Definition of terms:
"Traditional Distributor"
= A company that distributes hard copy DVD's to physical stores (like
Best Buy and Wal-Mart), as well as
internet store, and also handles video on demand (VOD) and broadcasting rights. Because physical store shelf space is limited,
many traditional distributors typically only accept and open accounts with film
companies that have many high quality movies in their catalog, or
individual filmmakers who have at least one high quality movie title that has
great potential. Because they are very selective and because the market cannot
support the thousands of movies released each year, it is difficult to get a
movie distributed with a quality traditional distributor. Some traditional
distributors focus exclusively on distributing finished product, but most design
the DVD box cover and do their own DVD manufacturing. Note that signing with a traditional
distributor, and getting your DVD listed in their catalog is NO guarantee
that physical stores will stock your DVD in significant numbers regardless of promises made. Usually
physical store buyers (example: Best Buy) don't want to waste their
declining shelf space with indie DVD titles because they know that they
just don't
sell well. Ultimately
consumer demand will determine if a movie gets wider distribution, continues
to get distribution, or gets dropped. Examples of established traditional distributors
include Image Entertainment.
Signing with a traditional distributor
presents elevated risk and responsibility and should
never be taken lightly. Unscrupulous smaller distributors may try to get indie filmmakers to sign "dummy contracts" that sign over copyrights (a big no no) and / or have no adequate checks and balances regarding payment terms, accounting, remedies for breach of contract or fraud, distributor right to deduct fees and expenses. A
filmmaker should always without fail hire a film attorney to review a traditional
distribution contract. Horror stories of traditional
distributors skipping out on money owed has been very common for
years, even before the Internet revolution. It has actually been
virtually the norm for smaller distributors of CD's and/or DVD's to
rip off indie suppliers by paying pennies on the dollar owed for
media sold. Just based on my unscientific experience and feedback I've heard
from others, I'd say that about
80% of
small distributors outright rip off suppliers. With physical media (DVD's) rapidly becoming obsolete,
there will certainly be more blood as distributors go bankrupt
and filmmakers get screwed.
"Non-traditional Distributor"
= A company that mainly or exclusively distributes DVD's and / or VOD to or mainly to Internet stores and / or outlets -- not physical stores. Because cyber-based stores have infinite
space, non-traditional distributors will usually open accounts with anyone,
including filmmakers with just one micro-budget film. The filmmaker provides
the finished product (DVD or digital download file). Often these companies
have a "setup fee" and / or possibly yearly fees, so even if a filmmaker's
DVD doesn't sell a single DVD the non-traditional distributor still makes
money and so they are happy to open an account with anyone and everyone. Because it's so
difficult to ink a distribution deal with a traditional distributor, there are
great numbers of indie filmmakers ready and willing to sign up with a
non-traditional distributor. Currently some
examples of what I would categorize as non-traditional distributors include Bbitmax.net. You can also distribute your manufactured hard copy DVD's directly
to Amazon through Amazon's "Advantage" program, distribute
VOD on Amazon Instant Video directly through their CreateSpace, and directly to FlickRocket
(a digital distribution store). Non-traditional distributors typically offer very
simple, fair, take-it-or-leave-it agreements that don't require
review by a lawyer.
"Don't
Underestimate The Negative Impact Of An Over- Priced DVD... If you
sign with a sales agent (middleman #1) and a traditional distributor
(middleman #2) it is just about guaranteed that your movie will sell
for about $14.99 if not $16.99 or more"
THE GRIM SITUATION CONTINUED....
Illegal file sharing isn't helping the filmmaker with regard to
the forces of supply & demand much
either. More and more people have high speed DSL or cable Internet
service. It has become much easier for people to freely steal movies, music and software off of the
Internet. And the younger generation is only getting more and more computer
savvy about finding free content on newsgroups, or by using bitTorrent in
conjunction with PirateBay, Demonoid, SeedPeer, and so many others others, or by using search
engines or chat rooms to find links to files posted on RapidShare, iFile,
FileFactory, zShare, MegaUpload, etc. A check of one torrent site's "Top
100" typically shows individual movie torrents with as many as 10,000 to
15,000 "seeders" (AKA people who have downloaded 100% of the movie)
and 10,000 to 15,000 "leechers" (AKA people who are currently
downloading but haven't yet downloaded 100% of the movie). These are essentially
people stealing media (movies, music, etc) off of the Internet. And these numbers
are just for that moment in time. Most people download, then quickly
remove the torrent from their share folder. This goes on every hour of every day
and there's essentially no effective way to stop it.
Furthermore why PAY for video entertainment when you can be entertained endlessly on YouTube for free?
Further complicating matters is the ongoing recession. In the words
of one DVD distributor "the DVD economy has taken a nose dive and
retailers are just not buying as much as they used to." Another
DVD distributor from Los Angeles tells me "The industry is really f*cked right now."
