Film policy in Iceland
By Einar Thor Gunnlaugsson

 TABLE OF CONTENT

Abbreviations
Abstracts
Introduction
- the subject
- this document

Chapter 1.0 The background and brief history
1.1 A small framework dilemma
1.2 The Icelandic film community
1.3 The Icelandic Film Fund
1.4 Neighbors in films
1.5 The cultural funding system in Iceland
1.6 Neighbor’s policies
1.7 The characteristics and the contrasts

Chapter 2.0 The globalization
2.1 The market force
2.2 The European scene
2.3 Privatization
2.4 US v Europe

Chapter 3.0 The finance
3.1 The nature of the funding sources
3.2 The market place and ‘gap’ financing
3.3 Financing an Icelandic film
3.4 The key contrasts and the role of the banks

Chapter 4.0 The critical issues
4.1 At the home base
4.2 A creative partnership
4.3 The artistic freedom and the business
4.4 Shortcomings & the lack of competition

Chapter 5.0 Proposals for the future
5.1 A policy
5.2 The implementation
5.3 The economical factor
5.4 The social and cultural factor
5.5 The management
5.6 Reformation

6.0 Few final words

References & further reading

Please note, this is an un-published draft only available in libraries, do not copy in whole or in part under any circumstances without prior approval from author.

einar@mailbox.co.uk

ABBREVIATIONS

ACE: The Art Council of England
AFM: American Film Market
BFI: The British Film Institute
DCMS: Department of Culture, Media and Sport
DFI: The Danish Film Institute
EC: European Council
EEA: The European Economy Area
EU: European Union
GATT: General Agreement on Tariffs and Trade
IFC: The Icelandic Film Centre
IFF: The Icelandic Film Fund
ISK: The Icelandic Kroner
MNE: Multi National Enterprises
MPPC: The Motion Picture Patent Company
NFTF: The Nordic Film & Television Fund
NVCF: The New Venture Capital Fund
UFC: The UK Film Council
USD: The United State’s Dollar
SFI: The Swedish Film Institute
SWOT: Strength/Weaknesses/Opportunities/Threats
WTO: World Trade Organization

ABSTRACTS

In today’s Icelandic film community a new legal framework will allow:

- local producers to act more globally,
- policymakers to adapt to new circumstances more effectively,
- management to act internationally,

The task is to form a new policy and develop new management methods, but the lack of modern film policy for more than a decade has created number of dilemmas in these areas. New law will however not guarantee improvement.


INTRODUCTION

The complex subject of cultural affairs
We know that there are number of well educated, skilled and talented people who are attracted to the cultural industry and the motion picture business, but do not always find it secure enough to pursue a career. There is also a number of talent with hopes of artistic, social or cultural achievement who enter the business, but do not always find it able to fulfill their hopes. But the film industry like any other industry needs to compete with other arts and business’s over this talent, and in that sense, the issue of management and creating a strong financial platform to attract the best of the best becomes significant. That is also important to develop an art activity into a business orientated industry.

To what extent films should be subsidized and the funding of the arts in general is a complex ground, and not specifically within the scope of this paper. But why put money into the film industry? Films and cultural ‘products’ whether a commercial product or artistic deed travel well and can combine profit and fine art effectively. And a film has in common with the traditional idea of culture, that it is bound up with power, image and status. Both local and state authorities have naturally exploited cultural resources, whether as art or a life-style, or in anthropological sense, to reflect their character at home and abroad. In a globalized economy, films, cultural heritage and contemporary art activity have also been increasingly recognized as tools of marketing, attracting tourists and helping to inward investment. The high profile international filmmakers of last century have also in common that they come from countries where film activity is a business orientated industry. So there is an advantage to ‘do business’ with the local film industry like any other young and promising industry. And in a sense, a subsidy is ‘a payment’ to the cultural and film sector for taking on this somewhat ‘PR-role’ for the community. Should it be free of charge? Would that be expecting too much, and then, how much should be paid for the ‘services’?

A film policy is linked the cultural policies, often referred to be the most demanding and complex area of modern government. Partly because policy makers need to deal with the wider issues, not only from an academic or philosophical point of view, or as a ‘hobby’, but because of the practical reality and social changes. These complex issues are universal. The main subject here is what suits Icelandic filmmakers and all private investors in terms of policy, management and investment, considering the small economical and linguistic society, or the ‘marginal territory’ as defined in the books of EU, and in a world of globalization. And these issues may contain the same dilemmas, opportunities and political twists and turns in some other areas of the Icelandic and European cultural business.

This document is not a detailed case study on Icelandic films or a specific artistic evaluation, but an attempt to highlight the main issues involved, take examples, look at Iceland’s partners abroad and observe possibilities. But what is needed is a transformation from being locally art based film activity, into a partly profit led business which supports creative filmmaking, is culturally committed and where competition is fair and effective. I will argue that the key to a growth is to create and develop a new financial income away from the taxpayer pockets and demonstrate how that can be accomplished. I also bare in mind that individuals outside of the film community will find it an accessible read, because I feel discussions on the development of the local film business are isolated among filmmakers alone. I hope that can change.

There are some definition ‘dilemmas’ here, such as how we define culture, art, globalization, privatization and so forth, but I will not go into at great length, as I see this paper first and foremost as a discussion about a complex subject.

This document
There are three key themes:

- globalisation,
- policy,
- management,

Chapter 1:
I will briefly compare the local film community to the international (mainly western) business and art of films, in terms of history, policy and management. Globalization is also calling for a deeper understanding of cultural and film policies of other nations, so I will also discuss cultural policies in neighboring countries and the mixed economy of the cultural and creative industries.
Chapter 2:
In this chapter I will focus on the factors that create the foundations for globalization in films, that is in the financial world. I will also mention the idea that globalization is a myth, discuss how matching funding and privatization in Europe can reinforce globalization, and explain how artistic freedom is effected by international co-productions.
Chapter 3:
Here I will take an example of how a commercial film can be financed, compare it to the subsidized film and highlight the key contrasts. This chapter argues that globalization leads to film’s finance.
Chapter 4:
Back to the Icelandic scene, I will reflect upon the local politics of the day and upon discussions on films.
Chapter 5:
I will propose guidelines for a new film policy in Iceland and for an entrepreneurial management style.
In chapter 6 I will conclude.

1. THE BACKGROUND AND BRIEF HISTORY

1.1 A small framework dilemma
There is a framework dilemma we should be aware of here because we have films as art and films as an entertainment product and public good. The film industry is often referred to as the motion picture industry only, but the audio-visual industry and many accept of the all around entertainment industry is quite linked together. What many feature film production companies in a small territory do at some point in their lifetime, manly the independent ones, is to produce other types of audio-visual products, documentaries, commercials, TV series, music videos and industrial videos. Some companies, mostly in smaller markets as Iceland is, also serve foreign production of any sort, by renting equipment, handling location scouting etc. This means a second income to keep the company going between production of a feature length movie which may take some time to finance. When the production company with desire to produce only movies has established its self within the film industry and obtained reasonable network of contacts, it will increasingly abandon other forms of film and video productions. In the UK and in all larger markets film companies specialize earlier or are set up primarily to produce motion pictures. This is also due to the commercial and political environment, that is the official film policy, the general economy, the tradition and the culture. As regards the Icelandic film community, other forms of audio-visual products for the film business than feature length films are an important side business, though number of companies primarily producing feature films have increased over the past years. What this paper deals with is primarily the motion picture industry which produces films for theatrical release.

