LORD PUTTNAM OF QUEENSGATE CBE
FDA PRESIDENT’S KEYNOTE ADDRESS ON TUESDAY 31 MARCH 2015
AT 8 NORTHUMBERLAND AVENUE, LONDON WC2N 5BY
On the FDA’s Annual Industry Breakfast launching the FDA 2O15 Yearbook, on March 31st, 2015 Lord Puttnam as FDA President gave the keynote speak during which he addressed a number of key issuing impacting on the sector; most nobaly the Digital Single Market.
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Good morning and welcome. It’s a pleasure to see so many of you here in what, 125 years ago, was opened as an ultra-luxurious 500-room Grand Hotel.
2015, as well as marking 75 years since the Battle of Britain and the start of the Blitz, is a year of any number of other significant anniversaries.
For example, it’s 800 years since the signing of the Magna Carta, which declared that everyone, king and commoner alike, should be treated equally, with a right to legal representation; principles still enshrined in English law.
It’s 750 years since the first ‘parliament’ of elected representatives convened in Westminster.
On the 18th of June it’ll be 200 years since the Battle of Waterloo, leading to the final downfall of Napoleon and the subsequent rise of ABBA. Although few in France feel that was a wholly satisfactory trade-off!
I mention both Waterloo and the Blitz because turmoil in Europe is going to be a recurring theme this morning. And in a few minutes I’ll also have a little to say about another, and rather different, forthcoming anniversary.
That young people have come to regard a future war between the countries of Europe as unthinkable is a proud legacy of what was a visionary project.
The European Union was founded by France, Germany and 4 other nations shortly after the Second World War. The UK and Ireland joined an enlarged group in January 1973.
As East European Communism collapsed in the late 90’s Europeans became ever closer neighbours, and the single market was formed with 4 ‘freedoms of movement’ at its heart, people, money, goods and services.
Recently, as you know, the European Commission, the EU’s executive body in Brussels, has committed to implement the modern online equivalent, the Digital Single Market. This priority is given additional traction by the borderless nature of digital technologies.
According to the present Commission – which took office last year under a new President, Jean-Claude Juncker – it simply no longer makes sense for EU countries to each have their own rules for copyright, data protection and telecoms services.
Whilst that sounds logical, as the Commission itself increasingly appreciates, it’s rather more complicated than that!
I’d like to spend the next few minutes adding my own voice to the growing debate over the implications of a Digital Single Market for our industry.
I speak as a producer of independent and studio-backed films; as a pretty passionate pro-European; and as President of Film Distributors’ Association here in the UK.
More broadly, I also speak as someone who knows FDA’s views to be shared by IFTA; Europa Distribution; FIAD in Brussels; the European Film Agencies Directors’ Association (EFADs); the BFI and a host of other industry bodies.
What’s at stake here are not only the rights held by creators over how their works are exploited under copyright law; but also the future of the business model which underpins and delivers a large and increasingly diverse range of independent films to international audiences.
There may be some who think there’s too much choice; that we’re already flooded with ‘content’.
If so, they should be careful what they wish for, because there are those in the industry who are genuinely concerned that the investments they are making – amounting to literally hundreds of millions of pounds, or euro’s – could be very seriously under threat.
This really matters to those hundreds of thousands of people in the creative sector whose careers and livelihoods appear to be under threat. Currently around 7 million European jobs, and half a billion euros of European GDP, rely on the copyright-based industries.
So let’s start from first principles.
A digital single market in large part already exists, and, to my mind, that’s a very good thing. The issue for the filmmakers and filmgoers of Europe is, what form of digital single market will serve them best?
As many of you know only too well, this is a highly complex issue; in fact it’s an interlocking set of issues.
However there may be a little more common ground, and a greater degree of shared interest, than sometimes gets portrayed.
Film distributors, whose livelihood comes from licensing the titles they represent, are as keen as anyone for this new generation of digital technologies to expand their reach, empowering people to share more and ever better audio-visual experiences.
