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The Business of Independent Filmmaking & DVD Distribution Why the cards are stacked against you ( Other websites, books and seminars CHARGE you for information, while this site is free ) |
FORCES of OVER-SUPPLY & FLAT DEMAND:
There is a huge over supply of independent movies. The numbers indicate that at least 30,000 new DVD's of all kinds (including exercise videos, concert videos, etc) are released every year. There's NO way that consumers are going to buy all of these DVD's annually in significant numbers, no way that physical stores can stock all of these new titles, and traditional distributors are never going to handle all of these new releases. There's so many straight to DVD movies being released that distributors don't even have the time to sift through the piles of DVD's to find that one diamond in the rough. Twenty years ago when filmmakers had to shoot on film, video cameras and computers hadn't come of age, and there were much fewer DVD releases. Back then an independent film could stand out in the crowd and generate lots more revenue. But ever since high quality digital cameras (beginning with the Canon XL-1 and most recently with the Red One camera) have been cheaply available to small-time aspiring filmmakers, and low cost home computer editing technology has come of age, there's been an explosion of new home videos being made, and with this over-supply, the price paid by a distributor for an indie movie has been in a tail spin.
There's a big disparity between the have's and the have-not's when it comes to media (CD's, DVD's, books). Consumers prefer a small minority of "the hits", but never hear about the vast multitude of obscure titles. The disparity you see in CD sales is no different than in DVD sales. SoundScan reported that out of nearly 30,000 independently released CD titles in 2001, more than 24,000 of those scanned LESS than 1,000 units. So 5/6th of them bombed! The average independent album sold only 1,438 units in 2001.
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Over Supply
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Flat Demand
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Definition of terms:
"Traditional Distributor" = A company that distributes hard copy DVD's to physical stores, as well as internet stores, NetFlicks and other outlets. Because shelf space is limited, 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 traditional distributor. Some traditional distributors focus exclusively on distributing finished product, while others may also design and package DVD's. Note that signing with a traditional distributor, and getting your DVD into their catalog system is no guarantee that physical stores will stock your DVD in significant numbers. Usually physical store buyers (example: Best Buy) don't want to waste their shelf space with indie DVD titles because they know that they don't sell. Ultimately consumer demand will determine if a movie gets wider distribution, continues to get distribution, or gets shunned. Examples of traditional distributors include Image Entertainment and Infinity Entertainment.
"Non-traditional Distributor" = A company that distributes to (or mainly to) Internet stores and / or other outlets other than physical stores. Because cyber-base stores have infinite space, non-traditional distributors will usually open accounts with anyone, including filmmakers with just one micro-budget film. Often these companies have a "setup fee" and / or 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. 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. Currently some examples of what I would categorize as non-traditional distributors include FilmBaby, Amazon's Advantage program, NetFlix, CreateSpace, and FlickRocket (digital store). At some point in time when in-demand become a seamless and viable way for consumers to view movies, there will certainly be a non-traditional distributor that will capitalize on this medium of distribution as well.
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 number are just for that given 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 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."
Blockbuster is planning to close as many as 960 stores by the end of 2010, shrinking it's presence by 20 percent as it struggles to compete with Netflix and Redbox.
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 COST PROHIBITIVE:
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?
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. 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.
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 NetFlix is usually the only outlet they can get their title available through, and under most agreements NetFlix pays NO royalties.
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)?
WHAT WILL BE THE FUTURE DELIVERY METHOD OF HOME VIDEO?
Physical stores like Blockbuster stores are closing left and right and this is great news for indie filmmakers who can't get distribution (or adequate distribution) or hate paying 25% - 40% to middlemen (sales agents and traditional distributors). Hollywood video is closing all of their stores by June 2010. Hopefully Blockbuster will also go belly up soon.
Once video stores go extinct, as "record stores" have, what will become of the NetFlix and RedBox delivery method? I believe that ordering movies through the mail (from NetFlix) will go out of style. It's too slow and too much work. And the problem with RedBox is their tiny selection. How can that stand the test of time? Once these two fall by the waist side, this will be good news for indie filmmakers.
Audio content has already evolved to the point that soon CD's will be as ancient as vinyl records. Eventually the vast majority of consumers will buy digital audio content off sites like iTunes and Amazon's digital store to listen to on their computer and on their iPod. Because it's cyberspace there is unlimited "shelf space" for everyone including indie artists who don't have traditional distribution. Companies like Tunecore and Amazon will "distribute" anyone's audio content. This is great news for indie audio artists. Unfortunately indie filmmakers are not enjoying a similar renaissance at this time.