1. 2 The Icelandic film community
In 1911 couple of Swedes traveled to Iceland to film Icelandic wrestling, which is believed to be the first filming in the country. During the first decade of the century and up to the World War 1, filmmakers from Sweden, Denmark, France and Switzerland continued to travel to Iceland to film the extraordinary landscape that fascinated filmmakers, and in 1919 a Danish director, Gunnar Sommerfelt, shot a feature film, The Story of the Borg Family, based on a novel by the Icelandic writer Gunnar Gunnarsson. The first Icelandic feature length film for theatrical release was made 1962 (Taxi 79), the second one 1974 (Murder-story). Prior to 1960’s, film activity was mostly due to that Iceland was an exciting location for a variety of documentaries and dramatic films made by international filmmakers, but handful of Icelandic visionaries made shorts and documentaries of reasonable high standard. Worth mentioning is the documentary, ‘The Rescue Operation at Cliff Latrar’ (1949), with outstanding cinematographic narrative and so well balanced it still captures the imagination of modern day audiences and remains a world class piece of filmmaking.
With the introduction of the Icelandic National TV in 1966, professional audio-visual production on regular bases started for the first time. Within the TV, few had education or experience of TV or filmmaking, staff had few weeks of technical training abroad and mainly local journalist and academics formed the programme. After IFF was formed in 1979, films begin to be made regularly with one or two films being produced the first years, then gradually the numbers went slightly up but a boom or a considerable rise in production did not occur. This was nevertheless exciting times and in the late 1980’s, a growing number of filmmakers got training and further education, both technical and academic, in the US, the UK, Scandinavia, Germany, France and in the former East European countries, resulting in higher technical quality and more competitive films in the early 1990’s. Number of Icelandic filmmakers were also by early 1990’s getting offers from high profile and established companies at the both side of the Atlantic, but relatively few remained abroad which suggests that Icelandic filmmakers want to work ‘at home’. The all around practical conditions in the country for making audio-visual material at present is good, distances are short to a range of variety of excellent locations, most facilities available to make or serve complex productions, plenty of technical know-how and experience.
The law about filmmaking from 1979 (it was not called film industry) were amended in 1984. Various minor regulations have applied and been altered through the years but the Minister of Education & Culture can alter the regulation which more or less functions as a policy. The law state that IFF shall grant and loan Icelandic filmmaking, funded projects need to be in its core Icelandic and the purpose is to reinforce local film making, aid the film library and support promotion of Icelandic films. Some dialogue took place at the Icelandic Parliament 1990 initiated by then Minister of Education & Culture who proposed the inauguration of an Icelandic film institute and new law on film making to replace the previous from 1984, and various ways of funding possibilities were discussed, mainly taxation (22. The talk at the parliament is interesting since number of ideas discussed are relevant today and were later applied in other countries. It also shows a certain political understanding about the importance of film industry, which though did not deliver, but is significant to observe in order to understand the film makers political environment, past and present.
The previous law were already in 1990 getting inadequate in rapidly changing environment, counting to little bit over one page and the regulation did not detail its policy in broad cultural context. The Minister suggested the IFF should be allowed to access the accounts of a funded company after production, and to guarantee a bank loan repayable in the event the film would return profit. The new law also suggested that the fund could offer the funded project a financial and organizational advice to assist producers and prevent, as the Minister said in his speech, that film producers risked their homes in a possible bankruptcy (22. The law also proposed a tax incentive programme in the form that films would be mentioned especially in tax regulation on tax breaks for general cultural events and projects. The opposition attacked these ideas with firm persistence. However, in the current policy document from the DFI for instance, states that producers must submit the production accounts to the DFI, and during production the producer has to up-date DFI of any change in plans, whether in schedule or financing and costs. So it was not an unusual idea. The bank loan guarantee in the proposal from 1990 are also interesting as a premature venture capital policy, but suffered detailed executive plan. In most European film funds today, repayment (venture-capital-style) of grant is a rule, a policy that has developed over the last five to ten years.
This parliamentary dialogue shows that it was both interest in and concern about the future of filmmaking, and the proposal came at the right time. The most likely reason however, for the failure of approving the new law lies perhaps in other and deeper political roots of different nature, that is, post cold-war party politics. At this time, 1990, the local film community was facing recession in the profession, with no increase in government funding and fewer audiences were willing to see an Icelandic film. It was thus more unfortunate that amended law did not pass through, considering the fact that during the remaining years of the 1990’s were difficult within the film community. In 1989 two films premiered, in 1990 two films, one film 1991 and on the average two-three films were produced each year through out most of the decade. It was not until late 1998 that the government increased its subsidy to some degree after a campaign by local filmmakers for number of years, and initiated discussions on a tax incentive scheme. Further to these changes, some dialogue took place at the parliament about Icelandic film making again (late 2000) but was not as detailed as 1990. Foreign advisers or specialists on film- & cultural policymaking were apparently not approached. It also appears, that local filmmaker today, as before, have been reluctant to explore other financial options than looking towards taxpayers money.
IFF changed the standards towards globalization, as regards English speaking films (that is, without clear dramatic reason for the English), when one English speaking film was awarded a small amount in 1998 but until then English speaking projects were not accepted. The development since mid 1990’s in the Nordic countries as well as Germany, was to take part and invest in commercial English speaking films in much more systematic way than before. But foreign investors and funds, mainly German and Scandinavian, have financed approximately 57% of the Icelandic films, 24% comes from the local producers and other Icelandic sources, and IFF has provided 19% (21. Recently, or in 1999, The NVCF decided to support filmmakers by offering venture capital at development stage and for marketing, but applicants needed to have received support from IFF to be able to apply. The NVCF policy is to follow the IFF’s policy, but a detailed policy note from NVCF was not available (see also 4.4)

1.3 The Icelandic Film Fund
The IFF is a key institute and the Iceland's only governmental film body, with the general purpose of supporting Icelandic film productions and promoting Icelandic films worldwide. It could largely remain the same in theory though according to new law, the IFC will take over all film activities, and the IFF will become its fund and one of the activities (22. The new law is partly shaped to meet the expanding activity of IFF, resulting in the set-up of IFC. But the key alteration in the law is that the board will have more freedom to adapt to an unforeseen development in the international scene, without needing to call for amendment in the regulation.
IFF supported mostly low budget films during the 1990’s, several shorts and documentaries, as well as running a script development scheme. Since 1979, 95% of Icelandic feature films were made with the support of the IFF and the fund promotes Icelandic films at international film festivals and markets. It facilitates contact between film festivals and the Icelandic film industry with its presence at major film festivals. In co-operation with film producers, IFF is responsible for the promotion of Icelandic films abroad, by organizing Icelandic film-events throughout the world and by participating in Nordic film-weeks within Scandinavian Films (common organization of the five Nordic film institutes). IFF is the information center for Icelandic films and for film making in Iceland. In addition, it supports a film newsletter and publishes catalogues about Icelandic films and has a website. The budget of IFF in 2000 was ISK 206 million, around USD 2.0 million, and further to a recent agreement with the Government mentioned earlier, will be raised to over USD 3.0 million in 2002 (22.
The IFF has been supervised by a board of governors of five individuals, from The Association of Icelandic Film Producers, The Film Makers Association, The Alliance of Icelandic Artists, The Association of Film Distributors in Iceland and the chairman is appointed by the Ministry of Education & Culture. The IFC board of governors will have two more members with &endash; perhaps - professional background. During the 1990’s, one of these members has been a filmmaker, and the chairman an MP. The old law are simple, set out in rather short 12 paragraphs and the regulation set out in 14 paragraphs of approximately three pages (discussed further in chapter 5.0). The regulation at present for IFF does not say how often each year the IFF should distribute its fund. The IFF’s board has so far chosen to have one application deadline a year, and the fund’s guidelines for applications are simple and standard. There are no rules of appeal for applicants like the UK Film Council (UFC) or the ACE has and number of film bodies in Europe. The funding has been decided by a committee of three people selected by the board, so far a combination of academics and journalists, and shortly after a development fund was established which supports around ten projects per year, another committee of three was set up. The new law however, suggest that funding decisions can be taken by the managers alone upon professional advice.
The fund does not have any specific leaflet or a detailed information package on its policy, and it varies from year to year if applicants are interviewed or not, and there is no ‘shortlist’ system. At present, IFF seems to be experimenting with different policies and criteria each year, but IFF does except the same project again and again though it has been passed on previous years (what many would consider a good advantage over most film bodies in Europe). Tax incentive scheme, initiated by the government, mentioned above, took effect in December 2000 and allows 12% repayment of total production cost if 80% of budget is spend in the country. But this can mean that project which do not get funding from IFF and qualify as foreign-Icelandic co-productions can obtain tax relief as an alternative.

1.4 Neighbors in films
West European countries, including Sweden, Denmark, Germany, France, Italy and Britain, and the United States, have more than 100 year old history of filmmaking. These countries also happen to be Iceland’s neighboring countries, sharing historic background, history of trade and cultural exchange. And many of those countries, maybe all of them, have claimed to be the birthplace of cinema, but we can comfortably say that the art and business of films is born in all these countries. The first public screening is believed to have taken place in Brighton in South England, 1896, and from being a mere novelty in 1895, films were in 1915 an established international industry. In 1900, point of view shots were first seen on screen, which broke up the theatrical style of films. In 1903, the business started to develop towards what we call today the Hollywood system, in 1907 audiences could see multishot films and as early as 1910, films were produced and sold in more than ten countries in the world, mostly in Denmark, France and Italy, and enjoyed in many more. In the US, MPPC in New York established a separate distribution arm 1910, and the period from 1907 to 1913 has been regarded as the time when contemporary industrial capitalist film-enterprises were established.
The development of the art, craft and business of films during the century has been constantly hand in hand with the evolution in technology, in terms of sound, color, computer graphic, and on-line selling. Those who have adapted successfully to technical development have survived but the nature of the international business from early days has always been shaped by the need to sell, not to exchange cultural ideas. With new technology, new talents have emerged, and new ideas and new ways to treat old ideas, both in terms of business and art. To mention one production, the making of Citizen Kane (1941), new lenses and film-stock had been developed in the late 1930’s which director Orson Welles used wisely and gave the film a unique look which audiences had never seen before. And as time passed, film noir, who many found its birthplace in Citizen Kane (though debatable), became trademark on its own. The film also remains a valuable product since it still has an importance in people’s mind. Some Danish filmmakers half a century later, reinvented a film making method (cheap, handheld, no accessories etc.) and gave it a stylish trademark, the Dogma, which though have no common internal theme or subject, and can not be called a ´new wave´ as in France and Italy during the mid 20th century. But the Dogma trademark helps to sell the films, and as Dogma films became profitable the Dogma filmmakers tended to make more expensive films, up to USD 1.000.000 and the original method lost its purpose, but the business survived comfortably.
The Global Film Industry is today believed to be worth USD 45 billion annually receiving USD 17 billion in cinema admission alone. These figures are probably off our radar screen, but at the AFM held once a year, over 1000 titles are on sale and up to 200 Telefilms and TV series are produced in the States alone each year, but no one knows for sure how many films are made in the US altogether, they run up to tens of thousands. Number of features produced in the UK i.e. range from 125 to 150 a year (127 in 1996), 700 to 900 in India, and at Cannes film festival 2001, 1,798 films were submitted and viewed by a selection committee (including 854 feature films and 944 short films), compared to 1,397 in 2000 (681 feature films and 716 short films), a 29% increase (25.
Iceland, like most of the neighboring countries, is a member of the EEA which allows them to apply to EU and EC media funds, such as Eurimage and Media Plus 2001-2005, but EEA is an 18-nation free zone comprising EU plus Iceland, Norway and Liechtenstein. The underlying treaty as regards films is the European Convention on Cinemaphotocrafic Co-production, made in 1992, and which Iceland signed in June 1997. The convention is set out in 22 articles and to qualify as a co-production under the treaty in order to apply to any members state’s film fund, the co-production has to follow set of rules in terms of balancing the artistic and technical contribution, that is quotes. If the production collects 15 points or more out of 19 it will qualify as European, that is in the case of an international (global) co-production, and would have assess to European funds. The weighting points are as follows.

