Our last few blog posts have been inspired by questions we’ve received from students in our online filmmaking program. We were recently asked about the potential profits filmmakers could make from being included in the iTunes or Netflix catalogues. We thought we would post our thoughts on the topic below.

Accessing popular distribution channels as an indie filmmaker generally means that you’ll need to have a distribution deal in place. Otherwise, accessing these popular retail platforms will be near impossible for independent filmmakers.

However, as the self-distribution model is being adopted by more and more filmmakers, finding ways to access these large retail platforms with built-in audiences is becoming a pressing priority.

The self distribution model has become increasingly popular over the years amongst entrepreneurial-minded indie filmmakers who have the business acumen to effectively brand and promote their independently produced films or documentaries. These filmmakers also have the creative expertise necessary to tell engaging stories, and the technical expertise to be able to tell these stories while maintaining high production standards. Miraculously, they are able to do all of this within the many limitations that accompany all low budget productions.

Essentially, they have become small, independently run production houses, DIY distributors with their own small PR, management and artistic teams. Often, many of the people on the PR and management team are the same people on the artistic and distribution teams.  Directors are now moonlighting as their own publicists, producers find themselves heading location scouting teams and production designers find themselves managing the team’s twitter account during the day’s lunch break. These new independent film companies are becoming increasingly skilled at the many different elements of the production and distribution process and are finding effective ways to group film production jobs together to keep their team small, effective and affordable.

However, there is still one major obstacle in their way. The most popular retail platforms don’t want to enter into distribution contracts with individuals or small business that have one or two films in their catalogue, no matter how talented the filmmakers are. For these larger retail platforms it would be an administrative nightmare to enter into contracts with individual filmmakers. These large companies, such as iTunes, Netflix and Comcast want to deal with distributors because not only does it streamline administrative efforts but it also serves one other major task as well. Distributors help filter content.

Distributors Act as a Filter for the Audience

With the current over-saturation of the market it’s important that these companies protect themselves from poor quality content. For example, Netflix and iTunes have quickly built reputations where customers know that they can watch films and documentaries that will adhere to certain production standards.

This is in part because the selection of films we see on platforms like Netflix and iTunes have already been heavily filtered due to distributors being picky with their selections. Therefore, before a film has been submitted to Netflix or iTunes it’s already been filtered once. Now iTunes or Netflix will make a decision to host the film or not. By the time the audience sees the film, the film has been filtered generally no less than twice.

For the most part this benefits all parties involved. Distributors pick films that meet their creative and technical standards and films that they believe an audience will want to see. Next, retail platforms benefit from dealing with companies who have done their filtering for them and who have large catalogs of films and documentaries to choose from. This helps ensure places like iTunes and Netflix don’t become digital dumping grounds. Next, audiences benefit from looking through catalogs of curated films and documentaries. Lastly, the filmmaking community benefits because only the best quality work is picked up by distributors in the first place. So filmmakers who have invested the time perfecting their craft will be rewarded.

Seems like a pretty good model right? Except there is one major problem. Great indie films are still being ignored for a variety of reasons. For example, maybe the content is too risky, it’s not to the distributor’s taste, the filming style is too avant-guard or maybe there are no named stars. The list can go on, but the fact is that great films are being left to die or fend for themselves on the sidelines.

Indie films that do get picked up are often either shelved so the distributor can put their resources into a more market-friendly film, or not given the attention the filmmaker feels their film deserves. To make matters worse, these films are often picked up at a price around the cost to make them. Take for example the film Ballast by Lance Hammer. The film was made for between $25,000 and $50,000 and won prizes for both best director and best cinematography in the 2008 Sundance Film Festival. IFC liked the film and offered Lance a ditribution deal. It was, after all, one of the most well respected films in the one of the most prestigious film festivals in the world. The problem was that Lance invested too much time in his film to walk away from a deal to pretty much break even. You can see the trailer for the film below.

What message does that send to filmmakers working on art house films like Lance’s? Does it mean that indie filmmakers are expected to work for free (or to lose money) for the chance at giving their film an audience?

