Upload
others
View
6
Download
0
Embed Size (px)
Citation preview
Film and Television Production in Massachusetts: Industry Overview and Analysis
February 11, 2010
FILMANDTELEVISIONPRODUCTIONINMASSACHUSETTS:
ANINDUSTRYOVERVIEWANDANALYSIS
February11,2010
ProfessorPaceyC.Foster,ManagementandMarketing,UniversityofMassachusettsBoston
ProfessorDavidTerkla,Economics,UniversityofMassachusettsBoston
WiththeassistanceofRobertLaubacher,MITSloanSchoolofManagement
Acknowledgements
ThisresearchwasmadepossiblewithagrantfromthePresident’sCreativeEconomyInitiativesFundattheUniversityofMassachusettsBoston.RobertLaubacherofMITcontributedsignificantlytothesectionsonunions,historyofdocumentaryproduction,postproduction,highereducation,services,studioprojects,residuals,healthcareandbenchmarking.HisworkwassupportedbytheAdamsArtsProgramoftheMassachusettsCulturalCouncil.WearealsogratefulfortheinputprovidedbyTheMassachusettsProductionCoalition(MPC)andTheMassachusettsFilmOffice(MFO)aswellaslocalunions(IATSE,SAG,IBT)andcompanieslikeBrickyardVFX,NationalBostonStudiosandPowderhouseProductions.WealsothankTheCenterforIndependentDocumentary,theLEFFoundationandofficialsattheMassachusettsDepartmentofRevenueandotherstateagenciesfortheirhelp.WearegratefultothemanyotherindustrymemberswhoagreedtotalkwithusforthestudyandespeciallytoBenOlendzkiforhisresearchassistancethroughouttheprojectandtoErinSiskforherworkonthelocaldocumentaryandindependentfilmmakingsector.Inaddition,wewanttothankRaijaVaisanenwiththeUniversityofMassachusettsDonahueInstituteforherassistanceinconductingtheIMPLANanalysisandtoDanKochwhohelpedusmapfilmindustrynon‐wagespendingpatterns.
2
ExecutiveSummary
Thisreportdescribesthestructureandrecentgrowthofthefilmandtelevisionindustryin
Massachusetts.Webeginwithadiscussionofnationaltrendsinthisindustryandfindthat
Massachusettsisoneofthefastestgrowinglocationsforfilmandtelevisionproductioninthe
UnitedStates.Wethendiscussrecentemploymenttrendsinthissectorandfindthattherehas
beensignificantrecentgrowthinthetotalnumberoflocalfilmandtelevisionproductionjobs‐‐
particularlyamongtheunionizedcrewandactorsthatstafflocalproductions.Examinationof
federaldatarevealsthatbetween2005and2008therehasbeena117%anda126%growthin
employmentinthemotionpictureandvideoproductionandpostproductionindustries
respectively.Usingnetworkandgeographicmodelingtools,wealsoidentifynovelpatternsinthe
non‐wagespendingoflocalfilmandtelevisionproductions.Wecontinuewithadiscussionof
growthtrendsacrossseveralsubsectorsofthelocalfilmandtelevisionsectorandfindthat
severalaregrowingrapidly.
Whileourreportrecognizesanddiscussestherevenueandfiscalimplicationsofthefilmindustry
taxcredit,itisnotthefocusofouranalysis.Indeed,theevaluationoftherevenueimplicationsof
theMassachusettsFilmTaxCredit(FTC)1hasbeendonecarefullybytherecentMassachusetts
DepartmentofRevenuestudy(2009).Ourreportisfocusedmorebroadlyonunderstandingthe
breadth,performance,anddynamicsofthefilmandtelevisionindustryinMassachusetts.
Updatingthe“LensontheBayState”study(Laubacher,2006),weprovideanoverviewof
aggregateemploymenttrendsinthisindustryanditssub‐sectors.Weusefederalemployment
datatoexaminetheeconomicimpactofthisindustryontheCommonwealth.Wealsorelyon
interviewswithindustryparticipants,employmentandspendingdataprovidedbylocalunions,
archivaldatacollection,andbothnetworkanalysisandgeographicvisualizationstodescribe
productionandemploymenttrendsinspecificsub‐sectorsofthisindustry.
1 While we use the term Film Tax Credit (and its abbreviation FTC) in the report below, the program
actually applies to motion pictures as well as certain kinds of television programs. A description of the program is provided in Appendix 2.
3
Weidentifyseveralimportanttrendsintherecentgrowthofthefilmandtelevisionindustryin
Massachusetts:
1. Massachusettsisamongthefastestgrowinglocationsforfilmandtelevisionproductionin
theUnitedStates;andnotablysomestateswithmoregeneroustaxcreditprogramshave
notexperiencedasmuchrecentgrowthasMassachusetts.
2. EmploymentinfilmandtelevisionproductionhasincreasedinMassachusettsduringa
periodwhentotalstateemploymenthasbeenonthedecline.Thereisalsoevidencethat
someofthisjobgrowthhashelpedtooffsetjoblossesinparticularlyhardhittradeslike
constructionandtransportation,asworkersfromthesesectorshavefoundworkinfilm
andtelevisionproduction.
3. Localnon‐fictiontelevisionandpost‐productioncompanieshaveexperiencedparticularly
dramaticgrowthinrecentyearsandseemtobegeneratingnewcareerpathsforlocal
collegegraduates.Inaddition,becauseorganizationsinthissectortendtospendalarge
proportionoftheirproductionexpenseslocally,theyrepresentaparticularlyinteresting
sectorforlocaleconomicdevelopment.Moreover,asthehometoWGBH,Massachusetts
hasalonghistoryofleadershipinnon‐fictiontelevisionanddocumentaryproduction.This
historycombinedwithitsnumerouscollegeprogramsgeneratingfilmandtelevision
students,researchuniversities,andhightechnologycompaniesprovidesMassachusetts
withauniquestrategicadvantageintheproductionofnon‐fictioncableandpublic
televisionshowsaswellasgrowingopportunitiesinpost‐production.
4. Thegrowthinlocalfilmandtelevisionproductionhasstimulatedgrowthamongacluster
oflocalfilmservicecompaniesthatsupporttheseproductions.Ithasalsoluredsome
largernationalfilmservicecompaniestotheCommonwealth.Thereremainsroomfor
growthinthisareaassomespecializedfilmandtelevisionproductionequipmentisstillnot
availableinMassachusettsandthereforeneedstobesourcedoutofstate.Totheextent
thatthelocalfilmservicesectorcontinuestogrowinresponsetoincreasingproduction
activity,anincreasingproportionofnon‐wagespendingmayremaininthe
Commonwealth.
4
TableofContents
ExecutiveSummary..................................................................................................................... 2IntroductionandGoals ............................................................................................................... 5
DescribingMassachusettsFilmandTelevisionProduction .......................................................... 7 MassachusettsInTheNationalandRegionalLandscape 7
LaborMarketStructure 10 AggregateStateEmploymentTrends 11
TheContributionofFilmandTelevisionSpendingtotheMassachusettsEconomy ........................................................................................................... 16
EmploymentTrendsinLocalFilmProduction 17 Non‐wageSpendingPatterns .................................................................................................... 22
DevelopmentsinSpecificSubsectors ........................................................................................ 25
Conclusion ................................................................................................................................ 41Appendix1:Methodsandapproachesinstudiesofregionalfilmand
televisionindustriesandincentiveprograms ............................................................................ 42
Regionalfilmandtelevisionproductionincentiveprograms 44
Variationsinmodels:adiscussionandevaluation 47 Secondarymarketfortaxcredits 50 Marketingandtourismbenefits 51
Incometaxfromresidualsandthegrowthofalocalcreativetalentbase 53 Benefitsfromchangestothemassachusettscorporatetaxlaws 55 Increasedhealthcoverageandotherbenefits 56
Benchmarkinglongtermgrowthtrends 58Appendix2:AbriefsummaryoftheMassachusettsfilmindustrytaxcredit.............................. 59 References 61
5
IntroductionandGoals
Asdocumentedinthe2006“LensontheBayState”report(Laubacher,2006),theMassachusetts
filmandtelevisionindustrywasonthedeclineinthe1990swithtotalemploymentfallingathird
between1990and2006.ThelocalindustryreachedanadirwiththeclosingoftheMassachusetts
FilmOfficein2002.Torevitalizethisoncethrivinglocalcreativeindustry,in2005theState
Legislaturepassedataxincentiveplanthatprovidedabankabletaxcreditforqualifyingmotion
pictureandtelevisionproductionsproducedinMassachusetts.Asupdatedin2007,the
MassachusettsFilmTaxCredit(FTC)providesarefundable/transferrabletaxcreditfor25%of
qualifyingwageandnon‐wageproductionexpensesandasalestaxexemptionforqualifyingin‐
statespending.2
TheFTChasclearlyincreasedtheamountoftimeandpercentageoftheirbudgetsthatfilmand
televisionproductionsarespendingintheBayState.Industryrepresentativesreportthatthis
increasedactivityhashadapositiveimpactonlocaljobs,non‐wagespendingandthegrowthof
localfilmservicecompanies.Whilemembersoftheindustryhaveclearlyexperiencedthepositive
impactofthisprogramandsomestudieshavefoundthattheyhavepositiveshorttermrevenue
implications(ErnstandYoung,2009a,2009b),othersstudiesraisequestionsbothaboutthevalue
oftheseprogramsandmethodsusedtomeasuretheirimpacts(Luther,2010;Gregg,2008;Saas,
2006;Tisei,2007).Thislackofagreementisdriveninpartbythechallengesofaccurately
measuringeconomicactivityinaproject‐basedindustrylikefilmandtelevisionproductionandin
partbyvariationsinthemodels,data,andassumptionsusedinstudiesofincentiveprograms(see
Appendix1forathoroughdiscussionoftheseissues).
TheprimarypurposeoftheFTCistostimulatefilmandtelevisionproductioninMassachusetts.
However,tobuildapermanentandstablefilmandtelevisionindustryrequiresthatpolicymakers
considerbothannualreturnsoninvestmentaswellasaggregateindustrytrends,localworkforce
developmentandcareerpaths,infrastructuredevelopmentandthegrowthoflocalfilmservice
2 For a detailed description of the provisions of the tax credit program see Appendix 2
6
industries,aswellasvariationsinproductionpracticesandlinkagesamongsub‐sectorswithinthis
industryandemploymenttrendsineach.
BecauseMassachusettsisoneofmanystatesthatofferFTCprograms,itwouldalsobehelpfulto
evaluatehowMassachusettsisdoingrelativetootherstatesthatarecompetingforashareofthe
totalnationalfilmandtelevisionproductionbudgeteachyear.Finally,itisimportanttoidentify
whethertheCommonwealthhasasetofuniqueresourcesthatcanputsubstancebehindthe
aspirationofbecomingapermanentcenteroffilmandtelevisionproductionintheUnitedStates.
Industryrepresentativesarguethatbecauseofitsuniquecombinationofdesirablelocations,large
numbersofuniversitiesandstudents,atalentedcastandcrew,taxincentives,andstatusasa
worldclasscitythatisdesirabletotalent,Massachusettshasthepotentialtobecomethethird
largestcenteroffilmandtelevisionproductionintheUnitedStates(behindCaliforniaandNew
York).Indeed,ifthissectorgrowstothepointthatMassachusettsbecomesanewhuboffilm
production(likeVancouver,BritishColumbiadidinthe1990s),therewillbefuturebenefitsfrom
workforceretentionandattraction,infrastructuredevelopment,linkagesbetweenuniversities
andindustry,newcareerladders,etc.Conversely,iffilmproductionleavesMAassoonasanother
stateoffersamoreattractiveincentive,evenarevenuepositiveincentiveprogramcouldfailin
establishinganewindustryinMA.
Therearethreeprimarygoalsofthisstudy:
1. Todescribethestructureandrecentgrowthpatternsofthefilmandtelevisionindustryin
Massachusetts,identifyitskeysub‐sectors,andbegintounderstandthekeyeconomic
leversthatpromotesuccessinthissectorofthecreativeeconomy;
2. Toestimatetheaggregateimpactofthefilmandtelevisionproductionsectoronthestate
economythroughdirectandinducedspending.
3. Tosupplementanalysesusingstandardinput/outputmodelsbycollectinginterviewand
networkdataonemploymenttrendsandnon‐wagespendingpatternstobetter
understandthelinkagesamongthesesubsectorsandtheirconnectionstoothersectorsof
thestateeconomy.
7
Toaddressthesegoals,wecombineeconomicmodelingwithinterviews,archivaldatacollection,
networkanalysisandgeographicmodelingtoprovideanuancedpictureofthemotionpictureand
televisionindustryinMassachusetts.Byfocusingonproductionpracticesandvariationsacross
sub‐sectorsofthislocalcreativeindustry,weidentifyfactorsthatmayimpactthelong‐term
healthofthefilmindustryinMassachusetts.
ThisreportbeginswithanoverviewofthecurrentstateoftheMassachusettsfilmindustryusing
datafromtheBureauofLaborStatisticsandtheMotionPictureAssociationofAmerica(2009)to
discussaggregatelocalandnationalfilmandtelevisionemploymenttrends.Followingthis
overviewoflocalandnationaltrends,weanalyzethelocalfilmandtelevisionproductionsectorby
classifyingorganizationsandemployeesprimarilybythekindsofproductstheyproduce(e.g.,
featurelengthfilms,advertisements,scriptedandnon‐fictiontelevisionprograms,independent
filmsanddocumentaries,etc.)andidentifyingconnectionsamongthesesectorsviashared
workforce,materialrequirementsandproductionpractices.
Wealsoidentifytheorganizationsthatprovidesupportservices,equipmentandmaterialtofilm,
television,andvideoproductionsanddiscussrecentactivityinthesesubsectors.Weconclude
withasummaryofourfindingsandadiscussionofourfuturework.Anextensivediscussionof
issuesinvolvedinevaluatingtheimpactofFTCprogramsisprovidedinAppendix1.
DescribingMassachusettsFilmandTelevisionProduction
ThissectionbeginsbycomparingthegrowthofthefilmandtelevisionindustryinMassachusetts
togrowthratesinotherstates.Afterdescribingtheaggregateemploymenttrendsinthe
Commonwealth,wediscusstrendsinnon‐wagespendingandidentifyacoreoffilmservicefirms
andlocation‐specificspendingpatternsassociatedwithlocalmotionpictureproductions.We
concludewithadiscussionofseveralimportantsub‐sectorsinthisindustryandinterconnections
amongthem.
MassachusettsintheNationalandRegionalLandscape:Overthelastdecade,severalimportant
nationaltrendshaveemergedthataffectthegrowthofthefilmandtelevisionindustryin
8
Massachusetts.WhilethebulkoffilmandtelevisionproductionstilltakesplaceinLosAngelesand
NewYork,otherstatesareincreasinglycompetingwiththesetraditionalcentersthroughtax
creditandotherincentiveprograms.Infact,on‐locationshootingdaysinLosAngelesdropped
19%in2009;thesteepestdeclinesincetrackingbeganin1993(Verrier,2010).Toanalyzerecent
nationaltrends,weuseddatafromtheMotionPictureProductionAssociationofAmerica(2009)
andtheQuarterlyCensusofEmploymentandWages(QCEW)datafromtheBureauofLabor
Statistics.
AccordingtodatafromboththeMotionPictureAssociationofAmerica(2009)andtheQCEW,
Massachusettscapturedalittleover1%ofthetotalnationalspendingonmotionpicturesand
televisionproductionsin2007.WhileMassachusettsdoesnotcurrentlycapturealarge
percentageofthenationalfilmandtelevisionproductionspending,itseemstobegrowingmore
rapidlythanotherstates(someofwhichhavemoregeneroustaxprograms)andcapturingwork
thatmightotherwisebetakingplaceelsewhere.
Figure1usesdatafromtheMotionPictureProductionAssociation(2009)tochartthepercentage
changeinthenumberoffilmandtelevisionproductionsthattookplaceinthetop25mostactive
statesintheUnitedStatesbetween2007and2008.Duringthistime,workdeclinedintraditional
centerslikeCaliforniaandNewYorkandgrewrapidlyinstateslikeGeorgia,Indiana,
Massachusetts,Michigan,MinnesotaandWisconsin.Accordingtothesedata,Massachusettshad
thefifthlargestgrowthrateamongthetop25mostactivestatesinthecountry.Itisalsoclear
thatseveralstateswithactivetaxincentiveandinfrastructuredevelopmentprograms(andmore
generousincentivesthanMA)arenotamongthetop25mostactivestatesaccordingtotheMPAA
(2009).Careiswarrantedininterpretingthesedatagiventhatthemagnitudeofchangesinstates
likeWisconsinweredriveninlargepartbytheverysmallnumberofproductionsthatithadin
2007.
9
Figure1.Percentagechangeinfilmandtelevisionproductions2007‐2008
Source:MotionPictureAssociationofAmerica
DataonnationalemploymentprovidesadditionalsupportforthenotionthatMassachusettsis
amongthemostactiveandrapidlygrowingstatesinthenationforfilmandtelevisionproduction.