Creative group 3
Director 3
Scriptwriter 1
Composer 7
Performing group 3
First role 2
Second role 1
Third role 6
Technical craft group 1
Cameraman 1
Sound recordist 1
Editor 1
Art director 1
Studio or shooting location 1
Post-production location 1 (22

If a US partner brings in, say, a director and scriptwriter, the production can apply to all EU’s film funding bodies.

1.5 The cultural funding system in Iceland
There is no specific document on Icelandic cultural policy. And due to lack of documents on local cultural policy in general, appeal processes and the general relationship between the state’s art institutions and the public in Iceland, it is hard to say if we can refer to a specific policy model. That is to say, like the Architectural model in Sweden, the Patron-like state in the UK, the Engineer state in China or the Facilitator state as best known in the USA. It seems to be a floating combination of it all like in most countries, but somewhat without a definite objective and without a predominant model.
There is no Art Council but the Ministry of Education & Culture handles all cultural affairs. There is a specific department that deals with cultural affairs within that Ministry, that is art and cultural heritage, broadcasting, sport and education, and among key institutions the Ministry is responsible for are the National TV & Radio, the National Symphony Orchestra, The National Theatre, The Council of Sport and Pastime, and the IFF. (22.
The arm’s length principal is not explicitly expressed, and it is not easy to say to what degree it has been applied within the cultural sector in reality, and as far as the IFF is concerned. But the arm’s length principal seems a proper principal for the local public funding, though generally debatable in the arts. It is practical and the strength of it lies in the fact it can be applied within different political environment, as a principal applied in politics, law and economic, which is generally the case in Iceland. The flaw of the arm’s length principal is in many views that government is not accountable enough, but regarding IFF and the government, it seems it can improve the practical mechanism.
Under the so called ‘law about artists fee’ (revised 1991), the ministry has four funds at its proposals, a fund for writers, for visual artists, for composers and for all other artists, announcing its funding once a year upon applications. The executive committee of four is appointed by the Minister upon proposals from the Association of Artists, University of Iceland, The Icelandic Arts University, and the Minister appoints the chairman. This committee selects successful applicants for one fund, that is ‘for all other artists’ which primarily is for more respected artists and operates as a pension fund. A selection committee for the other three funds is selected by the Minister upon suggestion from various organizations and institutions in their respective art fields, but the structure is identical to the National Art Council’s in Finland, were board members are not elected as private individuals but as representatives (8.
There are other minor funds, such as ‘The Culture Fund’ in the field of academic and historic literature, operating on the same principal as described above and number of funds in association with the Nordic Council to encourage cultural exchange between the five Nordic countries.
In the event an artist, or an applicant, is unhappy with the way the system operates or the committee’s selection and application process, he/she would not find any appeal guidelines, and would probably need to find a lawyer and appeal through the so co-called ‘law on public affairs’ (22. Detailed application guidelines, appeal guidelines, documents on how and to what degree new talent should be supported and so on, is lacking. In broader terms, it is also unclear if Icelandic society sees itself as a one indivisible societies like Sweden and France with no distinction between the citizens who are equal members, or as Britain (so far) and the US as composed societies of series of overlapping communities which expresses people’s complex identity.
Iceland shares however the basic philosophy of arts funding with the other Nordic Countries, that it is the government’s responsibility to support the arts. This is in part to counterweight mass produced ‘junk’ which is marketed with ‘glossy’ commercial methods culture (the word ‘junk’ and ‘glossy’ is used in some of the official Swedish documents on culture versus commercialism) (20. And also to support artists who cannot survive in the small market and as part of leveling income differences (social inclusion), as one of the key elements of the social democratic welfare state. It is also a growing trend in Iceland within the private sector to support art and culture against tax incentives, and City of Reykjavik for instance, one of the Cultural cities of Europe 2000, got private sponsors for many events during that year and the private sector in general responded very positively. The government has however not introduced a specific policy in terms of tax relief and the arts, such as the British business sponsorship incentive scheme that was introduced during the Thatcher years in Britain, which was meant to develop a business relationship between the art and the private sector (7.
There has not been enormous dislikes about current set up or the funds mentioned above, or not on the surface, and existing law and regulation have developed modestly. Though there is one exceptional case (The Cultural Fund for Radio and TV during most of the 1990’s), where the selection committee was not answerable to the public, the media or an individual applicant and did not answer criticism for some years and never explained some of the funding. The fund had simple application guidelines like the funds discussed above, set in 8 articles but without a clear policy, apart from what appears in the 1st sentence 1st article: ‘The Cultural Fund for Radio and TV shall give grant to support local programme making which may be of cultural and educational value’ (22 (my translation). After long-standing dispute, it was reformed.
Putting all the pieces together, it is yet hard to say if a policy model is predominant. It seems, like in Norway, that Iceland is leaning towards the idea that centralization can provide an organization structure that can promote greater decentralization. We can say that the IFF is not operating at arm’s length since the chairman is an MP, but otherwise in principal it has number of similarities to the Patron model as known in the UK and elsewhere (19. We cannot say the Architect role is dominant since funding decisions are not taken by bureaucrats at the Ministry, we can not say the state is in the Engineer role because the government is not involved in making movies, but the state does facilitate with minor tax breaks. It is however clear that the funding system is centralized, as I will discuss later.

1.6 The neighbor’s policies
Sweden is one of the best known and most studied cases of social democratic welfare system where the arts are also seen as a factor in leveling income difference (access and activity) and provide equal opportunities to the citizens (20. The state is in The Architect role, that is, it funds the arts through a Ministry or Department of Culture and decisions are made by bureaucrats. The artist and art organizations are relieved from depending on box office success and the artist’s are granted the civil right to have a decent income as other citizens. The government expenditure to the arts is therefore a ‘social expenditure’ as well. Finland applies a similar rule, but the arts funding system is also strongly motivated by the fact that Finland, like Iceland, is a small linguistic and cultural territory. Only handful of writers can make a living out of commercial writing. The arm’s length principal is generally not applied in Sweden i.e., with the exception when voluntary organization in the cultural sector are supported, and also, curiously enough, when it comes to Commercial Art (pop music) which receives support in order to encourage international sale and gain new markets abroad, mostly in UK as the 4th biggest music market in the world (14. The architect system in the Scandinavian countries is marked by the Social Democratic politics, mainly in the 1970’s to the 1980’s, organized working class politics and alliances between working and middle class, with a touch of conservative forces who have entered a coalition government from time to time.
Germany, with their high level of excellence in their history of Fine Art and an experience of the Nazi regime, the freedom of the art is a constitutionally protected basic right and arts organizations have a clear independence from the state. The German funding policy has developed through the last three decades to be one of most highly committed policy in terms of promoting the arts across borders. That may explain constant investment in Icelandic films. Being a federal state, large funds come from local authorities. In the 1980’s the state’s underlying goals in cultural policy shifted from social to the economical field. In other words, the German cultural policy moved towards the US and the UK in the 1980s, where the Thatcher administration initiated a ‘value for money’ arts policy (7. The market would need to have a say too in what was to be supported. Germany though did not and has not spoken of direct privatization (2.
The Association for Business Sponsorship in the Arts was established in The Great Britain in the mid 1980’s, under the Thatcher Government as mentioned earlier, to help art organization to develop new finance resources, namely more co-financing and matching grants schemes. At the same time, funding to the arts was cut dramatically. That model has a long tradition in the US, where state or local government facilitates with tax incentives and funding decisions are often made by individual donors or private foundations.
The film policy is generally tied into the cultural policy in the European countries and the Norwegian cultural policy note i.e. Goals and Means, sets out its objectives in general terms and applies them accordingly within the film sector. The policy has been in the making since the 1940’s, considerable revised in the 1970’s, now with The Norwegian Council of Cultural Affairs overseeing arts organizations, funding and most other cultural issues, including films. The policy note discusses the special characteristics of Norwegian culture, such as the two languages in the country though it considers itself as a homogenous country. The Norwegian cultural policy is along the line with other Scandinavia countries. Subsidies are relatively generous, films are heavily subsidized, in Norway through cinema tickets as well with funding but the Norwegian authorities are currently working on a new film policy considering the matching funding principal which is applied in Denmark, but not in Sweden and Finland. And only recently, June 2001, the Norwegian Film board appointed a managing director with a background in business but no experience in filmmaking. The DFI has very detailed film policy (11 pages), i.e., making clear distinction between low budget and high budget films for commercial exploitation, 60/40 rule in matching funding, clear guidelines in terms of applications, repayment, recoupment and the relationship between the DFI and funded producers.
Danish producers have also discussed the possibility that the matching funding principal will reduce the quality of many films, because production companies which have the 60% matching funding to DFI’s contribution, might push underdeveloped projects into production if they needed the cashflow. The other side of the coin is that the decision about what kind of films are made lies more within the film community than among committees, in other words, matching funding favors decentralization. But recently, and that goes for Germany too, up to 40% of film companies are believed to go bankrupt or bought by larger companies by early 2002. This may well be a result of more private finance in the field, while existing businesses that have relied on government money on yearly bases are adapting to new environment.
The UK Film council is worth mentioning here since it is relatively new, set up in the year 2000 overtaking funds and film bodies, such as British Screen and working closely with the BFI. The UFC is managed as a private limited company, with Development Fund of £ 5 m., New Cinema Fund of £ 5 m. and Premier Fund of £ 10m, funded with lottery money and answerable to the DCMS. The 15 members of the board of governors have all professional background in either film or TV or both. Many of them still working in the industry, but their experience is brought in on professional grounds avoiding any conflict of interested, where three managers manage the funds and take funding decisions. All finance is repayable and the UFC shares agreed net profit from successful films. It is too early to say if the UFC is a success. It is a modern day film body, operating at arms’ length, came into being after a considerable policy making process and is born in the ‘from rule to cool’ society of the New Labor, an infant of Cool Britannica. So there are expectations that UFC will support grassroots activities as well as furnish the UK scene with some commercial achievement. They will be closely watched.

