An Introduction to Internet Movie Distribution
By Ty Hulse
It has long been presumed that the Internet promises a new world of distribution in which anyone can succeed, a world in which independent films can finally compete with Hollywood. The truth is however that most independent filmmakers have met with mostly poor success using Internet distribution, leaving them and everyone else to ponder why this should be. The reason the Internet has not worked as it should is that it has not been used as it should. Very few people creating content in hopes of selling it on the web understand Internet distribution.
There are certainly more opportunities for filmmakers online then offline. Outside of the Internet it is almost impossible for independents to get their products into stores. The primary difficulty online is in rising above the millions of websites to gain an audience. In order to do this a filmmaker must develop a solid distribution plan. They can’t simply build quality content and hope that people accidently stumble across it.
Any functional distribution plan has two parts: 1.) methods of monetization (earning revenue) and 2.) methods of promotion. At the moment, major distributors are working to monopolize the methods of monetization both on and offline. These distributors have succeeded offline so that no independent can compete with them. The advantage to the Internet is that, although large distributors have come to monopolize most of the methods of monetization, they can’t control them all.
Promotion like the Internet is something no one person can monopolize. At the same time however, promotion costs money and/or time and so the bigger players have an advantage. Indie filmmakers thus need to work more intelligently with what resources they have in order to ensure success. The advantage independents gain in utilizing the Internet is that marketing on the Internet can be measured, used to target specific audiences, and do all this at a much lower cost then they could elsewhere. This means that filmmakers can spend money only marketing to the people most likely to purchase their movies.
Methods of Monetizing Films
Success in monetizing a film requires that the filmmaker use as many methods to earn revenue as they can. Multiple sources of revenue are the way any movie finds success. After all, no movie can become famous if it’s only sold in one store.
Pay-Per-View or retail methods are the most obvious means of earning money and are also the method with the highest potential for profit. Before the Internet, selling a film was nearly impossible without a distributor, as they controlled the sales channels to most stores. Adding to this problem was that filmmakers didn’t make much for their films even when they did get them distributed because the retailer would take 50%, the distributor would take 60% or more of what remained, leaving less then 20% for the filmmaker.
One of the major advantages the Internet offers is that filmmakers can earn 100% of the money from the sale of their film by selling it directly to consumers via the movie’s website. Doing this is fairly difficult and requires a good understanding of marketing methods, which is why most content providers struggle to sell units directly to the consumer. Even so, selling direct via a website not only offers the opportunity to double the money made on films sold, it also provides a way for the filmmaker to brand themselves and their movies by controlling the look and feel of the movie’s site. Proper branding can improve the reputation of a filmmaker and increase the likelihood that visitors will become repeat buyers for their movies.
Selling direct is just one means of monetizing a movie. Another method is by selling through retailers who already have a known brand. Selling through an existing retailer often helps to increase the likelihood that consumers will purchase a film while also increasing consumers’ opportunities to purchase the film.
Amazon.com is one of the better places to have a movie sold, and they have built a 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 met with an [increasable] amount of success using CreateSpace.com. Such documentaries have a huge advantage because they are not sold based on their own brand, but instead use that of the sports teams they are documenting. Success in the retail space whether on or offline requires that a film build a solid brand or a promotional plan which is where most people trying to sell independently through Amazon.com, eBay, etc run into difficulties.
The problem is that most people who go online to purchase a film already know what they want to buy. This means that most of the money made selling movies online is through selling blockbusters. Because of this, one cannot depend solely on a few retailers to help carry their 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 is different than using retailers such as Amazon.com because in this process one must build a unique relationship with retailers or utilize shops that sell to them. There are a number of websites that help with this, places where retailers go to purchase their goods. By promoting a film on these sites or to retailers in general, and by selling films at bulk rates, a filmmaker can add a large number of stores to their revenue stream.
The difficulty filmmakers will run into for now is that most wholesalers on the Internet deal in cheap goods, dollar stores, used goods, and overstock. This means that a movie sold through a wholesaler on the web typically has to be sold for cheap. There can of course be advantages to this. Short films especially could potentially be distributed to dollar stores providing a new outlet for a genre that didn’t have much sales potential before. Further, as the B2B online industry grows filmmakers well likely find further opportunities and methods of selling their movies directly to retailers using the Internet.
Beyond wholesalers another means of selling through more stores is the drop shipping method. Drop shipping means that the e-tailer well attempt to sell a film. If they are successful in doing so they will pay the filmmaker for the sold film and then the filmmaker must ship to the e-tailers customer. Doba.com is one of the many drop shippers that allows anyone to sign up to become a supplier for their e-tail customers.
