Why Is Movie Production Getting Outsourced From Los Angeles and California | Brian Ralston

Movie industry in LA and California is not doing as well as it used to. Some movies are made in other countries like Europe, Canada, different parts of the world. And the idea is that they're cheaper than the US. Believe it or not, people saying UK is cheaper than LA. How can that be? So we sit down with Brian Ralston, who's a producer, music composer, who's been in this space for many years. He's here to tell us the key factors behind Hollywood outsourcing to countries like UK, Canada, and other parts of the world. And if there is a way to change this trend and keep it here in LA and California. That TV show is made for the United States audience. Its entire cast and all the contestants on the show are US citizens. It's actually shot in Ireland. It was cheaper to ship everybody there than to do it here in California. I'm Siamak Kourami. Welcome to California Insider. Brian, it's great to have you on. Welcome. Thank you. Thanks for having me. We want to talk to you about Hollywood and what's happening there. You're an insider. You compose music for movies. You're also a producer. I am. And can you tell us what's happening right now with Hollywood? Hollywood in general right now is very worried. We've had both the pandemic and a couple of Hollywood strikes, changing atmosphere of economics, and the world stage is wanting to compete with Hollywood. And it's caused Hollywood production to start leaving California and leaving Hollywood. And this has been happening for decades. It didn't just start with since the pandemic. But I think that has actually caused it to get a lot worse as Hollywood changes how it does production and, of course, moves production to where it is more financially advantageous for Hollywood to make movies. It used to be they would go all over the world to shoot their movie, but they would always come back to Hollywood to do post-production, to edit their film, to color their film, to do sound for the film, and then it would get released. And even now we're seeing that is changing to where Hollywood is kind of decentralizing a lot and moving away. People are leaving Hollywood in California to live. It's a very expensive place to live. And they are settling in other cities around the country and even around the world where it's maybe cheaper to live and they're taking their technology with them. You don't need to be in a huge facility anymore to do most of your work. If you're an editor on a film, you could edit that at home. You can have the same software, the same computer set up at home and do that work at home. And maybe the final mix of the film still needs to come back into a big theater dub stage to really know what that's going to sound like on a release. But most of that work can be done remotely anywhere else in the world. And so as technology has increased our ability to be mobile and to not be here, it used to be the infrastructure that kept us here. We don't need that infrastructure anymore on the level that we used to. And so Hollywood is now kind of spreading out around the world and making movies everywhere. You mentioned production was already outsourced. So what we see in the movies were not made here. So of course, when a movie is made overseas because of location, I think of a James Bond movie and it's constantly traveling around the world. They're going to go to those places around the world to shoot. But now financially, of course, other states in the country like Georgia, Texas, Nashville, Tennessee, these places are offering tax rebates and incentives to come shoot here. And they might creatively have their story set in New Orleans, but it's more advantageous to shoot in Georgia. So they make their soundstage and their locations look like New Orleans, even though they're in Georgia. And we've been doing this for years. It's the magic of Hollywood. You don't need to be in that facility to do it. There's a film I worked on that actually shot in Massachusetts for most of the time. And about a year later, they had to go back and do reshoots for creative reasons. And those reshoots at the time were actually done in Los Angeles. And they made the stadium and the area that they needed to look like that stadium that was done in Massachusetts at the time, because it was cheaper than assembling a crew in a whole other location. So almost the reverse is happening from that now, where we will go out and go anywhere in the world where it's cheaper to shoot that movie. I remember seeing an interview, Rob Lowe talking about a TV show called The Floor right now. And that TV show is made for the United States audience. Its entire cast and all the contestants on the show are U.S. citizens. It's actually shot in Ireland, apparently. I did not know this. But it was cheaper to ship everybody there, shoot in the soundstage there for the audience here than to do it here in California. For those actors to stay there. And now, how is this impacting LA? So people, I always think, think that movies just magically come out of Hollywood. Somebody in an office decides we're going to make another Avengers movie, and they realize it's a Herculean effort. But two years later, movie just gets released, right? There are hundreds of thousands of people in the