Consortium Purchasing

Many distributors and independent producers reported a higher percentage of revenues from purchases by consortia representing a geographical area or collection of academic institutions or libraries. Larger academic consortia increasingly make block purchases on behalf of their member universities. For example, OhioLink is a consortium of Ohio’s colleges and universities, with 600,000 students at 85 schools. Such purchases raise questions about pricing policies and also on how the use of the materials is regulated.

Distributors and makers take most consortium purchase offers on a case-by-case basis. For example, Larry Daressa of California Newsreel responded to a blanket license for Florida state schools. To calculate the cost, they first projected sales revenues made through the usual channels. They factored in the additional use that the programs would get in an expanded use context and boosted the rate accordingly. While the deal with Florida worked well, Daressa said that they do have some fears about distance learning and IP-based media for classrooms via online delivery. For now they “are doing pricing in the dark,” as there aren’t many useful models or standards in pricing.

Producer Peter Wintonick has experienced consortium buying at a national level when selling his documentaries. For example, he sold Manufacturing Consent, the film on Noam Chomsky, to Austrian and French governmental agencies on a countrywide basis for schools and libraries. He settled on $20,000 as a fair price for allowing any school in France to show the film.

Arthur Dong also likes the idea of consortia purchasing as he gets these kinds of requests on a regular basis. He also takes the pricing on a case-by-case basis and negotiates a balance depending upon the circumstances. He generally gives institutions the benefit of the doubt on whether or not they adhere to any limitations that might be in the terms of the agreement.

Many people want to get a better idea of how to handle consortium pricing and presentation policies, especially with new delivery systems within the institutions. There is a real need for bringing users and vendors together to air questions on consortia and new delivery systems such as IP-based delivery and distance learning. A convening and better information and analyses of these areas would help suppliers and independents respond to these new markets and demands as there is little sense of existing benchmarks. Unfortunately, for the moment, many distributors are flying blind in this area.

Options for Self-Distributing Filmmakers

For those independent filmmakers who do not have or wish to have a distributor, there are some options for distribution vehicles. Perhaps the best known and most widely used is the Amazon Associates program, an online affiliate program of Amazon.com with nearly 900,000 members who have the potential to reach the more than 40 million potential customers in the Amazon network. The Associates range from personal blogs to large websites and drive Internet traffic to Amazon.com through specially formatted links that allow Amazon to track sales and other activity. The links can be individual item links for specific catalog items or they can be recommended product links that are dynamically linked by Amazon. The Associates (members) can earn up to 10 percent in referral fees correlated to a relatively simple formula based upon the volume of sales. Amazon also provides additional tools such as “Build-a-Link” and “Amazon Recommends” along with a web services program.

Many of the interviewees said they would prefer other options, because the return from Amazon isn’t great. However, it is an efficient system and is often the default choice for distribution vehicles. For example, Peter Broderick, President of Paradigm, which provides consulting services to filmmakers and media companies, said that the 2.5 percent referral rate he received for the Films to See Before You Vote series that he founded (see below for more information) was less than he would have expected. That said, it was easy to set up (with Pay Pal, etc.) and Amazon was generally efficient, except for a glitch or two with DVDs stocked in a warehouse. Broderick said he would definitely be interested if an independent distributor could meet the criteria of being responsive, turning DVDs around quickly and providing up to a 10 percent referral fee.

The Books We Like, a Beta website created by Brad deGraf and Anselm Hook, is a good example of how the Amazon model can be quickly adapted into an ongoing and sustainable economic model (www.bookswelike.net). The Books We Like connects book enthusiasts in a social network, with Amazon handling the fulfillment and technical work after the initial coding was done by the creators. The system is set up to share lists done by the thousands of recommenders and also compiles data on all previously recommendations.

