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In Praise of the Middleman

26 May, 2003 By: Stephanie Prange

Studios are realizing that retailing just isn't their game. Walt Disney Co. is planning to close or sell its Disney Store outlets, which have been a problem for years. Warner likewise pulled out of its Warner Bros. stores a few years ago.

As much as the studio execs like to rail against external middlemen, they are finding that being their own middleman isn't all it's cracked up to be. An independent middleman offers perspective. Like a Hollywood agent, he or she knows how best to sell a client. A client (actor or actress) often has a skewed vision of his or her best attributes. In short, not many people know how to best sell themselves. But a middleman does.

It is understandable that the studios would try to cut out the middleman. After all, they create (or more accurately they pay to create or market) the product. Why should they allow anyone else to take a cut?

I would say the answer is focus. The middleman, once removed from the creative process, has a clearer view of a product's value to the customer. In our business, that translates to a retailer or distributor who knows which movies his customers will want to rent or buy better than the studio that creates them.

As studios move into the brave new world of video-on-demand, it is interesting to note that the record-label-backed Web sites are going the way of the Disney and Warner Bros. stores. Roxio has hired Napster creator Sean Fanning and is buying up Pressplay, started by record labels Sony and Universal, with plans to turn it back into Napster, reincarnating that most vilified middleman of legal battles past. (As proof of the vilification, the major music labels are suing the venture capitalists that backed Napster, claiming they fostered copyright infringement.)

So, hats off to the middleman. Everyone is trying to cut him out (or sue him into oblivion), but, in the end, he's often a necessary component – some say evil – to good business.

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