industry that get hired as a result of this to actually release movies in Hollywood. You've got people that build the sets. You've got the Teamster truck drivers. You've got all the crew, the lighting technicians, the camera people. I'm a musician. So you have musicians. Not every movie has a huge orchestra like a Star Wars movie. But for the ones that do, there's a department of 100 people right there being hired to record the orchestral score for the movie. So for every movie made here, there are thousands and thousands of people being hired. You've got catering people. We got to feed them on set. You've got makeup artists. You've got all that stuff that gets hired underneath the guise of making that movie. So moviemaking is a huge driver of jobs in the state, in any state that it goes to, but certainly in California. And these jobs pay well, right? In general, they pay well. So most of Hollywood is a union-driven industry. And as a result of that, which is, it's all about labor. And there are union contracts that production companies have agreed to in these signatory agreements with the Screen Actors Guild, with IATSE, which is most of the crew, with the Teamsters, which are the truck drivers, that there are certain standard wages that are fairly expensive. Yes, they are paid well. But that is also a huge thing that drives our industry to other cities, other states, and other countries, is that those other states, with their tax rebate incentives that California doesn't have, or doesn't have as good of a program, those other countries, which don't have the same unions, or don't have a union at all, allow these production companies to pay less for the same number of crew to build a soundstage in an Eastern Europe country, for example, and to shoot there. And they'll make it look like somewhere in the United States, but it's, you know, it's in Slovenia, for example. So the jobs pay well, but Hollywood is always looking to, how do we make, do more with less? Or how do we do more without the cost going up, even? And so, because union contracts never go down. They always negotiate. The next contract negotiated is probably going to be higher. So the cost of making movies escalates all the time. Every time there's a new contract negotiation, it's probably going to be a higher fee to hire people here. California is not only setting trends in the U.S., but the whole world. We have some of the most and best products, and best entrepreneurs across the globe. That's why we decided in California Insider to pick products that are made in California, and let you know about them. Today, we want to highlight House of Coffee. This is a coffee shop and coffee producer in California that we actually interviewed on the show. So you combine that art and science, and so that way you get a consistent, like, really good cup of coffee. They're from San Francisco. They have a very important and amazing family legacy. Well, that's my father's roasting style for whatever, 30, 40 years that he's done. That started multiple generations ago in Middle East, and now it's in San Francisco. They sent their coffee to us. We tried it. It was amazing. You can try it using the California Insider CA Insider promo code, and they'll give you a 10% off. Let us know what you think of their coffee. The way they roast it is unique. You mentioned that now post-production, post-production was always here. Yes. What did you see? How did this happen that now post-production is moving out? I think technology has actually driven a lot of this, and I can speak really closely to the music industry. To score with an orchestra is not only expensive, but you need infrastructure. You need a scoring stage, which is not just a normal place to assemble musicians. It's not a concert hall, right? There's a lot of electronics and wiring and microphones infrastructure and projecting the movie up on a big screen so the conductor can see it. There's a lot of infrastructure needed to do that, and Los Angeles has always enjoyed having that infrastructure for decades because it used to be the only place in the world other than, say, London. London was always a good place where you had that infrastructure that you could record scores like that. Over time, that infrastructure has started to be built in other locations. So in the United States, I can think of Nashville, Tennessee. There's a church there that they have converted over the years to be a recording studio. They're about to build another recording studio in Nashville. While it's in the United States, Nashville is a right-to-work state, and there is a union in Tennessee. It doesn't have the same weight as the musicians union here does in Los Angeles. It's the same union, by the way. It's still the American Federation of Musicians. So the costs of recording in Nashville or Los Angeles on the same union contract, because it's the same contract in every state, is the same. So you're not going to save money by going to Nashville and doing a union score. It would cost you the same. So you're saving money in other ways. But being a right-to-work state, Nashville, a lot of the musicians in Nashville either don't belong to the union or don't have the political sway that they do here in Los Angeles. And so most work done in Nashville is done non-union. And they assemble large