Embracing Uncertainty

Embracing Uncertainty – Preparing for a future at the intersection of creativity, business and screen technologies.

Address delivered to RMIT Capitol Theatre by Sue Maslin, 27 August 2019

Thank you for joining me today in exploring the challenge of uncertainty that lies at the heart of all creative practice and how we might best prepare for an unknown future at the intersection of creativity, business and technology. Creatives, innovators and entrepreneurs know what uncertainty means because we experience it daily.

When people ask me “What does a producer do?” I say that I am in the risk management business. My job is literally balancing risk. I strive to enhance creative risk taking on every level with my collaborators but I equally strive to reduce financial and legal risk for my investors.

Most of us here tonight live on the roller coaster that is freelance contract work and we constantly ride the ups and downs of both joy and disappointment. We live with and often struggle with the uncertainty of work opportunities and income. Not to mention the uncertainty of whether our efforts will ultimately reach an audience or a market and find success. We all have our individual motivations for doing this but one thing we know is that we cannot sustain a creative life unless we can find a way to live with uncertainty.

It is not just the creative industries that are grappling with this reality. Across the board – business employers, governments, policy makers and educators are asking;

How do we prepare for an unknown future just over the horizon that is AI enabled and driven by digital platforms? I believe that those of us in the creative sector working have a valuable perspective and direct experience in preparing for this future.

Forecasters such as Rob Lawrence, Director of Prospect Research and Marketing, anticipate that in the future people will need to transition constantly between multiple roles and “be adept at self-promotion through building their own networks, creating and seizing opportunities, sourcing ideas and taking them direct to market”1.

Sounds familiar? The creative industries already have a head start in this regard as those skills are our stock in trade. The so-called ‘soft skills’ such as story-telling, creative risk taking, collaboration and agility will become ‘hard currency’ in the new digital economy.

We are certainly well positioned to have a competitive advantage but only if we address the challenge of the future by radically reviewing our approach going forward and not relying upon the strategies we relied upon in the past. In the screen industry we need to accept that the rules of engagement that have applied over the last 50 years, no longer apply. We need to address the profound digital disruption that is currently re-shaping every level of the Australian – and indeed global – screen business and our evolving relationship with audiences. I cannot overstate the challenge going forward as the tidal wave of digital disruption hits.

This evening, I want to give you a screen practitioner’s perspective on these questions and hopefully offer some useful insights into embracing the uncertainty ahead. What is certain is that audiences will always want stories. And there will always be a role for creatives who desire to connect powerful ideas with people. And the technology will always continue to change. For the students here tonight, the very technologies that will shape your careers have yet to be invented. Just as the technologies that I currently employ in my screen production and distribution business were not invented when I graduated back in 1982.

So what is the reality for those of us creating work for screens? Access to the means of production and distribution has never been greater. Yet building a sustainable creative practice has never been more difficult.

Up until as recently as seven years ago, there existed a largely viable screen economy globally. Creative risk taking was offset by minimising financial risk at each stage of the value chain – development, production and distribution. Producers held the intellectual property in trust for investors and we could pre-sell productions to television networks, home entertainment and Pay TV in territories around the world in order to reduce up front risk. Sales companies provided low, medium and high sales estimates and producers were able to borrow against those estimates to finance our productions. We could build recoupment streams into our business plans and if the production was a success, share in that revenue as an equity investor. The Producer Offset introduced back in 2007 was instrumental to the idea that by having greater equity in our productions, we would be able to build our businesses on the back of that revenue.

Well that era is officially over. Revenue derived from traditional or heritage media has collapsed over the past 10 years. Commercial television networks have lost significant advertising revenue to on-line alternatives and the advertising spend continues to contract around 4.5% per year. Public broadcasters face diminished government subsidy – The ABC and SBS have lost in excess of $60m over the past three years and remains under sustained attack by the government for its perceived bias. Video stores closed as people moved away from purchasing and hiring DVD’s; and expensive Pay TV subscriptions no longer make sense up against cheaper streaming options. DVD’s that sold for $25 each have been replaced with streaming and subscription offers returning a fraction of the price to producers. All of this adds up to higher risk for investors and less money available for finance available from traditional markets.

