Your Movie Industry Questions Answered

INSERT DESCRIPTIONDan Glickman

We recently solicited your questions for Dan Glickman, C.E.O. of the Motion Picture Association of America.

In his answers below, he discusses, among other topics, the source of his piracy figures and why the ratings board isn’t the “morality police.”

He also tells us what he thinks of the documentary This Film Is Not Yet Rated, which critiqued the M.P.A.A. ratings board — and initially received an NC-17 rating:

To be clear, Kirby Dick‘s movie was a one-sided and inaccurate view of the system and it should by no means be considered a credible source on the topic.

In the end, Glickman says, the film was part of the reason the M.P.A.A. is trying harder to “demystify” the ratings process. Thanks to Glickman for his answers and to all of you for the questions. Unfortunately, we didn’t get an answer to why so few movie theaters employ variable pricing.

Someday …


Q:
What concrete action do you propose to help “rehabilitate” the NC-17 rating?

A: We’re about to celebrate the 40th anniversary of the rating system, so it’s a timely question — and an important one to folks who want to see a diversity of films in the marketplace.

The history is an interesting one. NC-17 was originally the infamous X rating. It was the only rating the M.P.A.A. did not copyright when Jack Valenti, my predecessor, created the rating system. We changed it to NC-17 because X came to be associated with pornography. NC-17 simply means the film is intended for adults only — whether for its depictions of sex, violence, drug use, or other intense situations.

As we’ve seen in recent years with films like Lust, Caution (which received an NC-17), these are wonderful and innovative films that adults want to see. Our partners at the National Association of Theater Owners polled their members, and they overwhelmingly said that they were willing to run NC-17 films in their theaters; so it’s ultimately up to distributors to decide how to release them. I hope we can get past the stigma associated with this rating because it will help bring to this art form an even greater diversity of creative visions.

Q: How did the M.P.A.A. estimate that “$6 billion worldwide” loss from piracy?

A: In 2005, we released the Cost of Movie Piracy Report. This report found that the major U.S. motion picture studios lost $6.1 billion to piracy worldwide. This calculation was based on the number of legitimate movies (movie tickets, DVD’s) consumers would have purchased if pirated versions were not available.

One question we often get is: Do you assume that everyone who stole a movie would have bought the movie? The answer is no. This estimate factors in the fact that it’s not a 1:1 correlation.

Q: What can you do to lower the prices of theater tickets?

A: Yes, movies aren’t the $2 and a quarter they were back in 1977, but if you take that ticket price and adjust it for inflation over the past 30 years, the average national ticket price today would be over $8. Instead, it’s just over $7. In these more challenging economic times, where the buzzword of the summer was “staycation” (vacationing at home to save money), the audience has spoken and movies have proven they continue to be a terrific value and an attractive form of entertainment.

Q: How has profitability of the film production industry evolved over time?

A: Movie making is inherently a risky business. Last year, the average cost to make and market a studio film was over $100 million. Contrary to the perception you might get if you just read the headlines about the big summer blockbusters, 6 out of 10 movies never recoup their original investments in their domestic runs.

Q: According to the documentary This Film Is Not Yet Rated, in the process of appealing ratings decisions made by the M.P.A.A., there is a rule saying that people appealing the rating of their film cannot cite other films’ content. What do you think are the merits of this precedent? And, conversely, what are the drawbacks?

A: Last year, the Classifications and Rating Administration, which oversees the rating process, changed the rules to allow filmmakers to make these arguments in the appeals process. My view is that this was a constructive change — for filmmakers and for the rating system.

Q: How geographically dispersed is the movie industry? Do state or city incentives or tax breaks work to bring production to new locations?

A: It is increasingly geographically diverse, and yes, I do believe that is due in part to the incentives being established to attract this lucrative business. Thirty states now have these incentives, and it’s smart economic policy.

Take The Dark Knight for example. It was filmed in Chicago last summer. Over the course of the 65-day shoot, Warner Bros. created more than 1,000 local jobs which generated $13.5 million in wages. They also spent more than $3 million on hotels, $1 million on catering, and $900,000 on lumber and other set materials. In total, The Dark Knight injected more than $35 million into the Chicago economy in two months. Another bonus? On-location filming is terrific marketing. It’s estimated to boost tourism by up to 54 percent.

Q: How is violence rated in the M.P.A.A. ratings system? What is the fundamental reasoning for sex requiring more censure than violence?

A: The job of each rater is to rate each film as he believes a majority of American parents would rate the film, taking into account sex, violence, language, and other factors.