9-23-2010 - Bankrupt
Blockbuster has 3,300 stores left in operation. 960 will be
closed by the end of 2010. Sometimes in 2011 another 1,000 will
be closed. Blockbuster has cited digital download sales,
Netflix, Redbox, and piracy as the cause of its demise.
One filmmaker says that because distribution companies are
paying so little for rights to an indie movie, unless your film cost less than
$5,000 you aren't going to get your money back. Another says that
Lion's Gate used to pay $50,000 advances, but now they're barely paying $5,000.
The
Wall
Street Journal reported on April 20,2009 that even the larger budget
independent releases (30 and 40 million dollar budgets) are falling short on
foreign sales due to the credit crunch, illegal file sharing, and competition
from each particular country's native film releases. Foreign distributors no
longer have the money to pay for rights to films (or pay as much) in advance of
the release.
Filmmaker
Magazine's Winter 2009 issue reports that filmmakers
aren't making much money by signing with a traditional distributor. When distributors just
aren't posting significant sales numbers, going the do-it-yourself distribution
route makes a lot more sense.
MAKING A TRADITIONAL "MOVIE" IS
MORE COST
PROHIBITIVE THAN EVER:
Nowadays a movie must be made as cheaply as possible or it is
doomed. With no stars (with legitimate box office draw) in your film, realistically you're
probably not going to make more than $1,000 to $10,000 in gross profit in the
USA over the life of the DVD. To make
a movie this cheap you need a script that doesn't require huge expenses,
otherwise don't shoot it.
Crazy car chases? Forget about it. Are you pulling permits in Los Angeles? Renting expensive locations?
Need 50 extras for scene or two? Not doable. Additionally you need to be able to do as much of the work yourself as possible
(Ex- DP, director, editor, sound mixer, DVD authorer, motion graphics editor, etc) because hiring people
is cost prohibitive. It helps greatly if you can join forces with someone else who is
highly motivated, can pick up
the slack, do what you can't do, and who has the (free) equipment that you don't
have. In order to make it work you will probably need to shoot one
weekend at a time only when you're ready. This will enable you to produce
it yourself, build your own sets, hire less people, etc. Then after cutting all
these corners what does your movie look like compared to the big budget movies
that consumers have grown to expect and demand? It almost certainly looks like
nothing remotely close.
Instead of making a "movie" you're way better off
producing some sort of "reality DVD". Some examples that I think of: Girls Gone
Wild, Heavy Metal Parking Lot, Super Size Me, or a documentary about climbing a
mountain, or a documentary about your freakishly odd drunken grandmother, or
fights outside bars. How else are you going to create something dirt cheap, yet
something that people will still be captivated by? The odds are stacked
against you if you attempt to make a traditional movie that must compete with
the multimillion dollar movies being created by the big studios.
The need for a someone "famous" in your movie can
literally make the difference between getting distribution and not getting
distribution, or between selling DVD's and not selling DVD's. This will cost you more money. If you are making an indie
movie, don't just open up your wallet to anyone who seems
"famous" or claims that their name sell DVD's because they appeared in
this movie and that movie. Actors have big egos and will always make big
claims. Instead you need someone
with legitimate box office draw power. How do you research someone's star
power? Type in their name and you can find out just how popular they are using
this special Google tool....
https://adwords.google.com/select/KeywordToolExternal
Then compare their name popularity with other actors.
Overall making a "movie" is a super high risk investment.
Indie hits like the
Blair Witch Project and Open Water and Paranormal Activity
are rare. An
executive
at Mirimax says that about 3,000 of these micro-budget horror movies are
made every year, and only about once every 5 years one of them hits it big. So
statistically the odds of hitting the jackpot making a super low budget movie
might be about 1 in 15,000.
These days you have about a snowball's chance in hell of getting an
indie movie widely distributed into theaters on your own. Over the last 14 years
a
mere 12 distributors have accounted for a staggering 92.13% of all box office
revenue. Even if you get that far, odds are still stacked against
you that you will never see a profit. Nowadays filmmakers who actually do
manage to get some sort of theatrical release consider the whole theatrical phase
as merely "promotion" for the DVD release, even though the theatrical
release loses money or breaks even.
Short film? Forget about it! Short films don't make money. Walk
into a video store and see if you can find even one short film.
Some distributors put together compilations of various shorts, but
essentially these releases never make the filmmaker money.
THE CULTURE OF RENTING DVD's
(CHEAPLY) RATHER
THAN BUYING:
Unlike music consumers who actually buy CD's or digital downloads to own,
most consumers refuse to pay full price to buy a DVD, and
will only rent. And why should
they if they can rent for a buck? This culture really
hurts the the indie filmmaker because under most agreements, NO
royalties are paid. Word on the street is that NetFlix buys 20 - 60 DVD's at wholesale price then they are allowed to rent those DVD's as many times as they can. This cannibalizes sales (at full price). When asked how many times a title gets rented, NetFlix had no comment. One can only assume that it averages out to less than a dollar to possibly pennies. Not a good deal for indie filmmakers. I feel that a better option is VOD through Amazon's Video Direct in which renters pay perhaps $2 to watch a movie.
