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Thursday, June 23, 2011

Working directly for the studios

Working directly for the studios

Joe Harkin, Dave Rand and David Stripinis have all expressed a potential solution to some of the problems in today’s vfx industry by having vfx artists working directly for the studios on projects.  David Stripinis excellent article goes into more details.

I covered some of this in my VFX Business Models post.

The idealized version goes like this:
If vfx workers were employed directly by the studios that would eliminate some of the potential problems and disconnect going through a vfx company. The vfx workers currently can only interact with the vfx company for working issues but much of the power (including scheduling and changes) is out of the vfx company’s control. If vfx workers were directly employed by the studio then there would be a direct connection in terms of costs and schedules, especially for changes. There would be more incentive to make less changes and to stick to schedules.

Because the workers would be part of production the director would interact with them more and would be able to provide feedback sooner, eliminating waste. These would be creative and schedule wins for the workers. Since most post-production (besides vfx) is still here in California then that would mean that most vfx would remain here as well.  This eliminates the need for U.S. vfx workers to travel to other countries to keep working and earning a living.

If only it were all true.

Yes, there can be some real advantages to having vfx artists work directly for the studios.  And as with everything, there are some disadvantages.  And in some cases it may be a case of “Be careful what you wish for”.

A little background
David covered some of the changes in his article. There were other projects besides Star Wars and Close Encounters (Doug Trumbull, vfx supervisor) which setup a team under production to do visual effects. 2001 and I believe Logan’s Run and many other projects done as the studios were closing up their own vfx departments. I worked on Close Encounters out of high school and was part of setting that up. All of us were paid directly by the studio. I was lucky enough to work in just about every department.

After Star Wars, George Lucas decided having a vfx team was a good thing he set in up ILM in Marin with the intent for himself and his friends to use (Spielberg, Coppola, etc) Others from the original Star Wars team (John Dykstra) setup a vfx company called Apogee at the same location and with some of the same equipment.

After Close Encounter wrapped Universal setup a vfx facility called Universal Hartland to do Buck Rogers (TV and film projects) and Battlestar Galactica (Apogee had done the original work). A number of us went to work there. The vfx for Star Trek: The Motion Picture was setup at Robert Abels, a commercial production company that did very graphical type of work (7UP, etc). Richard Yuricich, the vfx dp on Close Encounters, called myself and a number of others to come work on that project. When it became apparent a commercial production company may not be the most suited for the vfx, Paramount brought in Doug Trumbull. He re-opened the same industrial building used earlier on Close Encounters and added another building.

At the end of Star Trek, I and five others decided to setup our own company, Dream Quest. Seeing short term facilities being setup and dismantled for each project seemed like a waste. We were able to supply vfx for commercials (CBS, Dodge, Timex, etc) , television (V mini series, Space, Amazing Stories, etc) and features (Blue Thunder, Buckaroo Bonzai, etc.) Depending on the project we might bill based on a given rate for animation camera and motion control stage. This was time and material. Or we may bid on the whole project if we felt confident and there were a limited number of options.

There weren’t a lot of vfx projects at that time but we kept reasonably busy. We also did some work for other vfx companies (matte paintings in Caddy Shack for Apogee, floating balls in E.T. for ILM). You might be doing piece meal work but if you were a mid to large size company you would likely be the vfx company doing the whole movie. And there was usually just 1 full vfx supervisor on a film at that time.

In the pre-digital days if you wanted to start a vfx company you need to have some real equipment, hard work and expertise. Stage space, room to build models, motion control system, animation cameras and optical printers weren’t cheap so you had to make a real commitment. VFX companies weren’t the problem for vfx or vfx workers.

The development of digital was the opening of Pandora’s Box. That created an explosion of vfx companies and competition. It also allowed the work to be done anywhere. There had always been some Hollywood work going to the East coast or to London but those were certainly the exceptions. The need to interact and the needs to ship and view film make those options more awkward in pre-digital era. All of this ushered in at the same time as fixed bids were becoming the new normal. Previously the studios might put out the work to bid but this involved the producer and director. In the digital age each studio now has their own vfx producer which are very involved in where the work is likely to go.

And given the size of the projects the shows are frequently broken up and sent to multiple companies. It’s not unusual to have 12-13 companies. The break up is due to having a short time for post, trying to send to the least expensive company for a given task, sending to the best company for a specific task, and/or to not put all of the studios eggs in one basket. Now each company might have their own vfx supervisor, vfx producer, CG supervisor, animation supervisor, coordinators, etc. So this creates a certain amount of redundant overhead and waste. This has led to an explosion in the number of people in these positions since there are now multiple people holding these same positions on each project. The disadvantage is this dilutes the position of visual effects supervisor and some of the other positions. On a feature film there is only one 1st unit cinematographer and possibly a 2nd unit cinematographer who follows the lead of the 1st. When you have multiple vfx supes and others on a film then the studios start to look at all of these people as being interchangeable.

So now we may have come full circle to look at working directly for the production again, either in whole or part.

Previs
Notice the development of Previs follows a similar path. Some previs is done by the vfx companies themselves but there were also a number of freelance previs artists who were hired directly by the production.  In the last few years there have been a number of previs companies setup so the production hires a previs company which in turn hires previs artists. The difference with previs is they normally bill for time and material since it’s clear the number of artists working directly for production.  Will they end up going to more of a fixed bid route like vfx companies or can vfx companies work their way back to become more time and materials companies?

Working for the Studios
Below are some of the advantages and disadvantages for the different groups affected if more vfx work was done directly for the studios. I list a number of items as potential which means it’s possible.  How likely these things happen depend on the studio, director, producer and situation.

