Tretiak
If you know you know, if you don’t you don’t.
#209, #StandUpLocust, #MurphysFerry, Surah Yunus 10:71
User ID: 2418
That’s not how movie financing works. If you’ve ever read about the politics and mechanics of the industry, it goes something like this (I’m oversimplifying a bit and some details may be a little inaccurate from what I remember):
A lot of rich people (and even ordinary people without their knowledge) finance movies.
In IB, there exists a specialty financing department called something like “TMT-DCM” which stands for “Telecom, Media & Technology,” Debt Capital Markets (DCM). A common goal of IB is to raise money for companies projects (this is a fairly standard function called “capital sourcing”).
Some movies are absolutely financed by rich people. The story of the dude that defrauded Malaysia and then used the money to party and fund 'The Wolf of Wall St' is pretty well known. But the reality is that this isn't that common. Rich people don’t have cash just sitting around. They’re rich because they own companies that are worth a lot of money.
Anyway, IB’s are commonly tasked with raising money for movies. I don't know who’s active today (and TBF it’s been about 15 years since I read about this), but Bank of America, Wells Fargo and JP Morgan were very active back in the middle of the 2000’s. The thing is IB’s don't really have money themselves, so they reach out to rich people and institutions (e.g. pension funds, insurance companies, endowments, foundations, also sometimes hedge funds, etc.) to invest. More normal people unknowingly have exposure to this than you might think.
This is where people go wrong in their thinking. Individual movies are very risky. So then why would people invest in a single movie? Well they actually don't, and this is where the magic happens. What happens is you go in and create a portfolio (which is substantially less risky than an individual film). The these deals are setup is that, say, 10 future movies were coming out for a studio in the next 18 months, and their total budget was estimated to be $600 million, with a mix consisting of few $100 million movies and several $30 million movies. The producers and the studio will then reach out to an IB. The bank will then say, "If the studio sources $100 million, we can get the other $500 million.” Alright. Deal.
The IB then creates an ABS (which is essentially a financial package that will contain all the money that these movies make over the course of their entire lives. That includes everything, box office, DVD’s, cable broadcasts, TV broadcasts, foreign broadcasts, airplane broadcast, you name it, they do it, or 'other' licensing like when a clip of a movie is featured in a commercial for a toothpaste advertisement. The ABS will have a lifespan of, say 10 years for instance, and will have a minimum return of 8% a year and a maximum of, 15% a year, which is all based on several inside and outside estimates of how the movies should perform. The IB then turns around and markets this security to rich people and institution's to invest. They give $X (up to $500 million) and get a percentage of the total return pool.
So then your movies start coming out. The ABS starts getting a chunk of the profits, and the terms for 'revenue' and 'profit' are very strictly defined. The debt agreements for these ABS’s can run like 300 pages long, with everything laid out in excruciating detail. The split will be something like 20% of the profit which goes to the studio / producer and 80% going back to the ABS. When the ABS hits its maximum return for a given year, the excess profit then goes back to the studio which is to incentivize them to keep distributing the films.
So the idea is that out of 10 movies, maybe 3 bomb, 5 do ‘alright’' (e.g. are profitable but not exactly raking in dough), and 2 are huge blockbusters. But the point here is that the 7 that do 'alright' or great more than pay for the ones that bombed with money left over.
Then after a while, say 5 years or so, all the movies come out and now we have a better picture of how all 10 did, and we can figure out how the investment did. But, there’s still 5 years left on the ABS. Usually there are call or put clauses in the contracts that allow either the investors to be made whole by forcing the studio to put back the ABS at a predetermined return (that’s the “put” and it’s used if the movies failed to perform) or the studio may have a “call” (which allows the studio to buy back the ABS at a predetermined price if the movies way overperform). But it’s also common that people just ride the ABS and collect the checks up to maturity and at the point of maturity, normally the residuals are auctioned and everyone gets a cut of the final distribution.
Incidentally, this scenario is how Netflix funds all of its content. The debt that Netflix issues is “backed” by the streaming rights and liquidation value of all its IP (movies / TV/ etc.). The only real difference is that instead of having a bunch of little boxes containing let’s just say 10 movies each, Netflix itself is just one giant box that holds everything. But the structure is more or less the same.
I don’t know how much any of this has changed in the years up to today, but this is how it used to work in the early 2000’s.
Tretiak
If you know you know, if you don’t you don’t.
15hr ago
He probably did it at home out of appeasement if I had to guess. I’ve met people who do similar sorts of things.
Tretiak
If you know you know, if you don’t you don’t.
15hr ago
The standards on polite society have fallen and I'm not sure they can ever be brought back.
“A nation is born Stoic and dies Epicurean.”
Tretiak
If you know you know, if you don’t you don’t.