1.7 The characteristics and the contrasts
The Icelandic movie business is the smallest in Europe; it can hardly carry the name industry and is more dependent on overseas funding than any of its neighbors. It is entirely dependent on the state’s support. What characterizes foreign investment is it comes from countries that heavily subsides films, have detailed cultural policies and where the Architect policy model, that is bureaucratic decision-making in arts funding, is dominant. The commercial market forces have therefore no or little effect on Icelandic filmmaking. Iceland is also the smallest independent linguistic society in Europe. It has the shortest history of professional filmmaking, and seeks artistic confidence in other art forms such as creative writing. Its cultural policy is not detailed and policy revisions are casual and rare.


2.0 THE GLOBALIZATION

2.1 The market force

International co-productions are increasing and the grand globalization of film productions started to pick up in the 1980’s, but international co-productions have though always been a considerable business through out the century. As the driving force in globalization is the market, movies are by and large a profit led business, and globalization of a film’s production today leads to finance. In this global environment, smaller countries, territories and enterprises have had to make up their mind how to react and form a policy, based on the attitude of either ‘defense’ or ‘opportunity’.
Before going further into this, there are views worth mentioning, that today’s globalization is a myth, and what we call globalization took off 2000 years ago with Plato and Christ. Today’s globalization is only about certain turns in the development of modern capitalism and technological innovations. These developments have just changed temporally how, and in some case what, we produce. The MNE’s business, though working globally, are primarily regional based (triad-based), operating under local law and government’s policies in each area. (I will demonstrate this as far as films are concerned in chapter 3.2.). This leads us to the issue of the fate of the nation-state, which has also been highlighted in this context, where it rests with each nation if it benefits from the forces of globalization, but lies more within international institutions how it benefits.
But in films, tax incentives are a reaction to global market forces based on the idea to increase opportunities. Tax breaks have been introduced in number of countries like Canada, Ireland, Luxembourg, Germany and Britain in order to bring in international productions and reinforced globalization. For instance, The British Chancellor of the Exchequer, Gordon Brown, introduced in 1997 100% tax relief for film production costs, that are sale & leasback. And in Canada, 40% tax relief of all labor costs was implemented early 1990’s, meaning a below-the-line benefit programme, which has proved enormous advantage for Canadian involvement in international productions (1. Britain did have tax breaks prior to 1997, but mainly to attract bigger US studio productions, but the 1997 move was made so all productions, no matter how small, could benefit.
Early 1990’s, TV stations seem to have discovered competition. Cable TV, satellite transmission and new channels have become an addition to the cinema screen because TV, especially global TV that doesn’t find its prime audiences in local or small cultural territories, but worldwide, need to compete and answer demands on quality programmes. Today, the most popular cable and satellite TV programmes among European television exhibitors tend to be artistically driven American TV dramas with strong international cast. European drama is well received as well and though key personal in many productions may be Americans, it often involves European cast and producers alike. These financial sources which emerge with global Television, or expanding penetration, has meant further globalization within the motion picture industry and suggest continuing development towards a greater concentration of film and TV production in giant corporations, and more accumulation through consumerism and finance.
With rising numbers of private sales agents and distributors who have either an international network of cinemas or operate globally and sell to the big distributors as well as small domestic video dealers, a new financial source was replaced by world wide pre-sales. ‘Straight to video deals’ and ‘gap financing’ were rare terms and phrases in film production deals until the 1980’s, and a sign of globalization (discussed further in chapter 3.2)
Let’s take an example of an American Independent producer who goes to Europe with a project. He/she believes (and maybe no one else believes it) that he/she has done domestic (US) video sale for 25% of the budget, a cable TV presale deal of further 25% and would like to get the remaining 50% in Europe. The producer finds a European co-producer, and say, a France actress and a Spanish cameraman, and pre-sales the film with his European co-producer to European sales agent. But the sales agent wants more guarantees against the 50%, or will only put up 35% of the budget. So the producers go to Canada, claim around the ‘missing‘ 15% from Canada’s tax incentive and small local grants, and shoot the film in Canada in English as US/European co-production. By this, the film gets made, sold and distributed, but what is worth noticing here, is that it implies restrictions on the artistic freedom, where as producers ‘have to’ hire a certain amount of European crew according to point system and quotas. However, it increases individual artist’s possibilities to work internationally.


2.2 The European scene
The bigger ‘picture’ of the cultural funding systems in Europe shows us quite an activity, somewhat flexible and moving, complex, sometimes confusing because it both overlaps with EU’s funding system and can change locally from year to year, from one art activity to another. This bigger ‘picture’ has the characteristics of the enormous diversity of Europe and we can see the continent is trying to move towards one coal, that is unification. Number of subsidized films were made - and still are - during the 1970’s and 1980’s in Europe, which just made it to the local cinema screen for a couple of weeks and then the local TV screen and video. The need to sell was not as dramatic as the need to make. European films have been subsided to the degree - up to 80% of the budget - that there is hardly any need to sell. As a result, American movies, and over the past decade international co-productions with US deal attached, have had more success in terms of distribution because European film industry has not developed the tools and the network to distribute and sell their films until recently. With the globalization, the American film industry is benefiting as well as the world wide movie business, but the US Industry has at present a stronger position in the market place, up to 85% market-share, because they got their first and have also developed audiences for their movies.
Stephen Stweig wrote in his book ‘The World That Was’ about the artists indifference in early 20th century Europe. The artists were not interested in politics, they didn’t care what the politicians were doing or a small and aggressive movements at the time, like Fascists. They were interested in art, life in its beauty, and all the glorious things that come with it. Then came two wars and Europe was in ruins. There was no art, there was no bread either. Gradually artists took much bigger role as the social-political critics, having seen Dadaism pull the curtains in the 1920’s, no one was really an artist who didn’t know what was going on politically. The cold war pushed it even further, either you are left or right. Many European films and filmmakers from 1950’s to 1970’s have a political agenda, and any films with a political agenda and highly artistically driven have therefore been branded the title ‘European’.
But after the collapse of the political east, the late 20th century commercialism in the west has challenged this, and among many things lead to privatization policies on broader scale. It can also be said, that the main contrast between Europe and the USA, or even Asia, is the fact that Europe is today struggling to finds its common European identity, if it exists. European policymakers are well aware that common European identity will reinforce Europe, as the world seems to be moving towards three economical blocks. But judging from the history of the last 50 years it will take some time to discover this European identity, as the European tradition is a complex tradition of many Europes.
European films may for years to come be marked by those currents. Also because smaller national funds in Europe, like IFF, are more concerned with the question of national identity than creativity, cross cultural diversity and participation. Larger European countries were ethnic communities i.e. are plenty and diverse and their voices always heard, are working along more complex mixture of criteria and are more ‘open’ for privatization policies, therefore find it less radical to merge with the cultural Europe, and have the political will to unify (though there are doubts about UK).



2.3 Privatization
In most European countries, privatization is something like ‘The Issue’ of the 1990’s, an issue inspired by The End of Cold War. This is taking place in both economics and social politics, but as far as the art is concerned, the changes come in all shapes and forms. Private ‘winds’ in art may influence film-financing policy as regards none-commercial films, but privatization in the widest sense of the word, is a key element and driving force in intercultural business relations today.
The motives in East Europe through out the 1990’s have however mainly been to get rid of former political ruled bureaucracies, but in Western countries a look for a better financial situation. And privatization in Eastern European countries have not meant that the financial situation has improved and many art organizations such as publishing houses, film distribution and music companies got into deep crises, went bankrupt or bought by partly foreign own enterprises who did not see profit in many areas of the local heritages. While countries as Croatia and Slovenia move towards semi-privatized cultural industry, they at same time are improving the legal framework and legislation for a cultural policy. In Croatia, the process of privatization was called ‘chaotic and uncontrolled’. The Czech Republic is faced with hundreds of citizens associations and foundations out of reach of the public control, but Bulgaria however is asking for law to regulate the privatization process in culture, before adapting to private-public policy in the arts. The same problems seems to apply to the Icelandic film making, since it is in many ways facing the same dilemmas as the East European countries, with politically appointed chairman at the IFF and an old cultural film policy.
The privatization in France is not a characteristic for the France cultural policy but is more seen as a need to diligent administration and accountability within the subsided art sector. In Germany full-scale privatization is not mentioned but is only talked about public private partnership. However German film producers are from July 2001 set to benefit from a new private film investment fund, entitled German Film Productions (GFP), which is to raise USD 21.6 (DM 50m) from private investors by the end of 2002. (25
Greece has introduced privatization in the management, legal and administrative sector along the France line, and Britain identifies privatization mainly with economical innovation processes. The general acknowledgement is that public bodies guarantee stability and quality in cultural life but with the involvement of the private sector a ‘fresh air’ blows through the art business, and administration and management improve. It has not necessarily meant additional funding or more finance in the film and/or cultural sector, but the privatization has affected the practicality and management style of the arm’s length bodies, and arts organizations have got a more noticeable client, the private donor.
Iceland is so far the only Nordic Country offering specific tax breaks for local and foreign film productions. And as it facilities all film projects, but not only projects selected by an official committee, we can assume it can have thorough effect in a small society where local funding options are limited, and thus serve as a mean of decentralizing and to encourage both local, international and private investment. And worth pointing out, as privatization has been more linked to right wing politics in Europe, that there is really little that suggests it is not a cross political issue, as it seem like a ‘natural’ reformation of a business, which many left wing parties have been reluctant to discuss. In fact, privatization has been around for a good while and with many different faces, for instance, ministries in many westerns governments are increasingly hiring fewer experts, say lawyers and economists, but seek, and buy, advice from private companies when needed. We may well call that a privatization of the ‘governmental advisory system’ (see 5.5)