Old business models have collapsed as a result and those producers who have not restructured in time have struggled and many gone out of business. But hang on. Aren’t we being led to believe that we have entered a ‘golden age’ of screen content?

The digital streaming services –Netflix, Amazon Prime, and Youtube – have changed everything. They are not simply new players in an established marketplace. The old marketplace is irrelevant to them.

They have created new revenue streams, new rules of engagement with content makers and new business models based on proprietary big data and algorithms that shape content development, acquisition and delivery to consumers. They generate micro-payments on a massive scale. Seven out of ten of the largest global companies now are based on platform business models.

Schenker, J. The Platform Economy. The Innovator (Jan 2019)https://innovator.news/the-platform-economy-3c09439b56

The streaming platforms have bypassed government content regulations and have absolutely no obligation to share their data. Producers and distributors who once accessed box office figures, ratings and information about who was watching their content are now left completely in the dark. Our federal government has failed dismally to date to ensure that foreign companies providing digital services and content are taxed. To date it has not insisted on quotas or a minimum local spend as a percentage of revenue.

On the other hand, the streaming services have delivered an explosion of content and talent available on devices anywhere at any time. And audiences have loved it!

Over 11 million Australians now have access to a Netflix subscription in their household totalling more than 4.9 million subscriptions nationwide. Netflix rakes in up to $400 million subscription revenue annually from Australian alone. Netflix pays no tax on this and is not obliged to meet any content quotas or minimum spending on local content. This means we are currently unable to siphon the flow of revenue generated by Australian audiences back into the Australian screen sector. The Screen Producers Association of Australia (SPA) has recommended that 10% of Netflix’s Australian revenue be funnelled into home grown content. Just imagine it! It could inject up to AUD$80m into the Australian screen industry each year.

This is not a gradual transition. It is an all out rout that challenges the very business model of Hollywood and independent production alike. Added to this, up until last year, Netflix and Amazon would routinely buy films at major markets like Berlin, Cannes and Sundance. They no longer need to do this as their primary focus is upon commissioning Originals. By the end of the European Film Market in Berlin this year, Amazon had bought just one title and Netflix none. In fact Netflix dominated the trades on Day 1 of EFM by announcing not a film deal, but its decision to commission six new original series in Spain.

Of course it is a bonanza for consumers. Not so great for screen content producers… Less than 1.5% of content on Australian Netflix is locally produced. To date Netflix has commissioned just four original series from Australia. Up until very recently Netflix did not employ a single person in Australia. That may be about to change with the recent announcement that they will open an office in Sydney.

And on top of all this, Australia has one of the highest rates of screen piracy anywhere in the world. A significant number of people still download content from bit torrent sites such as 123 Movies and Daily Motion for free. Few of them consider who will pay for locally produced content going forward.

In this disrupted landscape, new opportunities have opened up for some on the inside and they have grown their businesses substantially. Scale means everything in this new environment. But for those taking time to adjust, the long held business models employed by producers, broadcasters, distributors and sales agents are collapsing worldwide. Those who evolve and survive in this radically altered landscape must adopt new approaches.

It is not as if we have not experienced this level of disruption before in Australia. From the very invention of cinema technology up until the 1920’s we enjoyed a thriving and highly innovative local film industry. Australia produced literally hundreds of silent films every year that screened in Australian owned cinemas – there was practically a cinema in every town and suburb across the country and our films drew in the second largest cinema going audience anywhere in the world. During this period ordinary Australians went to the cinema on average 29 times per year.

However by 1933 the vertically integrated Hollywood studios, facing enormous losses domestically during the Depression Era, moved down under. They were in search of a new market and the Australian government welcomed them with open arms. The studios controlled the supply chain and forced local cinemas to screen their pictures shutting out local films. They bought up all the cinemas ending that brief golden era of Australian film and driving local production companies out of business for the next forty years. Four major studios formed an oligopoly setting the terms of trade that continue largely unchanged to this day and between them they still rake in upwards of 85% of Australian box office annually.