There's gotta be an easier way if video content will ever follow the path of audio content. People do not have the patience or know-how to download a movie and then burn a DVD. The Internet is too slow and the average consumer can't figure out how to burn a CD. It would be better if the masses could 1) EASILY order and watch movies directly off their TV set, and 2) download a file that they could save to a memory stick, which they could simply plug into their TV set, and then push play. Once something like this becomes the preferred method, indie filmmakers will be on a level distribution playing field with the big studios that currently get their movies distributed everywhere.
So you've finished your movie. Now what?
CONDENSED PLAN: My advise is to shop your movie to 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 market cannot support. So if nothing happens then it's time to just release it yourself via your website and via Amazon.com's Advantage program. Stick a trailer up on YouTube, Hulu, MySpace and anywhere else you can post it. If your movie bombs and only sells perhaps 1 DVD a month then consider opening an account with FilmBaby so that they can make it available to rent via NetFlix. Otherwise 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" like FilmBaby are used, so my opinion is that renting on NetFlix is an act of desperation.
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 not waste my money on the big film festivals like Cannes, Sundance, etc. 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 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 & 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 store and see how many (if any) of the DVD titles that they handle are actually stocked, let alone selling. Are you ready to give away 25% of your profits in addition to being billed for sales agent fees (or give away 30% with no fees)? 10 years ago nobody would have ever questioned whether or not a traditional distributor was worth signing with, but the Internet revolution has changed all of that. Are you ready to give an additional 25% to a traditional distributor that does nothing more than sell your DVD on the Internet (which you can effectively do yourself)? Well think again and try to just sell your movie yourself. Back to sales agents... 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 sales agents / distributors out there are nothing less than con artists, who fully intend to rip you off or at least just make an easy buck off you. 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". A major red flag alert!!! 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, I've heard that there are only about 10 sales agents in the world that are 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 probably do a better job just being their own sales agent, thus saving 15 to 25% plus expenses, and being their own Internet 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. DO NOT EVEN BOTHER negotiating with these people. 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. I say these companies, usually smaller ones, are predators who don't have much clout with distributors anyway.
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. So based on THEIR contract offers, you can pretty much expect them to bill you for the maximum dollar amount allowed. 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?
Foreign 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 a 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 expensive and a failure, filmmakers can't afford to fight it and distributors know it.
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 is made, but these 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 $375". How in the hell do you know what "Travel" 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). 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, otherwise the sales agent will be his own judge and jury in determining how much to pay himself, his business buddy, friends, wife, etc. You should find an attorney who already has a standard contract to work with or prior knowledge about these contracts. You definitely don't want to pay any attorney to draft one up from scratch; Before you know it they'll bill your 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 tell 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 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.
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. And once on-demand of movies comes of age it's really gonna be game over for most of them. There will CERTAINLY be an 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 as inroad for indie artists to sell their CD's on Amazon.
PROMOTION:
DVD sales are driven by getting press, publicity, web traffic, trailer downloads / views, having name stars (with box office draw) in your movie, a great "look", great sound, a big advertising budget, etc. Having a great looking box cover also counts 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, or Entertainment Weekly to enjoy your no-name, low budget film and publish a review about it. If the movie doesn't have what it takes, it just won't take-off. 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).
NETFLIX IS NOT 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?
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? 5 bucks? And then only make it available for purchase new.
Digital DVD downloads NOT worth it at this point in time:
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? Unfortunately these consumers are very scarce!! My guess is that it's somewhere around 1% or less. It's too confusing and too much work to figure out to download and then burn a DVD to later watch on their TV. Watching it on a computer is not the same experience as watching on TV. So sell your movie on FlickRocket if you wish, but don't expect a hill of beans worth of sales. The bottom line is that until consumers can SEAMLESSLY order and watch movies on their TV set, people will continue to rent and buy hard copy DVD's - not digital download movies.
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 distributor (middleman #2) it is just about guaranteed that your movie will sell for no less than $14.99 if not 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 $5.99!!!! 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.
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 I say you've made a 25% mistake (or upwards of 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", captivating story, a very luring DVD cover design and either a big buzz 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 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 has been the NORM from my experience. 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 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. One day 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 traditional distributor.
Film Investing * Email your questions
A MUST READ ARTICLE: Self Distribution: Abandon All Hope?
ARTICLE: Big Hollywood studios are in midst of their own "horror show"
ARTICLE: Paranormal Activity
ARTICLE: About demise of Hollywood Video
ARTICLE: Hurt Locker producers suing thousands of illegal downloaders
ARTICLE: Law firm prosecutes peer to peer downloaders for free
ARTICLE: Government cracking down on Internet piracy
Beware of writer's agents / literary agents who charge up-front fees: Writer's Agent / Literary Agent Red Flags