2.4 US v EUROPE
In the process of co-productions between the two continents, the US producers have come to appreciate more that the role of others than the key cast and stars can get a movie to the big screen and show profit too, and the Europeans have become to appreciate that stars can certainly do likewise. But then there is politics. Further to the WTO agreements and later GATT in the 1990’s, number of quotas was introduced, including on American films bought to and distributed in Europe. From commercial point of view, European public was hurt because they were denied the right to see films they wanted to see, and in some respect it was censorship. The fact that the demand for American films is there was ignored and European distributors and exhibitors got into trouble. From the European political point of view, this was an act of decentralization, or to prevent the development that European filmmaking becomes centralized from the big enterprises, studio and distribution companies, mainly US based. The quotas were also a trade device - in addition to the protection of European film making - in the over all US/EU business relationship, including banana import from C-America via US, and other issues of import export which was violating WTO’s agreement and GATT.
The commercial industry felt that the quotas would not prove to do many good things in the long run, perhaps few independent producers in Europe would make films in the politics of it all, but it would slow down development within the European industry to commercialize, and feasible, to get the European Banks to move further towards media lending. That had been a stronger move to decentralize the big studios, since it would not create political and diplomatic tension, but help internationalization and majority of European producers to find finance in Europe, and who were already moving towards internationalism. The US/EU partnership in films was, and is, looking at some ideas to improve their relationship in the world of trade barkos, statistic controls and de facto censorship, and having gained considerable experience of each other. The options currently looked at by number of major players in the industry are:

1) Further expansion of European banks in media.
2) Reduce co-production requirement, which inhibit creative freedom. The danger of ‘Europudding’.
3) No more quotas.
4) Expand subsidies (not necessarily increase), they should include all projects, whether from US, EU or elsewhere.
5) Government loan guarantee, which could function as a sales agents guarantee in smaller territories in order to help films into the market. (1

In current international climate, the studio system has become a norm. ‘Going to Hollywood’ was a phrase which meant going to Hollywood to make movies. But Hollywood methods in filmmaking and so-called Hollywood companies and studios have also come to the doorsteps of many European countries and a filmmaker does not have to go to Hollywood anymore, to ‘Go to Hollywood’.
In this climate, it seems that smaller film industries have no better options than participate with the forces of global business, at least, global entertainment products will always find their way to the smaller local screens anyway, and compete about viewers.

The basic philosophy is the same throughout Europe, that the government has responsibility in art funding, but the UK has moved rabidly towards the US model over the past 15 years, that is tax breaks policy, privatization and less public funding, Germany has been following in the 1990’s, but slowly and carefully, countries like France and Greece are only looking at the administrative sector in privatization, the East European countries are still improving new legal frameworks, but the Nordic countries, mainly the Scandinavian’s, seem less interested in the private donor.


3. THE FINANCE

3.1 The nature of the funding sources
The nature of the European funds is in theory and principal, to work by the matching fund principal and fund according to detailed cultural policy.
In addition to the IFF, Icelandic filmmakers can apply to the NFTF as it were a local fund. The NFTF is a joint venture of the five Nordic countries, that is Finland, Sweden, Norway and Denmark in Scandinavia, and Iceland. The fund supports feature length films, TV drama and series, short films, documentaries, development and distribution. It is funded by The Nordic Ministry Committee, which annually distributes fund to cultural exchange programmes and encourages artistic and political communication between the five countries. Nordic Funds, apart from the IFF, mostly participate on pro rata bases. Eurimage, an EC body, has helped numbers of productions, but one of the criteria is that it needs to be a co-production between three European countries (UK is not part of that treaty). Media Plus 2001-2005, a EU body, is highly committed in supporting development of projects, young companies and distribution of ‘smaller’ films. These are culturally motivated finance sources, but with pro-rata based finance input.
It is not un-common that films are financed by one private enterprise in the market place, but that is mainly the big US studios and in recent years major TV stations.

3.2 The market place and ‘gap’ financing
The definition of a commercial film and none-commercial film is made here only to make a distinction between the two main practices of financing a film, which characterize the commercial films on one hand and the artistically driven and subsided film on the other. A film financed the commercial way might in any event end up less commercial as the subsidized one. The main difference is that the none-commercial will most likely not invest in completion bond or have insurance company insure the completion of the picture. The need is not there since there are no sale agents who require insurance against advance payment. This is the rule, but with exceptions of some major subsidized productions.
A picture of less than USD 5 m. is the common size for independent ‘globalized’ producer. A finance plan for a budget of USD 4.500.000, could look like this, including finance charges;

- 2% bank arrangement fee,
- 17% bank interest 2 years,
- completion fee on finance charges at 4.5%,



Financed by
%age USD

Sales Agent - Advance 15% 675.000
Germany/France outright sale 10% 450.000
UK sale & leasback 10% 450.000
UK pre-sale 10% 450.000
Canada co-producer 30% 1.350.000
Bank, 50% of ROW Sales Estimates* 25% 1.125.000

Total Finance: 4.500.000

* Rest of the world (ROW) sales estimates provided by the sales agent at USD 2.500.000.

Budget %age USD
Above Line Costs 1.350.000
Below Line Costs 2.100.000
Contingency 10.00 345.000
Completion Fee (rebate) 3.00 103.500
Production Overhead 6.00 207.000
4.105.500

Finance Charges
Bank Charges 13.00 146.250
Arrangement Fee 2.00 22.500
Bank Interest 2yrs 17.00 191.250
Bank Legal Fee 2.5 29.440
Completion Fee 4.50 5.060
394.500

Total budget; 4.500.000,

We can see that 10% of the budget is UK tax incentives and the Canadian producer would recoup around 20% of the budget in tax relief and grant in Canada. The sales agent offers 15% advance, which is less then pre-sold territories in Europe alone. The media lending bank lends against what the sales agent estimates it can sell the film for in the rest of the world. The already pre-sold territories give the bank also a hint of what can be expected from the un-sold territories. The money from the bank, which in the industry is called gap financing and I will hereafter call it so, is an important factor and can ‘make or break’ the production. The ‘gap’ is considered as the remaining gap between the un-sold and sold territories for the film which in this case is 55% of the budget (if we include Canada as pre-sold). The gap is closed by the bank and the sales agent. In the event of considerable grant, the gap is smaller and the financing becomes easier, but a pre-sold territory remains always vital for the lender to serve as a hint of a market subscription.
Why the bank started to lend towards something which is not 100% secure, that is un-sold territories, is simply because no film lenders today can expect anymore that full cost of production can be covered by pre-sale or grant. As seen above, the borrowing is not free of charges and comes to ca. 8% of the budget altogether, but many regard that as ‘not expensive’, since it can secure the making of the picture, steady cash-flow and delivery on time. What the bank would also require is to be first in line to recoup its money, than comes the sales agent and then it is down to the small print in the contracts how the remaining income is distributed from an equity pot. This lending business occurred because many international territories stopped pre-buying films - in the 1980’s - and crisis developed among independent producers. The banks found out, that if the producers don’t find ways to finance their films they would be out of business too. Many bankers, especially in the US, had spend 15 years or more banking pre-sales and getting to know the market and international sales agents well. The bankers got more comfortable with gap financing as things developed and expanded the amount they would gap finance. From 1996 to 1999 the gap financing became somewhat a cold pot for the independent producers, but later losses and lack of recoupment to the banks made them take a more careful line after 1999. They started to lend less to fewer producers and more on ‘three-films-package’ bases and so on, rather than to one single picture, and gap financing became more insurance backed. Among the banks and lenders are Imperial Bank, Bank Paribas, Newmarket Capital Group, Fuji Bank, Bank Lumie and The Deutche Bank. These banks and others have different lending requirements, terms, minimums and limits, some do not involve lending of less than several million dollars and some will in certain circumstances lend a few hundred thousand dollars, fees and interest vary and some take interest in the profit and some not. The bank would be looking at a) who the sales agent is, b) the sales estimates, c) the banker’s own analysis; the film’s genre, budget and ‘bankable’ names including producer, and un-sold territories, d) if the sales estimates are two times the amount they lend.
The fallout of sales agents in 1999 was however a result of the bank’s policies to recoup first (if they could) while many films did not ‘cover the gap’ in the marketplace. Sales agents deferred their fees and expenses to recoupment by the bank and insurance companies, and found themselves with no money to operate, and producers found their option lapsing on their latest project. It is only recently that the financial environment has found a balance again and gap and insurance companies continue to lend, while sales agents get bigger and fewer. Still, we can expect further loses for the banks as in any other business’s, but if loses will rise again to some degree the ‘gap’ financing environment may change over night and banks stop lending again. A successful producers will be able to predict and will rely on other sources to close part of the ‘gap’.

3.3 Financing an Icelandic film
The difference between a commercial and none-commercial can also be distinguished be the fact that producers, when seeking grant, will need to full fill criteria according to a cultural policy, that is they are not ‘selling’ the movie strictly speaking, they are full filling set of rules. This is worth mentioning here as a reminder, that these rules may have been set without any connection to the film industry as such. But a none-commercial and cultural film should stand as much change to get worldwide distribution as any other independent movie. With a none-commercial film, all good things can happen, and a low-cost film will return its negative cost quicker. The key to financing are grants. A finance plan for an Icelandic none-commercial subsidized film budgeted at 100 million ISK could constitute of:

1st grant (Icelandic Film Fund) 20%
2nd grant (Nordic Film Fund) 15%
Pre-sale (Germany) 20%
Pre-sale (Scandinavian rights) 20%
Soft dollar/producers contribution 15%
Deferment 10%

The budget will not include finance charges, and in most cases, interest on lending are included in overhead. It has usually meant that 100% finance has been raised when IFF has contributed to a film because the budget is normally low and it has sufficient cultural and artistic appeal to raise finance in EU and minor presales in Scandinavia or even Germany. In worst case scenario the producer is likely to make the picture for less then the 100 millions ISK (which is not uncommon in Icelandic film producing). The tendency is that the company’s facility will be overpriced in the budget and labor cost will be over prized too in order to raise the percentage of producers contribution, which means raising the budget and get few more dollars against the same percentage from the subsidy fund or presale. Even actors roles will be ‘written out’ and various production cost left abandoned. But this would not be possible with a ‘bonded’ picture since it is insured prior to production and all parties need to provide guarantee and be accountable for all expenses. The real cost of the film will perhaps be 70-80 millions, so Icelandic Film Fund grants may be up to 35% in reality, instead of 20%. In the event the film goes over budget, the producer has to rely on domestic and foreign un-sold territory sale. But further to this, number of expenses, such as legal fee, insurance fee and completion bond fee cease to exist in a low budget film, allowing the none-commercial film more flexibility and less controlled environment, and perhaps, and only perhaps, more spirit of freedom. But we can well assume that by only producing films that way, as in Iceland, a film business will find it quite hard to develop towards a competitive industry.

