At C2E2 over the weekend, a bunch of people were running around showing off how awesome comics look on the iPad. I have to agree, comics on the iPad appear to be way more enjoyably readable than I had anticipated. No one seems to be quite sure if this is great news or awful news. Well, it’s both. It’s great news for comics junkies who aren’t yet overstimulated by too much digital content and for comics creators who see their stories as loss leaders for movies and action figures… the rest of you are fucked.

Oh I’m no Luddite about this shit, but I do have more than enough anecdotal reference material to make the call here.

Here’s a list of a few retail shops I worked at during my teens and early 20s:
- Tower Records (Huntington, NY)
- Tower Video (Lafayette & 4th, Greenwich Village NY)
- Kim’s Video (Bleecker Street, West Village NY)
- Two Boots Video (Ave A, East Village NY)
- See Hear Zines (St Mark’s Place, East Village NY)
- St. Mark’s Comics (St Mark’s Place, East Village NY)
- Village Comics (Bleecker Street, New York)
- Mama Mia What A Pizza (Broadway & 8th, NY)

Yeah I had a lot of jobs, sometimes I worked at more than one at once and sometimes I got fired right away for being an asshole.

The only one on that list who’s likely to see the next decade is Mama Mia What A Pizza (or whatever it’s called nowadays) because you can’t download a pizza (yet).

Tower Records was put out of business by iTunes.
Tower Video, Kim’s Video, and Two Boots Video were put out of business by Netflix.
See Hear was put out of business by Blogger.

I hate to put a deathwish on great indie businesses, but the iPad has me concerned about the future for St Mark’s Comics and Village Comics.

There’s a reason why I attribute the death of music retail and video retail to iTunes and Netflix rather than Napster and PirateBay. Here’s my unique take on all this: Piracy doesn’t put companies out of business, Privateering does.

For my purposes here, a Privateer is a legal Pirate… let the historians argue the nuances of that. Privateers were essentially pirates with a government issued right to attack, capture, and plunder enemy ships. These days, there are people who receive government protection (in the form of corporate status) to plunder other businesses (in this case, media creators). Businesses like iTunes and Netflix have figured out how to make a dollar by costing other people three dollars. They are not creating value, they are accruing revenue by lowballing the value of other people’s content.

The reason Piracy isn’t the problem is because Piracy is an unreliable, unsustainable pain in the ass way to consume content… and people are lazy consumers of entertainment. Sure, you’ll get a bunch of shit for free and then you’ll get a virus and then you’ll get free shit but then you won’t be able to find what you want and then you’ll get free shit and then the people running the site get jobs and it shuts down. Piracy alone is too difficult to manage.

The problem comes from the union of Piracy and Privateering.

Before iTunes & iPods, we were all downloading thousands of songs that we had to burn to CD-Rs if we wanted to listen to them anyplace other than our computers. It was a fucking hassle. Suddenly we all had more music than we could fit in our CD wallets and our mixes were too long for a mix CD. A new demand occurred in the marketplace: “give us a way to organize all our stolen music.” Apple responded with the iTunes/iPod system. The iPod didn’t replace the walkman simply because mp3 players were cool, there were plenty of mp3 players in the marketplace. And it wasn’t the iTunes store either… it was the system of managing a tremendous amount of digital music that most people had accumulated through piracy. Privateering… Apple benefited legally by managing the illegal sharing of content.

Netflix is a bit different and I’ve already beaten that horse to glue, so for right now I’m gonna stick to Apple.

So what does this have to do with comics? Well, the iPad is a very impressive device… and based on the fact that there’s a Kindle app on there I’m assuming Apple’s business model is not to shave revenue off ebook sales. No, the iPad is going to be a fantastic means of managing stolen comic books.

My friend has the first few hundred issues of Spider-Man, X-Men, Iron Man, Fantastic Four, and Captain America on his computer as .cbr files (all obtained legally I’m sure… or maybe they were cracked out of the PDFs on those Marvel CD-Rs from a few years back). I tried reading one on my iPod and it was annoying. It’s also not a great experience to read them on a laptop or desktop since the monitor is landscape not profile. Well… the prospect of reading them on the iPad is downright exciting.

There is already rampant scanning piracy of comics, but until now there was no ideal way to organize and read those pirated comics. Well, it’s here… and as soon as the iPad (or a similar device) takes hold, there will be a blitz of comic book scanning that will begin a cycle of the iPad causing increased comic book scanning which will lead to increased sales of iPads and then more people scanning and so on.

