An Update on the State of Indie Film Online

I worked on a piece for Variety this week that intended to examine why no online destination has emerged specifically to serve up independent films.

From the piece:

A decade after the dot-com boom, when the Web promised to make any piece of content globally accessible to any interested viewer, a dominant online destination for indie film has failed to emerge -- though many have tried.

Earlier this year, San Francisco-based Caachi quietly shut down, and world cinema purveyor Jaman let go most of its staff. Two of the first sites to try to connect cinephiles with streaming and downloadable indie films, GreenCine and Intertainer, have since exited that business.

As usual, there was a lot of material that didn't fit into the piece... and Snagfilms CEO Rick Allen e-mailed to take issue with some of the data I presented.

- Gary Hustwit told me his last doc, 'Helvetica,' has already broken into six-figures of iTunes earnings. He says his new film, 'Objectified,' is now available for pre-order on iTunes, and it's already in the iTunes top ten list for documentaries. Hustwit is also selling a USB drive containing the movie (pictured above). They're $75 each, and they've been produced in a limited edition of 500. Hustwit says they're selling briskly.

- Cory McAbee told me that a deluxe package of 'Stingray Sam' goodies is selling well through his site: for $49, you get a DVD, t-shirt, photobook, soundtrack CD, and two digital downloads (HD and standard definition).

- Rick Allen, CEO of doc-streaming network Snagfilms, takes issue with the traffic figures I cited in the story, supplied by Compete.com. Compete says the Snagfilms site gets about 100,000 unique visitors a month, compared to about six million for Hulu. Allen accurately points out that some of Hulu's most popular full-length films actually come from Snag (like 'The Future of Food' and 'Super-Size Me.') And he argues that a lot of Snagfilms content is viewed on other site, describing Snag as "a massively sub-distributed network." Unfortunately, Snag doesn't share any data of its own about how often films are viewed on its site or others, so reporters like me have no choice but to cite statistics from independent third parties like Compete or Quantcast.

- An interesting quote from Eric Lemasters, who handles digital distribution for E1 Entertainment: "iTunes and Netflix are probably leading the pack, but there’s a huge middle of the pack. Hulu is doing well, as is EZTakes. There's Amazon, Blockbuster [Movielink], CinemaNow. They all seem to be holding their own. EZTakes has done the best in that world. Snag and Jaman aren’t moving the needle much." Lemasters says 'Welcome to Macintosh' and 'The Bridge,' both docs, have been doing especially well on iTunes.

- Steve Harnsberger of Jaman says that site has no plans to shut down, but they're focusing more on providing "white label" video delivery services for other customers, like content owners, electronics manufacturers, and potentially telcos. "The Jaman site is definitely here to stay," he says. "It's a demonstration site for our technology."

- Distribution consultant Adam Chapnick of Distribber: "You have to be reminded that people like studio movies more. The reason that 90 percent of revenues online goes to studios is because most people don’t like indie movies." One reason that indie-only Web sites haven't succeeded, he believes, is that "most people don’t say, 'I’m in the mood for an independent film tonight.' They want a destination where all film can be aggregated."

- Some data points from Chapnick: "I know of one film property that's been making $50k/ month on iTunes, but it's not a feature, it's a stand-up comedy offering. I'm told by Netflix that they pay up to 30k for their [streaming] rights; of course that means they probably pay at least twice that to a really worthy title.

"But my bet is that 90 percent of indie films sell under 1000 units on iTunes, and 90 percent of indie films on Netflix are paid under $2500 for a year of [streaming] rights..."

- Some data from an anonymous source about indie content on Netflix and iTunes:

Per-title agreement [for two years] with Netflix can go up to 5k-20k, especially if we give them a 60 day pre-dvd release window, and we have.

Standard on one-year day-and-date ranges from .8-2k and catalog renewal can go as low as .25-.5k per if the titles is 5 years old or more...

Per-title revenue on iTunes for one year has proven to range greatly, from $ 50 to about $ 2000 with the average well below $1k thus far, but they have only been offering indies for just over a year so let's allow them to continue to build steam.

Your comments welcome...

The Reality of DVD/Digital Revenues Today: 90-10

I took just a few notes while I was moderating yesterday's SXSW Film Fest panel on 'The Future of DVDs and Digital Distribution.' It was populated with execs from New Video (one of the biggest funnels that gets indie films onto iTunes), Cinetic Rights Management, and SnagFilms, but the folks who really made the panel, I thought, were filmmakers Gary Hustwit and Morgan Spurlock. Unlike most of these panels, where people talk in generalities, this time we got some specifics about where we are today.

Hustwit and Spurlock and the other panelists seemed to agree that even if you can get your film placed on a few of the big digital marketplaces, such as iTunes, Hulu, Snag, and Netflix's streaming service, you'll do well today to earn about one-tenth the revenue that you earn from DVD. They seemed to agree that there's about a 90/10 breakdown today, in terms of the ratio of DVD revenues to digital.