UsingdatafromtheQuarterlyCensusofEmploymentandWagespublishedbytheBureauof
LaborStatistics,weexaminedrecentemploymenttrendsinthe15stateswiththemostfilmand
televisionworkersin2008.Table1presentstheaverageemploymentinthesestatesbetween
2001and2008.Notably,duringtheperiodencompassingtheenactmentoftheFTCin
Massachusetts(2005‐2008),totalemploymentintheNAICScode5121(MotionPictureandVideo
Industries)inMassachusettsincreased33%.Thisrepresentsthelargesttotalpercentagegrowth
between2005and2008ofanystateamongthe15withthemostmotionpictureandvideo
employeesin2008.Thisisnotablegiventhatstateswithmuchmoregenerouscreditslike
Michigan(whichoffersbetween30‐42%onqualifiedexpenses)actuallyexperiencedadeclinein
filmandtelevisionemploymentduringthisperiod.
Theseaggregatenationalemploymentandproductiondataconfirmthewidespreadreportsfrom
industryparticipants(aswellasthefrequentcoverageofHollywoodstarsightingsinlocalpapers)
thatMassachusettsisfastbecomingafavoredlocationforHollywoodproductions.Inthe
following,welookbeneaththesenationaltrendstodiscusslocalemploymentinthe
Massachusettsfilmandtelevisionindustry.
10
Table1.Averageannualemployment(NAICS5121)
Source:BureauofLaborStatistics,QuarterlyCensusofEmploymentandWages
LaborMarketStructure:BeforeanalyzingtrendsinMassachusetts’sfilmandtelevisionindustry
employment,itisimportanttofirstdescribetheprimarylaborpoolsusedinfilmandtelevision
industryproduction.Thisisahighlyunionizedandproject‐basedindustryinwhichlabor,services,
andmaterialareorganizedthroughlooselycouplednetworksthatcoalescetemporarilyaround
specificproductions.Whilesmallerandindependentproductionssometimesrelyonnon‐
unionizedemployees,largestudioproductionshiretheirtechnicalemployeesfromoneoftwo
internationalunions,theInternationalAllianceofTheatricalStageEmployees(IATSE)andthe
InternationalBrotherhoodofTeamsters(IBT).
IATSErepresentsfilm,televisionandtheatricalemployeesinskilledcraftslikesetconstructionand
dressing,lighting,specialeffects,rigging,props,camera,sound,wardrobe,make‐upand
hairstyling.Ineachofthesecrafts,relativelyseniorcraftspeopleassemblecrewswhowork
togetheronasemi‐regularbasisandmovefromjobtojob.Inthisrespect,thetechnicallabor
requiredforfilmproductionisorganizedliketheconstructionindustryandothertrades.
11
Moreover,becausethetechnicalskillsrequiredinsomeaspectsoffilmproduction(e.g.,set
constructionandlighting)aresimilartothoseintradeslikecarpentryandelectricalwork(and
becausebothsectorsarehighlyunionized),wefinditinstructivetocomparestateemployment
trendsacrossthesesectors.TheTeamstersrepresentthetransportationemployeesthatdrivethe
trucksandotherequipmentusedinfilmproductions.Becauseitalsorepresentstransportation
employeesinlargerlocalindustries,filmtransportationworkersrepresentarelativelysmall
segmentoftotalTeamstermembershipintheCommonwealth.
Inadditiontotheskilledemployeesdescribedabove,filmandtelevisionproductionsalsoemploy
creativepersonnellikeactors,writers,andproducerswhoareorganizedthroughtheirownunions
andtradegroups(e.g.,TheScreenActorsGuild,AmericanFederationofTelevisionandRadio
Artists,theWritersGuildofAmericaandtheDirectorsGuildofAmerica).Thesetwolaborpools
aretypicallyreferredtoas“belowtheline”(e.g.,IATSE,IBT)and“abovetheline”talent(e.g.,
AFTRA,SAG,etc.),respectively,andtogetherrepresentmorethanhalfthetotalcostsofatypical
majormotionpicture.
AggregateStateEmploymentTrends:Therearefour,five‐digitNAICScodesthatmakeupthe
5121MotionPictureandVideoIndustriescategoryanalyzedabove.Ofthese,twocapture
productionactivities(MotionPictureandVideoProduction51211andPostProductionServices
andOtherMotionPictureandVideoindustries51219).Thesearethetwoprimarycodeswefocus
oninthefollowing.Theremainingtwocodes(MotionPictureandVideoExhibition51213and
MotionPictureandVideoDistribution51212)donotrelyonthesamekindsofemployeesand
organizationsthatareengagedinproductionactivities(andparticularlyinthecaseofexhibition
aretreatedasseparateindustries).Asaresult,wedonotaddressthesesectorsinthisstudy,
althoughwerecognizethatoverthelongterm,thepresenceofanactiveproductionsectorinthe
Commonwealthcouldencouragegrowthofalocaldistributionsector.
InadditiontothetwoprimaryfilmindustryNAICScodes(51211and51219),wealsoexplore
employmenttrendsintwosectorsthatlikelycontainsignificantnumbersoffilmandtelevision
industryworkers.Becauseofthelargenumberoffreelanceemployeesinthissector,filmand
televisionproductionstypicallyusepayrollservicestomanagewithholdingsanddistributewages
12
forcastandcrew.Before2008,theseworkerswerenotclassifiedbytheBureauofLaborStatistics
asbeingpartofMotionPictureandVideoProduction(NAICS51211).Beforethistime,some
proportionofemploymentinlocalfilmandtelevisionproductionlikelyappearedinthecategory
for541214(PayrollServices)andtheprocessofrecodingemploymentfromthiscategoryto51211
isstillongoing.Similarly,itisunclearwhatproportionofemploymentinrelatedNAICScategories
(e.g.,71151IndependentArtists,Writers&Performers)actuallyoccursinfilmandtelevision
production.Therefore,whilewereportandanalyzeBureauofLaborStatisticsdatainthe
following,werecognizethattheylikelyunderstateaggregateemploymentinthesector.
Between2008and2009,Massachusettsexperiencedsignificantjoblossescausedbycontraction
inthelocalandnationaleconomies.Overallemploymentdropped3.2%inMassachusetts
betweenMarch2008and2009continuingadownwardtrendthatbeganin2007.Although
Massachusettsexperiencedsignificantjoblossesin2008(withthestateunemploymentrate
increasingfrom4.9%inMay2008toover8%inMay2009),jobsinthefilmandtelevision
productionsectorhavebeengrowingrapidlyduringthesameperiod.
Between2005andthethirdquarterof2008,thenumberofmotionpictureproductionemployees
(NAICS51212),postproductionandotheremployees(NAICS51219)andindependentartists
(NAICS7115)intheCommonwealthgrew117%,126%and8%respectively(Table2andFigure2
below).ThesubstantialgrowthinNAICS51219(postproductionandother)isnotableparticularly
becauseestablishedlocalcompaniesaredoingsomeofthiswork.Inaddition,thePayrollServices
sectorgrewsubstantiallyinto2007,whichwasbeforerelevantfirmswerereclassifiedintoNAICS
51212,sosomeofthisgrowthmayreflectgrowthinthefilmindustry.Moreover,asnotedabove,
reclassificationisstillongoing,whichmeansthatsomeofthe2008figuresforNAICS541214still
representfilmindustryactivity.
Althoughthenumberofestablishmentshasnotgrownasrapidlyasemployment,thismaybe
causedbythewidespreaduseoffreelancelaborinthissectorandthefactthatexistinglocalfilm
servicecompanieshavegrowntomeetnewdemand.Itisalsoworthnotingthatmotionpicture
productionandindependentartistsareveryhighwagesectorsandthatpost‐productionhas
vacillatedbetweenhighandrelativelylowaveragewages.
13
Table2.AverageAnnualEstablishments,EmploymentandWages:1998‐2008
Source:BureauofLaborStatistics,QuarterlyCensusofEmploymentandWages
Figure2.AverageAnnualEmployment:1998‐2008
Source:BureauofLaborStatistics,QuarterlyCensusofEmploymentandWages
Somecaveatsarerequiredwheninterpretingthesedata.First,becauseQCEWdatadonotcontain
freelanceemployees(whicharealargeproportionoftheworkforceinthisindustry)theymay
underestimateaggregateemploymentinthesector.Second,someofthelargepercentage
14
increasesarepartiallyareflectionofthesmallbaseofemployeesinthesesectorsandthusdonot
representlargeabsoluteincreases.
Third,bothmotionpicture&videoproductionandpostproduction&otherservicesexperience
largefluctuationsinemploymentduringtheyear,reflectingthedifferingintensitiesof
moviemakingactivitiesintheCommonwealth.Figures3and4belowplotmonthlyemploymentin
NAICS51211(motionpictureandtelevisionproduction)andNAICS51219(postproductionand
other)for2007and2008.Inthecaseofmotionpictureandvideoproduction(NAICS51211),
employmentin2007rangedfrom1162to1462andin2008from1869to3126.Evengiventhis
range,therehasstillbeenasignificant(61%)increaseintheminimumlevelofemploymentinthis
sectoracrossthetwoyears.Fluctuationofmonthlyemploymentinthepostproductionsector
(NAICS51211)hasbeenevenmoredramatic,rangingfrom230to1505in2007and314to2480in
2008.Therefore,whilethereappearstohavebeenasignificantgrowthincoreemploymentin
thissector(theminimumemploymentlevelin2008wasalmost40%higherthanin2007)itisless
dramaticthanwhatisimpliedbytheannualemploymentnumbersinTable2.
Figure3.MonthlyemploymentinNAICS51211:MotionPictureandVideoProduction
Source:BureauofLaborStatistics,QuarterlyCensusofEmploymentandWages
15
Figure4.MonthlyemploymentinNAICS51219:PostproductionandOther
Source:BureauofLaborStatistics,QuarterlyCensusofEmploymentandWages
Thesedynamicsalsohelptoexplainthesignificantdropinwagesinpost‐productionbeginningin
2007.Onecontributingfactorseemstobethehiringofalargenumberoftemporaryemployeesin
supportoflargefilmproductionsinMassachusetts.Anotheristhegrowthofthelocalnon‐fiction
televisionandpostproductionsectorthathasalsobeenhiringlargenumbersofrelativelylower
paidnewentrants.Manyofthesehireshaveinfactbeenlocalcollegegraduateswhoarefinding
newcareerladdersinlocaltelevisionproduction.Becausebarrierstoentryarelowerintelevision
andpost‐productionthantheyareinstudiofilmproduction,thesejobsareparticularlyimportant
fordevelopingthelocalworkforce.
Finally,in2008therewassomereclassificationofemployeesfrompayrollservices(NAICS541214)
intothefilmindustryNAICScode51211(motionpictureandvideoproduction)making
comparisonswithprioryearsinMassachusettssuggestiveratherthanconclusive.However,since
thiswasanationaleffort,itshouldnotaffectourcomparisonsacrossstates.
Manyofthejobsinthefilmindustryconsistofcrewandskilledworkerswhobuildthesetsand
runthelights,cameras,andotherequipmentusedinfilmandtelevisionproduction.Thesetrades
16
usemanyofthesameskillsthatarerequiredinconstructionandothersimilartradesthat
experiencedthefastestrateofjoblossesinMassachusettsin2008.InMassachusetts,
employmentintheconstructionindustrydropped12.8%betweenMarch2008andMarch2009
sheddingatotalof17,400jobs(BureauofLaborStatistics,2009).Asdiscussedbelow,thereis
evidencethattherapidincreaseinfilmindustryemploymentduringthisperiodhashelpedabsorb
someemployeesfromconstructionandothertrades.
TheContributionofFilmandTelevisionSpendingtothe
MassachusettsEconomy Asnotedinthediscussionabove,formalmodelingofthefilmindustry’scontributiontothe
Massachusettseconomyisdifficultbecauseoftheindustry’sstructure,fluidity,andthedifficulty
inobtaininganaccuratesnapshotofthecurrentstateoftheindustry.However,itisstillworth
knowingwhatstandardeconomicmodelscalculateastheeconomicimpactoftheindustryonthe
Commonwealth,giventhebestsourcesofemploymentdatathatareavailable.Itisimportantto
distinguishthisanalysisfromtheanalysisconductedbytheMassachusettsDepartmentof
Revenue(2009)inrelationtotheFTC,whichisdiscussedinAppendix1.Inthisanalysis,weare
concernedwiththecontributionoftheentirefilmindustryaswehavedescribeditonthe
Massachusettseconomy,notjusttheimpactoftheportionoftheindustrythatcanbeidentified
ashavingbeenattractedtoMassachusettsbytheFTC,whichisthefocusoftheMassachusetts
DepartmentofRevenue(2009)study.
Table3showstheresultsoftheIMPLANanalysisforthefilmindustrysectorsthatwehave
focusedupon3.Thefirstcolumnrepresentsthenumbersthatwereusedasinputsintothemodel,
withtheemploymentnumberderivedfromthetotalofthethreeprimarysectorsdescribed
previously(wedidnotincludepayrollservicesbecauseitisnotclearallemployeesofthissectorin
3IMPLANisaninput‐outputmodelthatquantifiesinmonetarytermstheflowofgoodsand
servicesamongindustriesandhouseholdsintheeconomy.Thisenablesonetofollowaparticularexpenditureasitimpactsdifferentsectorsoftheeconomyandtracethemoneyasitisspentandre‐spent.Inthiscase,thepathofadollarthatoriginatesinthefilmsectorendswhenthatdollarleavestheCommonwealththroughdomesticorforeigntrade,oriscollectedasatax.Likewise,thisexpenditureanalysisalsoenablesustotraceemploymentimpactsinthesedifferentsectors.
17
2008arefilmindustryrelated,butasnotedpreviously,someemployeesareprobablypartofthe
filmindustrysoouremploymentnumberismostlikelyanunderestimate).Theoutputnumberis
basedontheIMPLANmodelassumptionsthatemployeesinthesefilmsectorsonaverage
generate$119,101perworker.Itisworthnotingthatthisisassociatedwithassumedrelatively
lowaveragewagesofbetween$26,000and$32,000.However,asnotedpreviously,twoofthe
industrysectorsweexaminedhadmuchhigheraveragewagesin2008of$61,225and$94,316.
Thus,IMPLANcouldbesignificantlyunderestimatingtheimpactofthissectorontheeconomy.
Table3.IMPLANAnalysisofMAFilmIndustryEmployment2008
Direct Indirect Induced Total MultiplierOutput 451,749,958 268,463,348 159,959,092 880,172,401 1.95Employment 3793 1821 1171 6785 1.79
Thisemployment(3793)andtheexpendituresassociatedwiththisemploymentbothintermsof
employeewagesandthevalueofproductionproducedbytheseworkersthengenerates
additionalemploymentandexpendituresinindustriesthatsupplyproductstothesefilmsectors
andthisismeasuredinthecolumnlabeled”indirect.”Thenextcolumn,labeled“induced”
measurestheadditionalemploymentandspendinggeneratedbytheexpendituresofthedirect
andindirectemployees.Theseimpactsarethenaggregatedinthe“total”column.Thefinal
column,labeled“multiplier”,reflectsthetotaladditionalimpactontheeconomythatthefilm
sectorhasgenerated.Theoutputmultiplierof1.95canbeinterpretedtomeanthatanadditional
dollargeneratedbythefilmsectorwillproduceanadditional$.95ofoutputvalueinthe
Commonwealth.Theemploymentmultiplierof1.79canbeinterpretedtomeanthatanewjob
generatedinthefilmsectorproduces.79additionaljobsintheCommonwealth.
EmploymentTrendsinLocalFilmProduction
Therearefourprimaryorganizationsthatrepresentcrewandcastemployedonmotionpicture
productionsinMassachusetts:TheInternationalAllianceofTheatricalStageEmployees,Moving
PictureTechnicians,ArtistsandAlliedCraftsoftheUnitedStates,itsTerritories,andCanada
(IATSE);theScreenActorsGuild(SAG);theAmericanFederationofTelevisionandRadioArtists
18
(AFTRA);andtheInternationalBrotherhoodofTeamsters(IBT).Therehasbeensignificant
employmentandwagegrowthineachoftheseunionsinMassachusettsinrecentyears.
IATSELocal481:MostlargemotionpictureandtelevisionproductionsinMassachusettsaredone
bycompaniesthathavesignednationalagreementswithIATSEoragreementswithLocal481
specifically.Asaresult,crewsonlargeandmediumbudgetstudiofeaturefilms,televisionpilots,
televisioncommercials,andsomelowbudgetindependentfeaturefilmstypicallyworkunderthe
termsofaunionagreement.IATSErepresentedemployeesmakeupalargeproportion(upto
75%)ofthecrewonfilmandtelevisionproductions.Alargeproportionofthesearemembersof
IATSELocal481(http://www.iatse481.com),whichrepresentsthestudiomechaniccraftsinthe
NewEnglandstates(Massachusetts,RhodeIsland,NewHampshire,Vermont,Maine).4
IATSEmembershiphasgrowndramaticallyinrecentyearsasaresultoftherecentgrowthinfilm
andtelevisionproductioninMassachusetts.Local481’sMassachusetts’smembershiphasmore
thandoubledsincethepassageoftheFTC,increasingfrom237in2005to585in2008.There
havebeensimilarratesofmembershipgrowthinotherMassachusettsIATSElocals.
TotalannualwagesearnedinMassachusettsbyLocal481membersincreasedten‐foldoverthe
sameperiod,growingfromapproximately$3millionin2005to$30millionin2008.Because
IATSE’swageratesareeffectivelyfixedbyitsagreementswithproducers,andinlightofthe
growthinLocal481’smembership,itissafetoassumethatthisgrowthinwagesrepresentsan
increaseinearningsfromincreasedworkopportunitiesacrossabroadspectrumofthelocal’s
members.
