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Another One Bites The Dust

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Neil Hurwitz
Another One Bites The Dust
on May 25, 2011 at 3:46:27 am

Howard Schwartz Recording has closed in NYC.
This was one of the largest and best known Audio
houses in the city, a feature of the landscape for the last 38 years.
The carnage is not over, If HSR can fail no one is safe in this biz.


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Craig Seeman
Re: Another One Bites The Dust
on May 25, 2011 at 5:41:09 am

The big ones aren't safe. They haven't been for a long time. Small and nimble survives. New business models are needed for the new tighter economy.

Big expensive rooms.
http://www.hsrny.com/hsrny/thestudios/studioa



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Nick Griffin
Re: Another One Bites The Dust
on May 25, 2011 at 11:36:44 am

I will just add that the last time I needed studio time for a voiceover with NY talent I called around and Howard Schwartz wanted something like $400/hr.

"Umm... maybe you don't understand what I'm asking for," I said. "I need single channel VO recording that I can pick up from an FTP."

"Yes. That's $400 an hour," they said.

Needless to say I went elsewhere.


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Patrick Ortman
Re: Another One Bites The Dust
on May 26, 2011 at 6:48:14 pm

As long as small and nimble is smart, I tend to agree.

A side note: a whole lot of microstudios haven't spent time figuring out a fee structure that will allow them to be in business for more than a couple of years. It seems like an ongoing problem for businesses in our industry.

----------------------------
PatrickOrtman, Inc.
Los Angeles Digital Agency and Video Production Company


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Craig Seeman
Re: Another One Bites The Dust
on May 26, 2011 at 7:31:46 pm

[Patrick Ortman] "A side note: a whole lot of microstudios haven't spent time figuring out a fee structure that will allow them to be in business for more than a couple of years. It seems like an ongoing problem for businesses in our industry."

Absolutely. It has to do with your comment about "smart" as well. A lot of price crashing is due to a plethora of microstudios who have no clue about a business model. The result is that price shoppers simply jump from studio to studio as each fold. I guess clients who are happy with "one offs" rather than the advantage that long term relationships give them are part of the picture. It's the pervasive short term thinking (or lack of thinking) that's at root.

While the ROI on gear can be short given the low equipment prices, the profitable lifespan of equipment is much shorter as well. While we may gawk in wonder and how great the gear is today at such low prices, compared to what some of us old-timers used to use, the cost over time may not be that much less.

Consider the ability to keep a BetaSP camera going for the better part of a decade to the typical good camera than may be need to be replaced within 2-3 years to remain feature competitive. Basically most microstudios don't take into account that their price has to include enough money to purchase replacement gear in a couple of years.



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Patrick Ortman
Re: Another One Bites The Dust
on May 26, 2011 at 7:39:55 pm

That's absolutely true, I agree. It's maddening, as clients begin to think we're all commodities. And the smarter of us realize that by presenting ourselves or allowing ourselves to be seen as commodities is foolish. You need more than equipment and a great room. You need value-added, or you're gonna be next on the chopping block. What is it Ron says? Nobody wins in a race to the bottom?

----------------------------
PatrickOrtman, Inc.
Los Angeles Digital Agency and Video Production Company


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Craig Seeman
Re: Another One Bites The Dust
on May 28, 2011 at 4:27:48 pm

[Patrick Ortman] "It's maddening, as clients begin to think we're all commodities."

Although it may be more complex than simple commodification. Some clients really only need the "kid with the camcorder" for some simple jobs. This is assuming the kid can competently run the camcorder and understand some basic aesthetic principles.

The problem happens when that kid has zero business understanding. Kid doesn't take into account the cost of maintaining and replacing the gear and meeting all their monthly personal and business expenses. The client moves from kid to kid from year to year replacing last year's kid with this year's kid.

It's not even simply "bottom feeder" mentality as the client truly has simple needs. It's the kids who have no business sense and the steady supply of replacement kids.

BTW these is made even worse when sometimes the kid is truly talented, having spend years doing creative projects in school and on their own. Then such kid, with no business sense or confidence, undercharges, works 24 hour days, produces excellent work, maybe even goes deep in debt buying expensive gear that they do know how to use. Even these kids are replaced every year. The client can gamble on such kid because kid will work 24 hour days and do endless revisions without charge eventually meeting the client's expectations.

So it's not simply that clients view video as a commodity, it's that kid business views itself as a commodity.

We are sales people (and business people) even ahead of being content creators. We must explain the value added with experience and skills.



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Bruce Frankel
Re: Another One Bites The Dust
on Jun 29, 2011 at 4:05:18 pm

The other issue is the loss of accumulated knowledge. I grew up in the biz where we worked under the watchful eye of a seasoned pro, we had a mentor, if you will. We absorbed knowledge not only about the tech stuff, but client services, how to keep clients happy and coming back. The kids who never worked as an assistant, intern or gofer in a working studio, miss out on that stuff. It is a great loss for everyone.