The piracy of comics will be uniquely ubiquitous because so many back issues are simply not available, so fans will consider it a service to share their back issues. The publishers will want to cash in by making digital back issues available, but at $2 a pop how many people are going to actually buy 1,000 or so back-issues of the various Spider-Man series? Instantly, there will be too much content avilable and that will diminish the value of the individual books… smart publishers will offer blocks of content cheaply (Spider-Man issues 1-100 for $20 or something) and then suddenly new comic books will be competing directly with classic back issues for the time, attention, and dollars of each comic book reader. The digital comics New Release Rack will be as glutted as the rest of the internet.

The drop in perceived value for comics will have massive repercussions for comic shops and especially comic con dealers who specialize in back issues, but also for publishers in general… especially indies.

My advice? Open a pizza shop. Or buy stock in Apple, I guess. The rise of the iPod didn’t exactly make the music business more lucrative but it sure helped Apple’s share price.

But I actually don’t think comics are as fucked as other types of digitized media, because comics have a unique advantage over film and music in that they’re fundamentally periodicals. I know a lot of people will get pissed at me for saying that because there’s been a big push in comics to get away from being periodicals in favor of amassing libraries, but if there’s one thing every industry can learn from MGM and Miramax it’s that the media library business model is a bust… digital media ubiquity demands periodicals. The internet loves nothing more than ongoing, serialized, branded content that keeps issuing forth new releases. So that could wind up making all this hugely favorable to the comics business… but either way it certainly won’t be business as usual.

(get here by accident? welcome to www.hollywood-2point0.com)

I’ll give you an example of how things can go awry very quickly. We put out fitness videos with indie rock music playing in sync with the workouts. It was a clever idea and people really dig them. At first we were super on top of making them cool, then we got preoccupied with other projects and let one of the performers take charge of the production and design. The result was that the aesthetic changed and, for whatever reason, the choices she made turned it… less cool. We were surprised we dodged the hipster-snark bullet for the most part on the first batch, but as soon as we took our eyes off the project it was targeted for internet ridicule. Now, to be fair, it kind of deserved a lot of the ridicule… it was the weakest video in the line and the style was a mess. So I have no problem with the fact that it was criticized. But the snark quickly got out of control. In The Onion, Amelie Gillette and her readers called the girls “beefy-thigh indie whores” and went on to say:
- “at least two of them are on heroin, the rest are on crack,”
- the instructor “should have been sold into white slavery when she was 6,”
- and the cast should be “date-raped, murdered, and thrown in a dumpster.”

I mean, jesus christ, whatever happened to Thumbs Down?

I could spend pages and pages recounting the ridiculous verbal sludge I’ve seen thrown at our filmmakers and performers, but I’m not feeling very Sisyphus right now. Again, there are plenty of perfectly fair critical assessments that, while I may not agree, I respect their validity. Then there are the kinds of ad hominem attacks that make you envy Hillary Clinton for the comparatively kid-gloved treatment she received in the primary last year.

But none of that is the point of this blog post. The point of this blog post is sales.

The filmmakers & performers getting kicked in the balls & ovaries by hateful snarks always complain the same complaint “this asshole’s opinion is costing me money, making it harder for me to pay my rent, making it harder for me to feed my family with PERSONAL attacks because I must have somehow pissed him off… did I not sleep with him in high school or something??”

Yes, besides wounded egos, there is also business at hand and even those who can take a few emotional arrows still don’t like losing money and career opportunities based on some random person’s opinion. This is why gangsta rappers are known to stab critics over bad reviews (did you know Wordpress dictionary recognizes the word “gangsta” but not the word “Wordpress?” how awesome is that?)

So… after all this blathering, I’m finally ready to hit you with the twist ending to all this.

Do bad reviews, snark, and hateful blog posts cost filmmakers & performers money and career opportunities? Well, yes, they probably do.

Ok that wasn’t a very good riddle. BUT!

Do bad reviews, snark, and hateful blog posts cost FILMS money?

NO! THEY MAKE THEM SELL MORE!

Well, wait, let me clarify.

In the lexicon of the internet, let’s use a 1-10 star rating system to break down the analytics of a film’s critical reception.

- Movies that get mostly 3 through 6 star reviews (out of 10) are generally our lowest sellers.
- Movies that get mostly 7 through 10 star reviews are our lower midline sellers.
- Movies that get mostly 1 through 2 star reviews are our upper midline sellers.
- Movies that get mostly 1 star reviews or 10 star reviews are our TOP sellers. By far.