Hustwit said that 'Helvetica' has earned about $60K in digital revenues so far... and it's among the top ten documentary rentals and downloads on iTunes.

Spurlock's film 'Super Size Me' is among the most popular films on SnagFilms, the site that sells advertising around documentaries and shares a slice of the money with filmmakers. Yet he said that 'Super Size Me' and 19 other films he'd supplied to the site earned just $1,200 from Snag over a two-month period. 'Super Size Me' alone sold almost 70,000 DVDs in the last quarter of 2008, he said.

"If you’re looking to pay your rent [with digital distribution], not so much," Spurlock said. "But if you’re looking to pay your phone bill, you have a great chance."

Steve Savage from New Video and Matt Dentler from Cinetic Rights Management also shared a bit about the fees they charge filmmakers when they assist with digital distribution on various platforms. After the platform takes its cut (iTunes takes 30 percent of revenues, for instance), New Video takes about 15 percent more... and Cinetic takes a 25 percent fee.

Hustwit was quite vocal about urging filmmakers to take the DIY approach whenever possible." Why are we building other people’s businesses when we could be building our own," he asked. But even he relies on New Video to get films onto iTunes.

I asked Savage what the #2 digital marketplace is, after iTunes. He said it's Microsoft's Xbox gaming platform.

I asked Rick Allen, CEO of SnagFilms, whether he could share with us the percentage of people who watch streaming films on Snag and later go on to buy the DVD. He said there isn't a good average, but that less-well-known films tend to have a higher "conversion rate" for DVD sales than some of the bigger name docs on the site.

Here's some coverage of the panel from Web TV Wire... IndieWire (owned by SnagFilms, incidentally)... Scott Macaulay at Filmmaker Magazine.

Audio: Outreach & Connection panel, from Making Your Media Matter 2009

Just wanted to post some rough audio from today's panel on "Outreach & Connection" -- how filmmakers can effectively build an audience for their work (captured with my little Olympus digital voice recorder). This was part of the 2009 Making Your Media Matter conference organized by American University's Center for Social Media.

The panelists were:

- Andrew Mer of SnagFilms
- Almudena Carracedo and Robert Bahar, filmmakers of 'Made in LA'
- Scott Kirsner, editor of CinemaTech (that would be me)
- Maia L. Ermita, Director of Festival and Outreach at Arts Engine

And moderating was Wendy Levy, Director of Creative Programming at the Bay Area Video Coalition.

Here's the MP3 file... or just click play below. It's about 90 minutes long.

Some Big Questions for 2009

I wanted to post a few rough notes from Sunday's Sundance panel on distribution, focusing mainly on some of the challenges that filmmakers and distributors and exhibitors are grappling with in 2009. Your ideas and comments are certainly welcome, below.

- Should festivals be used as a launching pad for new films, making them available immediately afterward? How can filmmakers prepare not just their finished film in time for screening at the festival, but make sure that DVDs and digital downloads/rentals and marketing campaigns are ready to go, too?

- If indie filmmakers experiment with release windows, making films available on DVD and digitally while they are still playing in theaters, will they be frozen out by exhibitors? Will that sort of experimentation -- trying to address by piracy by making films available when audiences want to see them, in whatever format -- kill the art house circuit? Is there a way to ensure that both filmmakers and exhibitors benefit, perhaps by sharing profits?

- If the influence and impact of newspaper reviews is on the wane, in part because of the decline in the number of movie critics on staff at papers around the country, what will supplant that? Will new voices emerge to help viewers sort through the thousands of indie movies that are released every year, to find the gems? Will it be a handful of new influencers, or a thousand bloggers covering a thousand niches? Will "established media" like the New York Times ever start reviewing movies that go directly to DVD or the Internet, without the requisite theatrical run in Manhattan? ("Princess of Nebraska," by Wayne Wang, represented a tentative toe-dip-in-the-water by the paper last year; that film went straight to YouTube.)

- Blogs and Web sites and social networks seem like they work well when a filmmaker is trying to sell DVDs or downloads, or drive online views of a film on a site like SnagFilms or Hulu. But can online work well when it comes to putting butts in seats at a movie theater? That was once the role that newspaper ads and reviews played... but the sense is that we need some new strategies for getting ticket-buyers out of the house and into theaters.

Outreach & Connection, at Making Your Media Matter 2009

I was thrilled to be invited to next month's Making Your Media Matter conference, organized by the Center for Social Media at American University.

The panel I'll be part of includes Wendy Levy from BAVC, Almudena Carracedo and Robert Bahar of 'Made in LA', and Andrew Mer from Snagfilms, and it'll focus on how you build an audience for your work and how you gauge the impact that you're having -- two topics I've been very interested in lately. It's in D.C., and registration is $100.

