Is cinema overpaid ?

Rumour 1: Rajnikant making a cool 40cr off Shivaji
Rumour 2: Akshay Kumar getting 17cr for a forthcoming movie
Rumour 3: Salman Khan demanding a pay package of 50cr for his next movie

If you follow Indian cinema, or at least either Bollywood or Chennai film world, you would immediately sign me off for calling these "rumours". These are facts, you would say. Or that these are stale statistics, as the actual figures are much higher. Whatever. But we got the idea.

Film personalities are paid too heavily in India. They may not have equaled the salaries of their Hollywood counterparts, but still they are too highly paid. Lets look at the most basic facts first -

Per capita Income, India - Rs 30k approx (1,2)
Per capita Income, USA - $47K (=Rs22.5 lack approx)

So if an actor makes $50million in US, he is earning 1060 times the average salary of the US citizen. If an Indian actor makes, lets say Rs20cr, can you make out the difference? Its 6666 times. And the average citizen in US makes 75 times more than an average Indian.

Thats just for the disparity. Now lets see how it really works.

The film works more on the appeal of actors than the skill of storytelling. So the actor is paid a fair share of it. If the film can earn 50cr, what's wrong if the actor demands some 10Cr. A film is not priced based on production costs plus the expected profits, the way all other commodities are. It is priced based on the market demand.

Lets assume a family of five, or a group of five-six cinema goers once in six months, may be as a celebration, may be a good film, may be exams getting over. That leads us to a very crude figure of approximately 1 person every month, out of 5. It means, every month, you have around 20 crore people likely to go to a movie. If the industry decides to release 5-10 films a month, that makes it to average 2 to 4 crore people available for your film. If your tickets are, say, 20rs to 100rs, you probably have a market 40cr to 400cr, ready, all the time. Gosh!

And the actor demands just 10-20% of this. The whole country is out to spend on the movie for him, and you give him just 20% of it? He is the one who converts this 'probable' market to a 'certain' one. By the appeal of his charisma, he pulls in the 'first day first show' goers, who serve as the film's advertisers then on. He also pulls the hero-worshiping-hero-starved Indian masses, who form a part of the crowd more frequent to cinema than my once in six months assumption.

The next possible question is can all of these 20cr people really pay. They are poor. Can they afford it? The answer is YES, they do. Even when its not easy to afford, they do, if they can find the opportunity and convenience. Doesn't matter whether the movies are good.

Entertainment is a very important human need.
Hero is a very important Indian need.
There is a big demand for both. Film industry is just taking advantage of the huge demand-supply gap.

There are few more things film industry takes advantage of -
1. Technology. Cinema as a medium is revolutionary technology. In all older forms of public entertainment (like theater), the act had to performed each time to earn money. Here you perform once, store it on a device, use another device to play it, and you are done. Money comes while that storage device performs on your behalf.

2. Copyright Laws. Government and law makers have made sure that you can't use the device to watch the film, without paying to the producer. Never. Even scientific patents have a period after which they come to public domain. But a film makers dynasty can earn out of the storage device. Of course you can't try showing it to others to earn money, legally without paying to producer.

3. Infrastructure. Mass public entertainment requires huge infrastructure. And whether or not you have enough schools in a small town of the country, you surely can find cinema halls. And then there is a pre-established channel of distributors and other middlemen. All you need to do as a film producer is convince the distributors to release your film all around. Most distributors are lured only when there are bankable performers in the film. But once that is done, scalability is guaranteed.

4. Lack of competition. By co-operating among themselves at various levels (distributors association, film-makers guilds, workers union), film industry makes sure the monopoly works smoothly. Moreover as the industry is hostile, unprofessional, and even criminal, not many people give it a try. Sure we hear of of multitudes of struggling actors-performers, does that number compare anyway with those writing engineering entrance exams?

5. Lack of consumer protection. You spend money on a product or service, you are protected by the law, against possible frauds in quality or lack of service. Except when you spend on cinema. Can you in any way reclaim your money and time wasted on a bad movie? Not by litigation at least.

After so much of protection-monopolies-demand, it is said that the success rate is low. Most films fail. Really? And why?

Year on year, the pay packages of the performers (heros!) doubles. Top gainer movies break previous records. Producers are ready to spend more, investors invest more. Still success rate is low? It is. It is because the industry largely suppresses itself under its own burden. The burden of greed, unprofessional style of work, and lack of creativity. Because the economics that works is, making large profit at one time to cover losses of all other times. The only loser is the movie-goer, whose money is already gone into this system, on the functioning of which, he has no say. (Also, the above calculations are very inaccurate, and a lot of non-trivial factors play crucial roles in most films' success or failure.)
And the worst part is, when someone comes out to say he does it all to 'entertain' the public, while everyone knows he is out only for the money! Actors? Fakers?

But solutions exist.

Proliferate:
What the world came up with to challenge Microsoft's monopoly ? Its Open-source. Make software that Microsoft makes, and also make sure to let the user (and everyone around) have the knowledge of how it is made(the source code).
Spread the knowledge of cinema making. Introduce courses in universities, encourage free lance and hobby film making. Equipment and technology costs are reducing. Make information freely available. Enable all creative individuals to be able to compete with the established cinema.
Personalize:
Encourage regional/local cinema. It not only competes well with the above described 'global' cinema, it serves as capable cultural advertisement medium. So how nice it is when people everywhere get to know and appreciate your culture and way of life by watching interesting movies you make . Win-win!

Bottomline - The purpose of this is not to criticize, as the tone appears. Its an observation, worth attention, which I think was mostly missed.