1. Broadcast Network => Group Forming Network

We’re seeing a gradual decline in television audiences while people are spending more time on social networks and this is wreaking havoc on business models. A traditional broadcast network grows in value along a linear scale, therefore the community value can be calculated based on the number of viewers. The value of social networks (a.k.a. group forming networks) grows along a very different curve as dictated by Reed’s Law. The significance of Reed’s law is that eventually the network effect of potential group membership can dominate the overall economics of the system. David Reed discovered that the community value of large networks–particularly social networks–scales exponentially with the size of the network. The number of possible sub-groups of network participants is 2 to the power of n, where n is the number of participants. This explains the phenomenal growth in the value of social networks. Adding an additional 100,000 viewers to a television audience of 1 million is no big deal, but adding 100,000 network participants to a 1 million participant social network has a significant effect of the value of participation in the network. Networking pioneer J.C.R. Licklider wrote in 1968, “we form communities of common interest, not common location.” David Reed explains these concepts in the article “Weapon of Math Destruction: A simple formula explains why the Internet is wreaking havoc on business models” (Context Magazine, Spring 1999, link) along with “That Sneaky Exponential—Beyond Metcalfe’s Law to the Power of Community Building,” a companion article originally published as an online suppliment to the “Weapon of Math Destruction,” article.

2. Institutional Funding => Crowd Funding

The internet and a growing number of people paricipating in a variety of online communites is making it possible to raise money for creative projects online. Two services that stand out inlcude: IndieGoGo and
Kickstarter. These services differ in siginifiant ways in terms of how they operate. Kickstarter is a community limited to fundraising projects that meet their curatorial goals, and projects don’t receive any money unless the fundraising goal is reached. This is good in terms of providing funders confidence their money will go to a project that will be completed. On the other hand, IndieGoGo is an open community allowing anyone raise money for their creative project. If you don’t make your goal, you can still keep the money you raised to put towards your project, however, a lot of funders might not like they’ve given money to a project that does not have the funds needed to be completed. To some people this seems to give Kickstarter the edge with their all or nothing approach. At this time, Kickstarter is only available for projects made in the United States and you must have a U.S. bank account and a U.S. place of residence in order to use the service (even though contributions can come from anywhere in the world). In favor of IndieGoGo is that it’s open to any project (not just creative, and no gatekeeper) and they have a more global perspective with campaigns in almost every country. This year (so far) fourteen films have made it to top festivals after crowdfunding on IndieGoGo, see: “IndieGoGo Films Showcased at World-Class Festivals in 2011” (Adam Chapnick, Tribeca Future of Film, September 30, 2011). There’s a rapid rise in the number of creative professionals leveraging crowd funding to support their work. One of the most impressive examples to date is Jennifer Fox’s Kickstater campaign for My Reincarnation in which she raised over $150,000 in order to get her film into distribution, she shares what she learned doing in her guest post, “How MY REINCARNATION Broke All Kickstarter Records & Raised $150,000” on Ted Hope’s blog.

3. Independence => Interdependence

In our connected world, filmmakers are moving away from the paradigm of “independent” filmmaking and embracing the notion of “interdependent” filmmaking. Unlike many industries, we’re not in competition with each other and we can benefit more from cooperation. This idea is being championed by Tiffany Shlain, Her film Connected is about the impact of the Internet on our lives and a call for to embrace a new philosophy of interdependence, for more details see see: 10 Big Ideas for the Future of Film by Tiffany Shlain (Mediashift/PBS.org, April 20, 2011) and The Power Of One: Food For Thought 2011 by Sawn Parr (Fast Company, Jun 1, 2011).