Movies made for global audiences – the Pixar or Marvel titles, for example – can be and are released day and date across Europe, or in some cases worldwide in cinemas with digital projection systems – installed, never forget, at the on-going expense of film distributors.
There is – rightly – nothing in copyright law that prevents the simultaneous global release of product.
In the music industry, too, pan-European licensing is commonplace, while Netflix expands everywhere, joining dozens of other streaming and on-demand entertainment platforms.
So far, so good.
I’d also agree with the Commission that enforcement of copyright infringement should be aimed at serious, organised criminal groups – the priority being to ‘follow the money’.
The problem for audiences, and it’s a big one, comes when you seek to remove the flexibility for certain films to be released on a territorial basis. Not just released, but financed. And when I say ‘territorial’, I’m not referring to national silos, but in many cases groups of countries with a shared language.
Europe’s total population of 740 million citizens is double that of the USA, and over half that of China.
The European film industry is well established as one of the world’s largest and most diverse production centres. Close to 1,500 feature films were made in Europe last year, surely an indication that something’s working pretty well.
Surely, if you’re thinking of ‘outlawing’ the model that’s effectively enabled all of this production, you’d find yourself looking for some pretty robust evidence that what you plan to replace it with is going to offer a better service to Europe and its audiences.
You can’t simply replicate the United States of America with a United States of Europe, even if there was a popular mandate to do so. For one thing, there are 23 officially recognised languages in the EU.
And probably an equal number of ‘content classification’ regimes, too.
The high up-front production costs of film and television mean that many projects only become viable through licensing on a territorial basis.
There is no reason why Europe’s filmgoers should understand the how’s and why’s of the model that underpins many of the movies they enjoy, but equally it’s a reality that can’t simply be wished away.
In a nutshell, territorial licensing enables financial advances to be secured against exclusive local distribution rights, before a film enters production.
It’s that ‘exclusivity’ which provides the distributor with the possibility of recoupment – and even eventual profit – each investment being in effect a risky ‘prototype’ in an ever-more crowded marketplace.
Distributors’ campaigns are necessarily and expensively tailored to a local marketplace, its culture and its language.
Maybe the Commission knows something I don’t, but I’ve yet to see a shred of evidence that ‘territoriality’ works against the public interest. Quite the contrary.
Without a solid underpinning of pre-sales, it’s very doubtful that many UK films such as Mr Turner, The Railway Man, Philomena, Suffragette or Paddington could ever have been made. And the same applies right across Europe.
The entire spectrum of cinema that lies between the Hollywood blockbuster and the subsidised ‘art house’ title relies to an alarming degree on territorial licensing.
Film production and distribution are two sides of the same fairly efficient business model, a model with an established track record of delivering choice and diversity to audiences across Europe and the wider world.
Any one-size-fits-all approach, the very sound of which seems to belong to a bygone analogue era, can only result in a significantly diminished film culture.
Surely a healthy, vibrant single market can continue to accommodate a plurality of release patterns?
This is not any form of ‘discrimination’, it’s just plain common sense.
Surely cultural diversity for Europe’s citizens must rate for serious consideration alongside the theoretical ideal of ‘simultaneous accessibility’? Which doesn’t of course, even occur with every film released in the US.
In a piece of economic analysis commissioned last year by the European Commission from Charles River Associates, the authors concluded that, and I quote, “perhaps counter-intuitively, a total ban on territorial licensing might decrease, rather than increase, consumer choice”.
And I’d add: is also likely to blow a hole below the waterline of cultural diversity – that same ‘diversity’ that colleagues from across Europe fought hard to maintain and strengthen during the GATS trade talks almost 25 years ago.
Within an overall digital market, we need to safeguard Europe’s local markets in ways that best meet the consumer needs of those markets.
It’s only when a movie becomes a significant success in its home market that its status, appeal and value are enhanced for wider audiences elsewhere, who may well get to experience it a few weeks or even a few months later.
Take as an instance The Artist, one of the most award-laden European films in history.