Advantages
Studios/Director/Producer
·      Less expensive
  No paying for vfx company profit
  Potentially less overhead (no need to pay for down time or for people/equipment not in use on project)
·      More direct connection to vfx workers
·      Can prioritize and schedule work directly
·      Can setup near studio or other desired location
·      All work focused specifically on their film. No people or equipment being pulled to help on another project.
·      VFX supervisor doesn’t have to ‘sell’ work to director based on pressure from vfx company

Workers
·      Part of production, not just person in a black box (vfx company)
·      Potential to interact with director more
·      Potential for working more efficiently (quicker feedback, less changes)
·      Potential for union coverage (Studios are already union signatories so covering vfx not as big of jump as vfx companies)
·      Employer is both paying the bills and making the profits so it’s a more balanced system. The people you work for have the most to gain from you.
·      Potential for profit participation directly or indirectly (health care funding, etc)
·      More individual branding. Vfx companies tend to push their brand, not their vfx supervisors or other key people.

vfx companies
·      A vfx company could lease out a facility for $x per day/week with profit built in.  Less risk. Studio would cover the most expensive and variable cost, labor.  Direct connection makes the studios responsible for changes, not the vfx company.
·      If the vfx company is simply a lease company then they have potentially less overhead costs during slow times.

Disadvantages
Studios/Director/Producer
·      Time required to setup a facility. Pre-production already tight on most productions.
·      Preplanning required
·      Final vfx cost more of an unknown
·      Would have to hire a vfx production manager or facility manager to actually setup and run the vfx facility. Most vfx supervisors and producers these days don’t have the experience of setting up and running a full facility.  With the short schedule they’re unlikely to have the time even if they had the ability.
·      No historical data on how well a particular team will work (time, money, quality) unless they use same team over multiple projects
·      No long term R&D since this would only be for duration of the project. Longer R&D projects and related benefits would not come to fruition except as 3rd party developers.
·      Who owns the R&D that is developed on a single project? How is that able to be used on other productions?
·      Can’t point finger at vfx company for costs or schedule issues
·      Can’t ignore issues of required overtime

Workers
·      The director may not actually be any more involved. The director is usually busy with editing, sound mixing and other tasks at the same time as vfx are being done. This is the case even more so with tight post-production schedules. Most edit suites are setup at a studio or nice digs in a nice neighborhood. Typically trying to find large square footage to house vfx workers at a low rate means an industrial building elsewhere in town. This can mean 1 ½ hr drive across town in LA traffic. (Note that in London the main vfx companies and much of the editing is done in Soho so this is already convenient.  Property costs must be very high and cause a related rise in overhead costs at such companies.)
·      If you work for a company that is able to keep busy then you may not have to worry about looking for the next project and have little down time. Working for the studio directly would mean you were project to project and be forced to be a full freelancer looking for work after each project ends. And the studio isn’t looking to do another vfx project, they’re looking to do their next film project, which may or may not include vfx.
·      Even though the studios are already union they are much larger companies than vfx companies and could push even harder back to avoid a vfx union. A number of vfx supervisors are in the camera union but the studios don’t recognize this because there is not an official title of VFX Supervisor in the union contract.
·      Even though the studios are now more financially linked to the costs of making changes, the executives and director may feel freer to make changes since there’s no company between them and the people working on the vfx. The vfx company sometimes acts a buffer to some studio demands.
·      Saving money on one aspect is not always the highest priority at a studio.
·      Not all directors want to spend more time working on the details of the vfx and directors vary on the ability to review in progress takes.
·      Nothing prevents the studio from setting up the vfx team anywhere in the world so doesn’t necessarily gain more work balance in LA.  (unless an LA director wanted to truly spend more time working with the vfx team)
·      Vfx are still very labor intensive. Incentives and lower costs elsewhere are still likely to cause the studio to choose to setup a team elsewhere, even if it might not be the most efficient. If the studio spent as much money on editing and sound mixing as they do vfx, those tasks would probably go to less expensive locations as well.
·      If the studio is doing all of the vfx then there will be many vfx company personel that will be out of work including the company vfx supervisors, producers, cg supervisors, etc. since there aren’t enough films to keep all of those people busy.
·      Any type of profit participation is extremely unlikely for vfx workers, except as a form of payment into health care insurance.

vfx companies
·      Any form of additional competition makes it more difficult, especially competing against a team that works at cost.
·      Studios may not be interested in leasing your company
·      Switching to a lease type of setup may not be easy and there’s still the issue of making enough profit to cover the overhead during the time between projects.

Reality
In it’s current form the vfx business model works great for the studios.  They can send a package of storyboards/previs out to multiple companies throughout the world and get back bids.  Since the studios view the vfx as a commodity they can simply pick and choose from a menu.  All the companies they’re bidding have been around for a while and most likely already worked for the studio at one point or another so the studios know what they’re getting.  The studio can simply select based on the balance of quality, speed, size, dependability and costs among other factors. They’re selecting a known quantity in most cases and are able to validate it to anyone else in the studio.

It may cost a bit more to have it done by a third party but it’s also much less risk. That’s why studios prefer sequels and remakes. It’s also much easier to simply turn over footage to a vfx company and let them deal with the details of artists, hardware, software, and other issues, including the complexity of setting up a facility and pipeline originally. Just like when you need to change the oil in your car.  You could do it yourself but you're usually happy to pay someone else to deal with the details and mess rather than hassling with it.

Studios could also setup a longer-term vfx facility to avoid potential waste of starting up another team/facility for each project.  The problem then becomes the overhead and the need for long-term commitment. This has been the same for most studio facilities which usually closed after a small number of projects.

Unless there is a very large compelling reason for studios to do the vfx work employing vfx artists directly, it’s unlikely to change except for specific cases.

More things to think about.

-----
Just a note regarding David's mention of the VES.  There are a range of different people on the VES board, including hands on people who don't manage others. I know most of us are keenly aware of the plight of the average worker since we're usually side by side with them.

Part of the problem is that:
1. People need to volunteer and sign up to be on the board.
2. Enough people have to be aware of the person to be voted on.
These two things make it difficult for random roto and TD's to get on the board. Hopefully members will vote to balance that out.

Note the same issue will likely happen if a vfx union were to form. Best if there were a requirement for a representative from each main category of workers.

The other thing is the VES is not looking at any group (studios/vfx companies) as the enemy.  Each group is trying to do what it thinks is best. All the pieces have to be working together and the VES is trying to find solutions that help balance this out.

