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(A Digital/Internet Distribution Company)

by Jerome Courshon

Internet distribution today is an important market for movies & documentaries. We've all seen it grow since its fledgling days of the late '00s -- and it wasn't that long ago that Morgan Spurlock uttered the infamous words that you'd be lucky to pay your phone bill with revenues from the online market.

Today, however, online distribution is coming of age. While the revenues in this market are still small compared to DVD, Theatrical, and (for many films) cable/satellite/telco VOD, they are growing annually, with many independent films generating some real revenues. Not just films with names, but films with "unknown" actors too.

(If you're looking to exploit the online markets -- or all markets including the online markets -- seriously consider taking my 3-Day Course. To have success online, is NOT just about uploading your movie or documentary to a bunch of online platforms. In fact -- and most Producers don't know this, because distributors and aggregators won't tell you this -- but of all the hundreds of platforms out there you can put your film on? There are only about a dozen that mean anything today for generating real revenues. You need to be on as many of those dozen as possible -- not just the 3 or 4 that your distributor utilizes.)

I recently sat down with Linda Nelson, CEO of Indie Rights, to discuss this maturing market for independents.

Jerome Courshon: The digital platforms and internet distribution has changed a lot in just the past 2 years. What are the most important things a Producer or Director should know about this market today?

Linda Nelson: There is more opportunity for filmmakers to build an audience today than ever before. Several premium platforms can be considered mature, in that they can provide a real opportunity to earn significant income, provided the filmmaker is willing to take some responsibility for developing and implementing a well-thought out Marketing Plan that includes social media. Reasonably priced, hyper-targeted advertising is readily available to anyone willing to learn how to reach their potential audience.

Jerome: What are the 3 biggest mistakes filmmakers make, when entering the digital/online markets for bringing their movies & documentaries to the public?

1) They wait too long to start marketing their film. It's important to begin this process as soon as you start development of the film.
2) They don't take the time to understand and define who their audience is, and they don't research and plan their distribution until the film is finished. Or until after they've played in some film festivals.
3) After working hard on producing their movie, they often lack the willingness or energy to be aggressive in marketing it to distributors or the public.

Jerome: Why do filmmakers make these mistakes? What's your feeling about this?

Linda: First of all, more movies are being made than ever before because technology has made it possible. Most filmmakers tend to lean towards the art of moviemaking rather than the business side. In the "old" days of distribution, distributors would be out looking for films and there weren't so many festivals or films available. It was the job of the distributor to advise and handle the business of distribution.

Now, with thousands of festivals and even more thousands of films, the filmmaker has to take the initiative of researching and evaluating the best distribution path for their film. Depending on the marketability or the film, it might be suitable for theatrical, DVD, broadcast and/or digital distribution. It's important to determine this as soon as possible. Most filmmakers are still focusing on getting their movie made and are failing to take advantage of early social media marketing to build a buzz for their film.

Jerome: What kind of revenues can one make in the online market today with an independent film? I understand that a few of the movies you're handling -- ones without stars or "pedigree" -- are generating $10,000 a year?

Linda: Yes, that is true. In fact, one of our own in-house produced films is currently making more than that. We have seen tremendous growth this year in the number of digital outlets for independent film, not only domestically, but internationally. With good social media marketing you can establish a steady stream of income that will continue to bring in revenue indefinitely. Unlike the past, when independent films got stale and the stores would no longer stock an old title that was not a blockbuster, you can continue to earn revenue from the "endless shelf" in the cloud for as long as you want.

The goal for filmmakers should be to build up a body of work that will generate a significant revenue stream that can sustain them through good times and bad. As any successful filmmaker will tell you, some movies turn our great, and others not so great.

Jerome: Are the films generating this level of revenue doing any marketing & advertising? Or is it because of their title or another aspect?

Linda: Some of our filmmakers having success are marketing their films with social media. But some are also having success solely because their films appeal to certain audiences, such as horror films, sexually-themed films, and stoner comedies. Some documentaries, depending on their subject matter, also do well without much marketing. Generally, a drama without marketing is not going to sell. We're handling an art film (a drama) that normally wouldn't do well, but the filmmaker is very pro-active with his marketing and it's doing quite well.

