Some clarifications

Wow.  I really wrote that last post poorly, based on how it's been interpreted by several people.  I'm really sorry, and hope that this post will correct any misimpressions I've given. These are mostly addressed to commenter Steve Kaplan, who seems not to know me very well, and seems to have made several assumptions about me and why I am writing this blog.

• I am very much pro-labor and pro-union (perhaps not pro- some particular unions).  Just because I owned a business and hired people for a while doesn't magically make me "management."  I have spent by far the larger part of my 28 years in the VFX trade as a freelance worker. The entire idea of rigid early-20th Century labor or management roles is an impediment to finding a solution to the industry's current problems.
• I have exclusively worked as a freelancer or consultant for nearly 2 years, not as an employer.  I have had no employees or subcontractors in that time, other than an IT specialist for a handful of days. I have no intention of starting a new VFX business under the current conditions. I have no interest in promoting the agenda of shop owners over that of workers -- quite the opposite.
• I have been a labor representative on a negotiating committee for a CBA.  I and my fellow reps had to repeatedly tell the business agents to take a stronger, less-conciliatory stance.  We voted to authorize a strike in the face of pressure from the local to take a bad deal.
• I spent years on the Executive Board of Local 659, was a founding member of the National Executive Board of Local 600, and proudly sat on Haskell Wexler's subcommittee to help draft 600's constitution and bylaws.
• I have never, and certainly not in my previous post, advocated misclassification of employees, advocated violation of labor laws, or passed on the costs of an underbid job to my hires. I went into considerable personal debt to not only pay every single one of my workers every cent they billed, but to do the same for my subcontractors and vendors. I have never asked a worker to put in overtime when I didn't put in at least as much myself. I (and my then-partner) have been stiffed by clients to the tune of 6 figures over the past 5 years, and I have never passed that on to anyone working for me.
• I think a level playing field is essential to the survival of the US VFX business, and have been an outspoken proponent of not only not underbidding or "buying" jobs, but switching to a cost-plus model.  
• Steve's appalled reaction notwithstanding, it was very much the norm for VFX and mograph/design shops in NYC to pay everyone not on staff as 1099 workers, up until the past 2 or 3 years. Now that the states are hungry for revenue, they are auditing like crazy, and many shops have reacted by requiring their freelance workers to contract with and bill through one or another fly-by-night EOR (Yucor, MBO). A long time ago, I proposed an organizing drive targeting the EORs.  As far as I know, no one has tried to card-check them.  
• It may also appall Steve to know that the vast majority of freelancers that I hired and worked with preferred and asked for or demanded 1099 instead of W2 status, even if they didn't have a legitimate business entity. Some of those people even went on to file claims for unemployment insurance, citing me as their employer, triggering audits that ultimately resulted in my paying substantial fines (which I did not contest).  This last scenarios has happened to every single VFX/post/mograph/design business owner I know in New York.
• Unless and until we can bill our clients cost-plus, yes, paying a 20-30% increase in labor costs would prevent any small shop from breaking even, much less making a profit.  I believe this is less of an issue for large shops, for obvious reasons of economies-of-scale, and leverage relative to clients' demands.
• The money for benefits and legally-mandated OT has to come from somewhere.  It can't come out of existing shall-shop margins, because they're too small right now with current payscales and the much-abused-by-clients firm-bid model.  If small shops quoted rates high enough to make the margin healthy, they'd never win a bid the way things work now. ONLY if the field were level, and everyone were paying the same rates and billing their clients more than we can now, could any small shop owner stand a chance of surviving while also hewing to both the letter and spirit of wage laws.
• As a freelancer, I now work 40-60 hours/week.  As a shop owner, I worked 50-110 hours/week (without health benefits, and not much of a retirement plan)  Most small shop owners I know work just as hard, and make just as little.  That's one reason they're closing up and going freelance -- at least in NYC.
• Unless you want a world in which there are only big shops and their time-card employees, in which you can't be a worker this month and a vendor next month -- a world without opportunities for entrepreneurship -- you can't just take the "Goodfellas" approach of "f__k you, pay me."  You have to think about whether you could afford to treat your (perhaps hypothetical) employees the way you want to be treated.  And if you couldn't, then you either have to work for a world in which you could, which may include tempering your own demands, or you need to stop complaining.  Personally, I vote in favor of complaining and working hard for change.
• The main point of the previous post was simply this: if you want to not be pressured into working when it's unfair, if you want to have more time for your family, if you want to have portable healthcare for everyone in the business (not just yourself!), then you have to be willing to level the whole playing field, not just between the studios and the VFX shops, but between the VFX shops and the workers.  If you want a kid starting out to not have to "pay dues" by working in sweatshop conditions, even if you did, you have to be prepared to organize, fight, and, yes, pay for it.  You'll have a better life.  Your children and colleagues will have better lives. That kid starting out will have a better life. You'll still have a US industry to work in.  But you may have to take home less cash at the end of the year, if you're in, say, the top third or quarter of industry workers.  You'll be making more per hour. You'll be more secure. But you will no longer have the option of saying "screw it, I'm gonna get mine right NOW," and devil take the hindmost.
• And that would be a very good thing in my opinion.  We all, workers and shop owners alike, need to stop shooting ourselves in the foot (or face) by working too hard for too little, "just this time," or taking advantage of the inequities in the system, "just this time." That's going to take hard work, discipline and sacrifice on all sides.
• Maybe in feature film tentpole-land, the studios will loosen their claws enough to add to the pool.  If they were long-term smart, they might. But in the commercial world, there's no additional money to be had for our work -- it has to come out of someone's pocket. Maybe the big shops have something in there. The small ones don't.

