[Neil Hurwitz]

Ron said
We also give our people IRAs and we pay all withholdings and workers compensation.

Please explain How you GIVE your people IRA accounts?
It has always been my understanding that this is a vehicle
for the individual to set up,hold and keep with their money
either with before tax dollars (tradional IRA) or with after tax dollars (Roth IRA)

With that said, I’d like to tell you that the world is changing so fast that EVERY company that isn’t consciously and actively trying to put itself out of business and replace itself with something better is just working itself slowly towards the cliff…

Total Agreement

We are in a time of such chaotic and turbulent change that the death of companies like Howard Schwarz Recording is no surprise to me, in fact I am surprised they lasted this long with the business model they were using. Truth be told, they were probably feeding it money for years, waiting for things to “turn around.”

The surprise here was that this was a very successful firm for decades, with substantial high paying clients and reputation.
So the bigger question is exactly what went wrong? Was it their
Business model(great studios,equipment,people)? Owner starving the company to maintain lifestyle?
The cost of providing a living wage? Medical Insurance? Lease renewal on the studios in NYC?
I think laying the failure of this type of company on the
catch all phrase of “Business Model” is an oversimplification
at best. I wish more data was available on this collapse so
we could indeed analyze it and learn from it. However
when I see comments from others with a lack of specific
information boasting about how they have figured it out and have a superior business model, I can’t help myself and must ask
for specifics. There was a world of difference between your
response and the other member who responded. I think all
here can benefit from a probing discussion. After all,
we all have the same desires, To do good work, Make good money,
Raise our families in Peace and Prosperity, Preserve the Earth
and then be left alone by all other forces.

This isn’t a recession and it isn’t a bump in the road. This is the New Normal and welcome to the future that none of us wanted.

Total Agreement

<i>Me, I do not bemoan the death of companies as much as I bemoan the collapse of our educational system, which is completely failing in its duty to educate our young people to know how to compete in today’s world.

Now that’s a tragedy…

Once again total agreement,

But being someone whose significant
other is a high school teacher, I can say without reservation
or equivocation that a huge part of the collapse of the educational system is not the fault of the people employed by that system, ie: the Teachers. Today’s student (grades 1 thru 12) spend just 10% of
their time in school and in that time the teacher is supposed
to educate them . Unless the student is engaged, motivated
and prepared by their parents it’s just not going to happen.

As an additional comment I would say that you are to
be commended for the things that you do for your people.
A good living wage (career wage) Medical Insurance,
and so forth, I do believe that you are the exception in our space.

Best Regards
Neil Hurwitz

[Neil Hurwitz]

Completely asinine from Apple to drop these functions (if true), but when you have your head in the iCloud you tend to not think that clearly in terms of professional video production.

What makes you think that Apple gives a rats ass about Professional
Video Production anymore or if they ever really did?
As of the most recent stats from Apple, 75% of Mac sales are for
Macbooks. Apple is now a Lifestyle Brand. Just go to any college campus in the fall and you will see millions of new freshmen walking around with new Iphones, Ipods, Ipads and Macbooks. FCP is going to go away as we know it today. You don’t need a crystal ball to figure that out. The market is just too small. Junior running around with his new sub 1,000.00 camera making movies for YouTube is another story all together and I bet we will see some pretty interesting stuff from this bunch. We all use word processing programs on a regular basis now but 25 years ago there was a great profession called a “Wang Operator” or how about a “Chyron Operator”
The pace of change in this biz is crazy. Now that Avid has changed it’s pricing it is a viable alternative and so is Adobe.
But don’t think that in 10 years from now, knowing how to make a
video on your computer is not going to be as common as being able to read is today and this will have a dramatic effect on this market.
One could even make the argument that Apple should sell FCP with the proviso that it is forever limited to the Mac OS and that it can’t sell for less than a Grand. That would make everyone happy?

