Can Indie Filmmakers Survive 'Free'?

Prompted by a recent blog post by Mark Barrett titled "Doctorow, Anderson and Godin, Oh My"  criticising the gurus who support the notion of giving content away for free, I thought I'd discuss the argument in terms of how it applies to indie filmmakers.

For those who haven't heard of Cory Doctorow, Chris Anderson, Seth Godin, or the theory of "Free," let me give you a quick run down: in the digital age, with the cost of file distribution next to nothing, these gurus suggest that authors, filmmakers, software developers, digital content creators, etc, can benefit more from giving away digital copies than they will by sticking to a traditional user-pay-per-item system.

The basic argument against 'Free' commonly involves misunderstanding what these gurus actually mean by 'free.' 

Obviously it is unsustainable for filmmakers to create content and give it away without any financial renumeration. However, if giving away some things for free boosts overall revenue, that's a pretty good trade off, right?

First step to understanding Free, is that you're not giving everything away for free. As a filmmaker, you can gain revenue in any number of ways. Off the top of my head:

• Ticket sales (user pays)
• DVD sales (user pays)
• TV licensing (network/advertisers pay)
• Product placement (advertisers pay)
• Merchandise (user or cross-promoter pays)
• Sponsorship (advertiser pays)
• Advertising (advertiser pays)
• Government grants/investment (tax payer pays)
• Benefactor (benefactor pays)
• Membership subscription (user pays)
• Collectors items (user pays)

The trick to successfully using 'Free' in your business model is to determine which bits to give away in order to increase payment in other areas. 

What is an indie filmmaker's greatest obstacle to making money from their film? I would suggest, using Doctorow's words, "The greatest threat to an artist is obscurity, not piracy." It costs money to advertise your film, it costs money to run a PR campaign in competition against the big guns, it costs more money to get noticed by traditional means than most indie filmmakers have, and as a result indie films often simply slide under the radar unnoticed. 

What if, by allowing people to watch your film online for free, you were quickly and cheaply exposed to a huge audience who otherwise wouldn't know about your film? You can very easily make the film free to view on the proviso that they register or log in - thus you gain an email address and the beginning of a relationship direct with your audience.

This close proximity to your 'free' audience works well as a test market. You can track when they watch the film, whether they watch it all the way through, reevaluate who your target audience really is, ask them directly what they thought of it, create a community around the film, and request those who like it to share their thoughts on twitter, facebook, their blog,  to build even greater buzz.

The greater the numbers who see your film - even if they're not paying - the more bargaining power you have with potential sponsors, advertisers, distributors, exhibitors, both to exploit the film rights and get your next project up. 

To earn revenue, you seek to upgrade a proportion of those people into paying customers by giving them a range of options: 

• Pay what they want (Coldplay is one of the most famous examples of success in this area)
• Purchase the DVD directly from you (better return for the filmmaker than in-store purchases)
• Purchase additional merchandise from you 
• Purchase autographed/ collectors items from you
• Entice them to a cinema screening or Q&A near them
• Keep their email on database, letting them know about future promotions, projects, and partner offers.

Now, this might all sound like 'pie in the sky' stuff. How do you know that you will gain a greater audience, rather than canabalise it? How do you know people will pay for the film, if they can get it free? 

There are never any guarantees. However, using the traditional distribution method you also have no guarantees about bums on seats or revenue. 

A bonus is that profits you make online go almost entirely back to the filmmaker, as opposed to only receiving a small cut from boxoffice, rentals and in-store sales. Instore a $30 dvd may only yield $3 for the filmmaker, while for online digital distribution, a $5 sale may well mean all $5 to the filmmaker. (Less if you go through iTunes, Netflix, Amazon, or Blockbuster, etc). This direct connection between indie filmmaker and audience obviously means a better deal financially for both parties, without the unnecessary expense of all the middle men.

Ink is one film I've mentioned before that had a bump in DVD sales after the film was pirated. By releasing the film yourself for free, you can circumvent 'piracy', and gain value in both enlarging awareness of your film and building a database of potential customers (something that usually costs a filmmaker money).

Still not convinced? Well, how about taking a leaf out of Anderson's book with a modification on the above plan. He released his book "Free" digitally for free - but only for a limited time. By creating a false sense of demand (only one month in which to access it) he got a huge amount of downloads immediately, created buzz, and thanks to the proportion who upgraded to purchase, the book became a New York Times Best Seller. 

And while people wonder 'why' anyone would choose to pay if they could get it for free - there are additional things to consider. Firstly, the 'upgrade' options are offering more than the free version (read Ross Pruden here about additional 'value' beyond the 'movie'), and secondly, human behaviour is such that most decent people will feel a level of indebtedness if they are given something free (read Influence: the Psychology of Persuasion).  If they like it there's a good chance they'll be willing to pay something for it, and if they love it they'll buy additional stuff.

Still not into giving your movie away for free? That's okay. There are other ways to operate within the realm of Free. Going back to that first list above, you'll notice that in some instances someone other than the user can pick up the bill - such as a sponsor, advertiser, or partner.  What if a third party offered to pay you $2 per view on the proviso that they could stream it to their 2 million customer with 'Brought to you by' branding? Each of those viewers would get to see the film free, but you would still receive payment.

Free doesn't mean that you don't get paid, it just means you're leveraging what you have in the best way possible to gain a balance between audience size and income - knowing that the greater the first, the more likely the second. Your use of Free does have to be carefully considered, and backed up with a business plan that includes alternative revenue streams. At the end of Anderson's "Free" is a list of fifty different business models built on Free, and while you can argue that some of these might be a tad flimsy in using the word, it certainly gives indie filmmakers something to consider beyond the traditional distribution route.

Back to Mark Barrett's post for a moment - his primary complaint, apart from an initial misunderstanding of the theory behind Free, is that it's all very good and well for famous people such as Anderson (who is editor of Wired Magazine) to make the theory work when he already has a huge paying audience, but is is fair to tell this to individual writers who have no such audience?

He has a point. However, I am inclined to believe that an individual has a better chance of building an audience for themselves in this online 'free' space than waiting for a publisher to promote them. It may not be fair, but it is the way the world works now.

Making your content available for free helps it spread furthest and fastest. Where people would otherwise have to mitigate their sense of 'risk' over the cost vs value, when there is no upfront cost they have no barrier to participate, and are more likely to try new authors and edgier content.

As mentioned in an earlier post, I bought a couple books online from a 'risky' unknown self published author due entirely to the free content that paved the way as introduction - as indie filmmakers' biggest battle is gaining awareness, I think some aspect of 'Free' should be written into every indie business plan.

If you're interested in this stuff, I recommend checking out the Filmmakers Road Map to Free by Ross Pruden too.