The Entertainment Economy

Throughout our 17 decades of existence, Austin has been a government town, and from nearly the beginning, local leaders have wanted it to be more than that. The University of Texas turned out to be a great success, but other efforts to diversify the local economy have proven, well, erratic, with a calamitous bust following every precipitous boom. Now, and not for the first time, pressure is being applied to local leaders, elected and otherwise, to guide Austin out of today's economic wilderness -- and after decades of misperception or neglect, those leaders have cast their eyes upon the local entertainment industry.

Not that City Hall, the Chamber of Commerce, and others in the loop were completely oblivious to the burgeoning fortunes of our musicians, our filmmakers, our writers and artists, or our multimedia and game developers. But the Austin entertainment industry has grown from a regional curiosity into a node of the global information economy in spite of, rather than because of, anything done by the traditional forces of "economic development."

This may be about to change. The much-discussed Mayor's Task Force on the Economy, chaired by council members Will Wynn and Betty Dunkerley, has a subcommittee on "cultural vitality" -- popularly dubbed the Keep Austin Weird committee -- that's wrapping up its meeting phase this week. The panel's charge is not only to find ways to support across-the-board ambience, but also to "foster the continued growth of creative jobs." In his mayoral campaign, Wynn has targeted "the creative industries" among a handful of "New Economy industry clusters" deserving of future rounds of city-sponsored public assistance. His leading opponents -- Max Nofziger and, less specifically, Marc Katz -- have said similar things; indeed, Nofziger, a former three-term council member, claims credit for what little City Hall has done already for the music industry.

Meanwhile, the Greater Austin Chamber of Commerce, in its "Opportunity Austin" economic-revival initiative announced last month, has likewise called out digital entertainment, film, and music as "emerging industries now targeted by the chamber for growth and recruitment." The chamber is not alone. Attention to the bottom line of the entertainment economy grows among the bottom-line crowd with every new threshold set by the local industry. When an Austin-recorded album sells 4.9 million copies (the Dixie Chicks' Home) or a film production comes to town with a $75 million budget (Disney's Alamo project, now shooting in Dripping Springs) or a local digital studio wins 35 "Game of the Year" awards around the globe (Ion Storm's Deus Ex), people naturally want to get in on the action. Being a friend of the media industry no longer seems optional for those who would gain or retain political and social power.

In prior times, the preferred lame excuse downtown was that there wasn't much civic leaders could do to support the creative industries -- and, after all, the men in suits were everything the hippies and slackers and geeks were trying to avoid. In the words of one now-departed City Council member, entertainment "is the best kind of growth industry to have, because we don't have to help it succeed." Compared to Austin's elaborate efforts to woo and win technology employers, our civic exertions on behalf of the entertainment industry -- like the Austin Music Network or the city's at-first-awkward embrace of the Austin Studios at the old airport -- have been somewhat short of aggressive.

When you talk to the players on the field of the media economy, though, it only takes 10 minutes to brainstorm a practical and useful action plan that City Hall, the chamber, and allied parties could implement right now. Some ideas simply call for the powers-that-be to get out of the way, but others imply a more proactive role. Yet to advance the ball here, we need to know our current field position and the direction and location of the goal line. How big is the Austin entertainment economy now? And how big could it be?

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Where the Jobs Are

The "creative class" and its work may constitute more than half the local economy, but the three big sectors of the local entertainment world are only a fraction of that, and not a very well-defined one. The music industry is responsible, according to economist Jon Hockenyos of economic consulting group Texas Perspectives, for 11,200 jobs in Austin and about $616 million in direct, indirect, and induced economic activity. (See chart, p.36.) That's counting actual "production" work -- both recording and performance -- and, in more or less equal measure, music's share of the local travel and tourist industry, which Hockenyos' study (commissioned by the city in 2001) estimates at about 10%. What does "direct, indirect, and induced" mean? Basically, when I buy drinks and pay cover at a club, that's direct activity. When I pay the cab driver to take me home, that's indirect activity. When the cab driver buys gas with the money I gave him, that's induced activity. Hockenyos' model estimates that every dollar of direct spending on music generates another 43 cents in follow-on activity.

