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November 25 at 4:00pm

Hey Filmmakers, You Guys Are Next: A Word of Warning from the Music Industry

By Count 

I feel most filmmakers are looking at this moment in time as an age of opportunity. But having gone through this revolution already in the music business, I feel compelled to tell you why right now we should be questioning everything.

There are countless comparisons between the music and film industries. On the critical side, both traditionally have had an extremely insulated network of good old boy executives who know little or nothing about the creative process, yet try to tell you how to make your art. Both have a history of obnoxious fat cats living in excess. Both still have an endless string of gatekeepers that have a stranglehold on the means of distribution, and who rarely showed much love for independent creators except with lip service at the cool film festivals.

But the internet revolution is changing all of that, so I decided to take the past 2 years away from my career as a music producer to make a documentary about this fascinating and often misunderstood subject that is near and dear to us in the creative world. The film is called Unsound, and it uncovers the dramatic collapse of the music industry and its impact on musi­cians and creators of all kinds. The film reveals the larger story of how the unintended consequences of the internet revolution go well beyond the music industry, impacting creators of movies, books, software, journalism and more. Although there are so many positive changes in both the music and film industries, what is more interesting to me is what most people don’t know. So I decided to take a more critical look in this film.
 
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The music industry was perhaps the first to go through the digital transition. For better of for worse, the smaller file sizes of music made it a primary target for piracy over the much larger sizes of films. By watching the mistakes made by the music industry, and having a few years head start to prepare, the film business has really had an enormous advantage over the music business. But this does not mean all is well. In fact, right now we are at a critical moment in the internet revolution. This year we seem to have entered the internet revolution part 2, the streaming revolution, and it is imperative that we take a closer look at the direction we are headed to ensure this path is good for independent creators.

One of the great promises of the internet revolution was that of the possibility for a direct connection between artist and fan. In the music industry, this didn’t quite work out. Although this is of course technically possible, at least in the music industry, the countless layers of middlemen still haven’t gone away. The stranglehold on the means of distribution hasn’t gone away either, the names have just changed. For film, it appears this may be the case as well. Instead of a national theater chain, it is now massive corporations like Youtube and Netflix distributing our work, most likely taking an equally obnoxiously large cut for themselves, and most likely without investing a dime in our work. It seems we’ve traded the old monopolies for new ones. 

Not all monopolies are necessarily bad inherently. Apple is another monopoly in the music industry. Luckily for musicians, Apple ended up being a benevolent force in this story. They provided a legal platform to download music which was something everyone else failed at. They got major labels to actually agree to do something together, which is almost as impossible as getting Congress to agree on something. Although I personally prefer these new monopolies to the old ones because of the creative opportunities, having that much control, power, and money in the hands of a few companies usually doesn’t work out well, especially for independent creators.

So it seems the concept of streaming services (which for the most part failed a decade ago), is now the direction both of our industries are headed. But is this a good thing? The music industry’s equivalent of Netflix, Spotify, hasn’t exactly been the most transparent company in the world. And the fractions of a penny they pay artists per stream is horrific even compared to the old major label days. Now I’m not saying Netflix is exploiting filmmakers in the same way. In fact, I don’t have the information I need in order to make that call just yet. Thus far, my overall opinion of Netflix is actually good. I can now see independent films I simply didn’t have access to before. But this sounds familiar doesn’t it? Consumers said the same thing about accessing music on the internet. For fans, things have never been better, but what about the people who actually make music and films? We’ve finally solved the problem of access for fans, but now we have the whole making-a-living problem to deal with for creators. Take a closer look, and things start to smell funny.

Despite the suspicions I have about many large media companies, it appears that Netflix is actually investing in creators, unlike Spotify and Youtube who invest essentially nothing towards creating the music that powers their platforms. Although Netflix’s investment thus far does appear to be big money into a few projects, which doesn’t really help independent filmmakers, at least it is a step in the right direction- a step away from the music industry. 