16hr ago
Story of Civilization I loved growing up. It was one of my first ‘broad sweep’ reads of history. The way him and Ariel wrote is so superficial without sacrificing depth, that type of literary style I have a great affinity for, and I actually re-read The Lessons of History maybe little more than half a year ago. Their work is now being made into audio format and might have finally completed. I bought the audio CD of Our Oriental Heritage 5 years ago(?) or so.
Tretiak
If you know you know, if you don’t you don’t.
23hr ago
The latter is how it started and now I’m pretty sure that’s where it wound up. At one point they’d go around and organize research workshops among experts in the fields to make progress and produce research and at one point they did. I read some of their papers but don’t know if that’s still going on. Eliezer I think is on a crusade to bring it all to a halt now because of his epiphany about alignment but I doubt it’ll stop progress behind closed doors.
Tretiak
If you know you know, if you don’t you don’t.
1d ago
For Turkish people their sense of superiority is more culturally and historically chauvinistic, probably similar to the way Parisians view themselves in contrast with the rest of France. In the Israeli case it’s rooted in theology (and outright racial ideology for some).
Tretiak
If you know you know, if you don’t you don’t.
1d ago
Even here, where many are supposedly libertarians, @Amadan and other mods complain that lots of users hammer the Report button in response to posts they disagree with. I also note that many American citizens seem to quite like their government getting its way by muscular means, so long as it works and they aren't inconvenienced.
I figured that was the reason I got downvoted so much on certain comments here. I suppose I should be proud to be one of TM’s most controversial posters.
Tretiak
If you know you know, if you don’t you don’t.
1d ago
As people “used” to say about Canada before the cost of housing crisis and infinity immigrants policy, “Canada is America-lite. All of the awesomeness, none of the bullshit.” Or as some US citizens call it, “Diet America.”
They’re the only ones who can even remotely make the appeal to both sides in a way that’s somewhat satisfying, but I still hesitate going all in on them. You let me download a fully open executable with no licensing requirements, I’ll save developers all the overhead costs of physically distributing their media. Only way I’d do it.
Of course that won’t prevent piracy, but it keeps honest people honest and stops legitimate buyers from defecting. “The suits” don’t understand that actual buyers have a direct incentive to reward developers and because if you like their work you want to continue to consume their content and keep turning it out. In all the times I’ve pirated games or movies I almost never did it was a way to give the parent studio a finger, I did it because it was easier to use and less punitive.
Tretiak
If you know you know, if you don’t you don’t.
1d ago
I used to have Dropbox but dropped them after the change in their privacy policy. I’ve used MEGA for over a decade now and never looked back. I still prefer things locally and disk duplicators have never made the task easier than they have today, but the cost of physical storage is actually more expensive than cloud subscriptions, ironically. The increase in content quality has matched the rate of storage expansion such that it’s less economical than it used to be. I don’t like the trend in that direction but realistically what can you do? Either bite the bullet and accept the out of pocket cost or take it to the cloud. I’ve tried the synchronization thing too, MEGA also has the same thing but I can never optimize it for how I want things to synchronize and just forego it entirely.
Tretiak
If you know you know, if you don’t you don’t.
1d ago
There was a similar controversy years ago, around the time when cloud storage first took off. People were very skeptical of putting all their files onto someone else’s servers, hoping that it would still be there, hoping it would still be secure. A handful of people thought it was idiotic and said you’d never get them onboard with it and that you should stick to local storage. The counter-response was, “What if there’s a fire in your house? What if you get robbed?” These are all risk factors, and I’m not against cloud storage at all, but I prefer the vectors I have direct access and control over rather than the ones I don’t. It’s also why I don’t use ebook readers for general purpose consumption. If I’m at work and I have some downtime, sure. But generally I don’t like the thought of losing my place because my alarm clock drained the battery which caused my book to die.
Tretiak
If you know you know, if you don’t you don’t.
1d ago
Dean Baker was the guy to read on this some years back. He had some good proposals.
Tretiak
If you know you know, if you don’t you don’t.
1d ago
It really only took off after they were acquired by Activision. It was all downhill after that.
I still use TOPS legal pads and pin that shit to my cork board, 😤. But seriously. I haven’t tried OnlyOffice but I have used LibreOffice and found it wanting.
It used to be the case in early American history that you had only process patents; not the end product. But if you want to keep to IP law, they were highly protectionist tools designed to protect monopolies rather than foster innovation. The World Trade Organization is the 21st century poster boy for this, by trying to guarantee monopoly pricing power for big corporations. That prevents development and competition, it doesn’t encourage it.
Tretiak
If you know you know, if you don’t you don’t.
1d ago
This is a peeve of mine. I fully understand the legal and practical idea that a 'license', in terms of IP, is revocable pursuant to its own terms, and thus enforcing that revocation is... fine.
“I had a dream once the RIAA kicked my door down and arrested me for singing too loudly in the shower.”
Does anyone else here remember EA’s “Spore” DRM controversy at launch, that only authorized a licensed user something like 3 installations per purchase? It was an attempt they made trying to kill the secondary market for video games and went about as well as one would expect. I don’t think they’ve tried to make that move sense.