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walter biscardi
Re: Another One Bites The Dust
on May 27, 2011 at 3:28:36 pm

[Craig Seeman] "Consider the ability to keep a BetaSP camera going for the better part of a decade to the typical good camera than may be need to be replaced within 2-3 years to remain feature competitive. Basically most microstudios don't take into account that their price has to include enough money to purchase replacement gear in a couple of years."

The Sony UVW-1800 is the one piece of equipment we still have running today. It's the only thing left from our original opening of our first location in 2001.

I'll add that there are a lot of people who don't believe in buying new year, maybe losing a little money on a few jobs to pay for it, and then having that gear for at least two years to make money with it. that's pretty much how I built my place so in general, we carry little to no debt load for our equipment.

That has allowed us to keep our production prices almost the same for the past 10 years while expanding the company twice. It's not easy, you have to work like you've never worked before and have an incredible partner to help you along the way. In my case, my wife has been an incredible part of this ride.

Walter Biscardi, Jr.
Editor, Colorist, Director, Writer, Consultant, Author, Chef.
HD Post and Production
Biscardi Creative Media

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grinner hester
Re: Another One Bites The Dust
on May 26, 2011 at 9:15:26 pm

Often the bigger and older the company, the harder it becomes for them to evolve with the times. They use to provide something that could not easily be had elsewhere. Now, digital recording is in the hands of literal babes and VOs don't have to cost any of us more than 250 bucks with often less than a one hour turn around. They simply got blinded by the 80s. Those times were very good to them... hence the inability to let go of that habitual behavior.
I liked the 80s too. Parachute pants went out of style and I'm too bald for a sweet mullet today. I can't bill 400 an hour anymore either but all the above are common sense if you allow them to be.



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Patrick Ortman
Re: Another One Bites The Dust
on May 26, 2011 at 11:11:46 pm

I missed the 80s, I was just a kid. Sad.

Voiceover for $250 works once in a while- if I know who I want to use, if they're non-union, and if the client isn't too picky. Otherwise, if you need to do casting, union, tests for the client, etc., it'll be more. Sometimes a lot more.

I know I'm like a broken record today (see, 80s reference), but the trick really seems to be to stop being a commodity. You'll have to compete with the "kid with a camera" crowd if you don't explore exactly why the client should pay you more.

Then again, I'm still learning :-)

----------------------------
PatrickOrtman, Inc.
Los Angeles Digital Agency and Video Production Company


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Nick Griffin
Re: Another One Bites The Dust
on May 27, 2011 at 7:36:30 pm

[Patrick Ortman] "Voiceover for $250 works once in a while- if I know who I want to use, if they're non-union, and if the client isn't too picky."

Patrick-
I believe what both Grinner and I were talking about was just the rate for the studio time, NOT the talent fee also. Well at least that's what the $400/hr at HSA was. IMHO people who go for $250 or even $100 voice-overs get exactly what they pay for.

Who's to say whether we should hope for or dread the day when Apple Garage Band technology comes with a selection of voices and intonations which can be easily edited. Pick Don LaFontaine and add "warm" markers around the client's name, and while you're at it dial up the "growl" 10% on the tagline. The day is coming. Let's just hope that Don's estate benefits mightily from it.


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grinner hester
Re: Another One Bites The Dust
on May 28, 2011 at 3:20:56 am

Unions. If a voice talent wishes to mimit himself by restricting himself, there are penty others that are willing to do work. Today spoils me. If I can't have a 250 vo by noon by someone, I just call the second guy on my list and call it done.



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Craig Seeman
Re: Another One Bites The Dust
on May 28, 2011 at 4:47:26 pm

[grinner hester] "Often the bigger and older the company, the harder it becomes for them to evolve with the times."

I suspect many facilities invested in expensive equipment based on what they thought would be the demand to use such gear. Demand fell as less expensive hardware and software alternatives hit the market. Unfortunately such business may have been carrying heavy debt loads which, even if they sold the gear for less expensive replacements, couldn't alleviate the debt load. The result was that those facilities such as HSR continued to charge rates for sessions in which the gear really wasn't needed, in the hopes they could meet their debt obligation.

I suspect at one time debt based business model was attractive since one could write off the equipment over an extended time while bringing in regular high dollar fees. The monthly obligation was meet, the tax deductions where heavy, profit margins were high.

It no longer makes sense to run a video business with heavy debt. ROI must be shorter, equipment can be rented or purchased for specific jobs.

Now you only need to fight for business against kids who charge rates so low that they'll go under within the year, to be replaced with another kid using the same poor business model.