It may be too early to tell in the film industry, but the music industry has been languishing for years in this conundrum. We’ve gone from the devaluation of recorded music from piracy, to the new era of streaming services. The proliferation of piracy actually enabled this new wave of legal streaming services to exist. Streaming services for the most part failed when they were first attempted back when music had a higher perceived value. But after a decade of piracy, artists and record labels now find themselves in the terrible position of either having their music taken for free, or accepting fractions of a penny from the big established streaming services who dictate the terms from their large market share. 10 years ago, labels and artists never would have licensed their music to Spotify for such terrible terms. But now, its either fractions of a penny, or you get nothing. So piracy has had an enormous impact, and streaming platforms have certainly capitalized on the fact that piracy devalued music. So shouldn’t we be more critical of this direction that both our industries are headed? Shouldn’t we be striving for more value in what it is that we have spent our lives creating? Should we be accepting this new status quo?

We should take a look back in recent history to remind ourselves what has happened thus far in the internet revolution. Musicians were hit first when we jumped head first into the digital age. In the early days when it became apparent that piracy wasn’t going to go away, we really had no choice but to embrace the new “age of free”. Even though most of us immediately saw the problem with all music becoming free, we also saw the opportunities we now had creatively. There were so many positives compared to the old system, and given the apparent impossibility of fighting piracy, we accepted it and hoped we could move on. After all, creatively we were liberated. No longer would some executive tell us what kind of art to make. We could reach our fans directly!

Most of us also believed the myth that allowing our music to be free would ultimately end up working out for us, and that our careers would blossom in other ways. We were told not to fight it. Allow your music to be free and you’ll make up for it from touring and selling more Tshirts! Many people believed this myth and you still hear it perpetuated by the tech world and in the media. But this didn’t turn out well for independent artists who actually lose money on their tours. In the music world, only the top touring acts actually profit on any sustainable level. So how will this affect filmmakers? They can’t go on tour filling up venues across the country selling Tshirts (except maybe Steven Soderbergh. By the way Steven, if you do a tour, my band will TOTALLY open for you bro!). Anyway, unlike the handful of musicians who actually make money touring, the work of filmmakers, journalists, and writers cannot afford to be devalued the way music has. Their work has to retain its value in order for them to survive and create more of the movies, books, and art we love and depend on. It is heartbreaking if your favorite band stops creating because they have to get day jobs, but it is downright scary when journalists and filmmakers aren’t able to break important stories that actually save lives because all of the money has been squeezed out.

This is where the film industry does not benefit from going through the digital transition after the music business. For better or for worse, we now seem to have settled on a new system, the streaming paradigm, the terms of which are largely due to the fact that recorded music has been so devalued. But will the streaming age work out well for filmmakers? We are now finding out from musicians that thus far, it isn’t working out well for them. One by one, artists are speaking out against the large streaming services like Spotify. So are filmmakers headed for the same fate as the music business? Are films being devalued the way recorded music has been? Can filmmakers survive on the income from streaming?

These are the questions we should be asking right now. Although it is easy as a filmmaker to get caught up in the optimism of the time we are living in, we should collectively be taking a critical look at the unintended consequences to ensure that the internet revolution is not just good for a few rogue pirates and massive corporations. If you ask me, if things aren’t good for independent musicians and filmmakers, they simply aren’t good. Regardless of your views on this often heated topic, one thing I think we all could agree on is that this is a conversation we should be having right now, and the voice of independent musicians and filmmakers should be heard.

Count is a San Francisco based music producer who has worked on projects with such artists as DJ Shadow, Radiohead, The Rolling Stones, Frank Sinatra, New Order, No Doubt, Galactic, Zoe Keating, Tycho, Trombone Shorty and more. His documentary Unsound currently has an indiegogo campaign to raise money for post production. The campaign ends this week on Thanksgiving Day!

http://www.indiegogo.com/projects/unsound

 


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  • http://filmmuseik.synthasite.com Doug

    I think this brings up a lot of great points, and I also want to throw in another idea. I think a big screw up of the music industry is their failure to change with the time. iTunes was created because they failed to innovate. They still are trying to run a business like it’s 1980. When the digital age really started to pick up and they saw their retail numbers plummet, why didn’t they setup first-party distribution on their sites? When Napster promoted massively wide-spread piracy, why didn’t they offer the same digital product (read: song) cheaply, from a trusted source (read: the label that produced the content originally)?

    They screwed themselves with insultingly low percentages from Spotify because they clung to an old paradigm, that almost instantly became irrelevant with the advent of digital distribution, instead of working to create an environment where Spotify wasn’t even a worthwhile product. How stupid is it that they have to share income with those companies, like iTunes, when they could just as easily sell the same exact product themselves?