It was first screened at Cannes in May 2011, opened in French cinemas in October, and in the UK two months later, by which time it was riding the crest of major award nominations.
Or a different example. Bloomsbury published the first Harry Potter novel in the UK in June 1997. 15 months later the US edition was launched.
It took several more years for the book to be translated into the 72 languages in which it’s now available.
But here’s the key, if it were available online, everywhere, simultaneously, as an e-book, in English or other languages, surely its value to potential publishers around the world would be severely reduced?
Stieg Larsson’s dark thriller, Men Who Hate Women, was first published posthumously, and to extraordinary acclaim, in his native Sweden in 2005. The following year, a French translation was published; a German one in 2007. Another year went by before it emerged in English as The Girl with the Dragon Tattoo, reaching UK bookshops in January 2008 and US stores in September of that year.
As we now know, Larsson’s writings stoked the extraordinary success of the Nordic Noir crime fiction genre that today spans novels, TV series and films around the world.
There has to be a moral, or more importantly, a cultural and commercial lesson in all of this?
Local audiences will decide what most interests them at any given time in their own cultural and commercial cycles.
The citizens of Europe have such a variety of entertainment options, so many different digital media players to pick from, that the unpredictable demand for movies has to be nurtured and very carefully built, title by title, week by week.
The copyright regime that the European Commission currently seeks to re-fashion has already enabled the digital revolution to flourish, and consumers’viewing behaviours have readily adapted over the past few years.
The Commission is preparing to publish a document on a Digital Single Market on the 6th of May, the day before the UK General Election and the week before the Cannes Film Festival.
I can only urge the Commission to progress this matter in a thoroughly informed and evidence-based way; in a manner that takes full account of European film economics, the practicalities of diverse consumer demand, and a demonstrable understanding of why things work as they do.
I’d suggest that the Competition Directorate of the Commission also adopt the same disciplines when weighing evidence in relation to the enquiry into e-commerce it announced just last week.
The Commission has a clear responsibility towards audiences, that’s to say the citizens of Europe – and I’d argue that the choices of those audiences matter more than any newly adopted orthodoxy or ‘digital ideology’.
I’m not, nor ever have been, a fan of ‘protectionism’ or the status quo.
So this morning, in addition to laying out my concerns, I’d also like to look through a wider lens – focusing not just on the business in 2015, but offering a vision for 2020 and beyond.
As a passionate champion of the value of digital technologies, I have always advocated ‘digital’ as being at the heart of all aspects of policy, both in commerce and education. The digital world continues to shift on its axis, and is changing our lives much faster than many people seem prepared to acknowledge.
The UK is now the biggest e-commerce market in the world, with a greater spend per head on or over the internet than any other country. Online shopping has dramatically broadened the scope for impulse buying, perhaps triggered by a valued recommendation, and I hope that film portfolios can increasingly benefit from this phenomenon.
At key junctures in its history, the film industry has always adapted supremely well to seismic change. How many ‘nay-sayers’ were on hand at the dawn of sound; of television and video; even of multiplex cinemas? The short answer is – a lot, but in just about every case they were proved wrong.
To an extent our industry is already reinventing itself for the 21st century.
For a ‘digital’ era in which China becomes the world’s biggest film market.
Incredible as it seems, last month for the very first time, China’s box-office outstripped that of the US.
This is an era in which IMAX-sized screens are being fitted into homes as well as cinemas.
An era in which movies face ferocious competition in the time economy as well as the financial one. YouTube’s top 100 channels generated over 14 billion views in January 2015, more than double the equivalent plays in January 2014.
This is an era in which film ‘recommendations’ can be sent to the wristwatch of every potential customer, let alone to their iPhones and Tablets.
[DP introduces a new 94-second montage, ‘130 Years of Screen History’.]
With Apple’s smart technology in mind, I’d like to offer a further example. It was in January 2007 that Steve Jobs, then CEO of Apple, first introduced the iPhone. “This will change everything” he observed, and I’m not sure any more prophetic words have ever been spoken.