Why is this? Beats me. Would I hazard a guess? Sure!

First of all, nobody likes mediocre. People will watch a mediocre movie that’s on TV, but rarely will they run out to the store and plunk down good cash for a mediocre movie. So getting consistent 3-6 star reviews is death.

Why do 1-2 star reviewed films outsell 8-10 star reviewed films? I have no idea. We have a film that has a 91% Fresh rating on Rotten Tomatoes from over 30 reviews… it’s one of our lowest sellers. We have a splatter film that I’ve never heard a single positive thing said about and it pays the rent each month. My gut is that, for whatever reason, people rent the highly-rated films on Netflix (where we make no money) and buy the guilty pleasures.

Of course, it makes perfect sense that titles which consistently score 10s and 1s would be the top sellers, because they’re divisive. People argue about them, get mad at them, champion them… people CARE about them. This is why Rush Limbaugh and Keith Olbermann and Glenn Beck and Howard Stern are so ridiculously successful. If you’re not pissing someone off, then nobody cares.

Allow me to demonstrate: Let’s say you love the band W.A.S.P. (haha). Ok, you tell me “holy shit I love W.A.S.P.” and I say “yeah, they’re pretty good.” The conversation is over. You’re not going to champion them to me, nobody fights against lukewarm. But if I say “I fucking hate W.A.S.P., Blackie Lawless is a no-talent prick who should never be allowed in public with buttless leather pants!” Well, now we’re in an argument and we’ll start making some noise. Multiple that conversation a few thousand times across the internet and watch W.A.S.P. albums fly through PirateBay left and right.

Now, here is the flaw in the internet analytics system… if a movie gets 100 6-star reviews and a 100 4-star reviews, a website’s rating system will tell you it’s a 5-star movie. If a movie gets 100 10-star reviews and 100 1-star reviews, the website’s rating system will tell you it too is a 5-star movie. But those two 5-star movies couldn’t be more different.

Good reviews are better than mediocre reviews, but if you’re not getting bad reviews then I have two words of advice for you: try harder.

At Halo-8, we’ll put the A FILM BY credit [henceforth I'll refer to it as AFB] on the key art if a filmmaker wants it there, so we have a handful of release with the credit. Now, I hate to do this because I don’t want everybody checking key art to figure out other filmmakers’ sales etc, but it’s interesting… our films with the AFB credit are our lowest selling DVDs. Consistently. It’s so fucking weird. They range in content and marketability, but for some reason if that AFB credit is there it dooms the release.

I do NOT want to villify or judge the filmmakers, so I don’t know how much to weigh in on this… but my gut is that a filmmaker who wants that credit has an overall filmmaking ideology that might make the rest of the team less apt to feel ownership of the film and want to help promote it. That may or may not be a big deal on a studio level, but for an indie release that feeling of camaraderie and collaborative-ownership is critical. Or maybe it’s totally coincidental. I sincerely have no clue. I don’t feel comfortable getting super analytical on this one (at least not in public haha), but I thought it was interesting enough to mention.

I’m really curious what everyone else thinks.

[FULL DISCLOSURE: I did once take the AFB credit sort of (and probably cursed myself in the process). I always referred to THREAT as "A Kings Mob Production" and used that term where the AFB credit would otherwise go. When Queque and Killili were making the first THREAT postcard, they asked me about it and I said it should be "A Kings Mob Production." Q&K made the argument that if Kings Mob is a creative collective where everyone eventually helms their own project (the dream that was never realized), then the key art should represent both by saying "A Kings Mob Production" as well as, for example, "A film by Matt Pizzolo." Besides seeing their point as valid in terms of accountability and also allowing the collective to have two levels of ownership to identify the team as well as the project's primary creative force, I also agreed to it because I was incredibly frustrated that press was constantly referring to it as "Matt Pizzolo's THREAT" just because I was the director... but in fairness if it wasn't "Kings Mob's THREAT" and if they insisted on personalizing it then Katie should certainly have the same level of ownership I did, so I suggested "A film by Katie Nisa & Matt Pizzolo" (alphabetical order). I later pulled the credit entirely when the movie finally came out. Now... if that didn't just completely bore the shit out of you, I'd be happy to spend a few pages detailing my neurotic process of dealing with THREAT's opening title cards. Ugh. Credits are stupid.]

