Tech Won't Save Us - How Streaming is Reshaping the Film Industry w/ Peter Labuza

Episode Date: July 29, 2021

Paris Marx is joined by Peter Labuza to discuss how streaming is reconfiguring Hollywood, what that means for the film and television we consume, and whether it’s time to consider antitrust action against the streaming giants.Peter Labuza is a lecturer at San Jose State University whose work focuses on the legal, financial, and political history of creative industries. He’s currently writing a book about the history of entertainment law in Hollywood. Follow Peter on Twitter as @labuzamovies.🚨 T-shirts are now available!Tech Won’t Save Us offers a critical perspective on tech, its worldview, and wider society with the goal of inspiring people to demand better tech and a better world. Follow the podcast (@techwontsaveus) and host Paris Marx (@parismarx) on Twitter, and support the show on Patreon.Find out more about Harbinger Media Network at harbingermedianetwork.com.Also mentioned in this episode:Peter wrote an op-ed for the LA Times about what streaming is doing to culture and the need for antitrust action.Paris has written about the consolidation in entertainment companies, the need to consider state action, and Amazon’s acquisition of MGM.David Graeber wrote that British culture from the sixties was a product of the welfare state.Joshua Glick wrote about how Netflix is changing documentary production.Jennifer Holt provides an overview of media deregulation in “Empires of Entertainment: Media Industries and the Politics of Deregulation, 1980-1996.”FilmCritHulk wrote about the impacts of streaming and industry consolidation on labor, unions, and more.In 2020, a judge ended the Paramount Decrees.The Writer’s Guild recently went on strike over streaming residuals.Salt of the Earth was a film made by blacklisted filmmakers.Support the show

If we think about classic monopolistic behavior, if one studio can dictate all the rules of an art format, there's certain things that are going to be told and aren't going to be told. Hello and welcome to Tech Won't Save Us. I'm your host, Paris Marks, and this week my guest is Peter Labuza. Peter is a lecturer at San Jose State University, and he's currently writing a book about the history of entertainment law in Hollywood. Peter wrote a great op-ed for the LA Times recently talking about the effects of streaming like Netflix, Amazon Prime Video, things like that on the film and television industries, but also, you know, the culture that we consume every time that we watch these platforms, how it's changing the type of film

and television that actually gets made and gets put in front of us. I've been writing about the topic of streaming and how that's affecting the film and television industries for a couple of years now. And so when I read this piece by Peter, I said, this is the perfect opportunity to talk to someone with this historical knowledge about the industries, about what's happening right now, to kind of put it in a good context, but also to understand what it's doing on the culture side of things, which has been harder for me to explain. So I was really happy to talk to Peter about this. And I think that you're really going to enjoy our conversation. At the end, we have, I think, a little bit of a disagreement about the role of public funding in the film and television industries. And I think Peter makes a really good

point that it's really difficult to see how this could happen in the United States right now just because of the way that the political system operates. And I would note that from my end, the interest in public funding looks at what's happened in Canada and Europe over time and how we do have these traditions not only of public broadcasting but of public funding for film, television, and other forms of art. When I ask that question, I talk about how in Canada, one of the reasons why the public broadcaster was created was to ensure that U.S. news and U.S. culture was not what was dominating Canada and that there was Canadian news and content that was being produced.

And that was also a driving know, a driving force for public arts funding so that there was actually Canadian art being produced instead of just everything coming in from the United States in particular. I think that tradition is a little bit different in Europe where, you know, public broadcasting comes out of this idea that this new technology should be for the public good. And there's obviously also a desire to, you know, fund the arts to ensure that local film and television and things like that are being produced there as well. But I would also note that, you know, public funding plays an important role in ensuring that things that otherwise might not be produced because they wouldn't be profitable

could get made if, you know, they are able to get that funding. And in the United States, that role can sometimes be played by philanthropy and private donors and things like that. And that's a role that I think in Canada and Europe is more often filled by public financing agencies rather than rich people. But I would note just before we get to the episode that I think Peter also makes a really good point that the need for kind of public supports is also really important. And he talks in particular about healthcare. But you know, I think that we could also look at many other forms of support for artists or just for people in general, so that there's not so much risk of taking on these creative projects. There

was something that I read a few years ago, I believe it was written by David Graeber, where he explained that part of the reason that the Beatles and like all these bands were coming out of the UK during a certain period, you know, a number of decades ago now, obviously, was that the welfare programs them the stability to get the band off the ground so that they didn't have to be working some kind of like low paid job that took away from the time that they would have been putting into their music or another art form instead. So I think that that's something to like reflect on when we think about what are the kind of structures that would help promote more creativity and art through public funding and public programs, even if they might not be directly for artists. So with that said, Tech Won't Save Us

is part of the Harbinger Media Network, a group of left-wing podcasts that are made in Canada. And you can find out more about that at harbingermedianetwork.com. If you liked this episode, please make sure to leave a five-star review on Apple Podcasts and share it on social media or with any friends or colleagues

who you think would enjoy it. And every episode of Tech Won't Save Us is provided free for everybody because listeners who like the show choose to support it with a monthly donation. If you feel like you learn from the show every week, you can join supporters like Nathan Strickland and Hannah from London by going to patreon.com slash tech won't save us and becoming a supporter. Thanks so much and enjoy this week's conversation. Peter, welcome to Tech Won't Save Us. Thank you so much for having me. Really glad to be here.

Yeah, I'm really excited to chat with you. You know, I've been wanting to talk about streaming and you know, what's been happening in film and television for a while. And so you published this op ed in the LA Times recently. So I'm really excited to kind of dig into this with you. And I wanted to start by talking about the recent history of consolidation in the industry. Listeners will probably be familiar with Disney's acquisition of Fox a few years ago, and will certainly be familiar with, you know, Amazon's acquisition of MGM that was announced recently, and that is supposedly getting some extra scrutiny, but we'll see what comes out of that. But obviously, these mergers are part of a much broader trend that has been occurring, you know, over the past decade or so.

