Wednesday, March 28, 2012

DD Finds New Revenue Stream .. Students!

VFX Soldier's latest post brings to light a shrewd business tactic Digital Domain CEO, John Textor, has revealed in an IPO discussion held in November of last year. The linked audio clip on the post has Mr. Textor explaining to the crowd of would-be investors one of the ways DD has discovered to to add to its revenue stream.

Digital Domain has partnered with Florida State University and started the Digital Domain Institute. According to their own explanation, the institute "sets a new standard in digital media education through an unprecedented public-private partnership with The Florida State University".

Mr. Textor explains it this way:
What’s interesting is the relationship between the digital studio and the college. 30% of the workforce at our digital studio down in Florida, is not only going to be free, its going to be [student] labor that’s actually paying us for the priviledge of working on our films.

I know what you're thinking, how is that possible? There are laws that protect such things from happening, right?. Mr. Textor begins to answer that:
We were able to persuade even the academic community, if we don’t do something to dramatically reduce costs in our industry, then we’re going to lose these industries .. we’re going to lose these jobs.

So, if 30% of our labor can be free, actually paying tuition, but by [the] Junior and Senior year at the college, [students are] working on real films, as part of the professional workflow, and [they] graduate with a resume that has five major films, [their] name in the credits, and more than just an intership level of experience, then that’s the perfect kind of trade off.

Is This Legal?

DDI's Course Catalog page has a class called Internship. Its easy to assume this will be the class that students register for to obtain the "privileged" work, even though Mr. Textor has already claimed the work to be above intership level experience. USDOL has a fact sheet that defines internship programs under the Fair Labor Standards Act. While the whole document answers the question, this paragraph punctuates it perfectly:

Similar To An Education Environment And The Primary Beneficiary Of The Activity
In general, the more an internship program is structured around a classroom or academic experience as opposed to the employer’s actual operations, the more likely the internship will be viewed as an extension of the individual’s educational experience. [...] If the interns are engaged in the operations of the employer or are performing productive work, then the fact that they may be receiving some benefits in the form of a new skill or improved work habits will not exclude them from the FLSA’s minimum wage and overtime requirements because the employer benefits from the interns’ work.

Calls in to the Florida Department of Education haven't been returned yet. One can guess there are loopholes that are being exploited there as well. The FLSA documents seems to claim that in order for DDI to be compliant, all they have to do is pay their students minimum wage and overtime. Is that enough?

The Broken VFX Business Model

This isn't the first time we've run into a school attempting to exploit students. In the summer in which I was hired, we discovered that Gnomon proudly boasted about their students working on feature films and popular television shows. These days, the big scam is getting tax payers to offset production costs.

Its been pointed out many times, the whole visual effects business has to be restructured. Studios have turned to visual effects as a means to get people to purchase tickets and see their movies. Since the workers aren't unionized, it was only a matter of time before those seeking profits worked to get us where we are today.

Fixing it, will take courage and determination. Its a waste of time to vilify the entertainment producers for doing what good business does. Its time to start being accountable and use the leverage that's inherent in the skills and talent that the artists bring to the table.

Its time, to unionize.

Animation Guild Representation Card


Anonymous said...

John Textor is a scumbag. And of course, it's florida--where he's only one of many. Do the students get credit for making DD a billion dollars?

DD is down for the count anyway. Until they can prove they can create content, they're nothing but just another service company. And not a particularly good one, either.

Anonymous said...

Do the students get credit for making DD a billion dollars?

Probably not, because Digital Domain has never turned a profit, much less made a billion dollars.

Anonymous said...

wow, trainwreck...

Anonymous said...

This is DISGUSTING. I, for one....will be boycotting Tembo, and any other film DD puts out.

And the fact that he boasts about it? The guy is batShit crazy.

Anonymous said...

Our industry has been changing fast and this is nothing revolutionary, but studios, (all) studios are rapidly trying to find ways of reducing costs. Either by working outside of Los Angeles or creative relationships like those in Vancouver or using more of the cg plethora of kids coming out of the cg schools everywhere. It doesn't surprise me if you've really been watching where out industry has been going in the last several years.