Example: I was lucky enough to be included in the Horror Comics Into Film panel Peter Katz organized at Comic Con last month. At risk of hurting my fellow panelists’ feelings, I imagine Marv Wolfman was the guest of honor. Maybe not, surely there were a lot of important, influential, successful panelists up there… and then there was me and Jeff Katz. I mean, who the fuck am I to sit next to Tim Seeley and Whitley Strieber talking about horror? The only horror film I’ve directed was Slumber Party Slaughterhouse and that was a joke (literally: it was supposed to be a Halloween prank but it accidentally became a real DVD… oops). In any case, I’m pretty sure I had no business being on that panel. Which is why it was awesome for me, because I got to reach a new audience.

I like to take Halo-8 and our various titles to all sorts of places where we don’t belong. It didn’t make a lot of sense for us to set up a table at comic book conventions last year, but it seemed like a cool place to spread the word about our films and we were starting to publish comics at the time. Before we headed to the first con, we wondered if we should bother bringing the Fitness For Indie Rockers DVDs with us. We decided to bring them along and the results were this: we didn’t sell any comics, we sold a ton of fitness videos. Why? Because everyone else there was selling comics, and the kind of art school girls who go to comic cons love our fitness videos. Yoga For Indie Rockers had no business being at the comic con, and thus it stood out.

In the past few months, Godkiller has had panels and signings at Wondercon, Comic Con, and Fangoria Weekend of Horrors in LA. Because Godkiller utilizes a brand new filmmaking format that integrates comic books with cinema, you might think it would be a homerun at Comic Con. Nope. The people who dug it at Comic Con were awesome, but the turnout for the signings was light. The Wondercon panel went okay because the art school crowd was into it, but the best response was at Fangoria. Why? Why does Godkiller get chatter in the film trades and horror press but not in the comics blogs? My guess is that when viewed through a horror prism Godkiller is weird enough to be unique, whereas through a comic book prism it just doesn’t stand out as much… either due to comic art overload or because the luddites think we’re bastardizing their artform (which we are, thank you very much). The best thing we can do with Godkiller is present it in a context where the audience isn’t already desentisized to its unique attributes.

Threat was carried by tons of retailers, but I find two particular retailers define my argument here well: Best Buy and Hot Topic. When Threat was in Best Buy, everyone thought it was awesome for it to be there because that’s where most people buy DVDs (at least, DVDs that aren’t in WalMart). Threat sat on a shelf next to thousands of other DVDs including the biggest hits from the top studios. When Threat was in Hot Topic, a lot of people thought it was weird for it to be there… after all, Hot Topic isn’t really a seller of DVDs. In fact, Threat sat on a tiny little shelf in the back next to a handful of other punk-themed DVDs like Sid & Nancy, Repo Man, etc. Guess where Threat sold better?

Seth Godin makes a point about the importance of being “the best” at a specific niche. He points out that the top performer generally outsells all its competitors combined. If you can be in Best Buy and be the top-selling supplier there, good for you. If not, move to a different context… it’s not hard to be the best-selling line of fitness videos at a comic book convention–and it can be quite profitable.

Personally, I don’t like the term “fanbase.” I prefer the simpler term “base.” I also like “core following.” I find those to be more instructive. Today’s media creators can learn a lot from politicians who understand things like kissing babies & shaking hands, galvanizing the base, and “all politics are local.” Political pundits have developed a shorthand for how politicans roll: there’s retail politics and wholesale politics. Retail politics is direct, one-on-one… shakin’ babies and kissin’ hands. Wholesale politics is broad, massmarket… reading a teleprompter on network television. I suppose in the Age of Obama we could probably add a third category: aggregator politics–the use of web-systems to create retail connections on a wholesale level. [I brought up Obama so I guess I should close out that thought: Obama is masterful as a wholesale politician and groundbreaking as an aggregator politician, but not so great as a retail politician. Then why did he crush his opposition? Is retail politics less effective than wholesale & aggregator politics? I don't think so. I think he developed aggregator politics into a science to offset his retail weakness, and he raised enough money to crowd out opposition in the far costlier battleground of wholesale politics. But that's just my humble opinion and I digress.]

There’s a theory that’s been circulating the past few years called A Thousand True Fans… basically if an artist can have 1,000 people who adore her work enough to buy everything she does as soon as she does it, that artist can make a decent living. It works a bit better for say a singer-songwriter than an actress or filmmaker, but that’s not the point. The point is “True Fan.” True Fan does not equal Fan and it does not equal Friend. It’s a very specific type of person… it’s basically a fan who feels they have a personal connection with you, but not so much that they’re actually your friend (because your friends want everything for free). Where does a True Fan come from? I believe a True Fan comes from retail politics.