3.4 The key contrast and the important role of the banks
Gap financing would not be available without the sales agents, and since many subsidized films, and all Icelandic film to date, do not get or depend on worldwide distribution, involvement of media lending banks is unusual. These films therefore go onto the market, say at film festivals, without having pre-sold world’s rights. The films are primarily sold individually to buyers or sales agents after its release. The artistic freedom per se can be considered more in a subsided production, with less pressure from sales agents and the box office, but I could not find any research that confirms that notion (see also 4.3). But what one can see, is the great importance of the Bank, not only ‘a place´ to visit and borrow money, but as a lender who understands the nature of film business. Without such a bank, as it appears to be the situation in Iceland, it may be even harder to develop commercial film producing. But it can be argued that banks in Iceland have in some cases not been doing either film producers or themselves a favor by lending upon poor business plans without decent sales. And today the local movie business does not have a great profile when it comes to banking because there are loses (see also 5.3). In terms of contrasts, we are also talking about different types of production teams, requiring different skills on different levels, and differently motivated by key cultural principals such as identity, diversity, participation and creativity, or by business style management and commercial knack.

4.0. THE CRITICAL ISSUES

4.1 At the home base
Looking at GDP figures Iceland has been among the top ten countries in the world for decades, and in terms of mobile phones and internet assess Iceland is usually associated with the homeland of Nokia, Finland, and the homeland of Microsoft, the USA. Globalization in Iceland is to be found mainly in two areas, in fishing policy (approx. 70% of export), and within the economy. As regards the general politics of the existing government (liberal democratic-conservative coalition), we can assume judging from a manifested policy, that efforts will be made to make the local art activity and cultural bodies more economical (it has been done within the business community), that is to privatize management and in appropriate cases create a context where the market works fairly and efficiently. But after ten years with a conservative government in power, film finance is still entirely dependent on a government institution. Looking at it closer, then in the coalition agreement from the 23rd of April 1995 about the emphasis within the government says; ‘... to aim for innovation in the state’s economy, i.e. with increase in contracted work, merging of institutions, service-contracts, different salary structure and increase in managers responsibility ... to make the state economy more simple and at same time more effective ... demand for profit of state own companies ...to propose a plan for privatization ... of companies and institutions...’ And later; ‘... the market forces are generally more effective in terms of productivity ... decrease political influences within state companies....’ (my translation). (22
The government made also a statement on the future of the Icelandic information society, ‘The Icelandic Government’s vision for the future about the information society,’ with an introduction by the Prime Minister, writing ‘... the changes ahead need to reinforce Icelandic culture ... ‘ (my translation). (22
There also seems to be a more favorable political climate for privatizing or encourage more private investment in films, than i.e. in Sweden or Finland. But before going further, let’s look at today’s Icelandic film business from a SWOT point of view:

First the strengths which provide a foundation for the future,
* Solid links with creative and financial partners in Scandinavia and Germany.
* Assess to European Union funds.
* Skilled and flexible technicians and craftspeople.
* A creative local community with experienced and original talent.
* High level of domestic cinema admissions.
* Competitive post-production facilities operating at the cutting-edge of new technology.
* A tradition for creative writing.

The weaknesses, which inhibit growth, are:
* Under-developed business and entrepreneurial skill base.
* Unilateral interaction with foreign film investors and partners and failure to attract finance from the commercial markets or potential trade investors.
* Monopolized funding system.
* Lack of comprehensive government policy.
* Under-capitalized development projects and production companies (cash flow problems).
* Long-term stagnation with too many poor quality films being made.
* Political Corruption.
The opportunities are:
* Within the commercial market, English speaking territories and in globalization.
* Within the local creative community.

And finally the threats:
* Foreign investors will become mayor shareholders in Icelandic film companies.
* On going absence of official film policy and beaurocratic management.

The sophisticated economy, education system and law in Iceland, suggest that it should be unproblematic to deal with the weaknesses of the film business. But judging from the discussion on film policy among some filmmakers, journalistas and academics today (26, 27, there is however a sense of apprehension, or perhaps a misconception what the idea of ‘an industry’ means. Also, it is clear that both filmmakers themselves and people within the film community are mainly looking towards further subsidy in terms of getting more finance into the business (27. And from time to time, a warning of ‘English speaking Influences’ and commercialism appears regularly, but without any clear moves towards a new comprehensive policy making on how to respond to global forces.
The answers to the questions on what should be done can be summed up in two main and, in this context, contrast words: defense or opportunities. Defense seems more appropriate word in Iceland at present, because there are many concerns such as the artistic freedom, the peril of being too small in the international relationships and so forth.

4.2. A Creative Partnership
Icelandic projects and the environment of local film making companies is for most part the same as companies in other businesses, they live in a competitive world, belong to a political environment and need to produce. Different priorities from on company to another are shaped by reckoning the artistic value of the product, or ‘read’ the market. A subsidy or up front payment from a major film studio does not appear to guarantee an artistic freedom, because it also lies within the way how the film company is managed, primarily the conceptual part of the management. And film history has showed us that a movie budgeted at USD 10.000, can be more successful than one budgeted at USD 10.000.000.
The distinct priorities from one film making company to another normally reflect the shareholding in the company, or in a particular movie project. The artistic ‘priorities’ may well come at later stage. Shareholders within the commercial creative industry tend to look more at who are the other shareholders and partners than if we were talking about i.e. a food factory. Profit is the key word for the shareholders, and because the risk factor can be high with some projects and investors, sales agents and banks ask for a high return. To meet the demand for high return, the risk is minimalised as well by finding the ‘right’ combination of partners and shareholders, that is distributors, co-producers, public funds in addition to private investor. The ‘right’ combination is in many cases the key factor in getting a movie made. Because even though there is finance available, it is generally considered a high risk if the creative combination does not fit together. That is when the conceptual management becomes more demanding.
As discussed earlier, the great emphasis is to get a distribution deal, a sales agent who can turn risk into profit. The sales agent would in return ask for ‘bankable’ names, actors, director etc, or a well-known producers and a good script. What can be considered ‘good’ or ‘bad’ is clearly a subjective matter depending on both the culture and the policy of individual film company. And since distribution companies and sales agents do not depend on market researchers and product tests, the policies can be different from one company to another although dealing with very similar projects. Another factor which minamises risk and what partners look for in other potential partners are new finance sources, new contacts, talent and experience from unknown territories. This is ever more important in the creative industry than in other business, and small and medium size film companies in Europe are constantly looking for partners and co-production deals. So when a new partner for a project is estimated, it is not only the current cash-flow report which determines the value of a possible co-production. There is no reason to believe that a small creative and flourishing film community like the Icelandic one, will not find its place in this environment.

4.3 The artistic freedom and the business
The other concern about attracting private investors and play with the marketplace, is the threat to artistic freedom. Within the sales agents, producers and distributors expectation, the profit, is also a demand for artistic value. Most investors can see a profit in what people want to see, something that matters for them. In the ideal circumstances, a sales agent for a particular film project and the director and the producer, allocate the risk (perhaps attract one bankable and international name). They may do so in order to increase the artistic freedom among the artists who work on the project and who do not yet have a market for their names. The artistic instinct of the businessman/woman or the investor, and the business instinct of the producer and the director, can be complementary and create a dynamic and fruitful partnership.
Artistic freedom in commercial films can thus not be compared to the artistic freedom of, i.e. the visual artist. Also, when a film management is appropriate and backers can expect a decent sale, producers do not have time to keep taps on daily routine in making the actual picture. There is also number of sub-contracted work and individual artists ‘drop-in’ on a project for a minor work. What seems to threaten the film artists more is the co-production requirement between countries and international quotas, (see 2.1).
In brief, influential factors on the creative freedom in movies are for most part the conceptual management, and/or if a key figure, say director, is hired to do a job, or if he/she is contracted as an author. If the function and meaning of these two factors are clear, then the artistic freedom has it place, whether small or big. So the level of that freedom has got little to do with if a film is a Hollywood film, an Icelandic countryside drama or an Indian musical, and that the creative atmosphere depends on whether the film is commercial, a studio movie or independent, seems more like a myth. It may just suit creative filmmakers differently to work in different places, as authors, as hired ‘executives’ and so forth.

