Data-Based Insights & Decision Making as a Creative

It's not difficult to track data, but effectively using it in decision-making is something else.

Since late 2015, my Filmsupply stock footage portfolio has generated 1,276 individual licensing fees. As a Contributor, that revenue gets split with me (currently 45.1%). 2020 and 2021 saw my revenues up 150-200% compared to previous years, but those two years were outliers due to COVID-19 turning live production on its head. There was a solid period in that mess where my cut of that revenue was $6-7,000/month, but those days are long gone. 2023 was a dumpster fire and my average monthly licensing revenue was roughly 47% below my 2022 numbers. So far, 2024 is looking up, but I'm hesitant to be holding my breath.

The chart below helps me feel somewhat better in terms of trying to explain the significant swings in my licensing revenue. As the U.S. Federal Funds rate decreases, it becomes cheaper to borrow money. As that rate increases, borrowing becomes more expensive, making it harder for businesses to finance their operations. That said, I wouldn't say I'm qualified as an expert in this nonsense so I'd take this chart with a grain of salt. If you've got the time, go check out Tyler Vigen's Spurious Correlation where he features charts of correlated data that actually have nothing to do with each other. "Correlation is not causation."

Having a solid understanding of this nonsense has helped me to make better-informed decisions when it comes to investing in new film projects and/or equipment likely to contribute to my stock footage portfolio.

Investments in Projects & Equipment

As of last month, I've made a 13% return on the actual money I've dumped into my unfinished rubber stamp project. Based on my previous data, I was confident I'd make a decent return on the licensing fees from the raw footage. My film has elements of small business ownership and the existing clips in my portfolio around a similar theme have done well in the past. I also know I'd be traveling quite a bit while making this film and I've had a good experience with drone footage of city skylines.

Keeping my fixed costs low has certainly been helpful; I own the gear I'm using and I've kept my additional crew expenses to a minimum. Still, I've had major expenses including a week-long road trip to Washington D.C., a couple NYC shoots, and a trip out to Amsterdam with a couple local crew hires. This project still hasn't been released and could honestly be a hot turd, but the reality is that it's been profitable and will continue to generate revenue via stock footage licensing.

Another example is looking at the licensing revenue generated by my DJI Mavic 2 Pro. Currently, I'm not tracking the revenue generated by each piece of gear with my client projects, but I do know what gear was used for my stock footage clips. There's been a 53% return on investment (ROI) with my Mavic 2. In April 2022, I crashed that flying chainsaw to death and I replaced it with a Mavic 3. I do have some stock footage sales connected to that new drone, but considering I don't have as many clips associated with that gear yet, I can imagine it'll be a hot minute before I see the same types of ROI via licensing fees.

Forecasting

As an MBA student we learned how to use different forecasting models and I've done some nonsense with my existing licensing data, but it's nothing I'd lean too heavily on. It's important to remember that it's impossible to forecast with zero error, meaning forecasts are always inherently wrong. My stock footage sales haven't been exactly stable the last few years and a level of data stability is necessary if it's being used to forecast. Still, I have a good idea of where I'm at and what to expect.

Cool, So Now What?

Do realize that none of this nonsense is directly related to generating additional licensing revenue but simply tracking what's already happening. It's possible to increase the search visibility and potential sales of each clip through search engine optimization (SEO) tools, but I didn't talk about adding more assets to my portfolio. Now that I'm wrapped up on my MBA, I've got the additional margin to go out and create new works that could generate additional licensing revenue.

All this nonsense is helpful in gaining insight and making data-based decisions, but at the same time, I'm fully aware of the fact I'm still a self-described "art kid" out here trying to make creative work. It's a fine line trying to convey a feeling or tell a story while still being profitable.

Can We Talk About YouTube?

This past week or so I've been trying to justify the last 500+ days of my life and my shiny new student loans. In March I'll be a self-proclaimed creative with an actual master's degree in business and instead of being productive and furthering my professional life, I've been digging into YouTube and trying to smash together the creative work I do and some of what I've learned in business school.