WhileLocal481’smembershiphasgrowninsize,ithasalsoincreasedinquality.Overthepastfew
years,manyLocal481membershaveadvancedfromjuniorrolestobecomeheadsof
departments,aprogressionthatnowprovidesthemwithincreasedresponsibilitiesandhigher
wages.ThisdevelopmenthasenhancedtheabilityofMassachusettstosupportlargeproductions
withlessneedtoimportkeyworkersfromoutofstate.Forexample,onarecentlyfilmedAdam
4 The 15 crafts represented by Local 481 are Art Department Coordinators, Construction, Costume/Wardrobe, Craft Services, Electric/Set, Lighting, Greens, Grip, Locations, Medical/First Aid, Properties, Set Dressing, Sound, Special Effects, Teleprompter Operators, and Video Assist.
19
Sandlermovie(“LakeHouse”)almostallofthedepartmentsrepresentedbyIATSEmemberswere
staffedlocallyfromdepartmentheadsdown.Oneveteranofthelocalindustrynotedthatthe
Commonwealth’screwbasecouldnowsupport4‐5featurefilmsatonce,whichwasnotthecase
twoyearsago.
IATSErepresentativesreportthatsomeofthesenewmembershavemigratedfromrelatedtrades
thathavebeenexperiencingsignificantemploymentcontraction.Therearenumerousinstancesof
carpenterswhohadbeenlaidofforwereunderemployedintheconstructionindustry
transitioningtothemotionpictureindustry,workingsteadily,andthenjoiningLocal481.Each
newjobinfilmandtelevisionproductionthatreplacedalostjobinconstructionandrelatedfields
generatedbothdirectbenefits(inincreasedwages)andindirectbenefitsbyreducingdemandsfor
stateservicesandbenefitsthatwouldhavebeencollectedbyunemployedtradespeople.
ExperiencedmembersofotherIATSElocals,formerlybasedinLosAngelesorNewYork,whohad
familytieshereorwhohadattendeduniversitiesinMassachusetts,havealsomovedbacktothe
Commonwealthtoworkonproductions.Ifthesetrendscontinue,itcouldincreasetheproportion
ofwagesfromlargeproductionsthatgotoCommonwealthresidents(atrendtheDepartmentof
Revenueiscurrentlytracking).
SAGandAFTRA:SAG(http://www.sag.org/)andAFTRA(http://www.aftra.com/)bothrepresent
performerswhoappearintelevisionshowsandcommercialswhileSAGalonerepresents
performerswhoappearinmotionpictures.Sincemotionpictureproductionaccountedformost
oftherecentincreaseinproductioninMassachusetts,recentworkforcedevelopmentsinthelocal
branchofSAGareespeciallyrelevanttounderstandingtheimpactoftheseprojectsonthelocal
workforce.
TheBostonbranchofSAGgrewbyalmost30percentbetween2005and2008,withmembership
topping2100bytheendof2008.Therewasa58%increaseinwagesearnedonfeaturefilmsand
20
televisionprogrammingin2008,ascomparedto2005.5Wagesearnedontelevisioncommercials
bymembersofSAG’sBostonbranchremainedroughlyconstantbetween2005and2008.This
mightbeduetotheoveralldownturninthecommercialindustryaswellaslessawarenessofthe
availabilityoftaxincentivesinthispartoftheindustryasopposedtofilmproduction.
Anotablefeatureoftelevisioncommercialsisthattheygenerateresidualpaymentsforactors.
Totalresidualsearnedbyactorsonacommercialtypicallyequaltwicethewagespaidduringthe
shootandmayrepresentfuturetaxableMassachusetts’sincome.Featurefilmresidualsare
currentlyaminorcomponentoftheearningsofBostonbranchSAGmembers,approximately10
percentofoverallfilmwagesin2008.However,thereisoftenaseveralyearlagbetween
productionandtheeventsthattriggerpaymentoffeatureresiduals,suchasreleaseofDVDand
appearanceoncable/broadcasttelevision.Featureresidualsarelikelytoincrease,potentially
markedly,forlocalSAGmembersasproductionsthathavebeenshotinMassachusettsoverthe
pasttwoyearsreachthosephasesofthedistributionprocess.Inaddition,itispossiblethatfuture
wagesfromresidualspaidtoprincipalperformersandparticipationagreementsforabovetheline
talentcouldbetreatedasMassachusettssourcedincome.Ifso,thiscouldrepresentasignificant
sourceoffutureCommonwealthtaxrevenue.(SeeAppendix1foradiscussionoftheseissues).
InternationalBrotherhoodofTeamstersLocal25:TheInternationalBrotherhoodofTeamsters
Local25(http://www.teamsterslocal25.com/)representsthetransportationworkerswhodrive
thetrucksandequipmentusedinfilmandtelevisionproduction.Althoughfilmandtelevision
employeesrepresentasmallproportionofLocal25’stotalmembershipof11,500employees,this
grouphasbeengrowingrapidly.Historically,therehaveonlybeen30Teamstersemployedinthis
industry.Currently,thereareover200.Inadditiontothegrowthintotalemployment,therehas
beenagrowthinthetotalhoursworkedbytheseemployees.In2008,therewereover330,000
hourspaidintotheTeamster’spensionandhealthandwelfarefundsbylocalfilmandtelevision
workers.AsinthecaseofIATSEmembers,someofthesenewworkershavecomefromotherlocal
transportationindustriesthathaveexperiencedrecentcontraction.
5 Permission is required from SAG’s national office to report on gross wages earned by local
branches, and since the national has not granted such permission to the Boston branch, we are only able to report on trends in this report.
21
Becausetransportationcoordinatorstypicallygetcompetitivebidsfrommultiplevehicleand
equipmentleasingcompaniesandbecausemanykindsofequipmentandtrucksarenotavailable
intheCommonwealth,localproductionsoftenrentequipmentfromoutofstate.Somelocalpress
reportshaveusedthisfacttosuggestthattruckswithoutofstateregistrationsarebeingdriven
byoutofstateemployees.Infact,anytruckorpieceofequipmentthatisusedinaunionfilmor
televisionproductionisdrivenbyamemberofLocal25.Therehaveevenbeeninstancesof
TeamsterstravellingoutofstatetopickupequipmentbeingusedinMassachusetts’sproductions.
WhilethesedriversarepaidasMassachusetts’semployees,increasingthenumberoffilm
equipmentrentalcompaniesinMassachusettswouldincreasetheproportionofnon‐wage
spendingbeingkeptintheCommonwealth.
Workforcedevelopment:Asdescribedabove,therehasbeensignificantgrowthinboththe
numberandskilloflocalfilmproductionemployees.However,therearestillsomecraftswithtoo
fewemployeeswhoareexperiencedenoughtostaffkeypositions.Inthemiddleof2008,alocal
assistantdirectorandlocationmanagerreportedthatsomecrewlackedexperienceworkingon
largeproductionsandexpressedtheneedformorelocalseniorcrewinpositionslikecostumeand
productiondesign,specialeffects,directorsofphotography,digitalimagetechnicians,hair,and
makeup.Otherthingsbeingequal,filmsandtelevisionproductionsprefertouselocalcrew
becauseitsavesthetransportationandhousingcostsassociatedwithimportingtalent.However,
becausecrewsareassembledbykeypositionsanddepartmentheadswhodrawonnetworksof
employeesthatworktogetheronasemi‐regularbasis,thegrowthoflocalkeypositions
representsanimportantlynchpininlocalworkforcedevelopment.Becausethesekeypositions
tendtohirepeopletheyhaveworkedwithbefore,astheMassachusettscrewbasegainsmore
experienceandconnectionswithoutofstateproducers,wemayfindthattheproportionofwork
onlargefilmsgoingtolocalcrewwillincrease.
AIMMandMPC,alongwiththeMassachusettsFilmOffice,havecollaboratedwiththe
Commonwealth’sDepartmentofWorkforceDevelopmenttobuildawarenessaboutopportunities
infilmproduction.Anindustryinformationday,“Jobs,Camera,Action,”wasalsoheldinBostonin
January2009andattractedmorethan600people.Thisday‐longworkshopwasdesignedto
22
educateattendeesonhowtobuildacareerintheMassachusettsfilmindustry.Itincludeda
careerexhibitionaswellasfoursessionswithindustryexecutivesexplainingwhattypesof
positionstheywillneedtofill.MPCandAIMMhavealsoheldseveraleventsforlocaluniversity
students.Thesefocusedonskillstrainingforentry‐levelpositionsandnetworkingtolink
employerswithstudents.
InJanuary2009,theDepartmentofWorkforceDevelopmentincollaborationwithIATSElocal481,
heldtwotrainingsessionsfor80servicescounselorsfrom37CareerCentersstatewideonhowto
helpdisplacedworkerstransitionintofilmindustryjobs/careerpaths.Thesesessionsparticularly
emphasizedworkerswhoseskillscouldbereadilytransferredtomotionpictureproduction,
includingcarpenters,painters,medics,andlandscapers.Subsequently,theDepartmentof
WorkforceDevelopmentscheduledeventstoidentifyworkerswiththoseskillswhomightbegood
prospectsforthefilmandtelevisionindustryandrecommendthemforacareerworkshopthat
willbeconductedbymembersofLocal481.Ifthismodelprovessuccessful,itmaysubsequently
beusedforothereventstochannelprospectiveworkerstounion‐basedjobopportunitiesthat
maybecreatedbytheAmericanRecoveryandReinvestmentAct(ARRA)
UsingacombinationofBLSdataandinterviews,wehavebeenabletodocumentsubstantial
growthinseveralsectorsofthefilmindustryintheCommonwealth,muchofwhichisassociated
withtheimplementationoftheFTC.Howeveritisclearthattherearemanyotherrelatedsectors,
includingindustriesthatservicethefilmindustryandtelevisioncommercials,independent,and
documentaryfilms,thatarebenefittingfromtheexpansionofthefilmindustryworkforce
associatedwiththeincreasedproductionoffilmsintheCommonwealth.Inordertoexplorethe
industriessupplyingthefilmindustryinmoredepth,thenextsectionfocusesonthenon‐wage
spendingpatternsassociatedwithfilmproductionintheCommonwealth.
Non‐wagespendingpatterns
AccordingtotheMassachusettsDepartmentofRevenue(2009:8),36%(e.g.,$247M)ofthetotal
filmindustryspendingintheCommonwealthbetween2006and2008wasonnon‐wageitems.The
23
largestcategoriesoftheseitemswerelocationfees($56.8M),transportation($35.8M),fringe
benefits($33.5M),hotelsandhousing($29.3M),setconstruction($27.2M)andfood($17.7M).
Interviewssuggestthatalargeproportionofthisspendingiscenterednearproductionlocations
andcanrepresentsignificantsourcesofrevenueforlocalmerchants.Theyalsoraisequestions
aboutwhetherandhowwellthesepatternsarerepresentedinexistingeconometricmodels.For
example,locationfeesareoftenpaiddirectlytosmallorganizationsandevenindividual
households.Forexample,themovieZookeeperwasfilmedintheFranklinParkzoointhesummer
of2009.Atatimewhenthezoohadexperiencedasignificantbudgetcutandwasinriskof
shuttingitsdoors,themovieproductionpaidalarge(butundisclosedfee)bothtothezoodirectly
aswellasa$20,000feedirectlytothecity’sParksandRecreationDepartment(Irons,2009).In
additiontoprovidinganimportantcashinfusiontoastrugglingpublicinstitution,thisproduction
alsoprovideddirectinvestmentsintopublicfunds.Thesespendingpatternsmaybemissed,orat
bestincorrectlyspecified,bystandardeconometricmodelstypicallyusedineconomicimpact
studiesoflocalfilmandtelevisionproductions.
Togetabetterunderstandingofthesenon‐wagespendingpatterns,weinterviewedlocal
productionemployeesandvendorsaswellascollecteddataonthevendorsusedby10motion
picturesfilmedinMassachusettsin2008.Unfortunately,wewerenotabletoobtaindataonthe
amountsspentateachvendor.However,combininginterviewsandnetworkandgeographic
visualizationmethods,wewereabletoidentifyseveralinterestingpatternsinthedistributionof
thisspending.
Figure5belowrepresentsanetworkanalysisofthevendorsusedby10motionpicturesfilmedin
Massachusettsin2008.Usingdataprovidedbyoneofthelocalunions,wecreatedthisdiagramby
importinglistsoffilmsandtheirvendorsintoanetworkanalysisprogramcalledUCINET(Borgatti,
Everett,&Freeman,1996).Inthediagram,filmsarerepresentedaswhitesquaresandvendorsas
blackcircles.Thisanalysisclearlyshowstwodynamicsinthenon‐wagespendingpatternsinthe
localfilmindustry.Thetwoclustersoflargeblackcirclessurroundingthefilmsrepresentthe
rapidlygrowingcoreofvendorsthatprovidespecializedservicesandequipmenttofilmand
televisionproductions.Eachfilmisalsosurroundedbyaclusterofuniquevendorsthatarenot
sharedwithotherfirms.Inotherwords,whilemostfilmsrelyonasmallcoreoffirmsthatprovide
specializedservicesandmaterial,eachfilmalsohasitsownuniquesetofvendors.Thispatternis
24
explainedbyinterviewswithindustryparticipantsandpressreportswhichsuggestthata
significantproportionofnon‐wagespendingisclusteredaroundthelocationsinwhichfilming
takesplace.
Figure5.Vendornetworkof10MAfilmsin2008
Toexplorethegeographicdistributionofspending,weplottedtheaddressesofthevendorliston
amapofthestate(Figure6below)6.Thismapshowsthatwhilenon‐wagespendingislocated
primarilyintheeasternhalfofthestate,itisalsoclusteredaroundproductionlocations.This
makessensegiventherapidpaceandlogisticalandmaterialrequirementsoftheseproductions.
Filmandtelevisionproductionsarematerialintensiveandoftenrequirerapidservicefromlocal
vendors.Forexample,costumestypicallycomeinduplicateandoftenneedtobelaundered
overnight.Thiskindofworkistypicallydonebylocalvendors.Moreover,becausefilmand
televisionproductionshavehighlaborcosts,productiondelayscanbeextremelycostly.Asa
6 Note that we were only able to generate geographic coordinates for 70% of the vendors for the 10
films studied. Therefore, the diagram likely underestimates the concentration of spending in some locations.
25
result,productionsaresometimesrequiredtomakelargeunexpectedexpendituresatlocal
vendorstokeepworking.AlocalAssistantProducerdescribedoneproductionthatspentover
$4,000atasmalllocalsportinggoodsstoretobuyraingearsothatthecrewcouldkeepworking
throughanunexpectedstorm.Whilesuchexpendituresmaynotrepresentalargeproportionof
thetotalspendingforalargeproduction,theycanrepresentsignificantrevenuestreamsforlocal
merchants.
Figure6.Geographicdistributionofspendingfor10filmsmadeinMAin2008
DevelopmentsinSpecificSubSectors
Interviewswithindustryparticipantsandanalysisofarchivaldatahelpedusidentifyrecent
developmentsinseveralimportantsub‐sectorsofthelocaltelevisionandfilmproductionindustry
otherthanfeaturefilms.Inthefollowing,wedescribeproductionpracticesandtrendsin
televisioncommercialproduction,documentaryproduction,post‐productionandspecialeffects,
independentfeaturefilmsandstudentfilms,linkagestouniversities,andthedevelopmentof
studiocomplexes.
26
Televisionproduction:AccordingtotheMassachusettsDepartmentofRevenue(2009:6),
televisionproductiongenerated70%(186)ofthetotalnumberofcrediteligibleprojectsfrom
2006‐2008.However,becauseoftherelativelysmallersizeoftheseproductions,thesectoronly
used7%ofthetotalvalueofthecreditsissuedduringthatperiod.Comparedtofeaturefilms,
televisionproductions(especiallycommercialsandnon‐fictionprograms)typicallyuseamuch
smallerproportionofabovethelinetalent.Asaresult,theseproductionsmaymakelarger
proportional(thoughamuchsmallertotal)contributiontolocalwageandnon‐wagespending.
Infact,thetelevisionproductionsectorinMassachusettsisitselfcomprisedofatleastthree
differentsub‐sectors.Inthefollowing,webrieflydescriberecenttrendsinscriptedanddramatic
television,non‐fictionandpublictelevision,andadvertisingproduction.
DramaticandScriptedTelevision:Ascriptedtelevisionshowbeginswiththeproductionofapilot
episode.Notallpilotsbecomelongrunningtelevisionshows.However,evenshowsthatare
pickedupandairforasingleseasongenerateconsistentemploymentforasmanyasonehundred
castandcrewmembers.Likeblockbusterfilms,therelativelysmallnumberofshowsthatbecome
popularcangeneratelong‐termeconomicbenefitsintheformoflocalwageandnon‐wage
spending,futureearningsfromresiduals,andpotentiallylocalbrandrecognition.Forexample,the
Cheerstelevisionshowgeneratedlong‐termeconomicbenefitsintheformofincreasedtourism
eventhoughitwasnotfilmedinMassachusetts.The1980stelevisionshow,“SpencerforHire,”
generatedlong‐termjobsformanylocaltelevisionproductionemployeesandcontributedtensof
millionsofdollarstothelocaleconomy.
