Internet Movie Distribution 101

What Indie Filmmakers Need to Know

By Ty Hulse

The Internet promises a new world of distribution possibilities, and anyone can succeed. This is a presumption that is usually false. Before the Internet, selling a film was practically impossible without a distributor, because distributors controlled the market. Filmmakers didn’t make much even when they got them distributed, because the retailer would take 50%, the distributor would take 60% or more of what remained, which left the filmmaker less than 20% of sales. So selling direct via website not only offers the opportunity to double money made on a film, but provides a mechanism for the filmmaker to brand himself or herself and his or her movies by controlling the look and feel of the movie’s site. Proper branding improves the reputation of a filmmaker and increases the likelihood that visitors will become repeat buyers. But succeeding requires a good understanding of marketing tools.
Any viable distribution plan has two parts: 1) monetization (a way to make money); and 2) promotion. Major distributors work to monopolize monetization, both on and offline. They have successfully monopolized standard distribution to the extent that no independent can compete with. The advantage of the Internet is that large distributors cannot control every avenue open to a would-be on-line independent distributor.

Promotion costs money and time, and so the bigger players still have an advantage over the smaller ones. Indie filmmakers thus need to work more intelligently with the resources they have in order to maximize chances of success. Independents, by utilizing the Internet, can control their marketing, target specific audiences, and do it at a lower cost than they could elsewhere.
Monetizing
Success requires that the filmmaker use as many methods to earn revenue as they can. Pay-per-view retailing is the most obvious means of earning money and the method with the highest potential for turning a profit. But selling direct is just one way of monetizing a movie. Another method is to sell through retailers who already have a known brand. Selling through an existing retailer helps to increase the likelihood that consumers will purchase a film, and increases consumers’ opportunities to purchase.

Amazon.com is one of the better retailers, and they have a built-in system for independent filmmakers called CreateSpace.com. Through this site, any filmmaker can sell DVD’s or downloads. There have been a few sports documentaries that have done very well on this site. Documentaries have a huge advantage because they are not sold using their own “brand,” but instead rely on the “brand” of the sports team they are documenting. Success in the retail world, whether on or offline, requires that a film be built on a solid brand or promotional strategy, and this is where independent marketers run into difficulties.

The problem is that most people who go online to purchase a film already know what it is that they want to buy. This means that most of the money made selling online is made selling movies that are already blockbusters. Therefore, the independent marketer cannot depend solely on a few retailers to help carry his or her film; a film must be sold through a large number of retailers to meet with success. In order to expand beyond a few retailers such as Amazon.com, the filmmaker must use Business-to-Business (B2B) distribution methods.

B2B on the Internet is the process of marketing and selling to businesses. This works differently from using retailers such as Amazon.com, because in the B2B process one must build a relationship with the retailer, or with the warehouses/shops that sell to retailers. There are a number of websites that help with this process, places where retailers go to purchase their goods. By promoting a film on the warehouse sites, by promoting directly to retailers, and by selling films at bulk rates, a filmmaker can add a large number of stores to their revenue stream.

The difficulty is that most wholesalers on the Internet deal in cheap goods– dollar stores, used goods, overstock and so on. This means that a movie sold through a wholesaler on the web typically has to be sold cheap. There are potential advantages to this– short films in particular could be distributed to dollar stores, in a way that would provide a new outlet for a genre that typically doesn’t generate much in the way of sales. And as the B2B online industry grows, filmmakers will find additional opportunities to sell their movies directly to retailers through the Internet.

Beyond wholesalers, another method of adding more sources to a film’s revenue stream is the ‘drop shipping’ method. Drop shipping means that the ‘e-tailer’ will attempt to sell a film. If they are successful in doing so, they will pay the filmmaker for the sold film and the filmmaker will ship to the e-tailer’s customer. Doba.com is one of the many drop shippers that allows any filmmaker to sign up to become a supplier for their e-tail customers.

A method similar to drop shipping is something that was developed and used first by Baker and Taylor and a handful of other companies for offline book and video stores. Baker and Taylor’s distribution method has made them one of the most successful distributors, and is a major reason that Amazon.com has been profitable. Amazon.com used Baker and Taylor to distribute, and therefore didn’t have to purchase or stock many products, because book and video stores can order products without paying for them unless they are actually sold. While nearly any content creator could historically sign up with Baker and Taylor, the Internet has simplified this process greatly.

Once a movie has identified a number of ways to sell to retailers, filmmakers should begin to promote their films to businesses. Filmmakers should have a section of their website devoted to selling direct to retailers just as they would to do for customers. They should sell their movies to retailers for about 50% less than market value. The exact amount depends on which distribution system the filmmaker is using to send to the retailer, and which distribution group, if any, the filmmaker and store agree to utilize.

Similar to the retail method of monetization is the pay-per-view system. Potential customers resist paying for content online because the original Internet companies offered much free fare, assuming they would be generating a lot of ad revenue. Charging for a service can be difficult. Indeed, even Google has tried a pay-per-view system and had very little success. Again, these problems are exacerbated by the rise of YouTube and other large free-content providers.