No question, I spend far more time consuming video content on YouTube compared any other the other streaming platform (Netflix, Hulu, Disney+, Amazon Prime, etc.). We've got an antenna connected to our TV to get the basic channels and it's been at least a decade since we've had any kind of cable subscription.

According to November 2023 Nielsen data, streaming made up more than 36% of the total TV usage with YouTube alone claiming 9%. Having been around before the internet was a thing as well as essentially growing up with it, seeing traditional network TV be eclipsed by streaming is bonkers.

There's also the ginormous advertising revenue YouTube brings in. Back in August I'd posted an MSNBC video here on this blog that went on about changes in TV viewing and advertising revenues amongst some of the social platforms and traditional media outlets. In 2022, YouTube brought in $29.2 billion in ad revenues, completely dwarfing their competition.

So why bring any of this up?

After the boys went to sleep on Christmas Eve, Anne and I wound up watching some old videos of us on my YouTube channel. Before each video started, we'd have to sit through one or two ads on the work I'd created and I'm certainly not seeing any of that revenue. YouTube is a free service and I know they cover their expenses and make a profit from advertising dollars, but dang I'd have liked to pocket even a sliver of that ad revenue.

Right now my YouTube channel is swimming in old videos from 2006 till 2013 when the cool kids left for Vimeo. The golden age of that video platform is way gone, but somehow I'm still paying them $59.95/yr for a Vimeo Plus membership.

If you've been paying attention, you'll know there's some independent YouTube channels bringing in some outrageous revenues. There's a financial YouTuber I watch with 833k subscribers who laid out his numbers and revenue streams recently. That video sent me down a rabbit hole of similar ones from other independent creators: the productivity dude with 5.1m subscribers and the millions he earned in 2022; a music composer with a PhD and 4.71k subscribers; this dude talking about how much money his wife's fitness channel makes.

In considering what it takes to get monetized on YouTube, it's something like 1,000 subscribers and 4,000 public watch hours in the last 365 days. Currently I've only got 310 subscribers and 120 public watch hours. Needless to say, if I'm ever wanting to see a dime from those ads in front of my videos, I've got quite a hike ahead. That said, I'm not opposed to the idea.

I'm clear-eyed enough to know this isn't a "get rich quick" thing, regardless of what the YouTube algorithm has fed me. Turns out there's also business models built around buying monetized channels, but from what I've read it sounds like a bad idea. There's so much information available on how to get started doing this nonsense, and plenty of it has got to be just hot steamy trash. Thursday I spent 45+ minutes listening to two art YouTubers – of course that's a thing – with their aptly named "How to Avoid the Artist to Content Creator Pipeline on YouTube."

Surely the world doesn't need another YouTube channel, let alone one with my face plastered all over it. Considering how long it takes me to write a single blog post, would I actually have the bandwidth to keep feeding the YouTube beast? Being on the tail end of my MBA and the 1,600+ hours of studying I've logged since fall 2022, what I know now still seems incredibly small compared to what I know I don't know.

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Still, I like the idea of sharing some of the conversations I get to have with people who are much smarter and more interesting than I am. I'm also a fan of attending film festivals as a networking opportunity, but questioning the value of paying film submission fees when instead I could post my project online and use that festival submission budget on a promotional campaign.

Staying self-employed, providing for my family, and helping others are still the main goals. The fact that I've been able to make a living in part due to passive income streams seems like a magic trick compared to the alternative. The tremendous time and effort I've dumped into business school was meant to be a long-term investment instead of simply buying more gear I'd end up replacing a few years later. Surely I can position some of what I've learned in a way that legitimately helps others, covers my expenses, and turns a profit.

Surely the world needs more of this kind of nonsense though:

UPDATE: March 2, 2024

The fact that our six-year-old could barely leave the room as I'm writing this because there's an image of MrBeast on my screen is telling.

Wisecrack is one of the YouTube channels I've followed for quite a while and recently they released a video titled MrBeast and the Toxic Culture of YouTube. It's a long watch and goes deep – it's a philosophy channel after all – but certainly worth your time considering this post. The video goes into depth about a recent Times article, "In the Belly of MrBeast" written by Belinda Luscombe.