A method similar to drop shipping was developed by Baker and Taylor and like companies for offline book and video stores. Baker and Taylor’s distribution method has made them one of the most successful distributors and is the reason Amazon.com was able to find success (Amazon.com initially used them and a few other companies to distribute and so didn’t have to purchase very many products to sell a lot of products). In this method, video/book stores can order products without paying for them unless they are 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 a list of ways to sell to retailers, filmmakers should begin to promote their film to businesses. As part of this filmmakers should have a section of their website which allows them to sell direct to retailers just as they would to customers. In order to do this the filmmaker must sell their movies to retailers for about 50% less then 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 go through.
Similar to the retail method of monetization is the Pay Per View System. This method of monetization has had real difficulties because people don’t generally like to pay for content online. This is because the original Internet companies presumed that they would simply earn ad revenue and so offered everything for free. This means that earning money by charging for a service can be very difficult on the Internet. Indeed even Google has tried a Pay Per View system with very little success. These problems are exacerbated by the rise of You Tube and other large free content providers.
Rental systems on the other hand have met with more success, a success which filmmakers could use in combination with retail methods to sell more units. This works because it is often easier to convince people to pay three dollars to try something then it is to get them to pay the full twenty to purchase.
Netflix, Blockbuster Online, Red Box, and more have quickly 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, iTunes and others have also had a decent amount of success renting downloads.
Of all of these only UnBox offers a real solution for independent filmmakers to earn money off of this growing monetization system. Netflix has stopped dealing with indie films because they did not want to appear to compete with major distributors. iTunes has determined that they don’t want to deal with a lot of filmmakers and so would rather work with a limited number of distributors, which 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 means for content providers to earn money on the Internet, and during the Internet bubble the Internet standards were set so that it was difficult for any content provider to earn money through fees. Sadly ads did not pay for everything it was thought they could, which is partly why the Internet market crashed.
Right now the new set of Web 2.0 companies are running into the same problem. Ad space does not sell for much money on the Internet and so even sites like Facebook and YouTube are struggling to earn money. Organizations like MTV say that their biggest problem in earning money online is the trouble they have selling the ad space they have. Companies such as Revver (like YouTube only 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 example of these, and it is perhaps the oldest and best established of these sites. Their ad system works well because they target their site to a very specific audience while also allowing for rich 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 more. Blip.tv further 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 any money on their creations with ads. [unclear]
When reviewing a site through which to potentially earn ad revenue, filmmakers should keep in mind that some types of ads pay ten or more times what others pay. So the number of visitors is not always as important for earning revenue
Outside of the difficulty in earning revenue on ads, the biggest challenge filmmakers will face in earning 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 still others provide a space to show the film. This makes navigating the world of ad syndication complex and often unaffordable to smaller independents working by themselves.
Perhaps the only real solution to this problem is for filmmakers to build their own conglomerates for the web similar to how newspapers created CareerBuilder.com in order to compete in online job classifieds. This idea is simple enough: a group of filmmakers join together to create a site that would syndicate and sell ads for the filmmakers’ movies, allowing them to earn money on the content they place on sites such as YouTube. In practice however, this idea could become very complicated as various rules would need to be established to ensure that the brand remained intact. Negotiating deals with publishers such as YouTube could also raise problems for many alliances of indie films, as they are not yet profitable and so are concerned with earning their share of any revenue. Further, any rules established to ensure the continued success of the conglomerate put it in the position of being another disturber creating barriers for independent filmmakers.
Methods of Promotion
In order to find an audience for movies, filmmakers must either spend time or money promoting the movies. The more time they spend the less money they need to spend and the more money they spend the less time they need to. Knowledge of marketing methods can of course help to reduce both of these needs while increasing the overall success of any campaign. Even so, it is still important for filmmakers to understand that it is not possible to simply make a good movie and walk away from it in hopes that someone will see it.
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 visually obvious. Such differences can be huge however when one examines the sales and visitor reactions of a website.
For some websites a few small changes can double or triple the sales that site is able to generate. Many times small changes may not be enough and the entire website must be redone in order to get this same effect. As with any marketing effort what’s important is not egos but how people respond. In order to read how people are responding to a website a filmmaker needs to use analytics, Google offers a free analytics program at www.google.com/analytics. This program also has some tutorials on how to use it.
Even with a good website 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 people know what to look for. Such promotion requires a combination of public relations and advertising.