New Business Models for Digital Distribution

Any idea what the weekend box office numbers were for April 14-15, 1894?

Or how much home video raked in, the first few days that you could purchase movies on VHS or Betamax tapes?

Cinema was a tiny business at the outset. The Holland Bros. Kinetoscope Parlor in Manhattan took in $120 on its first day of business, a Saturday. When the entrepreneur Andre Blay started selling Hollywood titles on cassette in the 1970s, he made $140,000 during his first weekend.

Those are pretty unimpressive figures.

But by the mid-1920s, movies were generating $1 billion a year (adjusted for inflation). By 1990, home video had grown into a $6 billion business.

Those two examples may be instructive when studios and filmmakers look at digital distribution today. It’s small. It’s tempting to ignore it, and focus instead on selling DVDs. That’s where the money is. But digital, I believe, will gain a lot of steam over the next five years.

This shift from the business of selling physical DVDs to the business of selling digital bits was the focus of two panel discussions earlier this week; they were sponsored by ITVS and the Paley Center for Media. One took place Monday in Beverly Hills, and the other was held Tuesday in San Francisco.

The panel included Rick Allen, CEO of Snag Films; Tami Yeager, a filmmaker who is also working with the Tribeca Film Institute’s Reframe Project; and Jesse Patel of the Participatory Culture Foundation. Filmmaker Tiffany Shlain participated in the SF panel, and Brian Terwilliger was the filmmaker on the Beverly Hills panel.

Even the filmmakers who have been pioneers of digital distribution haven’t yet come close to earning online what they earn from selling DVDs. Terwilliger said that while his movie One Six Right is for sale on iTunes, it isn’t easy to find unless you specifically search for the title. (For some reason, Apple doesn’t list it under “Documentaries” or any other category, and he hasn’t been able to rectify that.) Shlain told me that while her short “The Tribe” was the top-selling short film on iTunes for a while last year, and while she has offered it through other sites, the digital revenues have been only about 1/10th what DVD sales have achieved. (Shlain has also had trouble getting paid by the aggregator that helped funnel the movie to iTunes.)

But everyone on the panel agreed that DVDs will not last forever.

What was most useful at both panels was exploring some of the different business models that are emerging for earning digital dollars from movie releases:

- Paid downloads, a la iTunes.

- Paid rentals (limited period for viewing)

- Free rental or download (to reach broad audience); what’s free may be only a portion of the film, and “extras” or bonus material or a "comprehensive" version of the film may be for sale, digitally or on DVD

- Subscription (a project is released in installments, and interested viewers pay a small monthly subscription to receive them – or receive them first, a week or a month before they’re released for free)

- Slicing and dicing. Educators or institutions may pay a fee for the right to edit or excerpt a full-length film in a way that suits their needs. Instead of the old, “Buy this DVD for $300,” you might say, “Pay $300 for the right to customize this material to fit your course, or to work in the context of a group meeting.”

- Bounty fee/referral fee. A film becomes a tool for generating new members for a Web site or other organization. With the YouTube release of Four Eyed Monsters, for instance, the filmmakers received $1 for every new user they directed to the Web site Spout.com

- Advertising/sponsorship/underwriting. A film will be peppered with short ads (they’re 15 seconds long on SnagFilms), or sponsorship/underwriter messages.

- Live speaking gigs via videochat. One interesting new idea that emerged from the panels is that filmmakers might earn “speaking fees” without having to travel. Instead of asking a non-profit or educational institution to pay $2500 or $5000 to fly you out to address their group, ask them to pay $250 or $500 to have you do a short live talk/Q&A (using software like Skype or iChat) after they’ve watched your film. More groups would be able to afford that kind of filmmaker interaction than the pricier one, and fewer filmmakers would be spending time stuck in airports or jammed into center seats.

No doubt there are other models that will work, or are at least worth trying. Post your thoughts below…

The Numbers I'd Like to See from SnagFilms

One of the big questions on the mind of filmmakers at the IFP Filmmaker Conference this week was, is Internet distribution working for anybody? How much money is there to be made?

Yes, it's still the early days for all things digital -- but given that the traditional distribution marketplace is in such disarray, people are eager to understand their alternatives.

One of the featured speakers, on Wednesday, was Rick Allen, CEO of SnagFilms (which I wrote about here, back in June).

Allen shared some of the numbers from SnagFilms' first two months of operation.

They now have 440 films in the library...and viewers have consumed two million minutes of content online. About 10,000 people have installed the SnagFilms widget, which lets them select movies to "embed" or integrate into their own site. Allen said that by the end of the year, the process of submitting a film will be much easier for individual filmmakers.

There are two numbers that filmmakers probably would like to see from Snag...

