Abraham writes:

Twitter in particular has proven to be a great device for communication amongst our followers. It has also become a tool for evil, I’ve discovered. On Saturday, August 8th, one month after our official release date, there was a spike in tweets related to LBS. We wondered why and took a look. It appeared that people were tweeting and re-tweeting a URL that linked to a pirated version of the film.

Remember the pink slime from “Ghostbusters II”? For most of the film, it was also a “tool for evil.” But Dr. Spengler et al. sprayed it all over the inside of the Statue of Liberty, and then it made everybody hug. (Ok, it represents a slightly different kind of “free,” but I think the analogy holds.)

I don’t need to spend a lot of time on how to compete with free, since it’s a well-covered topic. Kevin Kelly’s essay “Better Than Free” lists a number of factors that you can build into your film/story/product to give it value that make it worth paying for, even when it’s available for free. Brian Newman has a blog post and video on it, which is worth watching.

What this is really about is taking advantage of Twitter and other communication tools to play a major part in the global conversation about your work. (If there isn’t one, you need to start it.) Piracy on Canal St. happened before the Internet, and illegal downloading happened before Twitter. As Abraham acknowledged, you can’t stop it. Beyond pointers to free downloads, people are going to be saying lots of things about your film that you don’t like, including bad reviews, off-brand descriptions of your work and possibly even lies or personal attacks. The power of the Internet is that you can be in on it. You can know it’s happening, you can respond to it and you can preempt it.

As a filmmaker, you are at a tremendous advantage in owning your brand’s online story. Presumably, you know all about your film before anyone else does, so you can start putting your message out there before anyone else gets to it. You own the domain name, twitter account, etc. for the name of your film. (You don’t? Get on it!) And the people who love the film are probably the most vocal about it, and they’ll link back to you. You have to work real hard to piss people off enough that the haters will shout more loudly than the fans. If you keep the conversation going, those tweets and blog posts about torrent links and other nastiness will drift off the front pages and into obscurity. There are a few tiny things about me personally from way back that I’d rather not have out there (nothing too juicy, sorry), but you have to dig pretty deep to find it, because I’ve put myself out there with Twitter, an open Facebook account, my blog, etc.. But if you keep quiet, the nasties will fill the void for you.

Of course, it’s much harder to take advantage of this when you’ve got $1 million or more at stake and you address the matter after your film is already out. I think it’s wise to keep budgets low for now, as the details are still being worked out, but they will be worked out, since these are not entirely new business principles. Mercedes-Benz doesn’t go out of business just because it’s cheaper to get to work in a Hyundai. And Coach is still profitable, even though their belts are being knocked off everywhere. That’s because Mercedes and Coach are premium brands, and it’s not about a cheap ride to the office or keeping your pants from falling down. Their advertising messages reflect that, which is why Mercedes ads have Janis Joplin and vintage cars instead of some announcer shouting about seasonal discounts.

Most independent films are also premium brands. Your film is probably not about killing 90 minutes. It’s not about catching a glimpse of Megan Fox bent over, and it’s not about keeping the kids quiet in the back of the minivan. You can’t compete with “free” on price any more than Mercedes can compete on price with Hyundai. So don’t. Your film is about a deeper story, and the ability to create that is your sustainable competitive advantage. Twitter and other digital media are your opportunity to demonstrate that.

I’m writing a film right now, and even before the script is finished, I’m planning some cool stuff for screenings, merchandise and other payment points to add value along the lines of Kevin Kelly’s article. When I release the film, I will probably put it online for free. By putting it out there myself, I can beat the pirates to it and make sure free copies are burned with a URL to my online store, and I can track how many people are watching it. But it also tells the story that my film is a full experience and more than just a few hundred megabytes of pixels. After all, as a filmmaker, I should know how to tell a story, right?

Sure the Internet is a double-edged sword. But if you know where to swing it, you don’t have to cut your face off.

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Inspired by our roundtable discussion, I pulled out a couple of old distribution contracts I had and took them apart to look for the value that the distributors brought to the table in exchange for the rights granted. A typical distribution deal will offer the following:

• Physical distribution
• Cutting the deal
• Promotion
• Cash advance and/or minimum guarantee

If we can understand what this value is, we can evaluate whether these distribution deals are the best option. Here is a look at what each of those means and which rights and costs to the filmmaker are associated with each service.

Physical distribution

Getting your film (and soundtrack, posters, t-shirts, etc.) to an audience is a clearly necessary and valuable service. It includes replicating and shipping DVDs and placing them in stores (online and offline); theaters and film prints or digital cinema; and digital download or streaming services. Most of the above services are commodities, in that there are many competitive companies from which a filmmaker or distributor can choose, so prices tend to be reasonably close to the actual cost of time and materials. For physical distribution, the filmmaker often pays either a fixed fee or a small percentage of revenues. Exclusivity is almost never required, and contract terms are for short periods of time.