TelevisionpilotsandserieshaverecentlybeenfilmedinMassachusettsandcaptured16%ofthe
totalcreditsissuedbetween2006and2008.Onerespondentdescribedthelong‐termimpactif
oneofthesepilotsgeneratesatelevisionshowthatismadeinMassachusetts.“Iftheshow
comes,everyepisodewillcostabout$2M.Theywillshoot10episodes.Thatis$20Mrightthere.
Therewillbe80corepeopleandupto140atlunchwhenyouincludetheextras,dayplayers,etc.”
However,becausescriptedtelevisionistypicallyproducedinastudio,Massachusettscurrently
lacksacriticalresourceforthegrowthofthissector.Respondentsarguedthatwithoutastudio,
scriptedtelevisionshowsmaycontinuetouseMassachusettsasabackdropforexteriorshots(as
27
thelongrunningshow“BostonLegal”did)butwouldfinditdifficulttoproduceafullshowinthe
Commonwealth.
Non‐fictioncable:Non‐fictioncabletelevisionproductioniscurrentlythefastestgrowingand
mostprofitablepartofthetelevisionindustry.Thisisdrivenbythefactthatcablenetworks(as
opposedtobroadcastnetworks)cangeneraterevenuefrombothadvertisingandcarrier
subscriptionfees.Moreover,ascomparedtoscriptedtelevision,non‐fictiontelevisionhaslower
productioncosts.Respondentsreportthatthereissignificantroomforinternationalgrowthinthis
sector.
IndustryrepresentativessuggestthatMassachusettshasthepotentialtobethenation'sthird
largestcenterfornon‐fictiontelevisionproduction.Thereareseveralfactorsthatmaygive
Massachusettsastrategicadvantageinthisarea.First,thelaborpoolcontainsexperienced
documentaryproducers,videographers,andsoundrecordistsaswellasalargepoolofstudents.
OnlyLosAngelesandNewYorkgraduatemorefilm/TV/videostudentsannuallythan
Massachusettsandmanyofthesestudentsarecurrentlyfindingjobsintherapidlygrowinglocal
non‐fictiontelevisionsub‐sector.
Barrierstoentryintonon‐fictionTVarelowerthanforfeaturemovieproduction.Inparticular,
non‐fictionTVhasmanyopeningsforproductionassistants,assistanteditors,andresearchers.
Movementupcareerladders(tobeingassociateproducerandproducer)isalsomorerapidthanit
isinfeaturefilmproduction.Thejobsalsolastlongerthanfeaturefilmjobsbecausethecomplete
productioncycleofonehourofprimetimenon‐fictioncableTVisbetweensixandsevenmonths
long.
Massachusettsalsohasseveralotheradvantagesthatmaycontributetothegrowthofthissector.
Thestateishometooneofthenationalleadersinvideoeditingequipment,Tewksbury‐based
AVID,aswellasarapidlygrowingdigitalgamingindustry.PowderhouseProductionshasused
someofitssavingsfromtheFilmTaxCredittoinvestinAVID'snewUNITYISISeditingsystemand
recentlybecameoneoffewindependentproductioncompaniesinthecountrytohavethis
sophisticatedvideostorageandretrievalsystem.Notonlydiditgenerateadditionalsalesrevenue
foranotherMassachusettscompany(Avid),itwillalsoenablePowderhousetoeditlargenumbers
28
ofprogramsatafractionofthecostofitscompetitors,givingthemasignificantcompetitive
advantage.PowderhousewillalsobefeaturedinanationalmarketingcampaignbyAVIDabout
theUNITYISISsystem.Thisstoryillustratessomeofthepositivespillovereffectsofincreasesin
localfilmandtelevisionproductiononotherlocalcompaniesthatarenotdirectlymonetizing
credits.
Finally,becausetheBostonareahasalargeconcentrationofresearchuniversities,high
technologyandbiotechnologyfirms,manyofthestoriesthatmakeupthecontentfornon‐fiction
televisionprogramscanbefoundlocally.Thisaccesstocontentprovidesanadditionaladvantage
forlocalnon‐fictiontelevisionfilmproducers.
AllofthesestrategicadvantagescombinedwiththepassageoftheFTChavehelpedthissector
growrapidlyinrecentyears.Onecompany(PowderhouseProductions)grewfrom35employees
in2006toahighof124employeesin2009.In2009,Powderhouseproduced36hoursofprime‐
timenon‐fictionTVforDiscovery,History,Science,AnimalPlanetandPBS.Duringthattime,they
hired45productionassistants,12assistanteditors,6researchersand105studentinterns.In
2010,Powderhouseexpectstoproduce45hoursofTVandexpectstocontinuehiringnew
employees.Notsurprisingly,thisgrowthisalsoreflectedindramaticrevenuegrowththatnearly
doubledbetween2007and2009.Itisalsoleadingtonationalrecognitionreflectedinthefactthat
oneoftheleadingagencies,CreativeArtistsAgency(CAA,)recentlytookonPowderhouseasa
clientandnowrepresentstheminbothLosAngelesandNewYork.
PublicTelevision:AshometothepublictelevisionstationWGBH,Bostonhaslongbeen
recognizedasanationalcenterfornon‐fictiontelevisionproduction.Asoneoftheflagship
stationsinthePublicBroadcastingSystem,WGBHhasa60yearhistoryproducinginternationally
recognizednon‐fictionprogramslikeFrontline,NOVAandThisOldHouseaswellasawardwinning
children’sprogramming(e.g.,Zoom,Arthur).WGBHtypicallyhasbetween100‐200projectsin
productionanddevelopmentatanygiventime.Itisalsothesourceoflocalproductionspending
andemployment.Infiscalyear2007,WGBHspentover$126milliononprogramdevelopmentand
productionalone(WGBH,2008).Asinfeaturefilmandotherkindsoftelevisionproduction,
locationdecisionsinpublictelevisionaredrivenbycomplexcombinationsoffinancial,aesthetic,
29
andpracticalconsiderations.Forexample,aproducerforaspecificshowmightbeselectedforher
expertiseinthetopicwhileothercontractorsmaybeselectedforspecifictechnicalandartistic
skillslikeanimation.Therefore,someproportionofthetotalWGBHproductionbudgetgoestoout
ofstatevendorsandemployeeswithskillsandexpertisethatarenotavailablelocally.
Thesefactorsnotwithstanding,WGBHremainsalargelocalemployerintelevisionproductionwith
approximately900peopleatitsBostonheadquarters.Moreover,anexaminationofWGBHtax
filings(availableatwww.guidestar.org)revealsthatthreeofthefivemosthighlypaidindependent
contractorsforprofessionalservicesin2007wereMassachusettscompaniesthatreceivedmore
than$500Kthatyear.Althoughmanyoftheirlargestindependentcontractorsforproduction
servicesareoutofstatecompanies,somelocalcompanieshavereceivedworkfromWGBHandit
ispossiblethatthestationmaybeabletoincreasetheproportionofitsproductionworksourced
tolocalcompaniesastheygainnewexpertise,equipment,andskilledemployees.
Asignificantnewdevelopmentoccurredin2007whenWGBHopenedanewflagshipoffice
buildingandstudiocomplexinBrighton,MA.Thisbuildingrepresentsanimportantnewresource
inthelocalnon‐fictiontelevisionproductioncommunityandgeneratedover$20millionin
revenuesforlocalconstructioncompaniesbetween2006and2007.Becauseofthisnewspace,
WGBHhasbeenabletobringmembersofthepublicintoitsfacilitiesasneverbefore.For
example,anOctober2009premierforthecriticallyacclaimedseries,LatinMusicUSA,drewover
1,000gueststotheWGBHstudios.Thiskindofincreasedpublicengagementhasbeendirectly
enabledbytherecentWGBHexpansion.
Whilethefilmtaxcredithasnotbeenasignificantdriverofthisexpansion,ithashadapositive
impactonsomeWGBHproductiondecisions.Becauseitreliesheavilyonexternalfundraisingto
produceitsprogramsandtheseprogramsoftenhaveproductioncyclesof18monthsormore
(duringwhichtimefundraisingoftencontinues),programsoftenneedtobeapprovedbefore
fundingisfullysecured.TheavailabilityoftaxincentiveshashelpedWGBHmanagetheserisksby
providingafinancialcushionthatallowsthemtoapprovemoreprogramsbeforecomplete
fundingissecured.
Inadditiontomanagingtheserisks,WGBHhasusedcreditstoincreaseresearchanddevelopment
innewprograms.Forexample,the2006seasonofDesignSquadcost$2milliontoproduce.Of
30
this,allbut$500,000wasspentinMassachusetts.Thisproductioninturngenerated$235,000in
cashforWGBH,whichwasthenusedtofundfutureproductionsandeasefundraisingpressureat
thestation(Mohl,2008).Therefore,onehiddenbenefitoftheFTCmaybeincreasingthescope
andbreadthofWGBH’spublicprogrammingandhelpingtoreducerisksandfundraisingpressure
atthisnationallyrecognizedpublictelevisionstation.Thecombinedimpactofthe900workers
WGBHemploysdirectlyandcontractswithlocalproductioncompaniesandfreelanceemployees,
aswellasitsrecentlybuiltstudiocomplex,representsignificantlong‐terminvestmentsinthelocal
non‐fictiontelevisionproductionsector.
Commercialsandadvertising:Amajorityofthetelevisioncommercialsproducedin
Massachusettsaremadebyasmallhandfuloffirms.Theresearchteamtalkedwiththreeofthe
largest.Thesefirmsreportedthattheiroverallbusinesshasremainedstablebetween2005and
2008,duringaperiodwhenproductionofcommercialsintheU.S.asawholehasbeenonthe
decline.Moreover,agrowingpercentageofthesefirms’workisnowbeingproducedin
Massachusetts.Onecompanyreportedthat70percentofitscommercialswereproducedinthe
Commonwealthin2008comparedtoonly40percentin2005.
ThetaxcreditshavemadeBoston30‐40percentlessexpensivethanNewYorkCity,andthis
differentialcangiveMassachusettsbasedcommercialproductioncompaniesacompetitive
advantage.Atypicalcommercialshootsfortwodaysandspendsapproximately$200,000oncast,
crew,andmaterials.Ofthisspending,asignificantproportion(includinglabor)istypicallylocal.
Oneproducerprovidedthefollowingbreakdownforspendingonarecent2‐day($200K)
commercial.
Table2.Approximateexpensesfora2‐daycommercialLabor(alllocal) 90,000Locationexpenses 17,000Propsandwardrobe 12,000Equipment 20,000Filmstockanddeveloping 10,000Talentcosts 10,000Creative,director,insurance,etc. 41,000 200,000
31
Commercialproductioncompanieshaverecentlyluredoutofstateadvertiserstoshoot
commercialsintheCommonwealth.Forexample,onelocalcompanyrecentlycompletedspots
hereforalargepharmaceuticalcompanybasedinNewYorkandanautocompany.
BostonadvertisingagenciesandlargeMassachusettsbasedadvertisers(forexample,Fidelity,New
Balance,GilletteandRebok),however,havestilltendedtouseoutoftownproductioncompanies
formostoftheircommercials(although2008wasthefirstyearpeoplehaveheardofoutofstate
commercialproductioncompaniesshootinginMassachusettstocapturethetaxcredit).TheMPC
hasrecentlyundertakenanaggressivecampaigntoencourageMassachusetts‐basedadvertisers,
suchasTJX,toshoottheircommercialsintheCommonwealth.
DocumentaryFilm:Documentaryfilmmakinghaslongbeenadistinctivestrengthof
Massachusetts.Manyofthepioneersof16‐millimeterdocumentaryfilmmakingwerebasedhere,
andWGBH’sroleastheflagshipPBSstationhasallowedtheCommonwealthtoestablishand
maintainaleadershippositioninbothseriesandlong‐formtelevisiondocumentaries.Interviews
indicatethatthetaxcreditshavebeenhelpfultosomeindependentdocumentarymakers,making
projectsfeasibleandenablingthemakerstoproducehigherqualityprojectsduringaperiodwhen
financialsupportforindependentworkhasbeengrowingscarce.
Whileitisimpossibletodeterminepreciselyhowmanyindependentdocumentaryproducersare
workinginthestate,theylikelyoutnumberindependentnarrativeproducers,asmallerbutnot
insignificantgroupoflocalfilmmakers.Itisworthnotingthatmostindependentfilmmakershave
incomesourcesotherthantheirindependentfilms.Thesefilmmakersoftenworkinrelated
sectorsincludingindustrial,educational,andcabletelevisionproductionandearnalowerwage
workingontheirownfilmsthantheyearnfromtheirotherjobs.
Becausethesefilmsareoftenmadeusinggrantsandotherdonations,independentfilmmakers
relyonfiscalsponsorswhoprovidethe501c3statusneededtoqualifyformajorgrants.While
therearemanyfiscalsponsorsintheCommonwealth,threeofthemworkwithalargenumberof
localproductionsandassistfilmmakersinresearching,applyingfor,andadministeringgrants.
Interviewswiththeexecutivedirectorsofthreesuchorganizationshelpedusunderstandrecent
trendsinthissector.
Together,theseorganizationssupportedapproximately150projectsin2009.Notalldocumentary
32
filmsthatreceivemajorgrantsuseoneofthesethreeorganizationsandthereareseveralother
smallerfiscalsponsorshiporganizationsinthestate.Indeed,sinceany501c3organizationcan
serveasafiscalsponsorforafilm,somefilmmakerschoosetoworkwithnon‐profitsthatarenot
primarilymediaartsorganizations,butwhosemissionsareconcernedwiththecontentareathe
filmexplores.However,thesethreefiscalsponsorsrepresentalargeproportionofthetotalgrant
fundedindependentdocumentaryproductionintheCommonwealth.
Astheirprimarysourceofincome,twoofthesponsorsdependonthefeestheychargeonthe
grantsanddonationstheyacceptonbehalfoftheirfilmmakers.Theotherisadistributorand
makesasignificantportionofitsincomethroughthedistributionarmofitsoperations.Thereare
severalfactorsthatmakeithardtogaugewhetherthefinancialstatementsoftheseorganizations
canbeusedasindicatorsofthelevelofindependentfilmproductioninthestate.First,these
organizationsdonotexclusivelyworkwithlocalfilmmakers.Localfilmmakersoftenshootthe
majorityoftheirmaterialoutsideofthestate,andwhileitishardtoestimatewhattheratioof
shootingin‐statevs.out‐of‐stateis,allthreefiscalsponsorsreportthatamajorityoftheirprojects
areshotout‐of‐state.Therefore,asignificantportionofmoneyraisedforthesefilmsisspentin
otherstates.
Anotherimportantfactortonoteisthatmajorgrantsareoftenawardedinstages.Forexample,a
majorfundermightgrantafilm$300,000inthreeyearlyinstallmentsof$100,000.Sometimes
grantsareawardedwiththestipulationthatmatchingfundsareraised,soagrantmaybe
awardedbutnotactuallypaidoutuntilyearslaterwhenthefilmmakerisabletoraiseenough
moneytomatchthosefunds.Therefore,thefinancialstatementsinanygivenyeardonot
necessarilyreflectsignificantchangesinfunders'behavior;thereissomelagtimebeforeany
changesinfundingbehaviorwouldbereflectedintheincomefiguresofthesefiscalsponsors.
Althoughthenumbersdonotgiveusaclearsenseofmorerecentfundingchanges,twoofthe
fiscalsponsorsreportedthatmajorfundersarecurrentlygivingless.Oneofthesenotes:
“ThebiggesttrendI’venoticedbetween’04and’08isthedecreaseingovernment
funding,that,especiallytheNEHwhichiswhatwe’vealwaysearnedourbreadand
butterfrombecausetheytendtogiveverylargegrantsofhalfamillionormore….
I’venoticedespeciallyinthelastthreeyears,maybetwoyearseven,thatthose
33
budgetshavebeenslashedandtheNEHishardlyfundinganyfilmsanymore…and
iftheydo,likethisyearwegotthreebuttheywereeach$70,000,theywerevery
small,asopposedtothreethatrangebetween$400,000and$700,000inthepast,
sothat’sahugedeclineinincomeforus.”
Severalfilmmakersinterviewedechoedthesentimentthatithasbecomeincreasinglydifficultto
raisemoneyfrommajorfoundations.Inreferencetoherattemptstoraisemoneyduringthe
periodof2005–2007onefilmmakersaid:
“Therearecompetingneeds.Alotoffoundationsyouknowjustdon’twanttofund
films.Or,ifthey’regoingtofundfilms,theymightfundoneortwofilms.And,that
–thattakesuptheirwholecommitmentforanythingthattheyweregoingtospend
onfilm.”
Thiscommentsuggeststhatperhapstherearemorefilmmakerscompetingformajorgrants,and
thathascreatedaperceptionthatthereislessmoneyavailable,evenifperhapstheamountof
majorgrantshasnotdecreased.Theprevailingviewintheindependentdocumentarycommunity
isthatlargefundersaregrantinglessmoneytofilms.Whilesomethinkitisdirectlyrelatedtothe
recenteconomicdownturn,otherslocatethechangebeginningasearlyasfiveyearsago.
IntermsofspendingforindependentdocumentaryfilmsinMA,noonereportedanysignificant
changesinspendingpatternssince2005.Allfourdocumentaryfilmmakersreportedtheytypically
shootoutsideofstate,whilepost‐productionismoreoftendonein‐state.Inmostcases,wages
forproductionandpost‐productioncrewwerethemajorexpenses.Insomecases,asignificant
portionofafilm’sbudgetwasdesignatedforobtainingrightstohistoricalfootageand/ormusic.