4.4 Shortcomings & the lack of competition
Since the IFF has had to operate on the basis of old and inadequate law, the IFF’s board, staff and managers have presumably had numbers of difficulties to adapt to the modern filmmaking environment over past decade. But before the new law came to being, there were three far-reaching and promising changes that took place in Iceland, the tax incentive scheme early 2000, the involvement in English speaking films and the government’s increased in funding late 1998. There was however no change in the law at the time, so there are doubts if the increase in funding should have taken place until new law had been approved. But now, the new Icelandic Film Centre will need to identify and deal with current weaknesses as efficiently as possible.
But we can argue that the absence of appeal guidelines, which is primarily a form of communication, absence of detailed policy and possible changes has further to under-developed skill base added to an isolation of the local film community, not only internationally, but also in the cultural and business scene in Iceland. For instance, if there is a continuing development towards a greater concentration of film productions in giant corporations, and more accumulation through consumerism and finance, what is the Icelandic film community’s position? IFF would not know, IFF does not have an opinion, and IFF would perhaps not know what consumerism in film terms means.
But the centralized position of the IFF is worth pointing out again (see 1.7). That is, due to the small size of Icelandic society, local TV station and private investors do not have the capacity to invest in movies to any substantial degree. This gives the IFF a monopolistic position &endash; which is it may not want to have at all - and even more responsibility to the film community than other public film bodies in Europe. The various IFF’s selection committees over the years may or may not have realized this, but is seems they have primarily been looking at an artistic valuation from the point of view of national identity, which is highly subjective, both in terms of what is the identity of modern day Iceland, and what is art in that context. But though a selection committee may be a proper and good arrangement in certain circumstances, the fact remains, that members of these committees in 1990’s had also little experience of the international film industry, or how to ‘buy’ or encourage projects which may have had the capacity to move away into new territories, and find and develop new finance sources for producers as well as IFF. These committees have somewhat presented the old idea of ‘the establishment’, something I would like to call a ghost from the cold war. And politicians may well have had the desire to change the funding system, but felt insecure to move forwards with radical ideas because filmmakers themselves have not been united behind a policy &endash; until maybe now. The media and the academic world, due to its lack of expertise, seem also weak in terms of making authorities and filmmakers alike answerable for the way things have been managed. But by ignoring these important administrative and legal factors in Icelandic film community over the past ten years, their observations on filmmaking in the future may not be academic ‘enough’, just about semi-professional and with poor meaning to history.
The involvement of the NVCF in filmmaking is another interesting chapter worth pointing out, but with the policy to follow IFF policy only, is another act to reinforce the monopolized statues of IFF and fight the global market forces and smooth intercultural relations. NVCF could be drastically with fair competition. In addition to this, NVCF is not giving other audio-visual projects, such as TV, a chance, and has not set out either a policy note or an argument for its policy. And since the NVCF is official, the government has total control over how film producing in the country develops. More importantly, competition seems by this hand-made by the authorities, which means there is no competition in the Icelandic film community. It also looks that one of the side-effects are that banks and lenders are reluctant to lend money to the ‘industry’ which is not ‘running on competition’. But we sure hope that with the new law and new policymaking all that will be ‘yesterdays news’.




5.0 PROPOSAL FOR THE FUTURE

5.1 A policy
Our coal with a policy is for instance;
- to decentralize the state’s statues by encouraging private investment, and withdraw public involvement as much as possible. By this, the local business will develop more flexible tools, culture and attitude towards changes in the international scene.
- to make the working life of IFC’s staff behind the desk more challancing.
- a well-balanced policy attracting foreign investors while fostering the local scene, a policy which measures and justifies the taxpayers money in the field.
- involve banks and lenders and make movies more attractive investment for TV stations.

And it may seem a problem that changing and reorganizing costs too much money, but in fact the biggest risk is to do nothing because the competitors are also trying to do their best. Many ways are around this, that is to make a new policy, funding system and structure. Here is a suggestion for a guideline.

5.2 The implementation
The IFF would be managed as a limited company, and divided into three funds, ‘Icelandic speaking film fund’, ‘New talent/ development fund’, and ‘Commercial film fund’ - in any language.
The three-fund system is partly to represent debate about the meaning of ‘art’ (excellence and heritage), ‘growth’ (experiment and development) and ‘popular’ (fashion and profit) in their most spiked forms. The fund would operate at arm’s length principal from the government, without politically appointed representative, and make the government accountable for their policy. Twelve people, instead of seven, would be in the board of governors in order to minimalize conflict of interest and bring wider experience. The board would seek advice in all areas of the film community. The fund would have set of rules of appeal for applicants, which would likewise make the fund accountable for its management and development of the policy. A good ‘client relationship’ should be maintained with applicants in order develop the fund’s policy, so the implementation would have a better chance of being successful in practice since it will reflect the experience and concerns of people working in the field. The fund should be consultant in the field of New talent/development, but inactive in any other areas. While celebrating both established national culture, working at street level and engage itself in international exchange, the IFF would over the first year emphasize participation in English speaking profitable commercial projects which bring them further knowledge from the international scene, such as the North American and UK market, and to build up financial foundation for the fund and create and develop a new financial income.

5.3 The economical factor
The task is to help the film industry to help itself. 2% of the government fund would over two years period be spend to make detailed policy, action plan in various steps and a business plan for the fund’s investments. If the commercial fund will be given three years to show profit, managers would take agreed commission (pay-for-performance), and in the event it will not show profit, they will be replaced. Subsidy should be replaced by venture capital in order to encourage pay-for-performance management among Icelandic producers as well, based on the philosophy that grants are only for beginners. The role of the government, in addition to support the IFC, should be to create a context where the market works fairly and efficiently by facilitating tax incentives in the widest sense of the word and channel investment and lending from other part of the society, such as TV stations and banks. This would be a decentralizing act in order to loosen the monopoly of the IFF and as such moderate conflict of interest within the board of governors and within the fund’s funding policy. Conflict of interests would automatically be less when funding options are more. As an option, the government could cut ‘subsidy’ to IFF against the tax breaks in order to help to establish business relationship between the film sector and the private sector.
Investment from IFF would be in form of challenge funding. In a first step of an action plan, matching funding would be automatically provided from the commercial fund if producers have raised x-amount (say, 75%) of budget from the commercial market and have international distribution agreement. IFF would require agreed profit participation from all production investment. Recoupment in the event of development support (lending) where the IFF is not investing in productions, would take place on the first day of principal photography. The IFF could also seek to positively reward successful producers who have invested in development of Icelandic speaking films, by extending development funding into next project. As regards Icelandic speaking films, IFF would allow the producer to gain x-amount of profit (higher than commercial) before recouping the IFF in order to encourage culturally driven filmmaking.
The role of Icelandic banks as a lender could be significant, both in terms of taking up minor gap financing against insurance’s and to communicate with foreign media lending banks. All business’s need banking anyway, and know-how’s in media lending is much needed. One way to approach this challenge is that the authorities could encourage banks and financial institutions to invest in training for their staff and seek partnership with big media lenders. This encouragement could be in a form of temporary tax breaks against entertainment industry investment, and in return subsidy would be cut down. The NVCF is also a source that reasonable can be expected to participate if the fund is being involved in film industry development at all. If Icelandic banks lend to films they would also encourage local producers to seek more pre-sale abroad or an international sales agent, even though it would be for a small amount.
All IFF’s profit would be distributed between the three funds, regardless of where the profit comes from. If the commercial film fund shows 25% profit, the fund’s board of governors would have the power to direct the profit into new talent fund alone.

5.4 The social and cultural factor
Films are widely regarded as a major component in the way a country presents itself to the rest of the world and it is the social politics of the fund, which provided the key philosophy, or the justification, for the public funding. The fund must recognize the diversity of the society and determine in what manner it will take into account in their criteria the variety of applicants, whether in terms of class, sexuality, geography, age, employment status and so on. It is not within the scope of this paper to deal with social politics a such, but an independent TV and documentary fund would perhaps reflect societies different communities on a broader scale than IFF. It is the politics of the day, of the government and the nature of applications that would inspire how a semi-commercial film fund would support the film culture, whether diverse or monotonous, its past or the present.
It is not uncommon among that cultural institutions exploit the cultural resources of the past, in Iceland it is the literature, rather than contemporary art activity. The value of past culture has always been debatable and what should be brought out from the dark and cultivated. At the end of the day, it is easier than nurturing today’s changeable artists that tend to be neglected. Authorities may also find it more attractive in the short run to build a clamors building around a cultural past, while they are in power, and a film fund might feel it would raise its profile by investing in a film with plenty of stars (as mentioned above concerning the old IFF’s selection committee). But work on 'street level' is vital, because it is the massive information explosion of recent years and fast cultural changes and shorter life expectancy of ideas that brings out this predestined weakness of public bodies, and they decline. And in this production environment, those who continually invent themselves on street level and set themselves apart will comfortably survive. Thus new talent should constantly be invested in or appraised, and their own creativity should always be in touch with changes to the popular psyche. The New Talent Fund should recognize this. The social factor will in the long run shine through the products of the film fund’s supported projects, and how much it emphasizes external image of the society and the country, and how much the internal reality.

5.5 The management
None of these suggestions above need to be permanent and the internal management of the IFC and the Icelandic film community would need to follow set of rules of communication to develop the policy and create the necessary flexibility, (see 5.2)
Privatization &endash; in the widest sense of the word - of the management is an exciting option, which would be open for contracted work for, say, five years. At least, here is nothing that suggests that appointed management team would do a better job than ‘privatized’. The key achievements expected from an outside management team is profit and projects, which reflect cultural diversity, and the managers (say three, one for each fund), can bring in as many foreign advisers as they which, as long as they don’t go over agreed management budget. The management would be answerable to the board of governors. A horizontal management style would be emphasized, but a vertical management, this is ‘from above’ management, does not suit the film making process, whether on set or in the administration. Horizontal management is appropriate because teamwork is one of the characteristics of film making, but currently Icelandic film community (the Ministry, IFF, association and guilds), is administrated vertically, not necessarily because it is the management style of specific individuals and groups, but because of the present infractstructure. This suggest that improvement in only one or two area of the whole infractstructure of the film industry would not deliver an overall growth and development, but moreover, it suggest that part of the infractstructure, that is the management, should be converted into ‘outside’ activity, that is ‘privatization’.
It is often easier to think in terms of infractstructure, at least for politicians who can point at a balance sheet and show what they have delivered. The infractstructure is important within film industry and elsewhere, but the danger is that the management within it and its presence through out lead into thinking that they are the film industry, not a mean of a support. Infractstructure tends to grow and get expensive, instead when partly privatized activity can be easier to cut down, (see 2.3). A management would need:

1. Clear definitions of mission - in a new financial and international cultural environment.
2. Realistic statements of goals.
3. Failure and confusion should be considered as an indication that the objective is wrong or at least defined wrongly.
4. To build into their policies and practice the constant search for innovative opportunity in management.

