The New Independent Film Distributors’ Business Model (Pt. 1 of 2)

Guest post by Sheri Candler. In this second post, I want to focus on how to rehabilitate the film distribution entities so that they may continue to exist. I know what you are thinking “What’s she on about? We’re fine. We survived the latest shake out and are all the stronger for having less competition.” I am here to tell you that is fallacy. The old ways of bringing films to market are fading fast and it is time to reinvent your business. I want to acknowledge my gurus Gerd Leonhard, Seth Godin and Clay Shirky (though he is more my go to guy on all things having to do with immersive storytelling and audience collaboration) for being a constant source of inspiration for me in looking toward the future of media.

When Ted announced on his Facebook page that he would take part in a panel discussion at the upcoming Woodstock Film Festival concerning the new distribution paradigms, I had to look at who would be involved in this discussion. What people and companies would be taking part who are practicing radically changed business models for film distribution? It was as I thought; none. I posted a link on his page (http://www.techdirt.com/articles/20100326/1452138737.shtml) asking all involved in the discussion to read it and then talk about how they see the new paradigms. I don’t know if anyone did, but I did get a response from Dylan Marchetti from Variance Films explaining to me how his company functions to actively engage audiences for films they’ve booked in the theater. It was a lengthy exchange that resulted in my writing this post. I don’t think he read the article before he spoke because the point of that piece was to inform on how businesses need to form ecosystems around their companies, not continue only to sell copies of the content they distribute. Distribution companies should not be focused on selling copies, either for viewing or for owning. They should be selling access, creating networks of devoted fans around their brand and developing customized experiences instead. In other words, selling things that cannot be copied. This means they must first gather and cultivate a community of engaged followers and then develop, acquire, produce, and source material with only these people in mind.

Of the companies taking part in the Woodstock panel, I would say only Cinetic with their Film Buff organization has started with the potential to do this, but rather than building an engagement platform, they have merely built another online distribution portal (like so many others in existence that consumers have never heard of) to put copies out on the internet. Actually you can’t see any of the films on the site, it just directs you to their existence on VOD channels. Their “community” engagement is only a call for an email address so that they may send marketing messages. What is communal about that? What connection would a consumer have to the company itself besides advertising? None. Cinetic has no idea who these people are, what drives them, motivates them, interests them. It is not fair to pick only on Cinetic, I can’t think of a single distributor currently connecting directly with audience who can answer those questions. Troma comes to mind as a distributor with a very clear brand identity but even they are not directly in dialog with their audience. All current distributors are far too dependent on push marketing, usually hired from outside the company, and sourcing films purely on guesses based on audience reactions at festivals , favorable press or from hottest trends in market research. Every investment prospectus will tell you future earnings are not indicative of past performance, so why is that how decisions are continually being made?

What would I suggest for these companies? First, a total rethink of what business they’re in. Distribution of goods is no longer needed from you. You should not think of yourselves in the film distribution business because distribution has become easy to access by anyone online. (I know Dylan, you’re not online, but art house theater days are numbered too). Attention getting is now your main role. But from whom? If you don’t have a following as a company, a deep relationship with a community, how will you get attention and keep it? By building a tribe around the people in your company and, in turn, the company brand itself. This starts by identifying what kind of group you appeal to or want to appeal to, actively seeking them out and forging those deep connections. At first, this will mean attracting people through outside means, appealing through media and various outside groups to introduce yourself. Eventually the effort to enlarge the circle will be done by the community members, but until you have one, you must do that work.

Often, in a rush to monetize, companies jump right over the relationship building. The dismal failure of paywalls in newspaper circles only serves to prove my point. They did not build up an engaged community first, and then ask for payment. They falsely thought that their paper subscribers would be willing to continue the previous paid relationship even after it was possible to get most of the news stories from aggregators for free online. There is a great video from Jeff Jarvis explaining the new business models for newpapers here (http://www.youtube.com/watch?v=Jsb9NfJmqPY&) and lots can be gleaned from it for all corporate endeavors.

The reinvention “The future leaders in business will be connectors, not directors”-Gerd Leonhard The new model will be to build and foster a community around the brand as a company and to be in the entertainment fulfillment business. This community will have interests that the company can fulfill and that is the company’s ONLY function. To try and serve a well balanced diet of wide ranging content is to spread too thin and attract no one. Mass is not your target. You will be a resource to your community not only in entertainment but in anything that interests them. This means you MUST know what “that” is. Is it books, is it music, events, clothes, games, causes, other similar tribes? These will be your other revenue sources as you create a network of interconnection with other companies who have their own niches, their own tribes. Also, consider enabling community members to profit in what you have sourced, to be affiliates and to create networks of their own. The network will feed each other spreading the brand even further.

A key part of your site will be to connect your community to each other. Some companies have sites where they connect to the user, but they don’t allow for intraconnection and some networking platforms are merely housed on a company website but members are never engaged by the company, merely left to use the tools as they see fit. Listening and collaboration will be cornerstones for this model to work. This isn’t work to be left to interns, by the way, but by those in power within the company.