So can you start by talking a bit about the recent history of mergers in film and television? Yeah, absolutely. So obviously, the way that Hollywood's been set up for decades, all the way back to the 1920s, has always been around a few major companies kind of expanded between there was the big five, and then we had the big six. And now say, yeah, Fox moves to Disney, Netflix moves in kind of Fox's place, right? It's always kind of been built around a few large, big companies, a lot of freelance workers, who are kind of moving between and small production companies that make up these spaces. I think maybe people don't necessarily know, but unless you're, say, Disney producing the big blockbusters it makes, most films, even those released by major studios are produced by smaller production companies that the large studios are financing, right? So it's sort of, I think, a good example, one people might know if they've watched the horror films that come out of Blumhouse,

which is run by Jason Blum. They did films like Happy Death Day. They did the Jordan Peele films that people like a lot, Us and Get Out. They exclusively work with Universal. So it's sort of a thing, Universal finances the company, the company makes the films, and then Universal distributes them. So there's a lot of rise and fall of those small companies, and then a lot staying on the larger side. But there's been shifts essentially going, you know, you could start in the 80s and 90s, you could go back to the 60s of large conglomerates being built. So NBC Universal has been owned by General Electric.

Now it's owned by Comcast still. AT&T obviously made a big splash when it tried to acquire WarnerMedia. It did acquire WarnerMedia for a few years. AT&T has this infamous history now of destroying every company it tries to touch, which is very, very bizarre. DirecTV crashed and burned under them.

Warner Media tried to do this. HBO Max in this light, I wouldn't say is crashing and burning, but got into a lot of mess. And now that's being siphoned off. And Discovery, which obviously is, you know, people think about the Discovery Channel and Shark Week, but right, it's the Food Network, it's the Home and Garden Network. It's a lot of reality programming, right? That is like a huge bastion of content production in the industry, not necessarily the big blockbusters, but just makes a lot of money. So that's going to take over Warner Media. So that's being combined in a different way. But I think the big thing that's really defined the

last 10 years is this move to streaming as this new platform. Obviously, we think about this first as Netflix. And of course, if you're young enough, or I certainly this was the way that I became a cinephile was Netflix DVD distribution network, right? When my parents realized they didn't have to drive me to the video store. And if they just paid what was $15 a month online, and I could just, you know, use the mailbox to get any movie I wanted. That was like a huge, great thing. And then they moved to streaming. And that was right, it was like, oh, all the films that you could possibly get from DVD, we can have some licensing from different studios, from DVD companies that do more archival or foreign films. And we'll have

that. And then in 2014, right, is actually the really big decision when Netflix gets into its own streaming production. The story as it goes, right, is Reed Hastings knows that House of Cards, the Kevin Spacey, David Fincher political thriller, was being shopped around Hollywood, but nobody was picking it up. And he looked at the internal data numbers that Netflix had about what people stream, what people like, and said, this makes sense. This can be a popular series. Why don't we just hand them the money and do it? So that's the first move toward internal production. And what kind of happens during that moment, I think is really, really crucial because it

makes sense that Netflix has seen that the licensing for streaming is going up from other studios, right? So CBS, which is part of Paramount and Viacom or Disney, right? They're all kind of increasing their licensing fees. And so Netflix is like, let's make our own stuff where we don't have to pay those licensing fees. What sort of happened now is that Netflix makes about 50% of its own production. It's only trying to increase that. And then the other studios realize that there's money to get out of theatrical entirely and build their model around large streaming platforms. So it used to be the way that movies made money.

And well, television is slightly different. But if movies made money, is that you make a big blockbuster or an indie hit or a midsize hit, right? So that makes a lot of money as you downstream down the way. A lot of it gets built out on that first weekend box office, which is why it's always been important in Hollywood. But all that sort of downstream. Now it's get it onto the streaming platform and get the subscription space and keep that as a steady amount of income. So now what we've seen is Disney has launched Disney Plus, Paramount first had CBS All Access and now has Paramount+. Sony has made a very kind of specific play to not build a streaming company, though they now have a specific agreement with Netflix to show after they do their theatrical

window to go specifically straight to Netflix. Netflix obviously has their huge production, Universal as Peacock, which also is doing the Olympics right now. Right. So obviously has their huge production, Universal as Peacock, which also is doing the Olympics right now. So I think in one way, the studios that are the same as they were maybe 10, 15 years ago, with the exception of Netflix and 20th Century Fox, and it's kind of the same players. But what I think is really, really different is that the studios usually had these relationships with the large theatrical companies, AMC, Regal, and the very smaller subsidiaries after that. And now they're kind of getting cut out of the game on a competition level for theaters.

And it's being built around the streaming, which kind of feels right going back to this classical exhibition format that the studios once again own exhibition in a way they haven't since the 1930s and 40s. I think that kind of covers a lot of what's going on. And now there's a lot of fighting for mid-sized companies and where those companies are going to go. I think that gives us a really great kind of overview of what's been going on and what's been happening. Before we dig into the effects of this shift to streaming and how much it's grown, I was interested when I was looking at the history of these recent mergers, it looked like before streaming started to take off, Disney was already kind of moving into this model of

buying up these massive IP franchises, Marvel,, Marvel, Lucasfilm, things like that, to focus on a model of theatrical distribution that was about these like really large tentpole blockbuster films. And you even saw the number of smaller mid tier films that it was producing going down as it was focusing more on these blockbusters. And then streaming kind of comes along. And it seems like that strategy, even though going for blockbusters. And then streaming kind of comes along. And it seems like that strategy, even though going for blockbusters in theaters seems very different than, you know, building out a streaming platform, but getting all of that major IP seems like it also benefits in the streaming era, because it's this kind of recognizable thing that people are looking for.

