The Movie Rental Business: Blockbuster … or Blockbusted?

Blockbuster logoWhat’s going on with Blockbuster? For several years now, business analysts have wondered whether the company’s movie rental stores could withstand the competitive pressures from alternative delivery systems such as Netflix’s monthly subscription program, or the growing popularity of movie downloads direct to the customer’s own computer.

The latest announcement by Blockbuster’s management seems to suggest that we may be entering into an endgame phase for the company. Blockbuster reported that it will be closing as many as 40% of its stores over the next two years. This figure – nearly 1,600 of its ~3,750 total store population, is significantly higher than had been signaled by the firm earlier in the summer.

Blockbuster seems to be caught in a situation where its business model is no longer attractive – or even relevant – to a large and growing chunk of movie consumers. The company has nicely appointed, well-stocked stores scattered all across the United States. But these outlets are an expensive way to rent movies when compared to Netflix’s “movies by mail” program or Coinstar/Redbox’s $1 movie vending machine kiosks. The Blockbuster stores are losing money – and customers.

Come to think of it, Blockbuster has been playing catch-up ball in the movie rental game for quite some time. When Netflix introduced the idea of “no late fees – ever,” Blockbuster resisted following suit for a time … until it became clear that charging late fees was becoming a deal-breaker for many consumers. And with the end of late fees, a major source of revenue and profits dried up.

Blockbuster has also tried to compete with Redbox, but the latter is expected to have nearly ten times more kiosks than Blockbuster (~20,000 versus ~2,500) installed by the end of this year.

Blockbuster has even tried to compete with Netflix by introducing its own monthly mail-order subscription program. But that program, which had grown to ~3 million customers, sank back to ~1.6 million once its aggressive promotional program for the service had run its course.

And then there’s the direct download business – the proverbial “elephant in the room” that is a threat not only to the Blockbuster model, but also to aspects of Netflix and Redbox’s business as well. Blockbuster is taking a stab at this segment of the business by working out a phone-download program with Motorola plus a TV-download program with Samsung, but it’s not clear at all that these efforts will help preserve Blockbuster’s market dominance.

Looking at the current volume of business done by Blockbuster compared to its competitors, the casual observer might think that the company has nothing at all to worry about. After all, its customer base numbers more than 50 million compared to just shy of 11 million for Netflix. But these point-in-time figures belie the fundamental problems facing the company. Blockbuster – the lumbering ocean liner – is losing upwards of $40 million each quarter, while its rivals – the swiftly maneuvering speedboats – are making profits.

Wonder how much longer that can go on?

Sandford Dody: The most famous biographer you’ve never heard of.

Sandford Dody, ghostwriter to the stars.
Sandford Dody: Ghostwriter to the stars.
The American author Sandford Dody died a month ago. You’re forgiven if you don’t know who he is – and not just because, at age 90, he was a throwback to another era.

Mr. Dody was, in fact, the author of numerous autobiographies of American stars of the stage and screen. But the public never really knew that, because his name didn’t appear on his books.

Dody was a ghostwriter. Acclaimed “autobiographies” that in actuality he authored of celebrities like Bette Davis (The Lonely Life) and Helen Hayes (On Reflection) became best-sellers, with readers delighted to find out how “good” Miss Davis and Miss Hayes were as authors – almost as great as their acting abilities!

Most would never learn the truth – that Sandford Dody, as confidante and gentle interrogator, was the person who coaxed and teased these great stories out of his subjects.

How did Dody end up becoming “Ghostwriter to the Stars”? Like so many people who made their careers in the field of entertainment and arts journalism “back in the day,” the native New Yorker started out wanting to be in show business, perhaps as an actor or a writer. And like many others with stars in their eyes, he made the trek to California to try his luck in the film industry.

Back in the 1940s, it wasn’t so hard to meet the famous as well as not-so-famous who inhabited the then-relatively small world of the Hollywood film industry. Even as he dreamed of becoming a playwright, Dody took bit parts in a few films.

But as it became clear he would never ascend the heights either in front of the footlights or on the marquee boards, and in need of money, Dody turned to ghostwriting beginning in the 1950s. His first project was authoring the autobiography of a now-obscure silent film star, Dagmar Godowsky. (One could assume Miss Godowsky was obscure even then, some 30 years after her film career had ended!)

The assignments with Bette Davis, Helen Hayes, the Metropolitan Opera star Robert Merrill, and members of the Barrymore family came along later, in the 1960s. (The Davis autobiography was particularly successful, and is credited with leading to a late-career renaissance for the aging movie star.) And while these projects would prove to be financially lucrative for Dody, it is clear from his own writings that the author was somewhat ambivalent about the whole business of ghostwriting.

In fact, he stopped doing it after his book on Miss Hayes was released. Why? In his own autobiography, published in 1980, Dody gives us a clue. “The most suitable way to view stars is from a long way off,” he declared.

For Dody, it seems that spending so many hours with his subjects as he prepared to write his manuscripts, experiencing their egotism and petty vanity “up close and personal” inevitably came as a letdown. “Let the next star write her own damned autobiography,” is how he would sum it up after he retired.