4. Oligopoly => Constellation of Gatekeepers

Once upon a time talented filmmakers and/or promising projects would be discovered and/or packaged by the Hollywood studios. With high barriers to entry (e.g. specialized knowledge, scarce resources, a lock on distribution, etc.) the major studios has a tight control on the industry and operated like an oligopoly. With access to inexpensive digital technology for production and postproduction–along with social media making it possible to establish a connection with an audience–filmmakers with the talent and drive to make it have the ability to take themselves from a state of being unknown talent to becoming popular with an audience through a process of lots of hard work developing an audience on their own. It used to take an influential executive at the studio to give you a green light for a project, now you can take your work directly to an audience an see if what you’re doing resonates with them. It may still take lots of money to make a film, but the ecosystem is growing into a constellation gatekeepers working a variety of levels, for example, film production is not within reach of many organizations who may choose to fund films that promote their agendas. One example that stands out is Paranormal Activity (Oren Peli, 2007) a supernatural horror film. It was originally produced as an independent feature with a home movie camera, but was later acquired by Paramount Pictures after a representative saw the film and was impressed. It has become a very profitable film along with a very effective social media marketing campaign, see “Paranormal Activity Rides the Social Web to Millions at the Box Office” by Christina Warren (Mashable, October 13, 2009). Realistically, cases like Paranormal Activity are the rare exception to the rule, it’s still as hard as ever to find an audience, but it you have a film that resonates with an audience, there are less factors in your way, as the oligopoly has given way to a constellation of gatekeepers that are more attuned to enabling rather than limiting your potential. Scott Kirsner’s book, Fans, Friends And Followers provides a good survey of how various people have developed their audience in the new media landscape.

5. Auteurs => Collaborations

Normal Hollyn, an editor, teacher, and author of The Film Editing Room Handbook (now it a 4th edition) wrote a delightful blog post titled, “Collaboration and Why The Auteur Theory Is Bull,” in which he argues that, “it’s impossible to make a film by yourself.” He points out that not every idea the director is going to have is good, and not all good ideas are going to come from the director. Film is a highly collaborative art form. Hollyn suggests the ideal way to work with any creative person is to, “come to the table with an idea (the ‘thesis’), let that person come up with a different idea (the ‘antithesis’) and then to let those two opposing notions contribute to a third, usually better, idea (the ’synthesis’).” Hollyn argues that directors who think they are the, “sole auteurs of their work, and are too afraid or guarded to open up to other ideas, will generally miss out on those ‘third, usually better’ ideas, and their work will suffer.” Today it is easier than ever with email, Twitter, Facebook, DropBox, etc. to share and communicate and keep an open dialog as a project develops over time. But these just facilitators. The important trend is a change in mind-set in terms of what it means to be an “auteur” vs. “visionary” director. A visionary director can articulate a clear vision while orchestrating the process of synthesis that Hollyn discusses in his essay, which leads to the best work. Even Orson Welles, perhaps one of the greatest “auteurs” in Hollywood history, surrounded himself with amazing collaborators who made significant contributions to his films. He had so much respect for Greg Toland’s cinematography that he shared a title card with him. Behind the most successful “genius,” whether it be an Orson Welles or a Steve Jobs, is not an auteur in the classic sense of the term, but a visionary who collaborates effectively with creative people. There’s a huge difference between the two, and the difference boils down to creating an environment that supports synthesis.

6. Media Objects => Media Fabric

I believe Blu-Ray disks are the last physical media distribution format consumers will ever see. Everything is moving to the cloud. I love the convenience of Netflix streaming and I find it annoying I still have to wait for many movies to arrive as DVDs. Why can’t they all simply be streamed to my Mac or iPad? While licensing deals will keep a lot of media tied up in knots for a while, eventually it will all end up on the cloud. See “Apple, Hollywood Close To Streaming Movie Deal?” by Thomas Claburn, Information Week, October 13, 2011) and “Movies in the Clouds” by By Michelle Kung (Wall Street Journal, October 11, 2011). But the concept of Media Fabric (which I borrow from Glorianna Davenport) goes way beyond the notion of media living on the cloud. Davenport’s idea is that of, “a semi-intelligent organism where, lines of communication, threads of meaning, chains of causality, and streams of consciousness converge and intertwine to form a rich tapestry of creative story potentials, meaningful real-time dialogues, social interactions, and personal or communal art- and story-making.” The idea is that media is becoming something integrated into our everyday lives, connecting us in new ways that we are shaping through the very process of our interaction with each other. See “Media fabric — a process-oriented approach to media creation and exchange” by Glorianna Davenport, et. al.