One quote from the Times article that I don't remember from the Wisecrack video but is wildly alarming goes into how much time this dude is spending on set.

It all requires an enormous amount of time and effort, especially for someone with a finely tuned need for quality control. Donaldson has 15-hour filming days 20 to 25 times a month and devotes the other days to Feastables. But he’s always been a guy willing to knuckle down if he thinks the payoff will be there.

20 to 25 15-hour filming days a month. For anyone working in production, that's insane and not at all healthy let alone sustainable. It's certainly not an example to follow.

More importantly, there's this line that should raise some major red flags:

“These algorithms are poisonous to humanity. They prioritize addictive, isolated experiences over ethical social design, all just for ads,” he says. “It’s not MrBeast I have a problem with. It’s platforms which encourage someone like me to study a retention graph so I can make the next video more addicting."

I'd mentioned my six-year-old earlier. That 40lb house fire thinks this YouTuber hung the moon. "He helps people." He went on to tell me in detail about several different videos he'd seen where MrBeast gives out life-changing amounts of money to people who could honestly use it. Surely that's a good thing, but how do I approach telling my kid about all the other nonsense involved with making that happen let alone some of the ethical concerns?

Short-Term Investment Returns as a Freelancer & Small Business

So, checking in on a certain blog post from January 2023. That one where I rambled on about short-term investments for freelancers & small businesses. It's been a full year to simmer on and experiment with this nonsense and wanted to share where I landed.

First off, it's worth mentioning that financially, 2023 was a hot mess. Those interest rate hikes intended to cool inflation seem to be making for the soft landing the Fed was hoping for, but the process still felt like riding an unfinished roller coaster in the dark. Higher interest rates made borrowing more expensive, and that certainly meant it was harder to finance production budgets. That squeeze showed up in my stock footage sales which were down about 48% from 2022 and down 51% from a five year average. Then came the entertainment industry strikes. Serious kudos to both the Writers Guild and SAG-AFTRA for holding out and getting good deals, but the process and industry fall out wasn't pretty, especially for those working in production. Thankfully I wasn't directly impacted by the strikes and personally can't blame it for a slower year – my labor income was actually up 6% from 2022 and up 12% from a five year average. That said, I have plenty of friends in film production who are seeing their revenues be well below normal.

I'm not here to whine about a genuinely rough year, but did want to share one of my wins. Last time I'd mentioned it, U.S. Treasury bills (T-Bills) were sitting at just north of 4%. Around the end of May 2023, the 4-Week T-Bill peaked at a 5.9% coupon equivalent. These nearly risk-free short-term investments weren't a bad place to park your short-term money, especially considering the alternative of just leaving it in a basic savings account which as of Dec. 18, 2023 is 0.46%. I'll not go into the details about T-Bills here, but if you're interested, go back to that previous blog post where I dig into that glorious bond nonsense as well as high yield savings account options.

Part of the way I track my financial nonsense is based on the gross profit of each project. From that gross profit, I set aside 20% to cover end of year taxes and tax prep fees. For example:

\[Project\ Revenue\ - Project\ Expenses\ = Gross\ Profit \] \[$1,000 - $100 = $900 \]
\[Gross\ Profit * 20\% = Set\ Aside\ for\ Tax\ Purposes\] \[$900 * 20\% = $180\]

Instead of just parking that cash in a savings account like I'd normally do, this year I bought U.S. Treasury Bills directly from the U.S. government at treasurydirect.gov. You can only buy T-Bills in $100 increments, so my individual purchases ranged from $100 to $7,500 throughout the year.

This is where I'm supposed to talk about how I did everything according to plan. Instead, for the first few months of the year I used a good deal of that tax money set aside to pay down business related debt from 2022. The return I'd have made in those short-term T-Bills making 4-5% wasn't worth the interest I would've been paying on that debt with its 15+% interest rate. Once I got that debt paid off I returned to my short-term investment plan, refilled those cash reserves spent to pay down debt, and kept at it throughout the rest of the year. I also planned it out so that those purchased T-Bills would all mature by around mid- to late-December, allowing me to cover my business taxes and tax prep fees.

