One of the most pressing issues facing Hollywood right now is the idea of movie futures trading, the idea of treating films as commodities.
The Merriam-Webster dictionary says a commodity is “a mass-produced unspecialized product” -- the same no matter who produces it, such as a barrel of oil, a bushel of wheat or a gallon of orange juice.
On the federal level, the Commodity Futures Trading Commission is the regulatory authority that oversees markets for commodities. It is the CFTC that, via a 3-2 vote, recently approved the creation of a commodities market for movies.
On the creative side, if you’re a writer, actor or director, are you comfortable with your work being treated as a commodity? Do you believe your vision should be considered equivalent to a barrel of oil?
During awards season, it’s common to discuss the difficulties of comparing works of art. We ask how we can value the relative merits of an indie drama vs. a period piece vs. a biopic. One way is to classify all films as commodities and trade them as if they were nothing more than financial derivative instruments. Are we comfortable with the idea that, for example, the life story of Harvey Milk is a commodity to be traded on an exchange?
Think about the precedent that's about to be established here, not just for film but for all works of art. If we say that it’s acceptable to treat films as commodities, why not treat music the same way? If works of art have no unique artistic merits, if they’re all generic commodities, why not establish a commodities market for paintings and sculptures? These are dehumanizing ideas, to say the least.
And it’s not just theory and conjecture: The CFTC has approved a market for treating films as commodities. If we sit back and let this go forward, what’s next?
On the business side, the primary argument in favor of movie futures trading is that it will decrease risk. What if risk increases due to manipulation by industry insiders -- or industry outsiders?
Industry insiders will have a strong financial incentive to manipulate the new system by selling confidential information. A studio employee and her boyfriend recently were arrested for attempting to sell secrets to investors. They tried to sell the information, but there was no market for it; now we’re going to create a market for it, where insider information will be worth its weight in gold? In this case, the two of them got caught, but how would we ever know about others?
Suppose someone gets away with selling insider information and this results in widespread shorting, where the buyers of the information publicly bet money that the film will not meet expectations. It is widely reported that many people are holding short positions, so the film dies on opening weekend. The seller got paid for the information and the buyer(s) profited by shorting, everybody wins … except for the writers, actors and director.