7. Specialized Competence => Media Literacy

Media was was once the domain of specialized individuals working in specialized organizations. Today, the trend is towards media production and dissemination becoming a core competency of every organization, as well as every individual. Many of us shoot a lot of casual video to share with friends, which helps us develop a sense for working with a camera. Increasingly we are purchasing smart phones equipped with spectacular cameras. Small videocameras like the Canon VIXIA provide high-quality high-definition images in the form-factor of a small camcorder. Things like smart-auto focus with face recognition makes it easy to produce good, sharp, point-and-shoot video. The ubiquity of video cameras has made it easy for anyone to pick up a camera and try their hand at media production. In the late 1990s it was essential for everyone to have a web site. Today it has become essential to enhance that web site with video. With video sharing sites like Vimeo and YouTube, we have at our fingertips an easy way to share video with others. With all the traditional barriers gone, writing with a camera is poised to become almost as ubiquitous as writing with a word processor. See my blog post, “Cinema will eventually become a flexible means of writing.”

For additional perspectives on these trends, see my companion post, “Researching Seven Macro Trends,” which provides a survey of the background research I did while preparing for this presentation. It includes micro-interviews with: Patricia Aufderheide, Perry Bard, Philip Hodgetts, Brian Lucid, Caroline Blair, Charles Papert, Steve Garfield, Chuck Green, Geo Geller, Jon Goldman, Julie Mallozzi, Kathryn Dietz, Kevin Brooks, Lee Morgenroth, Nathan Felde, Philippe Lejune, Ryan Evans, Slava Rubin, Zak Ray, Anne Marie Stein, Audrey Kali, and Brian Henderson.

This post was revised on October 17, 2011 to fix some typos and links.

This post is a follow-up with related links and references to my participation as a panelist on “Distribution in the Digital Age” at the Roxbury Film Festival. My fellow panelists were Cynthia Close (Executive Director of Documentary Educational Resources), Nettrice Gaskins (Computer Arts and Community Liaison, Massachusetts College of Art and Design), and William Murrell (BlackSoftware.com, Smallwall.net). The panel was moderated by Lisa Simmons (Director, Color of Film Collaborative).

Below are links and notes related to the topics I presented, divided into six sections: 0. Independent Film Distribution Economics 101; 1. Resources for independent filmmakers; 2. Good blogs to read; 3. Distributors, organizations, and start-ups doing interesting things; 4. Articles, interviews, books, etc.; and 5. Industry Publications.

0. Independent Film Distribution Economics 101

Consider this, with a typical home DVD release, the economics look like something like this:

Retail price: $19.95
Wholesale price: $9.95 (price to retailer)
Royalty to you: 20% of wholesale: $1.99 per DVD
Distributor takes care of marketing and advertising expenses
Profit to distributor: Mysterious accounting

The distributor is taking care of management, marketing, prints, replication, fulfillment, advertising, etc. costs. Any theatrical release, becoming more and more rare for independent films, is likely to lose money, but it is a marketing activity to create value in the DVD segment which does help sell more DVDs. So the theatrical factors into the economics as a marketing and promotional cost. Any money comes from DVD sales for all but the largest grossing films. Look at the box office figures for small indie films, they pale in comparison to the cost of marketing, managing, and advertising a theatrical release.

In a self-distribution scenario, the economics of selling DVDs from your website would be:

DVD price: $20 + $5 shipping and handling: $25 revenue
Cost of replication, shipping, handling, and e-commerce transactions: $7.00
Gross evenue to you: $18.00
YOU take care of marketing and advertising expenses on your own.
Net: you know your own numbers.

This is about disintermediation, and even if traditional distributors get out of the way and you have direct access to you audience, someone still has to do the hard work. Attention is the scarce resource today. Viewers have so many options, so many screens, so many things competing for their attention. Then it was the distributor, now it’s you and your partners. There is no panacea. The difference with the DIY scenario is you can build a fanbase that you control, you can build relationships with organizations that have compatible agendas around a cause, and everything you do to build relationships you are in control of. This relationship can be very similar to the time-honored relationship of artist and their supporters and patrons. There is a trend towards an increasing number of filmmakers who are developing fanbases numbering thousands, if not tens of thousands, to whom they can sell DVDs and other items. While DVD will be the staple for some time, I expect a dramatic increase in direct digital distribution. There is a huge intangible value in creating this relationship.