Friday, June 17, 2011

Using the nail

Using the nail

The last post I covered  some of problems facing visual effects workers. Today I’ll cover some of the potential outside groups that may be able to help the VFX industry.  (* I’m not a lawyer so legal comments are based on my understanding and as always could be wrong)

As an individual you have to make decisions about your employment and situation. You have to be able to control what you can. If you’re being treated improperly then try to resolve it.  If you're not being paid then quit and change companies if at all possible.

However there are many things outside an individual’s control. Sure, you can talk to your manager but how good that does is very dependent on how important that manager feels you are to completing their current project at that moment. You can also quit but beyond these actions the individual has little control. You may quit a company only to find all the other companies doing the same thing simply because they can.

A company tends to have all the control because they have the money.  They are organized and made up of a number of people (manager’s, owners, etc) whose sole purpose is to make as much profit as possible.  Laws prevent them from exploiting workers too much (laws in place thanks to the unions) but beyond that it can be David versus Goliath if you have an issue with the company you work for that isn't handled by your manager.

There are many issues bigger than individuals. Bigger than single companies. Outsourcing, health care, overtime, and other problems are systemic issues and can’t be solved by a single artist.

In the past when situations like this happened the individuals would group and work together with like-minded individuals.  Suddenly it’s not one lone voice in the woods but thousands. Some of these vfx issues will have to be dealt with by some type of organization of many individuals if the hope is to make improvements to the situation.

UNIONS
Unions are organizations of individuals in the same situation. Their point to exist is to allow some voice from the worker’s perspective. They try to provide a balance to the companies. In the extremes a company will try to push to make as much profit as possible and to incur as little expenses as possible (paying workers less, etc).  A union will push to get as much as they can for their members  (benefits, working conditions, etc). Now neither side is nearly this extreme but it doesn’t take much to make it out of balance.  Large companies like GE are pushed by shareholders to keep making large profits.  The CEOs and executives simply view their workers as faceless drones that cost money.  Anything they can do to reduce these costs earns them a bonus.  Many vfx companies were started or are being run by people who were involved in vfx hands on at one point.  Most of them try to do a reasonable job of dealing with their workers but situations and changes may throw even that relationship out of whack.

The trick here is to find balances so the companies and the workers can both succeed.  It doesn’t help anyone if the company or the workers fail.

Since most vfx workers today work for vfx companies those are the places that would have to unionize if workers wanted them to.  The studios sometimes place the vfx companies in difficult situations so it's not necessarily an easy step to make for the vfx companies.

As I’ve stated before most people say of unions and vfx is ‘it will be the nail in the coffin for the vfx industry’.  This implies ‘keep quite and hope that wages and benefits don’t drop too quickly’. Like the man who swept up after the circus elephants, we don’t want to give up showbiz. The other favorite phrase is ‘look at the auto industry and what the unions did’. Really?? You’re trying to correlate the vfx industry of today with a totally unrelated industry from over 60 years ago?  Really? The Hindenburg caught fire in 1937 so we shouldn’t fly today.  In 1950’s there were only a few computers and those filled entire rooms so any vfx company should only have one computer.  “640K ought to be enough for anybody.”  PLEASE do some research on the actual facts of the auto industry and it’s ills before blaming them on the union.  Instead let's focus on the motion picture unions of today rather than a different industry over 60 years ago.

IATSE (International Alliance of Theatrical Stage Employees) covers the Camera Guild, Art Directors Guild, Editors Guild, Costume Designers Guild, Sound Technicians, Stagehands, Makeup Artists and Hair Stylists, Studio Grips, Publicists Guild, etc.  In addition to the IA related guilds are the Director’s Guild of America, Screen Actor’s Guild, the Writers Guild of America and other guilds.  IATSE was formed over 100 years ago for those who want to see how it  compares to the auto industry.

What group is involved with creating some of the top money making films and is doing more work on films every year? What group of artists and craftspeople currently involved with creation of motion pictures and television is the only one without a union?  That would be visual effects.

So exactly why are we undeserving of having basic bargaining rights and basic health care that a union provides? I think our contributions speak for themselves.  I think the amount of work and effort and skill is certainly without question.  There are those that say our wages are above the median so we don’t deserve coverage. Look at that list again. We’re not out of line with any of the groups nor are we the most expensive.  Others have said we want to be union to be cool. I still don’t get that.  Some say we shouldn’t get paid as much as other skilled high tech workers.  These same people forget that a large portion of the vfx workers are project to project. Much different situation for both workers and employers than having a standard job.

Now the majority of those other groups are hired directly by production whereas most vfx workers are employed by vfx companies.  But there are labs, DI and other companies (sound mixing, etc) that are union.

Unions aren’t perfect.  Anytime you have more than 1 person in a group you’re likely to have differences of opinion and politics. But the union does provide a voice for workers.  It does provide the potential of continuous health care and better protection from companies that go out of business or companies that force people into independent contractor employment.

Both the IBEW (International Brotherhood of Electrical Workers) and the IA have stepped forward in the last year simply because they were contacted by a couple of vfx workers.  The IA tends to cover the majority of the creative arts guilds in motion picture and television and would seem to be a better fit with other craftspeople in the motion picture industry.

Unfortunately the IA has done a terrible job of getting the information out. They have something of value that vfx workers should at least review but they have been having difficulty providing a clear message.  The details and the plan have yet to be provided. Some of this may be changing.  Latest personal meeting notes from the union and from Joe Harkin.

Just to respond to a couple of items in Joe's posting:
"The AMPTP thinks facilities are screwing the studios with over-inflated bids, and that they are making out like bandits.  I told Jimmy, it’s true, most of the VFX CEO’s are loaded with over-inflated salaries, and that he can quote me on it."

Producers have always thought vfx were over-inflated bids even in the optical days. "Sharpen your pencils" was a favorite catch phrase.  If it wasn't something they knew or were involved with they couldn't understand the amount of time, work and skill was required to do the work. At Dream Quest we had provided a production a basic shot estimate since they didn't know how many shots they were going to need. The project was shelved for a time and  had a new producer and team come on board months later. The new producer had a note from the previous team regarding the price and had misinterpreted that to mean do all the work (now 12 shots).  He went into full rant mode when we told him that was for one shot.  According to him all vfx people were just raking productions over the coals. You couldn't even assemble a minimal camera crew for a few hours for the price he was talking about.