When most people think of Internet advertising they often think of pop-up ads and groan. This should not be the case for filmmakers however both because there are many other types of online marketing, and because pop-ups can themselves 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 for example has used pop-ups to earn millions of dollars with very little marketing expense. Pop-ups are one of the lowest cost forms of advertising there is. Further, trailers can be placed directly within the pop-up so that consumers can click to play a film within the ad itself. Of equal importance is the fact that pop-ups 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 on advertising. This is that banner ads are the cheapest form of visual advertising there is, not just online, but offline as well. Further banners can be used to target specific interests, demographics, and regions. This ability to target the views of the ads and track their response allows advertisers to make certain that banner ads are also one of the most effective method of visual marketing they have as well.
Banner ad targeting also allows filmmakers to couple their ads with towns and groups of people who reacted well to the film in festival. By targeting specific groups of people the filmmakers can build their movie’s brand to the audience that is most likely to purchase in order to build a revenue stream 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 loosing money overall.
Currently banner ads are fading in popularity on the Internet as they are replaced by text ads. Text ads are growing in popularity because they bring low-cost visitors to a website as filmmakers only have to pay for a text ad when someone clicks on it. For many, this means that they seem to cost less then other ad types overall. For movies, however, text ads may not be as useful as banner ads for a number of reasons. Firstly, a text ad does not provide visual recognition for a movie; it instead provides short name recognition only. Second if a banner is well designed and interesting which a movie banner should be, then the banner can receive enough clicks to make it cheaper than text ads are.
In order to know which advertising mix is right for any given movie, those promoting the movie need to keep track of not only which ads are bringing the most people to their website, but also which ones are leading people who buy the movies to the website. Again Google Optimization can help determine this.
The key to success in advertising is reviewing the effectiveness of any ad campaign in order to constantly improve the marketing methods. The goal of an ad campaign can be improved to the point where a filmmaker is earning more money then they are spending. That way it doesn’t matter how much or little the filmmaker has to promote their movie, because they can potentially earn the money needed to do so with a minimum investment.
Beyond advertising there are many forms of marketing that can be done online, and many of these methods are free outside of the time spent on performing them. At the same time, each of these methods—as with websites—require that consumers find them. This means that at least some knowledge of SEO is key for their success.
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 easily find using search engines. SEO is important because most people on the Internet find what they are looking for using search, whether it is a search portal like Google or Yahoo or the onsite search within YouTube or MySpace. This means that making content findable by search is important to the success of that content.
The most important aspect of SEO for most filmmakers is keywords—words which are used in the text of a page that people are also using to search. Search engines determine what something is by the words within it to an exacting degree. For example, a page with the words “independent film” 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 by people using a word or phrase to search, a page must have that word or phrase in its pages. Many people presume that this means they need to put as many search terms as possible on their page. This is not however the case. Typically a page will get better results with three or four search terms than it does with dozens because it is unlikely that they will be ranked for more than this number of terms.
In order to determine which words should be used, a filmmaker on a tight budget can use Google’s Keyword Tool. This will allow the filmmaker to see how many people are searching for a word each month, and how high the computation for that word is. Picking a keyword that has enough searches to be valuable, but which doesn’t have too much competition for a movie’s promotional materials to rise to the top is a fairly tricky business. SEO in general can be very tricky and so anyone who plans to do SEO should research it before performing it on a website. SEO is complex and making mistakes can actually hurt a website’s ability to be found on search.
Outside of websites there are many places where it is much 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 EzineArticles.com) where it can 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 their website. Be forewarned, however, 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 which is separate from a film’s primary one.
Finding a subject to write an article about that is both relevant to a film and which people are searching for can be complicated. A simpler option is to use PR Log or similar online PR sites to submit press releases about a movie. In the case of press release distribution sites, the article can be about the film and the filmmakers, which can make them a valuable marketing tool.
For movies running the festival circuit, a press release could be submitted for each festival the movie is accepted to. This release could include the name of the area the festival is in or some keyword related to this, so that anyone searching for information on entertainment in that area would have a chance of reading the press release about the movie.
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 wording for tags and descriptions a filmmaker can increase the likelihood that people will see the images and clips from their movie that they place on these types of sites. Even Facebook pages can show up on search, so choosing keywords for the profile can aid in getting a film out there.
Ultimately what’s important for independent films to succeed online and off is coordination both between the many forms of promotion and monetization that a film uses for distribution, and between other films. Independent filmmakers can never have the resources that major films do. For this reason they will likely find that they must work together to find niches that they can dominate on the Internet. This is what the Internet offers, openings that a group of intelligent people can come to dominate. For example if forty or fifty horror film writers were to get together then they could create a site that was found first any time someone searched for horror films and that became the major brand for these types of films.
So while many filmmakers have not found the success they would like to have online, if filmmakers come to understand the Internet then it well begin to work better for them.