I didn’t pick this up last month when it was going down, but in mid-July, Sean Atkins, SVP of HBO Digital Media, ankled the company.  This comes only a year after he was hired from Yahoo! and HBO fired almost the entire Digital Media team that had been based in LA (the office subsequently moved to NYC).

What’s interesting about this story is that unlike many other big media companies, HBO has really not gone full-force into digital, preferring to use the web for marketing and promotion of their broadcast programming rather than for content delivery.

The question for a lot of smaller companies, and a lot of filmmakers, is just where to ride that line- you don’t want to get left behind on a new revenue source, as so many did with DVD, but there is little sense in sinking resources into a ‘market’ that at this point could simply reduce more lucrative sales (either advertising or DVD) by diffusing the options for consumers.

HBO has made a reputation by offering a premium product that does not have mass access.  There are still ways for that to translate digitally but it doesn’t make as much sense.  It’s no wonder they have had trouble developing a successful digital division- but with their lucrative catalog, they could begin to find themselves on the wrong side of the line soon.

TechCrunch reports today on a move by the major studios to protect digital media through a DRM scheme called Open Market.  Rather than bow to the the individual protections of a single retailer, otherwise known as iTunes, the studios are working with about 30 different retailers and portals, including Amazon, Best Buy, Direct TV, Time Warner Cable, T-Mobile, Target, Wal-Mart, and others to create a system whereby any digital media available through the participating companies would be subject to third party encryption that would only work on registered devices.  (Essentially, you could only play the movie on a device you had registered in advance for the purpose of ‘using’ that file).

This could be good news for indies, since it has been shown time and again how distasteful these kind of DRM methods are to consumers, who want to be able to use media they paid for when and where they want it, as they would a DVD.  If indies are able to market their downloadable products on Amazon or other portals as DRM-free (or at least, not “Open Market”) it may be a selling point.

Anne Thompson’s recent post on ‘changing tactics’ for independent film distribution shows how tenuous things are in the game these days and how much digital is becoming a part of all distribution strategies. She proposes that self-distribution is becoming increasingly attractive and/or viable, with films like BOTTLE SHOCK and GOOD DICK entering into service deals rather than going the straight distribution route.

But the idea that “filmmakers don’t have to give away the store with DVD deals anymore” seems a little premature, at best.  Especially for independents, revenue on digital download and streaming is not even in the ballpark with DVD yet.  This is partly because the independent audience skews a bit older and slower to pick up on tech (obviously, some indie films do have very young demographics). Partly it is because the majority of sales right now are on iTunes, and iTunes are basically like Blockbuster in terms of what sells and what they offer.  Mostly it is because way more people rent and buy DVDs, even still, than have the means or desire to watch them on a download.

It may seem like a coup to retain digital rights if you do a DVD deal but you may be shooting yourself in the foot.  A good distributor will manage your digital rights in concert with the DVD to make sure you see the maximum revenue on the balance sheet.

The film business has always been a high-risk venture, but now at the onset of a deal, the willingness to give is at an all-time low. Filmmakers want to hold on to whatever they can, in hopes they can parcel off rights for some benefit in case one or another distribution partner fails.  Distributors want every right, so that they can consolidate their campaigns and also have different avenues to fall back on if one strategy fails.  The only protection you have as a filmmaker ultimately is to know who you’re getting in bed with and their track record- or to do it yourself, but armed with a lot of knowledge and some good consultants.

I met Danielle DiGiacomo of IndiePix at Sundance a couple of years ago and since then have enjoyed working with her on a couple of different things- my company will be distributing a film she associate produced, and we both screened films for the Tribeca Gucci Documentary Fund with IndiePix Studio‘s incoming head Ryan Harrington.  She is an insightful and dedicated documentary lover with a unique perspective on digital distribution.

[I]nfinicine: What made you interested in working with an online video market like IndiePix? Was it just the films or were you a techie type?

Danielle DiGiacomo [DD]: Although I was more proficient at say, recording 90210 episodes onto videotape than my mother, I would never dare to call myself a “techie.” I fell into IndiePix because of the serendipitous meeting (through my great friend and head of Narrative Acquisitions, Jordan Mattos) of IndiePix visionary Bob Alexander, the need for a job, my love of independent film, commitment to documentary, and a rapidly shifting industry that allowed a small, flexible company to meet previous unfulfilled needs of independent filmmakers.

[I]: What do predict for the future for indie filmmakers in terms of distribution options? Do you think there will still be theatrical options or will things be mostly online?

[DD]: I think there will always be room for theatrical, but I think studios and filmmakers have to start being more strategic about it. I don’t think the blanket strategy of marketing all independent films the same way is working anymore; even mini-majors need to shift their thinking about getting an audience into the cinema.