Yeah, you know, it's interesting, right? I think you're kind of nailing kind of what happens, right? All the major companies realize that theatrical works as a model, if you make a blockbuster, or you make something that kind of surprises in some way. So it's either got to be a Marvel's Avengers level event where everyone goes to see it. Or, you know, maybe it's Jordan Peele's Get Out, right? You can produce it for $10 million. Maybe you do about $15, $20 million in advertising, so you spend $30. But then you make $300 million in box office worldwide. And obviously, you have to split some of that with theaters. But that's a huge amount of money, much more than you can ever make on a stream platform. And part of what has also happened is the transformation of television at this time.

And I guess television's focus on adult audiences, the development of prestige television, going back to HBO, Sopranos, The Wire, Mad Men, right? And so we've seen that actors and directors are more willing to work in these mid-level budgets and do what are now streaming series and everything. And that's kind of replaced the two hour film. But I think it also and we'll get into this more in terms of how television used to work in terms of how profits were due, how you design a series over time, how you evaluate how a series is doing. Because what's been really, really weird about this era is, obviously, we can look at it and be like, oh, there seems to be these danger meters going off little red alarm mirrors, but more content's being produced, more people are getting paid more to produce

content, except we're entering this weird precarity that's happening in the market. And right, I think it's kind of similar to a lot of ways that people have described some other industries right now, right? There's more money being produced for everyone, theoretically, except not everyone's getting paid what they used to been paid 10 years ago. And there's certain splits are happening. I think this was really, really obvious. And for those who may have followed the Writers Guild sort of strike against their talent agents, which began in 2019 and then continued into 2020, right, is that there was like, we're all producing so much content, but we're getting paid less and less every single day. What is going on here? And so I think there's a lot of questions about how this industry is restructuring all of its elements and how, I mean, really how it's affecting talent and labor. One of the things I was really interested in asking you about, especially, you know, after reading the op-ed that you had in the LA Times, was on how this shift to streaming and how everything moving onto these platforms also alters the kind of things

that are made. You know, you were talking a little bit there about, you know, how the move to blockbusters was changing things in a theatrical sense. But how does things moving to a streaming model also affect the type of like film and television that ends up getting produced for these platforms? Yeah, no, it's a huge question. You know, sometimes I want to always caution my more artistic whims, right? Like I think it's one huge question. And, you know, sometimes I want to always caution my more artistic whims,

right? Like, I think it's one thing you can get lost, especially when we're discussing issues of competition is being like, well, is it bad competition? Or do you just dislike blockbusters? Because I'm not a particular Marvel fan or Star Wars fan. I mean, I guess I went to see the last few Star Wars, but I don't go to watch any of the Avengers. That's fine. They're out there. People enjoy them. But right, it's sort of that question of what do I like? I like two-hour features or 90-minute features. I'm not a fan of trying to sit through eight hours or something. I think a lot of people have complained like, wow, that would have been a really, really good movie. Instead, it was eight hours. I think a good example of this was, and that wasn't even a streaming series. It was a television series, The Terror, which was about a bunch of men in the 19th century stuck in the Arctic. And I was like,

why is this thing 10 hours long? Well, there's a lot of reasons for that, right? Because like Netflix kind of created the idea of the bingeable series and that that was kind of the way they're pushed to the model of dropping all the episodes at once, as opposed to the weekly television release, really changed the way that people thought series should be produced from the start. And it really pushed away from some of the models of the classic writer's room toward a more director focus, which we might say is good. But I think there's sort of questions that we should definitely ask about that. But also, then what gets put in theaters gets, of course, then pushed to like, if it's not a blockbuster, it should be something that's streamable. And it should be something that extends past two hours. And I think a lot of

people aren't necessarily interested in making those. And so like, in terms of the models that you want out there, you kind of get pushed that if you like watching, quote, unquote, adult, interesting movies, and I use adult very, very in quotation marks, right, you have to watch it at home. Now, you don't have as many options at the theater. Many of the art houses that are out there are more and more having to show certain films from large studios that they don't necessarily want to do, but it's the only thing being offered to them. So I think the fact is that talent finds themselves now in places where they have to sign up for one of these large franchises in contracts, right, that guarantee that they'll do a certain number of films over time, as opposed to it used to be right, a Matthew McConaughey can do one bad action movie, get paid a lot of money and go back and do interesting kind of films that he wants to do. That's a bad example, right? But like now it's like if you're Scarlett Johansson or something, right, you've signed up for how many Avengers films you didn't know necessarily, and your contract kind of requires and you can

negotiate it a little bit, but they're going to kind of push you away from other projects you might want to do. And I think that's sort of, obviously, the intellectual property part of this is really important, too, because there's this push that the only things that make sense are things that are already recognizable to audiences. Obviously, some of that makes sense in a lot of ways, but a lot of it doesn't make sense. And it seems to be, you know, that unless you're doing a revival series of something, I don't know, I think the good one that just is, I know, I've seen some advertisements during baseball is for the Turner and Hooch miniseries on Disney+. Turner and Hooch was a Tom Hanks movie in the 1990s about a dog who can solve a crime with him.