    A brick and mortar store is a different beast, but all of these labels have websites already. They also own all the rights to their massive libraries of hugely popular songs. A searchable catalog with a “buy” button would have saved them a lot.

  • http://outinthestreetfilms.com/ Out in the Street Films

    My understanding is that Netflix pays a flat rate like $1500 for an indie film. iTunes makes more sense if any, giving you a cut. But why not just sell DVDs on your own website? You have the power to monopolize your own distribution. Streaming has no revenue anyway. You can also do this on CreateSpace/Amazon and set your price. Sure you have to put it at $35 to make $12 on Amazon. So what? You have nothing to lose. Or sell it direct on your own website for $20 or $25. Even stream it on your own site. Why must we play the industry game?

    But here’s the bigger problem. Most indie films aren’t attracting an audience. Even studios only get there by having stars and huge marketing. The indie challenge is to make something mind blowing, and beyond even a great studio film. Anything else is just practice. But if you can do that, at least in theory, you should be able to market it yourself with YouTube/FaceBook trailers and so on. Studios can make a profit on crap. We can’t. So there’s no comparison.

  • http://bradbell.tv/blog/ BradBell

    “But after a decade of piracy, artists and record labels now find themselves in the terrible position of either having their music taken for free, or accepting fractions of a penny from the big established streaming services who dictate the terms from their large market share. ”

    A question of clarification: are the artists and labels being dictated to by streaming services like Spotify, or are the artists and Spotify being held to ransom by the record labels? Or is it just the artists who are being screwed? I was under the impression the record labels are *the* problem, which seems unsurprising considering their reputation as extortionists, thieves and minions of satan. (I just happen to have read the Bittersweet Symphony saga this morning – hilarious levels of evil, greed and depravity.)

    On another note, is the lesson not to create an inverted cinema that is UNlike Hollywood in every respect. The business model is an inversion of Hollywood, and as a result, so is your production. You do not make big movies you make tiny movies. You do not make simple, superficial movies, you make complex, deep ones. You don’t use stars – that’s a different business model. Disembowel all traditional intermediaries. The streaming companies work directly for the filmmakers. I don’t think you can escape the logic of digital technology, ie. giving everyone the tools to reproduce everything. It’s destined to kill Hollywood anyway. The only cinema, if there is any cinema, will be the inverted cinema. Reject Hollywood or die. (This is in contrast to wanting to make Hollywood-style productions on finance and setting oneself up to be screwed by THE MAN and pirates alike.)

  • http://bradbell.tv/blog/ BradBell

    Apologies. I hadn’t watched all the videos. Having watched the trailer: I feel very passionate about the issue, but I wonder if the framing is too constrained to copyright, and too focused on music, which is a difficult case study. (I’m not critiquing the doc, just sharing ideas): commercial television can also be added to the list, as it relies on advertising that no one wants to see, and DVRs exist. (I haven’t seen a TV ad in over a decade.) Indeed, the advertising industry, a product of the mass media age, must inevitably decline with analog media. And as you say, everyone is a photographer, so pros struggle. Newspapers are dying because computer classifieds are better than print ones. There are a lot of people losing employment. We need what they do. We don’t know how to pay them.

    The fundamental problem is computers. Piracy is symptomatic of a disease we call computers, which is wrecking everything. We use computers to skim money out of the economy, and bet. The top hedge fund in the US did not own any stocks ever for more than 1 second. (How much value is an investment that lasts half a second?) The casino economy drawfs the real one. The damage done to the global economy by the financial fraud leading up to the crash of 2008 is estimated to be equivalent to giving every man, woman, and child on the planet $44,000USD. The most expensive real estate in NY is vacant of people, filled with computers which need to be literally yards away from an internet exchange so they can gamble on the future. Our economies stagnate under austerity caused by financial fraud. Safety nets are removed. Inequality is accelerating, ensuring little demand for any products, leading to less employment. Living standards are falling. Before we could begin to come close to solving the problem of how musicians get paid, we will be in another global depression from expensive post-peak oil, and therefore food, etc. We have an economy where 0.001% are multi-billionaires and everybody else, including Kim Dotcom, is a peasant.