Noneofthedocumentaryfilmmakersinterviewedreportedthatthetaxcreditimpactedtheir
spendingdecisions.Onlyonefilmqualifiedforthetaxcredit,andinthatcase,duringthe
productionandpost‐productionofthefilm,thefilmmakerassumedthattheywouldnotqualify.
Eventhoughthetaxcreditprogramdoesnotappeartohaveinfluencedspendingdecisions,all
filmmakerssaidtheywerethankfulthatthetaxcreditprogramexistsandthatitmightimpact
theirspendingdecisionsinthefuture.Onefilmmakerreported:
“Forindependentbillings,peoplewhomakedocumentaries,whoworkonashoestring
basically…thetaxcreditisalifeline.It’saGodsend…Wedoalotofourworkin
34
Massachusetts,partlyoutofpreferenceandpartlyyouknowoutofbecausewe’rehere
andwecan’taffordtotravelanyway…Havingsomeportionofthatcomebacktous
is…goldenand…foralotofusthat’swhatwillenableustocontinuetowork.”
Anothersaid:
“Ihavenotmadeanyfilmsthathavequalifiedanditdidn’tinfluencemydecisionto
makewhatfilmsIhavemadesofar…But…itmakesmewanttoshootandeditin
Massorfilmsometimesoon.Iamkeepingmyeyeswideopenforfilmideasthat
couldbedonehere.Whynotshoothere?Weshouldbedoingthatkindofthing.”
Independentnarrativeandstudentfilms:ThenumberoflowbudgetfeaturefilmsshotunderSAG
agreementinMassachusettsdoubledinrecentyears,risingfrom18in2005to37in2008.The
numberofstudentfilmsshotunderSAGagreementmorethandoubled,goingfrom16in2005to
41in2008.Althoughthesekindsofprojectsdonotmakealargeeconomicimpactintheshort
term,theyareimportantfordevelopingyoungtalent.Inparticular,youngdirectorswhoachieve
earlysuccessinMassachusettsmaychoosetoshootsomeoralloftheirfutureprojectsinthe
Commonwealth.Indeed,successfullocalactorslikeBenAffleckhaverecentlyreturnedtothe
Commonwealthtoproducefilmshere.
Independentnarrativefilmsarefinancedthroughinvestorsasopposedtothegrantsand
donationstypicallyusedindocumentaryproduction.Investorsaretypicallyattractedtoa
narrativeprojectiftheybelievetheprojectwillbefinanciallysuccessfulandtheywillreceivea
returnontheirinvestment.Becauseindependentnarrativefilmmakersdonottypicallyhavefiscal
sponsors,itwasnotpossibletogetthesamebroadviewofnarrativeproductionoverthepastfive
yearsaswaspossiblewithdocumentaryproduction.
Onenarrativeproducerwhomadeuseofthetaxcreditwasinterviewedforthisreport.Although
theproducerisnotfromMassachusetts,thedirectorandprimaryinvestorsare.Theystarted
raisingmoneyin2007,shottheirfilminFallRiverin2008,andcompletedpost‐productionin
2009.Thistimeframeistypicalfornarrativefilmsbecauseunlikedocumentaryfilms,the
35
filmmakersknowthestoryaheadoftimeandcancondensetheshootingintooneconcentrated
periodoftime.Itisworthnotingthatthismakesiteasierfornarrativefilmmakerstotake
advantageofthetaxcredit,becausetheytypicallyknowwhich12‐monthperiodwillbethe
biggestspendingperiod.Incontrast,documentaryfilmmakersoftendonotknowwhatthe
biggestspendingperiodwasuntilafterthefilmiscomplete.Onthisparticularnarrativefilm,they
receivedthecreditbeforethepost‐productionwascompleteandappliedthemoneytowards
finishingpost‐production.Thefilmmakersarecurrentlylookingfordistribution,andhopeto
recouptheircostsandmakeaprofit.
Theproducerreportedthatthelargestspendingcategorywaswagesforcastandcrew.About
halfofthecastandcrewwerefromMAandtheotherhalfwerefromout‐of‐state,primarilyNew
YorkandLA.Anothermajorcategoryofspendingwasfilmandcameragear.Unlikeindependent
documentaries,whichareoftenshotonvideo,thisfilmwasshoton35mmfilm,asignificantly
moreexpensiveformat.Thesecostsaccountedforaboutafifthoftheoverallbudget.Thismoney
wasspentoutofstatebecausetheycouldnotfindtheequipmentorfilmstockinMA.Other
significantcostsincludedlocationfeesandcatering,whichwereallspentinstate,andpost‐
production,whichwasdoneprimarilyinLA.Theproducerestimatedthatabout40%ofthe
overallbudgetwasspentinMA.
Itseemsthetaxcredithasnotyetimpactedtheindependentdocumentaryandnarrativefilm
sectortothesamedegreeithasimpactedstudiofeatures.Forexample,seventeenfeaturefilms
wereproducedin2008,ascomparedtoanaverageof2‐4inyearspriortothetaxcreditprogram.
Incontrast,theoverallnumberofactiveprojectsreportedbythefiscalsponsorshipsorganizations
hasnotincreasedsignificantlysince2005.Itisdifficulttomeasuretheimpactoftheprogram
againstthefundingissuesfacedintheindependentsector.Thescarcityoffundslimitsthe
amountofprojectsmadeinthestate.Asthereappearstobefiercecompetitionforcurrentfunds,
ifthereweremorefundingthesectorwouldmostlikelygrow.
Itisworthnotingthatthetaxcreditmayimpacttheindependentsectorinsomeindirectways.
First,theincreaseinmajorstudioproductionshasenabledsomeofthelocalcrewbaseto
continuetoliveandworkinMA.Ifthesefilmshadnotbeenmadesomelocalcrewmighthave
36
movedelsewhereinsearchofemployment.Oneproducerwhohasworkedonbothfeatureand
independentprojectsnoted:
“Inaverysimplisticsense,arisingtidedoesraiseallboats,asdoesthe
developmentofamoreexperiencedcrewbase.Anygeographicalregionthatis
experiencinganincreaseofactivitywillalsogeneratemoreinterestinindependent
projects.Thecrewgoestoalmostanyprojectaslongasthereappearstobesome
actualfinancialbasisandifitfitsintotheirownpersonalschedules.”
Additionally,thestudioinfrastructurethatisbeingproposedtoaccommodatemorefeaturefilms
mightalsobenefittheindependentsector.Severallargesoundstudiosarecurrentlyproposedin
MA.Onefiscalsponsorcommentedonapotentialbenefitofthesestudiostotheindependent
community:
“Forinstance,theymightgivereallygooddealstoindependentssothat
independentscouldactuallyaffordtousesomeofthestudiosfortheirown
projectsanditmightincentivizethemtoactuallyshootsomethinghereversus
goingtoNewYorkortheymightrealizethatsomeprojectisdoablebecause
whateverservicestheyneedareinMA.”
Ifmoreeffortwereplacedoninformingfilmmakersaboutthetaxcreditandmakingthefiling
processeasier,moreindependentanddocumentaryfilmmakersmighttakeadvantageofit.One
filmmakernoted:
“Mysenseisthat…alotofindependentfilmmakersandmyselfincludeddosomuch
onourfilmsthatit’slikepeoplejustdon’tknowalotaboutthat[thetaxcredits].
Theydon’tknowhowitworks.Theydon’tknowtheinsandouts,somebodyhas
beenthroughitbutit’sbeenreallyconfusingandthentheywererejectedandyou
don’tunderstandwhy.Youknowitjustseemsreallyforeignstill.”
ItisdifficulttospeculateonthefutureofindependentfilmmakinginMA.Thebiggest
determinateofitssuccessisfunding.ItappearsthatMAhasthecrewbaseand
infrastructuretosupportasignificantincreaseinindependentfilmproduction,butit
remainsunclearwherethefundingfortheseprojectswillcomefrom.
37
Postproductionandspecialeffects:Theincreaseinmotionpictureproductionhashadapositive
spillovereffectinlocalpost‐productionandspecialeffects.Onenotableexamplehasbeenthe
expansionofBrickyardVFX.FoundedbyMassachusettsnativeandEmersonCollegegraduate,
DaveWaller,the16‐personorganizationisnowoneofthepremiervisualeffectsstudiosinNew
England.Brickyardbeganasaone‐manshopin1999andspecializedinvisualeffectsfortelevision
commercials.In2007,duetoanupsurgeofwork,thepartnerscreatedanewcompanycalled
BrickyardFilmworkscateringtothevisualeffectsneedsoffeaturefilms.ThenewFilmworks
companyenjoyedrapidgrowthandby2009hadtwentypeopleonstaffandcompletedhundreds
ofeffectsforfeaturefilmslike“TheProposal”and“Surrogates.”
Confirmingreportsfromothertelevisionandpost‐productioncompanies,employmentat
BrickyardalsodrewheavilyfromgraduatesoflocalcollegeslikeEmersonCollege,Boston
University,FitchburgState,andtheMassachusettsCollegeofArt.Inadditiontothesenew
entrants,Brickyardfoundthatitalsoneededindustryveteranstohelpkeepupwithincreasing
demandandrecruitedformerMassachusettsresidentswhohadmovedtoCaliforniaandagreed
tomovebacktoMassachusettstoworkatBrickyard.WhileBrickyard’sfeaturefilmworkhasbeen
growing,2008and2009werethefirstyearsthattelevisioncommercialrevenuesshoweddeclines
sincethecompany'sfoundinganditfacedtheprospectoflayoffs.However,bysharingthetax
creditsonseveralprojectswiththeirclients,theywereabletoobtainadditionalworkleadingto
thehiringofthreeemployeesalongwithassociatedworkstationsandequipment.Inthis,and
manyothercases,industryrepresentativesdescribehowthetaxcredithashelpedthemprevent
layoffs,obtainnewwork,andengageinnewhiringandequipmentpurchasingduringaperiod
witharapidlycontractingregionalandnationaleconomy.
Othercompaniesinthissectorhavereportedsimilarstories.NationalBostonStudiosbegana
relationshipwithSonyPicturesbypreparingthefirstHDVideoDailiesforthefilm"21"whichwas
shotmostlyinMassachusetts.SinceHDDailieswerealeadingedgestepinthedigitalworkflowat
thattime,NationalBostondevelopedanefficientprocessreplicatingthesameoperational
systemsusedforcreatingtraditionalfilmdailies.ThecompanyworkedwithEvertzofOntario
CanadatobuildspecialtyequipmentthatwasinstalledatNationalBoston’sStudiostohandlethe
processingofthesedigitaldailies.TheseHDvideodailieswereproducedovernightandthensent
38
viafiberopticcableusingproprietaryinternetsoftwaretoCulverCitywhereDVD'swerethen
producedforviewingbystudioexecutives.ThetaxcreditencouragedSonytoworkwithNational
Bostontodevelopatechnologicalsystemandworkflowthathadneverbeenusedbefore.In
2008,NationalBostonproducedseveralcommercials,televisionpilotsandmediaprojectsthat
allowedthemtotakeadvantageofthetaxcredits.AstheydidforBrickyard,thecreditshelped
NationalBostonavoidstaffandproductioncutsduringadifficulteconomicperiod.
Post‐productiontechnologyisalsodriveninlargepartbychangesininformationtechnology,and
theCommonwealthhasalongstandingstrengthininformationtechnologyrelatedtothefilmand
televisionindustry.MassachusettsisthehomeofAvidTechnologyInc.,whichisoneoftheglobal
leadersineditinghardwareandsoftwarefortelevisionandfilmproduction.Avidaloneemploys
2,350peopleandgenerated$845Minsalesin2008.However,becauseAvidislistedintheNAICS
codeforPhotographicandPhotocopyingEquipmentManufacturing(333315),itdoesnotappear
indataonfilmandtelevisionemploymentintheCommonwealth.Moreover,becauseitisnot
monetizingtaxcredits,itwouldnotbeincludedinanyanalysisoftherevenueimpactsoftheFTC.
GenArts,aCambridgebaseddeveloperofFXsoftware,recentlyattractedventurecapital
investmentandacquiredaleadingUKbasedFXtechnologydeveloper.Thecombinedpresenceof
AvidTechnologies,smallspecialeffectssoftwaredevelopers,digitalgamingcompaniesand
leadingresearchlabsinartificialintelligenceandemergingmedia(especiallyatMIT)could
representapowerfulsetoffuturesynergies.
Education:Withitsconcentrationofuniversities,Bostonisanimportantcenterforstudents
studyingtheproductionoffilm,televisionandothermedia.TheMassachusettsCollegeofArtand
Design,EmersonCollege,BostonUniversity,FitchburgState,CurryCollegeandBentleyUniversity
allhavefilmandtelevisionprograms,someofwhichareimportantfeederschoolsforLosAngeles
andNewYorktelevisionandfilmcompanies.BostonUniversityalonehasover1,000students
enrolledinCommunicationsandFilmandTelevisionprogramsandin2009graduatedalmost300
studentsfromtheseprograms.Manyotherlocalschoolsalsohavedrama,film,andtelevision
coursesandgeneratemanyyounglocalemployeesseekingjobs.
39
Untilrecently,graduatesoftheseprogramstypicallyfacedthechoiceofleavingMassachusettsor
givinguponacareerinthefilmindustry.Officialsassociatedwiththeseprogramsandother
industryrepresentativesreportthatalumniwhohadleftforLosAngelesandNewYorkhave
recentlyreturnedtoBoston,sinceitisnowpossibleforthemtoworkinthefilmindustryhere.
Moreover,asnotedabove,localproductioncompaniesareemployinganincreasingnumberof
thesestudentsasinternsandprovidingcareeradvancementopportunitiesforMassachusetts’s
collegegraduates.Inadditiontoprovidingalocalworkforcefortheindustry,theseprogramsalso
provideemploymentforthemanyseniormembersofthelocalfilmandtelevisionindustrywho
teachinthem.Industryrepresentativesdescribedtheseeducationalresourcesasuniquestrategic
advantagesforMassachusetts.
Careeropportunitiesforlocalgraduatesseemparticularlypromisinginnon‐fictiontelevision
productionthattendstohavemanyopeningsfornewentrants(e.g.,productionassistants,
assistanteditorsandresearchers).Moreover,thejobstendtolastlongerthanwithfeaturefilms,
becausetheproductioncycleislonger.Therearenumerousexamplesoflocaluniversityprograms
providingbothinternsandnewentrantstolocaltelevisionandpost‐productioncompanies.Ifthis
trendcontinues,itseemspossiblethatthiscouldinturngeneratepositivefeedbackloopsbothby
reducingwageleakagefromlocalfilmandtelevisionspendingwhilebuildingnewcareerpathsfor
Massachusettscreativeworkers.
Equipmentrentalandspecializedservicefirms:Thegeneraltrendinthispartoftheindustryhas
beeninvestmentbylocalfirmstoexpandtheirinventoryofequipmentandexpansionintothe
Commonwealthbyrecognizednationalfirms.Localgripandelectriccompanieshaveexpanded
theirofferings,andseveralnationalfirmshaveopenedMassachusetts’soffices.Therecentmerger
oftwolocalequipmentrentalfirms,RuleandBostonCamera,hascreatedaMassachusettsbased
firmthatpossessesthescaletoservelargestudioproductions.Anationalcateringfirm,HatTrick,
hasopenedanofficeinMassachusetts,fillingasignificantgapinthelocalindustry’scapabilities.In
addition,MediaServices,oneofasmallnumberofnationalpayrollcompaniesthatservethe
motionpictureindustry,acquiredCrewStar,aMassachusetts‐basedpayrollfirm.Thesetrends,
alongwithFigure5suggestthatthereisagrowingcoreoflocalfilmandtelevisionservicefirms
emergingintheCommonwealth.Ifthistrendcontinues,wecouldeventuallyfindthatitreduces
40
leakagefromnon‐wagespendingthatiscurrentlygoingtooutofstatecompanieswithskillsand
equipmentthatarenotavailablelocally.
Soundstage/filmstudioprojects:Soundstagesandfilmstudiosareoftendescribedascritical
lynchpinsintheevolutionofapermanentlocalfilmindustryinMassachusetts.Inadditionto
providinglargenumbersofpermanentsupportingjobs,thesestudiosbecomethehomeforfilm
servicecompaniesandotherimportantaffiliatedbusinesses.Asaresult,therearelikelytobe
significantbenefitsfromclusteringeffectsofhavingcreativepersonnelandtheirsupporting
industriesco‐located.Whileitishardtocalculatethebenefitsofthesekindsofclusteringeffects,
therearemoredirectbenefitsassociatedwiththespecificneedsandeconomicsoftelevisionas
opposedtofeaturefilmproduction.
Whereasastudiofilmmightemploybetween150–200people,theseemployeesworkintensively
overarelativelyshortperiodofseveralweeksormonths.Incontrast,atelevisionseriesmight
employ100peopleandfilm22episodesayear.Atacostofbetween$2Mand$2.5Meach,aTV
seriescancontributesignificantlytolocalemploymentandspending.Becausescriptedtelevision
showsrequiresoundstages,industrymembersarguethatastudiowouldincreasetelevision
productionworkinMassachusetts.Atpresent,evenshowsthataresetinBoston(e.g.,Boston
Legal)haveprimarilybeenfilmedelsewhere.
