Former HSX website developer tells everything he knows about movie marketing.

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Ben Curtis:

I was one of three programmers at when Max was there, from 1997-2001. We learned a lot during that time, and I’m not surprised that it’s taken this long to get such markets approved, and that such approval has resulted in forces pushing to make them illegal.

At that time, a “real money” market was just a dream, the primary goal of which was to allow independent filmmakers to raise money for promising projects. That market never got much interest, for two reasons mentioned in this post and in the comments and one not yet mentioned:

1- Unlike pork bellies or light sweet crude, the quality of the resulting movie product is not directly related to the “quality” of the participants. Even if the movie the stock was associated with had a contract with Writer A, Director B, and Big-Draw Stars C, D, and E, and Marketing Firm F — you still could produce a bomb. Studios manage this risk by taking total hiring control, reading the script, watching dailies, and the like. You can do that with a small number of investors- you can’t easily distribute all that for shareholders. Sure, shareholders could buy and sell based on their judgement of what information is distributed, but to have an open market all this information (i.e., the proto-movie itself) must be given away. We built a product called that explored these options, and produced “Shadow of the Vampire” under that aegis. From that experience, it does not work. However, clearly something *could* work- Microsoft faces similar quality-of-product debates, and it’s public.

2- Big studios currently control the entire market. Small independents find it difficult to enter the market because they don’t have the cash buffer to help absorb risk. Anything that reduces risk or spreads it out therefore acts to destabilize the hold the big studios have on the market. They will therefore act aggressively to ensure that full risk is borne by the filmmakers, because they are the only filmmakers than can easily do so. This may lower the overall quality of movies and therefore reduce the size of the market, but it increases the big studios hold on their share.

3- Individuals within the big studios see their only method of getting promoted is to take full responsibility for huge successes and to fully deflect responsibility for failures. The system that is in place is well designed through the evolution of millions of such decisions to give the individual decision makers exactly the means to do this. New markets such as these may make sense for the companies, but for the individuals they represent a risk that no one will take because it breaks the mold and so they MUST take full responsibility for a failure, while the market distributes responsibility for success. Just like Greenspan’s oversight, companies do not act in their best interest simply because the individual PEOPLE running the companies are acting in their own best interest. And they do not want the markets touching their movies.

So, those are the lessons I learned. I was just the programmer. Max was the markets guy. I think that in the end this sort of thing will get enough momentum (overseas, etc.) that it won’t matter much what people are concerned about. I do hope that such markets can be created. I think they may help make more interesting movies.

Why Hollywood Doesnt Want You Betting on Hollywood

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