The management should follow set of rules that contain;

1. Tackle the problems, whether internal and external, and focus on opportunities.
2. Successful projects explained and scrutinized.
3. To search, listen and look out for opportunities to achieve set goals among applicants and filmmakers.

The management would also need to be centralized to guarantee control, standard and consistency of approach, but decentralized in terms of policy making. The balance between the two would safeguard the standard and nurture innovation. The external management, that is the management team that IFF would be supporting is also a matter of policy and criteria. It raises the question if the art or the artists come first, or if the commercial viability or the producer comes first. The question IFF would need to answer is if whether supporting a specific artists or a producer, is the best way to support the art and business of films.

5.6 Reformation
The IFF would increasingly seek advice in terms of the business administration, that is work with ‘outside’ economists and media lawyers. Existing staff in the administration would get further and exciting training in the international industry to encourage a new attitude towards the existing business. Foreign adviser or manager for perhaps the commercial fund is possible. As discussed earlier, the main difference between a none-commercial and commercial films is the involvement of sales agents, insurance companies and media lending banks, prior to production. And the producers are either selling their film to investors or full filling criteria based on a social and cultural policy. If however no one within the IFF knows the meaning and function of insurance companies or completion bond and so on, it is hard to ‘sell’ a commercial package to IFF and IFF stands a less change to make profit. Know-how’s in the financing business is essential.
Film labratorum is a realistic objective though the market is small, it could serve in addition to feature length pictures, all commercials and foreign productions, such as music videos and documentaries. Possible the best choice is to negotiate a building of a small extenuation from one of the major labratorium, such as Technicolor, which would be able to process and print a negative to view dailies in cinemas. Machinery for Telesyne transfers, and ‘Blow ups’, that is from 16 mm to 35 mm film or from a digital format to 35 mm cinema print should be available. Negative cutting and optical prints for cinema release would be done elsewhere, head-office would also be elsewhere but the lab would be managed with minumum overhead. The first step would be to do a business plan for the lab, suggesting a potential investment from Iceland, say NVCF, and possible backed by both local authorities and the government which could facilitate a temporary tax breaks for the project. A lab would give the Icelandic film industry a stronger position to compete internationally in terms of attracting foreign productions and the service would not only improve significantly, but the industry would raise its confidence, cut costs for local productions and safe time in post production. IFC would encourage producers to sell ineffective and unnecessary equipment and houses/studios and invest in new equipment and reorganize the production. It would set out goals to support x-amount of films for the international commercial market in order to develop the new income. By making English speaking films, the local film community would find the most practical way to improve their contacts within the international scene and be better equipped for the future networking-society.
In brief, inspired by the global opportunities, the aim is to develop new audiences and attract outside professionals and artists to advice and work in the local film industry. Finding a new market should be a realistic goal, not in competition alone, but with out-put deals with medium size sales agents. IFC could set out targets to enter the global market with commercial English speaking films, so the local film business has a better chance to create a market for their own artistically and culturally driven movies on the market. Gradually Icelandic films in whatever languages could get their own market. Moreover, with this the state will more likely get its money back.

6.0 Few final words
The current political climate in the European cultural sector is much in favor of private public relationship, where most recent development has shown us dramatic moves in some countries. But Icelandic film business has much relied upon co-finance from Scandinavia and Germany, where the private partner is becoming more involved. How recent development, especially in Germany where the financial landscape is changing rabidly, will effect Icelandic filmmaking is yet uncertain. The nature of the private public relationships and future development is also dependent on the cultural policy in each country, and it is apparent that all nation-states will respond to this development towards globalization, not only Iceland. That is why the local business needs also more variety in order to be flexible and ready to take down falls. But globalization may have been hyped over the last decade, or since the end of the cold war, but what characterizes this period is also emergence of a global consciousness, somewhat as a product of rational knowledge, it has intensified intercultural relations and there are new ideas about national identity and meaning. Globalization has for instance improved possibilities for young people, smaller countries, minorities and subordinated social circles and created new job opportunities and so forth. On the other hand globalization has increased various arbitrary hierarchies in modern society, and gaps in opportunities have tended to widen during the period of accelerated globalization between different parts and groups of the world. These are the wider issues and we can come to many conclusions on this complex subject and ask questions. There is for instant no easy answer to the fact why Iceland has never entered a long lasting relationship with UK, Irish or US based film companies, like it has with heavily subsidized Scandinavian and German based companies. It is possible that Icelandic producers have developed their business’s with grants, got a little addicted to it, and meanwhile not developed the necessary business-tools to survive in a competitive world. It may also be argued that some local producers have therefore not wanted any change in the local scene, or fair competition. But a ‘small Icelandic market’ is not a problem, unless we want to, because the market is global.
The philosophy of government funding to the arts has not been questioned for few good decades in the Icelandic society, where films for instance have first and foremost been seen as Art, but not as An Entertainment Product as well, and where politicians are in some cases involved in funding. And art, culture and national identity is all open for discussion. So we can say that the Icelandic cultural and political scene could only benefit from revising its philosophy and make a new cultural policy where grants would not need to be the beginning and the end of artistic and cultural live, and where the creative industry is also recognized as international business.










































References & further reading:
1) Bernstein, Greg, various articles (1995-1999), ‘Financing Of Independent Films For the Millennium’, ‘Gap Financing, Friend or Foe,’ ‘The Business Of Film,’ Rosenfeld, Meyer & Susman, L.A. USA.
2) Boekman Foundation, report (1996), European countries reflect on privatisation., Boekman Foundation, Amsterdam Netherlands.
3) The Danish Film Institute, (2000), Policy & guidelines, DFI, Denmark.
4) Davidson Schuster J.M., article (1989) Government Leverage of Private support, EU.
5) Drucker, Peter F., (1999),‘Innovation and Entrepreneurship’, Butterworth Heinemann, Oxford UK.
6) The UK Film Council (2000), ‘Guidelines and application procedure’, The UK Film Council, London UK.
7) Hewison, R. (1995), Culture and consenus, London UK.
8) Kawashima N, (1995) Comparing Cultural Policy: Towards the Development of Comparative Study, Council of Europe Publishing.
9) Matarasso, Franqois,. Charles, Landy,. (1998), Balancing act: twenty-one strategic dilemmas in cultural policy. Council of Europe Publishing.
10) The Ministry of Industry & Commerce (2000), Law on tax incentives for films, The Ministry of Industry & Commerce, Reykjavik, Iceland.
11) Mundy, Simon, (1997), Making it Home, European Cultural Foundation, Netherlands.
12) The Nordic Film & TV Fund, handout (2000), ‘Application guidelines and Regulation’, NFTF, Oslo, Norway.
13) Scholte, Jan Aart, (2000) Globalisation, a critical introduction, St. Martin’s Press, NYC, USA.
14) Smith, Cris (1998), Creative Britain, Faber & Faber, London UK.
15) The Swedish Film Institute, (2000), Funding guide, SFI, Sweden.
16) Trompenaars F, and Hampden-Turner C., (2000), ‘Building Cross-Cultural Competence,’ John Wiley & Sons Ltd, West Sussex UK.
17) Trompenaars F, and Hampden-Turner C., (1999) ‘Riding the waves of culture.’ Nicolas Brealey, London UK.
18) Rugman, Alan, (2000), ‘The End of Globalisation’, Random House, London, UK.
19) Peacock A., Rizzo I., (1993), Cultural Economics and Cultural Policies, Dorcrecht, Boston, London.
20) Zimmer A., Toepler S., (1996), Cultural policy and the Welfare State, EU.
Websites:
21) The Icelandic Film Fund (2000) - www.iff.is.
22) The Icelandic Government (2001) - www.althingi.is.
23) The Norwegian Ministry of Cultural Affairs (2001) - www.odin.dep.no.
24) The UK Film Council (2001) - www.filmcouncil.org.uk.
25) Screen International (2001) www.screendaily.com.
26) Morgunbladid (newspaper website) www.mbl.is
27) Film maker’s website (2001), www.producers.is





















Einar Thor Gunnlaugsson graduated from The London International Film School with a distinction in directing in 1992. He studied mass media theory and Spanish at the University of Iceland and at the University of Malaga, Spain, from 1988 to 1990, and continued his academic studies 1999 at the department of Arts Policy & Management, City University Business School in London, were he completed his MA in 2001.
Prior to films, he took part in number of EU’s and EC’s conferences on cultural and social issues in Denmark, Germany, France and Spain, was a member of the Executive Committee of the Icelandic Youth Council in 1989, and actively involved in international exchange programmes in Europe and C-America in 1988.
After film school he went on to make music videos and industrial films in Iceland and Norway from 1993 to 1995, he also appeard as an actor in few short films in London and took on the lead role in a United Nation’s (UNHCR) music video, ‘Hate & Destruction’ in 1994, distributed for worldwide television. His film work as a director includes a documentary for the Icelandic National TV and five short films, including ‘Regina’ screened at number of European film festivals. He was nominated for the ‘Young Filmmaker of The Year Award’ at the Edinborg film festival 1993, received European Script Fund Writer’s Award in 1994 and Jury Prize in Antalya, Turkey 1995. His latest film work is his director’s job on the five directors feature ‘Dramarama’, which premiered in 2001. He has also produced and written over ten radio programmes for the Icelandic National Radio, and from 1986 to this day, written dozens of articles for Icelandic newspapers and magazines on culture, politics and media. He lives in England.