Edmond, OK

I decided when I went down the rebuild path for this website that I would install Google Analytics. It’s kind of neat to see where I get visitors from.

The results have been fairly typical: Hits every day…Traffic from Facebook, Google searches, some people from JWSound checking me out, etc.

It seems my most read blog post this far has been about some work I did this past Spring, involving licensing for a museum exhibit. Apparently, there aren’t that many examples or descriptions of the innerworkings of most favored nation (MFN) licensing deals. I will have to write more about this.

Aside from the front page, people seem to look at what is under ‘For Sale/Rent’…Not so much ‘Services’, which is where I make the bulk of my living these days.

Then there is an anomaly: Edmond, OK.

Starting June 19, 2010, someone has been searching via Google for “MFN for master use and synch license.” They then click on the link to my website, but don’t look at any other page. This is repeated daily, sometimes multiple times. This person is on a Cox Cable connection, is in Edmond OK, runs Firefox on Windows, and is a puzzle.

Anyway, Google Analytics is a fun distraction, if a bit stalker-ish.

On pride…

My little brother just graduated from high school. After a few years at ACMA (the Arts & Communication magnet high school in Beaverton), he has graduated, and is off to Southern Oregon University to study theatre and music.

Over the past couple years, he has performed at theaters around Portland, traveled as part of a Jazz band, and done some really innovative tech and sound work.

I would like to think that I’ve done something to aid in his success, or at least served as a minor inspiration.

Congrats Kevin!

How’s that supply chain working for you now?

The boring thing to call this post is Supply chain comparisons in commodity versus specialty products. The fun thing would be Dell, you screwed up.

See, Dell recently ended up shipping servers with malware in the firmware. The firmware. The very heart of the machine. Servers. Not consumer computers, but machines business rely on to actually, well, do business.

In the film and music industries, there are a lot of gearheads, myself included. We require reliability and manufacturer support, because it really sucks when a $50,000/hour shoot comes grinding to a halt because a $0.25 connector failed. We look for quality, because spending $5 instead of $0.25 on a connector seems like a great deal, in the face of $50,000/hour downtime.

At any rate, in the film and audio industries, outside the fiercely ‘indie’ realm, the professionals look for quality and pay for it. From Altman for lights to Manley Labs for outboard audio gear to Zaxcom for digital production recorders and wireless, quality is the supreme factor, because it is cheaper in the long run.

So what does this all have to do with Dell? Let’s do a little comparison:

Company 1: Kudelski SA

We can look at certain devices like the Nagra VI recorder (link to David Waelder’s excellent review), and appreciate a lot of details: The Nagra VI is, of course, made in Switzerland by the Kudelski Group’s NagraVision SA division, a company with a very long history in recording technology and data security. They made cold-war spy gear. They made the Nagra tape machines, the standard production recorder for decades.

The Nagra VI recorder is made by a largely vertically integrated company. The metal case, the circuit boards, the firmware programming, even the transformer winding…It’s all done by NagraVision inhouse, not a subsupplier. The few things that are subbed are obtained from equally quality-obsessed companies. Take a look at this factory tour. They consider the aesthetics of everything: What will the knob feel like after a 200 day shooting schedule? Will the transformers work in Death Valley one week and on Denali the next?

Now, the other interesting thing about the Nagra VI is the core processor choice. They started using and programming their own FPGAs in the 80s with their first digital products. NagraVision sources the chip from Altera (Specifically, Altera’s Korean plant), but they program it and write the firmware themselves, and have complete control over the code. Altera does nothing buy deliver a blank slate. There is more info here (PDF).

End result: Someone working on a feature film, or recording that once-in-a-lifetime concert tour can rest assured that the Nagra VI will work.  Not only will it work, but you feel the Swiss engineering in every facet of the machine…decades of experience and quality engineering lineage wrapped up into a single small package.