[Neil Hurwitz]

One of the most successful publications in our industry,
published continuously for about 50 years and is about as close
to a money tree as you can get is the MPE guide book.
That thin yellow book that we have all seen and used at some time.
The key to their success has been the fact that once you take out
an add they never raise your rate as long as you keep it continuously active so lets say 20 years ago you took out a half page add for lets say 500 bucks and kept it in there till now, you’re still paying the same 500.00 But if you let it lapse one issue you go up to the new rate which might be 1,000.00 A tremendous incentive to never letting it lapse. Grandfathering rates to old clients
is a sure fire way of holding onto them. Try to slip a rate increase
in and it’s like giving them permission to look around. Not a good idea in today’s world.
Huey Long once said “If your not getting something for free, well then you’re not getting your fair share”

[Neil Hurwitz]

Walter,
Thanks for the detailed answer, It might help others to
fine tune their business model. However I suggest you visit the
following link and discuss with your accountant.

https://www.irs.gov/businesses/small/article/0,,id=99921,00.html

This will cover what I called “Payroll Taxes”
which are alot more than what you withhold.

I once hired a
Temp for 2 days from an agency to cover for my receptionist who
got sick unexpectdly. This Gal worked at my place for two days,
was paid by the temp agency, who I in turn paid.
Jump ahead two weeks and this girl applies for unemployment insurance
listing me as her last employer. This brought down such a sh-tstorm
you just can’t imagine, An audit of my payroll going back 3 years.
I never appreciated my anal bookkeeper so much as then. These people are ruthless, unforgiving, and they want your Money. In addition I suggest that you find a health plan for your people and make them pay a percentage with before tax dollars and the other portion is tax deductable for you as well. A good bang for the buck.
That being said, My son who just graduated college is getting job
offers that feature 2 weeks vacation, 7 sick days and 3 personal days
and an 80% company paid health plan & a .75 to the dollar matching
401K contribution. So I would advise him not to
work for a compensation package as you outlined.
Thank the stars he is not in this
business but is into global logistics.

[Neil Hurwitz]

Walter writes
“Volume of work + Low Overhead. That’s our formula simplified.”
No doubt a good formula But I do have a few questions
1. Do you pay a living wage to your employees?
2. Do you provide health insurance? sick days? vacation pay?
3. Do you use unpaid interns?
4. Do you carry liability insurance? original negative insurance?
5. Do you pay all your payroll taxes?
6. Do you use the abusive and Quasi-legal practice of Permalancers?
7. Do you pay overtime?
8. do you pay workers comp?
This list can go on and on and on, so
could you, for the benifit of all explain in detail
exactly how you keep your overhead low?

[Neil Hurwitz]

As the poster of the original piece of news I offer
some comments on this discussion.
1. HSR had a 37 year run of great success.
Nobody here should comment about how to survive until they reach
Half That Age. They lasted so long because they were able to
Adapt.

2. I find it somewhat ironic that everyone has latched onto
Debt load as the killer in our industry.
I find that to be an oversimplification if not dead wrong.
For sure, a low or non-existent debt load makes it easier
to withstand slow periods but debt load is not the big killer.
In addition paying for equipment in cash, up-front, might not be
the best allocation of capital

3. So what is the killer? Operating Expenses, Operating Expenses
One noted member here says that by keeping cost in line they
have not raised rates in ten years. Well then they are
actually working for a lot less because everything costs
more now Gas, Electricity, Medical Insurance,
Liability Insurance,
Food, College Tuition, in short EVERYTHING so treading water
to make the same rate is well, Treading Water.
In the end There will be some huge companies
most likely formed by roll-ups and some very small shops
run by owner operators, But the vast middle is going away.

As a side note I have a good friend who is an attorney
(managing partner) of a 35 lawyer firm Who tells me that
if they could only bill at 250.00 per hour They would close
tomorrow, No expensive equipment, No build Out, No nothing
except personnel, But how do you pay the Rent,
Electricity, Phones, Medical Insurance, Sick Days,
Vacation Time, Payroll Taxes, and so on if you can
only bill 250.00 an Hour.

So in conclusion, I would like to hear about how you all
moderate your Operating Expenses and not about debt load

As seen above accounts desk
Accountant: Don’t spend money you don’t have
Client: Always a simple answer to a complicated question

[Neil Hurwitz]

“by cam khoury on Apr 26, 2011 at 11:54:14 am

Fair enough Craig but I think we have to consider the true nature of what Final Cut is really doing for us as professional editors. In and of itself, FC is just a basic editor and when compared side-by-side with Avid it’s feature set was weak. For instance, Avid provided (and continues to provide) animatte, excellent keying, tracking, exceptional motion effects, cloning, painting and so on all in a unified interface. FC offered none of these. The best FC could offer was a cheaper cost point especially when installed with third-party hardware such as Aja and BM.”