I experimented with buying different lengths of T-Bills throughout the year, but for the most part just stuck with buying the 4-week option which is the shortest period available. There's a difference in the interest rates for each of the other options and the longer term ones generally earned a higher return, but I calculated everything out and with the amounts I was dealing with, it didn't make a considerable difference. At first I was buying the T-Bills in one-period increments, but then started setting them up to where at maturity they'd automatically reinvest for another period at the current rate.

I'm a big fan of financial transparency. As a household, statistically we're in the top 20% of income earners in the U.S. according the U.S. Census Bureau. St. Anne the Wife is a public school teacher with two masters degrees here in Oklahoma, which according to USAFacts ranks 35th in the nation in terms of teacher pay. I'm a self-employed creative with a bachelor's degree and will finish my masters degree in business (MBA) this March. Currently my take home pay is less than half of the the average MBA salary here in Oklahoma and I'd honestly prefer to keep doing my own thing after graduation, so take that however you will.

Could I be earning more than I am? Yes, I believe so.
Am I primarily motivated by how much money I can make and having more things? No.
Do I enjoy the work I get to do? Most of the time.
Am I doing the right thing and providing for my family? I sure hope so.

I feel like if we were more open about our finances it'd help others in figuring out their own financial nonsense. It's one of those "rising tide lifts all boats" kind of thing. There's a Planet Money podcast with comedian Maria Bamford and financial transparency that I'd recommend if you're interested. With that in mind, by the end of November 2023 I'd done about $111,000 in actual revenue had a gross profit of $82,000. That left about $13,000 set aside for end of year taxes purposes. That number is a bit off from an actual 20% due to one of my larger clients this year requiring me to be hired and paid for my labor fees as a W-2 contractor instead of a typical 1099 S-Corporation and they withheld those taxes on their end.

Below is a line chart of what my actual cumulative U.S. Treasury Bill earnings looked like compared to what that same amount of cash would've done had it just sat in my savings account throughout the year. Here's a line chart of what my actual cumulative U.S. Treasury Bill earnings looked like compared to what that same amount of cash would've done had it just sat in my savings account throughout the year. You can tell I had some small successes and got more confident during the summer, then got serious about this hot mess starting in the fall. It's worth noting that the returns are directly related to the amount invested, hence that bar chart above. Like I said, I stopped jacking around and got serious in the fall. My cashflows are typically very low in August, but ramp up considerably right after that.

Let's be honest: $150 extra isn't all that much, especially considering the infrastructure and spreadsheet work I put in to track all this nonsense. That said, no question I'll take that return over that $13 I'd have made otherwise had I just left that cash sitting in a basic savings account. Let's not get into the fact that I'd have had a $335 return had I stuck with my plan through the entire year instead of paying off that business related debt those first few months. Will I continue doing this in 2024? Yep, and I've already started. As of the end of December 2023, those four week T-Bill rates are still up in the 5.4% range.

Maybe the biggest takeaway was the fact I wasn't freaking out the last few months of the year. Normally I'll end up digging into that financial cushion more than I should to cover other expenses, leaving me scrambling for cash at the end of the year. This short-term investment nonsense put just enough room in-between me and that cash reserve to keep my hands off it.

Another takeaway is the fact that I saw positive gains with little to no risk and without putting myself in a bind. Again, an additional $150 return isn't much considering I spend about that on coffee each month. Previously I've justified digging into my cash reserves to buy gear I'd assumed would pay for itself, but it doesn't always work out.

I'm also avoiding the fact that the small stock market portfolio I'm actively managing – not our retirement accounts – is up 40% year to date compared to the S&P 500 being up 24% this year. Me being greedy is thinking about how I could've put that short-term cash into the stock market and made a much heftier return, even after paying the short-term capital gain taxes. But then there's the scars from last year and the S&P 500 having been down 18% in 2022. I'm considering putting a small amount of my profits into the stock market via my S-Corp and actively managing that portfolio as well, but haven't started just yet. For sure that'd be a long-term investment decision and one outside my regular SEP IRA retirement contributions.