They see the work and amount of time on the set when the DP lights a shot or when the production designer has a set built.  The vfx people are always hidden away somewhere else.

Most producers, executives and directors are not interested in really spending a full day seeing all the work involved in vfx.  And of course some of it's our fault for wanting to keep it short and dazzle them by cycling through the rendered takes or by making a few adjustments in real time.  What they walk away with is that it's simply a matter of knowing which button to push. Giving them a shot to roto might do a world of good.

Now to correct a few things Joe says.  VFX bids are not over inflated. With the current competition it wouldn't be possible even if you wanted to. Multiple companies bid on just about everything.  If any of them are drastically different that will affect their ability to get the work. In the bidding phase there's only so much accuracy you can put into a bid, especially if it's in script or storyboard form.  Not knowing the director means you're only going to be so close. Nervous vfx producers may bump up some shots slightly to increase the odds of being covered but these same producers will reduce prices on other shots (likely below what it will really cost) to try to hone it down.  When the project is all done the amount of profit is very small, compared to other businesses and especially when you have to cover the dry spell.

Joe also mentions most vfx CEO have huge salaries. Frankly I don't see how anyone could know what most vfx CEOs are paid since that's not public information. I think Joe's making the same type of judgements as producers. Once again there's not a huge profit for most vfx companies these days.  I think it also depends on what you think an over-inflated salary is.

Here's an interesting tidbit: "A typical chief executive at a U.S. company earned 262 times the pay of a typical worker in 2005, according to a recent report. With 260 workdays in a year, that means that an average CEO earned more in one workday than a worker earned in 52 weeks."  From what I've read that's already eclipsed in 2010.  I can guarantee vfx CEO's do not make 262 times their employees.
Whether a vfx CEO is over paid depends on how valuable they are to the company. The CEO may be a part owner as well. But I think you'd be hard pressed to find most vfx CEO's being paid way above everyone else. Not to say it doesn't happen but that would be the exception.

UNION TO DO ITEMS
Some of the recommendations for the IA if they are serious:

1. List key union benefits for vfx workers.

2. What would be the benefits to the vfx companies? (potentially lower health care insurance, etc)

3. What would be the benefits to the studios? (certification ,etc)

4. Post a FAQ - Do you have to always work for a union shop? What happens if you work for a game company for 3 months? What are the dues? What is the initiation fee? How will this prevent outsourcing?  Won't this simply cause vfx companies to go out of the country? Is this only for LA? Only for California? etc.

5. Cost analysis of a medium vfx company with and without vfx union.  More? Less?

6. Overall Plan - What’s the plan to organize and more importantly what is the plan for how this will be structured?

[Update: some items now covered by Union website. Start at  VFXUnion.info ]

COSTS FOR VFX VENDORS
Many people are worried that the union would impose a very high cost increase for the vfx companies and this would simply drive the work out of the country.  Obviously it doesn't do the union any good if they truly price the companies out of business nor would workers vote for the union if it meant a vfx company closing.

Here’s a valid blog post from a small vfx vendor covering this issue.  What's best for *you*? 
This expreses the concerns raised by a number of companies.

I've owned and operated a vfx company.  It's not easy to do so and make a profit and it's even more difficult today. But there are some basics of business, one that you can't continue to work for less than it actually costs you.

Let’s review a couple of the key concerns mentioned in that posting. Health Care and Overtime.   Somehow many get the idea that these issues don’t exist if there is no union.  These in fact are issues regardless if there is a union or not.

If a company is not paying for some type of health care for their employees then the employees are footing the entire bill themselves already (or going without).  Take a look at real job listings for full time work at legitimate businesses.  Among the benefits listings are typically health care and 401k plans (after 3 months).  The company down the street making widgets likely has some form of health insurance for employees.  The bank or store you shop in does as well. These are the benefits that make up your total compensation.

Overtime pay is covered under the law and there are specific criteria that need to be met to avoid paying overtime.  The choice of being an independent contractor is not a choice to be made by the company or the individual.  It is the IRS.  It holds true for whether someone is technically exempt from overtime. The company has to have legitimate reasons to not pay overtime and just because isn’t good enough.

So using the numbers in the post the estimated costs are 20% (I’m not sure how accurate this is). Well either than 20% is made up by the employer or by the worker. And if the worker isn’t covered (which seems to be the case of the post) then the worker is already accepting a 20% cost overhead without a union. If you were paid $100,000 salary this would equate to $80,000 elsewhere (with benefits) if the numbers are correct.  As a worker you would have to consider these figures and how much overtime you expected to work for the same rate without being paid.  Is the pay high enough to cover all of this?  That's why I urge newcomers to use caution when simply looking at salaries without knowing what it truly means.  You can't do a straight comparison with a regular job since the hours, benefits and other circumstances differ. It's not uncommon to hear vfx workers are paid too much (by those not doing vfx).  However compare their adjusted pay (potentially no benefits, no overtime pay for what could be a lot of overtime, the length of unemployment, etc) and that of other high tech jobs that require a lot of skill, experience and knowledge.  It’s certainly not out of line in that context.

Overtime and some form of health care should be looked at as the cost of doing business just like computers, rent, power, etc.

So if you operate a business and do not cover health care to some extent or overtime and you can’t afford to cover these business expenses, then you’re under bidding.  When you bid a project these costs need to be included in the bid if it is required to get the work done.  If there are management mistakes then it shouldn’t be the workers who have to pay for it by putting in uncompensated overtime. If the client changes the delivery schedule or causes something that requires overtime, then that should be billed to the client. The workers shouldn’t have to be the ones to pay for an insufficient contract.  Now if you and all your competitors are bidding razor thin margins or underbidding projects, then it’s simply a race to the bottom where no one survives. How many other business expenses will be ignored or skipped to bring down the costs?

In any case the union will have to work with the vfx companies to come up with a balance of pay and benefits that is affordable by everyone involved.

Now we’ll have to see if the IA can ramp up and actually make this happen.

Since there is a need for some type of organization of workers to help solve some of these problems, the other possibility is a whole new group. The potential could be open to vfx workers worldwide and to focus on a way to achieve this in some form that would be built for today’s world.  Is there an equivalent or an alternative to the union now in 2011 that could achieve all the same results and more as a union?