    This is not all down to computers, but to political and economic ideologies, and institutional corruption – and not being able to deal with the impact of computers. What are all the people from all the collapsing industries going to do? Perhaps all the creatives of the world will need to create the inspiring messages to change everything. Perhaps copyright is a red herring. Computers also empower us to such a degree, that the only reason we can’t make this work is organisational, ie. political in the big sense of the word.

  • http://hopeforfilm.com/ Ted Hope

    Sent from a device that leads me to be more concise than I might otherwise.

  • R.A. Johnson

    Great response to a great article.

    I am curious as to how much the “TV license fee” is that Netflix pays for its content. Where did you find the 1500$ figure?
    In Sarandos’ (Netflix Creative Content Officer) keynote speech, a doc filmmaker questioned him on his new mantra, “give the people what they want and they will turn out to your theaters, your VOD, they will buy your DVD’s,” and the filmmaker said this is in fact, not the case. After making a deal with a distribution company that sold the rights to Netflix, the filmmaker was hoping for a decent amount of money in return, when if fact Netflix just pays a standard TV license fee, and I’m assuming the distribution company took a decent percentage of that fee before passing on a percentage to the filmmaker, he thinks that since most people saw his movie on Netflix, they did not “turn out” to buy his DVD’s or pay for VOD on his own websites, etc.

    To another one of your points, “Most indie films aren’t attracting an audience.” Sarandos agreed with you, saying something like, perhaps you’re (said filmmaker) banking too much on the unknown variables. Without Netflix, it seems like not nearly as many people would have seen your film, and the money we paid for the rights to stream your film, you never would have seen either.

    I like this statement you made: “The indie challenge is to make something mind blowing…anything else is just practice.” Truth, man, truth.

    Also agreed: “Studios can make a profit on crap. We can’t.”

    I am a cord-cutter, and rely on Netflix, pay VOD and Redbox for my home entertainment. As an indie filmmaker/writer myself, I’ve been reading more and more about the biz side of Netflix streaming and the indie filmmaking side as well.

    So far, imo, it seems like you need to wring as much money out of your project as possible before selling the rights to Netflix. I can now see why there is a “window” of theater release vs streaming release, or day vs date. A window that Netflix’s Sarandos isn’t happy about, and after the dust settles after the small TV licensing fee is paid to creators by Netflix, I can see why they (creators and studios) aim to keep it that way.

  • Dean

    Forgot to say another GREAT article and now I have another film to add to my watch list, so win win all around.

  • Dean

    Agreed with this too, the economy does need to be fixed before we can expect people to value movies over …eating, drinking, shelter, which are obviously more important.

  • Ben Leal

    You make a lot of points but seems the crux of your article hinges on ” Can filmmakers survive on the income from streaming?” but i think that’s the wrong question. Creating a film requires an investment by someone. As an independent (used here as unsupported by any studio) filmmaker, the need is to figure out is “Where does the investment come from?” Then it’s “What return do I want for my contribution?” There is a plethora of ways to monetize digitally distributed content, of which streaming is one. If the streaming solution doesn’t meet the needed/wanted return, go elsewhere. If what’s been produced is worthy, it’ll rise to the top and gain influence.

    Now you might say I missed the point and the point really is that streaming services should be making an investment in the production of what they stream. Why? They are businesses and it’s their interest to make money how they can. And guess what, Amazon and Netflix are both starting to create their own content. And this isn’t a step away from the music industry, it’s the music industry with a new distribution model. But for a filmmaker to say support me so i can create is old model thinking. A creator agrees to compensation in exchange for their efforts and rights to what’s been produced. If the return isn’t fair, today more than ever before, creators have more control to go elsewhere. But it’s a trade off; now you spend more time on figuring out distribution, etc and less time on creating.

    The tone of the article seems to express that independents are entitled to something when they aren’t. The question to be asked is how does the collective of independent creators increase it’s influence? If the independents pulled together, they could potentially hold as much influence as the traditional studio; after all distributors need content but creators can distribute themselves and reach millions today.

    One random thought – I own alot of music that i listen to multiple times but only own a handful of movies that i want to see multiple times. And even those go years between viewings.