That said, I think that filmmakers are waking up to the fact that, despite its cache, theatrical is not only a money-loser but also not the way to attract the biggest audience possible. Theatrical has never been viable for more than a thimble-full of independent filmmakers. So, yes, I think theatrical will always be there, but more and more films will roll out theatrically in a different way (for example, day-and-date models). No one can predict the exact future of what will take off online and which models will be the most financially viable, but something will surely take off.

[I]: How technically adept are most of the filmmakers you work with at IndiePix at this point in time? Can you talk about the challenges filmmakers have with negotiating technology?

[DD]: Everyone is different, but I don’t think it’s that hard to be technologically savvy. 98% of the people I know have either an iPod or an iPhone, and most online technology is relatively user-friendly for people of our generation — particularly people who shoot on HD Cameras and edit on Final Cut Pro. What I do see a broad range in is the level of business and self-marketing strategy that filmmakers have. There is a spectrum ranging from super-savvy (think the 4 Eyed Monsters and their mastering of viral marketing, podcasts, MySpace, etc.) to nearly clueless (those filmmakers who never thought of where their film would possibly end up after the final cut). We have some filmmakers who have done loads of leg work promoting their films through the Internet, and know about every online or viral service available. It really is a full time job keeping up, but independent filmmakers absolute HAVE to think about their potential audience and distribution/marketing strategy even while in development stages.

[I]: What has been the evolution for IndiePix so far in terms of the way it tries to sell films and what do you see as the future strategy?

[DD]: IndiePix has evolved and expanded rapidly in the past three years. After starting out as a catalog with a Download-to-Own capability, we rapidly expanded to distributing exclusive DVDs on our website, and since then, have opened up channels in the retail, brick-and-mortar markets, and have even started doing some small theatrical and international television sales. We also have cemented a strategic partnership with the Cinema Guild to handle the educational market.

Recently, we launched IndiePix Studios, which will be under the direction of Ryan Harrington (formerly of A&E IndieFilms and Tribeca Gucci Fund). This will serve as one-stop shop for filmmakers. Each film is different and requires different focus and distribution strategies. We try to have very personal relationships with the filmmakers to make sure we maximize the possibilities for their particular film and capitalize on our mutual resources.

[I]: What advice would you give a filmmaker who is just beginning their project in terms of thinking about digital sales?

[DD]: Keep your digital rights or give them to IndiePix :). Seriously though, if you do give away your digital rights, give them to a company you can really trust, and for no longer than 3 years at a time. Do your research and talk to other independent filmmakers about their experiences. And attend as many panels and receptions as you can. Knowledge is power, and it is helpful to have honest advisors in the community.

Back in my hometown Vancouver BC this weekend I had a chat with an old friend Clare Hodge, who I met when she was the Executive Director at Women in Film and Video Vancouver years ago, She has a new gig now at a website called SuperU, owned by Canadian broadcaster Super Channel, who are looking for content (and presumably viewers) online. Their scheme is to offer a contest to filmmakers, who can win cash and broadcast opportunities for their films. The site is (I’m assuming) being publicized through Super Channel itself as well as through Facebook, twitter and other more conventional promotional means, such as postcards. They also plan to market their library of films to other broadcasters as a middleman, taking no commission.

The challenge for SuperU is probably not finding content. Even though there are places that are more well-known for exposing User Generated Content, filmmakers will naturally be drawn to a venue where a chance for actual revenue and broadcast potential exists. Indeed, if a certain bar is set, then the site can expect to receive films of a lot higher caliber than typical YouTube vids.

Finding the audience is more enigmatic. Can broadcasters overcome the well-documented challenges of monetizing UGC by making it work for TV? Will televised UGC make other UGC more valuable (and if so, why doesn’t Bob Saget have a huge career right now)? Will this finally be the bridge between film and television that has been designed disfunctionally so many times before?

It looks like SuperU is only catering to Canadians at the moment (this is the kind of scheme born out of public-private partnerships) but it will be interesting to see how things develop.

The D-Word is an essential resource for documentary film folks- an online community of filmmakers, writers, and broadcast/distribution types. Doug Block, the founder and co-host of the site, is an experienced filmmaker whose breakout film 51 BIRCH STREET, a personal documentary about family relationships, benefited from a grassroots marketing campaign that included utilizing the internet. Infinicine asked him about the transitioning state of distribution for documentarians.

[I]nfinicine: In your experience, are independent filmmakers making a transition to online forms of distribution? Are streaming and/or downloading viable revenue sources for a filmmaker who has essentially self-financed their film?

