Producer Gill Holland forwarded me a link to this provocative interview by Eric Garland, whose company Big Champagne reports on filesharing activity for its customers — the major studios and broadcast networks. A lot of people talk about the relationship between what's happened to the music business and what's happening to the film business, but Garland effectively points out not only the similarities but also, promisingly, the differences. That said, he is not predicting that the mainstream film business will be able to maintain its revenue figures in a time of migrating audiences and technological change.

An excerpt from the CNET article:

CNET: But it doesn't appear that Hulu is making the kind of money that will satisfy content owners, at least those News Corp. and NBC Universal (Hulu's backers).

Garland: The cute answer, which is probably the truest answer, is that growing a sector is a privilege and not a right. There is no right size. There is no correct or God-given size for any sector. Why do we get to make movies that cost $300 million to make? Because we have found venues where people will spend more than $300 million on the result. If people spend only $50 million then the price of a movie must be $49 million or less.

I think in today's dollars no one could make "Gone With The Wind" because at the time this movie was made when everyone went to the movies. It was something like 79 percent of the population. The cute answer is that movies will get smaller.

I know people are tearing out hair and spinning in graves, but maybe "Transformers" has to be made for $75 million next time.

Oh my God, what am I saying? Put the words back in your mouth. That is just a pretty plain faced observation. One outcome might mean that in the Digital Age the return on investment on a major International tent-pole franchise is not a billion dollars. It's a quarter of that or a third. Therefore we have to get our costs in line with the market value.

When we talk about this in 3 or 5 or 7 years, one thing we will all have to concede is costs have to come down. We don't have the total control over the distribution chain that we exploited so well as industries for so long. Without that you can't take advantage of the consumer in the same way.

# posted by Scott Macaulay @ 10/29/2009 08:49:00 AM

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