orchestras with amazing, talented musicians, and they do it at a non-union rate. There is a myth that the non-union rate is a substandard fee. And it's not. On an hourly wage scale, they're getting about the same as what the musicians here would. An Avengers film is probably not a great example because those tentpole movies are at the highest cost the union will pay. They have a rated scale based on budget of the movie. Most movies are not $200 million movies, right? So those musicians paying a lower scale here and non-union in Nashville, the Nashville musicians are getting about the same per hour. But the unions have a provision in their contracts. It's called a residual, which is a residue of profits that they share with everybody on that contract. And when you do a union, you have to share future profits with everybody that was in that orchestra. SAG does this, Directors Guild does this. All the unions have a similar residual pay scale. So when it goes to HBO, goes to Netflix, goes on the airline system, they, whatever money was made from that new market that opened up, some of that gets shared with the people on the actors, the writers, musicians, right? But I always say, I compare it to this. If you want Tom Hanks, you have to sign a SAG contract. There is no other Tom Hanks. You are hiring Tom Hanks. When people hire a music orchestra, they don't care who's playing the violin or the viola or the trumpet. They're hiring the instrument. They're hiring those notes to be performed by someone live. And you're not hiring an irreplaceable star in general. So people will hire orchestras anywhere around the world where they can get a comparable product for a more reasonable price. And Los Angeles is the only place in the world that has this residual payment for the musicians that's due. So if you go to London, if you go to Prague, if you go to Vienna and record your orchestra there, it's a buyout, meaning the money you pay out front for your orchestra is all you will ever pay. It's very enticing for a producer. And so they don't have to calculate how much profit they're going to share when this movie goes to HBO or goes to streaming or goes to some other form of release in the future. Whereas here, they have to take that into consideration. Now, in an independent movie, it's not going to be that much money. For every million dollars or so in gross profit, it's only about $3,600 that are shared and split with all the musicians on a contract for a low-budget film. For a multi-hundred million dollar tentpole movie, that's millions of dollars that would go just to the musicians. Is it the same percentage or is it a lot? It's a slightly higher percentage, actually, for the tentpole movies. So it goes to the musicians? Does it go to the people that are doing camera work, lighting? They have their own residuals as well. So everyone will get a share? If they're on a union contract, yes. So if you go and record your Marvel score in, let's say, London, it's a buyout. They pay a large money up front to record their score, but then nothing is due in the future. And yes, they're still paying future residuals to actors and to camera people and to writers, but there is an option for them to do it where they don't have to pay future residuals to musicians. So they will go overseas and they will record it there. And the London Symphony at Abbey Road is not a substandard product compared to Los Angeles studio musicians. It's probably about comparable. LA studio musicians are among the best in the world, but they're not the only game anymore. And so these larger productions will go overseas frequently to get their scores recorded, save future residual money from doing that. So when you mention London, people going from LA to London to save money, that's actually a little bit shocking. Yeah. Because the cost of living in London is not a lot lower than LA, but there's this residual because of the residual. So essentially people get royalties when they play music or they act in a movie or they actually do camera work. Is that if they're part of the union? Correct. If they're on a union contract. And a lot of these decisions to go non-union or to shoot in another country, they're usually avoiding a union contract. And just because you sign a union contract for actors doesn't mean you necessarily sign a union contract for IOTC crew. So most people will sign a SAG contract for their production because they get a big name actor like the Tom Hanks that you can't replace. We need them to sell the movie, but no one's going to see the movie based on who the camera crew is. No one's going to see the movie based on who the orchestra is. So they will find options in other places around the world where they can get a good product, a quality product, and pay less money. And it's not just less money on the upfront, it's less money overall in the film where the residuals come in. Now, does this impact the industry? Because probably the residuals was a good, good enticing factor for people to be in this space, right? It is. I think residuals are actually, the profit share of that is a good thing. Because people will be committed and then they benefit from the results. Exactly. But unions, which Hollywood is a very union-driven industry, they break down when the monopoly of the location of where they're