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Ned Miller
Re: Another One Bites The Dust
on May 28, 2011 at 5:47:13 pm

Getting back to the original post: I haven't used a separate audio recording facility for VO in maybe 5 or 6 years. It seems either the editor has a "good enough" room or the talent have built something in their home. Some have used the master bedroom closet in their McMansion, the deadest room in their house. One has a full isolation booth WhisperRoom on a floated floor and lots of geeky professional gear including a Rode mic. I am often contacted by VO talent and the first thing I ask is can they record at their place, perhaps I will be on a phone patch. If yes, I query as to the model and quality of the mic, what software they will use, do they know how to cut out breathes, etc.

So...what was HSR doing in a specific niche in our industry as the entire business model changed? Debates about debt load are irrelevant, history is full of examples of businesses not adapting: they were delivering ice when the refrigerator started to be sold. Someone moved their cheese:

http://www.whomovedmycheese.com/?gclid=CLixxtmZi6kCFUa8Kgode109sw


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Craig Seeman
Re: Another One Bites The Dust
on May 28, 2011 at 6:10:18 pm

[Ned Miller] "So...what was HSR doing in a specific niche in our industry as the entire business model changed? Debates about debt load are irrelevant, history is full of examples of businesses not adapting: they were delivering ice when the refrigerator started to be sold."

Sorry but debt load is relevant.
Sometimes adapting can't alleviate the current debt load. When this happens a business will go bankrupt and you may even see the same people reform a new business with a new business model.

Business didn't expect to see the accelerated price drop in new equipment. In some cases they were blind to the changes but in other cases they "got in" before the change occurred and they followed an industry history in which quality equipment maintained its value for years. Change happened after they already had large equipment bills to pay off along with long term commitments on large spaces, whereas the newer gear costs significantly less required much less space.

The above businesses often have no place to go but under. There may have been no room to adapt and continue to pay off the gear that they had. Deep debt is a business killer now but may have been standard practice when they purchased their gear and leased their space.

Some businesses are in a position to adapt and others have no way out.



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Neil Hurwitz
Re: Another One Bites The Dust
on May 31, 2011 at 2:51:02 pm

As the poster of the original piece of news I offer
some comments on this discussion.
1. HSR had a 37 year run of great success.
Nobody here should comment about how to survive until they reach
Half That Age. They lasted so long because they were able to
Adapt.

2. I find it somewhat ironic that everyone has latched onto
Debt load as the killer in our industry.
I find that to be an oversimplification if not dead wrong.
For sure, a low or non-existent debt load makes it easier
to withstand slow periods but debt load is not the big killer.
In addition paying for equipment in cash, up-front, might not be
the best allocation of capital

3. So what is the killer? Operating Expenses, Operating Expenses
One noted member here says that by keeping cost in line they
have not raised rates in ten years. Well then they are
actually working for a lot less because everything costs
more now Gas, Electricity, Medical Insurance,
Liability Insurance,
Food, College Tuition, in short EVERYTHING so treading water
to make the same rate is well, Treading Water.
In the end There will be some huge companies
most likely formed by roll-ups and some very small shops
run by owner operators, But the vast middle is going away.

As a side note I have a good friend who is an attorney
(managing partner) of a 35 lawyer firm Who tells me that
if they could only bill at 250.00 per hour They would close
tomorrow, No expensive equipment, No build Out, No nothing
except personnel, But how do you pay the Rent,
Electricity, Phones, Medical Insurance, Sick Days,
Vacation Time, Payroll Taxes, and so on if you can
only bill 250.00 an Hour.

So in conclusion, I would like to hear about how you all
moderate your Operating Expenses and not about debt load

As seen above accounts desk
Accountant: Don't spend money you don't have
Client: Always a simple answer to a complicated question


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Craig Seeman
Re: Another One Bites The Dust
on May 31, 2011 at 3:17:48 pm

[Neil Hurwitz] "1. HSR had a 37 year run of great success.
Nobody here should comment about how to survive until they reach
Half That Age."


They began during a period where costs were relatively stable. That is no longer the case. Dinosaurs "ruled" the earth far longer than humans but one doesn't look to that as a modern form of survival. They used a business model that suited them well for decades but not for the most recent one. Hence the probable reason for the demise.

[Neil Hurwitz] "So what is the killer? Operating Expenses, Operating Expenses"
[Neil Hurwitz] " I find it somewhat ironic that everyone has latched onto
Debt load as the killer in our industry."


There are many ways to cut other operating expenses. It is often difficult to cut debt once accumulated. If one purchases expensive gear that takes 10 years to pay off it's difficult to cut short of renegotiation of the loan. When one cuts the operating expenses radically one is still left with debt. Debt payment is a monthly expense and it is the one thing that generally can't be trimmed. That's why it's the killer.