GROWING PRESENCE OF DVD RENTAL VENDING
MACHINES (Kiosks):
Independent movies are getting further shut out by the
proliferation of DVD rental vending machines like RedBox that are popping up everywhere,
such as outside 7-Eleven Stores. These machines can only hold a tiny selection
of "the hits", so there's no hope for "Joe Indie Filmmaker"
to get his movie rented out via these machines. People only have so much leisure
time on their hands and so much money to spend viewing movies. There's lots of
great, visually exciting, high budget movies that people have already heard
about and seen advertised. Most
people never get around to watching all of "the hits", so how are they
going to see Joe Indie Filmmaker's low budget movie (if they even hear about
it)?
GLAMOUR OF MAKING A MOVIE FURTHER INCREASES SUPPLY OF MOVIES
This is a glamourous business and as a result there are too many people who want to produce, direct and / or act in movies. Too many more movies are being made and released.
THE GAME CHANGER IS HERE: Amazon Video Direct
On June 15, 2016 Amazon announced that Create Space vendor titles have been moved to Amazon's new platform called Video Direct. This is the future of video distribution -- not physical media like DVD's.
Preiously it cost you about $1,000 to get "set up" to have your movie distributed through iTunes. Now you can get your movie sold as a download through Amazon as a ProRes 422 HQ, MPEG or H.264 file. Note that Amazon requires captions. You can temporarily upload your movie, or at least a blank video file with your movie adio, then use Amazon's captions tool to create your .srt captions file. When done you download the .srt file onto your computer to later upload to Amazon.
Digital Entertainment
Group produced these reports which gives clues as to how prevalent
digital downloading of movies is becoming...
|
Medium |
Year 2009 1st quarter sales |
|
DVD's |
$2,900,000,000 (or about 80%) |
|
Digital Downloads |
$487,000,000 (or about 13.5%) |
|
Blue Ray |
$230,000,000 (or about 6.4%) |
|
Medium |
Year 2011 sales |
|
DVD's |
$6,800,000,000 (or about 56%) |
|
Digital Downloads |
$3,400,000,000 (or about 28%) |
|
Blue Ray |
$2,000,000,000 (or about 16%) |
So you've finished your movie.
Now what?
CONDENSED PLAN:
My advise is to shop your movie to the most established and reputable medium sized distributors (such
as Image Entertainment) and only the most reputable sales agents
(such as Cinetic Media), and then
pick 4 or 5 medium sized festivals to enter it into. See if you get any action.
When a movie "connects" with audiences it usually does so right away.
If it doesn't then you didn't "fail" -- You just shot "par for the
course". You're just one of the many THOUSANDS of filmmakers who
will each year fail to achieve any success at this because of the
over supply of releases that the brutally tough market cannot support.
So if nothing happens then it's time to just release it yourself via Amazon.com's Video Direct platform. You might consider BitMax.net if you want to get your movie on ITunes although that will cost over $1,000. I say just stick with Amazon Video Direct. Keep in mind that
I don't think NetFlix is worth it because you're supporting the consumer culture
of renting versus buying. NetFlix doesn't pay royalties to
indie filmmakers when "middlemen" are used, so my
opinion is that renting on NetFlix is kind of an act of desperation.
Stick a trailer up on YouTube, Hulu, MySpace and anywhere else you can post
it. Create a Facebook fan page. You can pay for prominence on Facebook and YouTube. Either it will go viral or most likely it will flop and you wasted that advertising money. You can also pay for a press release. Good luck getting any media outlet to talk about some indie film.
FILM FESTIVALS:
The goal of entering a film festival should be to get the
attention of a quality distributor and maybe get some press / buzz. For most
indie films I would never waste my money on the big film festivals like Cannes,
Sundance, etc. So many filmmakers literally throw away money at these major
festivals. On the flip side I would also not waste my time on rinky-dink film festivals in
isolated cities where no industry people will ever see your movie and nobody will care if
you were a winner or not either. I believe it's best to
pick a few medium sized festivals in major markets like Los Angeles and New
York, where distributors are based. A few that come to mind are the San Fernando
Film Festival, the Malibu Film Festival, the Long Island Film Festival, and CineVegas. Otherwise I think you're just throwing away money. If you don't get
any action out of these festivals then it's time to focus on self
distribution.
SALES AGENTS & TRADITIONAL DISTRIBUTORS
("middlemen" who cut into your profits):
A sales agent may be right for one movie and totally wrong for another.
For the vast majority of low budget or micro budget indie films I say it is totally wrong. Why?