Barely 8 years later, about half the adult population of this country owns a smart-phone. By 2020 you can be fairly sure it will be up at around 80%.
Smart-phones are socially and commercially transformative. As mini super-computers, they bring people online, collect data, and are in every sense a platform for growth.
Asked which media device they’d miss most, British teenagers tend unsurprisingly to pick their mobile phone over TV sets, PCs and games consoles.
I’ve written about children’s evolving media habits in the new FDA Yearbook, published this month. It contains a wealth of Rentrak statistics, as well as a timely article on the Digital Single Market by Jelmer Hofkamp, the FIAD representative who speaks knowledgeably for film distributors in discussions in Brussels.
This month, the BBC’s technology programme, Click, broadcast a half-hour HD episode, shot and edited entirely on smart-phones and tablets. It was the first time a piece of long-form BBC content had been made in that way, but I’ll wager it won’t be the last!
At blistering speed smart-phones continue to re-forge entire industries, film and TV included, and there’s no turning back.
But even in a sector that’s well used to disruption I believe that the digital revolution constitutes the most fundamental paradigm shift we’ve ever known; we need urgently to grasp the huge opportunities, as well as addressing the many challenges it presents.
Those of you with companies based in an EU member state, who have previously made applications to Creative Europe’s MEDIA Programme will be familiar with the long-standing, and very worthwhile, Selective Scheme.
It’s designed to promote trans-national distribution of European films, giving European audiences access to a broader range of movies. It works by incentivising groups of distributors – a minimum of 7 per group – to release non-national films that would face far greater challenges if left solely to market forces.
In the near future, taking the Selective Scheme as a template, you may find it advantageous to consider ways to partner up with fellow independent distributors in other European markets.
It’s worth exploring the strategic alliances that might be formed to increase your reach and your options in bringing films to European audiences in a more ‘networked’ way? Distributors already possess all the requisite business skills, risk-assessment expertise and entrepreneurialism, if it can be made to work.
Which doesn’t seem a bad moment to add my voice to those who feel that a greater share of public funding support should be targeted at distribution, the point at which films connect with their audiences.
My view is supported by the fact that, only last November, an independent study on the international dissemination of European films found that “the imbalance between support for production and distribution seems to hinder the easy circulation and optimum success of some films”.
European public funders reportedly spend less than 10% (in fact 8.4%) of their annual budget on distribution, compared with almost 70% on production. It might not be a bad idea to seriously re-assess the arguments for this imbalance in the years ahead.
I have 2 further items to offer:
One relates to data. It’s hard to over-state the importance of data in the digital world. Data doesn’t just measure business, it inspires it.
I’d encourage every rights-holder to explore your own direct-to-consumer sales and marketing platforms in such a way as to harness and increasingly refine your own databases.
Secondly, many of the political speeches I’ve heard recently that purport to address the perceived problem of territoriality have in fact been about the apparent lack of ‘portability’ from one country to another.
The prevailing mood music in Brussels runs strongly in favour of fairness towards European citizens whose prosperity took a severe knock from the global financial crisis of 2008.
But what exactly should this ‘fairness’ mean in practice? In our context, I’d say ‘fairness’ means treating paying customers equitably, allowing the market to flourish to the benefit of Europe’s citizens and consumers, without any undue bias – much as our Magna Carta postulated back in 1215.
You can usually trust the gut instincts of the public on issues like this. They tend to know ‘fairness’ when they come across it, they seldom need it imposed on them. It’s heartening that some models extending ‘portability’ are already being developed. The process primarily needs technological solutions, not copyright reform.
I for one would certainly wish to encourage the market place, not regulators, to accelerate that process.
In due course, this could and should be a significant step along the path to a digital Europe – that is, a viable digital Europe – with fewer borders.
As we all realise, the worldwide web was the transformative British invention of a quarter of a century ago. Even the UK Parliament – widely perceived as functioning along deeply traditional lines – is getting its digital act together.