When one buys $100,000 piece of gear and two years later an equally talented competitor can do the same with $5000 worth of gear . . . they will likely have much lower monthly expenses at least relative to that gear. If you choose to sell the $100,000 piece of gear it is likely that, with its depreciated value in the market, it will NOT cover the loan.

In the last few years equipment costs have dropped radically. Also given the "miniaturization" of equipment and the movement of much equipment from hardware to software, reduces one's facility space needs or one can have more "rooms" per the same space. All these have driven down expenses. Facilities with large and expensive gear that was not yet payed off were saddled with expenses that were difficult to cut.

Debt load itself may impact whether a company files bankruptcy to reorganize and restructure the debt, vs bankruptcy to close down. Sometimes there's no viability in restructuring the debt. Certainly there are other reasons companies go under but this would seem to be the case with large expensive facilities. Examine the age and cost of the equipment and outstanding loans and I suspect it'll expose the pattern.



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walter biscardi
Re: Another One Bites The Dust
on May 31, 2011 at 3:55:24 pm

[Neil Hurwitz] "So in conclusion, I would like to hear about how you all
moderate your Operating Expenses and not about debt load"


Volume of work + Low Overhead. That's our formula simplified.

Walter Biscardi, Jr.
Editor, Colorist, Director, Writer, Consultant, Author, Chef.
HD Post and Production
Biscardi Creative Media

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Patrick Ortman
Re: Another One Bites The Dust
on May 31, 2011 at 4:34:44 pm

Plus you're one of the best guys in the southeast, plus you're located close to, and have connections with, things going on in Atlanta- which is a regional production hub. Plus you've been really good at getting the word out when you do cool stuff, and you're very active in posting and helping people on the Cow. And finally, there's a little bit of luck (we all need luck, too).

Not kissing your butt, Walter. Just saying, it's not JUST low overhead and volume. If that were the case, you'd be in Beijing using local talent.

Operating Expenses:
Neil's got a great point. There's a tv commercial company in Santa Monica that's known (spots you've seen on national tv), who are trying to deal with reducing operating expenses by having unpaid post-film school interns do ALL the creative jobs on set and in post (besides direct, they still do that with a paid director).

I personally made a huge error last year, related to operating expenses- we did a project for a client and made a little bit of money. Then the client insisted that we cut the budget for the next two. Wanting the work, I said yes. Turns out, we lost money on those two projects. Like Neil's lawyer example, who couldn't even stay in business if they had to "only" charge $250/hr, the fee for these two projects sounded like a lot of money on first glance, but realistically after operating expenses were calculated, it wasn't enough. As painful as that lesson was, to me, I've put in some controls that hopefully will ensure we don't end up doing that again.

----------------------------
PatrickOrtman, Inc.
Los Angeles Digital Agency and Video Production Company


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Craig Seeman
Re: Another One Bites The Dust
on May 31, 2011 at 4:40:14 pm

[Patrick Ortman] "Operating Expenses:
Neil's got a great point. There's a tv commercial company in Santa Monica that's known (spots you've seen on national tv), who are trying to deal with reducing operating expenses by having unpaid post-film school interns do ALL the creative jobs on set and in post (besides direct, they still do that with a paid director). "


I would not post that too widely (too late) since it may be violating state labor laws. Many states have legal definitions as to what an "intern" is and whether a company can benefit financially from using them.

[Patrick Ortman] "I personally made a huge error last year, related to operating expenses- we did a project for a client and made a little bit of money. Then the client insisted that we cut the budget for the next two. Wanting the work, I said yes. Turns out, we lost money on those two projects."

One of the most important things you need to do at the outset of starting a business is work on your financial model. You shouldn't be making this mistake. This is the "other" thing that tanks a business beyond debt load. You MUST know what you must make to meet your monthly expenses. If you must cut costs for a client it should be commensurate with costs you can cut for the job. That might mean lower equipment rentals, fewer hours, smaller crew, cheaper talent. You can't simply cut the price unless you have huge profit margins . . . in which case you're cutting your margin.



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Patrick Ortman
Re: Another One Bites The Dust
on May 31, 2011 at 4:49:54 pm

If they get outed, it's their fault for being jerks to these kids they "hire" for free to do all the work. Interns are fine, but they should not be running your shoots and so forth. It's abysmal that this prodco has stooped to this.

I agree with you on my mistake on the budgets for those two follow up projects. The only thing I have to say in my defense is at that time we were transitioning our business model. We're now doing many more higher-end film/video projects (we started as a web shop that did an occasional video).

We (and by we, I mean in the end despite any advisors and advice received, it's my fault) hadn't fully developed an idea of what these operating expenses would be. For instance, it was a bit painful to realize we really needed a second edit bay (and another editor) to get things done in time for the client's deadline.