In addition to the rating, the rating board also provides descriptors that further explain the reasons the film received the rating it did. For example, The Dark Knight was rated PG-13 for “for intense sequences of violence and some menace.” That’s about as straightforward as you can get.

The goal of the ratings system isn’t to censor films; it’s to give parents clear information about a film’s content so they can make decisions about what’s appropriate for their kids and at what age.

Parents have been very clear that these are their decisions — not Hollywood’s or Washington’s. The rating system invites its share of dissent. To a certain extent, this is fairly healthy and to be expected in a diverse society. But it’s important to note that the system has maintained a near 80 percent approval rating among the folks it exists to serve: parents of young children.

Q: How has the documentary This Film Is Not Yet Rated changed how movies are rated?

A: It hasn’t changed the way we rate films. The one thing it did do, however, is help us realize that there was a lot of misunderstanding about the rating system.

I think the most relevant thing that’s changed since the film is that we have made a significant effort to be more transparent and educate both filmmakers and parents about the process. We’ve also, I think, spent more time getting out into the independent film community, walking through the process, really letting in more sunshine, and demystifying the process.

To be clear, Kirby Dick‘s movie was a one-sided and inaccurate view of the system and it should by no means be considered a credible source on the topic.

The ratings are an informational guide for parents — and that’s it. The rating board doesn’t censor films. It doesn’t say if a movie is good or bad. It isn’t the morality police of our society. None of that is appropriate. It simply makes sure parents have the information they need to make decisions as they raise their kids.

Q: Why are box office numbers tracked by gross dollars rather than number of ticket sales? Each year I read: “Hollywood breaks box office records.” But this is largely due to inflation and rising ticket prices. Isn’t this a misleading figure?

A: What the businesses are analyzing with that particular piece of data is the bottom line. But you are correct that ticket sales have been relatively flat in the U.S. in recent years, and we certainly track (and publicly release) those estimates as well.

Clearly, people have more opportunities today to see movies in different ways — at the theater, at home on their TV’s or PC’s, and beyond. My personal view — and the view of most Americans — is that the theater continues to be the best way to experience a movie. But there is more competition. We now typically make more money off of home video than box office receipts, and (of course) there are other forms of entertainment such as video games.

That’s why we’re excited about the growing number of digital movie screens and the coming era of 3-D. The theater, too, is going high-tech, and it’s going to revolutionize going to the movies.

Q: What is the long-term vision of the movie business? Will hundred-seater cinemas still play a central role?

A: We ask moviegoers of all ages about the many ways they enjoy movies. Across every category, they say going to the movies with your friends is the best way to see a film.

Ultimately, audiences make these decisions, but my fervent belief and hope is that there’s room for everyone. Another interesting fact: We asked people who wire their living rooms with plasma TV’s, digital video recorders, HDTV, and all the rest about going to the movies.

What we found is somewhat counterintuitive to what you might expect: The more elaborate the their home theaters, the more they are going to the movies — about 50 percent more each year for the die-hard home theater folks. It’s not the either/or choice people often assume it is.

Q: There’s talk of the music industry beginning to rethink its business plan in response to pirated media. Is the movie industry thinking along the same lines?

A: Yes, absolutely; we have been thinking hard about our approach, particularly when it comes to consumers who, for obvious reasons, we want to maintain a positive relationship with.

There’s no question that a great deal of my job today — both in Washington and around the world — involves linking arms with other major intellectual property industries (computer software, music, and beyond) to shore up the legal foundations of intellectual property rights. I do believe that as this global information economy continues to emerge, more countries will have a shared stake in protecting the power of ideas.

Intellectual property industries account for nearly 15 percent of all U.S. economic growth today, and that figure should continue to grow over time if we get this right. That means jobs and economic health. So we’re moving to improve the laws around the world and, yes, very aggressively to go to court to shut down these illegal sites that distribute unauthorized copies of filmmakers’ works.

But we’re also trying to make a distinction with our customers to focus more on prevention, raising awareness about the costs of piracy to our society. We also understand that to win the war on piracy we need to offer the superior product; hence the emphasis today on enabling more innovative legal choices. So we’re coming at this from multiples angles.

Q: How much does advertising actually prevent piracy?

A: On its own, I don’t know that it would be particularly effective. As part of the much broader global strategy that I mentioned above, it has an important place (raising awareness both of the costs of piracy and the growing diversity of legal alternatives) and gives us an opportunity to communicate with our customers in a more proactive way.

