In the entertainment world, the boundaries between music and cinema continue to blur as artists tap into new avenues to engage with their audiences. Taylor Swift and Beyoncé, two music industry giants, have recently made headlines not only for their chart-topping albums and sold-out tours but also for their unconventional approach to film distribution. Their respective concert films, “Taylor Swift: The Eras Tour” and Beyoncé’s upcoming “Renaissance Tour” film, have set the stage for a transformative shift in the way movies are distributed and enjoyed. What’s more intriguing is how these ground-breaking deals came to fruition, and it all ties back to a significant change in antitrust law.
Traditionally, major movies found their distribution through well-established studios. However, Taylor Swift chose to take a different route by independently producing her concert film and partnering with AMC Entertainment for distribution. This decision to work with a theatre company rather than a traditional movie studio raised eyebrows, but the results have been nothing short of spectacular. With global ticket presales for “The Eras Tour” surpassing $100 million, it’s evident that this unorthodox approach is paying off.
Under this unique distribution agreement, theatres will retain less than half of the ticket proceeds, with Taylor Swift and AMC expected to share the remainder. In a nod to her birth year and an album title, ticket prices for adults start at $19.89. Beyoncé’s forthcoming concert film is poised to follow a similar distribution model, adding to AMC Entertainment’s growing portfolio of blockbuster music films.
Anti-antitrust
The exceptional aspect of these deals lies in their departure from the traditional Hollywood model. AMC Entertainment, as the distributor, stands to gain significantly from these partnerships, a prospect that may not have materialized without a recent adjustment to antitrust law. Makan Delrahim, the former Chief of the Department of Justice (DOJ) Antitrust Division, played a pivotal role in advocating for this legal shift in 2018. Delrahim shared insights with DealBook about how this change facilitated the movie deals involving pop icons like Taylor Swift and Beyoncé. The key to understanding the significance of this legal change lies in the historical context of the film industry.
In 1938, the DOJ took legal action against what were known as the Big Five studios – MGM, Paramount, RKO, 20th Century Fox, and Warner Brothers – for monopolizing the movie industry and imposing unfavourable terms on exhibitors. This legal battle resulted in the “Paramount consent decrees” in 1948, which imposed restrictions on the studios’ ownership and control of theatres. Over the years, these decrees became industry standards, ensuring fair practices and preventing anti-competitive behaviour.
Delrahim argued that these decrees, designed in a pre-digital era, were a form of misguided government intervention in the free market that hindered innovation and consumer-friendly business practices. He believed that the emergence of new forms of competition, such as streaming, cable, and television, rendered these decrees outdated. After a period of public comment and deliberation, Delrahim succeeded in convincing a federal judge to dissolve certain parts of the consent decrees, ushering in a new era of innovation in movie deal-making.
The Shift
Swift’s agreement with AMC, which covers all of its theatres, would have been improbable under the old system that required negotiations with individual theatres. With the changes in antitrust law, Swift only needed to negotiate with AMC, streamlining the process and enabling more efficient distribution practices.
Another notable change brought about by the legal shift is the allowance of minimum ticket prices. In the past, studios could not mandate theatres to maintain prices above a particular threshold. As a result, Taylor Swift’s decision to set ticket prices starting at $19.89, in reference to her birth year, would not have been permissible under the previous regulations. Similarly, Beyoncé’s decision to price tickets at a minimum of $22 for her concert film would have been inconceivable under the old regime.
While these developments have certainly opened doors for artists like Taylor Swift and Beyoncé, not everyone is a fan of the new norms for movie deals. Critics argue that the dissolution of the consent decrees has created a fairer playing field for major studios competing with streaming platforms, but independent producers may struggle to secure theater placements for their films. Some have suggested that a more effective approach would have been to update regulations that apply broadly to all industry players, including streaming services, rather than abolishing established norms.