On Your Own: The Economics of Independent Film Production

As the "me decade" of the 1980s slowly but surely gave way to the 1990s, America seemed ripe with possibilities. The fall of Communism had surely changed the political and economic climate of the entire world; along with these changes, likewise the popular culture was changing, as anything seemed possible and millions of people had their first taste of freedom. In 1989, the United States Film Festival, which in time would come to be known as the internationally famous Sundance Film Festival, was abuzz with the names of who were then new film directors, but would shortly become household names- Spike Lee, Steven Soderbergh and Michael Moore for a few quick examples. While the rise of a film director to a level of star status is impressive in the case of one that is bankrolled by a major studio and buoyed by a team of writers, assistants, and other resources, what makes the stories of Lee, Soderbergh, Moore, et al is the fact that these are self-made film producers so to speak, which is to say that they have reached the pinnacle of American motion pictures through independent films- those that are not budgeted by major established studios.

What one sees in a study of the independent film producer is not only insight into this new breed of media mogul and entertainment entrepreneur, but also a growing segment of the motion picture business that possesses the very real potential of shifting control of the present day film industry away from the studio system that typified the making of movies from the early days of the motion picture itself to the computer-generated wizardry of today.

This research will trace the rise of the independent American film producer and show, through the presentation of reliable data, exactly how much these mavericks of the film industry have contributed to the genre, as well as the awesome potential that they hold to shape the future of the modern motion picture. Upon completion of this research, a firm understanding of this fascinating element of the financial end of the motion picture industry will have been gained.

Independent Film Production in Historical Context

Any effective study of the evolution of the motion picture economy must first take a look at the origins of what is today called the American motion picture industry. Traditionally, the modern motion picture has been far from independent, usually needing to be produced by the many writers, directors, support personnel and vast sums of money available through the typical large film studio. Ironically, however, the American motion picture started out as a sort of independent venture, albeit with only one person controlling the production of ever single inch of film that a curious public clamored to see.

Beginning in the turn of the 19th century, Thomas Edison had zealously guarded the motion picture camera that it should be pointed out he in fact did not invent, but rather purchased from another inventor who had in fact created it. Even though Edison was able to guard against unauthorized use of his "invention" in the US, the same did not hold true for Europe. By the late 1800s, French entrepreneurs had duplicated Edison's camera and begun to produce silent films to be shown throughout Europe. In fact, the exhibition of films in public theater settings was different from the way that Edison-having been convinced that moving pictures were just a novelty to be shown in penny arcade viewing booths-had exhibited them previously in America. Thus, Edison's own technology was put to better use by others, which he himself then duplicated.

Edison, however, would not take the threat of competition lightly. In 1909, for example, Edison formed the Motion Picture Patent Company, a monopoly that attempted to control access to film stock and equipment, thereby regulating who would in fact be permitted to produce any motion pictures at all. The ensuing years would see increased attempts on the parts of motion picture pioneers to defy the possessive protection of Edison's MPPC and embark on their own projects and the like. Being forced to take decisive action to avoid the legal actions being taken against them by the executives of MPPC because of patent infringement on the east coast, the early part of the 20th century saw a mass migration of filmmakers to the west coast, where they would find the climate- weather wise and legally- more to their liking and more conducive to the successful production of movies. More specifically, several areas of southern California proved to be highly desirable not only due to the afore mentioned attributes, but also a quick escape route to Mexico if the legal heat in the US became too strong.

The early days of the newly created Hollywood saw the transplanted independent film makers free of the pursuit of MPPC for the most part, but the disadvantages of not having adequate resources to make or distribute their product eventually brought about the formation of United Artists in the early 1920s, and around the same time, other studios that are today considered household names in the movie business, Universal Studios and Paramount Pictures among them.