In later years, Sandford Dody returned to New York City, where he resided quietly in Lower Manhattan, living off his royalties and indulging in his passion for the musical and visual arts. For those of us who know New York as a “walker’s city,” it will come as no surprise that Dody kept up a nearly-every-day regimen of walking an eight-mile loop from his Greenwich Village apartment to the Metropolitan Museum of Art, Lincoln Center and back. It’s an important clue as to how he was able to reach his tenth decade despite having battled asthma from the earliest years of childhood.

Ironically, it is a poignant passage from his own autobiography, Giving Up the Ghost, that illustrates the uncommon talent Dody possessed as a writer – and hints at what he might have produced had he taken a different literary path:

“When a ghost’s job is done, he wanders, unheeded, unseen in a half-world and in circles now too grand for him. Unseen by everyone – except on rare occasion by the subject who pretends blindness but winks conspiratorially when the unfamiliars are looking the other way – I have been able to slip through closed doors and between locked mortals as they engage in their earthly affairs. Impossible to be heard, I for one have cried out in protest, in joy, in vain. Isn’t that what death is all about, finally?”

Risë Stevens: A Living Legend

Risë Stevens poses with a young Gen-Y fan, New York City (2006).
Risë Stevens poses with a young Gen-Y fan, New York City (2006).
Risë Stevens as Carmen, her signature role at the Metropolitan Opera for 20+ years.
Risë Stevens as Carmen, her signature role at the Metropolitan Opera for 20+ years.
Risë Stevens (c), honorary chairperson of the 2004/05 Career Bridges award program supporting promising young opera singers at the outset of their careers.
Risë Stevens (c), honorary chairperson of the 2004/05 Career Bridges award program supporting promising young opera singers at the outset of their careers.
This past week, a living legend in the world of the arts has celebrated a birthday. When Risë Stevens was born in Bronx borough 96 years ago, New York City was very much like it is today … the largest city in the United States, with a rich ethnic diversity including many first-generation immigrants. A city of amazing contrasts, from dirt-poor neighborhoods to districts of fabulous wealth and style.

Miss Stevens’ background was typical of many. Her father was a first-generation Swedish Protestant, her mother a second-generation Russian Jew. Growing up on the tough neighborhood streets of the Bronx, the bright lights of Manhattan must have seemed a world apart rather than just a few short miles away.

In her rise to the top of the billboards at the Metropolitan Opera, Stevens would have her share of luck – the onset of World War II in Europe gave American-born soloists their best chance ever to star in the limelight. But it also took years of practice, sheer hard work and “paying her dues” on provincial stages in places as diverse as Prague and Buenos Aires. Much of those early years are recounted in her biography Subway to the Met, published in the late 1950s.

Miss Stevens’ rich mezzo-soprano voice, coupled with her highly attractive physical appearance, made her a natural for several femme fatale operatic roles such as Dalila in Saint-Saens’ Samson & Dalila, Giulietta in Offenbach’s The Tales of Hoffmann and, most notably, the title role in Bizet’s Carmen. But early in her Met career, management seemed disinclined to cast her in this role, perhaps because several other stars were already filling the honors there. Not willing to accept this situation, Stevens did a true star turn, getting herself cast opposite Bing Crosby in the Hollywood blockbuster movie Going My Way in which, as Father O’Malley’s erstwhile neighborhood chum and now star of the opera, she sang the famous Habañera from the opera Carmen.

That seemed to do the trick, as the American public now clamored to see her sing the role. Dutifully, the Metropolitan Opera cast her as Carmen within the year, and for the next two decades, Stevens would practically own the role at the Met. (And it was as Carmen that Stevens made her last performance before retiring from the Met stage in 1961.)

The number of people who were introduced to the world of opera through Miss Stevens during the 1940s and 1950s is astonishingly large. Her compelling portrayal of Bizet’s cigar-factory worker temptress has been cited as THE defining catalyst for opera lovers in countless postings all over the web (you can read some examples here, here and here).

But beyond the limelight and the marquee board, there is another reason why Risë Stevens has been loved by so many: she has always been true to herself, and to her art. You can see that in how, despite the fact that she probably made more money starring in just three Hollywood films than she made in her entire career on the opera stage, she left Hollywood and returned to opera because it was her true love.

… You can see it by her loyalty in promoting the art of opera and her beloved Met Opera company. Even today, she remains on the board of directors of the Metropolitan Opera Guild, making her association with the company more than 70 years running.

… You can also see it in her compelling “up-from-poverty” personal story … and in her long and loving 65+ year marriage to her Viennese-born Hungarian husband, Walter Surovy.

And you can see it in the genuine interest she takes in people of all backgrounds and generations. Unlike so many stars who, once they are famous, become absolute personality horrors – full of arrogance and snobbery — Risë Stevens has never lost her connection to the “real world.” My own two daughters have carried on a correspondence with their “Miss Risë” for 15 years, who they’ve come to regard as a kind of special relative who lives far, far away and is larger than life in some respects.