Joe Harkin has suggested the VFX Foundation as a non-union, union.
Setting up any type of organization is a huge undertaking of time, money and effort. If you think it’s slow going now consider how long it will take to start from scratch. Trying to cover the legal issues, tax issues and organizing it is a full time job for a good size staff.  Even a non-profit requires spending money on staff, rent and legal bills so as much as some people wish to avoid some of the issues they see in unions, it’s likely the final results will be very close to a standard union

Newer post:
Visual Effects Guilds

Other union info:
35 Ways Unions have improved your life
How Companies Turn People Against Unions
When Did “Union” Become a Bad Word?
Anti-union and Certainty without evidence
Labor Stats - Guide to Motion Picture Industry


TRADE ASSOCIATION
When this is mentioned there’s usually the cry of collusion but there can be and are real reasons to have some type of trade organization for businesses.  This is where companies organize as a group on things that make sense.  Some of the reasons include standardizing practices, standardizing on technical formats (Blu-ray, etc), research and development, advertising (Got Milk?), and lobbying government for issues that would benefit the collection of companies.

One example is the Association of Independent Commercial Producers (AICP)

According to their documents “In 1978 the AICP undertook the task of developing guidelines to be used to foster responsible business practices between production companies and their contracting-clients.  Since that time, these guidelines have been recognized as the industry standard. “

Sounds pretty good to me.  Those guidelines include standardized bidding forms, firm bids, cost plus bidding, payment guides among other things.  Guidelines pdf.   The VES had been looking into standardized bidding at one point. Certainly these are a list of potential items to explore.

Another group is the Motion Picture Association of America (MPAA) which represents a trade association of the studios.  The MPAA deals with movie  ratings and piracy issues among other things.

From their site:
“What are the key functions of the MPAA?
We are the voice and advocate of the American motion picture, home video and television industries, domestically and, through our subsidiaries and affiliates, internationally. We champion a healthy, thriving film and television industry by engaging in a variety of legislative, policy, education, technology and law enforcement initiatives. These efforts range from safeguarding intellectual property rights to using technology to expand consumer entertainment choices, to championing fair trade agreements and a secure future for artistic freedom of expression.”

Now the vfx companies could do something similar (trade association) and actually had some initial meetings but nothing ever came of it. As I mentioned before such a group could likely set up standard health insurance for vfx workers if it wished to. They can’t collude on price but I would expect it’s possible to have all companies agree not to bid below cost as seems to happen in the vfx industry.


VES 2.0
The Visual Effects Society (VES) was setup as an honorary society for professionals in the visual effects industry.  This was to provide some type of common organization to share information, help to educate and overall to help further the advancement of visual effects and those involved with visual effects.

Along those lines it was somewhat similar to The American Society of Cinematographers (ASC).  The ASC represents some of the top Cinematographers in the U.S.  They publish the American Cinematographer Magazine, run comparison tests, help to standardize, give educational presentations, etc.  You have probably seen members in film credits with the ASC after the name.  There are similar Cinematography honorary societies for many other countries.  The ASC is very selective and limited to Cinematographers (not camera assistants, operators, etc) They have  approx. 350 members. The VES is not as restrictive and is global with over 2400 members worldwide.

The ASC is an honorary society and exists to celebrate the best artists in cinematography. This fits with the other parts of this equation. The International Camera Guild is the camera union that covers cinematographers, operators, and assistants and helps to provide them collective bargaining, pay scales, benefits including health care and pension and proper working conditions. The Alliance of Motion Picture & Television Producers (AMPTP) is a trade organization (there’s that idea again) that represents the producers/studios in negotiating with all of the film unions.

Here’s their info:
“Since 1982, The Alliance of Motion Picture & Television Producers (AMPTP) has been the trade association responsible for negotiating virtually all the industry-wide guild and union contracts, including the American Federation of Musicians (AFM); American Federation of Television and Radio Artists (AFTRA); Directors Guild of America (DGA); International Alliance of Theatrical Stage Employees (IATSE); International Brotherhood of Electrical Workers (IBEW); Laborers Local 724; Screen Actors Guild (SAG); Teamsters Local 399, and Writers Guild of America (WGA).”

The VES as noted is an honorary society and ideally there would be other groups to balance the business aspects (the union and a trade association) as there are with the rest of the motion picture industry.  The VES could not become a union or a trade associate.  It’s mandate was to be an honorary society and even if it wished to change this would require major legal and structural changes and no society would exist at that point.

It’s been evident the vfx industry has been hurting and facing some real issues.  Members have been asking the VES for help in dealing with this situation. When it became apparent that the vfx trade association was not happening and the vfx union effort was taking time the VES announced plans to do what it can as VES 2.0.  Because it’s not a union it can not collective bargain for its members.  Nor can it represent the vfx companies as an association but as noted in the announcement (and the followup update) there is strength in numbers and the VES hopes to explore solutions that will benefit the entire vfx industry.

I’m on the VES Board of Directors and on the the committee involved with this.  I can’t discuss any specifics but will say meetings are happening and we’re making progress.  The VES will be making official announcements when it’s appropriate.

Make your voice heard. Do some research.  post possible solutions.  Join a VES committee. Feel free to post comments here or email the Leadership group at the VES.  The VES Forum sometimes works as well.  Hopefully that will be improving shortly.

Monday, June 13, 2011

Pass me a nail

Pass me a nail

Every time someone even hears the word union and visual effects in the same sentence they always say "it will be the nail in the coffin for all visual effects in this the country”

Exactly what pamphlet or web page is this being copied from?

Look, if we all wish to solve the current situation we’re all going to have to be open minded and drop the unrelated and incorrect stereotypes.  This industry and its artists will have to explore all options open to it without predefined prejudice.

As you’ve no doubt already read the Visual Effects Society (VES) has stepped forward and announced it’s intention to put the spotlight on some of the issues facing the visual artists these days and explore solutions.  Link here and update here.

Now some people have said “What problems?” so let me highlight a few of those.
If you currently have steady employment for years at a time, get paid a decent wage, don’t ever work crazy hours, get paid overtime when you work over 40 hours and have health and pension benefits then consider yourself fortunate.