working stops. And outside of the borders of the United States, the industry unions don't have jurisdiction. So you can go to another country and get that done and technology allows you to electronically send the files back and forth. And it's not like you have to necessarily build a new soundstage if you're going to London, they have all the infrastructure there. And same thing with Eastern Europe countries, Prague and Slovenia, they're building soundstages. They're building locations where you can have green screen. It's no longer a monopoly that you have to come to LA to do that. So we see the industry now decentralizing and going to where it's financially advantageous to make these movies. And then they piece it together separately. And COVID certainly taught us that we can all work remotely. I mean, I got used to, during the COVID couple of years there, having meetings via Zoom or some other technology that we would use where the director didn't have to be with me to preview the music I was writing in scenes. And so they're seeing my computer screen, I'm sharing that and we're remotely working with each other. So we're beyond remote office meetings in the corporate world. We're remotely working. We're remotely working with technology. So people now are like, if I can remotely monitor my color grading session or my picture editor, why do I have to live in Los Angeles now to make my movies? I can fly to LA when I need to take that meeting. I can come to LA for some important mix or screening that maybe is a six-day period or a two-week period. But for the rest of the time I'm working on this, I'm either going to be on set shooting the movie or I'll be at my home in Nashville, Tennessee, remoting in to all these other players. And you take that concept and you have the same thing with your editors, your composers, your writers. A lot of writers I know love traveling the world and living in other places. It inspires them as a writer. They don't need to be here in Los Angeles. And they can take meetings via Zoom. If it's a really important meeting, they'll fly back for it. But they're not living here like they used to. And they're living where it's cheaper. We have some exciting news for you from California Insider. We're going to have events where you can come and watch our episodes as we make interviews live. Meet like-minded people that care about California and the community. Our first one is going to be with Larry Elder. He has a documentary about electric vehicles, good, bad, and ugly, where he dives into what's going on with electric vehicles. Make sure to sign up because our space is limited. Now, is this going to impact the relationship with Hollywood and LA and movies? I mean, I think so. I really do. I think, you know, the corporate base of Hollywood still seems to be here, where all the the head offices are and the decision makers are. When that starts to change, it'll be interesting. Like if Warner Brothers moved their corporate offices to another state or something like that. You know, there's another thing I was thinking about. Their tax base, Los Angeles City, has a gross business tax. It's on gross receipts within the city limits, so not the county. But if you think of how many production companies are within the city limits, you've got Paramount Studios, you've got Fox or the old Fox that Disney bought, but still there's a Fox lot there. And they're not giving up that 1% gross, right? Because that is a huge driver of the tax base. So even if these studio facilities shut down, if operations move outside of LA City, LA City is going to find a huge drop in their revenue because of their business tax. So I do think that Hollywood in general is very much impacted by a lot of this moving up. And LA is getting impacted because of the tax collection that they do. Do they collect the tax on movies that are made in other countries, but they're assembled here? To my knowledge, they do. I mean, I'm not running the money aspect of Warner Brothers per se, but because they have a presence within the county and because that's a product of that company, they're looking at gross revenue of the company being based in the city of Los Angeles. We have heard that a lot of people have been impacted. It's very hard to find jobs and these kind of gigs now. It's bad. Having said that, it has always been a business of relationships. So the problem is if you're decentralizing and moving production outside, your department heads may still get hired because the director has a relationship with that cinematographer or with that composer or with that editor they like to use. So they will still get hired. But the general crew, all the people that build the set design, they're not finding the same work because that work is not happening here. And same thing with lighting. Visual effects. Visual effects tends to be one of the largest departments. When you see a name scroll by on some space drama, there's hundreds and hundreds of names. And if they outsource that visual effects to another country, a lot of it goes to Asia, actually. If they outsource that to another country, the people in that other country are getting the work. But all those people are not. You're not getting the work. So I don't want to call them the faceless entity of Hollywood. But there are a lot of