There is a huge tectonic shift occurring in independent film distribution. Today it looks nothing like it did when I was in film school, and in ten years I’m sure it will be different from today. It’s a wild, wild west out there. What follows are some of the resources, blogs, and articles (some of which I mentioned during the panel) that will help you better understand alternative distribution models and to navigate this rapidly changing environment. If you’re in a hurry, start with some of the articles I link to.

1. Resources for independent filmmakers

• The Workbook Project
  A resource for content creators that will become a user contributed repository of information. The concept is part of an open source social experiment, the workbook is meant to be spread and edited. This means that content creators can add their own info, war stories, advice etc. We’re hoping that the workbook can grow as a resource. It’s being built with an open source client side wiki called tiddlywiki that can be saved to the desktop, edited and then uploaded again. Contributors include Lance Weiler, Alex Afterman, Arin Crumley, M dot Strange, and many others. The site offers great stories, tips on building an audience, information on tools and techniques, and pointers to the best resources on the web for DIY filmmakers.
• Independent Feature Project
  Now almost three decades old, the Independent Feature Project (IFP) is a non-profit membership and advocacy organization that has evolved into a vibrant organization that supports and serves the independent film community by connecting creative talent and the film industry. The IFP has grown to informing and supporting a network of 10,000 filmmakers in New York City and around the world.
• The D-Word
  A leading worldwide community of documentary filmmakers that hosts discussions about the art, craft, business, and social impact of documentary film. Public Topics are open to all, professionals can become Members of The D-Word and access a wide range of ongoing discussions in our Business, Creative, Social, and Technical Topics. The online community has grown to over 2,000 documentary professionals from around the world.
• DOCULINK
  The DOCULINK community, consists of an active email mailing list providing a forum for quickly shareing information and engage in ongoing discussion about documentary filmmaking; a website providing information and resources for documentary filmmakers; and monthly meetings in Los Angeles, San Francisco, Vancouver, BC and occasionally in New York, which alternate between guest speakers, work-in-progress screenings and socials. The community, launched in 2002, now boasts over 2,000 members.

2. Good blogs to read

• Cinematech
  Scott Kirsner, a journalist, writes about making movies in the digital age. CinemaTech focuses on how new technologies are changing cinema – the way movies get made, discovered, marketed, distributed, shown, and seen. He attends a lot of events and meets many people along the way and he shares his insights in this blog.
• Springboard Media
  Comments on the future of the media arts field by Brian Newman, CEO of the Tribeca Film Institute.
• All These Wonderful Things
  AJ Schnack’s widely read blog focused on documentaries and nonfiction, he is a filmmaker and writer based in Los Angeles.
• DIY Filmmaker Sujewa
  A blog written by DIY, ultra-low budget, self-distributing, Washington, DC area & NYC based independent filmmaker Sujewa Ekanayake. Recent projects: Indie Film Blogger Road Trip (’08), Date Number One (’08, ‘06), Magnus & The Air Quotes Woman (’07), Rock Collection (’07).
• Self-Reliant Film
  Paul Harrill’s blog that champions small-crew, low-budget, and regional filmmaking.
• Kino-Eye.com
  Yours truly writes about digital filmmaking, new media, and more.
• Resources
  A blog project of Tribeca Film Institute.