The VFX industry has gotten out of balance between the studios, vfx companies and the vfx workers.  Many vfx workers are not able to maintain a balanced life. Some of these problems are primarily U.S. centric and some are more global in nature.

To those who are fine with one location or another failing, let me make it clear – we’re all in this together. A failure anywhere will affect you.  And you may find yourself in the same situation sooner than you think.

OUTSOURCING
Outsource in VFX is caused by two different issues – Political driven economic incentives such as tax and subsidizes or by lower wages based on a lower cost of living, all based on location.

This is primarily a U.S. issue but has an impact everywhere directly or indirectly. A few people get upset when I mention things like tax incentives.  Let me be very clear:  There are talented visual effects artists all over the world doing great work.   But prices do have an impact on where the work ultimately goes.

Update: Here's a pretty sobering insight of the impact on the California VFX community
Another update on state incentive programs: Film-industry subsidies 

The hope would be that most of the vfx community would be able to find reasonable work without having to constantly travel elsewhere to do so.

Anytime most people purchase something, whether an item or service, they have to make a choice.  What they want, what they need, what they can afford, value versus price, etc.  The studios are no different, especially when they're dealing with millions of dollars. The studios want to save money so they can get the project made and so they can make more money.

How much the savings matters depends on the particular project. They may have a big tent pole movie and have the money and desire to get the best possible visual effects anywhere in the world.  Or they may have a smaller movie with limited funds that they have to squeeze every dime to get the visual effects work they want. Even with the large tent pole film they will be likely to split up the work and send the wire removal and simpler composite shots to another company simply because they’re not as concerned about it and want to lower their costs.

The majority of visual effects heavy films are funded and produced by U.S. studios, so those of us in the U.S. tend to look at it as money going out of the country.

Visual effects is a very competitive business. Trying to do great work and keep the price down is a tough thing to do. Trying to be as efficient as possible, roll with the punches as the director and studio make changes and still hit the deadline and target budget with flawless work takes real skill.  There’s also a natural ebb and flow of amount of work that causes both vfx companies and workers to be without work for stretches of time.

Now into that mix comes an outside force of tax (and other) incentives provided by countries or states.  Suddenly the studios have a 20-40% off coupon to spend in a certain location.  You can have the exact same team, getting paid the exact same wages and have the exact same bid but one of those options is now a lot cheaper without the vfx company itself having to compromise or undercut itself.  The taxpayers in that area are picking up the bill. What business wouldn’t want to offer a reduced price to it’s customers knowing the government is picking up the tab?

The studios tend to look at visual effects as a commodity, which we know is not true but in the studios view it’s close enough that a large discount is certainly part of the equation. If you’re located in an area that has some type of incentive program you have a built in advantage. If you’re not located in an area with a real incentive program then you’re at a disadvantage that is out of your control.  The playing field for getting work is not a level playing field and it’s out of the control of anyone involved with visual effects.

Now for certain types of projects the incentives may not play much of a role.  The studio in those cases values other qualities more and is willing to pay for it.  That means they can go anywhere in the world.  But this only applies to a percentage of projects.

Subsidizes and incentives exist for other things such as produce or oil but in the case of motion pictures and television work there are very few clients so it’s not possible to simply make up the loss by selling to other clients.

Various forms of tax incentives have not necessarily been shown to be a wise investment for the general population in a given area.  Many states here in the U.S. have film incentives that change every year.  And so the studios simply do their next picture wherever they can get the best deal at that time and the state never builds up a structure that increases jobs and income in the long term.  Some countries have been doing it long enough they have been able to leverage it and expand their film production infrastructure and create an entire eco system.

RESULTS
The results of the incentives mean that a lot of work ends up flowing to areas with the best incentives at that time. That results in the loss of jobs in some areas (such as the U.S.) and the addition of jobs in other areas, all simply controlled by politics.

VFX companies in the U.S., especially smaller to mid-size companies, are hurting because there’s no way they can make a profit and lower their costs to compete with places with incentives.  Even some of the larger companies may be required to ‘buy’ a project by working at cost or even less than cost.  This is in the hopes of keeping the company afloat and keeping key people.  In some cases companies offer very low rates to get projects in exchange for a tiny piece of the potential profit.  But this requires deep enough pockets that the vfx company can cover all of the costs now and they are taking a risk that the project will be profitable enough to recover those costs.

VFX companies have been setting up more and more satellite vfx shops in countries with incentives.  The thinking being if you can’t beat them, join them.  This allows them to offer the same incentives as other companies located there and increases the competition in a given location. What will be the final balance of local work versus the amount of work done by their satellite companies? Will the U.S. based company just become a few business offices in the future?

Getting started in visual effects is also more difficult because some of the entry level jobs are now being farmed out to other countries. The smaller and midsize vfx shops also allowed artists to become familiar with a wide range of techniques but these size of shops are closing down more often.

A number of VFX artists in the U.S. now have to become migrant workers and leave their houses and possibly their families for months or more at a time simply to continue working.  Working long hours makes it tough enough doing visual effects. When you have to leave your spouse and children for months or have to pull them out of school creates a very difficult situation for all involved.
This in spite of the fact there is VFX work required for U.S. productions and in spite of the fact the VFX artists may be skilled and experienced.

FUTURE
What happens if incentives stop in the location you’re working?  It’s likely to happen at some point.  What will your company do? What will you do and how far and long will you have to travel to get work?  What will it mean to your family?

SOLUTIONS
As with all the solutions I’ll be listing these are just some of the possible solutions or ideas.  These are not in any order and aren’t endorsements from me. Please post other solutions if you think you have them.  As usual I’m simply listing some ideas here for people to think about.

Ideally there would be no politically motivated incentives.  All vfx companies would be competing on a somewhat level playing field as most companies do.  How successful they are would be dependent on the quality of their product, their prices and how efficient management is.

Incentives have been in place for quite a while in some areas and are controlled by politics. You can show in a spreadsheet how they’re not working but logic and economic understanding have very little to do with politics. Neither the unions nor the VES can make incentives disappear and restore a more balanced business environment by themselves.