With the creation of these motion picture studios, films were made akin to an assembly line product; independent production gave way to an entity that was able to make films quickly and relatively inexpensively, leading to the fast generation of huge profits. These profits in many cases were then reinvested in advanced distribution systems, and even chains of theaters which would show the films themselves, effectively eliminating the possibility that a film would not find a screen upon which it could be shown to a public that was fascinated by the new technology that would keep them enthralled in the darkness of their local movie houses for hours on end.

As it would turn out, it was not the effort of MPPC or any militant independent film maker that would put a crimp in the armor of the studio system, but the US government itself. In 1938, the US government filed suit in what would become known as the case of US v. Paramount. The case would drag on for 10 long years, climaxing with a ruling in 1948 that the studios' control of all aspects of the motion picture business was a violation of anti-monopoly laws. Therefore, the studios were ordered to divest themselves of the theaters that they had owned for so long.

The theaters, out of the control of one particular theater or another, were now free to exhibit any films they chose, foreign or domestic, thereby opening up the American motion picture market to anyone who wished to compete for the admission money of the viewing public. Because of this and other factors, by 1950, the tight rein that Hollywood had on American film had been broken and the stage was set (no pun intended) for an exciting new chapter in the economic history of the modern film. The rise of the independent filmmaker had begun once again.

One of the pivotal events in the history of American independent film that is worthy of not came in 1919 when several of the best known names in the motion picture industry at that time- Charlie Chaplin, DW Griffith, Mary Pickford and Douglas Fairbanks- purchased an 18 acre plot on Santa Monica Boulevard in Hollywood and formed their own organization, originally dedicated only to the distribution of films made by independent producers. The founders named the group United Artists. In time, UA as it was soon called, began to produce its own films, always with the independent tradition in mind.

It should be noted that the founders of UA were also quite famous on their own prior to this collaboration. By 1919, Charlie Chaplin was already one of the highest paid, and most popular comedians in the movie business, having first started out as one of the "Keystone Kops" and later developing his own character, lovingly called "The Little Tramp", whose misadventures, always tempered with good intentions, helped America to smile through times of war, poverty and hardship. The one constant that Americans could count on in the worst of times was the unique ability of Chaplin to always bring a smile to the faces of young and old alike. Because of Chaplin's extensive experience in silent film, he possessed a unique talent for pantomime, using a wide range of facial expressions and body movements to take his acting to a level that many had never seen before. Beyond his talents on the screen, Chaplin was also a skilled marketer and negotiator, often financing his own films in the days before UA and using those acquired skills to provide a great deal of talent to the UA team.

David Wark (DW) Griffith came to UA with an extensive directorial background, having come from one of the original motion picture groups founded by Thomas Edison himself. Coming to the west coast of the US as part of the mass migration that led to the foundation of Hollywood, by the time Griffith came to get involved with UA, he already had an impressive resume and body of work to his name. His technical knowledge of film production would prove to be a huge asset.

Mary Pickford had started out at the tender age of 17 as one of DW Griffith's contract players, portraying a wide range of innocent, child-like characters on screen. Eventually, she would become known as "America's Sweetheart" because of the combination of innocence and warmth that she would portray on screen. Like Chaplin, Pickford was also a skilled businessperson, becoming well known as a movie mogul in a time when women were often not even permitted in some professions, and the bulk of American women were relegated to subordinate roles as homemakers and stay at home mothers. Therefore, Pickford, in addition to her immense contributions to the American independent film, also made great contributions to the effort for women to gain equality in a nation that was changing in so many ways. Aside from her duties at UA, Pickford would often participate in events promoting women's rights, making her an icon from several different points of view.

Douglas Fairbanks was a natural athlete and actor, born to a father who was in his own right a skilled Shakespearean actor. Starting out as a stage actor, with talent in that field which literally took him to theaters in all corners of the globe, Fairbanks soon found that with his athleticism and charisma that the stage was too confining for his talents. Through his close friendship with Charlie Chaplin, Fairbanks eventually came to be involved in the foundation of United Artists. Fairbanks became well known as a swashbuckler in films, also doing some comedies along the way. Also worth noting, Fairbanks made the successful transition from silent to sound films, further showing his versatility and immense talent.