Two months ago, the Speaker’s commission on ‘Digital Democracy’ published a report recommending a digital-first approach to many aspects of working life in Westminster.
There were recommendations that, by 2020, Parliament should be fully interactive, to include new digital means for the public to put questions to ministers, and online voting in general elections as a secure option for every voter.
The report is a decent if somewhat overdue attempt to deploy technology to improve parliamentary democracy and communications; I can only applaud it for that.
It would be a strange irony if, of all institutions, parliament were to be perceived as more attuned to the digital world than the UK’s cutting-edge film industry.
Which draws me inevitably to the live issue of windows, or theatrical exclusivity.
I’ve noted before that the current, rigid period of exclusivity that straight-jackets mainstream UK cinema releases is ultimately self-defeating.
It stifles innovation and leads some segments of the audience who can’t find a title at the cinema to feel justified in searching the option of last resort – the ‘pirate window’.
Whilst there are increasing numbers of consumer-focused experiments by, among others Curzon and Picturehouse, the releases in question tend not to be widely booked by the leading exhibitors.
The top three circuits control 75% of the UK cinema market place. Whereas the top three supermarket chains that we hear so much about have a combined grocery market share of just over 62%!
Those cinema operators, who may support a theatrical release for say 4 or 5 weeks, still require it to not be made available in any other format for at least 17 weeks. A one-size-fits-all imposition that is wholly out of kilter with just about every other product in the fast churning, digital marketplace.
To any politician or consumer who harbours the belief that film distributors are ‘holding stuff back’, and not making films available to the timescales they’d wish, let me clarify the situation.
Film distributors’ crucial ‘ask’ is for flexibility, not necessarily a shorter window per se. And importantly, there is no evidence to suggest that any such flexibility ‘cannibalises’ or lessens the interest of theatrical audiences.
So I’d urge those politicians or consumers to question, not the distributors, but cinema operators as to why their ‘inflexible’ approach to windows persists.
It could be that change of any form is thoroughly undesirable at a point at which investors are trying to position their assets for sale. But if we could only look beyond the next few months, surely some modern-day flexibility in release patterns is long overdue.
I’d encourage any prospective, let alone existing, owner of cinema circuits to take a closer look at on-demand platforms too.
If cinema operators would only consider a movie’s progress beyond the theatrical window, that could lead to them having a greater interest in the subsequent revenues in the movie’s life-cycle.
If there’s a benefit to reducing the ‘blackout’ – that’s to say the period when films cease to be legally available anywhere after the completion of their cinema run, why don’t exhibitors seek to participate?
And if there is no extra benefit, why is the window so inflexible in the first place?
The current impasse really feels like a ‘lose-lose’ situation, one in which a lack of imagination is stunting revenues; I can only urge the cinema operators to call time on it.
If UK exhibitors feel this is the moment to reconvene our sector-wide focus group, to share respective opinions; I am, as ever, more than ready to participate.
Before closing, I said earlier that I’d be referring to another anniversary in 2015.
It’s not the centenary of the births of Frank Sinatra or Billie Holiday. Or the 40th anniversary of the first broadcast of Fawlty Towers – although I bet that makes one or two of you feel your age!
On this occasion it’s none of those.
As I hope by now you’ll all realise, I’m referring to the centenary of Film Distributors’ Association itself.
It goes without saying that I’m more than proud of the work FDA delivers; it reflects credit on the whole distribution sector.
It plays a huge role:
- in the provision of sector-wide training;
- in the safeguarding of theatrical releases through its partnership with FACT, the envy of pretty well every other territory; and
- in developing audiences through its innovative range of generic promotions such as the ‘state of the art cinema’ exhibitions.
I’m also proud of our continuing commitment to the next generation, both through sponsorship of the National Film & Television School and, in partnership with Creative Skillset, this year’s pilot of a new internship scheme that’s running until the autumn.
More widely, 2015 marks 100 years not just of FDA, but of organised feature film distribution in the UK – 100 years of connecting countless thousands of films with the countless millions of their audiences.