Threegroupsareactivelyworkingtodevelopsoundstages/filmstudiosinMassachusetts.The
researchteamspokewithtwoofthem.OnegrouphasbeenworkingonacomplexinPlymouth
andinthespringof2009hadalreadyspent$8millioninMassachusettsover17monthsonlocal
architects,engineers,lawyers,andconsultants.Inthespringof2009,thisgroupemployeda
payrollof35.SixoftheseemployeeshavemovedtoMassachusettsfromoutofstateandhave
purchasedorareleasinghomesintheCommonwealth.Theremainingemployeeswerelocalhires.
Twelvecollegestudentswerehiredasinternslastsummer(2008),twoofwhomarenowfull‐time
employees.Thesummerinternprogramwasslatedtobringin20collegestudentsinthesummer
of2009.Anon‐profiteducationalfoundationhasbeenestablishedtoenablestudentstoaccess
work‐studyfunds.AsecondgroupisplanningacomplexclosertoBoston,whichwillcontain
cameraandequipmentrentalcompanies,alab,postproduction,andCGI.
41
Allofthestudioprojectsfacethechallengesofraisinginvestmentcapitalinadifficult
environment.However,ifevenoneofthesestudiosprojectsissuccessful,itcouldattracta
televisionseriestoMassachusettswhichbothprovidesmorestableandlonger‐termemployment
forlocalworkers.
Conclusion
Inthepreceding,wehaveprovidedahighleveloverviewofthecurrentstructureandrecent
growthofthefilmandtelevisionindustryinMassachusetts.Webeganbydiscussingthebroad
trendsinstateemploymentandwagesinthisindustryandfindthatemploymenthasgrown
dramaticallyinrecentyears(particularlyinpostproductionandothermotionpictureandvideo
productionindustries).AneconomicimpactanalysisusingIMPLANfindsanoutputmultiplierof
1.95andanemploymentmultiplierof1.79.Takenatfacevalue,thiscanbeinterpretedtomean
thatanadditionaldollargeneratedbythefilmandtelevisionsectorswillproduceanadditional
$.95ofoutputvalueintheCommonwealthandthatanewjobgeneratedinthefilmandtelevision
sectorsproduces.79additionaljobsintheCommonwealth.
Bycomparingthesedatawithinterviewsandnumerousrecentlypublishedanalysesofthe
regionalfilmindustrytaxcreditprograms,wearguethatthefederaldataandmodeling
approachesusedtocalculatethesemultipliersmaynotfullycapturethisrapidlyevolvingindustry.
Asingularfocusonmultipliersisbothunwarranted(givenlimitationswithexistingdataand
modelingapproaches)andtoonarrowgiventhecomplexitiesofproductionpracticesinahighly
mobile,networkedandproject‐basedindustrylikefilmandtelevisionproduction.
Thisreportexaminesbroadlytheproductionpracticesandrecentgrowthtrendsinthelocalfilm
andtelevisionindustry.Wediscussrecenttrendsandinterconnectionsamongthesubsectorsin
theindustryviasharedlabor,servicesandmaterial.Weuncovernoveltrendsinthestructureof
non‐wagespendingpatternsinthislocalindustryandidentifyacoreclusteroflocalfilmservice
firmsthatareservicingmanyofthelargestudioproductionsthataremakingfilmsin
Massachusetts.Wealsofindthattheseproductionstendtospendmoneyverylocally(with
clustersofvendorsbeinglocatedclosetoshootinglocations).
42
Thereareseveralnextstepsandfactorsthatfuturestudiesmaywishtoconsider.First,itwouldbe
helpfultoincreaseaccesstomoregranulardataonlocalemploymentandnon‐wagespending
patternsacrossthesub‐sectorsdiscussedabove.Thereareseverallargeorganizations(union
locals,castingagencies,payrollservicecompanies,fiscalsponsorsforindependentfilms)that
collectivelycapturealargeproportionoftotalactivityintheindustry.Anannualcensusofthese
organizationswouldbeveryusefulforscholars,analystsandpolicymakersinterestedinthe
growthofthisindustryintheCommonwealth.Inthesamespirit,itwouldalsobeusefulto
increasepublicaccesstogranulardataontheFTCprogramspecifically.Becausethesedataare
confidential,itisimpossibleforexternalresearchersandscholarstodotheirownanalysesofthe
FTCprograminMassachusetts.Increasingaccesstotheseimportantdatawouldbeagreatbenefit
tofutureresearchonthiscomplexindustry.
Appendix1:Methodsandapproachesinstudiesofregional
filmandtelevisionindustriesandincentiveprograms
Asfilmandtelevisionproductionincentiveprogramshavespreadacrossthecountryand
overseas,regionalstudiesoftheseindustrieshavealsoproliferated(Seee.g.,Christophersonet
al.,2006;EconomicsResearchAssociates,2009;ErnstandYoung,2009a,2009b;Luther,2010;
MassachusettsDepartmentofRevenue,2009;McMillen,Parr,&Helming,2008;Miller&
Abdulkadri,2009;Popp&Peach,2008;Weiner,2009a;Weiner,2009b).Ourexaminationofmore
than20reportsonlocalfilmandtelevisionindustriessuggeststhattherearetwobasic
approachesbeingusedintheliterature.Thefirstfocusesonestimatingthedirectandinduced
impactsofstatetaxincentiveprogramsonfuturetaxcollectionswhilethesecondlooksmore
broadlyataggregateindustrytrendsandproductionpractices.
Studiesestimatingthenetimpactofspendingonfilmandtelevisionincentiveprogramsonfuture
statetaxcollectionsvarywidelyintheirmethods,buttypicallyuseoneoftwowidelyavailable
economicmodels(e.g.,REMIandIMPLAN)toestimatetherevenueimpactsofincentiveprograms.
43
Despitethesignificantchallengesofestimatingnetimpactsinamobile,project‐basedindustry,
someparticularlycarefulrecentanalysessuggesttheshorttermnetrevenueimpactsofthese
programsmaynotbepositive(MassachusettsDepartmentofRevenue,2009;Weiner,2009a).At
thesametime,therehavealsobeensomestudiesshowingthatthenetimpactoftheseprograms
maybepositive(ArizonaDepartmentofCommerce,2007;ErnstandYoung,2009a,2009b).
Findingsacrossthesestudiesvarylargelybecauseofdifferencesindata,models,andassumptions,
whichhasgenerateddebatesaboutappropriatemethodsandapproachesforconductingthese
kindsofanalyses(Weiner,2009b).
Thesecondapproachlooksataggregateindustrytrends,variationsinproductionpracticesand
linkagesacrosssub‐sectors,andwageandemploymenttrendsineach.Becauseindustryanalyses
facethesamechallengesobtainingaccurateemploymentdataasstudiesonincentiveprograms,
theytypicallysupplementfederalemploymentdatawithsomecombinationofthefollowing
additionaldatasources:
1. Localfilmofficesthatcollecttheirownindustrydata;
2. Interviewsandsurveysofindustrymembers;
3. Unionsandpayrollcompaniesthattypicallycollectdataonaggregateemploymenttrends;
4. Otherarchivaldatasourcesandpublishedreports
Somestudieshavecombinedtheseapproaches(Christophersonetal.,2006)whileothersfocus
solelyontheevaluationofincentiveprograms(MassachusettsDepartmentofRevenue,2009;
Weiner,2009a;Weiner,2009b).Itisimportanttonotethatthisstudyfocusesonaggregate
industryactivityratherthanonanevaluationoftheMassachusettsFTC.Althoughwehave
suggestedsomeareaswhereourfindingsmayhaveimplicationsforfutureevaluationofsuch
programs,wedidnotsetouttoevaluatetheMassachusettsFilmTaxcreditprogramperse.
Indeed,acarefulanalysisofthisprogramhasbeenrecentlyconductedbytheMassachusetts
DepartmentofRevenue(2009)andthereisnoreasontoduplicatetheirwork(norwoulditbe
possiblegivenconfidentialityrestrictionsassociatedwiththetaxapplicationdatarequiredfor
suchastudy).
44
InthenextsectionwediscusstherecentstudiesontheMassachusettsFTCandseveralrecent
studiesofotherstateincentiveprograms.Weidentifyagenericapproachthatseemstobeused
byanumberofthesestudiesandconcludewithadiscussionofsomefactorsweidentifiedinour
researchonMassachusettsthatmaybeofvalueforfuturestudiesofregionalfilmandtelevision
incentiveprograms.
Regionalfilmandtelevisionproductionincentiveprograms:Anoverviewofrecentfindingsand
approaches
InJuly2009,theMassachusettsDepartmentofRevenuereleasedtheirannualreportonthe
MassachusettsFilmIndustryTaxIncentive(2009).Theirreportusedacompletesetoftaxcredit
applicationsfrom2006‐2009tocalculatetheneteconomicimpactofthetaxincentiveprogramon
economicactivityintheCommonwealth.Theircarefulanalysisfindsthatwhiletheprogramhas
beeneffectiveinincreasingfilm(andtoalesserdegreetelevisionproduction)intheBayState,its
short‐termfiscalimpactsarenegative.Specifically,thereportestimatesthatforeverydollarintax
creditsgeneratedbytheprogram,Massachusettscollectsonly$0.16inrevenue.Thisissimilarto
theresultidentifiedintheir2008reportwhichfoundeachadditionaldollarintaxincentives
generatedonly$0.18innewrevenue.Thesefindingsareconsistentbothwithapriorstudyin
Massachusetts(MassachusettsDepartmentofRevenue,2008)andrecentstudiesofthese
industriesinConnecticut(Weiner,2009a)andArizona(Popp&Peach,2008).
Suchfindingsarenotespeciallysurprisingbecausetaxcreditsareusuallynotdesignedtoresultin
anetexpansionoftaxrevenues,particularlyintheshortterm.Instead,mostlegislaturescreatea
taxcreditasacatalystthatwillhopefullyhelptojumpstartanascentindustryorgroupof
industriesinthestate,givingthemenoughofaboosttoreachavolumeofproductionthatisself‐
sustainingwithoutthegovernmentsubsidyinthefuture.Mostlegislativegoalsarecouchedin
termsofnewemploymentgenerationandexpansionofrelatedindustriesratherthanthe
expansionoftaxrevenues.
TherearethreeprimaryfactorsdrivingthesefindingsinMassachusetts.First,alargeproportionof
creditsissuedbetween2006and2008($150.8millionor90.7%)weregeneratedbyfeaturefilms.
Specifically,71%ofthetotalcreditsweregeneratedbyjust8featurefilmswithbudgetsover$30
45
million.Becausearelativelylargeproportionofwagesontheseproductionsgotoabovetheline
employeeswhoaretypicallynon‐residents,mostofthesewagesareremovedfromthecalculation
ofbenefits.TheMassachusettsDOR(2009)assumesthatnoneofthewagesofemployeesearning
morethan$1million(andonly5%ofnon‐residentsalaries)shouldbeincludedincalculationof
statemultipliereffects.Asaresult,themodelsubtracts$233million(52%)fromthe$451.9
milliontotalfilmproductionspendingthatoccurredinMassachusettsin2008.Whilethisisa
somewhatconservativeassumptiongiventhathighnetworthindividualsmaymakesignificant
purchaseswhilelocatedintheCommonwealthandthatsomeofthesemaybemadeusing
advancesagainstfutureincome,itisunlikelythatthesepurchaseswoulddramaticallyalterthe
netrevenueimpactoftheprogram.
AnotherreductionintheneteconomicbenefitstoMassachusettsiscausedbytheimpactofthe
balancedbudgetrequirement.Becauseofthisrequirement,the2009MADORreportremovesan
additional$60.2million(13%)fromthetotalfilmindustryspendingin2008undertheassumption
thataconcomitantreductioninstatespendingisrequiredtobalancethefilmsubsidy.Itisnotable
thatthisisoneoffewstudiesthataddresstheimplicationofthesetimingissuesintheirmodel.
Finally,DORremoves$12.7millionfromthe2008spendingtoaccountfortheproportionof
productionsthatwouldhavebeenpresentintheCommonwealthabsentthecredit.Asaresult,
thereportremoves$306.7(68%)ofthe$451millionintotalfilmindustryspendingin2008from
thecalculationofnetrevenuesviamultipliereffects.
WhilestudiesonMassachusettsandsomeotherstatessuggestthattheshort‐termrevenue
impactsoftheseprogramsarenegative,othershavefoundpositive(andpotentiallylongterm)
benefitsfromfilmindustrytaxincentiveprograms(ArizonaDepartmentofCommerce,2007;
Christophersonetal.,2006;ErnstandYoung,2009a,2009b).Forexample,arecentreport
(Weiner,2009b)foundashort‐termnetrevenuebenefittotheStateofNewYorkaswellasa
long‐termpositiveeffectoncashflowduetoalagbetweenthereceiptoffilmindustryspending
andtheredemptionofcredits,whichtypicallyoccurmanymonthsafterproduction.Moreover,
althoughitisaproject‐basedindustrylikeothertrades,wagesinfilmandtelevisionproduction
tendtobehigherthanaveragestatewages.AreportintheNewYorkfilmandtelevisionindustry
46
(Christophersonetal.,2006)foundthatbecauseitisrelativelyhighlypaidsector,thisindustry
“hasoneofthehighestemploymentmultipliersamongallindustriesinNewYork”.
Asweexaminethesedivergentfindings,itseemsclearthatthevariationinmethods,data,and
modelsalonecouldeasilyaccountforthevariedconclusions.Italsoraisesquestionsaboutthe
correctapproachforaccuratelyassessingtheeconomicimpactoftheseincentiveprograms.
Therefore,wefinditusefultobrieflydiscusssomeoftheremainingmethodologicalchallengesin
doingso.
Whilespecificmethodsandapproachesvaryfromstudytostudy,agenericmethodformeasuring
therevenueimpactofafilmindustrytaxcreditsseemstorequirethefollowingsteps:
1. Identifyinducedfilmactivity(e.g.,filmandTVproductionthatwouldnothavehappened
absentofthecredit);
2. Calculatelocaldirectspendingfrominducedactivity(e.g.,totallocalwagesandnon‐wage
spendingfromthisnewproduction);
3. Calculatemultipliereffectsofdirectspending(e.g.,inducedeconomicactivity,jobs
created,etc.)usingIMPLANorREMI;
4. Addindividualandcorporatetaxreceiptstostatefrommultipliereffectsonwagesand
non‐wagespending;
5. Subtractdirectcoststostateintaxcredits;
6. Subtractnegativemultiplierofassociatedreductionsingovernmentspending(under
balancedbudgetassumptionsassumingthatreasonableassumptionscanbemadeabout
howthesewouldinfactbeallocated).
Whilesomeofthecalculationsinthelistabovearerelativelystraightforward(suchasestimating
thecoststothestateinlosttaxes),othersaremuchlessobvious.Inparticular,thecalculationof
multipliersforwagesandnon‐wagespendingreliesontheuseofcomplexeconomicmodelsthat
maynotbewellsuitedtoflexible,networkedindustrieslikemotionmediaproduction.
47
Evaluationsofincentiveprogramsandothereconomicimpactsstudiestypicallyuseoneoftwo
existingmodels(IMPLANorREMI)toestimatethenetimpactsofchangesinemploymentand
spendinginspecificeconomicsectors.Becausethesetwomodelsusedifferentindustry
categorizationschemesandmethodstocalculatemultipliereffects,someofthevariationamong
thesestudiesislikelyexplainedbydifferencesintheinternaldynamicsofthesemodels.However,
ourreviewsuggeststhatdifferencesindatasources,approachestothecalculationofnetbenefits
andleakage,lagsbetweenindustryspendingandcreditmonetization,adjustmentsforbalanced
budgetrequirementsandtheinclusionoftourismbenefitslikelymakeamuchlargercontribution
tothesedifferences.
Variationsinmodels:Adiscussionandevaluation
Aswehavesuggestedabove,existingfederalemploymentdatamaycontainsignificanterrorsand
omissionsincreativeindustrieslikefilmandtelevisionproduction.Therefore,somestudiesthat
relyonQCEWdataforinputsintoeconometricmodelshavefounditnecessarytomakeestimates
abouthowmanyemployeesfromrelatedsectors(likeindependentartists)oughttobeincludedin
thefilmandtelevisionindustry(Christophersonetal.,2006).Otherstudiesgetaroundthis
problembyusinginputsobtainedfromactualtaxapplications(MassachusettsDepartmentof
Revenue,2009;McMillenetal.,2008)orbycombininginterviewsandarchivaldatacollectionwith
econometricmodeling(Christophersonetal.,2006).Theseapproachesseemlikelytogenerate
moreaccurateestimatesthanthemereuseofQCEWdata,whichmayover(under)estimate
actualwagesandemployment.Certainly,whenthesedataareusedalonetheirpotential
limitationsshouldbeidentified(astheyareintheanalysisabove).
Assumingthatdatainputsareaccurate,theremaybesomeaspectsoffilmandtelevision
productionthatviolateinternalmodelparametersandassumptions(liketherelationshipbetween
wagesandconsumerspending,laborflows,etc.).Forexample,locationfeesrepresentalarge
proportionoftotalspending(particularlyformajormotionpictures).TheMassachusetts
DepartmentofRevenueestimatedthatbetween2006and2008,netnewspendingonthese
paymentswas$51million(or17%ofthetotalspendingduringthattime).Becausethesefees
sometimesarepaiddirectlytoindividualsandorganizations,theymaybespentdifferentlythan
thetraditionalwagesandotherearningsuponwhichconsumer‐spendingmodelsarebased.