Doug Block [DB]: Like it or not, I think indie filmmakers are being forced to make a transition towards online distribution, but so far it’s mostly taken the form of promotion and self-distribution of dvds. Streaming and downloading of feature-length films just doesn’t seem viable until it can go right to your tv set rather than your computer monitor, and it’s not quite there yet. And even if it were, there’s the issue of how to make your film stand out from all the rest, which we’ve traditionally done via a theatrical release. So for now we’re talking mainly about shorts and serialized content driven by ad revenue, which is a pretty interesting concept with some real artistic potential from a filmmaker standpoint, but it’s just not the same thing as making a feature intended for a live audience.

Personally, I’ve long been excited about the potential of online distribution. Back in 1999, my documentary Home Page was the first feature film ever to be streamed for free and sold on home video online at the same time it opened theatrically — talk about day-and-date! I learned the hard way that it’s not always lucrative being a pioneer (especially when you don’t have a marketing budget), but it was a fun experiment.

It’s almost a decade later, and if any indie filmmakers are making gobs of money streaming or downloading their feature film I’m not aware of it. All the business “models” I’ve seen so far are models for the businesses but not for the artists. I’m sitting back and waiting for a wave of filmmaker success stories before I’ll go ahead and call anything a legitimate model for online distribution.

[I]: How does a network like the D-Word facilitate distribution channels for independent filmmakers?

[DB]: We’re basically a free online discussion forum for documentary professionals and enthusiasts from all over the world (over 4,000 members from 80 countries, currently). We don’t facilitate distribution channels for doc filmmakers; we facilitate discussion about distribution channels. Lots and lots of discussion. That said it’s always been part of our long-term plan to have our member’s work go online, both as a way to promote it and to facilitate collaboration across geographical boundaries. And we’re very close to getting there.

We’ve been approached by any number of online distribution/exhibition entities over the years, many claiming they want to be the main online portal for documentaries. Being able to bring a thriving, ready-made community of people who work in the documentary field, or just love seeing docs, is an incredibly valuable thing to bring to the plate. If you don’t believe me, just look at all the attempts that have been made at building film community online that haven’t taken off. It takes a ton of time and energy and passion, and we have a 9-year head start. So far we haven’t found the right match, but we’re certainly open to someone who recognizes the value in what we’re doing and is willing to make us part of their business plan.

[I]: How can filmmakers negotiate the various markets and content delivery companies and know when they are getting a good deal?

[DB]: It’s very difficult because it’s hard to predict how well the online market will do over time, it’s still very early. Is having a 50/50 split of advertising revenue a good deal? It sounds like one, but there’s no way of telling in advance how much advertising your film will generate and how much revenue that will ultimately bring in. And I don’t see any companies offering sizable minimum guarantees in the way that theatrical distributors often do. It’s obviously important to keep VOD rights if you can, they’re becoming increasingly valuable. But again it’s hard to quantify just what that value is. It’s more about keeping your distribution options open until things between home video companies like NetFlix, online distributors and broadcasters shake out.

In general, you want to either fully retain your online rights or have them be as non-exclusive as possible. That way you can have a number of online companies working with you while doing your own DIY distribution. Until downloading really becomes viable, dvd sales are still the main online revenue stream for indie and doc filmmakers. So it’s always good if a filmmaker can get some kind of theatrical or tv distribution and still retain dvd rights. And a good online deal would allow the filmmaker to get a link from wherever their film will be downloaded directly to a site — preferably their own — selling their dvds.

[I]: Can a filmmaker today “just a filmmaker” or is it necessary for them to develop fundraising, networking, producing and distribution skills?

[DB]: It’s always been necessary for indie filmmakers to develop those other skills. And it’s probably more important now than ever. But in the end, it all comes back to the fact that the best way to get your film distributed and seen is to make the very best movie you possibly can. So maybe the most important quality to develop these days is focus. To know when it’s time to do all that other stuff and when it’s time to shut out the distractions and make the film.

[I]: How has your personal experience changed as far as your engagement with digital distribution, both online and in theatres or other public venues?

[DB]: I’m very aware of the need for audience building early on and at the grassroots level, and that’s something that can be done very effectively online. From the moment you start a film, it’s hugely important to collect the email addresses of everyone who’s ever shown any interest in your work, your film or your subject. And to keep in communication with your growing email list as the project develops. There’s a lot of potential in online fundraising, which is something I’m currently exploring. Even if you don’t raise a lot of money in total you want to collect a lot of donations, for each person who donates is now invested in your film, which will pay off many times over in getting the word out about the film when it’s done.

I also love that we don’t have to deal with film prints any more. 51 Birch Street played theatrically in over 60 cities and all of it was done through digital cinema. The cost savings were so profound that we managed to actually make money on our theatrical release. Not a huge amount, but then the main idea with theatrical is to somehow cut through the clutter of films and get it on people’s radar without losing your shirt.

[I]: Do you feel things are “good” for filmmakers now? Why/why not?