DVD replication is a great example. Depending on volume, you can pay about a dollar or two per DVD. Shipping costs are fixed, as is the amount per unit that a retailer will usually pay. Download services are not quite there yet as far as deal terms. ITunes is pretty good, passing along 70% of gross revenues, though you have to go through an aggregator, who will take their own small cut. (See the next section.) Other download services have yet to come on board with reasonable terms. It is fair for a download contract to lock you in for a certain amount of time to cover encoding costs, but those costs are always falling and terms should become shorter. (The term should be somewhere from zero to no more than three years, but about one year is fair.)

Cutting the deal

Unfortunately, many distribution platforms won’t work directly with filmmakers, so you need someone to close the deal for you. This could include a lawyer to double-check your contracts. Again, iTunes is one such example; they require that you go through an aggregator, though it’s very possible that they’ll eventually drop that requirement as they learn how to scale the acquisition process. Think of these people as agents, whose services might be worth about 10%.

Promotion

Promotion is perhaps the most elusive and tricky of all the value points distributors will claim to offer. They will often incur costs for advertising, though incurring cost is not the same as providing value. Unless you have the kind of movie that is well represented by newspaper ads, billboards and trailers on television, a distributor is not likely going to know better how to promote your movie than you do. To look at it another way, you can spend $30,000 (guesstimate) on a quarter page ad in the New York Times. For a truly independent film, that might bring ten or twenty people to a screening. (For Four Eyed Monsters, it brought one.) Now, imagine what you could do spending the same $30k on a web video series, where your audience can subscribe and interact repeatedly directly on your website.

Promotion is particularly nasty because it’s the primary reason for someone to demand exclusivity. The idea is that if a theatrical distributor pays for a newspaper ad, someone might see that ad and then buy a DVD instead of going to the theater. So they need to not only get a cut of that DVD but also determine how and when you can sell that DVD. You can get around exclusivity by working with companies that don’t do much or any promotion, though there are many that will claim that they promote your work but don’t really. A buried listing on a website or in a catalogue is not sufficient promotion to justify exclusivity. You may want to offer very limited exclusivity (e.g. on a given platform for 30 days) in exchange for a great promotion or placement opportunity.

Cash advance

At the point that a film is picture locked and ready to screen, filmmakers often find themselves desperate to make a deal that will cover their budget. Such desperation gives any source of said cash undue negotiating power, and the whole situation should be preventable by preparing distribution funding in advance. Consider that a distributor’s advance/minimum guarantee is simply time-shifting of money and sharing of risk. It happens that these are the exact services that financial institutions and equity investors provide. So why would you go to a movie company for financial services instead of to a financial services provider?

Typically, before shooting a single frame, a filmmaker will raise money from one or more investors – perhaps private equity (like a dentist uncle), from a production company or by credit card. At that point, the investor is taking on a great deal of risk and will expect an accordingly high share of the profits. Maybe the film will stink; maybe the production will go catastrophically over budget; or maybe the director will get hit by a bus. But once the film is completed, much of that risk has dissipated. The movie has been delivered, and maybe it’s even pretty good. Any further investment from then on should take significantly less ownership, corresponding to the lower risk.

Given an investor-filmmaker relationship that has been successful enough to make it to picture lock, a filmmaker might be best served to return to the original investor(s) to fund delivery and distribution until revenues start coming in from box office, retail, etc. Better yet, one might prepare a business plan to receive a first round of production funding with a high-risk return, followed by a second round of distribution funding at a pre-determined lower return rate once the picture lock milestone has been reached. This is no different from how start-up companies prepare for venture funding.

Build vs. Buy

Whatever resources I need for a film project, I’m always asking myself whether to build or to buy. I look at the costs and benefits of hiring another company provide a service for me, compared with the costs and benefits of putting together the resources to do it myself. Once you break down the real costs and added value of any distribution or other deal, you can determine at each step whether you really need someone else to do it for you. Depending on what you find out, a distributor may be the best way to go, or maybe it’s just better to DIY.

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Brian’s a smart guy… we mostly talked about the importance of collecting information about your fans (and who’s a super-fan versus someone who’s just mildly interested in your movie). We also touched on the deal that ‘Four Eyed Monsters’ did with YouTube and Spout, where YouTube offered the full movie for free, and Spout served as a sponsor, paying the filmmakers a buck for every new member who joined after watching the movie on YouTube.

Check out Scott’s original post and take a minute to look at some of the other posts on his site.