Another possibility for independents who self-distribute is CustomFlix. The company has received a lot of attention because of its capacity to perform on-demand DVD publishing quickly, thus removing the need to have an inventory of DVDs. Makers can order a specified quantity of DVD-Rs for a relatively low cost. CustomFlix can also help with packaging, design, templates, authoring and other services, including fulfillment, that may well be beyond the capacity of an individual client. (Sidebar #4: CustomFlix: On-Demand DVD Publishing)

The ability to distribute programs without an inventory is certainly attractive to independent makers. Now that DVD-Rs are more compatible with a higher number of current DVD players, the option of distributing small runs of DVD-Rs becomes more attractive. The lower cost is an eye-opener for people accustomed to the cost of DVD runs of over 1,000 units on glass plates. For example, CustomFlix charges a filmmaker $50 to open an account and $9.95 for each film produced on demand. The filmmaker receives any revenue beyond that. If the title is popular, the filmmaker’s profits can rise because CustomFlix’s price drops to $7.95 per disc after 20 copies and $6.95 per disc after 50 copies.

The Effects of Theatrical Releases and Television on DVD Sales

The connection between DVD sales and the theatrical release or television broadcast of programs is close, with a number of permutations on this relationship. Everyone sees the strong link between some kind of theatrical or semi-theatrical release or television broadcast and subsequent DVD sales. Yet many offer differing opinions on the relative health of the independent theatrical scene and DVD culture within the independent media culture. The opportunities presented by video-on-demand, pay-per-view and digital video recorders will also impact opportunities for independent work to get seen (and make money). Independent media culture is already struggling to handle the transitional challenges of DVD culture, but will also be called upon to anticipate which of these new phenomena will be challenges and which will be opportunities.

Theatrical Release and DVD

Some distributors are firm believers in the need to have a theatrical window to drive DVD sales. Emily Russo of Zeitgeist films noted “we rarely take on a film without some theatrical or TV exposure. Theatrical does drive everything.” However, Curtis Hougland, the President of Film Movement takes a pessimistic view of the theatrical scene and the role played by DVD. He feels that DVDs have given the film market a false sense of security, noting, “DVD sales allow people to think that the emperor has clothes.” He points out that the economics of doing a platform release are very difficult if there isn’t enough money to release the film nationally. While a platform release strategy of starting a film small and gradually building up from there can be a fine way to contain costs, it can still be beyond the means of many filmmakers. Cash flow is also an issue. For example, if the film only takes in a $1 million at the box office and has merely decent DVD sales, it can be difficult for distributors to recoup their original investment in a reasonable amount of time (even a few years). As a result, many distributors (Cowboy Pictures, Artisan and Good Machine, to name three) have gone out of business, or been absorbed into larger companies.

Peter Broderick is more optimistic about the connection between DVD and some kind of theatrical release, saying “DVD and the Internet can free makers from needing funding with the criteria being whether the project is commercial or not. The filmmaker doesn’t have to be lucky and good all of the time Broderick recently coordinated a successful exhibition program with DVD distribution related to the 2004 election cycle. Entitled Films to See before You Vote, Broderick secured the permission of major filmmakers like Michael Moore and Errol Morris to have their films presented on college campuses, especially in swing states like Ohio, Pennsylvania and Florida. The model included “Film Fest in a Box,” a prefabricated kit or DVD to push local exhibitions. Screenings took place at a variety of venues, from large semi-theatrical spaces to smaller microcinemas and private screenings. The screenings helped stimulate DVD sales. This experience proved that DVD’s portability and accessibility could really shine when rights and release dates aren’t an issue. Broderick sees real potential for self-distribution, especially if the maker is tuned to social networks and has some marketing savvy. That way, they can retain a higher percentage of the sales revenues and can see real income from the start. Through social networks, a media maker develops a direct relationship with the audience, along with names and addresses, for future business and marketing.

Some distributors question the thinking behind having a simultaneous theatrical run and DVD availability. For some, it can work beautifully. Plexifilm did a long theatrical run in cities tailored for particular film and at a reasonable cadence, instead of investing everything in simultaneous screenings. For example, I am Trying to Break Your Heart — A Film About Wilco played in 130 markets and had a simultaneous window for pay-per-view and DVD sales. The final platform was a television premiere on the Trio channel.