1. VFXSoldier feels these incentives are illegal.  If a world body declared these to be illegal that would be one possible way that the incentives stop.  Personally I don’t see this happening with all the other items on their agenda.

2. Politicians in the U.S. and/or California could increase tax incentives to counter other states or countries. The union could lobby for this but as in anything political it could be very expensive to try and not result in anything. And if it did, would it simply switch back in another couple of years?

3. Politicians in the areas offering incentives could decide to cancel the incentives.  Especially if a large portion of the public got tired of supporting these productions or didn’t see the value added.  Would the lobbyists win over the people in these cases?

There's also the possibility the U.S. could place an import tax or duty on vfx work done outside of the country. Not likely to happen.

LOWER WAGES
The second reason for outsourcing is a lower price service due to a location with lower wages and lower cost of living.  Visual Effects is very labor intensive and by being able to tap into a lower wage for that labor, the cost of the work also drops.  The digital age has allowed high-speed transfer of images to and from anywhere in the world and some countries such as India and China have trained and able artists working in visual effects.  Over time these countries wages are likely to rise and other countries may take their places.  Once again there have been some high quality vfx from their countries so their wages are not a slight on the quality of their work.

RESULTS
The results are similar to outsourcing due to incentives.  VFX companies are setting up satellite companies in these countries as well in order to help bring down their own costs.

FUTURE
What will these companies and workers do when other countries are cheaper?

SOLUTIONS
There are no simple solutions here.  There will always be more or less expensive places to live and work in the world.  This isn’t caused by a single legislation.


HEALTH CARE
Unlike most other countries the U.S. does not have a government supported health program.  Since it is privatized and run by for profit companies it is very expensive.  The U.S. has a whole additional cost layer and that is health insurance companies, which makes a hefty profit. The medical costs here are some of the most expensive in the world and yet the care is not the best in the world according to many studies.   People in the U.S. are fine with paying taxes for public schools and public roads but the mention of trying to help sick people makes them jump to a socialism charge against the concept.  They would rather pay much more in health care costs and let the insurance companies decide what treatment they get rather than to rely in any way on the government.  Over half of the foreclosures in this country are due to not being able to pay medical bills.

How much health insurance coverage you have depends on the company you work for.  Since it’s not required you may not have any.   Many of the better vfx companies offer some health insurance but since most vfx workers are project to project it can be of limited value as a project winds down and they have to work elsewhere. As soon as they leave one company and go to work for another company, they have to qualify all over for health insurance.  This is usually a 3 month time period.  So if your project is 3 months or less you may never get health care coverage.  Even if it’s longer than 3 months you will lose it once you move to your next project elsewhere.

Some vfx companies use this health insurance situation to their advantage. If you finally get health insurance coverage from a company you’re less likely to switch to another company.  Even if you’re laid off for a time period you may think twice about switching companies and having to deal with the health care coverage issue again.

If you are required to be an independent contractor at a vfx company then you must buy individual health care coverage or have your own small loan out company be involved in health care coverage.  This is very expensive.

Some of those in VFX have stated that simply because we’re paid a good wage when we’re working we shouldn’t be provided company health coverage.  We should buy our own.  What other business in this country has that mindset?  Do you think all high-end professionals in other industries are told to cover their own costs?  Are the executives and CEO’s told that they have to pay their own and that only those who make a median amount or lower will be covered by the company?

For those in countries with health coverage, how are you taking the news that in some cases politicians are looking to privatize health care in your country?

RESULTS
There are likely a number of U.S. vfx workers who lack sufficient health care, especially in long periods between projects.

Those that have to buy their own have an additional cost burden they have to figure in when calculating their true income.

The type and coverage you get has to be considered when working for a company.  You have to update your doctor and others when your health coverage changes and a procedure or medication that may have been covered at your last employer may not with your new employer.

FUTURE
Health care insurance is increasing at the rate of 19-39% a year.  Your income is likely to be increasing 2-4% a year, if that.  How long do you think even with a ‘good wage’ you will be able to afford health insurance?  How long can small vfx companies help to cover health insurance for their employees?

Do you expect to remain employed by your current company until you retire? Do you expect them to always be in business?

Many companies and local governments have been focused on short term results so would tend to provide workers with more benefits rather than higher wages. Since the medical costs increased so rapidly this created an imbalance.  This is what happened to some of the state unions.  It wasn’t because their wages had been increasing, it was simply that the costs of the benefits accelerated at an accelerated rate.

SOLUTIONS
1. The VES has worked with a health insurance company to try to get better rates.  That is available now. As with many things the VES continues to explore other options.

2. Union. One of the reasons unions/guilds exist for most film production workers is to provide health insurance specifically for the issues mentioned. When working from project to project these workers are covered by the same insurance and don’t have to re-qualify for every production company they work for.  They don’t have to worry if they’re on a one-day project today and next week on a 2- month project.  And the motion picture unions worked out an arrangement with the studios to help fund the insurance coverage.  Rather than getting a percentage of the profit of a film project directly, a certain percentage goes into the motion picture fund.

3. The vfx companies could group together to form some type of health coverage base that would cover vfx workers.  Instead of each and every company getting their own health care insurance based on a small number of workers, they could pool those funds to setup something to cover workers no matter which company they worked at.  How feasible this is I don’t know but would certainly make it more reasonable for workers to move from project to project as required.


OVERTIME
This is another problem that some people don’t think is a problem.

If it were simply a matter of working a few extra hours the final week of a project it would be one thing but overtime has now become the norm for longer periods of productions. VFX are being pushed to be even more complex at the same time the post-production schedule is being reduced.  Since there is a very real and hard release date the typical approach is to work everyone more hours and days.

A vfx artists usually works more than the standard 40 hour work week at most vfx companies. 10-12 hours tends to be the standard at a number companies. (12 hours is another 50% of hours worked a day) This added time is less time to spend with your spouse and family.  If you’re single it’s less time you can spend with friends, going to concerts and other activities.  The more time you spend at work the more your entire life is consumed with work. Getting both some physical and mental rest from work is important. A worker who has sufficient rest is more productive.  As recent studies have show, more overtime work means more long-term health problems.