That mistake won't be made again. I plan on making a whole slew of other mistakes in the future, instead :-)

----------------------------
PatrickOrtman, Inc.
Los Angeles Digital Agency and Video Production Company


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Craig Seeman
Re: Another One Bites The Dust
on May 31, 2011 at 5:01:48 pm

There are some decent calculators online that will at least remind one what one needs to consider when running a business or doing freelance work.

http://freelanceswitch.com/rates/
and
http://www.nppa.org/professional_development/business_practices/cdb/cdbcalc...
and this regional cost of living chart might help if you're relocating or pursuing clients outside your immediate market.
http://www.bankrate.com/calculators/savings/moving-cost-of-living-calculato...
And since we're often compared to plumbers
http://www.masterplumbers.com/utilities/costcalc/


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Patrick Ortman
Re: Another One Bites The Dust
on May 31, 2011 at 5:43:20 pm

Plumbers unite!

I love the NPPA one, really, base office expenses @ 3,600 a year? Geez, that's like a month's worth in LA...

But fun & useful, thanks Craig.

----------------------------
PatrickOrtman, Inc.
Los Angeles Digital Agency and Video Production Company


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walter biscardi
Re: Another One Bites The Dust
on May 31, 2011 at 5:33:42 pm

[Patrick Ortman] "Plus you're one of the best guys in the southeast, plus you're located close to, and have connections with, things going on in Atlanta- which is a regional production hub."

One of the funny things is very little of our work comes from Atlanta. All those tax incentives you hear about apply to Production only. Almost all of the Post goes back to L.A. and Post is the bulk of our work.

Something I did very early on was to start working in the "cloud" before anyone knew what the "cloud" was. We've been working remotely with both clients and talent since at least 2004 for file exchanges, project reviews, etc... So while we have the nice big building here, the bulk of our work is done remotely with clients literally all over the globe.



[Patrick Ortman] "And finally, there's a little bit of luck (we all need luck, too)."

Plus an excellent partner, which in my case is my wife. :)

Walter Biscardi, Jr.
Editor, Colorist, Director, Writer, Consultant, Author, Chef.
HD Post and Production
Biscardi Creative Media

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Patrick Ortman
Re: Another One Bites The Dust
on May 31, 2011 at 5:45:11 pm

An ace up the sleeve, for sure.

----------------------------
PatrickOrtman, Inc.
Los Angeles Digital Agency and Video Production Company


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Neil Hurwitz
Re: Another One Bites The Dust
on May 31, 2011 at 10:27:47 pm

Walter writes
"Volume of work + Low Overhead. That's our formula simplified."
No doubt a good formula But I do have a few questions
1. Do you pay a living wage to your employees?
2. Do you provide health insurance? sick days? vacation pay?
3. Do you use unpaid interns?
4. Do you carry liability insurance? original negative insurance?
5. Do you pay all your payroll taxes?
6. Do you use the abusive and Quasi-legal practice of Permalancers?
7. Do you pay overtime?
8. do you pay workers comp?
This list can go on and on and on, so
could you, for the benifit of all explain in detail
exactly how you keep your overhead low?


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Gav Bott
Re: Another One Bites The Dust
on May 31, 2011 at 11:51:24 pm

When you're done answering that last question Walter, could you box it up so I can present it to my bank and say "we are going to do this"?

Thanks

Gav

The Brit in Brisbane
The Pomme in Production - Brisbane Australia.


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Craig Seeman
Re: Another One Bites The Dust
on Jun 1, 2011 at 12:27:51 am

[Neil Hurwitz] "3. Do you use unpaid interns?"

Walter has gotten around all that by staffing with dogs.
http://www.biscardicreative.com/Biscardi_Creative_Media_-_Bringing_Art_to_D...

When he can't book rooms to edit, he opens them as a diner. I hear he's got a good trick to use the DVD burners to make laser cooked burgers.
http://www.biscardicreative.com/Biscardi_Creative_Media_-_Bringing_Art_to_D...



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Patrick Ortman
Re: Another One Bites The Dust
on Jun 1, 2011 at 2:27:32 pm

Absolutely brilliant! AndI believe any training expenses are a deduction. Including milk bones.

----------------------------
PatrickOrtman, Inc.
Los Angeles Digital Agency and Video Production Company


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walter biscardi
Re: Another One Bites The Dust
on Jun 1, 2011 at 3:22:17 pm

We are so going to try those Laser Burgers! Molly's already wagging her tail.....

Walter Biscardi, Jr.
Editor, Colorist, Director, Writer, Consultant, Author, Chef.
HD Post and Production
Biscardi Creative Media

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walter biscardi
Re: Another One Bites The Dust
on Jun 1, 2011 at 3:01:15 pm

[Neil Hurwitz] "1. Do you pay a living wage to your employees?"

They seem to be quite happy and yes, I think the wages are quite fair. Our yearly raises are much higher than the industry norm. For example at CNN the yearly raises average 2%.


