DIY Days Boston, October 4, 2008 (conference notes, part 3)

This post concludes my coverage of DIY Days, a conference held in Boston at MassArt on October 4, 2008. Please visit part one and part two if you’ve not already read them. Do keep in mind these notes do not necessarily represent the views of the various speakers at the conference, sometimes it includes my own parenthetical thoughts, which are not always clearly delineated, but the goal is to preserve the essence of the conference.

Navigating The Distribution Divide

Lance Weiler (filmmaker and DIY Days co-organizer) gave a presentation comparing traditional independent film distribution and a hybrid DIY model. Much has been written about the erosion of the independent film distribution business over the past year, including the widely circulated and discussed “Yes, The Sky Really Is Falling” message delivered by Mark Gill at the Los Angeles Film Festival’s Financing Conference.

Many distribution companies have closed, specialty films are experiencing lackluster box office results, and with the replacement of video stores with big-box retailers, shelf space for independent films is shrinking. And all of this is happening at the same time the supply of independent films is skyrocketing due to the democratization of production, post-production, and distribution. Here’s a juicy quote from Mark Gill’s piece in IndieWire:

Here’s how bad the odds are: of the 5000 films submitted to Sundance each year– generally with budgets under $10 million–maybe 100 of them got a US theatrical release three years ago. And it used to be that 20 of those would make money. Now maybe five do. That’s one-tenth of one percent.

Put another way, if you decide to make a movie budgeted under $10 million on your own tomorrow, you have a 99.9% chance of failure.

OK, so we have a problem, but where are the new business models? What models can independent filmmakers use to get their film in front of an audience?

Lance’s presentation slides are available as a PDF download: diydaysBoston.pdf (the two charts in this post are from the presentation).

Lance began his discussion with an explanation of current release windows, which is rapidly compressing due to changes in the marketplace. Right now, mainstream distributors think in terms of the following windows and in this order for the most part:

1. Festivals: indie filmmakers have traditionally seen this as a gateway to a distribution deal and did not have to worry about the other windows, I think a classic example of the old way is Darren Aronofsky’s Pi, the film premiered at Sundance where it picked up an award and the producers quickly sealed a distribution deal, however, this is rarely the case for independent filmmakers, these stories are exceptions to the rule, and it’s becoming more and more rare with the decline of speciality film distributors. Arin Crumley and Susan Buice’s Four Eyes Monsters, provides a classic example of the more realistic and difficult DIY model, none of the specialty distributors saw a way to make money with the film, however, the film did indeed find an audience, but the filmmakers had to take distribution into their own hands (which at this point has been written about widely, it has become an excellent case study).
2. Theatrical: classically this has been the window after festivals, but a lot of studios now start with a single festival and go right into wide release, classically the independent filmmaker’s goal was to get a distribution deal that included a theatrical release, and this “builds value in the ancillaries” and is an effective marketing campaign for for all the other forms of release of the film (home video, pay-per-view, etc), but this is becoming more and more expensive to do, and independent specialty films are being shut out as the number of screens for specialty films dwindles, distributors are taking less risks, and audiences for specialty films are increasingly watching them at home rather than in a theater.
3. Pay-Per-View: 90 to 100 days, only a few ways to get into cable and telcos, only a few players here, pay-per-view has been good for Lance, he’s managed to negotiate deals for this, his suggestion is to carve out each release window and negotiate rights separately, this can be very complicated, but worth it in the end, as you retain control of the destiny of your film.
4. Home video and DVD.
5. Pay cable, black-out deal, no competitive releases are allowed.
6. Basic cable.
7. Network TV.
8. Internet. Right now this is seen as the last window, but this is certainly on the verge of change with a growing number of aggregators and online distributors experimenting with direct distribution models. There is lots of room for innovation and experimentation in this window.