And now the amount of overtime has increased beyond this basic time and the final week of production.  In some cases the last few months of a project may require 6-7 day workweeks with work hours exceeding 80-100 hours. Workers may have to work over multiple holidays and finals deadline may constantly be shifting.

This is caused by a few of things.
1. Studios tend to schedule less time to do the prost-production, including vfx.  In some cases this is because they started the project later and still have a fixed release date. In other cases they hope to save money by reducing the post schedule. (less interest on the money, less overhead at vfx company, etc)
2. There’s no true hard date except for the release so directors and studios executives continue to make big and small changes up to the release date. These constantly changes make it difficult to schedule or plan.  It also means that there's a lot of extra time and work.
3. The vfx company is reluctant or unable to ramp up more workers to handle the additional work or changes. There’s an added cost to getting more workers (training, workstations, etc). The thin margins and changing delivery schedules makes it difficult to always anticipate the correct ramp up speed.  At larger shops this results in people being pulled from other shows to put out this emergency fire on this production.  Which in turn causes that other project to have scheduling problems and require more overtime and big shift of workers.  This turns into a state of constant crisis management rather than preplanning.

RESULTS
Workers are burnt out and become less productive.
The extra overtime is tough on the workers home life and health.
The number of mistakes and errors increases dramatically.
The cost to the vfx company skyrockets.  How much of that is passed on to the studios depends on the company and the situation.
The end of a project can become more of a recovery than a vacation.
In the end there is a much higher cost of doing the work and the quality usually suffers as a result.

FUTURE
Studios are spreading the work over more companies in an attempt to reduce glitches caused by changes and the limited time.
As long as it doesn’t affect the actual release date of a movie this will continue to be the new standard approach.

SOLUTIONS
1. Ideally the studios would allocate sufficient time to do the job right.  Rather than relying on the linear time it took on the last project the studio should use the actual man time required and then calculate the required linear time if those were normal days.
2. The vfx companies should be realistic with themselves and the studios as to how much work they can get done in a certain period of time.
3. The vfx companies need to plan for a ramp up and monitor the situation before it gets out of control.
4. If post-production were treated a little more like production it's might be possible to reduce the number of changes and overtime. The studios could have a post person whose job it is to truly keep things moving and have hard schedules.  When shooting a film there is the 1st assistant director, the producer and the production manager (among others).  Part of their job is making sure everything that needs to get shot is actual shot in the given amount of time. There is a schedule for the number of shooting days and each sequence and set has a given number of days. The director and crew have to get so many setups a day in order to keep on schedule. The director is strongly encouraged to stay on schedule and adjustments are made if the time starts slipping. Pages in the scripts or sequences may be reduced or eliminated if they are slipping too far behind schedule.  Decisions have to be made and they have to move on.  A director gets the best take he/she can in the time available and then has to move on to the next shot. Almost none of this exists in post-production. Shooting can go over schedule but it’s based on the director and project and has to be fully approved.

There may be a schedule for locked sequences, vfx turnovers, vfx finals, etc but the only true hard date is when the film has to be completed to be printed or duplicated and shipped throughout the world. With the advent of digital, directors and executives have the opportunity to keep changing everything until the last possible moment. It’s great to have full creative freedom but as with the live action shoot, decisions have to be made as shots progress in order to work efficiently with limited time.  Right now it’s like trying to complete construction on a house while the floor plan is still being changed a day before it goes on the market.  It’s hard to set the pipes and lay the carpet if the floor plan isn’t locked down.


OVERTIME PAY
This is related to the overtime problem. 40-hour weeks are the standard workweek for most people. Salaries are usually based on this type of work week. Additional time above and beyond this is typically paid at a higher rate.  This is usually 1 ½ times for each hour between 8-12 hours and 2 times for hours after 12.  This in fact is mandated by law under most conditions in the U.S.  The added increase is to try to reasonably compensate the worker for the extra time and effort.  It also encourages a company to hire the correct number of people to do the work.  If it was the same rate there’d be no incentive for companies not to work their people 12 hours or more a day.

But a number of vfx workers are not paid overtime.  VFX supervisors, producers and even CG supervisors, dept managers and leads are frequently considered ‘managers’ and are therefore ‘salaried’ employees.   They are on a flat weekly rate which doesn’t change if they work 40 hours or 90 hours. Same holds true for many ‘independent contractors’ a vfx company may hire.  The more time someone with a flat rate works, the less they make per hour.  Even when these people work the same hours side by side with other employees, they may take home less pay since the other employees may be getting true overtime pay.

Anytime someone is paid on a flat there’s the incentive from management to get their money’s worth and work them long hours or 6-7 day work weeks.  The expected slow time at the start of the project never occurs.

RESULT
It’s bad enough being burned out from long hours and long workweeks but it’s doubly difficult when you don’t get paid to do so.

Some vfx companies try to put as many people on as managers or independent contractors to avoid paying overtime.  This lowers their costs.

FUTURE
This will continue as long as it’s in management’s advantage.

SOLUTIONS
1. Make sure in your deal memo you know how you’re being paid and how overtime is being handled.
2. When given the choice of jobs or companies, choose ones that pay overtime.
3. If you are being asked to work on a flat make sure to calculate the real rate based on real hours you expect to work, not what the company optimistically thinks.
4. If you’re asked to work as independent contractor please review the VES Independent contractor guidelines.  Few regular vfx workers truly fall in this category.  It’s also not your option or the company’s option.  It’s based on the IRS Classification.
5. The more people who work for a vfx company without overtime pay, the more likely you will see a lot of overtime work.  With no cost penalty there’s no incentive for the company to be smarter about scheduling or reducing overtime.
6. VFX companies could do the right thing and correctly classify people and avoid shortcuts or mismanagement.
7. The Union makes sure the overtime rates are clearly laid out and are enforced. They also make sure people are not improperly classified as independent contractors or other positions.  Just because you have to oversee people doesn’t mean you control the amount of hours you work. (Usually the excuse to make people salaried managers)


SUMMARY
There are a number of real problems facing the vfx industry and artists. These aren’t all of them but tend to be the highest for most people I talk to.

Rather than building coffins, let’s start building a better industry now.  Pass me a nail.

Related post
Using the Nail