I’ve Got 99 Problems and being famousish ain’t 1

I occasionally roll with famousish people. It’s a bit more fun than rolling with people who wish they were famous and a lot less fun than rolling with criminals. But most famousish people are nice enough.

A couple months back I was hanging with a famousish actress at a festival. I asked her if she’s psyched that she won the lottery and became famousish really early in life, and her answer was that she was happy about it because she “really learned a lot about people.” Really? Being famousish enables you to really learn a lot about people?

For the rest of the day, I watched her get hounded by fans who interrupted her conversations, asked her questions that had nothing to do with herself or even her public persona but simply about characters she’s played, and aggressively requested (demanded?) she take photos with them so they could grab her around the waist and smear sweat on her shoulder.

I don’t know what those kinds of experiences teach her about people, but if it were me I’d probably learn that most people are a mix of narcissistic dorks and overly-entitled assholes. I would think my fans were to be tolerated rather than appreciated and that they existed for profit not for connection.

So despite it being one-on-one, that’s not what I mean when I say retail politics.

That kind of relationship is the fruit of wholesale politics and massmarketing. It’s a relationship of “star” and “fan.” Massmarketing puts up huge barriers between stars and fans. On its face, the symbiotic relationship of mutual exploitation is fine, but it’s not built to last. The barrier between star and fan is erected by middlemen who profit from the transaction until the relationship inevitably sours. The fans and the middlemen move their attention to another star, and the star has no fanbase to call her own. Bummer for the star.

The key to retail-politics and base-building, in my opinion, is creating a direct, personal connection with your audience.

I’ve had a lot of different experiences marketing/promoting films and events, but there are two that really define the poles for me here.

My experiences in retail politics
After making the guerrilla-indie film Threat with the Kings Mob crew, we piled into a van and drove cross-country to Sundance. We were naive enough to think Sundance was some sort of halfway house for aspiring filmmakers, so it seemed like the place to take our film even though we weren’t actually invited (or welcome). I was 23 at the time and the internet was fairly new but it was already an effective means of organizing. Through hardcore-punk messageboards and the mailing list we’d developed during production, we turned our trip to Sundance into a little mini-tour. On the Atari Teenage Riot messageboard, we found a dude in Pittsburgh who offered to screen the movie in his apartment and let us sleep on his floor. Not only was the apartment packed full of awesome people when we got there, but he became one of my very close friends and ten years later he flew to LA for my wedding (I also eventually convinced him to make a vegan cooking DVD we put out). It’s weird to describe a relationship like that as retail politics or marketing, but it’s an instructive example of how marketing can result in real personal connections. On the way to Sundance, we met some of the most amazing, coolest people I’d ever met in my life, slept on their floors, ate the food they cooked for us, and played our movie for them and their friends and whoever else showed up. The audiences ranged from 10-300, which isn’t all that different from a lot of movie theater showings I’ve had over the years, except for the insightful conversations and personal connections that followed. I remember one night we played the movie in a bar in Iowa City and someone who really wanted to see it missed the show, so we went to her apartment that night and played it for a packed room (many of whom had seen it earlier in the night and wanted to watch it again) while we ate the bean burritos she cooked us and slept on her floor. This all probably sounds very small and unprofitable, but it is neither. Not only were these great times and great people, but the shows were more consistently profitable than a lot of things we do on a massmarket level these days, and without those relatively small pieces coming together I would’ve never had the base that’s enabled me to function on a massmarket level. If anything, I regret not being able to do more of those types of events today. Anyhow, we eventually made our way to Sundance where, of course, nobody gave a shit about us. None of the suits trying to get on the guestlist for the coolest coke parties wanted to see our movie. And if we hadn’t built our base along the way, we would’ve been fucked. BUT on the way to Sundance we’d learned that we didn’t need the suits to reach our audience. So we walked into a Doc Marten’s shoe store across the street from Sundance’s flagship Egyptian Theater and talked to the clerks, who later convinced their bosses to let us show the movie there. Then we went to WalMart and talked to the skater girl working in the electronics section about WalMart’s 30-Days No Questions Asked return policy. We outfitted the shoe store with as many TVs as we could put on our credit cards (all to be returned shortly thereafter) and promoted our shows to hardcore kids, skaters, snowboarders, and various young ne’er-do-wells in the greater Salt Lake City area. We wound up with lines around the block, all four showings sold out, and a 4-page feature cover story in London’s Daily Telegraph Saturday Magazine, which we later parlayed into a European tour. That was neither small nor unprofitable.

