A Conversation with Cinetic: Today's Market for Digital Rights

I spent some time on the phone today with three of the folks involved in building Cinetic Media’s new digital rights group, called Cinetic Rights Management. They wanted to supply a bit more background on the group, which seeks to help indie filmmakers wring the most possible value from their work by selling it to satellite companies, Internet portals, mobile phone operators, etc. (I’d posted last week about Cinetic’s hiring of Matt Dentler and some of the deal terms they’d been dangling before filmmakers.)

First thing: they didn’t dispute the deal terms I’d seen them offering to filmmakers last year (a 50-50 split of revenues after some expenses are taken off the top, like digitally encoding the film, and a 10-year exclusive contract to be represented by Cinetic.) But Cinetic’s Christopher Horton did say that terms are negotiated “on a case-by-case basis.” Horton said they’ve signed up “about 100 films” so far.

Janet Brown, the chief operating officer of CRM, said that the long-term arrangement is important to Cinetic because of the “unproven revenue model in this space”; the resources CRM will commit to marketing a film; and the logistics of encoding films and collecting info about how well they’ve performed in each distribution channel.

But what happens, I asked, if a filmmaker signs up with Cinetic and something goes awry? Cinetic might not find any buyers for the film, or might get out of the digital business in five years. Horton quipped, “This could be our only business in five years.”

Still, when Cinetic reps a film at Sundance or another festival, a filmmaker might sign a year-long exclusive with the firm, or even shorter. There’s a big difference between that and a decade. But the CRM team contend that they’ll be able to do a lot with a film’s rights over that period of exclusivity, as digital markets develop. “Having a sales agent for your digital rights is going to be even more important than a conventional sales agent” handling theatrical and home video distribution, Horton predicted.

Brown explains that CRM will market films to Internet portals like iTunes, Joost, and Jaman; satellite companies; cable companies; telcos; and wireless operators. They’re interested in repping not just new films, but high-quality older films where the rights have reverted to the filmmaker.

I noted that the big kahuna in terms of Internet sales (and now, rentals) seems to be Apple's iTunes marketplace. The CRM trio seemed to agree. They noted that, working with New Video, they helped cut the deal with iTunes to premiere Ed Burns’ “Purple Violets” there last year. (No data is yet available, they said, on how well it has performed.) And Brown said they’re “in discussions now to finalize our deal with [iTunes],” adding that CRM has “a very good relationship” with Apple.

Most of the deals CRM is seeing offered are so-called “consignment” deals: give us the movie, and we’ll give you a share of the revenues it produces. But CRM hopes that some films, in some digital outlets, will receive advances – especially when they’re offered to one outlet on an exclusive basis.

It can take a while for these Internet outlets to produce revenues, Horton explained. “We never tell filmmakers, we’re going to make you a heck of a lot of money through Jaman, Joost, and Netflix over the next twelve months. We’re focusing on the long-term,” he said.

A main emphasis in CRM’s dealings with filmmakers, it seems, will be helping them make sense of the growing number of digital distribution options – and freeing filmmakers up to get started on their next project, without spending years marketing their last one.

“Not every filmmaker has the time or inclination to do what Lance Weiler or the Four Eyed Monsters guys have done,” Brown said.

“Most independent filmmakers out there are still unaware of the opportunities,” said Dentler. "They’re so busy being filmmakers, engrossed in their project, that they don’t see the bigger picture, the bigger landscape.”

‘Four Eyed Monsters,’ he observed, came out in 2005, and directors Susan Buice and Arin Crumley “still haven't made another film. Hopefully, with our resources we can help filmmakers focus on continuing their careers.”