Walk into a Best Buy or Wal-Mart store and see how many (if any) of the DVD titles that they
handle are actually stocked, let alone selling. Wal-Mart alone accounts for
about 25% of all DVD sales, so if they wouldn't stock your DVD then who
will in any significant numbers? Fact of the matter is that the big
chain stores only like to carry big blockbuster titles - not indie
titles. So having said that, are you ready to give away 25% to 30% of your profits
in addition to being billed for
sales agent fees to a distributor that does nothing more than sell your DVD on
the Internet (which you can effectively do yourself)?
10 years ago nobody would have ever questioned whether or not a
sales agent and traditional distributor were worth signing with, but the Internet
revolution has changed all of that. Well think again and try to
just sell your movie yourself. If you're hell bent on finding a traditional distributor, there are indeed distributors
(such as Image Entertainment) who will look at movies solicited by filmmakers
themselves (not sales
agents). If you can sign a
consignment deal with a quality distributor on your own then you can do your own manufacturing and bypass
all of the legal expenses, risks, gathering and preparing of deliverables, and other complexities of signing with a sales agent.
Based on my experience I fully believe that some if not most sales agents and/or distributors out there
are opportunists and/or con artists, who fully intend to skip out on
paying you in full or just want to cash in on your non-traditional
sales, knowing that your movie has very little chance of ever
getting distribution into physical stores like Best Buy, Wal-Mart,
etc. I've heard stories about a few. Some agents may even "accept"
your film without having even seen your movie - an obvious red flag. Some may
actually require an
up front monetary "retainer" and they'll tell you it's for the purpose
of "making sure you're serious" or to "pay for their
expenses" -- major red flags!!! If they really believed in your movie
why wouldn't they just shop it to their distributor contacts without any
up-front fees? If they really have "connections" then how much does it
cost to mail a few DVD's to their distributor contacts? If they need to spend
money on trips to film festivals then you have to ask yourself, do they really
have "connections" that you would expect a producer's rep or sales rep
to have? Or are they really just trying to get you to pay them to promote
their business? It doesn't take a rocket scientist to tell you that these agents
are probably pocketing a sizeable amount of that up-front money as taxable
income! I wouldn't be so irritated by it if they were honest about it, but
unfortunately they lie and lead you to believe it's to cover their
"costs". Do a google search of the company name in quotes and you might learn a thing or
two about some of these characters in filmmaking forums! Unfortunately I can't
mention any of these companies in print.
While a few may have honest intentions, most are not worth dealing with. Very
few really have the clout to make things happen. Often they will only get you a
deal with a small distributor that merely only winds up selling your DVD on
Internet, which anybody can effectively do. I'm of the opinion that most indie filmmakers can do a better job
just being their own sales agent, thus saving 15 to 25% plus expenses. Indie
filmmakers can definitely be their own Internet distributor -- Just
sign up with Amazon and CreateSpace, and possibly FilmBaby (as an
inroad to NetFlix). Remember
that physical media is on the way out, and as it goes out of style
sales reps and traditional distributors will be dropping like flies.
There is no screening process needed for digital distribution
because it's infinite, virtual store space. Amazon, CreateSpace,
FilmBaby and others gladly open accounts with ANYBODY and EVERYBODY!
STILL WANT TO SIGN WITH A
SALES AGENT AND / OR DISTRIBUTOR?
BEWARE OF DUMMY CONTRACTS: I warned you not to, but if you still want to sign
with a sales agent and / or distributor, beware of so-called "DUMMY CONTRACTS" that sales agents (or
sales companies) or distributors try to get you to sign, hoping that you don't use an attorney (or
knowledgeable attorney) to review their contract. I encountered a Los Angeles
based "sales agent" company
wanting a whopping 50% of profits in addition to recouping fees! That
means that after the retailer and distributor pocket perhaps $7.50 on an already
overpriced $15 DVD, I would
have earned only about $3.75 per DVD (and not until after the distributor recouped all their expenses). I've also seen 15 year contracts, and other train wreck contracts.
NEVER SIGN OVER YOUR COPYRIGHTS: I was once even offered an "assignment contract" in which the distributor tried to get me to sign over my copyrights in perpetuity! If for example the distributor were to stop paying me then I would have absolutely no leverage in getting them to shape up! Even as I battled them in court, they would be free to continue selling my product. Imagine dealing with a distributor that you know is on the verge of bankruptcy, but they continue to live off of the profits of your movie? They have stopped paying you and you know that bankrupcy is a foregone conclusion. I've been in this situation with a media distributor before! Fortunately I simply stopped shipping them product and continued selling my product elsewhere. Had I signed everything away I would have been screwed. This is why you should never sign over the copyrights to your completed film.