The choice to buy a Nagra (or Zaxcom, Schoeps, Neumann, Sound Devices, and other quality gear) is easy when the cost of the equipment is virtually nothing compared to the cost of failure. Your cheap recorder died on set? Took a bunch of takes with it? Well, a single day of ADR with an A-list actor, the director and entourage costs as much or more than a Nagra VI (list: about $8,000 USD).

Company 2: Dell

How does this relate to Dell? Well, simply put, Dell doesn’t have control over their own production, engineering, supply chains or much else that actually is a Dell computer…

Dell has had to scramble recently to get replacement firmware to their customers. It seems that somewhere along their vast supply chain, some servers ended up with malware on them.  Instead of managing firmware in-house, as Nagra does, Dell seems to let someone else handle the brain of the hardware, as well as many other critical components like power supplies. Big mistake. Y’all lost the soul of the machine. Your users don’t seem happy either.

Dell is no stranger to quality issues: The Optiplex had it’s share of problems, and Dell didn’t recall them.

So what is Dell?  They are a marketing and support firm, not a manufacturer.

Is it better to buy a computer from a marketing company with support division, or from a company that is in the business of designing and manufacturing computers?

The Blame Game

People working in film and music make large capital investments in quality equipment, because even if it goes obsolete faster than we like, it is rock-solid.  When is it acceptable to sacrifice long-term quality and buy on the cheap? Never…Unless someone comes up with a really complicated way of saying it.

Dell’s Customers: Have you taken advantage of short-term capital cost savings, while  minimizing your exposure to high capital investments in quickly depreciating technologies?

Yeah. Customers bought cheap to save money upfront, hoping it would go obsolete before it broke…Or before accounting identified even more ‘cost savings’ in “extending the deployment cycle of high-replacement cost technologies.”

Do the accountants even once think about including the cost of failure and downtime? Rarely. Do the CxOs listen even if they do? Hardly ever.

Look inside, Dell’s customers. You are not just victims here…

Dell’s Shareholders: Does your pervasive neurotic focus on quarterly results prevent Dell from making long-term capital investments that might hurt short-term projections?

About that:

Dell also said it will have spent an unscheduled $450 million, or roughly 14 cents per share, on operational issues. This will make its projected third-quarter earnings per share about 25 cents versus the previous estimate range of 39 cents to 41 cents.

“The charge also includes the costs of workforce realignment, product rationalizations and excess facilities,” the company said.

“Michael Dell basically said, ‘Well, if we can’t trade them up or sell a monitor, we really don’t want that business,'” Kay recounted.

…But those quarterlies? Yeah, the cake is a lie:

For years, Dell’s seemingly magical power to squeeze efficiencies out of its supply chain and drive down costs made it a darling of the financial markets. Now it appears that the magic was at least partly the result of a huge financial illusion.

But shareholders keep demanding the cake…Over and over and over, even if it’s a lie. Think beyond next quarter…Or watch your investment crash like a non-conforming mortgage on an underwater house.

Dell:

Y’all simply screwed up. Big Time. Own it. Realize you have been screwing up for the better part of a decade.

Then make it better and get back to what you used to do: Lean computer manufacturing, with at least a touch of concern about quality…If  your institutional flaws ever allow you to vertically integrate your production. I’m not holding my breath. After all, you’ve done this:

“There was a sequence of human errors that led to the issue, That being said, we have identified and implemented 16 additional process steps to make sure this doesn’t happen again,” said Dell spokesman Jim Hahn.

Nice band-aid. Nice 16 band-aids. It still doesn’t solve the problem: How many more will you try and stick on to an increasingly festering gangrenous supply chain?

The bottom line:

Film and audio equipment is purchased based on total cost: The upfront+cost of repairs+potential cost of failure+ease of use/efficiency+aesthetic appeal+etc. Dell is very lucky, because most corporate accounting practices segment those costs across multiple books, so the true cost of owning lower quality equipment is never considered. This isn’t good for Dell, or the customer.

I guess my whole rambling point is this: Dell, get some Soul.

Filemaker: Containers galore

I’ve used Filemaker for a while, mostly for various organization tasks. I had an interesting experience with it recently.