  • http://EricSusch.com EricSusch

    Netflix is investing in creators and Youtube is not? What? YouTube has been giving upfront money to creators for a long time.

    http://www.tubefilter.com/2010/07/09/youtube-to-give-5m-in-grants-to-content-partners/

    They are even building free creative spaces for partners around the world that include soundstages, editing rooms, etc.

    http://www.tubefilter.com/2013/08/01/youtube-new-york-creator-space/
    http://socialtimes.com/youtube-space-la_b111326

    It’s true that only a few top YouTubers will ever be able to take advantage of these opportunities, but that’s not any different than what Netflix is doing, financing only a few original programs.

    The problem with this article is that it views the film industry from a very narrow perspective. (For example, the old demon piracy is mentioned nine times. A major new innovation like Kickstarter isn’t mentioned even once.) The music industry got it wrong mainly because they tried to hold onto their old business model without acknowledging how things were changing. New business models need to emerge and we’re still at the beginning of that process. “Streaming” isn’t a business model, it’s a technology. Netflix and Amazon are perusing the subscription/studio model, AKA the HBO model. YouTube is perusing the traditional advertiser supported model. And iTunes and Amazon are perusing the pay-per-view model. I think all of these are solid business models and have their place but they are all only baby steps from tradition. There needs to be more. And with time there will be more.

  • Hanna Sawka

    The Weinsteins are moving into the television sector, which is still funded by subscription fees (and when they go, TV as we know it goes). This is a strong indication that money in film is drying up. In the meantime, cable carriers make tons of money on the content made by creative people.

  • Mikael Eldridge

    My comment was comparing Netflix for indie filmmakers with Youtube/Spotify for indie musicians. My hope is that Netflix and other streaming services are better for filmmakers than they are for musicians. Youtube has not only not made investment in musicians, but has gone a step further to extract value from their work. People access music on Youtube and Spottily free service now, which means they dont buy music or pay for a subscription. I hope filmmakers make their voice heard now before the film world goes the way of the music business where free is the norm…

  • Mikael Eldridge

    I would be careful to not paint all labels as being the same. There are only 3 majors left and they are mostly legacy artists. The vast majority of music released is independent. If you take a deeper look, you’ll find that labels aren’t the evil they have been portrayed as. But as bad as some of them were in some cases, they did invest in artists. Most likely your favorite artists were supported for years by labels before they generated a dime.

    But the main point of the piece is not whether record labels are good or bad. I wanted to compare our similar industries- particularly now since they both seem to be heading the same direction- towards a few massive media companies that are streaming based. Youtube is basically free but is ad supported, Netflix is a small monthly subscription. I just wanted to point out that neither has worked out for the music world. Especially not for independent artists.

  • Mikael Eldridge

    I agree. But that is the past. Its easy to criticize the music industry. There is plenty of blame to go around for sure. But right now what I think is more important is that we give equal criticism to the giant platforms that are dominating the landscape. If we are going to criticize the old major label music system for being exploitative, monopolistic, and clinging to the old status quo, we should also be criticizing the new status quo made up of a handful of giant Wall Street backed tech/media companies. These have proven to be even worse for independent musicians in many ways than the big bad old labels people seems to continue to hate on.

    The music world had a few years head start in the digital transition. I sense that film makers right now are feeling the same way musicians were a few years ago- optimistic and eager to jump head first into the new system. But that didn’t work out so well for musicians- especially independent musicians. If you are a filmmaker, now is a good time to be questioning everything to make sure we aren’t headed the way of the music business…

  • http://EricSusch.com EricSusch

    People aren’t buying music or paying a subscription on YouTube because it’s an ad supported model, just like radio and broadcast television. It’s not free though. You have to sit through the ad, and let me tell you, there’s an awful lot of ads on all those popular Vevo music channels. And people are watching them. Currently there are 25 Vevo channels in the top 100. There’s also a lot of popular independent musicians like Mystery Guitar Man and Pomplamoose making music on YouTube too. These top channels make six and seven figures on their videos so in that respect YouTube is actually supporting some musicians. The vast majority of course get very little but a few years ago nobody was making anything at all so it’s gotten better. Hopefully as time goes on, the vast majority will be able to make more. We’ll see…

  • http://outinthestreetfilms.com/ Out in the Street Films

    Good point. Filmmakers need funding up front for the production budget. Distribution revenue to indie filmmakers is nill. We need to get pre-sales or include our fee in the budget when finding funding through investors, incentives and so on. Only well established filmmakers with star power can expect any back-end profit.