1. How much are the most successful filmmakers earning from advertising? (Snag shows short ads during the streaming of movies, and splits revenues 50/50 with filmmakers.) Allen was asked this during his session, but he said they didn't have enough data yet.

Online, video advertisers pay about $25 for every thousand times their ad is shown, or .025 cents a viewing. If people press "Play" on your film 10,000 times on Snag, that's at least $125 for you. (One ad is shown before the movie, and there are other commercial breaks. If someone stops watching before the first commercial break arrives, you at least get credit for that first ad.)

2. ...Which means that the real way filmmakers will make money through Snag is by selling DVDs. I asked Allen after his session whether he could share any stats about the percentage of viewers who decide to buy the DVD. (There, Snag takes an 8.5 percent cut of the transaction, but lets the filmmaker keep the rest.) He said it was too early to tell, but that anecdotally, filmmakers he has spoken to have seen an uptick.

Allen will be on a panel I'm moderating next month, so I'll ask again then...

SnagFilms: Open for Business

As far as I can tell, the vast reporting team here at CinemaTech Global HQ broke the news about Ted Leonsis' SnagFilms a month ago, during Silverdocs.

Everything about that initial post was on-the-money (except I reported that the referral fee that Snag takes from a DVD sale would be eight percent; it's 8.5 percent).

Snag was officially unveiled today, with a bit of news that was new to me: they've also acquired the indie film hub IndieWIRE.

My take on Snag: this will be an important new way for connecting documentaries with audiences online, and generating revenue -- but many better-known films may be kept off the site because they've promised their digital/VOD rights to someone else.

In other reporting:

Walt Mossberg of the Wall Street Journal has a comprehensive review of SnagFilms.

USA Today has a story about Snag that includes some interesting commentary from founder Ted Leonsis.

"Because everything is digital now, costs are down, quality is up, and we have this whole new generation of non-fiction filmmakers," says Leonsis, majority owner of two Washington, D.C.-area sports teams and chairman of SnagFilms. "There's more product but less distribution. I wanted to solve that problem."

..."The Oscar-winning documentary of 2007 did $250,000 at the box office, which means that only 25,000 people saw it," Leonsis says. "Most videos on YouTube see at least 100,000 views, which would be like $1 million at the box office."

(Actually, Ted, I bet the average video on YouTube has fewer than 1000 views.... maybe even fewer than 100?)

Coming Soon: SnagFilms, a New Approach to Generating Revenue for Indie Filmmakers

[ This was an early news post from June about SnagFilms...updated news about the launch is here. ]

SnagFilms, a new service that aims to help generate new online revenues for filmmakers, had intended to launch this week at Silverdocs, but the launch has now been delayed until mid-July. I'd hope to talk to some of the SnagFilms team while I was here in Silver Spring, but that didn't happen (the one SnagFilms person I started to chat up at a cocktail party Friday evening literally scampered away when I started asking questions about it.)

I'm eager to find out more about it, but here's what I've been hearing about Snag through the grapevine, from filmmakers, producers, and other industry types.

- Snag's founders are Ted Leonsis, vice chairman emeritus of AOL and producer of the recent doc 'Kicking It,' and media exec Rick Allen. Stephanie Sharis, formerly head of AOL True Stories, is also involved.

- It'll be linked/partnered with the AOL True Stories site, which these days seems to mostly promote docs with which Leonsis has been involved ('Nanking' and 'Kicking It' are prominently featured.)

- Snag isn't going to try to create a destination site for film fans, but is building a video "widget" that can be placed on other sites: a filmmaker's site, a blog run by an advocacy group, a Facebook profile, anywhere. The widget will deliver streaming film clips, trailers, shorts, and in some cases entire features, peppered with advertisements.

- I'm told that Snag will split revenue from these ads with the filmmaker or distributor, 50/50. Snag (or one of its partners) will sell the ads. Video ads can run anywhere from $20 to $50 per thousand impressions. Basically, that means that if your short film is shown 1000 times via the Snag widget, even at the high end of that range, you'd earn $25.

- Snag may also try to "upsell" DVDs to viewers, offering a link to the place where a viewer can purchase the disc. Snag will take about eight percent of that transaction, I'm told. (Update: 8.5 percent) Snag may also partner with digital download sites, too. Eager to hear more about that -- especially if Snag does a deal with iTunes, the main online marketplace for video content today.

- Snag isn't going to require that filmmakers give them exclusive rights for digital distribution/video-on-demand. But one issue that could prevent some more established filmmakers from working with them is that often broadcast/cable/home video deals require that filmmakers grant them exclusive rights to VOD.

- I'm not yet aware of any filmmakers who intend to work with Snag, but if you are, perhaps you'll post a comment. Also not sure if Snag is purely focused on documentaries, or will work with narrative features too.