‘Walk the Line’ is a lesson in economics

Published 9:00 pm Saturday, November 26, 2005

It is certainly tough for any movie to stand up to the box office appeal of a new Harry Potter film. But “Walk the Line,” the new movie about Johnny Cash, is doing quite well – finishing a strong second to “Harry” in its first weekend.

“Walk the Line” stars Joaquin Phoenix as Johnny, and Reese Witherspoon as his wife, June Carter Cash, and tries to shine a little light on the life of the “man in black,” the country music singer who managed to touch so many hearts during his career. Along with showing how his talent was shaped and developed – by touring with Elvis, among other things – it also depicts his near-lifelong struggle with alcohol and drugs. And, not incidentally, it includes some great music.

There are two things about this movie that are especially interesting from an economics standpoint. The first is apparent to the audience: the two stars are actually singing the songs instead of lip-synching the words to recordings.

The choice of whether to use the original recordings or to let the actors go at it themselves, essentially covering the songs, is not an easy one. It’s an artistic gamble either way.

In the equations that drive the movie business, of course, artistic gambles are indistinguishable from economic gambles. And that’s where the second thing about the economics of this movie gets interesting.

The decision to use the actors’ voices was the natural result of the financial structure of this film, which is best described as entrepreneurial.

The total budget came in at less than two-thirds of the average cost of a major Hollywood production these days, and this was achieved largely by avoiding the punishing costs of paying stars up front. Witherspoon and Phoenix signed on for very modest salary compensations and a contract that includes a percentage of the gross receipts. This is a financial package very familiar to entrepreneurial business ventures, which typically use stock options or sales commissions to defer initial compensation costs.

The financial structure gave the movie’s two stars a direct and abiding commitment to its success. This is always a good thing, but particularly so in this production. The word is that both actors either hadn’t been informed that they would be singing themselves, or simply hadn’t been paying attention when the subject came up.

Whether the task was more difficult for Witherspoon than Phoenix, we do not know, but she has been the more openly communicative about the experience, which she said did not go well initially. At the end of the first day in the studio, in fact, things had gone so badly that when she got home she telephoned her agent and said, “Get me out of this movie.”

But they were committed to the success of this venture and they went on, learning from those who would teach them, eventually singing the songs with enough heart to give the movie life. The Oscar buzz now surrounding the film can undoubtedly be traced back to that commitment.

The film industry finds itself starring in a beachfront, sunshine-drenched version of the Rust Belt story. Its high-cost, low-quality, committee-designed products are increasingly rejected by consumers – in a scenario that appears to be some horrible remake of the U.S. auto industry’s triumphs of the 1970s.

The cost of a standard Hollywood release is now about $100 million, about two-thirds of which go to production and the remainder to marketing. There is something about a nine-digit budget that brings with it not only the nodding nonentities that accompany any big sums but also the doubts, uncertainties, hesitations and efforts to ensure against failure that have contributed so much to the film industry’s troubles.

The entrepreneurial financial structure may be precisely what the film industry needs to survive and flourish once more. Commitment to the enterprise is more likely to bring success than paying out big bucks for disinterested star attractions as box office insurance. And it is also more likely to produce better movies, the kind where the audience keeps its eyes wide open all the time.

James McCusker is a Bothell economist, educator and consultant. He also writes “Business 101” monthly for the Snohomish County Business Journal.