48
However,someoftheselocationfeesalsorepresentdirectpaymentstotowns,municipalitiesand
otherpublicentitiessotheycannotbesimplyenteredinonegenericNAICScategory.Thiskindof
idiosyncraticspendingbylocalfilmproductionsmaynotbewellcapturedinexistingeconometric
models.Althoughlocationspendingmayvarydramaticallyacrossproductionsduetodifferent
creativeandlogisticalconcerns,statescouldconductmoredetailedanalysesoftherecipientsof
specificlocationfeestoproportionallyallocatethepaymentsacrossrelevantNAICScodes.
Wagespendingmayalsoco‐varyeitherwithunpredictableexternalfactorsorwithothermodel
parameters(likespendingonlocalwages).Forexample,in2008,thethreatofasummerSAG
strikemeantthatseveralproductionswerefilminginMAatthesametime.Thisinturnledtoa
shortageoflocalcrewandrequiredimportinglaborfromoutofstate.Thisinturnledtoincreased
non‐wagespendingonfoodandlodging.Inthiscase,theproportionofwagesgoingtoMA
residentsandnon‐wagespendingforfoodandlodgingbothco‐variedwiththeavailabilityoflocal
crew,whichwasindirectlyrelatedtoschedulingissuescausedbyanimpendingSAGstrike.Thisis
butoneexampleofcomplexdependenciesamongvariablesthatmaygeneratemodeling
problemsinthisindustry.
Non‐wagespendingpatternsarealsohighlyvariableandoftenincludesignificantlocal
components.Forexample,inadditiontotheraingearexamplenotedinthetextabove,one
industryrepresentativereportedthatatelevisioncommercialmadein2008requiredthepurchase
of$1,000ofbodybagsforascene.Therearenumerousotherexamplesofsuchidiosyncratic
spendingpatterns.Asnotedinthetext,examiningvendorlistsof10filmsinMAin2008identifies
over800individualvendors,manyofwhichareclusteredtightlyaroundshootinglocations.Asa
result,standardinput/outputmodelsmaynotaccuratelyaccountfortheselinkagestothelocal
economy.Studiesusingdatafromtaxapplications(e.g.,MassachusettsDepartmentofRevenue,
2009)havebeenabletocircumventthesemodelingimperfectionsbyallocatingactualproject
spendingtotheappropriateNAICScodes.
49
Basedonourreviewandthediscussionabove,wesuggestthatsomestudiesofregionalfilmand
televisionindustriesmaytovaryingextents:
Incorrectlyestimatetheamountanddistributionofspendingthatislocatedinnon‐film
industryNAICScodes;
Overlookimportantdifferencesbetweenproductiontypes(e.g.,assumewageandnon‐
wagespendingisthesameforallproductions);
Incorrectlyestimatetheproportionoflocal(asopposedtooutofstate)spendingonwages
andnon‐wageexpenses;
Underestimateemploymentoffreelancelaborduetothewidespreaduseofpayroll
servicesandothercomplexlaborarrangements;
Underestimatenon‐wagespendinginserviceindustrieslikelodging,transportation,audio
recording,etc.;
Underestimatefuturerevenuefromresidualsandroyaltiessourcedtothestateinwhich
films,televisionprogramsandcommercialsaremade;
Overlookindependentfilmproductionandhowthissectorisrelatedtocommercial
productions;
Underestimatereductionsinstateunemploymentandhealthcarecostsduetoincreased
employmentamongtradespeople;
Notaddresshiddencostsoffilmproductioncausedbytheincreaseduseofpublicservices,
etc.
Itisworthnotingagainthatseveralrecentreportsandpapersdoaparticularlycarefuljobin
addressingmanyofthesecomplexissues(Christoperhson&Rightor,2009;Christophersonetal.,
2006;MassachusettsDepartmentofRevenue,2009;McMillenetal.,2008;Weiner,2009b)and
ourobservationsaboveareintendedasasummaryofourbroadreviewoftheliterature.
Nevertheless,thereremainsomequestionsandfactorsthatcouldimpactthefutureevaluationof
theMassachusettsFTCandsimilarprograms.Inthefollowing,wediscusssomeofthesefactors
usingillustrationsfromourresearchonMassachusettstoidentifyareastoconsiderinfuture
research.
50
Secondarymarketforthetaxcredits
Theoperationofsecondarymarketsforfilmindustrytaxcreditshasreceivedalmostnoattention
frompolicyanalystsoracademics.However,thismarketlikelygeneratessomeeconomicbenefits
intheformofasmallamountofincreasedtaxcollectionsandperhapsbyinducedactivityfrom
theuseofthe$11.6millioninvaluethatiscapturedbyMassachusettscompaniespurchasingthe
credits.
AccordingtotheMassachusettsDORreport(2009),asofJune30,2009$148.9million(89%)of
the$166.3millionintaxcreditsissuedsince2006havebeensoldtothirdparties.Whiletax
receiptsfromsaleofthecreditswere$140,000overthethree‐yearlifeoftheprogram,theremay
havebeenadditionalbenefitsgeneratedbytheuseofthecreditsbythelocalcompaniesthat
purchasedthem.TheMADOR2009reportstatesthattheFTCsareprimarilybeingpurchasedby
corporateentities(ratherthanbyhighnetworthindividuals).Ofthe$148.9millionofcreditsthat
weresold,only3%wenttoindividualswhile$148.1millionwenttoinsurancecompanies,financial
institutions,andothercorporations.Whileitisunclearhowthesecorporationshaveusedthe
credits,itseemslikelythatsomeproportionofthebenefitswouldgenerateneweconomic
activity,ratherthanwindfallsforshareholders,forexample.Calculatingthisbenefitismademore
complexbytheoperationofbrokerswhothemselvescapture4%ofthebenefitsfromthesaleof
credits.Absentdirectdataonthismarket(whichistreatedasconfidentialbytheMassachusetts
stateagencies),itisimpossibletoassessthepotentialeconomicbenefitsgeneratedfromthesale
ofthesecreditstoMassachusettscompanies.
Whilethecalculationofdirectincreasesintaxrevenuesfromsaleofthecreditsseems
straightforward,thecalculationofindirectimpactsofincreasedactivityiscertainlymorecomplex
anddependsonhowMassachusettscompaniesareusingthebenefitsfromthetaxcredits.Future
researchshouldinvestigatehowfilmindustrytaxcreditsareusedbythecorporateentitiesthat
purchasethemandwhether(andhowmuch)thisgeneratesneweconomicactivityforthe
Commonwealth.
51
Marketingandtourismbenefits
TheMassachusettsDepartmentofRevenuestudy(2009)recognizesthatundercertainconditions,
filmsproducedinMassachusettsmayincreasetourismbutpointsoutthatmodelingsuchimpacts
isbothdifficultandoutsidethescopeoftheirstudy.Somestudieshaveincludedtourismbenefits
intheirmodel(ErnstandYoung,2009a),thoughwithoutsufficientdetailtoevaluatethereliability
oftheestimatesofnewtourismspending.Otherstudiesrecognizethatthesebenefitsmaybe
significant(Milleretal.,2009)andsomealso(McMillenetal.,2008)provideanecdotaldataand
reportsofsmallsurveystosupporttheseideas.Researchondestinationmarketingandfilm
inducedtourism(Baker&Cameron,2008;Beeton,2005;Hudson&Ritchie,2006;Morgan&
Pritchard,2005;Woodside,Spurr,March,&Clark,2002)aswellaspressreportsonfilminduced
tourisminMassachusetts(L’Ecuyer,2009;Shanahan,2009)alsosuggestthatthesebenefitsmay
beimportantinthelongrunevaluationofbenefitstothelocaleconomyassociatedwithincrease
featurefilmproduction.Ourexaminationofthecurrentevidencesuggeststhatthesebenefitsmay
indeedbelarge,butwealsorecognizethattheyarealsohardtomeasureaccuratelyandlikely
outsidethescopeofmoststudiesonstateincentiveprograms.
Inawidelycitedarticle,Riley,BakerandDoren(1998)concludethatforfilmstohaveapositive
impactontourismatspecificlocations,theymustcontain“strongiconicidentificationwitha
particularlocation.”Becausethesestrongiconicidentificationsarenotpartofeveryfilmmadein
Massachusetts,theMassachusettsDepartmentofRevenue(2009)concludesthatitisanopen
questionwhetherfilmtourismwillbearealbenefitforMassachusetts.Whilethestudyrightly
pointsoutthatsomestudiesmayhaveimproperlyestimatedthemagnitudeofthesebenefits
(e.g.,ErnstandYoung,2009a),recentdestinationmarketingresearchalsosuggeststhatfilmand
televisionproductioncouldhaveasignificantpositiveimpactonfuturetourism(Hudsonetal.,
2006;Beeton,2005;Woodside,etal.,2002).
Thereareatleasttwokindsoftourismandmarketingbenefitsthatcouldbeconsideredinfuture
studiesoftheeconomicimpactoflocalfilmandtelevisionindustries.First,sincemoststates
engageinsomemarketingactivities(viaboardsoftourism,officesofeconomicdevelopmentand
officialvisits),itseemsreasonabletotreatappearancesinfilmsaspartoftheoverallstate
marketingeffort.IfwetreatMassachusettsasabrandthatiscompetingforattentionintheminds
52
ofpotentialtourists,merelyincreasingbrandawarenessamongthesepotentialvisitorsmayhave
value.Indeed,somelocationshavetreatedfilmappearancesjustthisway.TheNewZealand
TourismBoardconcludedthatthevalueofexposuregeneratedbythefirstLordoftheRingsfilm
alonewasUS$41million(NewZealandInstituteofEconomicResearch,2002).
Second,sincebrandawarenesshasbeendirectlylinkedtoconsumerpurchasingdecisions,
marketingscholarsarguethatsimilarprocesseslikelyaffectconsumertraveldecisions(Hudson&
Ritchie,2006).Theirreviewofrecentfilmindustrytourismresearch(Hudson&Ritchie,2006:398)
demonstrateslargetourismbenefitsacrossawiderangeoffilmsandlocations.InBoston,the
CheersBarreceived$7millioninannualunpaidpromotionaladvertisingasaresultofits
appearanceinthelongrunningtelevisionshowofthesamename.
However,asHudsonandRitchie(2006:388)pointout,thesuccessoffilmindustrytourism
dependsonmultiplefactorsincluding“destinationmarketingactivities,destinationattributes,
film‐specificfactors,filmcommissionandgovernmentefforts,andlocationfeasibility.”Among
these,destinationmarketingactivitiesseemparticularlyimportantaslocalfilmofficesand
tourismboardscanactivelymanagethem.Inasurveyof140filmindustrydestinationmarketing
organizations(e.g.,tourismboards,localfilmoffices,etc.),HudsonandRitchie(2006)foundthat
60%reportedincreasesintourismthatwereattributedtotheirmarketingefforts.Themost
importantbenefitsincludeincreasedbrandawareness,directeconomicbenefits,andincreased
tourism.Mostimportantly,thestudyfoundthatthemostsuccessfuldestinationmarketing
organizationsengagedinpromotionbothduringpre‐production(promotingspecificlocations,
offeringtours,appointingapromotionsspecialist,etc.)andafterreleaseofafilm(ensuringthat
locationsarementionedinmediacoverage,usingstarstopromotelocations,creatinglocation
maps,etc.).
Basedonourreviewofrecentresearchondestinationmarketing,weconcludethatthiscouldbea
significantsourceofunmeasuredeconomicimpactfortheCommonwealth.Interviewswithstudio
executivesandproducerssuggestthatthestatealreadyhasmanyofthepositive,locationspecific
factorsthatareidentifiedbyHudsonandRitchie(2006)asincreasingtourism.Forexample,local
pressreportssuggestthatthepopularityofSandraBullock’smovie“TheProposal”generated
53
increasedtourisminRockport,despitethefactthatthetownactuallyposedasaseasidetownin
Alaskainthemovie(L’Ecuyer,2009;Shanahan,2009).Asahistoriccityonthewaterfront,Boston
hasmanyiconiclocationsandscenesthathavebeen(andwillcontinuetobe)featuredin
productions.Sincethesefactorsareoutsidethecontroloflocaldestinationmarketing
organizations,theyrepresentanimportantresourcefortheCommonwealththatcanbemarketed
bysuchorganizations.Futurestudiescouldalsoseektoquantifytheeconomicimpactoffilm
tourismontheCommonwealth.TheCommonwealth’sOfficeofTravelandTourismcouldbea
veryusefulpartnerinthisresearch.
Incometaxfromresidualsandthegrowthofalocalcreativetalentbase:Likemostcreative
industries,thefilmandtelevisionindustryischaracterizedbyhighlyskeweddistributionsinthe
popularityofitsproducts.Whilemostmoviesaremoderatelypopular,asmallnumberofmovies
areextremelypopularandgeneratesignificantrevenuestreamsfromDVDsalesandrentals,and
internationalandtelevisionexhibition.Theserevenuesareinturnsharedwithabove‐the‐lineand
othercreativetalentintheformofresidualsandnet‐orgross‐profitsharingcontracts(Weinstein,
1998).IfresidualandprofitsharingincomefromproductionsmadeinMassachusettsaresourced
asMassachusettsstateincome,thiscouldbeasignificantsourceoffuturetaxrevenueforthe
Commonwealth.
Principalactorsincommercials,televisionprogramsandfilmstypicallyreceiveresidualpayments
forsecondaryusesofproductionsinwhichtheyappear.Forexample,whenatelevisionprogram
hasrepeatairingsorgoesintosyndication,theprincipalactorsinitreceiveresidualpaymentsthat
arecollectedanddistributedbytheScreenActorsGuild.Whilethespecificpaymentsreceivedby
agivenactorforagivenusedependsonmanycontractualfactors,takenasawhole,residual
paymentsrepresentasignificantsourceofincomeforactorsandotherperformers.Accordingto
theScreenActorsGuild(2009),totalresidualpaymentsin2007wereover$1.1billionand
exhibiteda10.3%compoundannualgrowthratebetween2001and2007.
Inadditiontofutureincometaxrevenuefromresidualpaymentsmadetoactorsworkingin
Massachusetts,certainprincipalactorsandotherabovethelinetalentalsoreceiveparticipation
deals(e.g.,aproportionoffutureprofits)forproductionsmadeinMassachusetts.
54
Becauseprofitsharingarrangementscantakemanyforms(Weinstein,1998),itisdifficultto
determinehowsignificanttheserevenuescouldbeforthelocaleconomy.However,giventhatthe
fourhighestgrossingmoviesmadeinMassachusettsbetween2006and2008hadcombined
worldwidegrossrevenuesofover$755million7,arelativelysmallshareofincometaxreceipts
fromtheserevenuescouldrepresentasignificantsourceoffuturestaterevenue.Accordingtothe
MADOR’s2009reportthereissomeambiguityaboutwhetherincomefromresidualsandprofit
sharingcontractsshouldbesourcedasMassachusettsincome.
AsMassachusettstaxesnonresidentsontheirincomefromanytradeorbusinessconducted
withinthestateanditisclearthattheresidualsandprofit‐sharesariseoutoftheactivitiesofthe
talentinthestate,itwouldseemthatMassachusettscouldimposeitspersonalincometaxon
theseearnings.Therearesimilarrulesforpensionpaymentsmadetoretirednonresidentsthat
earnedtheirpensionswhileworkinginMassachusetts.Ifthestateisnotcurrentlycollectingtax
receiptsfromthesewages,thiscouldrepresentasignificantsourceofunclaimedbenefitsforthe
Commonwealtheventhoughthecollectionofthesetaxeswouldbequitedifficultwithoutsome
kindofwithholdingrequirementontheresidualsearnedbythesenonresidents.
Inadditiontopotentialincometaxcollectionsfromresidualsandprofitsharingcontractsfor
principalactors,theremaybeadditionalbenefitsassociatedwiththedevelopmentoflocal
creativetalent.Threeofthemostsuccessfulandcriticallyacclaimedfilmsthathavebeenmadein
Massachusettshavebeenbasedonbookswrittenbylocalauthors(e.g.,TheDeparted,GoneBaby
GoneandMysticRiver).Whileitisimpossibletolinkthesuccessoftheseauthorswiththefilm
industrytaxcredit,totheextentthatthecreditfacilitatesthegrowthofsimilarlocaltalent,this
couldhavedirectpositivefiscalimpactsviaincreasedincometaxcollections(e.g.,fromthesaleof
bookrights,scriptsandotherintellectualproperty)thatwouldnotbeoffsetbyassociated
productiontaxcredits.
Theprimarybusinessmodelinfilmproductionreliesontheabilitytorecoverthecostsof
numerousmarginallysuccessfulproductionsagainstlargeprofitsonarelativelysmallnumberof
7 This figure was based on data from www.IMDB.com on the worldwide gross revenues of four
films (The Proposal, Mall Cop, 21 and Game Plan)
55
highlysuccessfulproductions.Providingtaxcreditstoincentivizeproductionswithout
participatinginbackendprofitsmeanstheCommonwealthissharingintherisksofproduction
withoutparticipatinginthelargeprofitsofthesmallnumberoffilmsthatdoextremelywell.