EXPENSES MUST HAVE CAPS: If that wasn't bad enough, this distributor's contract had no checks and balances to prevent so-called "Hollywood accounting" or "Billing Gone Wild". The contract language read something to the effect of "...any and all expenses, costs or fees to distribute and/or license the film, including but not limited to marketing costs, promotional costs, legal costs, etc." This is essentially an open tab with no cap on expenses. The distributor could deduct anything and everything against your profits: Office rent, office water, power and gas bill, a portion of employee salaries including inflated salaries for the owner's wife and son, lavish trips to film festivals and other trips, a trip to the chiropractor after hurting one's back while at work, day care for kid while at work, DO NOT EVEN BOTHER negotiating with
these people. Don't even return their calls. Interestingly they may insist on confidential arbitration (in the event of contract disputes) so that other filmmakers don't find out about these
companies' illicit behavior.
Some distributors out there will essentially sign just about anything and everything they come across. They know that only perhpas about 1 in 20 titles will have decent sales, but the other 19 will at least help keep the company going. These 19 filmmakers will never see a dime in revenue. Just empty promises.
There's so many fine points with regard to contracts, but
here's one more term that makes me chuckle. I've yet to see a contract offer
from a distributor in which they explain adequately and specifically what
they can and cannot "fee" you for or deduct as expenses against your revenue. So based on THEIR contract offer, you
can pretty much expect them to bill you for the maximum dollar amount
allowed (if there even is a cap, as there should be). Whatever it takes to reach the cap on expenses you can expect to be
used to subtract from your profits. The secretary's salary? Electric bill?
Phone bill? Gas for their car? A speeding ticket on the way to the office? Rent?
ONLY ACCEPT BUYOUT DEALS
FOR FOREIGN DISTRIBUTION
Foreign distribution deals are made in the form of cash buyouts per
territory. Do not sign a deal whereby a foreign distributor pays you a percentage of
sales, because from what I've seen they NEVER DO pay you or they short change you. Taking them to court in a foreign country (when they don't pay) would be
an absolute nightmare. Every filmmaker I've ever spoken to has gotten ripped off on percentage
deals with companies in foreign countries. Even when sold on a buyout
basis there are pitfalls: I also heard a story about a foreign distributor illegally
selling a movie outside of the territory it was licensed to sell to.
It just never ends with foreign distributors. They can't be trusted, the
international court
system is massively expensive and a failure, filmmakers can't afford to fight it and distributors know it.
FOREIGN
SALES AGENTS
As previously mentioned, foreign sales have been
drying up due to cheap technology. The vast majority of filmmakers who sign with foreign
sales
agents to solicit their movie to foreign territories never see a dime of
profit anyway. Yes money can be made, but sales agents rack up so many expenses in the form of travel
fees, film market fees, office fees, etc, etc that the sales revenue generated never out paces
the expenses. The sales agent just winds up pocketing all of the money as
repayment for "expenses". Further complicating matters, sales agents usually don't
itemize their expenses. Their expense detail might say "Travel:
$1,675.00" or "Office $775". How in the hell do you know what "Travel"
or "Office" entails?? Maybe the sales agent brought his wife to a 5 star golf resort in
Cannes on your dime. "Office" could include their electric bill or
salary paid to the office secretary who also happens to be the owner's wife who
works one hour a week. Unbeknownst to you they also may charge you in full for
ALL their travel expenses when in fact they were ALSO busy soliciting several OTHER
filmmaker's movies on their trip, in which case you should have only been billed
as a fractional percentage. There should also be caps on
expenditures. The only way to prevent this crap from happening is
with a bullet proof contract, drafted or tweeked only by an entertainment attorney
(which is costly by itself),
otherwise the sales agent will be his own judge and jury in determining how much
to pay himself, his business buddy, friends, wife, etc. All of this shady
behavior is yet another reason to just do it yourself.
LAWYERS ARE SHARKS TOO: You should find a film attorney who already has prior knowledge about sales agent and / or film
distribution contracts. You definitely don't want to pay any attorney to
do research from
scratch. Before you know it they WILL be sending you monthly bills for $3,000. Attorneys are the
other SHARKS that are looking to make as much money as possible off of you. They
must be kept in check. Tell them "I'm on a budget" and
before each task is performed ask them "How much is this going to
cost me". Also do as much of the work yourself. For example they may
say to you "OK. I need to call this distributor up and review a few things",
when in fact you can do this yourself! If they don't want to do it your
way then find another attorney. Lawyers love to be left alone to rack up a bill
("billing gone wild") and they have creative ways of doing it. You must be proactive in stopping
them in their tracks. And that's IF you decide to negotiate a sales agent and/or
distribution deal. I will remind you again that for the vast majority of
indie filmmakers it's just NOT worth it.
