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Man, I almost fell asleep before I had an interesting idea. My last post got me thinking about how so many movie production companies green-light such crappy movies (specifically I'm thinking about Poseidon and the sure-to-flop Snakes on a Plane).

I'm not a movie mogul (nor do I have any experience in the movie industry), so my understanding of the process might be a little light.

Let's assume there are two specific problems that are contributing to the decline in movie quality today:

1. The costs of movies are high enough that a few flops can affect the bottom line of the production company (today it seems like Sony, Time Warner, News Corp, etc.), which make companies that produce blockbuster movies risk-averse (and thus the love of craptacular sequels
2. There is no true mechanism for understanding if a movie will be "popular" with movie crowds by these companies

So what if there were a virtual market that allowed you to buy 'stocks' in movies under production?

This market would function similarly to the stock market - a production company would issue shares for a movie under production, and people could buy these common stocks (which would be used to make money). The stock could be freely traded once bought by traders; the total profit of the movie (based on movie revenues/DVD revenues) would be issued to stockholders in a dividend-like fashion.

The upside of this market is that it allows the cost of developing large-scale movies to be distributed among the masses. Furthermore, it diminishes the value of producers having a "say" (the movie stocks would simply be a mechanism for getting money to the director, meaning the "stock producers" would have absolutely no say in the artistic direction of the movie). It's added value is that once common stockholders have a vested interest in movies, they are more likely to invest in movies that will be popular.

I can't imagine anybody sane would invest in "Snakes on a Plane" or "Poseidon" as a concept ... and thus these crappy movies would probably not get made.

It seems today's economy is all based on managing risk - businesses are now able to take advantage of risk arbitrage, so why can't we extend this concept to movies? Maybe less crap would get created, *and* we could have some fun while doing it ;)

The only downside to this type of market is that some unique movies would probably not get the greenlight from the masses - the Matrix (first one) would have been a hard sell to the common masses (imagine trying to pitch that). This concept is not meant to completely replace the financing mechanism for movies - it is simply a way to allow movie companies to distribute some costs to the general public, and also to perhaps allow some directors to get some cash for their movies (if necessary).