It is deeply ironic that these same studios are now experiencing the very same threat from the streaming giants. But I tell this story to demonstrate how quickly and how radically everything can change and how vulnerable a small screen industry like ours is in the face of this disruption.

Just a side note on this word ‘disruption’. Recently we had a bright Year 10 student, Chloe, do work experience with our company. I asked her to read this paper and we then sat down for a chat. She asked me why I was using the word’ disruption’ as she had never heard it before in this context. It seemed harsh. She and her friends watch Netflix and Youtube non-stop, engage on Instagram and never watch free to air TV …..except for Married At First Sight. “Was it not simply an evolution or just a change?”

My first reaction was “Smart question! Smart girl!” Then I explained to her that the scale and nature of the change was so profound that it was more of a complete disruption to business rather than an evolution. But I have come to appreciate that for Chloe and the current generation of students, there is no disruption. The transition has been effortless, invisible and welcome.

The hunger for content is real and it is growing. The good news for creatives is that audience desire for culturally specific stories with universal themes shows is also growing. Netflix have based their business model on it and it is working. This gives me enormous hope and I firmly believe that we need to trust our voice and our unique way of seeing the world. Our greatest challenge today is not about learning new production and technology skills. Rather, it will be encouraging creatives to find something important to say and developing the talent necessary to connect their ideas with audiences. The more idiosyncratic the better. While we may be based in Australia, on-line platforms afford us the opportunity to find our audience anywhere in the world. And social media platforms provide the means for us to build our relationship with our audience. Thinking globally is the key to building a sustainable creative practice over the long term.

I want to give an example of how all of this came together for me. In 2002 I read a book about a couture dressmaker who returns to her small hometown armed with a Singer sewing machine and revenge on her mind. It was written by first time author Rosalie Ham who spent her childhood roaming her family farm at Jerilderie and dreaming about what lay beyond the horizon. Literally. I lived down the road from Rosalie and like her, spent my youth on the plains, often as the only girl for miles around. And like her, I spent many hours alone – often bored – but always dreaming and imagining.

Having the time to dream and imagine was the first important step that led to the success of The Dressmaker. It is hard to imagine how anyone today ever has the luxury of being bored. Let alone the space to muse without the distraction of devices – delivering other peoples dreamings and imaginings. But that is how creative lives are born.

Underneath all of the exaggeration and craziness, Rosalie’s story, The Dressmaker spoke a truth to me. About growing up in a small isolated country town. About what it was like to be an outsider in your community. About revenge. And against all odds the film found its audience.

This film, like all of my feature films, was distinctly odd and displayed distinctly Australian subject matter and voice. The Dressmaker was not made for a global market, it is not trans-Atlantic, it is not generic, and it is not a format. Yet it connects. Highly localised stories can open the door to global audiences because they speak to emotions and themes that are universal.

This is my second point. Now more than ever audiences are embracing unique, distinctive, culturally diverse stories. The key to Australia’s screen industry success in the future will be its capacity to embrace cultural diversity as well as gender diversity. And the stories will follow. The most exciting film and television to emerge from Australia over the past decade has been from indigenous voices. The same can be seen as a result of supporting and encouraging more women to tell stories. 7 years ago when I was trying to finance The Dressmaker, it was considered an enormous risk by many distributors and they turned it down. They regarded the female audience as a limited audience. That is, not commercial. I go to the movies. Has anyone actually looked around in the cinema and seen just how many women are there?

That attitude I pleased to say has changed big time. The Dressmaker immediately went to number one in gross box office charts when it was released by Universal Pictures in October 2015 and became one of the highest grossing Australian films of all time. It has subsequently sold to over 40 territories worldwide. There are many more films about women made by women creatives now coming through each year driven in part by policy changes but mostly because if they are well made, they will have an audience and they have the potential to make money. Ride like a Girl? Watch this space.

Our current challenge is to take a look at our multicultural society and recognise that audience demand will drive the need for greater cultural diversity both on screen and behind the camera. And we need to take the risk on creatives to enable these stories to be developed in the first place.

