Growing the film and music industry
By Greg Nabholz
The creative economy is one of Arkansas’s largest economic sectors, employing thousands of people. While The Natural State continues to produce more than its fair share of talent in the film and music industry, most of this incredible talent leaves the state to pursue careers in other places. This out-migration trend may be turning, as the impact of COVID, advances in technology, improved infrastructure and a low cost of living and doing business combine to make Arkansas more attractive. New economic development legislation passed in the last six years and the formation of statewide, industry-focused education and advocacy programs aim to retain talent. And organizations such as Arkansans for the Arts work to develop an ecosystem in which creative industries can thrive and homegrown talent can stay here at home.
The Arkansas Cinema Society, for example, is a statewide nonprofit whose mission is to be an umbrella organization for all things film. It successfully pushed for enhanced film incentives during the most recent legislative session. When Act 797 becomes law in July, the existing film rebate payable through the governor’s discretionary fund will be maintained, and the act also creates a transferable tax credit of 20% to 30% of qualified purchases, with a $4 million annual fund allowance. It also adds an extra 10% rebate or credit for veteran hires and veteran-owned businesses.
“It’s our hope that the new tax credit will make it possible for the state to sustainably incentivize more productions every year so that more Arkansas filmmakers can both live and work in the state that we all love,” Arkansas Cinema Society Executive Director Kathryn Tucker said. “Most universities and colleges in Arkansas now have budding film programs and they are growing. This bill is about creating job opportunities to keep our talent at home in Arkansas. This is not about Arkansas giving money to outside companies, it is about employing Arkansans in Arkansas with outside money.”
This legislation will put Arkansas on the same path as many other states that used tax credits to build strong filmmaking ecosystems. One limitation to Act 797, however, is that the transferable tax credit annual allowance is capped at $4 million. Because film production generates new revenue, the tax credit comes out of revenue that would not have existed in the first place. Case in point: In 2005 Georgia capped their annual credit at $10 million, which was increased to $140 million in 2010. By 2012, Georgians realized they were essentially capping their own ability to create new revenue and jobs, market their state and promote tourism. So Georgia uncapped their film tax credit altogether. This resulted in $2.9 billion in direct spending in the state and an $80 billion economic impact in 2019. That’s why more and more “Made in Georgia” credits with that iconic peach are viewed by millions of people daily. New Mexico, a state with a smaller population than Arkansas, recently doubled their tax credit cap from $55 million to $110 million.
Cities and regions are stepping up with their own incentives, offering things like moving allowances and bonuses, dedicated housing for artists and workers, new mixed-use film/music production studios and local sales tax rebates on film and music production.
Eureka Springs and Fayetteville are both wooing new business with economic incentives. Eureka Springs offers a 2% tax rebate on any production filmed within the city limits and shares a list of vendors who offer discounts. The City of Fayetteville made a direct contribution of $500,000 to the producers of the HBO series “True Detective Season 3,” shot in Northwest Arkansas in 2018.
The Northwest Arkansas Film & Entertainment Commission, FILMNWA, was founded by the major Northwest Arkansas cities through their advertising and promotion commissions. It is a collaboration with the Arkansas Film Commission and the Arkansas Production Alliance, and their board is intentional about having representation from the academic, film, music, arts and entertainment industries. Representatives from these organizations worked with Christopher Crane, Arkansas’s film commissioner, to establish FILMNWA with the hope that it would be a model for other regions across the state.
FILMNWA Board President Sandy Royce Martin and Visit Bentonville President Kalene Griffith spearheaded this regional effort as the Bentonville Film Festival was being launched. Martin explained, “We promote Northwest Arkansas as a film location and film/digital production/music hub through national publications and digital media such as MovieMaker magazine. Since we have started the commission, the region has become very production-friendly, and it has helped to build up our filming and production infrastructure. Several major studios, both video and audio, have opened and/or relocated here, more gear suppliers and our crew availability has expanded greatly.”
FILMNWA board member and University of Arkansas faculty member Jacob Hertzog is working hard to develop the music industry in the state. “We are creating a certificate program in Music Industry at the U of A that specifically addresses both wide-scale music business training for musicians and those interested in the business side of music and aims to assist in the development of our music economy. This includes courses in music business, music law, songwriting, live production and artist development. Our new student-run record label, Hill Records, is just getting off the ground. We have received submissions from artists across Arkansas and beyond, and we intend to begin releasing music later this year. The project is a hands-on music industry experience for students that includes academic classes and mentorship opportunities. Hill Records will ultimately release and promote Arkansas’s musicians in all genres while training students in an immersive music business environment.” Hertzog added, “There is extraordinary opportunity in Arkansas to leverage the potential of our higher education system to advance the creative economy.”
Other initiatives that have a music component include Best Buy Teen Tech Center, a partnership between the Arkansas Regional Innovation Hub and Best Buy, to be housed in the Innovation Hub’s North Little Rock location. This tech center will include a podcast and music recording studio. According to Errin Stanger, director of the Innovation Hub, “This will be a place where Arkansas teens can develop critical skills through hands-on activities that explore their interests in technology, art and entrepreneurial subjects. We are ecstatic that we have the opportunity to provide tools and resources focused on music!”
Greg Nabholz is CEO and principal broker of Nabholz Properties Inc, a commercial real estate and economic development consulting firm based in Conway. He is also a board member of the Arkansas Cinema Society.