3. Distributors, organizations, and start-ups doing interesting things

• DIY Days
  A series of intimate roundtable-style filmmaker events covering the word of DIY filmmaking and distribution. Recently held in Los Angeles and coming to Boston on a Saturday in September (date to be arranged). Last year Lance Weiler (Head Trauma) reached out to Arin Crumley (Four Eyed Monsters) and Mike Belmont (We Are the Strange) with a concept to create a virtual conference and festival. The virtual event has evolved into an online and real world event. It is broken into two parts. The first is the festival From Here to Awesome (described below) which will play out in theaters, living rooms, online, and on mobile devices. The second part is this series of conferences happening in Los Angeles, San Francisco, Boston, New York and London. Very cool, I’m looking forward to the event in Boston.
• From Here to Awesome
  An open-source discovery and distribution film festival that kicks off July 26th in Los Angeles and rollouts out over a six-month period with stops in New York, San Francisco, Boston and London. Filmmakers retain all the rights, see direct revenue from each of the outlets and enjoy access to global audiences. The festival’s goal is to create a direct connection between filmmaker and audience. There are no submission fees for filmmakers. They attempt to create multiple revenue opportunities for filmmakers by providing a platform that enables distribution across multiple outlets – mobile, online, living rooms and theaters. It’s not only distribution that is being re-envisioned and re-imagined, film festivals are also part of the old system and are thus also changing.
• Breakthrough Distribution
  Breakthrough Distribution was formed in April 2006 to connect content creators and fans in new ways, helping content creators take advantage of new distribution possibilities via online, retail, and other channels, beyond the traditional theatrical and broadcast options.
• Truly Indie
  They have a model to help you act as your own distributor, providing tools, guidance, and resources. Truly Indie has created a process to vet films from interested filmmakers who will then be able to choose which markets they wish to release their film in, and Truly Indie will dedicate customized marketing resources to the advertising and publicity of that film. Upcoming films include Fall to Grace, Cavite, and Tibet-A Buddhist Trilogy.
• IndieGoGo
  An online social marketplace launched in 2008 connecting filmmakers and fans. The platform provides filmmakers the tools for project funding, recruiting, and promotion, while enabling the audience to discover and connect directly with filmmakers and the causes they support. IndieGoGo enables a “filmocracy” by providing filmmakers an open platform to pitch their projects to the world, and giving the fans a vehicle to experience and influence the once inaccessible world of filmmaking. Filmmakers get new resources to build and engage a loyal fan base while fans get the opportunity to discover and impact new films while getting insider access and VIP perks for their contributions. Check out their blog as well.
• Mediastile
  A new service that provides broadcasters, film studios, and content owners with the tools necessary to manage their own digital distribution. They offer a royalty tracking systems for handling sales via a digital pipelines, and offer a way to get your media on you own store front as well as services like Apple iTunes, Microsoft Zune, Amazon Unbox, and more. They work with major media companies and small independents alike.
• Open Television Network
  A service launched with the goal of providing a distribution network the “middle class” of media publishers. It’s a framework that allows you to small media through iTunes using RSS feeds. Right now Apple will sell you media making tools, but they will not talk with you about getting your media on iTunes unless you are a established distributor. But OTN offers clever twist that does an end run around that, allowing viewers to access your video through iTunes with a technology called KlickTab. Now you viewers can watch your videos on their Mac, iPod, iPhone, or AppletV through iTunes. Read more about it on the OTN site. Some media makers may be concerned about no DRM, but OTM is perusing a positive model and counting on the goodwill of most viewers out there that want to support media makers doing good stuff. As Philip Hodgetts of OTN has said, “it’s about making it, easier than piracy and almost as cheap.”
• TubeMogul
  Helps you distribute videos to multiple sites and track analytics. Not for feature length distribution, but a good way to get short promo videos out there widely.
• Jaman
  An online community that helps viewers find and discuss world and independent cinema. Members can download films to watch on their computer or television. They offer a player download that manages downloads, provides a full screen experience, and handles DRM. The Jaman Cascade Network helps the player obtain movie files from the nearest source, so it’s like Bitorrent in that way. Rentals are for 7 days from when you download and viewers can watch as many times as they want. Their royalties to filmmakers are not as generous as many of their smaller competitors offering digital downloads (many without DRM which is problematic), but we’ll see what market pressure does to that. Watching Jaman films on the iPod or AppleTV is not available, since Jaman’s DRM is not compatible with Apple’s FairPlay DRM and Jaman does not offer a non DRM option for filmmakers who would like to spare their fans the hassle.