Nothing nearly so detailed exists for other sectors of the entertainment economy, yet. (A suggestion being floated within the Mayor's Task Force effort is to do a similar study of film, digital entertainment, and the performing arts.) Texas Perspectives also produced the white paper that kicked off the Mayor's Task Force, in which Hockenyos cites census figures showing that Austin's "arts, design, entertainment, sports, and media" cluster employs 7,850 people directly and generates about $238 million in annual wages. The 11,200-jobs total in the earlier Hockenyos study includes people like our aforementioned cab driver, or the beer-truck guy, or the record-store clerk.

In the music study, Hockenyos estimates that Austin has about 1,000 actual working musicians at any one time, which seems low. But that's comparable to the number of people working directly in film (between 600 and 800) or in digital entertainment (between 800 and 1,000), according to local experts on those fronts. Obviously, the Texas Perspectives music-industry model can't be applied directly to those sectors. On the one hand, compared to the music scene, film and multimedia generate much less (though more than zero) travel and tourist activity. On the other hand, while few full-time music pros make above-average wages, film pros are fairly well-paid, and game developers extremely so. And both sectors are home to larger enterprises with larger budgets than we find in the music scene.

In the film world, the rule of thumb is that half the money spent on a production stays in the local economy. Austin's share may be higher, since we have an unusual amount of local crew talent and famous filmmaker neighbors making mostly homegrown productions. "I think [half the budget] is a very conservative estimate for Austin," says Gary Bond, director of the Austin Convention and Visitors Bureau's film office, "because in most places you can't hire 75% to 80% local crew, and here you can."

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Building the Talent Pool

But can Austin's entertainment economy keep growing without restraint? It depends on the sector. In film, there are only so many productions to go around -- about 250 studio or major independent features annually, although Austin sees probably thousands of "productions" of all sizes and scales a year. Austin has already more or less taken over the Texas production industry -- even though, according to the Texas Film Commission's (incomplete) listing of film professionals, about half of the state's crew pros are Austin-based, in 2002 Austin accounted for 75% of the state's feature-film production.

This is largely because of the Austin Studios, but other cities -- like Dallas -- have film-production facilities, and as with most kinds of commerce, the film world is an ever-more-global economy; movies get made in Canada, in North Carolina, in New Mexico, wherever. "Our only hope in competing is to beat 'em artistically -- how much art you get for the money," says Gary Bond. "The creative talent here is what makes the difference. Here you can get the best production value for the dollar; a $10 million movie looks like a $20 million movie."

Every film project is, in effect, a corporate relocation exercise, and as with our other "creative class" industries, Austin's homegrown film endeavors have developed a talent pool that's now attractive to this niche of out-of-town major employers. "Austin has had crew people working on Richard Linklater and Robert Rodriguez and Mike Judge films," says Austin Studios Director Suzanne Quinn, "and they get experience so that [Hollywood] people hire them and [trust they] know what they're doing. That's why Austin is head and shoulders above" other regional film centers.

While many big Austin film projects still have one or another local connection -- either through the talent (Rodriguez's Spy Kids franchise, Tim McCanlies' Secondhand Lions) or through the subject (the Austin-set Life of David Gale or, of course, the Alamo project) -- Austin has become a place where out-of-town producers can craft a generic work set in Anytown, USA. Witness the acme of Generica, reality TV -- American Idol, Insomniac, and Perfect Partners have all come to Austin to do their dirty business. "One of the smaller of those projects basically came to town to grab a cup of coffee," says Bond, "and they spent $60,000 on housing."

One limit on future growth might be the availability of facilities. The Austin Film Society, which runs the nonprofit Austin Studios, has long-term expansion plans and recently applied for a federal economic-development grant. In addition, because the studios sit in the middle of a 711-acre empty space -- the old airport -- as they thrive, the redevelopment plans for the Mueller site are expected to respond. The most obvious market for so-far-generic "commercial space" included in the Mueller master plan is the entertainment industry, and not just film.