This multi-tiered strategy offers exclusivity to each exhibition and distribution entity in the value chain during its particular stage of release. In essence, each tier operates as an exclusive window in which an exhibitor or distributor may screen the film. Day and date, on the other hand, eliminates exhibition and distribution exclusivity, as more than one entity in the value chain (e.g. theater chain, DVD distributor, internet aggregator) is allows to show the film at the same time. Historically theatrical releases have had the largest advertising budget because it clearly helps create value in all of the other tiers down the chain

As release windows shrink, theatrical release no longer operates as effectively as an advertising campaign for releases in other formats and therefore this may have a serious impact on the viability of theaters, who have depended on the traditional model for their survival. As the release window model is undergoes change, traditionalists feel it’s a problem to move the Internet window sooner in the process, however, this perception is changing among some people, you can do an internet release sooner, in fact, why not consider doing it immediately after a successful festival screening that might have gotten you buzz and press for your film (as Scott suggested in his session)?

Lance urges filmmakers to make sure that in any distribution deal you make, negotiate caps on expenses, marketing, and promotion. Otherwise you provide the distributor with a way they can have a creative accounting loop.

Lance stressed that it’s very important to make a deal with an exit strategy, this is critical, you need to be able to walk away with your rights if the distributor does not perform, otherwise they might shelve your and you can’t exploit it. The moment a distributor thinks they are not going to make lots of money on your film, or think they will lose money, they will abandon it, they are in a portfolio management business, you film is just one of many assets they are exploiting at any one time, and often good films get shelved and end up in distribution limbo. Sometimes distributors do this to take a competitive title off the market.

If the contract does not have the distributor releasing the distribution rights to you after a certain amount of time, you can’t exploit your own film, so make sure you negotiate an exit strategy. I know of several films which ended up stuck in distribution limbo and the only DVDs that have been released after the theatrical run are bootleg DVDs made by the director himself, this is a horrible situation to be in, unable to distribute your own film and giving away bootlegs which in theory the distributor could sue you for releasing.

Lance thinks it’s essential when dealing with a distributor that you look and see what other films have gone through the process with them and ask the filmmakers what it was like to work with a distributor. I would add to this you need to find a good entertainment lawyer with experience negotiating with distributors. Some even will take a percentage of their fee now and the rest when a deal is made. It’s always good when your critical partners have skin in the game. Share the risk and reward. Lance also discussed what has become a horrible stumbling for many independent filmmakers: the average $15K to $20K cost to prepare all of the deliverables for a distributor (these figures are for small films in the under $1M budget category). I suggest looking over a couple of deliverable contracts to see what kinds of things are expected. They vary from distributor to distributor, what Lions Gate expects is very different from what ITVS expects. Sometimes you might get an advance to cover the cost of the deliverables, but this is not always the case.

Lance reminded us that if you give something away, you get nothing below it, therefore Lance’s strategy is to carve it all up and break it down, multiple deals across and have movie revert back to him and this allows him to repackage his work again and again. Lance provided some ranges of figures you can expect from distributors for specialty films:

• Overall global rights: $0 to $450K
• General domestic rights: $0 to $250K
• Home video rights: $0 to $60K
• Video on demand rights: $0 to 40K
• Pay cable rights: $45K and up
• Basic cable rights: $5K and up
• Internet rights: $0 to $5K

Try to cut a deal with at lease a $15K advance towards delivery costs, which can kill you. You will spend between $8K to $12K for E&O Insurance. Get E&O rolled into the deal is an option, so try to negotiate for that. Transfers can run you $3K to $1K for HD, DigiBeta masters etc. Music and effects tracks can run you $1 to $2.5K. Clearances and title search, music clearances and release forms and contracts could cost you $1K to $100,000K for this. Legal fees $2K to $30K. In other words, many first-time filmmakers fail to account for the cost of finishing their film from a legal and distribution perspective. If you want to get your film out into the world, you need to know what it costs, in summary, traditional delivery averages around $15K, with a wide variance depending on your specific film. Original music, for example, is much cheaper than negotiating music rights and clearances. Look at a sample deliverables contract, all sorts of arcane requirements, you typically get paid for all of this at delivery.

