Hollywood Is Overpaying for the Wrong Talent, New Tongal CEO James DeJulio Says

Hollywood is running on an outdated content model, according to James DeJulio, the co-founder and, as of Wednesday morning, CEO of the independent crowdsourced digital-video network Tongal. The former Paramount executive argues that in both Hollywood and on Madison Avenue, talent is shut out of the system because of dated barriers to entry like geography, network and resume — something the 10-year-old Tongal wants to fix. “Everyone is looking at an infinite pipeline with no real way to sustainably fill it outside of operating under the same, outdated work paradigm,” DeJulio told TheWrap. “So, what you’ve got is an arms race — how many Ryan Murphy’s can you pay $300 million? That, in my opinion, is going to end badly for most unless they can evolve their content creation model.” Tongal aims to bypass that system by hooking up studios, networks and other brands with creators from all around the world. It works like this: Say Twentieth Century Fox decides it wants to create a short film to celebrate the 40th anniversary of its 1979 thriller “Alien.” So it writes a brief outline of what it would like the project to entail and submits it to Tongal, where more than 160,000 creators have the chance to submit their own spin on the project (the selected creator is then compensated, of course). With the demand for content on the rise (driven in part by the multibillion-dollar budgets of streaming services), Tongal fills content pipelines, said DeJulio, who was promoted this week from president to CEO following the exit of fellow co-founder Rob Salvatore. The company has created digital content for YouTube, Facebook and Instagram, as well as marketing, advertising and influencer content for partners including Nat Geo, MGM, LEGO, NBCUniversal and Twentieth Century Fox.ntinued growth, Tongal announced a slate of promotions Wednesday morning — including DeJulio’s promotion from the DeJulio discussed the company’s recent promotions, Salvatore’s departure and how studios are underutilizing IP due to out-of-control production costs. 1. Why does Rob Salvatore’s departure from the company mean for the company going forward? Ten years ago, I started Tongal with the mission to build a platform that would bring the world’s creative work to the world’s creative talent. That mission is even more alive today than ever, with demand growing for quality content and up-and-coming talent. Many people have made big contributions at different stages of the company and Rob is obviously no exception. After 10 great years at Tongal pioneering that mission with me, Rob has decided to go into business with his family and we’re excited for him. Moving forward, we’ll continue fulfilling our mission with a renewed focus on our platform and community — our real differentiators — and digging into a model that is providing both sides of our marketplace with the most value capture since we started the company. Because our model gives customers scale with a lighter cost load, we’re seeing increased demand and driving more opportunities for up-and-coming creators. As we continue to drive the creation of more content — from small scale to cinematic — we’re also focusing on continuing to improve our software to best fit the needs of everyone on the platform. 2. What is the problem that Tongal is trying to solve? In the creative economy in both Hollywood and on Madison Avenue, talent is shut out of the system because of dated barriers to entry — think geography, network, résumé. Most content businesses have a model built around overpaying for who’s hot, rather than finding the right talent for the job. This was the case back when I was at Paramount and is still evident today. It made sense when it was three networks and seven studios with limited screens and fixed attention spans. But now, everyone is looking at an infinite pipeline with no real way to sustainably fill it outside of operating under the same, outdated work paradigm. So, what you’ve got is an arms race — how many Ryan Murphy’s can you pay $300 million? That, in my opinion, is going to end badly for most unless they can evolve their content creation model. Exponential problems can’t be solved with linear solutions. If you try, you’ll end up with too many dollars chasing too few resources. That’s what happens when the business of content distribution undergoes a radical transformation but no one addresses the creation side of things. On the bright side, there’s a unique and infectious thing happening on the internet — tools and talent have been digitally democratized and new ideas are easily accessible — and it’s the wave of the future for content creation. By leveling the playing field for creators, not just the elite 1%, and democratizing the creative process, Tongal is solving the most vexing problem in content creation and delivery today: matching an accelerating level of differentiated content consumption with content creation on demand. 3. What does Tongal have to offer companies like Fox and Syfy that they can’t find elsewhere? A lot. How else can they effectively work with up-and-coming talent? The system is built so that to even get a meeting, you need to have moved yourself to L.A. or New York, be an insider with an agent or have a spec or sample that’s been deemed “hot” by someone else. Even with those things under your belt, it might not feel like you’re an insider, but compared to the rest of the world, you are. For companies like Twentieth Century Fox and Syfy, we’re greatly expanding their creative workforce, while leveling the playing field for undiscovered talent.    On the other hand, networks and studios are completely underutilizing their IP because the cost of production is out of control. Again, it’s a systemic issue. The generally accepted model is to invest everything you have into developing and promoting a tentpole picture. Pragmatically speaking, this makes sense in the short term when, for example, the studio collects the majority of receipts (about 90%) during opening weekend. But that’s short-term thinking and it’s tough to maintain without having a breakout hit every year–something that’s becoming harder and harder to do. Today, best case scenario, you release a sequel, prequel or derivative two to four years after a big hit. But when you incur extreme costs to build an audience, two years is too long. Tongal gives studios a way to monetize every title like they would “Star Wars,” allowing IP owners to properly invest in expanding their titles to digital and cultivating their audiences in a way that builds community and makes them that much more valuable in the long term. 4. After working with numerous brands on a number of projects, are there any trends you’re seeing emerge among brands in terms of content/platform decisions? The big trend we’re seeing is companies leaning into audience-created content. When it comes to cultivating a community, the product, show, movie or game is just the starting point. Our platform gives companies a direct line to creators who are passionate about their brand and want to help shape and extend their narrative. When these organizations give the audience permission to play, they find their fans show up in a really big way, and they end up with a kind of authenticity in their content that can’t be manufactured. If you look at our latest collaboration with Twentieth Century Fox for the 40th anniversary of “Alien,” you’ll see a group of unbelievably talented filmmakers who took their passion for the iconic franchise and channeled that into original content that rallied fans around the world years after the last box office release. That’s fandom at work. On the brand side of things, look at our work with Macy’s. Macy’s Style Crew takes passionate employees and gives them a platform to be influencers. Face it, people don’t want to talk to a corporation, they want to talk to other people. By empowering Macy’s ambassadors to share the products they genuinely love, you’re driving sales and connecting people to the Macy’s brand by connecting them to the people and personalities behind it. 5. What does the slate of new hires and promotions mean for Tongal? In both life and business, I’m a big believer in giving people a shot. Tongal is all about disrupting the status quo and giving passionate talent a chance to break out. As a business, we also embody that practice internally. I’m surrounded by talented people who have a real passion for our mission, so it seems obvious that we should lean into the leaders who have helped grow the company and prove out our new platform model. Look at Caleb Light-Wills. He was a community member making videos on the platform straight out of college when we offered him a job as our first employee. He’s been doing awesome work and helping shape the company ever since. Clearly, I’m passionate about spotting talent before others and developing that talent from the ground up. If you remember the film adaptation of “The Untouchables,” Malone (Sean Connery) suggests to Eliot Ness (Kevin Costner), “If you’re afraid of getting the rotten apple, don’t go to the barrel. Get it off the tree.” That’s my philosophy in a nutshell. And that’s why I know this is the right group of people to continue furthering our mission.