If we are to embrace uncertainty, we need to value agility and be able to adapt to the changing landscape. And we have to keep on doing it if we are to have sustainable creative lives. I will give you another example how I learned this.

In 2008 we were all working using the Internet and we saw an explosion in accessibility to interactivity. My business partner Daryl Dellora and I recognised that the new digital tools available to us could open up new ways of working. We sat down and really looked at what we did and realised it was so much more than simply making films. We were actually in the business of developing and managing creative content rights. If we were going to grow our business, we needed to secure and retain more of those rights as well as harness the digital technology that was rapidly opening up and enabling us to connect ideas directly to audiences. We established a new company, Film Art Media and it was not, nor has ever been a production company. It is a rights management and distribution company. It acquires properties – books, screenplays- and develops original ideas and scripts – to the point they are market ready and can be financed. At that point, FAM assigns rights across to a production company to make the film. That company would be our own and often would be a SPV, wound up at the end of the production. More importantly, we ensure that as many rights, if not all, are assigned back to FAM at completion of production so that we can exploit those rights over the long term.

The first thing we did back in 2008 was re-acquire the rights to our back catalogue of documentaries spanning 20 years. And we re-branded those films and started marketing them from our website locally and globally. We generated revenue that to this day keeps our company sustainable. Our films have been licensed to multiple territories around the world and every time a new digital platform emerges, we have re-licensed it – DVD, Pay TV, SVOD, streaming and downloading and whatever else comes next. The technology enabled us to find specific niche audiences on a global scale. Social media platforms then emerged and turbo charged this process. We used it to great effect on The Dressmaker and still have 85,000 FB followers today.

This is how we have done business over the past 10 years alongside the production work. But we now face a new challenge. We can no longer rely upon existing sources of revenue – DVD rental and sell-thru, Pay TV, TV sales. They have been replaced with micro payments that bring in a fraction of the revenue. We must find new ways to do business and monetise our intellectual property. We have had to change the way that we work at FAM and continually find new markets with new technologies. Our challenge is to learn how to monetise screen content that primarily exists on platforms driven by micropayments from audiences. We are doing it by constantly thinking of new ways to exploit content right and license these on a non-exclusive basis to different platforms. We recognise that in a crowded market, a film will struggle unless it can be connected with meaningful experiences for the audience.

For instance, the demand for impact documentaries is exploding. We have been able to raise finance for these kinds of films where there is a profound relationship between the subject matter of the film and its intended audience. One that can produce event screenings, forums, workshops and meaningful conversations that lead to social change. They also have a long life in educational and community settings if they are relevant.

This has all led me to the realisation that I am not just in the business of making screen content. I am in the business of creating experiences and as long as we can find ways to monetise those experiences over the long tail of the journey, we can remain sustainable. The Dressmaker is another perfect example. The film was released four years ago but I also produced a costume exhibition that continues to tour and generate income together with its catalogue. And I made sure that we could retain the educational rights and get the film together with the book listed as recommended texts on the VCE curriculum. This in turn generates Screenrights royalties.

As for cinema, we are witnessing a profound shift that is leaving many Australian films out in the cold and unable to secure screens and build audiences or revenue streams. Cinemas are driven by bums on seats and in the face of a blockbuster filled release calendar and an oversupply of content worldwide, it is a buyers market. Australian films simply represent an unacceptable level of financial risk to distributors and exhibitors for the most part. The irony is that just at a time when the old business models seem to be collapsing, we have more feature films being made now in Australia than ever before. Last year there were 55 Australian theatrical releases. 49 of those made less than $1 million at the box office – most less than $100,000. Everybody and their dog is a feature filmmaker these days – filmmaking is the pottery of the 70’s!

This is because of the unprecedented access to the means of production. But this boom in production is not indicative of a healthy or sustainable market. Much of it is an exercise in vanity publishing and the poor box office speaks to the disconnect between audiences and filmmaker aspirations. The number of times I have received phone calls from first time feature makers who flushed with the achievement of finishing their first feature film, ask me, “What do I do now”? Good question. But it needed to be asked long before they started filming.