Telling Strangers on the Internet how much money I make

A dude on the internet I've never met but followed for years and totally respect has been posting a series related to money and creatives. I've already posted a couple of my faves here on the blog, but when he dropped a link for anyone who'd be interested in sharing their experience I jumped at the chance. Now it's out in the world and kinda feels like standing there naked in a cold room in front of a doctor and their 58,000 social media followers.

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Is this a flex by any means? Oh, goodness no. You saw how much I make, right? Do I believe in honest transparency in hopes of helping someone else who may be in somewhat of a similar position? 100%. Is there a bit of irony there in the fact that the Instagram post didn't include my name? Well... Pretty sure anyone determined enough to find out who it is knows how Google works.

When I was first getting started as a freelancer, I don't remember having honest and open conversations with other freelancers regarding their relationships with money and finances. Now I'm probably too open about it and more often than not overly pessimistic. Surely I'm loads of fun at parties.

Rather than rehash what I'd already written for that dude's survey, I'll let you scroll through his Instagram post of my response embedded above.

Smashing Together Art Kid Assets and Math

You know what feels nearly pointless? Trying to come up with some concrete numbers on the actual return on the investment (ROI) I've made on my gear over the years. By all means, I've got access to those numbers considering the detailed records I keep, but the wheels fall off once I start digging into the minutia of the individual items in my kit, the associated costs, and what I've charged for every single job.

It's not hard tracking the the big ticket items like camera bodies, lenses, computers, etc., but good grief I've wasted nearly a full week trying to come up with the actual breakdowns of what I've spent on the additional accessories to make those big ticket items functional and how I've charged for them. There's also the revenue made from my stock footage sales – because I keep detailed records with that nonsense too. Let's not even get into how I dug through my tax returns from the last few years trying to plug in the deprecation on my larger asset purchases and how that factors into this fool's errand.

Why even attempt something like this? Well, for one thing, I had this past week off in between my MBA modules. Two, and more importantly, I'd like to know how much my assets are costing and making my business. It's not like my business is rolling in money (just ask Saint Anne the Wife), but dang... If there are better ways to spend and invest extra money, why wouldn't I try to figure that out?

Ideally, I should be able to track my gear purchases, the rates I charged clients each time I used that specific item, and come up with a specific date as to when that item paid itself off and became profitable. Ideally too if I got to the end of the useful life of the equipment and sold it off, I'd be able to plug in the amount I'd sold it for (salvage value). From that thicc spreadsheet of data, I'd be able to come up with an economically sensuous-looking graph showing the fixed cost and an upward-sloping line following the cumulative amount I'd made with that purchase.

For example, just comparing the rough costs of my RED camera packages (not including lenses, lens accessories, tripods, EasyRig, etc.) and Mavic 2 drone kit and the amount I've made via only my Filmsupply stock footage sales, I've made a 133% return on those assets.

But alas, even with all the records I've kept since starting my business nearly 15+ years ago and given my current equipment list and constraints, I'm pretty sure it'll take me more than a week to accomplish my goal of knowing which individual asset is making what. Like, I'm assuming there's a difference in the ROI percentage on a camera body that'll age out in 5-10 years vs. the type of long-term return on lenses and light stands. This is probably why firms employ accounting departments. Surely there's software out there that'd track all this and if not there should be, especially for small firms like mine. Sidenote: I'm starting a Management Information Systems class this week where I'm sure we'll dig into something like what I'm talking about. Twenty bucks says I'll end up developing my own relational database system that'll track all this nonsense.

This last MBA module had me in a Managerial Economics class where we were studying pricing models and using some geometry to calculate demand, marginal revenue & costs, profit maximization, and some other nonsense. Turns out my small business is essentially in a monopolistically competitive industry where there are many buyers and sellers, where each firm produces a differentiated product, and there's free entry into and exit from the industry. I say "essentially" because there's not really "free entry and exit" considering my upfront costs, but I'm nearly certain you're not here for a graduate-level academic lecture on the economics of a freelance cinematographer. Remember that geometry we were using to calculate profit maximization, here's what that kinda looks like.