In the traditional distribution model, there are lots of players taking a piece of the pie, which is why in the traditional model the filmmaker get a very small percentage of the retail DVD price. Along the chain you have: Consumer DVD « Retailer/Rental (Wal-Mart, Best Buy, Netflix, etc.) « Distributors (e.g. Ingram, Baker & Taylor, Studio Labels, entities large enough to talk with major retailers) « Sub-distributor (with enough volume to talk with the big distributors) « Filmmakers. It costs $20K for endcap placement in a large retailer, lots of pressure in the marketplace to sell mainstream, not specialty, titles. So what’s an independent filmmaker with an excellent specialty film to do?

Lance showed a digital distribution version of the chart, with iTunes, Voodo, Amazon, aggretors, studio labels, sub-aggregators, indie distributors, and with the exact number of steps, the same number of gatekeepers as before. So there remains lots of layers in the “value chain” between filmmaker and audience, each step extracting value at each stage and leaving very little for the filmmaker at the end of the chain, which reminds me that there are some similarities with the specialty coffee business, with retailers taking a larger percentage of premium prices so the coffee growers don’t see as much additional revenue as they should for their premium crops.

A new model may be evolving, from Festivals to Home Video DVD + VOD/Streaming, cable/sattelite/online + Pay or Basic TV. Shrinking release windows. Retailers might have issue with you being online, but From Here to Awesome is experimenting with this approach. Head Trauma started out as a virtual reality game before the film came out, then did the festival circuit, Lance did theatrical on his own. Lance also mentioned how Four Eyed Monsters did a podcast on their distribution saga. These have all been attempts to invert the model. DIY is flexible. Lance talked about 50/50 split vs. four-walling (you take all the risk) for doing theatrical screenings.

There’s lots of experimentation with new models going on right now. With Brave New Films Robert Greenwald has changed his style and distribution techniques based on political needs, clear calls to action, spreads the political message, he’s building a strong relationship with his audience, in contrast to Hollywood which has a hollow relationship with their audience, most of the interesting stuff that comes out of Hollywood properties like fan fiction are things that the Hollywood studios have nothing to do with, at least traditionally. I think the studios are getting smart and understand the value of storytelling across multiple media forms (known as transmedia storytelling), but so far, they’ve only controlled the movie and commercial tie-ins, not fan-generated media, however, in the near future I’m sure you will see some serious attempts to create new transmedia experiences by the studios, but but what makes fan fiction and fan media special is that it is NOT commodified media production, it’s all labor of love, so it will be interesting to see what happens when the studios try to step into this world. Some researchers at MIT are providing guidance in this area.

Lance believes that Audiience 1.0 was about traditional “broadcast” one to many marketing and distribution. Now with the emergence of Audience 2.0 the audience becomes part of the distribution network, they can amplify the message and become distribution hubs, all the people who help make a movie can become distribution points for the film. Examples of this include Wreck a Movie which provides a way to creating a film through connecting people and spreading information which was born from the film Star Wreck: In the Pirkinning. The producers of the film worked with people across the Internet to make and distribute the film. Lance reported that 3,000 people worked on the movie for 7 years, there’s real value in “crowd-sourcing” and all of those people can become distribution hubs. Another example is Swarm of Angels, driven by creative crowdsourcing and peer production, essentially a people-powered film studio.

Lance provided an excellent list of things to think about in terms of how to build an audience for your future:

1. Consider your own viewing habits
2. Who is you audience and why do they care?
3. Spend time thinking like your audience, how do they consume media?
4. Create a two-way conversation
5. Be prepared to spend time responding, this is huge, and time consuming
6. Build trust
7. Think of your audience as collaborators, never think you are smarter than them, they can revolt at any time
8. Have a clear call to action, consider the Dr. Horrible example, let your audience (collaborators) know “this is what I’m doing and why, help us spread this was the message,” this turns out to be one of the things people click on the most, consider why the Obama campaign has done well online, they offer people need simple steps in a call to action
9. Reward and respect the audience
10. The audience can not be controlled, can’t be stressed enough
11. Some tools are not for everyone, social media, it will not build the audience for you
12. Creating accounts won’t build the audience for you
13. Be willing to experiment
14. Share your findings openly with other filmmakers, this is the most important part and what DIY Days is about, this will help everyone in the community, this is about cross-pollinating audiences, and this can lead to real numbers

