Independent Film's Path To A Viable New Business Model

Guest post by Jeffrey Ballagh, lead strategist for Novacut (Note from Ted: I have not used Novacut, but heard what they were aiming for and asked Jeffrey to explain it to all of you.)

The future of distribution and funding for independent film relies on the Internet. The technology to forge a new business model for independent film success is out there, but it needs nerd champions to build a venue where artist-to-audience commerce can thrive. To thrive, that venue must be the condensation point for the independent filmmaking community. For that to be possible, that venue needs a strategy for reaching critical mass and a damn good draw for filmmakers' attention. This is what we know, and this is Novacut.

The spark? A pro-grade video editor that's free and designed from the ground up to exploit recent advances in technology and community - to name a few: digital production, HDSLR cameras, online collaboration, and cloud computing. We think that should get the attention of a few filmmakers.

The Landscape

Fundamental change has shifted every aspect of the filmmaking business: production, distribution, and most importantly how filmmakers can expect to make money from their craft. The new landscape is one of phenomenal opportunity fraught with incredible peril. Production costs continue to drop with advances in digital production, but more importantly, the old business model has evaporated with online distribution. Filmmakers now have an unprecedented opportunity to express their artistic visions and reach audiences directly. But online distribution also means there is no way to effectively stop a film from being available to everyone for free.

Where We Stand

With no way to prevent a product from being used for free, how can it be paid for? Economics has a few standard answers and there are compelling alternatives, but the dust has yet to settle and the market has yet to reach its final shape (author's background: 1/2 nerd + 1/2 economist). The traditional answers to the free rider problem are patronage or government subsidies. These are not the only answers. No one yet knows the best approach for fans and artists to meet in the marketplace and both get what they want, but it is only the mechanics of the market that must be sorted out.

To an inspiring degree, fans are showing they are ready and willing to directly support artists. Current examples are in their absolute infancy. Film/video projects on Kickstarter have raised nearly $4 million since the site first appeared. That's not a huge budget, but it has been accomplished with a new funding model on a site that has only existed for 1.5 years.

Promising alternatives include financing through complimentary business and a unique threshold pledge system. For complimentary business, think of monks making wine to support the monastery. Fortunately for film, there are options for supporting business related to the art, merchandising for example. The threshold pledge approach is a unique option for goods that can be freely copied. Also known as ransom publishing, distribution is withheld until a specified amount of money is raised. Nobody has access until the bills are paid, once they are, it's free for all.

What's Ahead

The aim is not to supplant traditional distribution. The aim is to be the single best destination for alternative distribution. A venue that artists can make their primary target or a next best alternative for projects not finding their place in mainstream channels. The distribution venue that rises to the top in this space must attract both the artists and audience needed to reach critical mass. Most importantly, it needs a path to reach that critical mass and way to draw filmmakers. Simply having a technically capable solution will not make a site the destination that everyone naturally turns to.

To be the primary venue for distribution outside the traditional market, we must be a venue full of great content and a venue where artists make money. To ensure great content means engaging artists with a unique draw, initially that is the editor. From there, we fan the fire with learning and collaboration resources to make a home for the leading community of independent filmmakers. Finally, that community takes its work to market on a platform for successful commerce. A platform that can accommodate any new funding approach, so the market can quickly help decide what works and what does not.

The New Ground Rules

On licensing, if anyone can get your film for free, the only sensible licensing scheme is to distribute with no restrictions on copying and reuse. I realize this rubs some people the wrong way (it used to rub me the wrong way), but in the new era, attempting to enforce all-rights-reserved copyright is a business disadvantage for anyone without a team of lawyers. With no feasible technical approach to stop reproduction and sharing, the only option is to attack legally. That takes lawyers and they are not cheap. Which approach is cost efficient - a market with profits that depend on copyright enforcement via legal channels or the venue that makes money despite unrestricted distribution? If you want to understand the future for copyright licensing, Lawrence Lessig is required reading. He lays it out far better than I ever could, plus his work is of the rare sort that is equally genius, entertaining, and inspiring. Specifically, hit up Remix and Free Culture - pretty sure a couple chapters will convince most anyone. You can buy the books or (Lessig puts his money where is mouth is) download them legally for free here and here.

There are other sites that aim to build the market that makes online distribution financially successful for independent film, but technology and intentions are not enough in vying for Internet prominence. Novacut stands alone with a singular path for achieving a viable marketplace and a powerful draw for getting the process started.

Jeffrey Ballagh is a developer, economist, and lead strategist for Novacut. Seeing powerful forces reshape the world of film and video, he and the Novacut team gathered to put their entire energies toward the goal of building a new infrastructure for independent film and video commerce. Novacut Kickstarter / Novacut Blog