My experiences in wholesale politics
When I was turning 30, I’d been through the wringer a few times and was broke and working graveyard shifts in a print shop in Central LA. One night at around 4am, I was arguing with my supervisor about something ridiculous and realized I needed to get the fuck out of there before I wound up losing my temper and doing something stupid (as I’m apt to do). So I went out in the parking lot, sat on the tailgate of my pickup truck, drank cold coffee and decided to dig up Threat, stitch it into some sort of Frankenstein and raise it from the dead so I could get out of my job. The question was how to do that with a strange little movie that never got much interest from the industry and whose core audience seemed to be hardcore punk kids, anarcho-squatters, radical protesters, and black women (what? I have no idea, that’s just how Threat rolls). To solve that problem, I considered a few of the cultural shifts that’d occurred since Threat had its life cycle as an underground weirdo movie: DVDs became huge, hardcore-punk and its metalcore derivations became popular, and “mashups” became stylish. So… I decided to make a Threat soundtrack album of hardcore bands being mashed up by electronica DJs, take that to one of the major studios that distributes indie labels, tell them it’s a modern day “Judgment Night” soundtrack, and convince them to give me a bunch of money for my new DVD/CD movie & soundtrack label. And basically that’s what I did. I got a bunch of money from Sony and I was so sick of retail politics that all I wanted to do was spend someone else’s money and market the film to people who buy stuff (astonishingly enough, anarcho-squatters don’t buy a lot of DVDs) so I could pay off my debts to society for years of indie rabblerousing. All of this led to some questionable marketing decisions where Frankenstein-Threat was retrofitted for American malls. Nearly ten years after it took its first breath of life as a gritty little bastard of a film that played bars, basements, and anarchist bookstores, Threat was essentially dolled up in a spiked collar & mascara’d eyes as a “New Release” at FYE, Tower, and Hot Topic sandwiched in between Thirteen and Underworld with full page ads in Revolver and Alternative Press and commercials running on MTV2 and Fuse. The result? Meh. It sold ok, but at such astronomical marketing cost that it wasn’t worth the effort. Plus it made its money by selling to people it wasn’t suited for, so the initial audience and critic response was lousy and that did more harm than good. I’d basically gone out of my way to make all the newbie mistakes of chasing massmarket will-o-wisps that we’d been savvy enough to avoid the first time around. So, kicking myself for being an idiot, I went back out on the road and started the retail politics of Threat over again from scratch, playing it in small venues, hanging with the audience afterward to discuss the film, seeking out critics with the appropriate tastes to understand the film and champion it, shakin’ babies and kissin’ hands. I managed to salvage it again (or maybe it managed to salvage me again), and it finally settled into the kind of respected-by-weirdos movie it was intended to be. And it got me out of the print shop, so I guess the ridiculous scheme worked at the end of the day.

Here’s the lesson I took from all this:
Threat wasn’t sustainable as a solely retail-politics style release, but it wasn’t launchable as a solely wholesale-politics style release. It needed both. AS DOES EVERYTHING. Your boat needs both a paddle and a sail, otherwise you’ll either never get out to sea in the first place or you’ll exhaust yourself once you get there.

You’re not making movies or music or webisodes or whatever it is you think you’re making, you’re making personal connections with other people. A film is a personal connection between the filmmakers and the film watchers. If you ignore that connection, the product itself has no value.

Making a personal connection with members of your audience can take many forms. It can consist of sleeping on their floors, facebook-friending them, or meeting them in public and taking a picture with them. However, it doesn’t mean getting a spambot to autofriend them or holding your nose in the photo. That’s why I prefer the example of sleeping on their floor… you can’t get a bot to sleep on someone’s floor for you. I’ll get into aggregator-politics in a future post (and hopefully a more concise, focused one at that), but do not make the mistake of confusing retail-politics with aggregator-politics. They’re two different things, even though they can be done using similar tools.

Your job is to cultivate a core following that cares about your message and what you do, and will support you with cash-purchases and positive word of mouth as you create your body of work. That process cannot be outsourced to spambots and massmarket advertising, it can only be done one personal connection at a time. Only once you’ve built that support network can you potentially benefit from the wholesale-politicking of massmarket distribution.

I can’t remember ever feeling quite so smart and quite so stupid at exactly the same time.

There’s a concept you hear every so often from media pundits and technology providers: the last ten feet. Basically it refers to the process of digitally delivering movies and TV shows and other video content via the internet. Internet speeds and compression and bandwidth have gotten to the point where high quality video can be sent from anywhere in the world right to your computer… but you probably want to watch it on your TV… and your TV is only another ten feet or so away… but the internet just doesn’t know how to get there.