With the success of United Artists, the studio became a haven for independent filmmakers. Being freed from the attitudes and egos of the studio bosses, whose desire to always be right and to have their own way often compromised the artistic vision and talent of many directors, true artistry and creativity was able to shine through. Fast forwarding several decades, UA would eventually collaborate with talents as diverse as Woody Allen and a young screenwriter named Sylvester Stallone, who at one time struggled to find a studio that would allow him to make his first film as he wished, a low-budget rags to riches tale called "Rocky". The point to be made is that the independent filmmaker, once given the proper venue in which to make films as they wished, would flourish and bring exciting material to the film watching public like they had never seen before. True genius cannot work under oppression and it is true that too many opinions added to a project will only lead to chaos and a compromise of the true vision which one needs to be able to bring all of their ideas to light.

The Political/Economic Environment of American Independent Film

The story of the American independent film is as much an economic as a cultural and political one, as research shows that there is little doubt of the connection between financial incentive and the interest of major studios in helping independent filmmakers in distributing their films. Data shows that in order for a major studio to assist an independent filmmaker in the distribution of their film, fees average upwards of 35% of gross receipts for this "service". This is not to say, however, that even with the possibility of making money that the major studios are interested in heavily distributing independent films. Since the studios have no financial stake in the films themselves, the percentage that they would gain in order to distribute the films is of little interest to them, since their primary interest lies in the promotion, distribution and ultimate profitability of their own projects. As such there is a semblance of the old studio system in the present day.

Despite the overall reluctance of major studios to get heavily involved in the distribution of independent films, there is data which clearly shows that there is lucrative profit to made in doing so, given the right films at the right time and in the right place. An excellent example exists in the early 1990s, when studios like New Line Cinema reaped huge profits from independent films like "Teenage Mutant Ninja Turtles", "House Party" and "Pump Up the Volume", eventually capturing 4.8% of the overall film receipts in 1990 alone. In the case of "Turtles", the popularity of the film led to a merchandising bonanza, as millions of children and teenagers bought a wide range of products, including breakfast cereal, action figures, and even a morning cartoon program shown first on American television and eventually broadcast around the world in dozens of different languages.

The experiences of New Line in the 1990s soon gave rise to a new breed within the Hollywood pipeline- the independent film distributor. True, independent distribution had been in place since the days of UA's foundation in the early 1900s, but in the 1990s, there was a different angle to the scenario. What is seen in a study of the history of independent film in the 1990s is more of an entrepreneurial angle to the situation. The independent film distributor is a rare breed who must possess nerves of steel and a high level of negotiation skills. Because the major studios have a virtually unlimited supply of films to provide to the theaters, the theater operators are highly receptive to the sales pitches of the major studios, which represent the ability to always have something to show in the theater, as well as top stars appearing in the films and massive marketing campaigns, driven by endless budgets with which to advertise the films and attract the audiences who will pay to view the films. On the other hand, the independent distributor must convince theater operators that their "one shot deal" is worth the risk. In this instance, the theater operators must have as much of an adventurous ilk as does the distributor, as both parties are taking a substantial risk in bringing the film to the eyes of the public.

The numbers that represent the struggle between major studios and independent films are hard to dispute. Typically, major studios capture 85% of the film receipts in America, with the independents claiming the other 15%. This makes the effort for independents to survive, let alone thrive, more critical than ever. For independents, every film also represents a theoretical rolling of the dice, for one failure from a financial sense for an independent can lead to huge financial losses and erosion of reputation that could keep them from making their next big deal for film exhibition.