You will also partner with other tribes of like minded individuals. Through these interactions, you tribe influence grows. There is no need for shouting out messages, gaining favorable PR placement, buying media for attention or forcing members to spread the word. If you are fulfilling their needs admirably, they will do it. You will however, generously reward those members in your community who do enlarge your circle. Instead of paying large amounts of money to outside companies to get “buzz” and “traffic,” you will invest that money in building experiences tailor made for your community. Development of experiences can only be done from active participation in the community and collaboration with them.

This model is far simpler to run as you won’t be going for masses, you will only cultivate your community. It will be labor intensive work, but not prohibitively expensive. You will need to develop tools so that the tribe members can speak to each other and so that they can spread the word to their friends easily. You should be facilitating sharability at all times, not closing it off and being insular.

The filmmaker/artist whose content you will source (not acquire as creators will have an equal partnership in your tribe) will be encouraged to participate with the community. In fact, if they will not, then their work is not very attractive to your community. Engagement at all times is key, this is no place for egos.

Tomorrow: How To Make Money With The New Model!

Sheri Candler is an inbound marketing strategist who helps independent filmmakers build identities for themselves and their films. Through the use of online tools such as social networking, podcasts, blogs, online media publications and radio, she assists filmmakers in building an engaged and robust online community for their work that can be used to monetize effectively.

She can be found online at www.shericandler.com, on Twitter @shericandler and on Facebook at Sheri Candler Marketing and Publicity.

Recipe For Happiness: Focus On The Future & Embrace Experimentation

Yesterday, I ranted a bit about the apparent silence in the film community regarding our collective need for forward thinking experimentation (and support thereof).  The need for such action is reinforced in a recent WSJ article by Clay Shirky promoting his new book:

This issue isn't whether there's lots of dumb stuff online—there is, just as there is lots of dumb stuff in bookstores. The issue is whether there are any ideas so good today that they will survive into the future. Several early uses of our cognitive surplus, like open source software, look like they will pass that test.

The past was not as golden, nor is the present as tawdry, as the pessimists suggest, but the only thing really worth arguing about is the future. It is our misfortune, as a historical generation, to live through the largest expansion in expressive capability in human history, a misfortune because abundance breaks more things than scarcity. We are now witnessing the rapid stress of older institutions accompanied by the slow and fitful development of cultural alternatives. Just as required education was a response to print, using the Internet well will require new cultural institutions as well, not just new technologies.

Yes, we are overwhelmed.  There are too many choices.  But solutions are being found.  And the tools have never been better.  How can you not be moved by stories of discovery like this.

Even more so, the benefits of such future focus is underscored by this great video based on Philip Zimabardo's lecture that my wife, Vanessa, turned me on to:

The whole RSA Animate series on YouTube is pretty great, and well worth your time.

Keep It Simple

Last month, Clay Shirkey had a most interesting post entitled "The Collapse Of Complex Business Models". Shirkey calls attention to Joseph Tainter who in his book "The Collapse of Complex Societies" pointed out that "under a situation of declining marginal returns collapse may be the most appropriate response”. Shirkey explains that in Tainter's view, complex societies don't collapse despite their cultural sophistication, they’d collapsed because of it.

Subject to violent compression, Tainter’s story goes like this: a group of people, through a combination of social organization and environmental luck, finds itself with a surplus of resources. Managing this surplus makes society more complex—agriculture rewards mathematical skill, granaries require new forms of construction, and so on.

Early on, the marginal value of this complexity is positive—each additional bit of complexity more than pays for itself in improved output—but over time, the law of diminishing returns reduces the marginal value, until it disappears completely. At this point, any additional complexity is pure cost.

Tainter’s thesis is that when society’s elite members add one layer of bureaucracy or demand one tribute too many, they end up extracting all the value from their environment it is possible to extract and then some.

The ‘and them some’ is what causes the trouble. Complex societies collapse because, when some stress comes, those societies have become too inflexible to respond.

Hmmm.... sounds a lot like the time we are living in now, doesn't it?

As one can expect, Shirkey provides great examples and greater understanding.  It's a must read.

Thanks to Couper Samuleson for making sure I did not miss this!

And What Makes It All Worse Is...

As freeing as the growth and utilization of new media is, the death of traditional media certainly hurts Art Film and The Specialized Film Market.   When I read (online of course!) articles like David Carr's "Mourning Old Media's Decline", I can feel that jolt of panic.  It starts in my legs, and then spreads...

“The auto industry and the print industry have essentially the same problem,” said Clay Shirky, the author of “Here Comes Everybody.” “The older customers like the older products and the new customers like the new ones.”

The problem is that Art Film's audience is predominately over 35.  They are not generally online as much as others.  They are not participating in the blogosphere.  How is the audience going to get their information?  How are we going to get them signed up?  We need to make sure they are getting their RSS feeds of the great film lover websites like Hammer To Nail (okay, I confess to being a tad self serving on this) and Green Cine.  
I think for every film fan over 35 that you get to subscribe to such a blog, you should get a gold star.  Two gold stars if they are over 45.  Three for 55!  I don't know the solution, but we have got to sign them up.  What to do, what to do?  We have to act fast...