[Neil Hurwitz] "2. Do you provide health insurance? sick days? vacation pay?"

No health insurance unfortunately. We really want to, but it's too expensive but that is the next goal for the company. As soon as a plan comes along that fits our budget, we will add it.

Each employee gets 15 Paid Personal Days. They can use that in any combination of sick days, vacation days, whatever. It's the model used by a lot of businesses these days. Of course the number of days will increase as a person's tenure grows with the company.

And of course all national holidays are paid as well so in reality I think everyone gets something like 22 paid days off.



[Neil Hurwitz] "4. Do you carry liability insurance? original negative insurance?"

We have more insurance that I know what to do with quite honestly. And we keep clones of all original materials off-site in case of a catastrophic issue. I also speak with my insurance agent at least twice a year to ensure that our plans are staying up to date and keeping up with what's in the shop and employees.



[Neil Hurwitz] "5. Do you pay all your payroll taxes?"

Are you kidding? Of course. We have a great CPA who handles all the payroll for us and all taxes are paid on a regular basis. We don't mess around with "creative accounting."

Why wouldn't you pay your taxes?



[Neil Hurwitz] "6. Do you use the abusive and Quasi-legal practice of Permalancers?"

I've never heard it phrased quite that way. I don't hire people full-time unless I'm confident I have enough work to keep them employed for at least two years and preferrably long beyond that. For individual projects, yes, we'll hire folks under contract for the length of the project. That's how I worked for years before being able to open my own company.

So you would rather I hire folks full time and then fire them in 2 weeks or 2 months when a project ends? That's not abusive to people? That's silly.

I hire freelancers on an as need basis to round out the workflow. When the workflow reaches a certain point, then we go with a full time hire. I'm nearing the point right now actually of a full time hire as we're about to bring one more edit suite on-line.

That's one of the reasons why this building was designed with 9 edit suites. When we have the need to bring in a freelancer, I don't have to throw them into a closet with an iMac. I have a professional room ready so the freelancer feels like they are part of our team and not just someone we threw in the corner to do a project. I can't believe some of the situations I walk into when I visit other facilities. Beautiful rooms for the "main editors" and closets for the extra folks...



[Neil Hurwitz] "7. Do you pay overtime?"

Yep, but because we manage the workload, it's rare for overtime to happen. All the folks work hourly so if they go beyond 40 hours in a given week, overtime kicks in.

Another option folks will do is to simply take some extra days off instead of getting paid the overtime. Work 8 extra hours, take Friday off instead.

Why wouldn't I pay overtime? That would be quite rude, don't you think? Ask people to get a project done on time for a client and then "oh by the way you're not getting overtime." I'd quit in a heartbeat if I heard that.


[Neil Hurwitz] "8. do you pay workers comp?"

I'd have to double check on that but I'm pretty certain we do.


You know you're talking to someone who started out as an Editor. Worked my way to a position where I can offer other editors a nice job working with some really great producers in this field. Why would I NOT treat them well? I treat everyone exactly as I would like to be treated.

You know what folks tell me when they come here? I want to work with you! Why? Every edit suite has a high quality Mac Pro. A Flanders Scientific 17 or 24" reference monitor. Dual 24" computer monitors. An Anthro Edit Console. KRK Rokit 5 monitors. 40" Panasonic HD Plasma Screen. 20" iMac for the editor and Producer to use. And each edit suite is 11'x 14' (i.e. roomy) In other words, I set up all my editors in suites that I like to work in. This place was designed BY an editor FOR an editor.

How do I keep the overhead low? By buying smart. That goes for the equipment that is purchased as I need it, rather than just to have it here in case someone wants to see it. That goes for the land / building and working inside this building every day for over 4 months to get it done and doing a lot of the work ourselves. That goes for adding all the small touches that make this place fun and not just a building that holds a bunch of equipment and personnel.

And I take care of my employees because the operation is nothing without them.

Walter Biscardi, Jr.
Editor, Colorist, Director, Writer, Consultant, Author, Chef.
HD Post and Production
Biscardi Creative Media

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Neil Hurwitz
Re: Another One Bites The Dust
on Jun 1, 2011 at 6:28:16 pm

Walter,
Thanks for the detailed answer, It might help others to
fine tune their business model. However I suggest you visit the
following link and discuss with your accountant.

http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

This will cover what I called "Payroll Taxes"
which are alot more than what you withhold.