A part of a project for someone I’m working for called for a robust file management methodology. In addition to tracking the songs used by a music publisher, there needed to be a way to store the associated files, such as sheet music, mastered tracks, etc. Basically, I needed Filemaker to handle the storage and naming of files. One cannot rely on the end-user to maintain a static file system and naming convention with 100% accuracy.

As many Filemaker users know, the two ways for Filemaker to interact with files: One can store them in the database, the second can reference them from the database, recording only a file name and path to a field.

The problems with each method quickly become apparent in a media environment:

Storing very large files in (what is usually) a local database causes it to drag. Badly. Stored files are also just that: files. There is no way to take advantage of Filemaker’s ability to handle media…No embedded audio, no pictures that display…Just <<random.file>>. This, quite frankly, sucks. Filemaker: You need to do something about it.

Storing references is also problematic, because when files move and folders are renamed, the reference is then useless. However, at least with a referenced file, it can be played or displayed within Filemaker.

I guess I should mention that the client works on a Mac, which is my preferred platform, and typical of many media companies. However, what follows would work just fine on a PC.

Solution:

My kludgy (Because of Filemaker’s limitations) solution: Note that the table we are using is called ‘Songs’, and that we are storing the full track in a folder called ‘Container Master Full Songs.’ The rest of the fields should be self-explanatory.

FullTrack Load
Clear [ Songs::TempContainer ]
[ Select ]
Insert File [ Songs::TempContainer ]
Set Variable [ $file; Value:(Songs::Song SKU & (Right ( Songs::TempContainer ; 4 ))) ]
Go to Layout [ “Songs” (Songs) ]
Export Field Contents [ Songs::TempContainer; “file:Container Master Full Songs/$file” ]
Clear [ Songs::Full Track ]
[ Select ]
Insert QuickTime [ “movie:Container Master Full Songs/$file” ]
Clear [ Songs::TempContainer ]
[ Select ]

In English:

Copy the file to a ‘swap space’ in the database, generate a file name, export it with that specific file name to a specific (non-user accessible place), and use that specific name to reference the file. The one interesting tidbit is:

(Right ( Songs::TempContainer ; 4 ))

This little string grabs a 3 character file extension (plus the period), since Filemaker relies on the extension, rather than the creator code to decide how to handle a file. This is a bad way to implement anything on OS X, since the rest of the OS, and many programs rely on creator codes, rather than relying on extensions. The problem with this method is that it only works with 3 character file extensions. Not a big deal, but still annoying.

Exports happen similarly: Copy the file to the database temp field, export and prompt user to name the file and location.

Is this ideal? No. Does it work? Yes.

Most Favored Nation: Licensing gets complex

Update, July 19: this post seems to be getting a lot of attention.
It presents a lot of info that might not be useful to someone with
more basic questions about MFN deals, step deals, or film/music
licensing in general. Please feel free to contact me for any questions.

OK, this one is a mouthful, and will be boring to a lot of people. Unless the title interests you, skip down to my previous blog entry. It’s got pictures and involves the word overkill.

I recently finished a somewhat complex licensing project. It involved motion picture assets from several major studios for use in a large-scale museum exhibit. It occurred to me part way through the project that the most-favored-nation deal structure was something that a lot of people have heard about conceptually, but that any example implementation is often hard to come by. I will attempt an explanation for the layperson, though the gritty details of the most favored nation (MFN) concept could easily take up a chapter in a book, and I’ve omitted boatloads of information. This explanation doesn’t address licensing for feature films/broadcast arena, which differs in some respects.

The Easy: Example Benefit

I’m assuming some familiarity with the basics of media licensing.

The most favored nation deal is pretty simple: You are licensing a bunch of things from a bunch of companies (licensors). The MFN deal says: I will give a licensor X, who is party to the MFN no less than any other licensor (this means ANY other, not just ones party to the MFN). This concept originated in international trade agreements.