It’s also why I’ve always preferred physical media. I don’t use Audible, I don’t have Spotify and TBF I don’t even like Steam all that much, but it’s the closest I’ll come to walking over to that side of the aisle. I wonder what kind of territory we’re going to wade into when synthetic biology and widespread nanotech really take off and you’ve got corporations scrambling to patent peoples genes. Plenty of room for dystopian futures to take root.
Tretiak
If you know you know, if you don’t you don’t.
1d ago
Stephenson belongs to his own class. While I loved the former, there aren’t that many authors that produce works similar to Snow Crash and Cryptonomicon.
He was a Libertarian Socialist himself. Save for his political explorations in Starship Troopers.
I've read a ton of books about hockey and they were all obviously written for someone who was already into hockey.
Bit of a digression on this point but your opinion on Klosterman is exactly why I love Isaac Asimov’s non-fiction so much; even more than his science fiction. He managed to turn my interest to topics other people always kept it away from. Hockey is actually where I got my handle. When I was a kid I hated physical sports. I was very good at playing it, I just never had an interest in it. Not out of an intrinsic dislike but was never properly acquainted with it by someone who could relate it to me, and it wasn’t until I was a teenager when that began to change and I’d play sports outside frequently with family, friends and neighbor kids across the street.
Anyway, one day we went to play Basketball on the black top at a church very close to where I lived. When we got there there were a bunch of kids playing street hockey. They asked if we wanted to play (we never tried it before), but we agreed. I played goaltender (and was pretty good). One of the kids randomly remarked at one point, “You play like Tretiak.” I had no idea what he was talking about and he asked if I ever watched the Disney movie Miracle (the one where the US hockey team defeated the Soviets) and I said no. Later we watched it and he goes, “You play really good defense like that guy (Vladislav Tretiak).” And among my friends and neighborhood kids, it stuck ever since. To this day, they will still call me “Tre,” or “Tret” when they see me. There’s only one single person I’ve ever met in my entire life who when he heard what others called me he looked at me and said “Hockey?” I had one of the biggest grins when he said that. He knew the reference.
Tretiak
If you know you know, if you don’t you don’t.
1d ago
I’m halfway through A Fire Upon The Deep but recently I had an urge to re-read Rendezvous With Rama but no longer have an on-hand copy of it. I’ll probably just go Kindle on my phone.
… it has occurred to me that I've read more Hitler and Stalin than Churchill.
Haven’t we all. Lol. Have you read any of Steve Kotkin’s volumes on Stalin? I read Paradoxes of Power a few years back and really liked it, and his writing style. I enjoyed it more than Court of the Red Tsar by Montifiore.
Tretiak
If you know you know, if you don’t you don’t.
1d ago
Well, if someone’s going to give me free money I am going to take it, but salaries often increase with the difficulty of the work you do. I’d much rather take a lower end job where I got to pursue the things I wanted than a high end one where life outside of a paycheck was terrible.
Tretiak
If you know you know, if you don’t you don’t.
1d ago
But it still requires complex understanding. Even if the models on hand compute the equations perfectly without error, each step requires input validation and verification of the end result. In some cases this can be a time save, in others, not no much.
Tretiak
If you know you know, if you don’t you don’t.
1d ago
Don’t underestimate just how much you can get fatigued by money overtime. I have a known technical skill set that some of my close friends and family know about and by proxy to others who know them, I’ve been offered a good amount of money to engage in work for them in the past (nothing like Tao probably has; not even close, but around low 5 figures). I’ve even received direct phone calls about it. I declined all of them because it’s very precise, very high pressure work, plus it’s very inconsistent and intermittent which disrupts and prevents me from establishing and keeping the stable track I’m already on. It’s hard for people to believe but money really isn’t everything.
Even Cory for all his brilliance vastly underestimates just how deeply entrenched the problem is. I’m a huge fan of the work he does and I love the guy but I can’t share his broader optimism on things.
To take one of your points as an example, not many people know there’s a company out there called Axon Fleet Systems that sells tons of equipment to law enforcement, military and government agencies all across the country. Well, they developed a new ‘kind’ of emerging technology called C-V2X which stands for “cellular to vehicle to everything” that massively leverages the cellular network infrastructure to conduct surveillance. What that means is new commercial cars will be equipped with the same tech, which means police responses, manhunts and dragnets can fully exploit the telemetry of cars to have pretty close to real-time intelligence of people “suspected” of criminal activity (as the signals bounce around from car to car before being relayed to the cell tower and then gets interpreted by a response center; meaning new cars are a relay for surveillance).
Add to the mix the fact that search warrants are largely rubber stamped and happen in secret with limited recourse to challenge things, it extends the scope and lowers the bar on probable cause for them to collect further evidence against you. It’s a very worrying trend. I used to be such a techie but I’ve been increasingly letting out a sigh and just want to go back to simpler times.
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