Providers of rentals, on the other hand, have met with better success, a hint that filmmakers could and should consider rentals in combination with retailing. It is often easier to convince people to pay three dollars to try something than it is to get them to pay the full twenty to purchase. Netflix, Blockbuster Online, Red Box, and other rental providers have started to take a huge percentage of the total rental market by renting DVD’s through a combination of Internet and mail. Amazon’s UnBox and iTunes, among others, have also had some success renting downloads.

Only UnBox offers a way for independent filmmaker to earn money. Netflix stopped dealing with indie films because they didn’t want to appear to be competing with major distributors. iTunes has determined that they don’t want to deal with a lot of filmmakers, and would rather work with a limited number of distributors, which practically speaking means that a filmmaker must have a deal with a distributor to sell through iTunes. Blockbuster will allow anyone to work with them as a content provider, but has strict supplier guidelines that will prove difficult or impossible for most independent filmmakers to meet.

Beyond sales, advertising is the most common way for content providers to earn money on the Internet. During the Internet bubble, Internet standards were set so that it was difficult for any content provider to earn money through fees. Sadly, ads did not pay as much as was first thought possible, adding to the burden that led to the crash.

The new set of Web 2.0 companies are currently running into the same problem. Ad space does not sell for much on the Internet, so as a result even well-established sites like Facebook and YouTube are struggling to make money. Organizations like MTV say their biggest problem earning money online is the trouble they have selling ad space. Companies such as Revver (similar to YouTube except that they pay a percentage of ad revenue to those who load content) have had serious difficulties selling their ad space, making the amount earned per view very small.

There are a few sites, however, that can and do share a decent amount of money with makers of short films through ad revenue. Atom Films is one, and it is perhaps the oldest the best established among these sites. Their ad system works well because they target their site to a very specific audience, and allow for media ads that earn more revenue per visitor.

Blip.tv offers a syndication service to filmmakers, allowing them to syndicate their films across a number of sites, including MySpace, blogs, and other sites. Blip.tv, furthermore, has a unique and high-value ad format within the videos themselves. While some find such ads annoying, they are the only way for filmmakers to earn money with ads. When reviewing a site that might be a source of ad revenue, filmmakers should keep in mind that certain types of ads pay ten or more times what other types pay; the number of visitors is just one factor to consider.

Outside of the difficulty of earning revenue from ads, the biggest challenge filmmakers face when trying to earn money on ad syndication is that the business is currently fractured into a large number of companies and different services. Some companies offer the technology needed to syndicate, others offer ads to earn money, while others provide a space to show the film. This makes navigating the world of ad syndication complex and often unaffordable for smaller independents operating solo.
Perhaps the only viable solution to the problem is for filmmakers to build their own conglomerates for the web, similar to way that newpapers created CarerBuilder.com in order to compete with online job classifieds. This idea is simple enough: a group of filmmakers would join together to create a site that syndicated and sold ads for the filmmakers’ movies, allowing them to earn money on the content they placed on sites such as YouTube. In practice, however, things could become very complicated unless various rules were established to ensure that the brand remained intact. Negotiating deals with publishers such as YouTube might also raise issues for many alliances of indie films, as they are not yet profitable and so are very concerned with earning their share of any revenue. Furthermore, any rules established to ensure the continued success of the conglomerate make it another disturber, creator of barriers that keep independent filmmakers out.
Promotion
In order to find an audience for movies, filmmaker must either spend time or money promoting their movies. If more time is spent on promoting, less money needs to be spent, and spending more money generally requires less time. Knowledge of marketing methods can help to lessen time and money spent and increase the odds of success in any campaign. It is very important that filmmakers understand that it is not possible to simply make a good movie and walk away from it in the hopes that a large audience will see it, and it will somehow become successful.

The first and perhaps most important aspect of promoting a film on the Web is the film’s website. The difference between a well-designed and a poorly-designed website is not always obvious from a visual point of view. Such differences can be huge, however, when one examines the sales and visitor reactions to a website. For some websites, a few small changes can double or triple sales. Sometimes small changes may not be enough, and the entire website must be redone in order to achieve the same result. Eliminating egos from the retooling process, and focusing on results is important. In order to understand the response to a website, the filmmaker needs to subject it to analytics, and Google offers a free analytics program at www.gooogle.com/analytics. This site includes tutorials that instruct the user in how to use the site.

Even with a good website in place, a movie may not sell simply because the Internet is filled with millions of websites. In order for anyone to find a movie’s website, the film has to be promoted outside of its own website, so that customers know where to look. This kind of promotion requires a combination of public relations savvy and advertising.

The mention of pop-up ads often elicits a groan, but pop-ups can be very useful to filmmakers. Pop-ups have a number of advantages over other forms of marketing, which is why some companies still use them. Netflix has used pop-ups, earning millions of dollars with very little marketing expense. Pop-ups are one of the lowest-cost methods of advertising. Further, trailers can be placed directly within the pop-up. Pop-ups also offer the largest visual branding space for ads on the Internet outside of expensive page-insert advertising.