The best approach for effective social media marketing, is a multi-platform approach that focuses on Facebook, but is cross-promoted with YouTube, Twitter, a blog and email marketing. It won't hurt if you don't need it, but if you do need it, it will help. Paid Facebook promotion/ads can be very effective in expanding your fan base and increasing sales. Also, having a custom sales app for your Facebook page helps make it easy for fans to find your film. You can build these yourself or hire someone to make them for you.

Additionally, finding marketing partners that have print magazines or successful websites or YouTube channels can also be very effective. For example, if you have a horror film and you develop a relationship with one of the big horror websites, you can find ways to partner or advertise with these sites to promote your film. We have a filmmaker that has done this very effectively with her horror film.

Jerome: You and I had a conversation the other day about a filmmaker complaining to you about marketing. Why do filmmakers have to do this themselves in the online market? Why don't aggregators do this?

Linda: Aggregators are too busy aggregating, especially smaller companies like us. We do try to market our Indie Rights company with social media, and eventually this will benefit the individual films. But in order to pay out the high percentage to our filmmakers that we do, we have to keep our expenses low. (We don't charge our filmmakers any expenses.) We have considered upping our percentage or charging for marketing, but social media can be learned by anyone and we'd rather educate our filmmakers. You know the old saying, "It's better to teach a man to fish..."

It should be noted that the actual distribution platforms do very little marketing, unless your film really starts to perform. So if you can get enough reviews, "Likes" and sales, major platforms like Amazon, Hulu and iTunes will feature your film.

Jerome: An elementary question for those of our readers who are unclear about the term "aggregator" that we just used. Can you define...?

Linda: Large or premium digital platforms like Google, Amazon Prime, iTunes and Hulu don't normally take submissions from individual filmmakers. They don't want to be individually paying thousands upon thousands of filmmakers every month or quarter. So they use "aggregators" like us to supply them with a large number of films. This cuts down on their back office tasks. Quite simply, an aggregator "collects" or "aggregates" films for sub-licensing to other companies that sell or rent movies directly to the public.

Indie Rights is both an aggregator and direct partner with a number of platforms. iTunes only has five aggregators and you must work with one of those companies. We have traditionally used Cinedigm/New Video as our iTunes aggregator. We are technically a "sub-aggregator" for them to get our films on iTunes. On the other hand, we are a direct partner with Google, ViaWay, and Amazon, so that means there are no middlemen between us and these distribution platforms where a film is sold or rented.

Jerome: There are currently two models the online platforms use, either a transactional (purchase) model, or an ad-supported model. How does the ad-supported model work?

Linda: An ad-supported site like SnagFilms or Hulu pay filmmakers a share of the advertising revenue that is generated by companies placing ads on your film. This can be just as lucrative as a rental site where filmmakers are paid a percentage of each rental/streaming/download purchase.

Jerome: I understand that some of the ad-supported sites may now drop a film if it's not generating views, such as Hulu. What's up with that?

Linda: Since ad-supported sites have to spread advertising revenue among their content providers, they would rather give popular content providers more revenue to encourage them to supply more content. If films aren't performing, they are just diluting the advertising pool, so they may get dropped if they are of inferior quality or don't get any views.

Jerome: As you know, I advocate that the online platforms are usually the last market to exploit, given that once a film is available on any of them, it will usually kill getting a deal in any of the other markets if one wants that, such as Theatrical, DVD, VOD (cable/satellite/telco), and Television. Your thoughts on this?

Linda: In most cases, I agree that it's worthwhile to explore from the top markets on down. You can start this process early so that your film doesn't lose steam by the time you do digital. Some films have really high production value, but if lacking name actors or a popular genre, it may be better for them to start looking into digital early on. You have to do your homework, your research, and figure out what's best for your film. Most theatrical distributors won't touch a film that's already online, so you must look at this first. If one feels lost or overwhelmed with all the distribution options, there are some good places to reach out for help, such as with your own "SECRETS TO FILM DISTRIBUTION" Program.

Jerome: What if one of my readers here has a film that's older? Maybe it's already gone through the distribution markets, maybe not. Can they come to you? What if the film is 5 or 10 years old? Is it still worth it?

Linda: It's possible. We have several films that are older and some that were previously distributed with major DVD distributors. In one case, the movie was originally shot on film and released on VHS, then ultimately shelved by the distributor. When the contract ran out, the filmmaker did a digital transfer and we released the film digitally in HD, allowing people to see it as they had never seen it before (except when it first came out in theaters).