So, yes, public service announcements and advertising have a place; it’s alongside working through governments and courts to strengthen copyright laws, partnering with law enforcement authorities to root out what we are finding to be increasingly organized pirate operations, and ensuring movies are available legally through new technologies.


Ambrose

"As we've seen in recent years with films like *Lust* and *Caution* (which received an NC-17)"

I think someone's been an over-enthusiastic sub-editor here.

Clearly he was referring to Ang Lee's "Lust, Caution" (http://www.imdb.com/title/tt0808357/), and it got edited because someone assumed that couldn't be the name of a film? Do your research, please! There's no excuse.

Geoff from Ohio

"To be clear, Kirby Dick's movie was a one-sided and inaccurate view of the system and it should by no means be considered a credible source on the topic."

Did anyone expect Mr. Glickman to do anything else but parrot the party line? The truth hurts, don't it, Dan? Good thing for you and the MPAA that "This Film Is Not Yet Rated" hasn't had nearly the audience (judging by the relative paucity of comments/reviews left on the IMDb listing for the film) that blockbusters like "The Dark Knight" attract. Gooood thing.

You can't fool all of us, Dan. Some of us realize what the MPAA is all about. It's about the money.

Ann

Question/Comment: Why do the movie writers feel the need to use the "F" word over and over when telling their stories? Have you ever counted the # of times it is repeated in just one movie. No wonder our youth are becoming so violent and do not use any other adjective except the "f" word. We are not prudes but have watched a few movies that had not one "f" word in it and you know what??? It didn't change the story one bit...it wasn't necessary at all and the movies were every bit as good without hearing that word over and over. Our children emulate what they see and hear and I hear little children using the word because they hear it so often and they don't even know what they are saying or the meaning. Maybe some good movies without all the violence, nudity and ugly words would help the way of our world in the future...being good role models can't hurt. The people that want these movies can still watch porn if that's their thing...but some of the movies shown in family theatres are pretty close to porn and the ultimate violence. No wonder our youth have no respect for people's lives. Granted there are ratings but not really to specifics, such as how many times you must hear the offensive language in one film or the explicit maiming of humans, etc. Maybe something can be done...maybe not...just had to vent. Thanks.

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felipe

Here is another costly lobby product: http://blog.wired.com/27bstroke6/2008/09/proposed-copyri.html.

Thing is: Mr. Glickman has not answered my questions (the second and the fourth), which were elegantly reformulated by the blog, without any loss or distortion of content, to what I am grateful.

About the second question: Mr. Glickman did not explain how they got to the US$ 6 bi loss figure, nor was it explained by the report he mentions (have a look at page six and the very vague language of the footnote supposed to clarify everything).

On the fourth: It does not follow from saying 6 out of ten movies do not recoup the investment that the profit margin has decreased over the years due to piracy or whatsoever. He just did not give an answer.

Taxpayers' money is invested in enforcing laws which are not in the taxpayers' interest. The bill mentioned at the top, which enables the American government to civilly prosecute IP infringers is just an indication of that.

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Stephen

Quite a few people have mentioned Lawrence Lessig as being a more capable interview subject.

The reason is simple: Lessig's position is to attack the status quo, and he's established a reputation for doing so with logical argumentation. The movie industry already has a large profit base which they don't want to risk, so their representatives are using interviews like this as free advertising to repeat the positions they adopted in the first place.

They want to say "piracy hurts us, it hurts America, and we are the authority."

Freakonomics wants to hear "why do you think piracy hurts you, why does it hurt you more then it hurts America, and can you provide additional evidence?"

JG

To make the argument that ratings aren't censorship is an argument of vocabulary. Of course the difference in the people who WILL see a NC-17 movie vs an R movie is vast and I think it's irresponsible for the MPAA to deny this.
I disagree entirely with the idea that the MPAA is accountable to parents as well as there are laws about selling tickets to minors and NC-17 movies cannot be seen by minors at all. It's possible that "This movie has not yet been "R"ated" had a biased point of view, but they go over concrete examples of how puritanical the board is, I do not think it's the responsibility of the MPAA to take the opinions of the most vocal advocates of censorship in this country ( the extreme religious right) and to enforce these as the guidelines for ratings, this is ethically ridiculous.

Will

"Yes, absolutely; we have been thinking hard about our approach, particularly when it comes to consumers who, for obvious reasons, we want to maintain a positive relationship with."