Assume we are licensing music for a film using an MFN structure. This is pretty simple: If the highest rate you are paying is, say, $50/second for a background vocal (BV) and background instrumental (BI) sync license, then anyone who accepts the MFN rate gets $50/second for a BI/BV use.

Errata: I will pause to note right now that everyone asks for dollar amounts.
"What does X cost?" or "Can I license for -insert pop song-?", well, every situation
is different. It's extremely hard to even estimate without knowing the exact use,
and having in-depth familiarity with a company's catalog. $50/second is a mere
example. Rates can (and do) range from $100/song to millions/song, depending on
the song and the use...or in some cases, impossible, as I note way down below.

Why is this MFN thing good? It seems to push rates up at first glance. Well, if you can negotiate, the MFN rate can ensure a lower total cost for the licenses:

The general idea is to establish a reasonable rate appropriate for your budget and use, then negotiate licenses to match that rate. This means possibly pursuing the cheaper licenses first, gathering some quotes, then starting down the negotiation path. The licensors are often willing to take an MFN deal, knowing that their asset isn’t valued at any less than anyone else’s asset. This is important to them, because they have a fiduciary duty to shareholders to maintain the long-term value of the intellectual property.

As long as you aren’t diminishing the value of their intellectual property, either through low valuation or an inappropriate use (used in adult entertainment, etc.) they are usually fairly receptive to licensing.

One last point in understanding licensors is that generally, a $300 license for a small doc to use music at a festival costs approximately the same to administer as a $25,000 license for a pay cable series to use music. Which deal would you spend time on? Which might you let slide?

The Hard: Example Problem

Occasionally, the MFN rate will be too low for a given licensor, or for their given asset. For instance, if you have licensed a large stack of obscure 80’s glam metal for your doc on the rise of yuppie cocaine use, most of it in the vein and popularity of Dokken’s Alone Again, then you try and include Twisted Sister’s We’re Not Gonna Take It under the MFN, Universal Music is going to laugh at you. Actually, they won’t laugh, they will just say no, assuming they actually gave you a quote in the first place.

Do you bump the MFN rate up, thereby making everything more expensive, or do you accept that the asset is just too expensive?

Alternatively, you negotiate, and innovate. For instance: if you’ve negotiated the MFN rate based on a BI/BV use, perhaps you can actually save money by using that more expensive asset in a more expensive way: as a featured vocal/instrumental or closing (credit bed) theme, for instance. The licensor might then be willing to accept the MFN rate for BI/BV use + a premium for an additional featured use.

Bottom line? It’s all a matter of communication. There is often a deal to be had.*

Administrative Complexities:

Now, a part of this whole mess is making sure that one actually gives the MFN parties the MFN rate. In effect, you are asking them to trust you. Only rarely have issues of verification come up in my work, though I work outside the realm of major studio features. Anyway, this is a trust that cannot be broken. One can break it, but it’s a good fast-track career move to entry-level food service work. Don’t ever be tempted.

These deals get even more complex when different entities own different distribution rights (domestic/international splits, or a film clip with music, etc.), or if a step deal is involved on top of the MFN agreement. I might blog a little about step deals in August. Check back.

There are a few other things to remember: A sync license is only half of what you need. The master recording (the other ‘side’) must be licensed, or you have to commission a recording. Sometimes, the latter is cheaper, and often fun. I’ve helped record Elvis covers, Hot Chocolate covers, and TV themes. Those new recordings are bespoke creations, and can be made to fit perfectly. The Elvis song? Tempo changes to match the cut. The Hot Chocolate Song? Stylistic changes to match the subject matter. The flexibility can be worth the sometimes higher cost.

After all that, you need an accurate cue sheet. Don’t mangle the cue sheet. A lot of non-famous composers and peons (like me) get royalties, and cue sheets are critical.

I’ve mainly talked about music, but this MFN process applies to other assets like film clips as well. Film clips, like music almost always have a split, wherein the picture and any music are licensed separately.