Lance also suggested five web tools that every filmmaker should understand:

1. Blogging with WordPress: blogging tool, make active, not static sites, updating constantly, people can subscribe, repost your content, other blogging tools include Blogger, Typepad, and Moveable Type (I think WordPress is the best among them), see wordpress.org if you want to host the blog on your own server
2. Sharing updates with Twitter: Lance uses it as an update tool, now CNN is twittering, lots of people are getting into this wonderful “micro-blogging” tool which is excellent for timely updates known as “tweets”
3. Content syndication with Feedburner: let people pull, easy to have blog posts sent as email to people, people can get your blog via RSS or Email
4. Social bookmarking with Delicious: share the things you enjoy, share with others, the more you share, the better, actively engage with the community, be conscious how you use these communities, sharing bookmarks is wonderful
5. Photo sharing with Flickr: this has helped Lance for high-res photos on presskit, prepared to link for photos, different versions of images, etc. document your work

I would add a sixth item to to this list, any one of the popular video sharing site like blip.tv, Vimeo, or YouTube, provides excellent way to embed trailers of your film on your web site or blog without dealing with any video hosting or bandwidth fees, also a good way to give away free shorts and behind-the-scenes materials.

Members of the audience suggested other sites that filmmakers should be aware of: Exposure Room for sharing your work and/or reel online for exposure and Seesmic for asynchronous visual conversation kind of a Twitter meets Video kind of thing, which was used successfully at Cannes. There’s also direct distribution start-ups doing interesting work like Caachi and Super Indie Films. All of these tools are a new part of the distribution and publicity mechanism available to independent filmmakers. There is a tipping point, the more you use it, the more people will help to amplify, many people think the filmmaking process is glamorous, tap into that using social networking tools.

Lance believes that “audience direct” is the future, especially for international distribution, some DIY solution providers worth looking into include:

• IndieFlix is a one-stop shop for non-exclusive distribution with a focus on community and discovery. They provide multiple revenue streams via PPV, sponsored streaming, download and DVD delivery direct from IndieFlix.com, and via third party delivery partners all at no cost to the filmmaker.
• B-Side is a technology company that provides acquisition, marketing, and distribution services to filmmakers, festivals, and distributors. Their mission is to find great films at festivals that fall through the cracks of the traditional distribution system and connect them with distribution opportunities.
• Breakthrough Distribution helps content creators maximize their distribution possibilities via online, retail, theatrical, broadcast, and other channels. Its independent producer platform provides rights holders with services, tools, and strategic frameworks to leverage new business models, technologies, and marketing approaches on a global basis.
• Neoflix is an integrated e-commerce, fulfillment, and customer support platform created specifically for self-distributing independent films.
• E-Junkie provides you shopping cart and buy now buttons to let you sell downloads and tangible goods on your website, eBay, MySpace, Google Base, Craigslist and other websites using PayPal, PayPal Pro, Google Checkout, Authorize.Net, 2CheckOut, ClickBank and TrialPay.
• CreateSpace, formerly CustomFlix, acquired by Amazon in 2005, allows you to sell directly through Amazon,and now Without a Box has become an Amazon company, they are buying lots of movie companies, interesting huh?

From Here To Awesome Filmmakers Roundtable

Arin Crumley led a discussion with From Here to Awesome filmmakers Matt Von Manahan, Zeke Zelker, Raffi Asdourian, Javier Prato, and Fritz Donnelly on how social media is working for them, how has the festival experiment changed the ways they think about making and releasing their films, and what they learned from “day and dating” their films.