  • http://outinthestreetfilms.com/ Out in the Street Films

    The Netflix figure comes from Linda Nelson in a recent podcast on FilmSpecific.com. Linda runs IndieRights, a film aggregator company that distributes to all the digital platforms. She says Netflix is in high demand but pays the least and should be the last window. She claims iTunes can bring in around $2K per month. I’m skeptical there too. You need to distinguish your film for it to make anything on iTunes, YouTube, Hulu, Vudu or anywhere, by marketing it so that people will want to search for it on a platform. How else would they know it exists?.

    She says one thing you must do is to gain a niche audience with social media, which is another service she provides through programming pages. This is also a necessary precursor to crowdfunding.

    Which brings me back to how to sustain a living. I heard that crowdfunding now returns more to the arts than the NEA. No shit. Filmmakers have to fund themselves up front in the production budget, not after the fact in distribution, because you aren’t going to see anything there.

    This is all a huge topic with many nuances and variables. Not to plug FilmSpecific, but there is a wealth of info there, which I find equivalent to taking 2 years of grad school in film marketing and distribution. It’s worth it even to try one month to hear these awesome podcasts.

  • http://outinthestreetfilms.com/ Out in the Street Films

    I don’t think so. During the Great Depression, the movie business thrived. People wanted escape.

  • http://outinthestreetfilms.com/ Out in the Street Films

    We’re asking the wrong question, with ‘can filmmakers survive on streaming?’ The right question is, can filmmakers get paid up front to make movies? Because the answer to the first question is a resounding no.

  • Ben Leal

    Mikael can you qualify ” neither has worked out for the music world” as you seem to be more aware of how much money artists are or aren’t making? I just did a quick search, found a site called tunecore.com that for $30 will make an artists music available to 20 digital stores to include iTunes (which artists can do for free directly) and Spotify (which only accepts content through aggregators). The artists maintain copyright ownership and the service does not take a cut of the revenue.

    The question that comes to mind for me is how many artists today are able to put their music out there for the world than were in the “good old days” of the music industry? Macklemore comes to mind as an artist that has been able to achieve success in the new model but i have no clue as to how much money he is making compared to if he had gone the traditional route.

    Overall i think your point is filmmakers need to see what’s happening in the various business models for music and work on how to improve their return.

  • noname_noslogan

    That was when there was one place and one place only to watch a movie. . .the theater. Disposable income is way down since the latest depression started in 2008 and make no mistake about it, we are in a depression.

  • http://outinthestreetfilms.com/ Out in the Street Films

    Wherever you watch it, you still have to pay for it.

  • Jonathan Starkey

    Offense Is the Best Defense

    Until IP creators of one form or another from the world over, come together and begin an intellectually aggressive but legitimate assault, the corporates will continue to exploit. Offense is the best defense.

    Jonathan Starkey,
    US/UK Pianist and Composer
    Cheshire, England
    jcstarkey@me.com

  • Keg

    I have a suspicion that the filmmakers who currently have ‘careers’ established themselves pre-2008, before the writers’ strike and the global recession. I don’t know a single independent filmmaker who isn’t living hand to mouth.

  • Kevin Smokler

    Answer me this: I love movies, I watch 200 new movies a year. But I don’t watch commercial television, listen to commercial television or take a subway to work. How will I found out about a filmmaker’s new film? Until we have solved this problem i.e. here are the kinds of movies I like, tell where, how I can see them, we will never have a 21st century film culture. As an audience member, I will pay any amount of money for a frictionless delivery of great movies (ex: the documentary Medora. The second I found out I could buy it on iTunes for 15.99, I did), I will not pay one cent for a film marketed with techniques from a media culture of 3 decades ago, through means I have long outgrown, not find out about great movies, then be accused as an audience of not caring. Want me to care about your scrappy little movie? Market it in a scrappy little way.

  • noname_noslogan

    Regardless, the less disposable income people have, the less they will spend on movies. Not to mention competition from 5,000 plus films released each year and things like video games et al. In the 30s there were far less entertainment options and competition than in todays depression, which makes it hard times for filmmakers.

This site could not have been built without the help and insight of Michael Morgenstern. My thanks go out to him.

Help save indie film and give this guy a job in web design or film!