4. Articles, interviews, books, etc.

• Can the Internet Save Indie Film? by Fred Schruers, Wired, June 26, 2008
  There was a time in indie film when specialty houses from the major studios stalked the earth, reaching into deep pockets to acquire the rights to distribute the best films at the coolest festivals like Sundance, but that is changing. The statistics are startling, indie/speciality films are tanking at the box office, indie/specialty distributors are dying, and the growing role of the Web in consumer culture is part of the problem, can the Web be part of the answer?
• Yes, The Sky Really Is Falling by Mark Gill, FIRST PERSON: IndieWIRE, June 22, 2008
  At the Los Angeles Film Festival’s Financing Conference, Mark Gill, CEO of The Film Department (and former President of Miramax Films) declared provocatively, “Yes, The Sky Really Is Falling.” He detailed many challenges currently facing independent film. Here’s a quote from the article: “If you want to survive in this brutal climate, you’re going to have to work a lot harder, be a lot smarter, know a lot more, move a lot faster, sell a lot better, pay attention to the data, be a little nicer (ok, a lot nicer), trust your gut, read everything and never, ever give up. If you’re looking for a cool lifestyle, you’re in the wrong business. If you want work-life balance, go get a government job. But if you really want to make movies–even after all the unvarnished bad news I’ve dumped on you today–then by all means do it.”
• The Long Tail
  Chris Anderson’s seminal book explaining the “long tail” of digital distribution, an insightful big-picture look at the tectonic shifts changing our industry.
• Hollywood Has Finally Figured Out How to Make Web Video Pay by Frank Rose, Wired, July 21, 2008
  Scrambling to find new economic models that work is not just the challenge of indie artists and filmmakers. Here’s a key quote: “Sure, the YouTube explosion was fueled by amateurs, but it will be showbiz professionals who cash in on Web video. That’s because most big corporate advertisers want a safe, predictable environment — not the latest YouTube one-off, no matter how viral. Once the major brands get on board, millions of ad dollars will follow. Which is why when the writers’ strike idled most of Hollywood last winter, talent agents fielded calls from clients eager to try their hand. At the same time, the fact that a three-minute clip can be shot for as little as $2,000 means Web video will be more open to ambitious neophytes than television ever was — witness the guys behind Lonelygirl15, who now have a second hit Web series called KateModern and a deal to develop more for CBS.”
• Theatrical Docs Down, But Not Out by Agnes Varnum, IndieWIRE (July 30, 2008)
• No Film Distributor? Then D.I.Y. By John Anderson, New York Times, July 30, 2008
  Increasingly, indie filmmakers find themselves facing a flooded marketplace with too few theaters and too many movies. The basic laws of supply and demand have depressed the economic returns for independent film.
• Jon Moritsugu Interview by Sujewa Ekanayake
• Rethinking Film Distribution by Rebort, iofilm
  Peter Broderick, President of Paradigm Consulting, speaking about alternative distribution channels, he says filmmakers should consider new strategies for distributing their films to avoid future disappointment.
• An Annual State of the Industry Post and Some Festival Advice for Filmmakers, by AJ Shnack, June 2, 2008
  With all the hanges in the independent film world, it’s become necessary to take a yearly look at the state of film festivals and ask the question, are we are abiding by an old, outmoded system?
• DIY Film Projects: 6 Thoughts on DIY Projects, from Self Reliant Film
• Roll Your Own Docs by Rebort, iofilm
  As DVD projection costs come down, filmmakers are finding it more easy to connect directly with their core audience.
• Cinemocracy
  A platform for commentary and inspiration for citizen reporters, activists and filmmakers. he films which garnered the most praise, interest and online votes (will be) screened during the 2008 Democratic National Convention.
• Screenwriters strike back: ‘Dr. Horrible’ leads Web charge, by Cynthia Littleton, Variety

5. Industry Publications

• The Independent
  The Independent is a lively online magazine that was started with the intent of rescuing, re-envisioning, and re-launching the print publication, archival records, and online resources of The Independent Film & Video Monthly, an respected publication for the community of independent media-makers from 1978 through July 2006, at which point it ceased publication when its parent, a nonprofit organization called the Association of Independent Video and Filmmakers (AIVF), closed its doors.
• Moviemaker Magazine
  A print and online magazine founded in 1993 (web site was added in 1995) focused on the art and business of making movies directed at both the audience and filmmakers.
• Filmmaker Magazine
  A publication of the IFP covering independent filmmaking. Also check out Filmmaker Magazine’s blog.

It’s never been a more confusing time to be a filmmaker, nor has it every been more exciting than this.