A Cue From Hollywood

Hollywood’s legendary studio system has been in ruins for longer than it existed, so long that many people are unfamiliar with why it collapsed in the first place. Here’s why you should care about what happened in Hollywood over 50 years ago: Because it could happen to you. To us. To the entire agency business. And as long as we know it’s coming and prepare for it, that’s not necessarily a bad thing.

For those who skipped Cinema Studies 101 in college, here’s a quick refresher course: Beginning in the early 1920s, studios controlled every aspect of the filmmaking process, from creation to filming to distribution, using their own stable of actors, as well as technical and production staff. But in the late 1940s, a federal antitrust action took away the studios’ ability to force theaters to take big blocks of movies, resulting in a significant loss of income. That, combined with the introduction of television, was a one-two punch from which the system never recovered. By the ’60s, old-style moviemaking was dead, as were the studios that could not adapt to the new world order.

Look at the two forces that led to an entire industry to change the way it produced and sold its creative product: a major loss of income and a new technology. That has got to strike some fear in the hearts of those who remember the easy days of 15 percent commission and the time before the Internet.

Faced with a situation similar to the one studios were up against 50 years ago—losing control over distribution and the emergence of television then, reduced compensation and the Internet now—agencies need to react in much the same way: adapt, as Hollywood did, or die.

The studios coped with a loss of income by evolving from a system of contract players (directors, writers, technical crews and, of course, actors; MGM had “more stars than the sky”) to a system of ad hoc creative teams. Under the new structure, talent was assembled on a film-by-film basis that dispersed once the project was done. The studio took a smaller cut of the profits, but its cost structure was altered drastically. And an added benefit beyond cost savings was that they were able to get exactly the right person for the right job—which was essential because to compete with free entertainment people could get without leaving their homes, movies had to be more spectacular than ever.

Most agencies today still operate like the old studios in a world that demands something new. They’re bloated with too many layers of too many people who don’t contribute to the only thing clients really want and are ready to pay for: ideas. If staff or disciplines don’t enhance an agency’s ability to develop business-building solutions, they have no reason to exist. And clients have no reason to pay for them.

In the near future, agencies will have to evolve from being landlords for copywriters, art directors, planners and production departments to becoming creative portals that can assemble a creative team to handle a project and then disband. Many agencies now consider the creative process over when they select a director. In fact, that’s only the beginning. If an agency goes for the best director or the best music house, why not start by going for the best copywriter and art director? Why limit ourselves to the people on the payroll?

When the studios ruled, the most important and powerful people were the studio heads, people like Louis B. Meyer or Jack Warner. But when the studios collapsed, the power vacuum began to be filled by the people who put the deals and teams together. Just as the most powerful people in Hollywood today are not the studio heads or directors, but the agents who assemble talent, the most successful agencies in the future will be those who are able to put together the exact right team for each project.

If agencies are going to totally reinvent themselves to strengthen our ability to develop better ideas for clients, then we also need to take a look at how we’re compensated. Our ideas are fueling the growth of the world’s businesses; it’s time we profited from that. Today, compensation does not discriminate between good and bad ideas. A more fair way to compensate for idea ought to be a scale: the bigger the idea, the more we get paid. That’s risky, yes. But if we’re going to share in the rewards, we need to share in the risk.

And that risk is considerable. Not every agency is going to be able to prosper, because there are simply not enough ideas or talent to go around. The successful agencies will be those who not only can put together the right teams, but who are willing to bet their commissions on them. Aligning agency-client interests equals a stronger, better partnership—and also produces better results for both.

We do have an alternative; we could make no concessions to gigantic changes in our industry and just continue on with business as usual. And if you’d like to see a dramatic representation of the consequences of that approach, just watch Sunset Boulevard. Made at the beginning of the end of the studio system, about the beginning of the end of the studio system, it tells of the tragic decline of an out-of-touch Hollywood legend who never made the leap from the silent era to talkies. No happy ending there.

Norma Desmond should not be our role model. Let’s look instead to the character in the first full-length sound movie, The Jazz Singer, who not only embraced the new technology but used it to make a brazen claim about the future, one I think could speak for our industry if we act with the confidence and courage we should: You ain’t seen nothing yet.