Inside Production: Walter Schoenknecht

Expense-Side Economics

Among the many creaky aphorisms I'm fond of dropping on those around me, none reflects that good ol' American bottom-line sensibility as much as this one: "You get nothin' for nothin'."

I'd always taken that phrase to mean that you've got to give to get something in return; you've got to pay to play. Lately, though, I'm sorry to say that for me, an entirely new variant has emerged: You can't charge a client for equipment he or she can't see.

The problem of charging for infrastructure is not a new one. There's no doubt that the price of your double-skim-mocha-latté includes the cost of the super-duper espresso machine; or that the electrician's charge for installing a ceiling fan makes you a major investor in his new 18-volt cordless drill. It's no secret: part of the cost of goods and services goes toward the machinery used in the process.

In the days of yore, and specifically video yore, there was no question that a $600 per hour charge for a fully-equipped online editing suite included not only those few items you could plainly see-a CMX keyboard, a big monitor and some speakers - but also a wealth of gear behind the scenes. Distribution amps, patch panels, VTRs and routers were understood to be essential, if pricey, parts of the big picture.

CHEAPER IS BETTER

Today, thanks to Mr. Jobs and Mr. Gates, everyone has heard that you can edit video with a simple desktop computer. Trouble is, even well-educated folks who ought to know better tend to reduce this notion to an absurd oversimplification: run out to Crazy Manny's Computers, buy one for $1,500, edit video. To some degree, the pricing we offer our clients, often based largely on "what the traffic will bear," is influenced by the common assumption that our equipment is just as cheap as theirs is at home.

The cheap equipment scenario plays just fine for the archetypical desktop editing startup, which I usually characterize as "some goateed guy with a G4, editing in his underwear down in the basement". But in any other scenario, the infrastructure needs to be more substantial(an ever-growing heap o' hard drives, big flat panels, powered speakers-nice powered speakers. And a good mixer.

And how about owning more than one VTR? Perhaps even a few different tape formats? An analog waveform monitor and vectorscope would be important. You can't ignore digital signals either; how is it that those simplest and purest of signals, AES and SDI, require so much terminal equipment to keep them pure? High-bandwidth coax for the 601 video, 110 ohm cable for the digital audio, DA's, synchronizers, A-to-D converters.

GROWING PAINS

When you add a second or third non-linear editing system, the cash really starts to fly. Monitoring and distribution become problematic; a multi-level, format-agile routing switcher becomes a necessity. Centralized file storage over a Fibre Channel SAN is a real possibility, with switches and hubs and $1,000-a-pop network interface cards. Of course, much of this new hardware needs software, too... disk-array striping utilities, paint programs and compositors, compression applications and the like.

You get the picture. More correctly, you get the bill. Leases and time payments and credit card bills. And the best part is that you can't really pass all these costs on to your customers.

TURNING THE TABLES

The problem is a thorny one, and hard to rebut: The work we do looks like it ought to cost less than we charge for it. It doesn't cost less, but it looks that way.

I've tried to come up with creative solutions to this dilemma, but there just aren't any real winners.

As I see it, we could all sell off our little production companies, strip down to our underwear and get down in the basement with our goateed brethren. Not an attractive option, and a truly scary mental image.

We could start to charge for infrastructure. By simply dividing equipment cost by its useful life, we can quantify all those nasty little charges that so often escape us. For example:

• 1 hr. Edit @ $150/hr.
• 1 hr. Routing Switcher x 4 Crosspoints @ $5/hr.
• 11 Gb Hard Drive Space Rental @ $12/Gb/day
• 4 hr. Use of FireWire Cable @ $0.50/hr.

This one's tough to implement... need to hire an extra bookkeeper, or maybe rig old taxicab meters. But we're on the right track.

How about educating our clientèle? We could talk about our investment in quality, and how it guarantees a superior product. We could give back-of-house tours. We could do and say all the things that make clients comfortable with our pricing, acknowledging the value they receive and building trust(in other words, creating a real working relationship.

Nah. Too obvious.

Walter Schoenknecht is a partner at Midnight Media Group Inc., a New York-area digital production facility. You can reach him via e-mail at walter@mmgi.tv