It all depends on the film. Since most people now have HD flat screen television sets, making a digital file from a VHS tape -- especially if it's in a 4:3 aspect ratio -- doesn't produce very good results. But if you have a 16:9 version from a digibeta or a telecine from your print, you can have great results. We've even had success in up-resing some older films and they look quite good. It all depends on what your master is. These days, we are recommending everyone shoot and master in 4K because it helps "future-proof" your film.

Jerome: You were one of the very first aggregators for the digital platforms. What led you to starting your company, Indie Rights?

Linda: The first film that I and my partner, Michael Madison, produced was a $5,000,000, 15-perf, 70mm film made for IMAX and other giant screen theaters. This was the "NSync: Bigger Than Live" film. Shot with a huge crew, John Bailey was our DP and we hired the very best we could find to do the editing, post production, publicity and marketing. It was a great theatrical success considering there were only 50 theaters at that time and they were all in science museums.

We just about broke even on the theatrical run and were on Variety's Box Office Report for over two years. Similar to today, we didn't expect to make our real profit on an independent theatrical release; rather, we expected to make it on the broadcast and DVD sales. Due to our own ignorance, we failed to tie up the necessary rights in our initial contract and wound up in a lawsuit over the broadcast and DVD release. It caused us to shut down our first production office, and we vowed never to move forward without all our "i's dotted and t's crossed" again.

Broke but undeterred, we moved from Beverly Hills to more humble digs. After being unable to raise money for our next production, we decided we would just finance it ourselves. But it was clear we'd have to get really creative if we were going to make another movie. Michael saw a sign for a job at a local storage facility that was looking for a team to live on-site and manage a 1,000 unit property. We checked it out and decided it would be perfect. We wouldn't have to worry about paying rent, they gave us a big, three bedroom house for free and we wouldn't waste time commuting. The job was easy and it left us with enough energy to write our next film.

Since we were the only people who lived in the industrial neighborhood where the storage business was located, we decided that the facility would make a great movie set. We wrote the crime thriller "Shifted," that centered around a storage facility. We set up our production office in our home, charged a Canon XL camera on our credit cards and shot the movie. Calling in many favors, we used the SAG Experimental Agreement (since replaced by the SAG Ultra Low-Budget Agreement) and shot our film in the summer of 2004. Then came the hard part. With no budget for post, we learned how to edit, got some great music from our neighbor, and finished the film.

Of course we submitted to Sundance, SXSW and Tribeca. There was no Facebook yet, but we had about 30,000 fans on MySpace and they even featured the film. Since entering Tier 1 film festivals was our only distribution plan, when we didn't get in, we had to come up with a Plan B.

Totally broke, having put everything we had into the film, we looked at local film festivals and found out about a great one in Los Angeles called Dances With Films. It was their 9th year, so we figured they were honest and we got in. It was an amazing experience and inspired us to stay committed to making movies. But still, we had no marketing or distribution plan. We tried going to AFM. We tried writing to distributors and even received a few offers, but because of our previous bad experience, we were not going to sign another bad deal with open-ended terms.

At first we were stumped, but after talking to some other filmmakers with similar experiences, we thought "Why can't we start our own distribution company?" We figured if we got five to ten films together, maybe we would have something of value to the few new digital platforms that were starting to emerge, like B-Side, Caachi and of course Amazon.

It soon became apparent that we needed to have a legal entity to sign distribution contracts, so we used LegalZoom to start a California Corporation called Indie Rights, Inc. That became the company that licensed films from producers & directors and then sub-licensed them to digital platforms. And the rest is history as they say. Today we have more than 100 films in our catalog and have direct partnerships with Amazon (this includes Amazon physical DVDs, Amazon Instant Video {SD & HD} and Amazon Prime), Google (this includes YouTube Movie Rentals and Google Play), SnagFilms, ViaWay, and Roku (the ADC Channel). We also aggregate for iTunes, Hulu, Vudu and a number of other platforms.

Jerome: Thank you for your time, Linda, hopefully my community has a bit more understanding about this increasingly important market for their films.

Linda: My pleasure!

CONTACT INFO for Indie Rights:
Linda Nelson
Phone: (213) 613-1587
Email: Linda [at] NelsonMadisonFilms.com
Or message her through Facebook: http://www.facebook.com/nelsonmadisonfilms

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