It's a very dumb comedy. It's fine. It's a fine, stupid Tom Hanks movie. I don't know who was screaming to turn that IP into a thing. I mean, you could just make a series about a cop and a dog, or I think it's a cop. You could just make it. You don't have to connect it to the series, except someone is explaining somewhere up that it has to be that IP that people recognize theoretically. Yeah. And you saw that with Amazon's acquisition of MGM, where they were saying that it was all about getting all this recognizable IP that Amazon doesn't necessarily have, right, to build out the streaming catalog. And I think you can see that sometimes when people argue about Disney and Marvel, when

they say that Disney is trying different types of films and different formats. It's just they're putting them all like within the intellectual property of Disney so that people recognize them and will keep watching them because it's part of this universe. And it's like, yeah, but you know, is that actually a good thing? Is that what we really want to see? And I'm not so convinced about that. And I think you're saying the same thing. But in the piece, you also talked about how this shift to streaming has affected documentaries in particular, like in a really concrete way. I was hoping you could discuss that a little bit because I found that really interesting and concerning.

Yeah, and I should cite Joshua Glick here, who's been doing amazing work on this. He's really the one who kind of has kind of solidified my ideas around this. But obviously, Netflix is big thing in terms of developing documentary over the last few years is right. They have so much people watch nonfiction on Netflix. And obviously, there's been a huge boon to documentary since if we go back to Bowling for Columbine and March of the Penguins, right? There's been, you know, you can have documentary blockbusters. And then of course, HBO had Making a Murder and Serial obviously is a kind of

documentary and all these other crime serials. But I think what Glick argues, and I certainly agree, is that one of the pushes is that, you know, documentary has this long, radical history, this sort of political, go back to Harlem County, USA, as one of the great, amazing documentaries about a workers' minor strike in the 1970s. And what now, you know, Netflix, because it's so interested in streamability and bingeability, is this push toward these more story-focused documentaries that are necessarily almost apolitical in nature. I mean, I think the big one that Glick references that I think my people know is if they watched American Factory, which won the Oscar for Best Documentary a couple

years ago, produced slightly by the Obamas and their production company, Higher Ground. The filmmaker behind it, Julia Reichardt, has a long history of really, really fascinating labor documentaries. And this film does include a labor strike. But in one thing, it kind of ends up just focusing on story and trying to be as apolitical about the nature of this factory that's owned by China, but in middle America, and more focusing on cultural distinctions and everything. And it sort of loses its sort of political valence in a way. And I think that's a lot of the way that documentary is being built today. And if you go to a festival, this is where the real problem is, you go to a festival, people are trying to get their documentaries now to. Sometimes you are told by,

you know, different grant agencies, go get your Netflix distribution deal, and then we'll give you the grants, right? So it's a lot of ways to push people toward ultimately ending at one place. And right, if we think about classic monopolistic behavior, if one studio kind of can dictate all the rules of an art format, or a political format, right? There's certain things that are going to be told and aren't going to be told. Yeah, absolutely. And, you know, I think it's a really concrete example of one way that we should be concerned about the trend, right, is how these things are evolving. And if you are kind of taking those radical elements out of the documentary, then what are you losing there? You know, one thing that I always feel when I'm writing about these topics or thinking about these

topics is that it's so difficult to recognize what isn't being made or how things are being changed as a result of, you know, different business models and things like that. Like, it becomes really difficult to say like, oh, yeah, you know, there are Marvel movies in the cinema, but what we're not getting is this other kind of film or, okay, we're getting these types of documentaries on Netflix. But what we're not getting is this other potential type of documentary that might have been produced instead, had, you know, the structures been oriented in a different way. Yeah. And I think it's almost becomes as part of a chicken and egg question, right? And I think about not that I chicken and egg question right and i think about not that i usually like to think but i think about the boomers right but like or boomers or gen x who

used to go to theaters right now the push for anything theatrical is usually geared toward adult males 18 to 35 and sometimes women 18 to 35 but certainly not older than that and the question is right did studios stop making types of films that appeal to older generations because they stopped going to theater? And there's certainly issues with the theatrical experience, and especially the way that AMC and Regal and Cinemark have sort of not necessarily done. But I think a lot of them aren't going to theater because they're not seeing the type of films except for maybe a couple of months from October to January when it's Oscar season. And they're not finding anything that might necessarily appeal to them in a certain way, even though the potential for

audiences out there. And I think because of the way that the market's being reshaped by the streaming era and by technology, right? They're being encouraged to stay home and subscribe as opposed to go out and try something different. And I think that's definitely part of it. And yeah, I think you're absolutely right. It's like people think, well, that's just the way it goes. But we've seen in a lot of markets and just to, you know, maybe to go toward an antitrust issue and everything, right? If you reshape the rules in the market,

new possibilities can emerge all the time, right? Like, I mean, I always tell this to my students, like you watch films in the 1940s. And I love old Hollywood, like, I think those are some of the greatest stuff ever. But there's a lot of similarity between like the most expensive films in Hollywood made in 1940 and some of the least expensive. And then you go to the 1960s and it's like, here's some, you know, sexy exploitation films and art foreign films and some big blockbuster musicals and everything. But the diversity of kinds of films are made, the social problem dramas that are being made, right?

You had so much choice at that time in the theater. Now people would say, well, you have that choice now on streaming too, but I don't think it's necessarily the same in the way that those options are being limited by who controls what those streaming possibilities are in terms of the box that's being created, as opposed to the potential for any theater to try and make it in the earlier model of competition. Absolutely. And, you know, I think that goes right into what my next question was going to be. And that's really around how the shift to streaming then changes distribution, and how films get out there, how we access films, because now we're moving to this place where, you know, as you were saying earlier, all of these companies are making their own streaming

platforms. And so often, you know, we need to subscribe to that platform to get their content. But then there are also production companies or small distributors that are making films that then have a harder time reaching an audience because now you need to get onto one of these platforms if you're going to access something. So can you talk about how the move to streaming has changed the way that films are being distributed and then how that affects companies and filmmakers who don't have a streaming platform of their own? Yeah. So let's take like you're a small midsize indie production company 10 years ago, right? You're going to make a film, maybe you've got one A-list star attached to drama,

you might be hoping for maybe some Oscar buzz and to make something right. And what you're going to do is you're not going to get into the big multiplex theaters, but you can start to get into these art houses, right? These art houses that exist, there's maybe Art House Convergence, which is a nonprofit that sort of collects a lot of the art house and helps build solidarity. I think there's about 300. And then you could say, take like Landmark, which is a company that owns about 200 in the United States or so. So maybe you start in 20 theaters.