Day and date is a release strategy in which a film is screened theatrically on the same day it goes into home video and/or broadcast (cable, broadcast, video-on-demand) distribution. This strategy been tried with films like Steven Soderbergh’s Bubble and Ten Items or Less. One reason for the day and date strategy is to maximize economies of scale in marketing and distribution expenses for films that are not expected to have a long theatrical run. Given current distribution trends and shrinking release windows, many experts predict more and more films will be released theatrically, on the internet and on home video formats at the same time. The day and date strategy diverges dramatically from the traditional release window model that Lance discussed in his presentation.

For Javier, From Here to Awesome was “the only festival” he submitted to (presumably because as a short film his piece has it’s best chance to find an audience online). Raffi said, “the results has been amazing.” Zeke said it was good for his film since it was “too controversial [for traditional distribution]” and people are “afraid of the [sexual] content.” Matt shot his film on 35mm and made in his parent’s basement. From Here to Awesome is a “user generated film festival,” viewers curate what films come in, filmmakers do their own social networking and see what opportunities are available, and they can get other filmmakers in this pool of opportunities. Javier said, “I had no idea of all these tools,” for him the “experience [was] amazing,” and he said, “I think this is a revolution and it’s happening, it’s just the beginning, it’s basically a school, a little bit of effort in learning all this amazing tools to get your work out there.” The panel also mentioned tools like Hulu and Our Stage for getting your work out there. Matt said that “YouTube was a good fit for us, 170,000 subscribers,” so he plugs his movies through videos on YouTube, which he said was a “creative way to market the film [that] does not cost anything.” Fritz said he sold his film To The Hills the on the streets of New York one on one and sold 3,000 copies that way, a lot for him, his perspective coming into this, screenings in little venues, movies in the hallway. When Matt was asked why in this day and age an indie filmmaker would shoot 35mm, he replied, “I wanted to it to look like a real movie,” but lamented that it involved, “dealing with the sacrifices, so much of the film was one or two takes” and apparently he would not do that again, because “the medium should not dictate the story that you tell.”

The panel spoke of a need to start establishing standards and best practices for DIY distribution and to get the word out how important it is to clear rights before putting the film online, especially if you worked with SAG, who starts chasing you after you start with making money with your film. It would be good to have more resources on DIY and the law, another example is that filmmakers need to establish best practices for brand inclusion as that has gotten several filmmakers in trouble. Some brands see inclusion as free product placement, others see it as trademark infringement.

There is a strong need to broaden the community, we’re not watching each other’s films, why not? We should be watching each others films and helping each other out in terms of distribution. My take on this has always been, people watch lots of movies, the competition is not really among indie filmmakers, it’s between the majors with the large advertising budgets and indies that have to vie for attention, but people have time to watch more than one indie film, so cooperation in this endeavor of distribution can go a long way in floating everyone’s boat.

An Open Conversation About Workflow

Andy Williams (Executive Producer, DIVE division of Shooters Post & Transfer) discussed the workflow involved in making and releasing a film and preparing deliverables that digital and traditional outlets require. The process of making and releasing a film can be a complicated process but a clear workflow path can ease the pain and reduce anticipated costs. In this session Andy took questions and comments from the audience and provided advice and suggestions. There were several questions about the new Digital Cinema Initiative (DCI) specification for digital theaters and Andy said mastering for this is a pain in the ass, it adds significantly to delivery costs, and you should do whatever you can to have the distributor pick up the cost if they want to release your film to an emerging number of digital theaters that are using this standard. So much of the DCI standard is about piracy protection rather than digital distribution, so it’s complex as a result. Standardizing on your video and audio formats for finishing your film in post and knowing what your deliverables are going to be will help you streamline your workflow and reduce costs.

Related post

On a related note, take a look at my post Distribution in the Digital Age for various lists of interest: Resources for independent filmmakers, Good blogs to read, Organizations, and start-ups doing interesting things, Related articles and interviews, and a list of industry publications.