Another common ad format is the banner ad, or small visual ads placed on the actual web pages. For a filmmaker, these can prove to be an invaluable promotional tool for the same reasons filmmakers have difficulty earning money from advertising: banner ads are the cheapest form of visual advertising, online or offline. Further, banners can be used to target specific interests, demographics and regions. The ability to target viewers and track their responses allows advertisers to make certain that banner ads are effective.

Banner ad targeting also allows filmmakers to show ads to towns and segments of the population that react well to the film in festival. By targeting specific groups of people, the filmmakers can build their movie’s brand within the audience that is most likely to purchase it, while spending the minimum amount of money necessary to do so. Once money has been made, filmmakers can then continue to expand their reach without fear of losing money.

Currently, banner ads are fading in popularity on the Internet and are being replaced by text ads. Text ads are growing in popularity because they bring lots of low-cost visitors to the site, and filmmakers have only to pay for a text ad when someone clicks on it. They cost less than other ads overall, but for movies, text ads may not be as useful as banner ads for a number of reasons. First, a text ad does not provide visual recognition of the product, it offers name recognition only. Second, if a banner is well-designed and interesting, the banner can receive enough clicks to make it cheaper than text ads.
In order to know what advertising mix is right for any given movie, the promoters need to keep track of which ads are bringing the most people to the website, and need to keep track of the ads that not only bring people to the website but bring customers who actually end up buying the movie. ‘Google Optimization’ helps the filmmaker make this determination.

The key to success in advertising is to review the effectiveness of any ad campaign in order to constantly improve marketing methods. The effectiveness of an ad campaign can be improved to a point where a filmmaker is earning more money than is being spent. In that case the overall amount spent becomes unimportant because the filmmaker has the potential to earn money for promotion, using minimal investment.

There are many ways of marketing online beyond advertising, and many of these methods are free, outside of the time spent to set them up. Each of these methods—as with websites—require that consumers find them to be successful. This means that some knowledge of SEO is necessary. SEO, or Search Engine Optimization, is in essence building a page, writing an article, posting a video, or placing some other form of content online which people can find easily using search engines. SEO is important because most people on the Internet find what they are looking for using search, whether it a search portal like Google or Yahoo, or an onsite search within YouTube or MySpace. Making content findable by search is important to the success of that content.

The most important aspect of SEO for most filmmakers is ‘keyword’ or ‘keywords’—words in the text of a page that people use to search with. Search engines determine content by the words in the page to an exacting degree. For example, a page with the words “independent film” on it would not likely be found by someone searching for “independent films,” “movie,” “indie film,” or any other term not on the page. In order to be found, a page must contain that word or phrase that the searcher is using. Many people assume this means they need to put as many search terms as possible onto their page, but this is not the case. A page will typically get better results with three or four search terms than it will with dozens, because it is unlikely that the results will be ranked by more than three or four terms anyway.
In order to choose the words that should be used on a page, filmmakers on a tight budget should use Google’s ‘Keyword Tool.’ This program allows filmmakers to see how many people are searching for a particular word each month, and to see how much competition there is for that word, in other words, how many other results come up when that particular word is searched. Picking a keyword that produces enough searches to be valuable, but that doesn’t have too much competition for a movie’s promotional materials to rise to the top, is tricky. SEO in general can be very tricky, and so anyone who plans to use SEO should research it before performing it on a website. Making mistakes with regard to keywords can actually hurt a website.

Outside of websites, there are many places where it is easier to perform basic keyword SEO, such as Article Marketing. Article Marketing is the process of writing an article and posting it to an article directory (such as ExineArticles.com) where it will show up in search, and be republished on blogs and other websites. By placing three good keywords in an article, the article can be seen by thousands of people, along with the biography of the writer and a link to the website. Be forewarned, however, that too many article links to a website is considered a form of spamming by Google. For this reason many articles should link to a site separate from a film’s primary website.

Finding a subject to write about that is both relevant to the film and is searched can be complicated. A simpler option is to use PR Log or a similar online PR site to submit press releases about a movie. In the case of press release distribution sites, an article about the film and the filmmakers can make it a valuable marketing tool.

For movies running the festival circuit, a press release can be submitted for each festival that screens the movie. This release can include the name of the region, or some keyword related to it, so that anyone searching for entertainment in that area might read the press release.

SEO can also be important for the success of social media. Flickr and YouTube both show up on Google and Yahoo Search and have search features of their own. By choosing the right words for tags and descriptions, a filmmaker increases the likelihood that people will see the images and clips from the movie. Even Facebook pages show up in search, so carefully chosen keywords for the profile aids in getting a film noticed.

Ultimately, for independent films to succeed, both online and offline, there should be coordination between the many forms of promotion and monetization that a film uses for distribution, and increasingly, coordination between films as well. Independent films never have the resources major films have, and for that reason, filmmakers, producers and distributors should work together to find niches they can occupy. This is what the Internet does well; it provides openings for a group of intelligent entrepreneurs to spot and utilize. Forty or fifty horror film writers/filmmakers could band together and create a site that comes up any time that genre is searched, eventually and theoretically making that site a prominent brand for horror. By understanding the unique challenges of the Internet, and beginning to explore the many ways it can be utilized, the Internet has the potential to be a superb marketing mechanism.