Should Filmmakers Pay for the Privilege of Having an Audience See Their Film?

Are we entering a time where filmmakers are required to pay for the privilege of having made their film? Let’s hope not.

Naturally, out of this problem arose many disgruntled filmmakers. Luckily, some companies saw an opportunity and a way to solve the problem. New companies called “aggregators” popped up allowing filmmakers to access some of the bigger retail platforms. Filmmakers were required to pay these aggregators for their services. Usually up front fees and a percentage of the film’s profit (usually between 15% – 50%). This provided a great option for filmmakers who still wanted to have the security of a distribution plan without the insult of working with a distributor.

However, aggregators are not as heavily invested in a film as a distributor is. So as filmmakers started taking this route, they started to feel that sharing 50% of their film’s profits with a company that wasn’t doing anything to help them promote their film seemed, to them, a little unfair. In fact, other than the front heavy work of getting the film ready for different retail platforms, (encoding the film, chapter breaking, tagging etc) and the yearly administrative expenses of having this film in their catalog, the aggregators were not doing much work on a monthly basis, or at least not enough work to warrant at 50% stake in a film.

Essentially, filmmakers were left back at square one. Feeling like nobody cared about their project as much as they did and feeling like their only option was to enter into an agreement with a company who designed inherently unfair contracts.

Is it Even Worth the Hassle? How Much Does iTunes & Netflix Pay Filmmakers?

Thankfully companies started emerging that realized that a filmmaker’s interests and a distributor’s or aggregator’s  interests were not mutually exclusive.

Finally, companies have emerged that are now giving filmmakers the possibility of reaching these larger retail platforms and are taking fees that seem to better align to the work that each partner is contributing.

The problem with the old aggregator model is that there are too many middle men and the filmmaker ends up receiving the smallest share of the film’s profits. Under the new model, there are fewer middle men and the filmmaker is compensated based on the payout rates of the retail platform (Often getting 100% of the payout). So how much does this amount to? How much do filmmakers make from these deals? Let’s take a look at the revenue payout of a few of the most popular retail platforms.

  • iTunes splits sales 70/30. With 70%  going to the filmmaker and 30% going to iTunes. For example, when iTunes sells a films for $9.99. $7 of that goes to the filmmaker. With the new aggregator model, the filmmaker will generally see 100% of that $7. With the old aggregator model, the filmmaker would probably see around $3.50 of the $7.
  • Hulu streams films for free but 50% of the advertising revenue goes to the filmmaker.
  • Amazon VOD pays the filmmaker 50% of what they collect.
  • Netflix purchases a license for your film for 1 or 2 years and they can play your film as many times as they like during that period of time. Licensing fees vary on a film by film basis.

Each of these platforms will result in different outcomes for the filmmaker.  Hulu seems to be the best choice for exposure, but ad revenue has generally not been the highest performer in terms of payouts to filmmakers. It seems like iTunes may be better for payout (depending on your traffic and conversion rate) but less effective with mass exposure.

Two Companies that Can Help Your Film Get onto Netflix or iTunes

We would now like to recommend two companies that can help get your film or documentary into these retail platforms. These companies charge an upfront fee but 100% of the money the filmmaker makes goes to the filmmaker.

Distribber: Upfront cost: $1295 (SD) $1595 (HD). Distribber was purchased by indiegogo and is one of the most popular aggregators for filmmakers.

TuneCore: Upfront cost: $999 (SD) $1249 (HD). TuneCore started off helping musicians get access to larger retail platforms but has now branched out to help filmmakers as well.

Spend some time and research these companies to see which one might be right for you. There are differences between them. For example, TuneCore seems to have access to more regional iTunes stores while Distribber has access to US and Canada only. However, Distribber has access to more retail platforms than TuneCore does. So spend some time and research the differences and see which one is a better choice for you and your project.

If you’re a student in our online filmmaking course, or any other filmmaker for that matter, and you’ve had experience distributing your film or documentary through either of these companies we’d love to hear about your experience in the comments section below.

 

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