LAWYER CONFLICT OF INTEREST: Also do NOT expect a lawyer to give you unbiased
advice as to whether it's even worth your while to sign with a sales
agent (or traditional distributor) or not. Remember, lawyers don't make money
reviewing or drafting a contract if you decide to completely skip
out on signing with a traditional distributor. Most lawyers only
know about contracts anyway. They actually don't know much or enought about business, about industry trends,
the finer points of distribution, etc.
DO IT YOURSELF
So, while it may be difficult, sell your film to foreign
territories on your own and hope for the best. Later, if your film does well in
the USA, that will be an attractive selling point to foreign buyers.
Purchase the Hollywood Distribution Directory for a list of film
distributors, both foreign and domestic. Understand that this book lists both
"distributors" and "sales agents" under the category of "distribution", even
though they are not the same. When soliciting your film, tell the prospective
distributor if you are only looking for a "distributor" - not a "sales agent".
Again there are only about 10 sales agents in the world worth dealing with.
I spoke to one filmmaker who signed a worldwide distribution
deal with an independent distributor. This filmmaker told me that in the end about
100% of their US film sales were merely from Internet sales (NOT physical stores!), and
90% of their foreign sales were from Internet sales. So they basically pissed away
probably about an
extra 30% of their profits, hoping that the distributor would get their DVD into
stores, but the distributor essentially failed. This is a prime example
of why you would NOT need a traditional distributor. This is consistent with the
results I've heard from others too. I often hear about filmmakers who haven't
seen a dime in profits from their distributor because A) low budget movies
basically never sell in any numbers to get excited about and B) the distributor
is forever recouping their upfront costs.
Understand that in 2001 a survey determined
that 94% of US Internet CD sales by independent artists were via
Amazon.com. Roughly the remaining 3% were via CDBaby.com and 3% via the artist's
home page. And while we're talking about CD's here, there's no reason to assume that
DVD sales aren't
very similar. This 94%
number is a staggering one. While other retailers like DeepDiscount DVD and
DVD Planet have probably cut into these percentages since 2001, I doubt Amazon
has lost much of it's market share of indie product as of 2009. Understand that
Amazon will open an account with ANYONE via their
Advantage
program! You can
also sell your DVD from your home web site via a credit card processor like
www.Ccnow.com
and pocket about 90% of your DVD sell price.
The remaining other sites like DVD Planet, DeepDiscount DVD and others don't
deal with individual vendors, but what are you missing out on? Those sales
aren't going to amount to much of anything. The point is that you don't need a
traditional distributor to "blanket" the entire world of Internet DVD
sales! Your
home page sales and Amazon sales will suffice just fine.
In conclusion, due to the Internet revolution, sales agents and
traditional distributors are a dying breed of middlemen. And once on-demand of movies comes
of age, replacing the DVD, it's really gonna be "game over" for most of
the middlemen. There will be
a viable in-road for individual filmmakers to get their movies sold via on-demand.
just as companies like TuneCore.com provide an inroad for indie MP3 distribution
on iTunes and Amazon's MP3 store, and just as Amazon.com's advantage program
provides an inroad for indie artists to sell their CD's on Amazon.
Unfortunately, at the moment, Tunecore and Stonehenge Productions
charge a whopping $750 to get one movie listed on iTunes. I don't
know who is pocketing all this money but one thing is clear; This
price is outrageous and I can't imaging it still being $750 in 5
years. This price MUST come down. It just makes NO sense for an
indie filmmaker to pay this much.
|
What Good is FilmBaby?
Some filmmakers are lured to sign up
with FilmBaby because they have an account with Super D,
which is a "1-stop" distributor, as well as Ryko. Well
from my experience all that Super D does is enter your
DVD into their system and that's the last you ever hear
from them. If someone walks into what's left of DVD stores
then they can then
special order your DVD. The problem is that this
virtually NEVER happens! As far as I know FilmBaby never
got my DVD into Ryko's system either. After paying my
setup fee, they sold a grand total of ZERO
DVD's!
Anyone can sell their DVD directly
with Amazon via their Advantage program. I already have
an account with Amazon, so no need for FilmBaby there.
You will get paid faster if you supply Amazon directly.
That leaves NetFlix, which I am not a
fan of. So in conclusion, what good is FilmBaby? My
opinion is that FilmBaby is merely an inroad to NetFlix,
that is IF you want to go there. Probably not. And the
latest rumor is that NetFlix may have stopped ordering
the usual 60 indie DVD's that they typically ordered in
the past.
UPDATE: As of September 30,
2012 FilmBaby has ceased physical distribution of DVD's
and has been asking vendors if they want to have their
DVD's in inventory shipped back to them or destroyed. I
told them to just destroy the 9 DVD's that I shipped to
them. They never sold a single one.