people that you don't know are behind making these movies that are on crews that are not getting hired when production leaves Los Angeles. Even though the department heads that still live in L.A., maybe, are getting hired because they are the name. It is the name to have this writer, this actor, this composer on a project. Now, in terms of California giving subsidies, so they're planning to increase the subsidies from $330 million to $750 million. I think it will help some productions and some people. I'm not entirely sure it's going to solve the problem because I think it's Assembly Bill 1138 and there's Senate Bill 630. If you read those bills now, it's doubling the tax rebate. There's still kind of a process to apply and kind of a lottery-like process to be awarded that. Other states and other countries basically have a similar tax rebate, 25 percent, some 30 percent, where there's not a lottery system, basically. You just get it. For money spent in the state, for money spent in the country of Slovenia, you get 25 percent back. There's no limit. It's government-funded and they can probably do that because they're trying to attract work. They don't have an over amount of work that's going to run out of the money that they want to commit to it. So I do understand California in that regard saying, well, if everyone went after this, we'd go broke. So I understand that. But at the same time, Hollywood's going to go where the money is most advantageous. They're not going to be sentimental to wanting to keep the work in California if it's more expensive. So I think it will help. I think it will help a lot of productions that have a choice to go elsewhere. And if that tax rebate causes them to stay here because the money at the end of the day works out, that will help. For music specifically, it's not going to help. And I'll tell you why. Music, unless it's a rare scenario like John Williams scoring Star Wars, who's probably on a creative fee, he gets a fee to score and be the composer and the production company pays for that orchestra. That's not the norm. The norm in music world is that composers are paid a package deal to deliver final product. So most movies, the composer is paid, to make the math simple, $100,000 to score a film. But the composer has to pay the orchestra out of that $100,000 to deliver final product. So the composer may actually be paying $80,000 easily for an orchestra and all the musicians and all the department underneath them to record and deliver that final score. And the composer at the end of the day only gets $20,000 to creatively score that film. But they deliver final product. In the assembly bill that's written, the money going to the music composer is exempt as a qualifiable wage for the tax rebate. So because you're exempting the money that goes to the composer, and yet all the money that goes to the musicians and engineers in the studio are out of the composer's take, you're basically exempting everybody in the music department with that one phrase, that we are exempting the composer. And it's not just the composer they exempt. They're exempting music supervisors. They're exempting actor wages. So you can hire people in London or other places to do the score, even though you got the subsidies from California. Correct. So I can now take that package I got and spend it where it is most wisely spent. And the production company is not going to assume those residual royalties we talked about. So I'm going to now have to choose a place that is as cheap as I can get a good quality product that is non-union because the production company will not sign an agreement on the residual royalties because they know they can get it as a buyout in other locations. And that means we're not doing it in Los Angeles. And when companies get the subsidies from California government, they have to do the work here. Yes. Besides the music, as you mentioned, there is an exemption for the music. Yes. Why is there this exemption in music? So the exemption in the assembly bill, I can guess, I don't know for sure, is because you have some composers being paid a lot of money. Because there's also an exemption on your top level actors. It's the actors' wages outside of background actors. There's an exemption on the producers and what they make. So what they're doing is they're exempting the top, the million dollar players. The contracts we hear about. Yeah, the contracts that we hear about. And they're trying to give the tax rebate on all the smaller contracts of these union workers and these crew members that are union W2. That are getting replaced actually when they're outsourcing. Exactly. So they're trying to focus it on them. But the entire of Hollywood, again, doesn't get paid that way. And music is one example of this. And so by exempting the composer, you're exempting the entire department underneath that composer for most films. So why this is, other than that, I don't know. I don't know if there's not the right lobbyists telling lawmakers in California, like this is not exactly how the entire industry works. But if they give one exemption for the composer, then you're going to have the actors going, well, wait. That Hans Zimmer or John Williams money is now eligible. So why isn't the Tom Hanks money eligible? Like you're going to have, and then they