Is it essential to know all this? Hard no. It doesn't take a graduate-level business degree to be an art kid. I will say though that having a better understanding of this hot mess should allow me to make better financial decisions related to the work I get to do as a creative.

One of the beefs I've had over the years is working on client-provided gear that actually hindered the work I was doing. As a freelancer, I'd be on set using their prosumer-ish and broken-down equipment while the staffers were nursing sunburns and hangovers after another weekend at their lake houses. As a camera operator, am I better able to nail a challenging focus pull with a higher-end cinema lens and follow focus vs. a still photo lens? Yes. Will that precise camera move look better on a higher-end tripod compared to that $150 excuse for one? Yes. Does the image quality and actual on-set working experience you get out of an Alexa, RED, or even the higher-end Canons and Sonys stomp what you get out of those lower-end camera bodies? Again, yes.

All that said, it doesn't always make financial sense to be using high-end gear. I feel like this is where the art I get to do smashes up against the actual math.

"Does it make more sense to buy or rent that particular item?" Show me the math.
"Is my $13,000+ tripod actually necessary for that locked-off interview?" Well...
"With the clients I normally get to work with and the market I'm usually in, should I get a matching pair of Alexa 35s kits when a set of Sony FX9s packages would accomplish the same goal?" Hmm...

Show me the math and let's talk about the potential long-term revenue models.

Punching Financial Anxiety in the Face

I nerd out about spreadsheets. It started in college while I was tracking money as the financial manager for a handful of touring music groups. As an undergrad, I carried around a spreadsheet breaking down each day into 15-minute increments to keep track of how I spent my time: class, music rehearsals, eating, studying, sleep, etc.

Fast forward to today, there are jillions of tiny little digital boxes with personal and business records going back further than I care to admit. My spreadsheets don't hold a candle to the actual financial software I use for business and personal use, but when it came time to apply for a small business loan the bankers complimented how detailed my Profit and Loss statements were.

Something else to know is that I'm an anxious little monster, especially when money is tight which is not helpful in the least.

More than anything – and this should be obvious – the main business spreadsheet I keep records a running total of project money in and out as well as profits. There's a good deal of other information riding shotgun, but my point for this post is keeping track of the money, specifically the profits, and having at least an idea of what's ahead. In times past, I thought I had an idea of the timing for my busy and slow seasons. "The winters are always slow" would've made for an appropriate face tattoo considering how many times I've said it. Turns out I was only partly right.

Last week had me Googling spreadsheet formulas – as one does – because I was looking to try and visualize some of the financial data I'd recorded over the years. I'd found some nonsense formulas, plugged in my data, checked/re-checked, and set up a graph to visualize the info I now had. The graph below visually represents my small business's year-to-date monthly profits, beginning in 2014, as columns with the purple line as an average of each month.

Sharing my financial specifics isn't relevant or helpful, but having been at this for a bit, the records I've kept are somewhat of a yearly road map to help me understand my cash flow, get a grip on my slow and busy seasons, and anticipate the associated anxiety. There'll always be outliers – June 2017 was awesome – so that's why I'm so interested in the averages.

Turns out my "Winter is Coming" fears aren't as scary as I've made them out to be while June can go straight to hell. July is getting started and with it comes the upswing of early fall numbers; Early winter just looks like a drunk toddler with a blowtorch.

Again, I'm an anxious little monster and I know tons of other freelance creatives who fight these same demons. This colorful little roadmap brings me back to the reality that some months are better than others and my fears of "I'll never get any more work so I should get a real job" are just dumb. This June was slow – as usual – but I intentionally used that free time to punch my anxiety in the face by working on personal creative projects and adding to my stock footage portfolio. Staying physically active is also crazy helpful in dealing with my – at times – crippling anxiety issues. Thank goodness the training for the Oklahoma City Memorial Marathon always starts in early January and helps keep my winter slow season demons at bay.