Let me briefly set out why I think it’s important that we mark this centenary.
Despite everything that’s changed – in some cases out of all recognition in those 100 years – the underlying principle of distributors being the lynchpin of the entire film value chain, positioning each individual title in a hyper-competitive, unforgiving market, and compellingly connecting it with filmgoers, remains as true as ever.
Among all the professional branches of the film industry, distribution is necessarily the one that has the greatest impact in determining the breadth and depth of audience access to film.
Inevitably, ‘what audiences want’ perpetually, and all too rapidly, fluctuates according to a deluge of market conditions and shifting social factors.
Yet in my experience, the earlier a distributor can be involved, the better.
Distributors may be able to offer a valuable perspective on any number of production choices, and they can certainly help to highlight those distinctive elements of a production that can later be developed as ‘promotional hooks’.
Film distribution is the powerhouse at the centre of our thriving creative industries – film impacts upon design, advertising, publishing, music and many other forms of creativity.
Earlier this year, the Department for Culture, Media & Sport published an update on the value of our creative industries. They are currently worth £76.9 billion to the national economy and their tally of 1.7 million jobs amounts to 1 person in every 18 employed in the UK.
The creative industries generate a large flow of VAT payments – £200 million from cinema tickets alone – and a great deal of inward investment. They also continue to deliver desirable jobs, transferable skills, export opportunities and the best possible platform with which to promote this country overseas.
I sincerely hope that, after the General Election, whoever forms the new Government will continue to offer robust support – financial, regulatory, moral and political – for the film and creative industries.
FDA’s centenary programme will, very appropriately, embrace other areas of creative endeavour.
The celebrations will kick off on the 4th of June with a special concert at the Royal Festival Hall. The Philharmonia Orchestra will bring to life Great British Cinema – a selection of themes that, between then, help to define us as a nation on the big screen.
Then there’s an interactive summer exhibition of film images and posters which has, as its centre-piece, the largest Lego® model of a working cinema ever built in the UK. I’m sure the inner child in all of us can’t wait to see that.
The centenary publishing strand includes a new book tracing the evolution of British film distribution from its origins all the way through to the present day.
I’m reliably informed that its fearless author, Geoffrey Macnab, has already half completed his manuscript, provisionally and rather enticingly entitled, 100 Shades of Film Distribution!
I can also announce that an independent study of the economic, social and cultural impacts of UK film distribution has been commissioned from Saffery Champness.
I believe this is the first time that such a dedicated, comprehensive, distribution-focused study will ever have been published, and I very much look forward to reading it when it comes out in June.
Happily, 2015 is shaping up to be a special year for UK cinema-going in other respects, too. The line-up of releases that distributors are bringing to market looks to be the most exciting for a generation.
A total in excess of 176 million admissions would make 2015 the best year for cinema-going in this country since 1971.
As someone still haunted by 1984’s nadir of 54 million, it would be great to see us set a high watermark, breaking the flat-line monotony of the past decade.
To retain and hopefully build upon that cinema-going habit, I’m delighted to note that a new sector-wide 2-for-1 scheme goes live next week.
Meerkat Movies, from Compare the Market is likely to be the single biggest new product launch of 2015 across the whole of UK marketing.
That’s quite a claim, but there’s every chance that Meerkat Movies will very soon have become part of the national lexicon.
I can only congratulate Compare the Market on the scale of their creative ambition, and hope their association with UK cinema-going flourishes for many years to come.
As this morning’s address has touched on the past, present and future, what better way to wrap up than to enjoy a selection of highlights showcasing the past century of home-grown cinema – followed by a glimpse of what’s coming this year?
With sincere thanks to Duncan Kenworthy, who painstakingly produced this wonderful compilation whilst at BAFTA, I am delighted to present ‘100 Years of British Film’ – condensed into a little over 5 minutes.
May I finish by wishing you all a very relaxing Easter weekend? Thanks for listening to me.