X

Looks like you are a new visitor to this site. Hello!

Welcome to Hope For Film! Come participate in the discussion, and I encourage you to enter your email address in the sidebar and subscribe. It's free! And easy! If you have any suggestions on how to improve this website or suggestions for topics please don't hesitate to write in to any of the blogs.

You can also follow me on Twitter or Facebook.

(If you keep getting this message, you probably have cookies turned off.)

October 18 at 8:15am

The 360 Equation: The One Business Model Every Filmmaker Needs To Know

By Ted Hope

By Marc Schiller

One thing is clear; for independent cinema to grow and thrive, it needs to find a more sustainable business model. And while there’s been a lot of hype around new forms of “alternative” distribution, few people have an answer to the question: “How does this new approach to distribution make more money than the more traditional approach?”

Akin to the old catch-phrase “Where’s the beef?”, today smart filmmakers are asking “Where’s the business model?”

Having spent the last three years analyzing all aspects of independent cinema in incredible detail (from production to marketing to distribution), I’ve developed my own answer in the form of an equation. With the recent launch of BOND360, I’m calling it the “360 Equation”:

Community + Data + Content Bundling + Dynamic Pricing = Revenue

Treated separately, none of these elements (Community, Data, Content Bundling, and Dynamic Pricing) will bring financial success on their own. They are only pieces of a much larger puzzle. But when you put all of them together, and execute them well (that’s the hard part,) they form a very potent combination. And if you develop and distribute your film in a certain way, adopting the 360 equation will definitely bring in more revenue for an independent film than any of the traditional alternatives.

So first, let’s break down each component:

Community: Today when people hear the word “community” they immediately think that their community equates to the number of fans and followers their film has on Facebook and Twitter. And while this is indeed a form of community, in itself its not at all what community is about. Today, filmmakers are being pressured by consultants to arbitrarily increase the number of their social media fans, without being given any direction on how they should be using them most effectively. But how many fans is enough? 500? 5,000? 50,000?

The number is completely arbitrary. The reality is that true results from a community come from the quality, not the quantity. With twenty years spent on more community based projects than I can count, one thing that I do know is that the number of fans and followers your film has does not in any way equate to your future success. I’ve had films with almost no social media followers do EXTREMELY well financially and I’ve had films with tons of followers absolutely bomb. A community that will bring long term rewards is always earned and never bought. The problem for most traditional releases is that this takes time. The process of building a sustainable community can’t be confined to the weeks that a social media agency has been retained by a distributor. Community is the by-product, that comes when your film starts to connect with audiences. It comes from goodwill, benevolence, and the creation of an environment that motivates people to get involved. It’s the rewards of your efforts, not the genesis of it, and it’s developed more offline than online.

For me, your community are the people who want your film to succeed as much as you do, and are willing to do anything and everything they can do to help it get there. They are the people who are willing to spend their Saturday afternoon putting up posters for you in their local towns. They are the ones who can’t wait to meet others who share a similar passion for your project. The real value of community is that these are the people who will tell ten others to go see your movie. And there’s nothing more powerful (and inexpensive) than leveraging the passion of your community.

When people ask me what the “call-to-action” should be for their film, I always have the same answer – “Get your core fans to tell ten others to go and see it.” And because of this, when I’m asked what the most powerful community building platform is for independent filmmakers, my answer is never Facebook or Twitter or Tumblr. It’s the personal email lists of the filmmaking team, nothing is more powerful when it comes to getting people to see a movie.

Data: When someone watches your movie on any of the older established transactional platforms (brick-and-mortar movie theaters, Cable VOD channels, Amazon, iTunes, Netflix, etc) you, as the content creator, are given ZERO access to the vast array of data that that platform has collected from the viewing of your film. Not only do you not have the ability to communicate directly to those who’ve watched your film, you’re not given any information as to who they are, where they live, or what they like. Because of this lack of transparency, a growing movement of content creators are demanding to have direct access to their own customer data, leading to a whole new wave of more open dashboard based digital platforms like Kickstarter and VHX. The real threat that the more established digital distribution players face is not a company, per se, it’s a philosophy. Companies like Apple will either become more open with their data, or eventually they will be left behind. What retailers have known for years is that owning the relationship with your customers means having the ability to reduce marketing waste. In reducing waste, you will reduce your costs, and in reducing your costs, you will be increasing your profits.

It’s as simple as that. And the key to all of this is having access to your own data. The good news for filmmakers is that each month new start-ups are being formed around the principle of giving the content owner direct access to customers.