This is our next greatest challenge as creatives – integrating screen story-telling skills with business, communication and marketing skills so that our films have a chance of connecting with audiences and rising above the noise. This engagement with the market cannot be left up to third party distributors. Creatives need to give this equal weight alongside development and production. We need to deeply understand the value of our intellectual property over the long-tail cycle. And we will need the skills to develop collaborations so that in the future we may build strategic partnerships with colleagues from anywhere in the world. The good news is that there is more and more demand for content and new platforms and television opportunities are opening up globally all the time.

Creatives need to work with the tools and platforms relevant to audiences now. Web series. VR. Podcasts. Destined for platforms such as Twitch, YouTube Premium, Facebook Live, Periscope and a myriad of new ones opening up all of the time.

We will need to become more informed about block chain and its potential to provide an alternative means of reaching audiences, aggregating micro payments on a large scale in a secure and transparent manner. This model will open up a brand new class of media players – the ‘influencers’ – the people who are the taste makers and trusted content aggregators for an audience that is overwhelmed by the sheer volume of available content. Blockchain is not fully here yet but watch this space.

“Watch this space”. A mantra for our times given the speed of change across every front. Which leads me all the way back to uncertainty and how we deal with it. We have choices. We can shield ourselves from change for as long as possible and not engage. We can be dragged kicking and screaming or we can try to fight it. Change will come regardless so we either find ourselves reacting or we can step forward to embrace it. I would argue for the latter but it takes courage and comes at a risk for creatives.

We need to address mental wellbeing in order to embrace uncertainty and develop the resilience and tenacity required to succeed over the long term. We need to have an honest discussion about the challenges of a freelance creative life. The financial insecurity in which 65% of creatives earn less than the Australian average wage. 44% live below the poverty line. Contract work can be intermittent, unpaid or underpaid, but we must never think of ourselves as unemployed. Just between gigs.

    In these time we become very isolated. The first major research study into the mental health of the Australian arts and entertainment sector showed that

    1. Moderate to severe anxiety symptoms are 10 times higher than the national average.
    2. Depression symptoms are 5 times higher.
    3. 5 people each week try to take their own life.
    4. Suicide attempts are double that of the general population.

    We need to recognise that our industry presents mental health challenges because of its very nature – the stress, the long hours, the constant rejection at auditions or when pitching new projects, the highs and the lows. There are very good reasons why some us came to use the term “The Stressmaker” when we were making that film!

    In order to survive, we need to build support around us and talk to other colleagues when we find ourselves struggling. Too often the onus is put on the individual to just soldier through but it is systemic and we need to change the culture. That is a whole other story. Watch this space!

    The truth of the matter is that we really don’t know what is coming over the horizon and everyone one of us will have a different way of meeting that challenge. But I think we will be best equipped if we can do some of the following;

    1. We need to know ourselves, dream, imagine and have a clear idea of our values and what we stand for.
    2. We need to translate this into a vision for both ourselves and our ideas and make these visible to others.
    3. We need to learn the power of goal setting and developing action plans.
    4. We need to develop the business skills to sell our ideas and build revenue streams from that we can participate in.
    5. We need to develop networking skills that enable us to find the people who will want to share and hopefully pay for our ideas.
    6. We need to be generous and recognise that it is always more empowering to share information than it is to withhold it.
    7. We must never lose the courage to take creative risks.
    8. We must look after ourselves as well as creative work and our business.

    In short, we need to develop creative leadership skills if we want to build a sustainable creative life.

    I don’t have all the answers but I do know the technology, the platforms, the screen content and the market will look completely different again ten years from now. In order to prepare, future screen content makers will need to be more entrepreneurial, more idiosyncratic, more diverse and take more creative risks than ever before. Our challenge is to embrace uncertainty, engage with the future and make the connection more forcefully between creativity, technology and business.

    Thank you.

    1. Lawrence, R. The new career norm: constantly taking on multiple roles in a series of disconnected projects. The Australian, 15 May 2019