And yet, paying customers are still treated with suspicion and scorn as potential criminals, deceptive advertising and promotion is still the rule, and they money we give them goes to paying lobbyists who fight to further limit our rights to use, share and modify the products we buy, and to participate in a two-way cultural conversation, rather than simply being passive recipients of what they want to show us.

The "intellectual property industry" as a whole seems to view this as merely a public relations issue: how can they figure out a way to have it so they make all the rules, act with heavy-handed impunity, are immunized from the consequences when they break the very laws they demand to protect their own aging and inefficient business models, and somehow make us feel grateful to them in the process.

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Drwg

I find the comments on Kirby Dick's movie to be particularly sad. Especially because there was no mention of how independent movies are discriminated against in the ratings system. To me, the most shocking criticism was that the major industry players seem to collude to keep out movies they didn't want to show.

Jeff #3

I find the quote "6 out of 10 movies never recoup their original investments in their domestic runs." Which would be like saying a manufacturer doesn't recoup the cost of design and tooling in the first days run or production. In addition to initial domestic runs there's international runs, domestic and international releases, and various merchandising tie-ins depending on the genre and target audience.

And if large budget movies don't recoup their initial investments, shouldn't the solution be to stop making over-priced movies? How much can 'Hollywood accounting' figure into these calculations?

teej

"Q: There's talk of the music industry beginning to rethink its business plan in response to pirated media. Is the movie industry thinking along the same lines?

A: Yes, absolutely; we have been thinking hard about our approach..."

...and decided to do exactly the same thing we're doing now - lobby for stricter IP laws, make people watch idiotic PSAs when they load DVDs, and insist that their product is somehow better when you buy it from them.

These guys really need to find a new playbook before they go out of business.

Robert

This is not a revealing interview at all. I learned nothing other than the MPAA needs to hire better communications people.

And of all the questions to avoid an answer of substance on:

"Q: How did the M.P.A.A. estimate that '$6 billion worldwide' loss from piracy?
A: In 2005, we released the Cost of Movie Piracy Report. This report found that the major U.S. motion picture studios lost $6.1 billion to piracy worldwide. This calculation was based on the number of legitimate movies (movie tickets, DVD's) consumers would have purchased if pirated versions were not available."

How on Earth did the MPAA determine the number of movies consumers would have purchased? Almost anywhere else you could get away with this half-truth answer, but this is a blog about economics. Surely the methodology is relevant to this audience.

As someone else pointed out, it's pretty obvious that, "This Film is Not Yet Rated" has had a significant impact on the way the MPAA does business, as evidenced by the answers that follow.

One last thing. Glickman says, "6 out of 10 movies never recoup their original investments in their domestic runs." DOMESTIC RUNS being the key words here. That doesn't include foreign theatrical or DVD, (which can be HUGE money)... and I'm pretty sure he's not referring to domestic DVD there eithe.

Glickman's answers are inadequate and evasive - at best.

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Mike M

My biggest problem is that many of the major theater chains have taken these ratings and refused to allow young adults into films, DESPITE parental approval.

I was 15 (this was about 9 years ago) and was unable to go see RANSOM with my friend, despite the fact that my mother went and waited in line for tickets. We weren't allowed to go in without her. Now, aside from the fact that the movie wasn't very good, what's the point of this?

The MPAA claims their ratings are "guidelines" but they continue to push (or allow them to be pushed)into policy. #4 made a great point about viewpoints being forced onto people that don't want or need them. My parents had no objection, and in fact went out of their way to enable me to see an R movie.

Maybe I'm in the minority because I saw Die Hard 2 when I was really young, but I've never found F-bombs and violent movies to be anything more than panic buttons for parents that want their kid to be 4 years old for life. The more you try to control your kids, the more they will do the opposite of what you tell them. They'll just lie to you about what they are actually doing.

I respect the rights of the theater to put restrictions on who patronizes their films, and parents to resrict what their OWN kids are exposed to. I just want them to stay away from mine.

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JB

His response that the ratings board is not a censor is disingenuous. Although they only put a rubber stamp on a film and mark it "R", that label corresponds to less box-office return than "PG-13".

The producers of a film, in order to recoup their costs and hopefully make a profit, can and do lobby for the most profitable rating they can get according to the material in their film.

Because the rating equates to financial return the ratings board holds financial power over the filmmaker, and can therefore exercise censorship over the film.

This means that rather than acting as an independent "informational" organization for parents, the decisions the ratings board makes actually affect the content of films contrary to the wishes of the artists who made the film who are unfortunately beholden to their financiers to return to them the funds that made the film possible.