Keep in mind that certain assets and uses require residual payments to unions and guilds such as the AFM/SAG/AFTRA/DGA/WGA. Use a clip from Titanic on the TV in the background of your period-piece-90’s narrative short? Pay up to SAG/DGA/WGA. You mix in some of the sound track? Pay up more. AFM probably wants a cut. It’s that Celine Dion song? Even more. These residuals tend to feed working artists, not the big names or corporations, so they mean a lot, despite the possibly annoying high-paperwork administrative work.

Now, in light of all that, I would risk giving a little bit of advice to producers out there:

Don’t hand licensing off to a PA or assistant. It’s tempting, because it’s just ‘paperwork’, and often boring at that. They will mangle it through no fault of their own, and any cost savings in labor will be lost several times over, because the PA/assistant doesn’t have the background knowledge to do it right, or quickly. Often, he or she is learning as they go. You don’t want them to learn on your project’s dime, or against your project’s deadline.

Before I did any licensing work, I had several years doing filings with performing rights organizations, some contracts administration, and a thorough business understanding of royalties and rights management. It mattered, and let me get things (mostly) right the first time I handled licensing.

*(You noticed the asterisk way up there? Awesome!) NEVER put yourself in a situation where you need an asset and can’t walk away. If you can walk away from the table, then you have options. Remember: Richard Linklater wrote Dazed and Confused but couldn’t use the eponymous song. It sucked, but Robert Plant wouldn’t budget. Linklater could walk, and did. The film was still made.

So: Hire someone who knows a bit about the process. You don’t have to hire an expensive entertainment lawyer (though having one take a look through contracts is always a good idea), but you do have to hire someone who is at least marginally capable. It can trim large chunks off your licensing costs, and make things happen quite a bit faster.

This was long…But hopefully useful.

Buy quality, buy once…Or adventures in overkill.

I recently made the mistake of buying a replacement suction cup for my GPS unit. The first one broke when the suction cup rubber detached from the rest of the device. The second one promptly broke as well. In the same spot.

I don’t like wasting money or time. This wasted money, and time:

I broke two of these.

The thing about the film industry is that work invariably invades one’s personal life. Film equipment is useful to have around the house, not just on set. I’m not the only one.

Instead of wasting more money and time, I took the $7 I would have spent on a(nother) replacement, and went to my favorite hardware store: McMaster-Carr. A $3 phenolic ball, $5 thread adapter, and a Wood’s Powr-Grip from a car mount, I had this:

A 4.5 inch diameter suction cup, thread adapter, threaded riser and phenolic ball.

The mount in a car. My neighbor has something odd on their car antenna.

I have to add some loctite to the threads to keep them in place, but the suction cup will stay on a window for…ever.

Overkill? Yes.

The joy of never having to buy another badly made piece of crap? Priceless.

The walled garden of licensing

Unless you have 6 figures to spend, very few media mega-conglomerates are willing (able?) to respond quickly to requests for licensing…Even if the requests are for educational purposes that millions will see…Millions, who, as they experience a more immersive museum exhibit (for instance), and engage in a culturally meaningful experience, will tend to value and consume more of the very back-catalogs I’m trying to license.

It’s a win-win, in it’s own small way. But I’m a small fish in a sea of whales, so I persevere until I break through. I don’t begrudge the licensing departments: They are under-staffed for what they have to do, and must prioritize high-value and internal clients.

A June deadline looms, but it will all get finished in time. 5 assets are cleared, and one remains.

Sometime, when this is wrapped, I will have to explain the details of administering an MFN deal. This time, there was the added complexity of a domestic/international split of one asset. Neat stuff.

A new project for the new year!

I’ve started work on a large licensing project, involving a big stack of feature film clips for a museum exhibit. It opens in June, so that should be plenty of time, right? Surely nobody at one of the media super-conglomerates has anything more important than my project…

Being a subcontractor to a subcontractor for this one, I’m either the mud on the bottom of the totem pole, or more romantically, the foundation holding the rest of the project. I will pretend it’s the latter.