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I’m working on some custom software that will use cross-site data sharing. But even Wordpress, the blogging software that powers this site needs it to fully function. Wordpress will certainly run without it, but here are some key features that require it:

• Comment spam filtering. Wordpress uses the Akismet plugin. To check incoming blog comments against a database of known spammers. It doesn’t work if your site can’t access the Akismet server.
• Trackbacks and pingbacks allow your blog to automatically post a comment on other blogs that your posts reference. This is a great way to encourage cross-site discussion and make other bloggers aware that you’re writing about them. It’s also great for driving traffic to your site by creating a link on another site.
• Update services such as Pingomatic notify blog directories every time you update your site. Certain plug-ins can also directly ping Google and other search engines so your search listings are as up-to-date as possible. Great for driving search traffic to your site
• Feed Syndication. You may want to have on your site a list of links or posts from other services such as Flickr, Twitter or del.icio.us. There are Wordpress plugins that will use RSS or Atom feeds to automatically update these lists.

Even if you’re hosting service does support cross-server connections, it’s not a bad idea to make sure the above features are enabled and working correctly.

Unbelievably, my current hosting service, aplus.net, does not allow this kind of intra-server data sharing. They claim that it’s a security problem, which I understand. But it’s so important that I have to switch to a different service and question the viability of their business. So I will be switching to Site5, which was recommended to me by Lance Weiler, who uses it to host the Workbook Project. So we’ll see how it turns out. (The fact that this site has been intermittently unavailable today has me more confident that this is the right decision.)

It can take two or three days to fully move a web site to a different hosting service, so don’t be surprised if you encounter some problems with this site. For starters, I’m going to disable comments on the old server to avoid synchronization issues. If there’s anything else that’s surprising or persists more than a few days, please do let me know.

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But here we are, living in a world in which the bottlenecks have suddenly become irrelevant.

I don’t think there’s any question that this is the logical model to pursue in the age of the Internet — the age of free distribution and marketing.

Suppose the writers’ strike continues for months to come — and even beyond that, suppose the actors or the directors also go on strike. In such a scenario, it is hard to see how many companies based on this new model won’t be created extremely quickly — after all, if you really can’t work for the Man, why not start your own company, if you can?

I’m all for it. (It’s exactly what many of my colleagues and I are trying to do – refer to blogroll). It seems that what the WGA strike and the whole “age of free distribution and marketing” thing really have in common is that they are both about power. Big media companies have historically based their value on the power that comes from controlling access to distribution. Similarly, Hollywood has maintained power over the writers (and actors, etc.) by controlling access to jobs. But if creatives can show that they don’t need Hollywood for jobs, Big Media might find itself facing a fresh wave of new competition.

On the other hand, Scott Macaulay at Filmmaker Magazine seems skeptical:

“I think Andreessen overestimates the entrepreneurial business ambitions of most content creators.”

Scott has a great point. For many working WGA writers, big media provides the safety of a steady paycheck. But real upside usually requires taking on risk, and if the writers are serious about the revenue share they’re demanding, they may be wiling to take on some risk. Venture capital investment can help to mitigate that risk while providing quite a bit more independence. Besides, Andreessen’s point is not just that artists are all set to become entrepreneurs – if a year and a half of nothing but reality shows drives away enough viewers, big media may be left too week to keep up either the steady paycheck or the revenue share. That makes the decision much easier.

The bigger obstacle to Andreessen’s model is resolving the expectations of VC investors with the economic realities of the movie business. VC’s spread their risk around a million or two at a time, hoping for one or two big successes (MySpace, Facebook, Twitter, etc.), assuming that the rest will be minor hits or failures. A bit of my own informal research has shown that VC’s expect those successes to attain valuations on the order of $100 million or more. That’s extremely exceptional for an independent film and, I suspect, even for a Hollywood film, once you account for advertising costs. And, as Silicon Alley Insider points out, putting your work on the web in a simple ad-based model is not going to cut it.

What then is the big difference between a successful tech start-up and a movie (or a production company)? The tech companies engage their audience repeatedly, regularly and for an open-ended time. They don’t rely on content alone, but they create expandable platforms that increase their value over time. In contrast, most movies invite the audience to interact a few times at best – theatrical, DVD/download, TV. And each successive viewing is lower and lower in value.

Here are some ideas about how you might run your film like a tech start-up:

• Create a brand for yourself. Keep the quality high and share your story in a way that links your work together and keeps the audience coming back. Individual filmmakers are much better at this than Hollywood is. David Lynch, Tarantino and Wes Anderson have strong identities as artists that keep people coming back to them. Compare this with the branding of any movie studio, big or small. They’re diversified and therefore too inconsistent and impersonal for most fans to relate to.
• Bring your audience into your story. Solicit responses from them as videos, text and sound, and feed that back out to your audience as part of your work. Engage them in an open-ended way, motivating them to bring in more fans, creating a network effect.
• Give your audience more ways and better reasons to pay you. Again, I refer to Radiohead’s example of providing the high-value, tactile Discbox. Also, shirt, posters, live performances, additional content, etc. And let your audience know that their money is going to support you, the artist, not some faceless corporation burdened with distribution and advertising costs. If you’ve managed to involve them in your story as above, they may actually care.