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PROMOTION:
A DVD just won't sell without a buzz. Normally it
takes press, publicity, having name stars (with genuine selling
power) in your
movie, a great "look", great sound, a big advertising budget, etc. Having a great looking
box cover can also count huge, especially if you have any chance of getting
distribution into physical stores. Signing with a film distributor won't change the cast
lineup in your movie, won't improve the quality of your movie, etc. A
film distributor can't cause the NY Times, Rolling Stone, Access Hollywood,
Entertainment Tonight or Entertainment
Weekly to enjoy your no-name low budget film and do a story
about it. Unfortunately it is very rare that an indie film ever gets that
all important press and publicity that you need to begin to actually
make money selling a movie. Any buzz usually begins at a film
festival or by going "viral" on the Internet. If the movie doesn't have what it takes
to create a buzz, it just won't take-off.
The movie does the selling -- not the distributor.
Some distributors might like you to believe that
they have magical selling powers, but they can't squeeze blood out
of a rock. In reality indie film distributors do
not generate enough web traffic to their site to sell a hill of beans worth of DVD copies. The
vast majority of online DVD sales occur on Amazon.com (which opens accounts
with individual filmmakers), and rentals on NetFlix (which FilmBaby distributes
to if you ever wanted to have your DVD available on NetFlix).
Realistically an indie filmmaker's best route is to
post their movie on YouTube, enter it into a few film festivals, and
then hope for the best. It's highly unlikely that a nationally
distributed magazine or TV program will mention your movie, but if
you have a unique angle to get their attention then it can't hurt.
Any publicity, including bad publicity, is good
publicity. Human Centipede got all kinds of negative buzz about how
absolutely sick and twisted the plot was. No problem! Last time I
checked it was ranked very high on Amazon.
Recently a local Los Angeles band called
the Imperial Stars literally shut down the 101 Freeway in Hollywood by
blocking traffic with a truck and then doing a performance on the roof. This
promotional stunt got world wide press! Yeah they got arrested,
people got really angry and
the music sucked, but imagine if they were promoting something
really good?
Once in a blue moon a YouTube video goes "viral".
People like Kimbo Slice, the "Leave Britney Alone" guy, and others
have used YouTube as a springboard. Easier said than done though.
CANNIBALIZING OF YOUR
SALES: NETFLIX IS NOT WORTH IT
Before there was Netflix we had stores like
Blockbuster and Hollywood Video who would order copies of indie
movies for ALL of their physical stores. There was good money to be
made because you could sell THOUSANDS of copies just for physical
store rentals. Now NetFlix has taken over the rental business and
they only need to buy 20 to 60 DVD's for the ENTIRE country! That's
a LOT of lost revenue -- so much that it begs the question... "Is it
even worth it?"
Are filmmakers missing out on "would-be" sales of DVD's when they allow their DVD to be rented for cheap?
Indie filmmakers can make their movie available for rent on NetFlix via
sub-distributors like Filmbaby, however I am of the opinion that indie
filmmakers
should just opt out of NetFlicks because I believe the whole thing is a net
loss, due to erosion of
your sales of new DVD's. I am told that this company typically will
initially order 60 copies of an indie DVD at only wholesale cost, then pay NO
royalties to small distributors that handle indie DVD's (such as FilmBaby).
If your wholesale price is $5, then they're paying your distributor (ex- Film
Baby) only $300 to rent out 60 copies of your DVD as many times as they can.
What a sweetheart deal!!! Additionally, a distributor like FilmBaby pockets part of that $300. Left with a
money saving choice of renting, a certain percentage of consumers will elect not to buy your DVD. What that percentage is I am
still trying
to figure out.
I have asked NetFlicks to
provide statistics on how many times a DVD is typically rented before it is
ultimately purchased by a renter, "lost" or "retired". I'm guessing it might be as little as 5 rents? Maybe 10 or more?
They
told me that they do not disclose how many times DVDs are rented before they
wear out, only stating to me that the number varies, which doesn't tell me
anything. What the hell are they trying to
hide??!!! I suspect that their whole "one time payment" must a a
sweetheart deal FOR THEM! Until they provide me with some statistics I have no plans on
changing my opinion about NetFlix. NetFlix explained to me
that the terms of acquisition for DVD's are between the company and the
filmmaker or studio. I wouldn't be surprised if NetFlix is paying
royalties to the big studios. In my estimation a filmmaker with a no-name movie
that can barely sell 10 CD's a year may find NetFlix to be a net plus. If you've
got more of a buzz then I am of the opinion that NetFlix is not worth it. Some
people consider Netflix to be the equivalent of "promotion". To that I
say having your trailer on your website and on YouTube is
"promotion"! Indie filmmakers have already declared theatrical
releasing as "promotion" so when does this "give it away for free"
desperation attitude end?
The Culture of Renting -
Not buying:
Renting your DVD via NetFlix seems like an act of desperation to
me. As more and more indie filmmakers "sell themselves
out" to NetFlix and the whole "rent; don't buy culture", they are supporting a system that pays filmmakers chump
change. If your wholesale price is $5.00 and NetFlix rents out each of your
DVD's 5 times, then that's $1.00 per rent. If a filmmaker is willing
to go this cheap then this begs the question, why not consider
lowering your new DVD sell price even lower? It's just not worth it.