So there are all sorts of proprietary solutions for how to connect your TV to the internet. If you want to buy an Apple TV, you can port your iTunes videos to your TV through Apple TV… but Apple TV is lame so it’s not being broadly adopted. Microsoft has its cumbersome home network system or its Xbox Live system where you can buy downloads of TV shows & movies or stream Netflix movies if you have an account… but you can’t just download or stream anything you want, only what Microsoft or Netflix has negotiated to sell you—and Netflix has a particularly weak catalog since suppliers are sick of getting nuggied by Netflix’s business model that seems to help Netflix and nobody else. Playstation 3 has a similar operation developing, as does Wii and Roku (formerly a Netflix-only box) which are offering broader catalogs from Hulu and Amazon Unbox. And there’s plenty more… it seems like every day someone is popping up with a new set-top box that will finally connect my TV to the internet.

Basically, everyone wants to be the iPod of movies and TV. Apple figured out how to integrate your stolen mp3s with your walkman in a seamless configuration that was hip, stylish, and integrated into Apple technology… the rest is a CNBC special on the genius of Steve Jobs, rugged capitalist individualist.

But iTunes and the iPod were integrating my access to *everything* into a newfangled walkman. It worked because the internet was already providing me with all the music I could possibly want to hear, Steve Jobs just gave me a simple way to organize and enjoy what I already had. iTunes did not generate false scarcity, it managed abundance.

These set-top boxes, however, are creating a false scarcity of available video content. They’re trying to tell me what I’m allowed to see and how I’m allowed to watch it. I want to watch Battlestar Galactica so I download it on my Xbox, but then I’m not allowed to take it off my Xbox without Xbox-branded plugins. I want to watch Season 1 of True Blood, but HBO only seems to have it available digitally on iTunes… who imposes DRM that prevents me from watching it on my TV unless I buy their stupid set-top box. I can’t even watch it on HBO On Demand through my cable provider, even though I pay a monthly subscription to the bastards and I hardly ever watch any of their goddamned programming. So I wind up calling Blockbuster (since both my local indie videostores have gone out of business thanks to Netflix) asking to see what discs they have in stock like I’m back in 1992 or something. Ridiculous.

Don’t these disservice-providers understand that I want to watch what I want to watch when I want to watch it? I don’t want to wait 2 days for Netflix to deliver it by mail like this is some Benjamin Franklin pony express bullshit… 2 days from now I’ll want to watch something else. And I certainly don’t want to have to choose from Netflix’s paltry Watch Now catalog just because they’re too miserly to offer suppliers enough incentive to sign on their streaming service.

So… I wanted to watch this mumblecore movie and of course it’s not on Xbox Live, it’s not on Netflix Watch Now, it’s not on Amazon Unbox, it’s not on Hulu, and it’s not on my Time Warner Cable On Demand. It’s not available for download on the filmmaker’s website or on the distributor’s website. But it is on Pirate Bay. So fuck you set-top box providers and fuck you filmmaker and distributor, you make it so I can’t see this thing legally and conveniently I’ll just download the torrent.

So I download the torrent and I’m about to watch it on my computer when something occurs to me… why can’t I just walk it over to my TV? I dump the file on one of the USB flash drives I have laying around. These days they’re like $20 for 15 GB and I keep accidentally leaving them in my pants when I do my laundry so I have like a gazillion of them laying around.

I drag the avi file I just downloaded from Pirate Bay onto the USB flash drive and I walk ten feet to my TV. I start looking for USB ports. Voila! Xbox has USB ports. I plug it in. I navigate to Video Library and it shows my USB drive. So I click it and there’s that little whippersnapper of an avi file. I click there, Xbox downloads some driver automatically, and 10 seconds later I’m watching the movie on my bigass flatscreen TV and it looks pretty fuckin sweet.

Am I an idiot? Does everyone else already know you can do this?

I did a little more research and found that on Amazon I can buy an iPod-to-RCA adapter for 53 cents. If you aren’t a techie, RCA outputs are the red/white/yellow plugs that come out of your VHS player or DVD player (if you’re not using one of the newer options like HDMI) and plug easily into just about any TV on the planet.

So then I wanted to see what else I could play on my Xbox besides avi files. On our website Televandalism we sell all our movies as DRM-free m4v files because that’s the file type we found to be most compatible with iPods, and we figured at the time that the most likely reason to download a movie rather than stream it would be for portability via iPod.