Sorry.  That turned into a bit of a rant. But, hey, it's a blog, right?  I hope it's clearer where I stand.  We need to hang together, or separately, as the man said.  But we also have to deal with the real world and not create straw-man enemies or raise unrealistic expectations  in order to pander to the widest group while serving only a narrow one -- we've had enough of that for generations to come.  This is not being defeatist. This is about facing and dealing with what is real, not wishful thinking.  Hope and change, yes, always and forever. Fantasy and wish-fulfillment, not on this blog.

etmthree

VFX companies need an old business model.

I'm coming around to the idea that the *only* way for VFX shops (as opposed to finishing, or editorial, or prodco, or design shops that also do some VFX) to survive in the long term is -- deep breath -- to refuse to work on a firm bid model.

NO ONE in any other business works on a fixed bid based on so many unknowns, except perhaps aerospace and defense contractors, who seem to have, um, other means of protecting margins.  Plumbers, general contractors, auto mechanics, electricians, carpenters, freakin' ditch-diggers all give you a good-faith estimate based on your description of the project.  Then, when they get into it, if they find more problems, they tell you about them and ask if you want them dealt with, for X dollars more.  We should do the same. 

We can read a script, break down a board, have endless conference calls with the creatives and director, but everyone knows that the number that comes out of that process might or might not have anything to do with the actual scope of work once the shoot and edit are done, to say nothing of the endless chain of approvals and tweaks.  Live-action can work on fixed-bid.  90% or more of a live-action shoot is totally predictable (weather and performing animals notwithstanding). There is over 100 years' worth of live-action production experience that is still applicable when bidding and scheduling a shoot.  I know live-action producers who can predict to within 2 or 3 percent what the actual costs for every single department will be on a live shoot (granted, not the crazy ones).  VFX on the other hand, is by definition exploration of the unknown, or at least rarely-visited fringes of production and possibility. 

We're going to have to be willing to lose some clients, at least at first, by telling them "This is a good-faith estimate, not a firm bid.  We can either give you a firm bid when you've locked the cut and we mutually define the exact scope of work, or we can work on a cost-plus or time-and-materials basis for as long as you'd like, at the following rates."

This is what freelance workers, in essence, do for the companies they work for.  They (or I should say, we) charge by the day, or hour, with or without overtime, but the key is this: if they work more, they get paid more.  As a company owner, this killed me, because I couldn't do the same.  If one of my artists was lazy, or less-productive than he or she should have been, or made a dumb mistake, or was a toxic personality, I couldn't penalize him or her other than by not hiring him/her on the next project -- and I had to pay someone even more to fix the problem. If my client made a last-minute change that exceeded the defined scope of work, I could demand an overage, but more often than not in the last 3 years, the response was, "there is no more money. we don't care if you bill us, we won't pay it."  And what is a shop that bills in the very low 7 figures annually gonna do -- sue Publicis or BBDO? Not only would that be a simple war of attrition for their lawyers, they'd certainly spread the word throughout the agency world.

I don't really see how to make this happen, since it would require a substantial number of high-end companies to simultaneously and without any appearance of collusion make a fundamental change in their client model. 

But I also don't see how small-to-mid-size VFX shops can survive without it. 

etmthree