Video on Demand (VOD):
A few companies offer indie filmmakers the ability to get their
DVD sold on iTunes. FlickRocket offers digital downloading of indie DVD's from
their site, with no set up fees. Another company charges $300.00 to get your
movie "set up" for distribution on iTunes' site. A 2009 study showed
that 50% of consumers are downloading digital music (mainly off of Amazon and
iTunes). So what percentage of consumers are downloading digital movies?
The study mentioned above showed that there's only about 1 digital
download sale for every six and a half DVD or Blue Ray sales. Right now it's too confusing and too much work
for consumers to figure out
how to
download and then burn a DVD to later watch on their TV set. Watching it on a
computer is not the same experience as watching on TV. In a few
years, when prices come down and more people are downloading movies,
it will be worth getting set up for digital sale -- Just not right
now.
How much can you make by monetizing your YouTube videos? It varies but from my estimates it's about $1,250 per million views. There's very few Jenna Marbles out there!
Don't Underestimate The Negative Impact
Of An Over-
Priced DVD:
Cramer explained (in Spring 2006) on his show Mad Money that in this recession
consumers just don't want to pay $15 for a DVD unless it's a classic that will be
watched over and over, such as Disney classics that will keep the kids occupied.
And as previously discussed, people want to rent movies for one
dollar -- not buy for $15. If you sign with a sales agent (middleman #1) and a
traditional distributor (middleman #2)
it is just about guaranteed that your movie will sell for about
$14.99 if not $16.99 or more! Who the hell
wants to buy an indie movie for $15 in 2010??? Especially when you can
download for free off of PirateBay. Especially
when big multi-million dollar blockbuster movies like Titanic eventually sell
new for
as little as $6.99. Go it alone
and you have the freedom to comfortably sell your DVD for $9.95 and
eventually perhaps as low as $4.99!!!! I caution against selling your DVD
too cheap otherwise consumers may think that the film company
is "desperate" to unload a crappy, low quality title that nobody
wants. I believe that $12.99 is a good initial release price, then
gradually lowering the price to $6.99 after a year has past. You can
go as low as $4.99 but that extra $2.00 discount actually will not
translate into any significant increase in sales.
CONCLUSION:
Realistically the purpose
of signing with a DVD sales agent and/or distributor is for them to get your product
into PHYSICAL STORES - not merely to sell your DVD's on Internet, which
ANYONE
CAN EFFECTIVELY DO. If your sales agent ultimately ONLY gets your DVD's sold on
the Internet then you've made a 25% mistake (or upwards of perhaps a 50% mistake if they get
you also signed with a small traditional distributor). Plus don't forget their
additional up front
costs that they get to recoup, and your attorney fees to review the contract. So you have to make an
honest assessment of your product. Sure a sales agent is going to promise you
the world and tell you that it's the only way to do it because they want 25% to 30% of your Internet sales, but after the ink
dries are stores like Best Buy, Wal-Mart, and Blockbuster really going to want
to stock your no-name indie DVD in all or any of their physical stores? Shelf space is
limited, and these stores look for stars, a great "look", a captivating
story, a very luring DVD cover design, a big buzz and/or an
expensive advertising budget before they consider stocking a title because ALL
of these things are what drives sales. And even
then, these stores usually only start out putting a new indie title in just a small
fraction of their stores. There's 852 Best Buy stores in the USA, but the truth
is that indie product is typically only "tested" in perhaps 30 stores
to start, if tested at all. If it doesn't sell like "hot cakes" (which it won't), then they
just stop carrying the title.
If a distributor offers you a chump change buyout offer, you're better off just
selling it on your own, then maybe one of your cast members will eventually become famous.
If you are
your own distributor then you won't have to worry about whether you will get
paid or not, which can't be emphasized enough. As previously mentioned, filmmakers getting ripped off by
distributors (and especially small distributors) has been the NORM from my experience. With the shift to
digital distribution there will be plenty of distributors going
bankrupt, and there will be blood as vendors (filmmakers) get paid pennies on the
dollar. This reason
alone might be enough reason to just DIY.
And if you are looking over your shoulder at the audio
distribution revolution that has been unfolding, I'd just hang tight; Soon
the remainder of all those physical stores like Blockbuster that don't want to carry your
indie film will go out of business just as the "record store" did.
Best Buy and Wal-Mart's selection of indie DVD's is currently almost
non existent. DVD's are
sometimes considered "loss leaders" that are used to simply draw
customers into the store. Soon
the "virtual store" will be both the consumer's delivery method of choice
and it will be accessible to all filmmakers without the need for a
profit-eating sales rep or traditional distributor.