Steve said...

Thank you so much for posting this. I emailed and posted it everywhere I could think of when I saw it. It is absolutely exploitation at it's worst. I for one will not be seeing Tembo when it comes out.

Steven Kaplan said...

There's also chatter on Cartoon Brew:

Anonymous said...


Whatever happened to an honest day's pay for an honest day's work?

I would ask who they think they can get of professionals who would teach and train and mentor (and fix all the problems) there. But I'm sure in this economy they can find people willing to train their cheap replacements.

A DD-credit will (and should) be worth much less now, since it's now a pay-to-play house. A diploma mill where you can buy a credit or sell your fellow artists down the river.

It just shows, you've got to compete on quality, 'cause you can't compete with cheap. There's always someone who can out cheap you.

Anonymous said...

As a student, I find this ridiculously disgusting. Won't be seeing this Dumbo rip-off.

Steven Kaplan said...

It just shows, you've got to compete on quality, 'cause you can't compete with cheap. There's always someone who can out cheap you.


Anonymous said...

unfortunately all studios are doing this. if they aren't using slave labor from overseas, they are using (student) slave labor here. and using the desperation of people in this horrible economy against everyone. greed rules now a days. very sad.

and most edu institutions are a scam now. :( they are all about the money..not about educating. again, very sad.

Anonymous said...

jester says: Never trust a studio that lives in a state where it's shape like a penis!

Floridian Animator said...

This is a bad idea. A very VERY bad idea.

And I was excited about having a big studio in Florida again... *sigh*

Anonymous said...

This guy is a scum bag, but it's no reason to bash on Florida. You act like everyone in California are angels.

Anonymous said...

jester says: You know it's really nice to see a animation studio that is not in California. It's good that Florida is having one ..... but since Textor said this, not only he's making himself look bad, it's going to make the company look worse.

Anonymous said...

"since Textor said this, not only he's making himself look bad, it's going to make the company look worse."

They don't need his help. But now their getting it.

Anonymous said...

An issue that is not being raised in the articles associated with this issue is how the students are receiving loans that amount to over 100k and creating enough incentive for private companies to want to access it.

When someone wants to get a loan they typically go to a bank or other lending institution. The bank will ask some basic questions as to how much you want to borrow and what will be done do with it. Based on this and other information at its disposal, like success rates for the intended use of the loan based on past like minded loans made. The bank will assess the risk profile and will charge enough interest to cover said risk or deny the loan outright if deemed unwise.

In the case of education, the intended use of the loan is knowledge the vast majority of this end use is not collectable if the person who receives the loan cant or will not pay back the loans after the case. The lender would be out of their capital in such a situation. Ask yourself, would you want to make any loans directly or with your retirement funds to any random prospective animation/VFX student based on the likelihood in the industry today of being the one who makes it?

Fortunately the government guarantees student loans and also makes them non dischargeable in bankruptcy. This allows Banks to not have to worry about risk and to make loans despite the likelihood of ones ability to pay them back. This also frees the educators to also charge whatever pie in the sky charge they can and still fill a classroom. The animation industry is far worse than others in this regard since young kids will do anything to be able to make a videogame or movie and are being sold on the dream. Without the having the life experience to properly assess the risk vs. reward of this decision and with a culture that promotes education, any education, no matter the cost.

This story ultimately is about one group of people having their futures stolen from them by arms length education system or the direct employer. The students are going to be fleeced by one of these two groups. If the government gets out of student loans and makes them dis chargeable in bankruptcy. The banks will have to make the loans based on their merit. The talent pool will no longer be diluted, the amount of schools will adjust to appropriate levels.

diablo said...


Anonymous said...

They do the same thing at MIT. Nobody seems to bothered by that. Labwork for credit. Textor didn't invent this idea. Sounds like he's making it easier for VFX companies to stay here. He didn't invent the pressures that are sending this industry overseas either.

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