Movies don't have the same value as they used to, but they now cost much more to market. Okay, maybe this simple observation is not as simple as I first thought.
When I started out in the film business, it was considered reasonable to value North American rights on a feature at 50% of negative costs. If I was asked to value such rights today, on the average, I would say they were either zero or they would be a negative.
When I started producing movies, a well packaged and developed project could anticipate get 80% of it's negative cost from licensing foreign rights. The value of foreign rights has been dropping consistently for years. What were once major territories in terms of revenue they returned, now seem virtually impossible to do deals in. Television rights abroad supported acquisition prices for years, but now those slots are increasingly difficult to obtain everywhere. If an independent film can piece together 50% of its negative cost from international, I think they are pretty fortunate.
When I started producing films, the luxury of making specialized films were that they were inexpensive to market. Sure it required making good movies that people wanted to see, but the benefit of making "review driven" films meant that was all one needed to make the film begin to work: a good review from the NY Times. Those days when everyone was reachable through a common source or soap box are long gone. Audiences have fractured, dispersed, and become increasing distracted as thousands of opportunities compete for their leisure dollars.
Is it a bit clearer now? What's the conclusion?
The formula doesn't work, granted. Unfortunately it is not so easy as, say, lowering the cost of production, as that decreases the scope of stories that can be told and the methods one uses to tell them. As much as everyone speaks about this wonderful tool of the internet, we still don't have many examples of filmmakers and their collaborators harnessing its power and increasing a film's reach while decreasing the costs.
Is there a way to increase the revenue that could be returned via a film or an artist so that their is greater reason for an entity to market them? The music industry has explored "360 degree" deals with both big and small acts. Yet film remains primarily a single product industry (one that is available in multiple formats) and the benefits of such an arrangement are a bit harder to see.
You can always design your movie so that the value vastly exceeds the cost of making it. Simple, huh? Isn't that how it used to be done. That is actually still how the typical studio film is greenlit, but if it was so simple everyone would be doing it.
Where does this leave us, this simple observation? I do think there are answers. I do think it is worth pondering. Yet the real necessity is recognizing that this is the present reality and most filmmakers are designing their work around an old model when it was reasonable to thing you could make something at a price point and market it at a cost that lead most people to assume there would be a profit at the end of the day. The simple observation is that those days are gone.