Research into the quality of the output of majors versus independents is also something which has economic impact. Naturally, for the majors, the bottom line is almost always the bottom line. Major studios have a responsibility to stockholders and stakeholders, and as such, they typically lean toward the production of serials and other projects with wide commercial appeal, preferring to make money over opening up new artistic avenues. For independents, the desire to explore a new angle of filmmaking is often enticement enough to make a film that appears to be commercially questionable. This instinct is not always correct, however, as evidenced by two Academy Award winning films for best picture in the 1990s- "Driving Miss Daisy" and "Dances With Wolves". Both films were rejected as being too risky by major studios, eventually being produced by independents, which took all of the risk in this case and, as time would show, reaped all of the benefits from their risk. In fairness, this situation seems to have emboldened majors to take more risks in the last several years, and hopefully will inspire more in the years to come.

Another economic perspective when talking about the relative acceptance of the independent filmmaking effort over that of the major studios comes from the viewpoint of the working men and women whose labor actually makes films possible. For the unionized workers who ply their trade in the production of motion pictures, there is an interesting perspective worthy of a closer look. On one hand, unionized labor in the movie business prefers to work with independents because their desire to make bold artistic statements, and are more likely to make quick decisions and take definitive action to bring a film to life and to depict something that will advance the making of film to new heights and lead to accolades and awards , such as in the case of "Driving Miss Daisy" as discussed earlier.

On the other hand, union workers in some cases have accused independents on cutting corners on safety and other necessary equipment in an effort to conserve costs due to tight budgets. As a result, workers are often forced, some say, to work in conditions that are less than desirable. Moreover, the independent film project, unless underwritten by someone with vast financial resources, can in some cases run out of money and the workers themselves can find that they will not be fully paid for their efforts.

Without a doubt, the independent filmmaker has challenges, as well as opportunities that others in the industry do not. All of this begs the question as to what the future will hold for the independent filmmaker.

What the Future Holds for Independents

As has been seen, independent filmmakers have earned the right to be seen in the same perspective as are the largest, established studios. Therefore, it is legitimate to ask what the future will hold for the independents. Certainly, beyond the awards that attest to the legitimacy of independent films, other examples of the progress of independents can be seen in the popularity and growth of film festivals such as Sundance Film Festival, which hosts an annual event that features independent films and boasts a guest list of celebrities that rivals any event that Hollywood has ever had.

The challenge for independents will lie in the common denominator that all other "businesses" have faced from the beginning of time- money issues. Producing any types of films is not an inexpensive proposition. The point was earlier made that the survival of the independents literally depends on the success of each project before another can be started. Therefore, the focus must continue to be on quality over quantity, substance over style, and the continued nurturing of the entrepreneurial spirit that gave rise to independents in the first place.

As an aside, the major studios would be well advised to explore the possibility of more financing of independent films, albeit under other names than those of the studios themselves, lest the free spirit of independents be lost altogether, and those filmmakers fall prey to the lure of easy financing and the majors become able to overpower these smaller organizations, which would take the film industry back to a state which existed in the days before United Artists and the studio bosses would rise to ultimate power once again. Indeed, the independent flame must keep burning brightly and warmly for generations to come.

Conclusion

In this research, one conclusion has emerged quite clearly- the independent filmmaker has certainly risen to the highest levels of the motion picture industry, winning its highest accolades and generating the kind of box office receipts that even the major studios find it difficult to earn at times. Therefore, in closing, what can fairly be said of the independents is that they will certainly continue to be a valuable part of cinema, provided that they continue to focus on the type of quality that they are currently best known for, and resist the temptation to merely try to put out the product that will make the fastest money with little regard for the output. Hopefully, the former will be the case.

References

Ferncase, R. K. (1996). Outsider Features : American Independent Films of the 1980s /. Westport, CT: Greenwood Press.

Lewis, J. (Ed.). (1998). The New American Cinema. Durham, NC: Duke University Press.

Moran, A. (Ed.). (1996). Film Policy: International, National, and Regional Perspectives. London: Routledge.

Prindle, D. E. (1993). Risky Business: The Political Economy of Hollywood. Boulder, CO: Westview Press.

Rosenthal, A. (2002). Writing, Directing, and Producing Documentary Films and Videos (3rd ed.). Carbondale, IL: Southern Illinois University Press.