I once hired a
Temp for 2 days from an agency to cover for my receptionist who
got sick unexpectdly. This Gal worked at my place for two days,
was paid by the temp agency, who I in turn paid.
Jump ahead two weeks and this girl applies for unemployment insurance
listing me as her last employer. This brought down such a sh-tstorm
you just can't imagine, An audit of my payroll going back 3 years.
I never appreciated my anal bookkeeper so much as then. These people are ruthless, unforgiving, and they want your Money. In addition I suggest that you find a health plan for your people and make them pay a percentage with before tax dollars and the other portion is tax deductable for you as well. A good bang for the buck.
That being said, My son who just graduated college is getting job
offers that feature 2 weeks vacation, 7 sick days and 3 personal days
and an 80% company paid health plan & a .75 to the dollar matching
401K contribution. So I would advise him not to
work for a compensation package as you outlined.
Thank the stars he is not in this
business but is into global logistics.


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walter biscardi
Re: Another One Bites The Dust
on Jun 1, 2011 at 7:53:01 pm

[Neil Hurwitz] "y. In addition I suggest that you find a health plan for your people and make them pay a percentage with before tax dollars and the other portion is tax deductable for you as well. A good bang for the buck."

We have looked at those, but none work with our budget right now, particularly after opening this building.

Walter Biscardi, Jr.
Editor, Colorist, Director, Writer, Consultant, Author, Chef.
HD Post and Production
Biscardi Creative Media

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Ronald Lindeboom
Re: Another One Bites The Dust
on Jun 8, 2011 at 3:15:46 am

Neil,

We meet with our CPAs quarterly and we pay big money for taxes, insurance, legal services and a whole lot more.

We pay VERY good wages to our employees and they have taken to giving it a name, THEY say that we "pay career money, not wages." I take that as a compliment.

We also pay 100% of their health insurance, paid by our company.

We do NOT hire permalancers. We have full-time employees, thank you.

We also give our people IRAs and we pay all withholdings and workers compensation.

BUT...

That doesn't mean anything in a world where things are changing so rapidly that companies like Howard Schwarz Recording fall like dominoes. And before you chide me as having not been around for 38 years, you did say you don't think people should speak unless they've been around HALF that long, and I've been doing this 16 years (not exactly half but close enough in a world where speeds accelerate greatly year-to-year and so I think 16 years gives me a bit of perspective on this issue).

If you disagree with that, I will throw in the this year I was named one of the 40 most influential publishers in the world of print, chosen by the leading print magazine journal, and so someone must think I am doing fairly well.

With that said, I'd like to tell you that the world is changing so fast that EVERY company that isn't consciously and actively trying to put itself out of business and replace itself with something better is just working itself slowly towards the cliff...

We are in a time of such chaotic and turbulent change that the death of companies like Howard Schwarz Recording is no surprise to me, in fact I am surprised they lasted this long with the business model they were using. Truth be told, they were probably feeding it money for years, waiting for things to "turn around."

This isn't a recession and it isn't a bump in the road. This is the New Normal and welcome to the future that none of us wanted.

Me, I do not bemoan the death of companies as much as I bemoan the collapse of our educational system, which is completely failing in its duty to educate our young people to know how to compete in today's world.

Now that's a tragedy...

Best regards,

Ronald Lindeboom
CEO, Creative COW LLC
Publisher, Creative COW Magazine

Creativity is a process wherein the student and the teacher are located in the same individual.

"Incompetence has never prevented me from plunging in with enthusiasm."
- Woody Allen


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Patrick Ortman
Re: Another One Bites The Dust
on Jun 8, 2011 at 5:09:43 pm

This just got more interesting.

----------------------------
PatrickOrtman, Inc.
Los Angeles Digital Agency and Video Production Company


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Neil Hurwitz
Re: Another One Bites The Dust
on Jun 11, 2011 at 3:56:57 pm

Ron said
We also give our people IRAs and we pay all withholdings and workers compensation.

Please explain How you GIVE your people IRA accounts?
It has always been my understanding that this is a vehicle
for the individual to set up,hold and keep with their money
either with before tax dollars (tradional IRA) or with after tax dollars (Roth IRA)


With that said, I'd like to tell you that the world is changing so fast that EVERY company that isn't consciously and actively trying to put itself out of business and replace itself with something better is just working itself slowly towards the cliff...

Total Agreement

We are in a time of such chaotic and turbulent change that the death of companies like Howard Schwarz Recording is no surprise to me, in fact I am surprised they lasted this long with the business model they were using. Truth be told, they were probably feeding it money for years, waiting for things to "turn around."

The surprise here was that this was a very successful firm for decades, with substantial high paying clients and reputation.
So the bigger question is exactly what went wrong? Was it their
Business model(great studios,equipment,people)? Owner starving the company to maintain lifestyle?
The cost of providing a living wage? Medical Insurance? Lease renewal on the studios in NYC?
I think laying the failure of this type of company on the
catch all phrase of "Business Model" is an oversimplification
at best. I wish more data was available on this collapse so
we could indeed analyze it and learn from it. However
when I see comments from others with a lack of specific
information boasting about how they have figured it out and have a superior business model, I can't help myself and must ask
for specifics. There was a world of difference between your
response and the other member who responded. I think all
here can benefit from a probing discussion. After all,
we all have the same desires, To do good work, Make good money,
Raise our families in Peace and Prosperity, Preserve the Earth
and then be left alone by all other forces.