A different challenge to the local industry -- as has been true in other regional film centers and even in Los Angeles -- may simply be finding enough of the people Austin needs to make all the productions that want to come here. A team of UT MBAs is currently doing a research project for the Film Society looking at "gaps in the film work force," says Suzanne Quinn. "Looking at crew lists over the last three years and at which positions are consistently hired from out of town or out of state, and finding out why. Is it because we don't have that skill level here, or is it a perception issue -- that L.A. won't hire an art director that's not from L.A.? And if it is a skill issue, and we need to do training, how would we do that -- through the unions, through the Capital Area Training Council, through ACC?" The study is also looking at support services, says Quinn, because "we're trying to capture more of that 'value added' here in the local economy."

A positive recent development, Quinn says, is that film craft unions "now allow people from throughout Texas to [come to Austin] and work as locals. If they want to come down here they can, which means you've doubled or tripled your crew base. And they're thrilled to come down to Austin to work on The Alamo, and the people in L.A. know that."

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A Song for Smart Growth?

The music industry is facing a different set of obstacles, skewing more toward capital and investment. Nobody thinks Austin needs more musicians or different musicians or better (or more "professional") musicians -- or sound engineers or promoters or other talent. Even less obvious "support services" for the industry -- like the mental health services provided through the SIMS Foundation -- while far from comprehensive, are robust enough to be noticed and valued. And the idees fixes of the last generation of the scene -- Austin's lack of connections with major label A&R reps, booking agents, or managers, the gap South by Southwest was in large part created to bridge -- seem less pressing than they once were. The 2001 Hockenyos study, which incorporates interviews with dozens of people on the scene, doesn't mention "the label issue" at all. Rather, the report's two top recommendations for policymakers were, "Explore ways to reduce costs for live music venues," and, "Work to develop additional opportunities for local musicians."

The live scene has already bumped into what may be permanent limits to its growth -- soaring rents, the high cost of living, and conflicts with other community interests, as encapsulated in the smoking and noise ordinances. It's difficult at best to make a living as a musician in Austin, which Hockenyos describes in the 2001 study as a "buyer's market for live music," and many are convinced that the live scene needs direct intervention, from City Hall, in order to simply survive. That means money at a time when City Hall has little to spare. Some obvious off-the-top ideas, often advanced, include offering utility rebates to clubs. "When it comes to the live music venues, there's got to be some kind of ... well, 'tax relief' gets everyone wadded up, but if you own your own utility, utility relief would be a great thing," says KGSR star Kevin Connor, chair of the city Music Commission. "It's pretty expensive to keep Antone's or Steamboat cool most of the year."

Wadded up or not, as long as people know there is a Smart Growth Initiative that gives incentives to Downtown development that -- in the view of many -- is threatening the live scene, there will be calls for similar intervention to help the scene. "We've talked very specifically about tweaking the Smart Growth Matrix," says the city's music liaison, Jim Butler, "to see if some of the same kinds of incentives could be expanded to help creative activities in Austin." The new Downtown's civic bricks and mortar can also hold up the music industry, says Connor, who feels "the biggest thing the city can do to help the music economy is whatever it takes to get the Long Center [for the Performing Arts] finished. It's not just for the symphony, ballet, and opera, but also for all kinds of music."

The Long Center would, most likely, address Hockenyos' second recommendation, expanding moneymaking opportunities for musicians. The Texas Perspectives study talks about helping acts get bookings throughout Texas and the Southwest, as most of Austin's truly successful full-time musicians have done. However, "when you have the graying of the live music audience, you have to start looking for ways to make a living other than playing live gigs in bars," says Connor. He has for some time advocated developing Austin as a center for music education; and, of course, more recording opportunities wouldn't hurt, either. "You need to think [about] what working musicians can do, that is musical, to augment their salaries as performers."