From them, and from so many others: Happy Birthday, Risë … and may you celebrate many more!

Happy Birthday to a Renaissance Man

Previn in younger days
Previn in younger days
andre-previn-at-801André Previn turned 80 years old earlier this month, which gives us cause to reflect on the incredible life of this highly interesting, very creative man. In his musical life, he’s demonstrated a versatility and catholicity that surpasses even Leonard Bernstein’s reputation.

Born in Germany, raised in the United States and truly a citizen of the world, Previn has lived out his life in the European capitals of London, Paris and Berlin … and here in the U.S. in places as diverse as Hollywood and Pittsburgh. A true wunderkind, he burst onto the musical scene back in the early 1950s, recording fine jazz piano arrangements that were released on 10” RCA Victor 78-r.p.m. and LP records … then soon migrated over to MGM Studios, writing musical scores for more than a dozen Hollywood films.

I own a few of Previn’s early jazz albums. His song arrangements are little gems – each one their own special musical adventure. Listen to his rendition of Stella by Starlight, for example, and you’ll immediately understand his special way with the music.

Previn’s pop music career masked the fact that he had studied classical music at the Paris Conservatory, and in San Francisco under the tutelage of the great French conductor Pierre Monteux. By the 1960s, Previn had moved from pop back to his classical roots, issuing a series of critically acclaimed recordings with the best symphony orchestras of London. His interpretations of the symphonies of Ralph Vaughan-Williams and Sir William Walton … along with recordings of the important British choral masterworks Belshazzar’s Feast and The Rio Grande remain touchstone performances, nearly 40 years on.

In his later years, in addition to guest-conducting the world over, Previn has penned a steady stream of memorable compositions, including several concertos for his ex-wife, the celebrated violinist Anne-Sophie Mutter. Even more impressive is Previn’s foray into the world of opera. His 1998 composition A Streetcar Named Desire has received more than 20 productions – an almost unheard of feat for a contemporary opera. And today, he’s busily at work writing a new work for the Houston Grand Opera to premiere next month, based on Noel Coward’s 1938 play Still Life (later made into the movie Brief Encounter).

At age 80, André Previn shows absolutely no sign of slowing down. And why should he? Musically speaking, he still has much to say … and the arts world is richer for it.

Happy Birthday, Maestro!

Is “Pay to Play” the Future of the Web?

More than a few feathers were ruffled by Kodak’s announcement that the multiple millions of users of the company’s Kodak Gallery online photo-storage service may have their photos subject to deletion if they don’t begin paying an annual service charge ranging from $5 to $20.

Is this the beginning of a trend? Some web observers seem to think so. David Lazarus, in his recent Los Angeles Times business column, draws a parallel to automated teller machines that were introduced by the banking industry back in the late 1970s. At first, there were no service charges assessed when using ATMs. The banks wanted their customers to start using ATMs, thus helping to reduce the demand for more labor-intensive (read: expensive) teller stations.

Then, after a number of years of free service the banks began charging ATM service fees for out-of-network transactions and even some in-network ones. The idea was now that consumers had become comfortable with the technology and the “24/7/365” convenience of the machines, they would accept the fees without resistance.

“Why should the Internet be any different,” Mr. Lazarus asks?

I think the comparason isn’t totally apt. It’s true that there is a cost for Kodak or others to maintain the infrastructure (hardware and software) to provide archiving and other web-based services. But the fact is, those costs are not nearly as high as the “brick-and-mortar” expense of building an ATM system.

What’s more, the banks were in a stronger position to move en masse toward charging fees. After all, they operate under a government-issued charters. The barriers to entry – both regulatory and financial – are far more onerous than anything in cyberspace.

Anyone ever heard of Flickr?

And that’s the real challenge today. Who is going to be the first to jump into the fee-based waters? And will anyone else follow? Put it another way: will others follow the leader … only to find themselves drowning in a sea of new, free alternatives that spring up in response?

Just ask the newspaper industry how simple it is to successfully implement fee-based services on the web. There’s your answer as to how easy “pay to play” will be to implement.

What is YouTube’s Business Model?

The information is starting to trickle out. YouTube is hemorrhaging red ink. Credit Suisse estimated recently that YouTube will make approximately $240 million in advertising revenue – revenue that has come from a cavalcade of different forms of advertising, licensing and partnership deals.

Balance that income against estimated costs of over $700 million and you get a loss of more than $450 million.

What’s wrong with this picture?

Advertising Age magazine has just reported that YouTube is now selling advertising against 9% of its video views. That’s up from 6% a year ago. But those figures are still paltry. And it’s really no surprise since so much of YouTube’s content is user-generated, devoid of any significant interest and thus not really “monetizable” for advertising purposes.

No one – not even parent company Google, with a market capitalization of over $100 billion – is going to put up with such a scenario forever. The question is whether YouTube will ever be able to generate enough ad revenue to offset the huge bandwidth and storage costs associated with managing a humongous repository of video material. It’s a question that, even if Google’s own senior management doesn’t ask, the company’s shareholders should.

Paid subscriptions, anyone?