It is understood that the project will be working with a key partner for exclusive access to the platform.
21Million Project’s ICO commenced on Monday, June 12, 2017, with a total of 21m "21MCoins" allocated to investors generating capital and to cast and crew for their skills, creativity and expertise. This is a fixed amount and any excess or unallocated coins will be removed or "burned."