open up a can of worms. So I think there's a line that they're drawing. But just know that the entire budget is not eligible for this tax rebate in California either. Because of this, these department head figures that usually make more money are being exempted. Their wages don't count. What about the business of Hollywood? Have you guys been impacted? A lot of Silicon Valley tech companies have recently come into Hollywood. When I think of that, I think of Netflix, right? I think of Hulu and streaming companies. Apple with Apple TV Plus, right? And they don't have the history of Hollywood, the sentimental history of making movies and releasing them in theaters like we're used to. They're after content, right? Netflix was built on, you know, like a blockbuster from home rental business. But then all the other studios are like, hey, we can, you know, once streaming came along, they're like, why do we need you to stream our movies? We'll do our own streaming. We have data centers. We have servers. We can do all of that. We don't need to go through the middleman. And we have product that we can sell. So Disney started Disney Plus and Paramount started Paramount Plus. Well, Netflix is like, if all these other studios take away our content, we've got nothing we can show. So now we have to start making content. So then they started making their own content. And Netflix put a lot of money really quickly into building a library of content that is exclusive to Netflix. And, you know, every now and then Netflix will release a movie theatrically. But I think that's just the vanity of it. In order to qualify for an Oscar award, you have to have a theatrical release. And the whole Academy is about theatrically released movies. Same thing with Emmys, right? If it's a television release, it's Emmy eligible. If it's a theater release, it's Oscar eligible. Even if it's a feature film, if it was only made for TV, it's an Emmy thing, not an Oscar thing. So they would release, per the Academy motion picture rules, a film every now and then to try to get an Oscar award. But it was intended for Netflix, really. So they do their qualifying one, two-week run in Los Angeles, New York, and they get a film with an award that they get to tout. But then that only exists now for the rest of its life on Netflix. And by the way, I think those union residual contracts are impacted by this. Because when you would sign a residual contract that are based on these secondary market residuals, meaning the primary market is theatrical, secondary market is anything after that. HBO, even Netflix, airline streaming, national broadcast television, like it appears on NBC one night. Those are secondary markets that they have to profit share. Well, if Netflix is signing a contract, they release it theatrically. They release it on Netflix. There's no other secondary market. It forever lives on that streaming platform, and they will never have it go anywhere else. For the most part. So the residuals will be only from one other market. Or if it never had a theatrical release, if the primary market was only streaming, it will never generate a secondary market residual. So that even impacts the residuals of all the unions as well. So now they're having to renegotiate their union contracts to say, we want to share streaming royalties or streaming profits, which is different than what they used to ask for. So the streaming market has really uprooted all of Hollywood. Actually, I think the loss of home video has uprooted Hollywood, which is the streaming market, because they used to release a movie theatrically. And then home video, Blockbuster, that rental period would pay for a good chunk of the movie after the fact. When Blockbuster video and that rental market went away, there's a huge chunk of revenue that they stopped getting. So what did they do? They reacted by, well, we're going to increase now our theatrical release, but we can't really increase that in the United States. So we now need to increase that worldwide. So now you're seeing much more theatrical releases of the bigger product worldwide in China, for example, in other countries. And they rely on that international release to help make up for what they did lose in home video. And then with China as well, you see how movies have started to go towards superhero movies, action movies with chase scenes, because culturally, you don't have a language barrier when there's 15 minutes of chase scene and no one's talking, right? So they're easier to translate across cultures. So a film like, a very Americana film like A Dance with Wolves or something like that today, where there's a lot of talking and there's a lot of drama. More meaningful, deeper. It's not going to sell as much in other cultures. And I know I'm generalizing, but in general, they want movies that can, they can make one movie, sells well, pretty much everywhere. And if you have a branded product, like a comic book superhero, a lot of action, a lot of chase scenes, not a lot of talking, that's going to do well, probably in most cultures. And so that becomes the kind of movie Hollywood starts to make. In the middle of the road, $30, $40, $50 million, Pleasantville, Dances with Wolves, all these older movies they used to make, they don't play well in other languages or other cultures, like