An interesting analysis of some of the changes coming to Hollywood and the entertainment industry:
In the 1980’s super agent Michael Ovitz positioned his talent agency CAA as one of the most important chess pieces on the board controlling actors, scripts, producers, how studios were bought and sold, music rights, all the way through to sports contracts. Agents held the power. But today the world of agenting is very different and a major power shift is underway.
First, most of the big agencies have sold out to major hedge funds where their first responsibility is to revenue and profits which means yearly growth at all costs. This need to feed the engine has forced agencies to dig their tentacles deeper and deeper into the entertainment community, eking out every possible penny. Spreading tentacles isn’t new. Just read ‘When Hollywood Had a King’ to see how Lew Wasserman came up against the U.S. government in 1962 as he tightened his powerful grip over all things entertainment. In Lew’s case the U.S. government stepped in forcing him to choose between being an agent or running what is now Comcast NBCUniversal — he chose Universal. Today, it’s not one single thing that is cutting off agencies’ far reaching tentacles but a storm on many fronts that is leaving most agencies with very little space to move. The result: massive damage that will likely take years to rebuild, leaving space for others to fill the void.
For one, the Writers Guild of America’s has been standing firm that agents not be able to produce/finance movies. This is essentially exactly what Lew came up against in 1962. This strange practice of your agency, who negotiates your deal, also being your employer has been going on behind closed doors for a long time. But in recent years the agenting world got more brazen about including it in their business model to look more attractive to their new Wall Street owners. This backfired with the Writer’s Guild, seizing the opportunity to win back a little more power into the hands of the writers and their membership, agreed to strike in April 2019. Top Hollywood writers fired their agents and in doing so a key piece of Hollywood power was taken from the agents: 360 packaging (the process whereby agents package their writer, director, producer, and acting clients together so that a studio buys a package and the agency can charge a premium packaging fee which some argue incentivized them to keeps clients’ fees lower so they can make room for their own fees).
If this were all the agencies faced, they could overcome this hurdle and still reign supreme. Historically, agents were masters of their craft in coming up with complex structures for their top clients’ ownership, profit participation, merchandise, box office bonuses, etc. Needless to say, studios were also masters in creative accounting, working to keep as much money in their accounts and away from the talents’ bank accounts as possible. But the game was there. A game of give and take, all pinned to public data around international sales and box office. Playing this game helped agents look powerful and valuable to their clients so they remain signed to a ten percenter.
But then came Netflix and the likes.
Global distribution, hidden streaming numbers, and clear data driven decisions vs booking talent based on industry ‘heat’. Now agents have many of their bargaining chips taken off the table and their creative dealmaking tools are a shadow of what they once were. How much extra value do agents now offer compared to lawyers and managers?
At the same time agencies have pushed hard into new entertainment revenue streams. The biggest: live events for their music artists — the last remaining cash cows for a music industry decimated by streaming technology in the late 1990’s and early 2000’s. But with the global pandemic many of these agencies have gotten caught without a chair to sit on as the music stopped playing in global arenas and stay-at-home orders swept the globe. With COVID-19 nobody is going to concerts — and they won’t be for a good time yet. Similarly agencies were hit with cancelled sporting events where big margins were also made by the agents not only representing athletes but integrating brands and driving marketing strategies.
Through these multiple one-two punches, the biggest players in Hollywood are on wobbly knees and the bell isn’t going to save them anytime soon.
Needless to say, the less power that can be wielded by Jesus-hating, devil-worshipping agents, the better. Also, while we can’t say anything about it yet, things are proceeding well on the Rebel’s Run front. And by “well” I mean very well indeed.