I don't know of a solution to this problem, but to ignore it as a fact of the situation is tantamount to the deception that poster #3 laments above.

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Mike

"We also understand that to win the war on piracy we need to offer the superior product; hence the emphasis today on enabling more innovative legal choices. So we're coming at this from multiples angles."

He says this, and yet pirated movies provide a superior product when compared to legitimate online services. The pirated movies are similar (sometimes higher) quality, allow you to view as you please (on your laptop, iPod, whatever), and have numerous ways of being displayed on your TV. In contrast, the legitimate online services are often tied to a PC and are difficult to watch on your TV. Only a select number of devices allow you to view them on TV, and they only work for certain services.

In some ways, pirated versions even provide a superior product when compared to DVD or Blu-Ray. The disks are typically higher quality, but the pirated copies give you more freedom in how you watch the movie. They let you set up a movie server, take your movies on the road without dealing with disks, etc.

I don't support piracy, and I don't do it myself. But I can see that the fact that pirated movies offer a superior product is a major problem here. It is ridiculous that if I want to watch a movie in certain ways, my best (sometimes only) option is to do so illegally.

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JoseAngelCMS

People have been against the high price of movie tickets for a long time. Even though the tickets are a high price, they are not as high as they should be by the moment. In 1977, a movie ticket was worth $2.25, and now they are just over $7.00. If the movie tickets' prices have grown as fast as the prices for everything else have due to the inflation, then the movie tickets' prices should be over $8.00, so this shows that the movie tickets are actually not that expensive compared to the prices of every other product in the market. People make the decisions of either to go to the movies or not, and even though the prices are not that high, movies might be damaged because people won't be going to them at this price.

sarahCMS

The rating system is a way to prevent children from being exposed to violence, sex, or inappropiate language. The industries also are "free of charge" if a child watches the movie, since they have established this rating system, they have done their best to protect the children. But the truth is that television is available to many children who probably are not watching it with their parents every single day. Since the only solution to prevent a child from watching the television is not having one, this still is not enough. Because most probably in school, or some other place the child will be exposed to all of this, because this is today's world. Unfourtunatly there is only so much a parent, or a film company can do in order to not let children be exposed to all of this.
Refering to the Dark Knight, being filmed in Chicago, most probably the tourism did grow. Not only because of the interest many people have of experiencing this beautiful job being made, but also because of the talented people who make it.(many have hope of meeting the artists, produceers, etc)
In my opinion advertising against pirating should be made, because ads always affect on people. It may work as a reminder of what a crime this is, or perhaps to teach you this is a crime, for those who claim not knowing what pirating really is.
Finally, about the price of tickets in the movies, I must agree the money is worth it. Also in some places the tickets for teens are chepear, this is an incentive for teens; and perhaps spend that money on an interesting movie, than on some other harming or negative type of entertainment.

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MITBeta

@ The Informist #3:

"It is sad that we are slowly desensitizing ourselves to sex, violence, poor language, deception, etc… "

It should be pointed out that most of humanity strives to avoid 3 out of 4 of the items you listed, and wouldn't exist at all without the 4th. Sex is natural, people, get over it.

Robin

Q: According to the documentary This Film Is Not Yet Rated, in the process of appealing ratings decisions made by the M.P.A.A., there is a rule saying that people appealing the rating of their film cannot cite other films' content. What do you think are the merits of this precedent? And, conversely, what are the drawbacks?
A: Last year, the Classifications and Rating Administration, which oversees the rating process, changed the rules to allow filmmakers to make these arguments in the appeals process. My view is that this was a constructive change — for filmmakers and for the rating system.
Q: How has the documentary This Film Is Not Yet Rated changed how movies are rated?
A: It hasn't changed the way we rate films. The one thing it did do, however, is help us realize that there was a lot of misunderstanding about the rating system.

Call me crazy, but don't these statements appear to contradict each other?

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Michael

@1:

A movie is a peice of art. Unfortunatly too many people think because something is not appropriate for kids it should be dumbed down for kids. Violence and sex can be blatent and over the top or it can be discreet and subtle, that is the decision of the director of the film. And they should have the right to enforce their choice on everyone who views the movie. If you dont like it, dont watch the movie. Teach your kids to read or find other forms of family entertainment than watching movies.

Either way your kids are going to be exposed to something you won't like, no parent can stop that. As a parent that is your time to shine by explaining to them why something is wrong/excessive/unneeded, not blinding them to the world.

Sharon

First time I've been disappointed in one of the "Ask a ..." series. Hard to believe someone can say so much and say so little.