Massachusettshasalreadymade,andisintheprocessofmaking,changestoitstaxingstatutes
andregulationstomakeclearthatearningsgeneratedfromfilmproductionactivitiesremain
subjecttoMassachusettstaxation,regardlessofwhenpaidorhowcalculated.Inaworkingdraft
oftaxregulationsissuedonJanuary11,2010,theMADORhastakenpreciselythisposition(830
CMR62B2.3)forpersonalincometaxpurposes,treatingtheincomeearnedbytalentarisingfrom
filmproductionactivitiesinMAassubjecttowithholdingtaxestotheextentpayabletoout‐of‐
stateindividualsortheirsurrogates.
BenefitsfromchangestotheMassachusettscorporatetaxlaws:Massachusettshasalsomade
significantchangestoitscorporateincometaxlawsthatsimilarlywillrequirecompaniestopay
taxinMAonincomederivedfromactivitieshere.In2008,Massachusettschangeditscorporate
taxlawstorequireaffiliatedcompaniesconductingaunitarybusinessinMassachusettsto
calculatetheirnetincomeandtheapportionmentfactorsusedtoallocatethatincometo
Massachusettsonacombined,ratherthanseparatecompany,basis.Inthefollowing,webriefly
summarizethischangeandexplainwhyitcouldhaveasignificantpositiveimpactonfuturetax
collectionsfortheCommonwealth.
Priorto2008,anaffiliatedgroupofcorporationsdetermineditsMAtaxliabilityusingseparate
companyfactors.Thiswasaccomplishedbyallocatingthenetincomeofeachcorporateaffiliate
toMAbasedonthepayroll,salesandpropertyofthatcompanythatarelocatedwithinand
withoutMA.TheincomethusapportionedtoMAforeachaffiliatewasthenaggregatedto
determinethetotalamountofnetincomesubjecttotheMAcorporatetax.
EffectiveonJanuary1,2009,corporationsdoingbusinessinMAwererequiredtodeterminetheir
MAcorporatetaxliabilityinanentirelydifferentmanner.Firsttheywillaggregateallofthenet
incomeofeachoftheiraffiliates.Thisnetincomewillthenbemultipliedbytheproportionof
thoseaffiliates’aggregatesales,payrollandpropertylocatedwithinandwithoutMA.(Seee.g.,
Koppel,2008foradescriptionofthedifferencebetweenthesetworules).
56
Thesetwomethodscanresultinmarkedlydifferenttaxliabilitiesforunitarybusinessesoperating
inMA.Althoughgenericallyonemethoddoesnotconsistentlyresultingreaternetincomebeing
taxedinMAthantheother,thereisstrongreasontobelievethat,inthecaseofthefilm
productionindustry,thenewmannerofcalculatingwhatistaxableinMAisverylikelytoincrease
MAtaxreceiptsmaterially.
Forexample,ithasbeencommontoestablishaseparatecompanyforeachproduction,usuallyin
theformofalimitedliabilitycompany(LLC)thatfacilitates,amongotherthings,thecollectionof
thecostdatanecessarytodocumentthecalculationofMAtaxcreditsclaimed.OftentheLLCis
dissolvedaftertheproductioniscompletedbutbeforerevenueisgenerated,sothatithasbeen
commonfortheproductioncompanytohavenobusinessactivitiesinMAintheyearinwhich
profitsbegintoflow.IthasalsobeencommonintheindustrytochargeMAaffiliatesfortheuse
ofanyintangibleproperty,whichareoftenheldbyout‐of‐stateaffiliates.Thedeductionclaimed
fortheuseofthoseintangiblesdecreasesMAnetincomeand,asaresult,reducesMA’stax
revenues.
Boththeuseofout‐of‐stateintellectualpropertycompaniesandthemanipulationofseparate
companyapportionmentfactorshavebeenlargelyeliminatedbytheJanuary1,2009lawchange.
AlthoughproductioncompaniesmaycontinuetoattempttoreducetheircontactswithMAinthe
yearsinwhichtheproductionisgeneratingrevenues,thisismoredifficulttodowhentheentire
affiliatedgroupofcorporationsisanalyzedasacohesivewhole,asisnowrequired.Further,to
theextentthatMAissuccessfulinattractingamorevibrantfilmproductionindustryinMA,a
greaterproportionofproperty,sales,andpayrollwillberesidentherewhichwillincreasethe
apportionmentofincometoMAinyearsinwhichprofitsarebeinggenerated.
Increasedhealthcoverageandotherbenefits:Filmproductionfollowsanatypicalworkschedule.
Becauseofthehighfixedcostsofassemblingtalent,crew,locations,andequipment,producers
seektomaximizethereturnontheirhighfixedcostsbyworkinglonghours.Crewsonproductions
intheCommonwealthalmostinvariablywork50hoursperweekatminimumandroutinelyas
muchas70.
57
Anaverageof60hourswouldbeaconservativeestimateoftotalhoursworkedinaweek.This
represents50percentmorethanapersonworkinganine‐to‐fivejob.Amotionpictureworker
whoputsina60‐hourweekonaveragewillclockasmanyannualhoursin32weeksasanine‐to‐
fiverworkingtheentireyearandtakingthestandardpaidholidaysandtwoweeksofvacation.
Partlyinrecognitionoftheseunusualworkschedules,theindustrylabororganizationshave
developeduniqueapproachesforprovidinghealthcoverageandotherbenefits.
MotionpictureproducersundercontractwithIATSEmakeabenefitscontributionrangingfrom
$65to$85perdayforeachLocal481representedemployee,withstudiofeaturespayingatthe
higherendofthescale.Approximately70percentofthiscontributiongoesforhealthcareandthe
remainderforretirement.Local481memberscanusethehealthbenefitdollarstheyaccrueby
choosingbetweenseveralinsuranceplans.Local481membersareeligibleforindividualhealth
coveragefortheentireyeariftheyworkapproximately75daysonstudiofeaturesorprojectsthat
makecomparablebenefitscontributions.Severalofthefeaturesthatwereshotinthe
Commonwealthlastyear,includingEdgeofDarkness,Ashecliffe(nowbeingreleasedasShutter
Island),andSurrogates,hadshootingschedulesof70+days,notincludingpre‐production,which
oftenaddsweeksormonthsofadditionalworkformembersintheconstructionandotherpre‐
productioncrafts.
SAGmembersqualifyforindividualhealthcoverageiftheyearn$14,000duringtheprioryear,and
forAFTRAmembers,thisearningsthresholdis$10,000.ItisdifficultforSAGextras,whoearna
lowerwagethanactorswithspeakingparts,toqualifyforhealthbenefitsinthisway.SotheGuild
alsoallowsmemberstoqualifyiftheyclock74daysoftotalworkduringtheprioryear.The
thresholdforeligibilityforfamilyhealthcoverageis$29,000intheprioryearforSAGmembers
and$30,000forAFTRAmembers.
Combined,thereareapproximately2500membersofIATSE/SAGintheCommonwealth.Ifeven
10percentofthesememberswerecoveredbyindustryplansandthusdidnotavailthemselvesof
58
theCommonwealthCareplan,thiswouldrepresentsavingsof$1milliontoCommonwealth.8This
calculationdoesnoteventakeintoaccountthepotentiallygreaterimpactofIATSE/SAGmembers’
familymembersbeingcoveredunderfamilyplans.
Benchmarkinglong‐termgrowthtrends:Itiscriticaltocomplementashort‐termfiscalanalysis
withalonger‐termperspective.OneveteranoftheMassachusettsfilmindustrynoted,“Bostonis
likeVancouverwas20yearsago.”Anexaminationofthehistoricaldevelopmentofthefilm
productionsectorinandaroundVancouvercouldidentifykeymilestonesthatregionpassedinthe
processofbuildingasustainableindustry.TrackingtheMassachusettsproductionsectoragainst
milestonesofthissortcouldchartthelonger‐termdevelopmentoftheCommonwealth’sindustry.
ExaminationoftheVancouvercasecouldalsobeusefulforidentifyingeconomicspilloversand
longtermbenefitsthatmaynotbecapturedincurrentevaluations.
8 A Massachusetts state government study estimated that the annual cost per person covered by
Commonwealth Care in 2009 would be $4,000 (Dembner, 2008).
59
Appendix2:
AbriefsummaryoftheMassachusettsfilmindustrytaxcredit
TheMassachusettsFilmTaxCreditprogramoffersatransferrableandrefundabletaxcreditequal
to25%ofthetotalqualifiedMassachusettswageandnon‐wageproductionexpensesforfilms,
andcertaintelevisionanddigitalmediaproductionswithbudgetslargerthan$50,000.Inaddition
totheminimumspendingrequirement,productionsmustmeetoneoftwoadditionalcriteria:At
least50%oftheprincipalshootingdaystakeplaceinMassachusettsormorethanhalfofthetotal
productionbudgetisspentinMassachusetts.Filmmakersmaychoosetoreceivethecreditasa
rebate,equalto90%ofthefacevalue(guaranteedandrebatedbythestate).Alternately,the
creditmaybetransferredorsoldatthecurrentmarketrate.Certainexpensesforcastandcrew
fromoutofthestatequalify.Thereisnostatewide,talentorproductioncap.Additionally,
filmmakersmaybeeligiblefora100%salestaxexemptiononanyproductionrelateditems
purchasedinthestate.Inaddition,certainexpenseslikeproductioninsurance,workers
compensationandcompletionbondarenotqualifiedexpenses.
ProgramDetails
Onlythefirst27episodesofaTVserieswillqualifyperyearandpre‐production,production,and
post‐productionexpensesqualifyaslongastheyaredirectlyincurredintheproductionofthefilm
ortelevisionprogram.Qualifiedexpensesincludepayroll(e.g.,salary,wagesorother
compensationincludingallfringebenefits)butnotinsuranceorcompletionbonds.Costs
associatedwithmarketingoradvertisingapicture,thetransferofthetaxcreditsoramountspaid
asprofitparticipationalsodonotqualify.
Theincentiveiscomprisedoftwocomponents:Apayrollcreditandaproductioncredit.The
payrollcreditisequalto25%ofthetotalpayrollthatissourcedtoproductionactivitiesconducted
inMassachusettsonproductionswithcostsexceed$50,000forataxableyear.Bothsalariespaid
toresidentsandnon‐residentsworkinginMassachusettsqualifyforthepayrollcredit.
Theproductioncreditisequalto25%ofallMassachusettsproductionexpenses(notincludingthe
payrollexpensesincludedinthelaborcredit)forproductionsthatmeetthefollowingcriteria:
60
TotalproductioncostsincurredinMassachusettsexceed$50,000forthetaxableyear,andeither
theMassachusettsproductionexpensesaremorethan50%ofthetotalbudgetedproduction
costs,oratleast50%ofthetotalprincipalphotographydaystakeplaceinMassachusetts.For
purposesoftheproductioncredit,theentireamountofeachsalarythatisequaltoorgreaterthan
$1,000,000maybeusedtocalculatetheproductioncredit(iftheentiresalarywasnotincludedin
thepayrollcredit).
Thecreditscanbecarriedforwardfor5years,butoncethecreditshavebeentransferredtheyare
nolongerrefundable.Inaddition,apoint‐of‐purchasesalestaxexemptionisavailablefor
qualifiedexpenses.Anapplicationisavailableatmafilm.organdmustbefiledinadvanceforthis
exemption.
61
REFERENCESArizonaDepartmentofCommerce.2007.MotionPictureProductionTaxIncentivesProgram:ArizonaDepartmentofCommerce.Baker,M.J.&Cameron,E.2008.Criticalsuccessfactorsindestinationmarketing.TourismandHospitalityResearch,8(2):79–97.Beeton,S.2005.Film‐InducedTourism.Clevedon,UK:ChannelViewPublications.Borgatti,S.P.,Everett,M.G.,&Freeman,L.C.1996.UCINET5:Softwareforsocialnetworkanalysis.Natick,MA:AnalyticTechnologies.BureauofLaborStatistics,NewEnglandInformationOffice.2009.NonfarmemploymentintheNewEnglandstates:March2009.http://www.bls.gov/ro1/neempa.htm.AccessedAugust7,2009.
Christoperhson,S.&Rightor,N.2009.Thecreativeeconomyas"BigBusiness":Evaluatingstatestrategiestolurefilmmakers.JournalofPlanningEducationandResearch,December,2009.Christopherson,S.M.,Figueroa,M.C.,Gray,L.S.,Parrott,J.,Richardson,D.,&Rightor,N.2006.NewYork'sbigpicture:AssessingNewYork'spositioninfilm,televisionandcommercialproduction.NewYork,NY:CornellUniversity.
Dembner,Alice.2008).Subsidizedcareplan'scosttodouble:Enrollmentisoutstrippingstate'sestimate.BostonGlobe.February3,2008
EconomicsResearchAssociates.2009.LouisianaMotionPicture,SoundRecordingandDigitalMediaIndustries.Chicago,IL:EconomicsResearchAssociates.ErnstandYoung.2009a.EconomicandFiscalImpactsoftheNewMexicoFilmProductionTaxCredit:ErnstandYoung.ErnstandYoung.2009b.EstimatedImpactsoftheNewYorkStateFilmCredit.NewYork,NY:ErnstandYoung.Gregg,K.2008.Hollywoodishere,butispricetoohighforstate?,ProvidenceJournal.Providence,RI.Hudson,S.&Ritchie,J.R.B.2006.PromotingDestinationviaFilmTourism:AnEmpiricalIdentificationofSupportingMarketingInitiatives.JournalofTravelResearch,44:387‐396.Irons,M.2009.FranklinParkZoogoestothemovies,BostonGlobe.Boston.Koppel,M.2008.TaxClinic:PracticalAdviceonCurrentIssues:AmericanInstituteforCertifiedPublicAccountants.
62
Laubacher,R.2006.LensontheBayState:MotionpictureproductioninMassachusetts:AllianceforIndependentMotionMedia.
L’Ecuyer,Jonathan.2009.BullocknominationspursinterestinRockport.RockportRamblings.GloucesterTimes,December19,2009.
Luther,W.2010.MovieProductionIncentives:BlockbusterSupportforLacklusterPolicy.Washington,DC:TaxFoundation.MassachusettsDepartmentofRevenue.2008.LettertoRepD'Amico:MassachusettsDepartmentofRevenue.MassachusettsDepartmentofRevenue.2009.AReportontheMassachusettsFilmIndustryTaxIncentives:MassachusettsDepartmentofRevenue.McMillen,S.,Parr,K.,&Helming,T.2008.TheEconomicandFiscalImpactsofConnecticut’sFilmTaxCredit:DepartmentofEconomicandCommunityDevelopment.Miller,S.R.&Abdulkadri,A.2009.TheEconomicImpactofMichigan'sMotionPictureProductionIndustryandtheMichiganMotionPictureProductionCredit:CenterforEconomicAnalysis.Mohl,B.2008.Subsidizingthestars.Commonwealth(Spring):37‐46.Morgan,N.J.&Pritchard,A.2005.PromotingNicheTourismDestinationBrands:CaseStudiesofNewZealandandWales.JournalofPromotionManagement,12(1).MotionPictureAssociationofAmerica.2009.TheEconomicImpactoftheMotionPicture&TelevisionIndustryontheUnitedStates.Washington,DC:MotionPictureAssociationofAmerica,Inc.NewZealandInstituteforEconomicResearch.2002.ScopingthelastingeffectsoftheLordoftheRings:ReporttotheNewZealandFilmCommission.Wellington:NewZealandInstituteforEconomicResearch.Popp,A.V.&Peach,J.2008.TheFilmIndustryinNewMexicoandtheProvisionofTaxIncentives.LasCruces,NM:ArrowheadCenter,OfficeofPolicyAnalysis.Riley,R.,Baker,D.,&Doren,C.S.V.1998.MovieInducedTourism.AnnalsofTourismResearch,25,(4):919‐935.Saas,D.R.2006.HollywoodEast?FilmtaxcreditsinNewEngland:NewEnglandPublicPolicyCenter.
63
ScreenActorsGuild.2009.SAGContractearnings2007‐2009.http://www.sag.org/files/documents/SAG_Contract_Earnings_Report_2001‐2007.pdf.AccessedSeptember2,2009.Shanahan,Mark.2009.BullockonRockport.BostonGlobe,June17,2009Tisei,R.R.2007.Governorjustkeepsongiving,BostonGlobe:Pg.A23.Boston.Verrier,R.2010.Companytown:L.A.locationfilmingdeclines19%in2009frompreviousyear,LosAngelesTimes:3.LosAngeles.Weiner,J.2009a.Cost‐benefitanalysisofConnecticut’sfilmtaxcredit.Boston,MA:NewEnglandPublicPolicyCenter.Weiner,J.2009b.Ernst&YoungAnalysesofNewMexicoandNewYorkFilmTaxCredits;http://www.bos.frb.org/economic/neppc/memos/2009/weiner040209.pdf;August13,2009.Weinstein,M.1998.Profit‐SharingContractsinHollywood:EvolutionandAnalysis.TheJournalofLegalStudies,27(1):67‐112WGBH.2008.AnnualReport:2007‐2008.http://main.wgbh.org/wgbh/about/report/annualreport2007/index.htmlWoodside,A.G.,Spurr,R.,March,R.,&Clark,H.2002.TheDynamicsofTravelerDestinationAwarenessandSearchAssociatedwithHostingtheOlympicGames.InternationalJournalofSportsMarketing&Sponsorship,6(June/July):127‐150.