these action hero movies do. And so those movies don't get made anymore. So you see Hollywood splitting, where you have this small million dollar micro-budget movie, say paranormal activity, getting made, because you could make 10 of those. If one is a hit, they're doing well. So they can risk a lot more with that. And then you have the 100 million plus tentpole movie, which is probably going to be some kind of a hit. Although every now and then you find one that's not, because it's less of a risk. It's a built-in audience, and they're going to throw a lot of money at it, and they're going to make a lot of money. But that middle of the road movie, it's really hard to make your money back. Because you're going to spend probably two to three times the amount to make the movie in marketing and releasing the movie. So if you make a 20 or 30 million dollar movie, you're probably going to spend 60 to 90 million dollars properly releasing, worldwide I'm talking about, releasing and trying to get that movie out there. So if you don't think you're going to make 60 million, 90 million on that 20, 30 million dollar movie, why do it? There is some level of dissatisfaction from people in the U.S. from Hollywood. Of course. And the movies that they're putting out. Do you think what you just explained has something to do with it? Because Hollywood cannot afford to make these kind of movies that are meaningful in a sense. They're not the action movies. They're not going to be big, but they're meaningful. Yeah. Well, and when you say Hollywood, I think of the studios and I think of the big money people. I do think these movies are still being made. They're just being made in the independent film world, which are being financed by independent financiers who are doing it for other reasons, right? So you do, but they're still smaller budgeted movies. And they don't have the muscle to come and make really good movies. Correct. So you get Hollywood now giving awards to and trying to recognize, you know, independent movies. And, you know, this year, Anora won. You know, how many people have seen the movie Anora? Probably not a lot. And yet it wins the Oscar for best picture. And I think a lot of that is, you know, that's an independent movie taking a little bit more of a risk, telling a different kind of a story than what you would expect a big Hollywood studio to tell. And that's where the risks are taken. That's where the more meaningful stories are, I think, is in independent cinema, which is a big reason why I've always kind of stuck to independent cinema. I would love to do the temple movies, but there's a lot more meaning and storytelling in independent cinema that I think is interesting to a film like that. You mentioned that some of these movies, China is a big player. And do they impact the content? They do. So Hollywood, and this happens in the independent world, too. So don't think it's only studios. But Hollywood, again, will go where there's money. If you have China or a production company in China, which is probably some kind of an arm of the Chinese government behind it, saying, we'll give you, you know, $50 million, $100 million to make this Avengers movie. But in return, we want you to do some extra scenes or we want you to cast a known Chinese actor in this role. Hollywood will do that. One of the Avengers movies, it was either one of the Captain America movies or one of the Avengers movies, had scenes in it that was only edited in for the Chinese release of the movie. And that scene had known Chinese actors in the movie that we didn't see in the United States version of the movie. And they were basically placating their Chinese financiers for the part of that movie. So they do have impact into that. Independent movies will do something similar. I mean, you might have some wealthy angel investor who wants to give you $3 million to make your independent movie for reasons that are only their own. And, you know, maybe at the end of the day, you're like, well, you know, we'll write a little one-liner part for you and you get to say you were in a movie. And they're buying that experience. So that happens with independent cinema too. But they're probably not as much of a control doing that as someone giving $100 million for a big, huge studio movie. There's also AI. We didn't discuss AI. We didn't, yeah. Are these jobs going to get replaced by AI as well? That's another threat for you guys. It is. I think it's a factor. I routinely say about artificial intelligence that right now, anyway, in the United States, this isn't the same everywhere in the world, but products generated by AI, I'm talking about complete generation, like a word prompt that spits out a script or spits out a design for a character or something like that. If it's generated by AI, it is not eligible for copyright. It's essentially public domain. And if Hollywood can't own it, they don't want to use it. So I think AI plays an important role because I think there are tools with AI. So the copyright office looks at AI if it's appreciative contribution, meaning if it creates something in a way that has value, that if a human were to create that, we would say it's copyright eligible. Then that's appreciated. If it's de minimis, meaning it's not copyright eligible because if a human did that, we wouldn't call