Content Bundling: Filmmakers who will succeed in the new direct-to-fan model are those who understand and maximize the bundling of digital content and physical goods, raising the average price point of their films when they’re offered through their own digital channels.

To be successful, the value given to fans through your own website needs to be greater than what’s being offered elsewhere. The best way to do this is to bundle digital content and physical goods, justifying a higher price by giving fans exclusive materials directly from the filmmakers. Today, we’re giving away far too much good content for free as part of our marketing campaigns because we don’t have any other use for it. We’re still conditioned to think that any good bonus material should be put on a DVD for your film.

But when was the last time you purchased a DVD? If you’re like me, you haven’t bought a DVD in years. Until companies like VHX and Vimeo began allowing filmmakers to sell direct, there was no commercial use for bonus content other than on a DVD. Today, smart filmmakers are bundling this content with their films when offering them for sale on their website and giving fans more value for their money. Now, nobody can compete on price with Amazon. And at a time where Netflix offers a month of unlimited access for less than the price of a single movie ticket, the only way filmmakers can make any money by going direct to fans is to offer them something that the other platforms can’t. And if done well this can come at a higher price as long as you are giving fans more value at the same time.

Dynamic Pricing: For me, the most exciting aspect of new direct-to-fan video streaming tools like VHX and Vimeo is not simply that filmmakers can now offer their films directly to their communities; it’s that they can control the pricing of their films without having to go through a third-party. Success in retail comes not from establishing a fixed price and then keeping it at that price until declining sales compels you to lower it, it comes from analyzing sales and adjusting pricing to take advantage of opportunities. Dynamic pricing is both an analytical and creative process that, if done well, can be the differentiator between making money and losing money. Today, agility is the key factor in determining success. And because of this, putting the control of pricing into the hands of the content owner is the true “game changer.” Most people believe the statement – “Prices never go up, they only go down,” but this is simply no longer the case. When you connect dynamic pricing with content bundling not only can prices go up, they can change as often as you like.

Revenue: From my experience in this area, I’m convinced that signifiant revenue for independent filmmakers will never come from platforms based on old models. Rather, to truly have a sustainable business model for independent film, we will need brand new platforms.

And one thing is certain, they will be platforms that offer filmmakers a true “360 Equation”.

So to recap…

COMMUNITY

Curating and nurturing those who are not only willing to pay more, but WANT to pay more… as long as they’re getting more value

+

DATA

Reaching your community directly, without going through a middleman, thus reducing waste

+

CONTENT BUNDLING

Offering a wide variety of versions of your product at different price points

+

DYNAMIC PRICING

Adjusting pricing “on the fly”

=

REVENUE

 

Marc Schiller

www.bondinfluence.com


  • Digg
  • Google Bookmarks
  • email
  • Print

2 Comments

leave a comment
  1. lustgarten / Oct 18 at 8:15am

    As we all try to grope towards new business models every idea is helpful, but I look at the ideas surrounding “community” “fan based” and think in order for this to work there has to be an object of fans attention. In the past, the auteur theory promoted the director as a brand and that is still operating. Occasionally a studio will become associated with a quality and kind of programming e.g. Miramax, Disney. So in order to develop a loyal and ardent fan base the “you” in the above has to be someone that is branded as having certain qualities. Yet on the other hand there seems to be this ethos of team work to make the project happen. These seem to be in conflict. Look at the roster of producers on some of these films that stretch beyond that of the post sound department. Dozen or more sometimes. Who is the filmmaker? Does a producer who works with different directors, and other producers from film to film ever have a brand or fan base? Other than the Coens and a couple others are there ever multiple directors? Should the director get all the credit and the fans or the producer. Who gets the data? Who owns the movie? The investors? This really is a huge problem and why “gate keepers” “distributors” will continue to thrive.

  2. Out in the Street Films / Oct 18 at 8:15am

    You have to define this in your contracts between directors, producers, sales agents, and distributors, just as you have to define rights. My take is that with rights to contract an initial six month window with a sales agent or distributor and if there are no sales in that time, the rights revert back to you. And you is whoever you define it as in your contracts.

    It’s also common to retain your own direct sales rights, which means regardless of what rights you give to distributors, you can always sell direct on your website, or digital platforms like Vimeo. You may have to agree to not sell during initial windows that a distributor would need, or perhaps to block out certain international territories, where right shave been sold.

    But this is all negotiable and can vary in any way you contract it to do so.

Leave a Comment

This site could not have been built without the help and insight of Michael Morgenstern. My thanks go out to him.

Help save indie film and give this guy a job in web design or film!