Though music has been around Austin a lot longer than film has, the actual "recording industry" appears to be a similar point on the curve as the film industry. Not only semilocals like the Dixie Chicks, but people from out of town with no real Austin connections (like, to use an obnoxious example, Russell Crowe) can without breaking a sweat choose to make a record here. "There used to be an idea that you can't make a major-league album in Austin -- you had to make them in Nashville or New York or Los Angeles," says Connor. "But the machines are smaller and more plentiful now, so you can make your record anywhere." The question for a recording artist is now "where do you feel most comfortable, and where can you get the musicians that are strong enough to be on the record?"

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We Got Game, But --

So the music industry would likely have to transform and diversify in order to grow. As for digital entertainment, the gaming world has already seen lots of transformation of a medium that's still very much in its infancy. "We're still waiting for our Birth of a Nation; that's how primitive things are," says Ion Storm designer Warren Spector, often described by game freaks as "a godfather of the industry" and such. "Once we have that magic moment when aesthetic and commercial interests come together, we'll be providing experiences people can't even imagine. I don't even want to speculate where we will be in five or 10 years."

Even by Austin's boom-town standards, the gaming sector has seen remarkably rapid growth, and -- unlike film and music -- Austin has from the beginning been a major outpost of the nascent global industry. "Austin's role is mostly happenstance," says Spector, noting the local industry's roots in predigital products from Metagaming and Steve Jackson Games, the latter of which brought Richard Garriott's Origin Systems to town. "And that nexus started from there. Lay on that the high tech image and appeal, and then on top of that it's a college town where people 'get' games and 'got' them before the industry got big, and it all adds up. Now we're one of the top game centers in the world."

However, that primacy is only true on the "creative" side of the industry; none of the world's major gamemakers, like Eidos (which owns Ion Storm) or Electronic Arts (or, of course, Nintendo or Microsoft) runs its business side out of Austin. This means, from the economic development perspective, that gaming may have its own "label issue."

"At the publisher level there are very few power players who own or control the destinies of a lot of development studios," says Spector. "That's the only business model that works now, because games are so expensive and the [development] teams are getting so big that costs are just ridiculous. We're in the classic Hollywood era, where a handful of people controls what happens. That may change with online distribution or other developments that I can't even imagine; there will eventually be an indie movement that breaks the stranglehold of the big publishers.

"But right now, all of the major Austin players are owned by someone outside of Austin, and that's kind of an issue. I don't want to put thoughts in the minds of the chamber or the city, but they could be wondering what to do about that. But that doesn't change the fact that this is a thriving business bringing in good people and generating high-paying jobs for Austin. We're turning out high-end jobs that attract just the kind of people that Austin needs to stay weird."

The growth of Austin's digital-entertainment sector obviously depends on the scale and pace of the local tech industry and the availability of programming talent; as Spector puts it, "We have to have someone invent the camera for us every time we do a new project." But it also depends on the availability of artists, including filmmakers and musicians, which is why the three sectors are so easily and often treated as a unit. "Game development is the most interdisciplinary creative endeavor I can imagine. We don't exist without writers, without musicians -- creating interactive scores, and entirely different forms of music -- without people who understand sound design, or 2-D or 3-D graphics or animation. Without being able to put those people together, we can't exist."

"Synergy" is a roundly hated word, but when the shoe fits, Austin feels compelled to wear it. The role of the entertainment economy as, basically, a lifestyle amenity, or as a symbol that Austin is the kind of place smart people want to live and do business, has preoccupied the multipronged civic discourse about the "creative class" and the economic future. That, in turn, is what animates discussions -- especially concerning the low-paid music end of the entertainment economy -- of keeping Austin affordable and comfortable for the people who keep Austin weird. But in the best-case scenario, from an economic-development standpoint, Austin's techies and creatives would not be locked in uneasy codependence but would come closer to convergence "as it becomes easier for us in our homes and workplaces to routinely use digital media to do creative work," says Jim Butler. "Austin already has a pretty good image as a place where cool creative stuff happens and cool tech stuff happens. If people think through how not to damage the environment for creative folks while still looking at the way technology can help creativity, there's a great thing for Austin."