Ah Here is the real NUB of IT
I get a kick out of all the Pissing and Moaning about what will
or will not be. I don’t know anyone or any edit house that bought into FCP because it was better or even close to Avid 9 or 10 years ago, But it was way way CHEAPER. End of story
How many here are in their own shops now because of the entry point
in terms of dollars that FCP offered? Who cares what is or is not going to be in the new FCPX? Avid and Adobe have now adjusted their
pricing to be more in line. So the solution is now PICK WHAT
YOU WANT, there is not going to be a huge cost difference.
What most are worried about is What is it going to cost if I decide to switch? What have you all done, subjugated your free will
to APPLE. Throw the hammer back at APPLE.
I quaranty they are more worried about how many Ipads and
Iphones they sell in MAY than the amount of FCPX they sell in the next 10 years.

[Neil Hurwitz]

I’d wait a little bit if you could
See Below taken from MacRumors
It wouldn’t surprise me if Apple put
thousands of these in it’s new I-Tunes streaming complex.

“According to 9 to 5 Mac, Apple is “toying with” a redesigned prototype for its Mac Pro line, narrowing the design from its current 8.1-inch width to something slightly over 5 inches wide. Combined with a slight reduction in height to around 19 inches, the redesign would apparently allow the Mac Pro to be rackmountable in server cabinets as a 3U component.

Nearly eight years after the Mac Pro’s current design debuted, Apple is toying with a re-designed version of the product. The new design is said to be narrower at just over 5-inches and a few inches shorter at around 19-inches. One of the reasons that Apple might be making this particular Mac Pro prototype smaller is because it is able to fit on to a standard server rack.
Apple of course used to offer its dedicated Xserve product line offering a thinner 1U component for rackmountable use, but the company discontinued the line as of January 31st of this year. The company has since introduced a new “server” configuration of the Mac Pro, but a redesign to accommodate both standard upright orientation and a sideways rackmounted one would likely be a welcome move for server fans despite the significant increase in rack space required.

The report claims that Apple has developed a “stacked” drive configuration utilizing sleds capable of handling two conventional or solid state hard drives apiece, increasing the density of drives in an attempt to squeeze all of the existing components into the smaller form factor while still preserving space for expandability.”

[Neil Hurwitz]

[Neil Hurwitz] “1.There is no resale value for FCP software, when you bought it
it was an expense not an investment
2. You have the option of staying just as you are
3.Switching to Avid is going to cost you more
So Suck it up, don’t worry about your INVESTMENT (not)
You blew the money the second you bought it
Buying software is not like buying a FDIC insured CD
YOU ARE IN BUSINESS, SUCK IT UP
JEEZ”

Matt Callac
“You’re totally wrong. Purchasing FCP, while being an expense, it’s also an investment.” .

You’ve Got To Be Kidding
Let me educate you just a bit, Here we go to “Accounting 101”

When you write out a check you Credit Cash
and Debit either an EXPENSE Account OR an ASSET Account
Your cash goes out the door and it’s classified as either one
Not booth. If your accountant (you’re in business, so you have one)
lets you or tells you to capitalize a 1000.00 disbursement for software, Please get another one, you are getting bad advice.
What the hell are you gonna do, capitalize the 1,000.00 bucks and take a 200.00 per year depreciation expense against it for 5 years? By the way classifying a disbursement as an Asset buy and not an expense is one of the ways large corporations lie about their
P&L and Balance sheet. Hey we really didn’t pay the phone bill
we made an investment in telecommunications. This has the effect of
understating expense, therefore increasing profits and overstating
assets on the balance sheet, therefore making the company appear
more healthy. Think Enron
Your money is gone the second you tear the shrink wrap off any software, This is especially true for software costing what FCP does. Thinking that it has any monetary value ie:an asset, after that is just not good thinking. However it still might have some non-monetary value in the fact that it allows you to sell your time working with it to make some money.

[Neil Hurwitz]

” How does our nearly 10k in licenses translate for a $299 dollar app you download from the App Store? I know a bunch of people who don’t really use FCP to make a living will say its BETTER and CHILL OUT and WHAT DID YOU EXPECT. But get real. This is no change to our editorial style with this release all it did was dumb down our investment, if not make it worth NOTHING.
Anyway, AVID here we come…”

My previous post was in response to the above posted
by Alexander

Neil Hurwitz