Oh, you get a really, really good review in the New York Times from Manolo Dargis or Justin Chang in the LA Times. And people start going and they talk, hey, this movie was really, really good. It's really interesting. And the studio's like, oh, great. Why don't we expand to 50 theaters instead? And then we can expand to 100. And maybe you become really buzzed. Maybe you're a parasite or a moonlight. Suddenly, those large chains are being like, hey, what's this movie? How much do you want for this? What's your percentage deal going to be? Right? So you have that potential to make it right. This has always been the way that Hollywood makes films, right? Like you have the blockbusters, which are guaranteed money, but you have all

this possibility of things rising above and right, that's the model, they're going to work. Now, the model is, well, what you really want to do is just get that upfront check from Netflix. And I say upfront check, because it's very important. Because Netflix will not be sharing any data with you about how the film does, you might not even have any guarantee of its placement on the UI, the user interface. Maybe it's buried. Maybe it's this. And unless it's Netflix's own, I mean, you go to the front page of Netflix and they have a mix of their own original content and everything. But sometimes it's very difficult. And I've talked to specific filmmakers who have said, yeah, my film premiered on Netflix and nobody watched it. Nobody said, unless they knew about the movie ahead of time, you did.

Now, that's a very different model because those art houses that I'm talking about, right? If they book you in their real estate, they want that film to succeed because they're getting a percentage of the profit. Now, Netflix can pay you a nice big check at the beginning, but if your film is succeeding, it's totally outside of your control. And Netflix incentives to make your specific film succeed are a little different necessarily, right? Their model is to make sure people don't unsubscribe, which is different from to make films succeed. So it really changes the dynamic in terms of how you create profits, right? So Disney Plus is a great example, right? Because they started

out and they're like, well, the big thing that's going to get a bunch of people to subscribe is a lot of people have kids. You don't have to buy Moana 10 times on VOD or even set up the Blu-ray. It's just going to be there and everything. But then Disney realized to keep people subscribed, oh, we need to have high quality blockbuster content. So they did this Disney's Investors Day, which was a whole hubbub on Twitter. But right, it's just kind of like this shift because the investors are also the fans and all that. 10 Marvel series, 10 Star Wars series, 10 Pixar series. This is to make sure nobody unsubscribes ever. But it's a different model of the subscription

growing to scale. I'm sure if you talked about a lot with it. There's a sort of push towards scale being the big issue, not necessarily the money that's being made by each individual. I'll say a big problem with Disney that I've been following, and I think is APRU, which is a very important number for a lot of the studios now is how much you get per subscriber. Netflix does the best they get about $12 per subscriber. Disney was getting about I'm gonna flood the numbers, but they're generally right. Disney was getting about $5 per subscriber in 2019 when they launched. But then they launched this free account version in India, Disney plus Hotstar. Hotstar is

a very popular India, and it partially gets into Indonesia. And that's dropped by an entire dollar in a year. And it's all toward this push toward scale, which the investors actually really like. They like seeing that scale. That's what keeps the Disney stock number high. But they're making less money as they go along. And it's not clear that they're going to, as they invest all this money in this large-scale content, they're going to make more money down the road. So the money issue is getting weird here. And it leaves those small production companies, right? It's like, either you are going to become somehow a small subsidiary of Netflix, or you're going to make those decisions somehow, or you're just you can't necessarily compete in the stream market,

maybe you can go to one of these smaller streaming companies like Mubi, or Fandor, but like, it's gonna get scary for you really fast. And your original financers who helped you produce the films in the first place are going to start pulling out unless you somehow partner with these larger companies. I think what you're describing there is fascinating, right? Because it makes me think of in the early days of Uber, like it was massively subsidizing rides, you know, you could get a ride for super cheap. And now kind of, you And now the discourse that I think many people have seen since the pandemic has eased a bit, I guess, since vaccination rates have come up, the pandemic is far from over, but is that the rides are very expensive because the

subsidy that Uber is providing has dropped because it's trying to reach a profit. And it feels to me like the moment that we're at with streaming is it feels like we're a bit beyond this kind of like golden age moment that people were talking about with Netflix, where like it was investing in all these kind of like diverse creations and blah, blah, blah. And then it reached the point where it was like canceling series after two seasons. And that was mainly hitting women and stuff like that. But we're at this stage where there's a lot of competition in the sense, well, you know, a bit of competition between major giants, Disney, Netflix, Peacock, etc. But they are spending a lot of money to try to get these subscribers to try to get subscribers up to try

to get people in their platforms. But when does it reach the point where they need to turn a profit from that or a significant profit? And then what happens to those vast pools of content that they're producing now? Will they still be able to produce as much as they're doing now to try to get those subscribers in? Will they then be able to hold on to people if that content drops, right? Yeah, and this is Netflix's plan. I mean, only makes sense. And this is like, I think this is one of the things is Hollywood's always been like, we're Hollywood, we do things one way. And the sort of financial legalese of the tech industry

coming into Hollywood, I don't think people have really understood. I've talked to a few entertainment lawyers who really understand what's going on because they're seeing it with the talent they represent. I think a good example is Amazon just premiered this film, The Tomorrow War. It's a sci-fi, big blockbuster.