[DB]: It’s certainly a great time for beginning and ultra low-budget filmmakers because the cost of shooting and editing films can be so ultra low. And there are lots of options for getting your work seen online, especially if you’re more interested in having a calling card than in making a lot of money back.

But for established indie filmmakers who work at higher budget levels it’s pretty tough going because of the economy and the seismic shake-up in traditional distribution. It’s very hard to show investors how they’re going to recoup their money, especially when there’s so much “product” out there and distribution companies are folding left and right. It’s all well and good to talk about the potential of downloads and streams, but it’s hard to back that up with realistic projections. So it takes a greater leap of faith on everybody’s part.

In the end, the truly committed filmmaker will always find a way to make his or her film. This is a funny business. You need to be aware of everything that’s going on, but you kind of need to have blinders on, as well.

In a nifty bit of synergy, Scott Kirsner over at CinemaTech has taken on the question “How to get your indie film on iTunes?” (a somewhat similar query to the very first post in the Infinicine discussion forum). Getting your film on iTunes does seem like a bit of an apex at this stage in the digital distribution evolution, not only because iTunes sales are so commanding relative to other download services so far but also because they charge a relatively high price and share it with the rightsholder. (As with any customer, terms will vary).

The challenge, as Scott pointed out, is that iTunes, much like oldmedia sellers Barnes & Noble or Borders, does not buy directly from individual filmmakers. This means that there are a number of ‘aggregators’ vying to become the wholesalers of the digital realm, and one must deal with them in order to place films on iTunes.

In contrast, Amazon, which has made its name on having just about everything available to customers looking for obscure items, has had a system in place long before streaming to work with independent vendors. As long as filmmakers adhere to terms of service, they can put their product on Amazon, albeit on the terms established for this type of product.

There are different ways to look at this situation as an independent filmmaker. First of all you need to evaluate whether iTunes would be a significant market for your film. Some might think that ANY market with the higher sales of iTunes would be a great place to put ANY film. But realistically, placing your film on ITunes will mean working with an aggregator, who in some cases will want to represent all digital rights and take as much as 50% of your net revenues. You might also think of doing a service deal with a distributor, who could deal with an aggregator on your behalf- increasing your layers of percentage-takers, but perhaps getting a better deal or being able to leverage some kind of promotion on the iTunes site.

As for iTunes, it is somewhat mysterious why they are being so cautious. They wouldn’t seem to lack for bandwidth or the technical know-how to implement such a system. On the other hand, the money to be made from indies is low, the risks are far more than with music- as Scott puts it:

By open, what I’d like to see is an aggregator accepting any finished film where the filmmaker can guarantee that there are no rights issues that will result in lawsuits… or at the very least any finished film that has played at least one festival.

In my experience, the former is a much smaller field than the latter, and a Venn diagram of the two would narrow things down significantly. Trying to sort out legals is something that probably does require more than just a ‘guarantee’- especially when you are in a much more highly trafficked space like iTunes.

That said, it would be great if iTunes would make the system more transparent and open so that filmmakers aren’t at the mercy of “aggregators” to offer them whatever marked-up deal they desire. And it would be great if iTunes made more of an effort to promote indie product on the site and build the market a bit, since it seems like their demographic is ideal for new indies.

Indiepix has gone in a few directions over the last couple of years. The latest is a partnership with SnagFilms, Ted Leonsis‘s widget-based monetized documentary player and a production end, Indiepix Studios. They are also staffed by very dedicated, delightful young people.

[I]nfinicine: What services are offered on your site?

[IP] Indiepix:
DVD Sale
Download to own
Download to disc

[I]: What is the structure of the deal, i.e. flat fee, percentage of sale, ad revenue, etc. Provide terms if possible.

[IP]: We do not give advances, but we do all the design, production, manufacturing and marketing. The filmmaker receives a flat 60% of all the revenue.

[I]: Does your service sell into all territories?

[IP]: Yes, it does. It depends on which ones the filmmaker(s) opt for.

[I]: How many people visit the site? How many are “members”? How many sales on average per title? What are the top-selling titles?

[IP]: Top-selling titles are SENTENCED HOME, COCAINE ANGEL, THE HOLE STORY, OFF THE GRID

120K visitors, 30K members. It is hard to say an average, sales range from hundreds to tens of thousands.

[I]: What is the marketing strategy for the site? Why will customers purchase or rent from your site as opposed to other similar sites?

[IP]: Each of our “spotlight” films is catered to individually. So, for example, for one film we will do viral marketing, set up event screenings to sell DVDs, plan release parties, promote in email, blasts, newsletters, and at festivals, while for others we will make postcards and buy ads in independent magazines. We work very closely with the filmmaker to strategize about marketing and promotion.

[I]: Can individual filmmakers sell to the site?

[IP]: Yes, of course.