These were all ideas that helped spur audience growth for Four Eyed Monsters. That film was funded with credit cards; how much farther could we have pushed it with venture capital funding? There’s room for many more such ideas. Please comment if you have some to share. I’d love to see someone (Mr. Andreessen, perhaps?) propose a financial model as a target for what it might take to get the venture capital model going.

Update: The L.A. Times has a story about Hollywood writers seeking venture funding for web startups, via CinemaTech’s Scott Kirsner, who has his own take on the matter.

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We are well beyond denying that a film website is the most effective and often the only entry point to discovery of your film. The audience has to jump an increasingly absurd number of hurdles to see your movie in the theater. The website is an opportunity to introduce the film as quickly as possible, provide the detailed information your audience and the media are looking for, to engage your audience repeatedly, and to make it ridiculously easy for fans to promote your film for you.

Below, I’m going to explain why this ancient model fails and suggest a few starting points for an alternative approach.

Why Flash sites fail

• Flash sites are heavy and slow. It takes extra time to download and process all those big graphics and sounds, and you can’t afford to make the casual web browsing fan wait. Many of them may be browsing on computers a few years old or spotty wi-fi connections. That “loading” progress bar isn’t part of your story, is it? Nobody likes it.
• Flash sites give your site a non-standard interface. Where did the right-click menu go? How do you copy text to the clipboard? Where does that link go? Does it open in another window? What does the “back” button do? Where the hell is the button that stops that loud music? Nobody wants to re-learn how to browse the web just for your little movie.
• Flash is not searchable. If you do it right, many visitors will find your site through a search engine. With Flash, that all disappears. It also prevents searching within the browser.
• Most of these sites don’t allow deep-linking. That’s the trade-off for not having to reload the whole flash file every time you go to a different section. This is important for encouraging links to your content. See if you can find a direct link to the trailer on the Lions for Lambs site.
• Flash can’t be syndicated. RSS and Atom feeds are becoming increasingly important as easy tools for people to follow your updates through news readers, such as Google Reader.
• Those animations keep repeating. They’re cool the first time, but don’t make me watch your menu fly in every time I go to another section of your site.
• You’re tied to your designer. Most Flash sites don’t allow you to easily change around your interface without going back to the busy, expensive Flash contractor you hired to build your site. What if you want to change one little menu item? Or even redesign the entire layout without losing all the content? Even another Flash expert could have a hard time tracking down the original source files and scripts. Same goes for jpg image map interfaces.
• Most Flash sites, like the examples cited above, give the impression that the site is finished forever, that there’s no reason to keep coming back for new content. Even if there’s a news section, it’s much harder and more expensive to implement in Flash than in other HTML-based options.
• No need to re-invent the wheel. Web browsers are good at laying out text and images and performing all the functions that go along with it. Flash requires you to re-implement all that, and more often than not you’re not gonna cover all the bases.

That’s not to say that you can’t solve any of the above problems within a Flash-based framework, but it’s a lot harder.

Easy Alternatives

Set your film site up as a blog. It’s that simple. They’re searchable, deep-linkable, syndicate-able, re-designable, subscribe-able, modular and allow easy user interaction through comments. Get yourself Wordpress on your own server or on theirs. You can also try Livejournal, Blogger or Moveable Type. For the most part, they’re all free. Do a comparison.

Most blogging software will double as a content management system. So even if your main purpose is not to blog, you can easily set up fixed pages to give the basic information about your film. You may still need help from an expert to fully customize your layout, but they all come with multiple themes that should be enough to get you started.

See Four Eyed Monsters as an example. There are some things I would do differently if I had it to do over again, but for the most part, the site was a success. I wish I knew more examples of film sites that I like. If you know of some, please comment on this post.

When Flash is okay

There are some things that Flash is much better at than HTML, and I encourage using it for those specific purposes. The best example is for embedded media players, such as YouTube or any of the countless other video hosting sites. There are also good embedded audio players, like the one in the Audio Player Wordpress plugin. (See it in action on Lance’s site.) Flash is also great for games or animation, as on Homestar Runner.

The other reasons I think it works so well in those situations are that the non-standard interface is within a confined space of the specific media player and because the specific, compartmentalized rich-media experience makes it worth waiting for the download. (More on that another time.) Otherwise, lose it.

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