Chris Pratt stars in it. That was a film that was supposed to come out in theatrical from Paramount, and Paramount sold it to Amazon. Well, how does Pratt get paid? He's a big star. He is selling this film. It's an original story, quote unquote, that's built around him. But he doesn't get any profit participation from Amazon. Maybe he doesn't even know how many people viewed it or something.

And, you know, there are data analytics companies out there that can do this. But it's very different from the public Sunday box office that Variety and The Hollywood Reporter used to kind of put on their cover. But I think the question is, like, how much do you need to spend? And you know, you see this, there was a story in the LA Times a couple years ago that just fascinated where like, one of Disney's key investors was like, you need to withhold dividends and put all that money into making streaming content. And it was like a billion dollars. And of course, Netflix is spending $17 billion on content this year. They're expanding into games as well, which is going to cost more.

And their debt is just going to continue to accumulate. And of course, the only year that Netflix made a profit in its last 10 years was in 2020 when it shut down production and it wasn't spending that money. And it was finally like, oh, they actually do make it a profitable company. But that moment that they have to start turning the spigot off and making a little less content so they can make a little more profit is going to be one because then it's a question, are people going to subscribe? You can see the data charts in terms of every time there's a price raise in Netflix, a few people drop off profit, right? They're always trying to find that balance between how much can we raise the prices where people won't drop off. But it creates a sort of unsustainable market at some point, because we're not building films in

the same way. And they don't make a profit in the same way. The weird thing about we can complain about that, you know, theatrical, the DVD to this is it was an extremely profitable enterprise to follow all those things the individual profits of a single film now are very vague and not clear and it's like i mean netflix has internal numbers and they know how things are doing but like i wonder if they can, really figure out are people unsubscribing because of this or that or whatever, right? So they're building a model that's like, the only thing you can do is just keep producing series and hope for what Netflix is particularly hoping for is their Game of Thrones, right? Like so Game of Thrones being the most successful TV series of the last decade. Amazon's doing a Lord of the Rings series hoping to create their own Game of Thrones. Everyone just wants that one series that makes sure nobody unsubscribes. It's why Disney is doing this. And it's not clear what then all the other content is there for except for filler. And that could lead to very good things because the content can be whatever, maybe it allows for a lot of creativity. But I think there's questions now about how the industry is organized that doesn't necessarily lead to those same results that maybe the B movies in the 1930s created.

You were discussing earlier about the history of this and how things developed, right? And in particular, you talked about the change between, say, the 1940s and the 1960s and what was kind of being produced, right? And so, you know, as we've discussed, we have reached this point where things are consolidating more and more. And obviously, there is a very clear example in history where, you know, the power of the major studios in Hollywood, you know, reached a point where the government had to step in and take an action to address it through the Paramount decrees. So can you talk a little bit about what the Paramount decrees were, how they came to be and what kind of effects that they had in the film

industry? 1910s, Hollywood, mostly a wild west, lots of small production companies, Universal is the first one to build a big factory like right thinking about the Ford factories in Detroit, model of production, but it's sort of that. And then the 20s is the moment when Wall Street comes in and says, hey, I think movies are big business. How do we get this? Well, you need to build these sort of consolidated factories, and you're going to create the Motion Picture Association of America, or what was the AMPTP, and now we know as the MPA, a trade association to kind of set standards and practices. These are labor practices.

These are political practices, foreign relations, even copyright issues. All that kind of gets consolidated out. And you get five major studios, the big five. This would be RKO, Metro-Goldwyn-Mayer, Paramount, Warner Brothers, and am I going to forget our fifth one here? I'm going to forget our fifth one. And then there's three smaller companies that are competing at this point. And part of what the studios did is, of course, a classic issue that comes up in antitrust literature is vertical integration. So they produced all the films.

They had big stars and big directors under long-term contracts that they could keep in perpetuity. Sometimes they would loan out to each other, but not certainly to any independent companies. They distributed all the films, not just in the United States, but worldwide. And they owned a large portion of the theaters. And let me just kind of specifically explain how this works. So in downtown areas, they owned 90% of the theater. So where I live in Oakland, you can still see the old Paramount and the old Fox theaters, right? These were owned by the studios, and you only went to go watch Paramount and Fox movies there. And then in more independent theaters or rural areas,

they did a practice called block booking. And this is what really kind of the antitrust case kind of rested on a lot of ways. What block booking meant is if you're Warner Brothers, and you've got a new Betty Davis film, and Betty Davis is an A-list star, it's going to be a lot of making money for you. You're going to sell that to a theater, but you're also going to require them to take 11 more movies. And those 11 more movies are going to be of low quality. They're going to be what were typically B movies, which mean they're 65 to 60 minutes long. They were shot in two to three weeks. And I love those B movies. There's a lot of creativity that happened in that era in terms of the work production culture, which has a lot to do with the unions and how the unions kind of design things. But these films are of low quality. And if you're a theater, you're looking, well, I really have to get that Betty

Davis film. That's going to be the only reason I survive the next three months. But man, I have to show these 11 other movies. And you try to negotiate, you get cut out. You try and go to a different studio, you might get cut out because they all talk to each other. So it was really, really pernicious for these independent directors. And then of course, the independent producers who existed in this era, they couldn't get their films into theaters because the theaters would never want to break their contracts with the larger studios. So there's sort of antitrust questions going through the 20s through the 30s. There's a sort of early consent decree in 1940 that tries to curb some of this. But then World War II happens.