that copyright eligible. And my examples of that are, again, a word prompt that spits out a script that's not copyright eligible. But if you use AI technology to help make a blurry image more sharp. If a person does it. Exactly. Well, even not just a person, but it's not a copyright eligibility to make a blurry image more sharp or to make a visual computer animated thing move in a certain way that's more real. There are tools that AI can do to mix music and make it sound more full or to make it sound a better mix than what a human could do faster. You can't copyright a mix, right? So essentially somebody has to operate it. Someone has to operate it. For it to be copyright eligible. Correct. And someone has to actually generate the thing that you're copyrighting. And word prompt is not enough. So as long as there's a copyright problem with artificial... Now, they could change the law and then Hollywood would have a much bigger problem. And there are other countries that are talking about right now allowing AI material to be copyright eligible for the companies that provided the algorithm. But as long as in the United States, the Copyright Office is taking the position, which they are, that only human-generated content is copyright eligible, then I think Hollywood's going to not shy away from AI as a tool, but shy away from strictly using AI to replace it with AI. What do you think will happen to this space in the next few years? And if there is a way for Hollywood to redeem itself here in LA? I think the best way for Hollywood, and I think of unions again, because it's a heavy union industry. They need to make their contracts competitive. They are competing on a global stage. And I don't think a race to the bottom is always the best thing either. But if they need to look at what their biggest competition is, let's say London, the UK, certain places in Europe, if it was financially similar to shoot here as it would be there, Hollywood would do it. So you have a tax rebate system in California that's trying to compete, supposedly. I'm anxious to see if that works. I think the system right now, as I read it, is a little more complicated than it needs to be. Other states and other countries, just dollar spent, you get 25% back. I know in Slovenia, for example, which is one place one of my next projects is looking to shoot, you get your rebate in 30 days. So from the date you submit your paperwork and show that what you've spent, you get that 25% back in 30 days, which is so quick that you can actually turn it around and use it on other aspects of post-production. So you can turn a $3 million independent movie into a $2.3 million movie. Because at 2.3, you're going to get 25% back and you could turn it in and get more value for your dollar there. California system, you're not getting it back in 30 days. There's a much longer process to when you get that money back. What do you recommend to Californians and the state representatives that want to keep Hollywood here? Not only listen to the union representatives in Hollywood, but seek out the advice and counsel of the non-union departments as well. There are many departments, music, for example, the musicians are unionized, the composers are not. All the musicians are paid out of the composer's take. So you have a law that fundamentally does not restrict union musicians from their tax rebate. But by way of how those union musicians get paid is they get paid out of the composer's money, which is restricted in the tax rebate. So it's a misunderstanding of how the industry really works. And because composers are not unionized, no one's talking to composers. They're talking to the American Federation of Musicians union and assuming that that covers the music department. And it doesn't really. So there's visual effects would be another industry that is not really unionized, right? Producers are not unionized because producers make all of these decisions, by the way, because they're managers. They're not really employees. They're seen as managers. They're not eligible to unionize. So they have a producer's guild, which is not really a union. It's really an organization. But producers are not unionized. And I don't think the California legislators are talking to a lot of non-union people in the industry. And I think that's important for them to do. I've found that when I have lobbied or talked with legislators about AB5, it seemed like all the advice and counsel they were getting were from their union contacts. And they had no clue about how this was going to impact, you know, AB5 was going to impact a four-member rock band playing at a bar on a Friday night. That wasn't because the bar playing musicians are not unionized. This is not something that they talk. So they didn't hear about that. So I think they need to speak with a wider variety of people to really truly learn how the industry works. Brian Ralston, Hollywood composer and film producer. It was great to have you on California Insider. It was great to be here. Thank you for having me. Let us know what you think. Is it possible for LA and California to keep the movie industry here? You can always email us at ciamac.californiansider.com or comment. We read all of your emails and comments. I'm Ciamac Coramie. This is California Insider. And we'll see you next time.