This isn't a recession and it isn't a bump in the road. This is the New Normal and welcome to the future that none of us wanted.

Total Agreement

<i>Me, I do not bemoan the death of companies as much as I bemoan the collapse of our educational system, which is completely failing in its duty to educate our young people to know how to compete in today's world.

Now that's a tragedy...


Once again total agreement,

But being someone whose significant
other is a high school teacher, I can say without reservation
or equivocation that a huge part of the collapse of the educational system is not the fault of the people employed by that system, ie: the Teachers. Today's student (grades 1 thru 12) spend just 10% of
their time in school and in that time the teacher is supposed
to educate them . Unless the student is engaged, motivated
and prepared by their parents it's just not going to happen.

As an additional comment I would say that you are to
be commended for the things that you do for your people.
A good living wage (career wage) Medical Insurance,
and so forth, I do believe that you are the exception in our space.

Best Regards
Neil Hurwitz


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Ronald Lindeboom
Re: Another One Bites The Dust
on Jun 11, 2011 at 10:07:24 pm

[Neil Hurwitz] "Please explain How you GIVE your people IRA accounts? It has always been my understanding that this is a vehicle for the individual to set up,hold and keep with their money either with before tax dollars (tradional IRA) or with after tax dollars (Roth IRA)"

Maybe "give" was a poor choice of words, Neil. What we do is match what our employees can legally withhold and delegate to their IRAs. The bookkeeper is not here today but as I recall, it is up to 3% of their gross that they are allowed to put into their IRA and then we match it. Not great but better than nothing.



[Neil Hurwitz] "The surprise here was that this was a very successful firm for decades, with substantial high paying clients and reputation. So the bigger question is exactly what went wrong? Was it their Business model(great studios,equipment,people)? Owner starving the company to maintain lifestyle? The cost of providing a living wage? Medical Insurance? Lease renewal on the studios in NYC? I think laying the failure of this type of company on the catch all phrase of "Business Model" is an oversimplification at best."

Surprise is one word I'd NEVER assign to a situation like this. Why? Partly because of chaotics, a phenomenon that is happening in the world today and when understood, it holds great analytical merit for planning and strategic decisions. Books like Philip Kotler's Chaotics: The Business of Managing and Marketing in The Age of Turbulence hold great value and I think anyone who doesn't read it wants to kill their own business.

Much of what is happening is due to disruptive technologies (turbulent innovation) that redefines the rules by changing the competitive business landscape through upheaval that actually makes a company's long standing investment and advantage work against itself, as low cost new tools and new competitors enter a market with much less investment and cost.

Yes, many will fail but in the end the "march of army ants" will redefine the market, and companies that have been asleep at the wheel -- counting on their long held position at the top to hold them safe through the chaotic period of equilibrium -- will find themselves like Gulliver, staked, tied and overcome by those they consider Lilliputians.

It is happening everywhere and the book "The Innovator's Dilemma" by Clayton M. Christensen does a brilliant job of explaining the process by which these onetime giants fall prey to poorly equipped and under-capitalized "Lilliputians" because of "disruptive technologies" -- or as some refer to it, disruptive innovation.

If you read these two books, Neil, you will see a great view of what is happening in the world today.

Your friend's company was a victim of the forces clearly outlined in The Innovator's Dilemma.

You don't want me to get started on what's wrong with the schools today, it would just anger both your wife and her bosses -- though I would agree, the problem is not your wife.

Best regards,

Ronald Lindeboom
CEO, Creative COW LLC
Publisher, Creative COW Magazine

Creativity is a process wherein the student and the teacher are located in the same individual.

"Incompetence has never prevented me from plunging in with enthusiasm."
- Woody Allen


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Bruce Frankel
Re: Another One Bites The Dust
on Jun 29, 2011 at 4:23:09 pm

I started in the biz in 1980. At that time, a film mix was done in a studio with a 16-channel mixing console connected to a bank of 35mm MTM dubbers running in sync to a 35mm projector! There were only a couple of facilities in town that could do that work, but that was the technology at the time. That is why the prices were high and clients paid them. Times were good for commercial editors and as the KEM gave way to the Avid, prices for service remained high and clients paid the price because the costs to set up an Avid suite were still very high. The bubble burst when FCP became popular and everyone from high school student to award-winning pros could easily get into the business and call themselves "editors". I gotta admit, there are some talented high school kids out there. The problem is, they live at home with mom and dad and have no overhead. My son's 16 yr-old friend showed me some After Effects stuff he did, at home, that blew me away! Yikes!


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