But after World War II, they go back and they're like, this still isn't working. And the Supreme Court rules in 1948 in US v. Paramount, but representing all eight of the big studios at the time, and say, it's not just that you're a monopoly and you vertically integrate. It's how you use that power to dictate rules, not allow for anyone else to compete. And so the Department of Justice made all eight sign what were called consent decrees. And it said, you have to turn your theater company into its own subsidiary, and then you can do limited block booking, like two or three films. So that created companies like Stanley Warner Theatres, which came out from Warner Brothers. You had National Theatres was a 20th

century Fox chain that split up on that. And so you had this kind of moment, then, where films are being sold on a film by film basis. And this was a lot of precarity, a lot of theatres. And there were some discussions in NATO, the National American Theater Organization, that kind of almost wanted a return to the Paramount decrees because of the quote unquote, stability it created for at least bigger theaters, but certainly not small. But then you had a lot of things that happened in that era where this sort of the B movie era really gets built into what becomes the teen market era, people who know Roger Corman, who really kind of developed, you know, some of the best B movies of the 50s and 60s, things like

I Was a Teenage Werewolf and race car movies and stuff. They're able to kind of get their ways into some of these theaters. Other independent producers now who are kind of finally free of their studio contracts because of another court decision to have on the Warner Brothers are able to create their own production companies and, you know, find footing with the studios and be like, well, you have to negotiate with us and we can have more creative power, we can make more daring, bold things. This is how Ida Lupino's company got started the first female director for over 30 years in the studios. This is kind of how Sidney Poitier's career gets built by kind of his role in being able to control his talent. So you get a lot more films that are doing interesting things. And of course, the studios, they certainly cut production in a lot

of ways, but they're still financing a lot. And they're still finding ways to work with the talenting. And they're just saying, well, the only films we're going to produce are the big blockbusters, the Ten Commandments, Ben-Hur, the big musicals, like Sing in the Rain and Brigadoon or whatever. So it's like there just allows for a lot of diversity in the market, a lot of different people to compete. And it was a precarious time. People were freaked out all the time. But there was a lot of different ways that people could compete in the market.

Looking back at that time then, what parallels do you see to today? And do you think that there needs to be some other kind of action to address the power that is being created as we enter into streaming and as these major entertainment companies own the streaming platforms where so much of the film and television that we consume now are also available from, I guess. Yeah. So the Paramount decrees are already getting exceptions in the late 50s and the 60s. I've kind of written about Irving H. Levine, who really does this with one company that sort of kind of does. And by the time you get to the 80s era, Reagan, the creation of the consumer welfare standard as the only thing that matters, you get a lot more consolidation already happening, even though paramount decrees are on the books.

Jennifer Holt's book, Empires of Entertainment, is fantastic on this. And then last year in 2020, the Trump Justice Department asked, hey, can we take this off the books? And I think the Southern District of New York and Annalisa Torres, who was the judge on the case, was right that these decrees don't make sense. They're dead and all but a name. And one of the things she noted, of course, was that there could be potential for streaming. And I think this is the problem when people talk about antitrust in Hollywood now, is everyone thinks, well, right, the theaters are their own big companies. Theaters don't do well. Why are we talking about this? Nobody talks about that streaming is exhibition.

It's the exact same thing. And if you control what people sign up for or the possibilities that people sign up for, that gives you a lot of power to dictate. Now, people might say the Internet's an open space. You know, nobody's stopping people from signing up for MUBI or whatever. But I think one of the things that, say, someone like Lena Kahn has really written is we need to get away from this consumer idea. We need to focus on, right, the small businesses and producers, the heart of America, as we

like to say, if I'm a, you know, a gun-toting center. But right, like, if you're a small business, or like a small production company, you would like to compete in the same way. And if your only choice is to sign up and work with one of these companies, that starts dictating and limiting your power. So I think that's the sort of similarity, right? If you're an independent producer in the 1930s and 40s, and there were a few, unless you were one of the biggest names, David O. Selznick, or certainly Orson Welles when he came to Hollywood at first, you are at the hold of what the large studios say.

And because they control what films are going to be seen, because nobody's necessarily going to sign up for this alternative streaming platform right away once they're signed up for three or four, right? This has kind of come up, I would say, a little bit in the Epic v. Apple case in terms of how people switch. And it's not as porous as I think the consumer welfare standard would tell us. So I think there's a lot of ways that that issue is like once you own exhibition again, they have a lot of power and it's harder for independent producers to really decide things. Whatever's left of theatrical market, I think will actually be much more driven by art house and that will kind of keep things alive a little bit.

But I think there's questions about like, what are people going to do? And how are people going to living? And especially because how precarious the work is becoming. I think you mentioned briefly, right, about streaming services cutting shows after two years, right? I think people have celebrated that, you know, Netflix has certainly highlighted women showrunners, people of color showrunners, but they've kind of changed the dynamics from television. You don't usually run something two seasons and cut it. Either you cut it at the pilot level or after the first three or four episodes. And so a lot of people get into this placement. They think, oh, I'm going to work on this show for six, seven years.

I know where my income's coming. And then suddenly after two years, they're being cut out. And the labor protections in the industry can only go so far. Hollywood is a really, really great labor town in terms of guilds, but they don't have protections on everything. So I think it's also creating this precarious environment for how people are finding work, even if there is, quote unquote, more work to go around. What you were saying there about the idea that streaming will solve these issues that might have existed before,

offer these new opportunities. It reminds me, I'm blanking on who said the quote, but I was reading about how they were saying when the broadcast networks and television were deregulated, they were saying like, oh, cable is going to address all these problems. We don't need to worry about it. But then cable just created the same kind of oligopolies as before. It just took a little bit of time to consolidate. And then you just had, you know, the same issues again. And so relying on the technology to address these problems, instead of putting in the regulations and things that you need, is probably not the way to address it. Yeah, the one thing we haven't talked about was the old 80s FinCEN rules. So this was a thing back in the 80s when television

and sort of partially what helped lead to the creation of Fox, right, is that all the television companies, you could produce it, but you couldn't show it on your own network. So there was a lot of sort of trade enforcing going around. And this is like, oh, I remember Friends was on NBC, but now the Friends is on Warner Media because it's a Warner Brothers television show. And yeah, I think there's been questions like, oh, can we bring back Finson for streaming? And I really don't think we can. I don't think anyone's going to go there. I wanted to ask as well, like, you know, obviously, when we look at the history in the United States of television and film, you know, it's very much oriented around private companies.

And there are certain regulations that come into play to set the markets in certain ways. So they operate in certain ways and to try to, you know, get certain outcomes from that competition. But I think when we look at other film and television markets around the world, whether it's in Canada or in Europe, there is a greater role for, you know, public funding, public broadcasters, things like that. Do you think that there's also a role for some degree of public funding in addressing these kind of issues that we're seeing with streaming in the United States as well? No. I mean, God, that would be great. I just don't see it. It's just so, you know, I think we have similar politics. I think it's just sometimes really, really hard to imagine the impossible in some ways here. And I think it's impossible, given particularly the history of this country

in terms of government funding for public arts and all the controversies. I mean, go back to, I think about Marlon Riggs work, which was partially funded under the NEH in the 1980s, which was about queer African American identity and the AIDS crisis. And of course, which was partially funded under the NEH in the 1980s, which was about queer African American identity and the AIDS crisis. And of course, that was a whole thing like, why are we funding this? I really get worried because I think the biggest problem that would face this issue, right, is in terms of the political switchback in this country, right? Because the way that you would do this is it would be eventually put under an executive department to distribute funds. And depending on the politics of the executive, and that's the thing that switches the most in the United States,

you would get very, very different kind of precarities being built out of that system. So I worry about the public funding element and like partially the thing about antitrust. And this goes all the way back, you know, Senator Sherman on the floor in 1890 said that part of the reason of passing the Antitrust Act was to stop communists and socialists. It was to stop Eugene Debs. And we can take that wherever you want. And like, you know, I think there's been a lot of discussion in terms of is antitrust right, like the bandaid for capitalism, and we should be much more focused on it. You know, the movie industry is really hard to, I think, you know, even if you look at those state ones and the other foreign examples, a lot of them still rely on a lot of capitalist tendencies in some way. And it's difficult to understand or see how it works without some sort of competition existing in some format. Maybe I'm not being my best socialist self here in some ways, but I think there's questions there in terms of things. And I think one way is to try and create a lot of regulations to fix things. Another way is to just say, well, if you were to say that streaming platforms should be different from production platforms and you should be a separate company if you run a large streamer with a large market share,

the free market can be really bad. Sometimes the free market can be really good. And I think there's a lot of ways that everyone would just figure out something and there would be a lot more diversity in the market like we've seen in other previous historical examples, I would say. So that's why I worry about the state regulation because of the political environment. The other thing we didn't talk about in terms of the 50s that at least had some control in the industry, of course, was the Hollywood blacklist and Hugh Axe's role in Hollywood. And that certainly, as much as there was a diversity of productions, there was a lot of stuff that was completely shut out. There's a really interesting antitrust case that I've been working on a couple articles

related to is this film Salt of the Earth, which is made by blacklisted writers about Mexican laborers right on the border that was basically shut out of every theater in the United States and every distributor, right? So there's ways that that can still be pernicious in some ways, depending on the political environment. So I don't know on the state funding. It always just makes me worried because some things we need more laws, some places we need less laws. I take your point, though, you know, because even though I would support like public platforms in

the way of like a Facebook or something like that, I think that when it does come to cultural production, like it just doesn't work for it to be completely like owned by the state in some sort of way. And at the same time, I think when you look at some of the reasons for public funding and public broadcasters in other jurisdictions, like when I think about Canada here in particular, it's often motivated by pushing back against the cultural imperialism of the United States, right? And that is kind of the justification. You know, I was talking to a filmmaker friend in Canada, I brought her into my class. And when you know, one of the things she said, you know, she doesn't make too much money from films, which is Yeah, but I have health insurance

every day. And that's the thing, right? Like, I think, you know, as we always get into, if we looked at other structural issues that might be actually at the heart of the problem of what people make, that might be the thing I was trying to explain to my students, like, oh, you know, they care about like, you know, how could you make something creative if you don't have the profit motive example? It's like, I don't know, I cook a lot. And like, I share the photos of my food and people like, are you going to do a cookbook? I'm like, no, it's it's just for me. It's for fun. I think there's a lot of people who would create if you had a better state structure

that doesn't necessarily have to deal with necessarily public funding as we think about it directly for the arts, but public funding through other resources that would increase people's ability to do creative work that's not tied directly to profit motivation. And that might be actually the way to work around that. Yeah, I think that's a great point. And I think it's a great place to leave it. Peter, I really appreciate you filling us in on the history, but also, you know, what's happening in the here and now. Thank you so much. Thank you. It was really, really fun to come on and talk to you.

Peter Labuza is a lecturer at San Jose State University, and he's currently writing a book about the history of entertainment law in Hollywood. You can find a link to his op-ed in the LA Times in the show notes, and you can follow him on Twitter at at LabuzaMovies. You can follow me at at Paris Marks, and you can follow the show at at TechWon'tSaveUs. TechWon'tSaveUs is part of the Harbinger Media Network,

and you can find out more about that at harbingermedianetwork.com. And if you've liked this episode, consider becoming a monthly supporter by going to patreon.com slash tech won't save us. Thanks for listening. Thank you.