So I downloaded an m4v of Pilates For Indie Rockers, dropped it on the USB flash drive, plugged it into the Xbox, and goddamn it played easy and looked awesome. No fuss, no muss… does that mean I can finally get rid of this goddamned bookshelf full of DVDs?

Maybe the rest of you already knew how easy it was to download movies and watch them digitally on your TV, but I didn’t… and I’m the kind of guy who’s supposed to know these things. Why didn’t I know it? Besides the fact that I’m a dumbass? Because it’s not in the interest of the massmarket aggregators, technology providers, and set-top boxes to market how simple it is for audiences to download platform-agnostic video content playable on whatever player they have handy and how filmmakers can sell their movies digitally on their own websites without having to lose 75% of the revenue to all these various pipeline providers.

But aren’t those revenue losses made up for by the fact that digital distribution is cheaper than manufacturing shiny plastic discs? No! Everyone talks about how the cost of distribution will decrease because of digital distribution rather than plastic DVD manufacturing, but in order to get into the iTunes store Apple has required an encode fee that is MORE than the cost of DVD-authoring plus manufacturing an indie-sized run of shiny plastic discs. Adding insult to a kick in the balls, the Apple encode is (a) the same fucking thing as outputting to h.264 quicktime for free in any number of applications, and (b) not transferable to other digital stores which have their own unnecessary encode fees. Basically, they’re all creating fabricated profit-centers that make digital distribution MORE expensive than traditional distribution. The middleman is boning both sides of the transaction.

It’s like if you and I wanted to hang out and there’s a perfectly safe path between our houses, but Steve Jobs and Bill Gates erected bridges and demanded we pay tolls and they spent millions marketing their bridges so we think we have to take them… but their bridges aren’t crossing a raging river, they’re just crossing a path that’s actually EASIER for us to take than their stupid bridges.

Microsoft loses money on Xbox sales, so they actually have to sell software and licenses and subscriptions etc etc–they need to sell content, not just Xboxes, so it’s not in their best interest to market the fact that you can buy video online and watch it through Xbox. Apple is a bit different… since the iTunes store is free and their margins are slim on downloads, they want you to buy iPods–so it’s important to them that whatever you buy in their free store encourages you to buy their proprietary hardware. As a result, no one’s running around raising a ruckus about how simple it is to watch a movie from the internet by using their hardware without using their pipeline. To be honest, I’m astonished they even allow their hardware to support it.

To be fair, Steve Jobs and Bill Gates aren’t the only ones doing this, I just use them as prime examples because they’d make particularly funny looking trolls. Last year Time Warner Cable rented me a DVR with USB inputs and I excitedly asked the cable guy if I could send in video files through the USB ports and he said “probably, but Time Warner Cable disabled all the USB ports before distributing the set-top boxes.” Fuckers.

There’s actually tons of simple ways to move video files from the computer to the TV, but these are discussed mostly in tech blogs not in consumer media. Brian just mentioned to me that LaCie is releasing a hard drive designed specifically for this purpose, but at $349 it’s no cheaper than an Xbox. There are plenty of even cheaper solutions.

The problem is that by muddying all this, they’re actually encouraging piracy. I download and stream plenty of video content legally and pay Microsoft, Apple, Time Warner quite well for it. If that mumblecore movie was available for download legally, I would have bought it–but by creating a false scarcity they made piracy the only way I could get the content in the format I wanted to consume it. I actually felt kind of guilty downloading it and if it was any good I would’ve felt even guiltier. But don’t worry, Justice Department: I was downloading it as research for this very important blog post.

So why has the buying and selling of non-DRM, platform-agnostic movies not become ubiquitous yet? If I can sell you a downloadable movie on my website that you can watch on your computer, on your iPod, on your Xbox, and anyplace else you want to watch it… then why would you choose to download it from Xbox where you can only watch it on Xbox? Or from iTunes where you can only watch it on Apple-approved players? And what’s the incentive for me to distribute through those pipelines if I get more money by selling to you directly? Because I’m hoping that by being on iTunes and Xbox you’ll discover my movie? That’s not very likely. Then maybe because being on those services somehow gives my movie credibility? Puh-lease.

The cost-benefit analysis here favors consumers buying direct from filmmakers’ websites, distributors’ websites, and DRM-free digital stores; and filmmakers, distributors, and e-tailers selling direct from their own websites while also hypersyndicating the content to all those other bridges for the suckers who want to use them. The only thing standing in the way of this model taking hold is the marketing campaigns of the service providers who all want to control the last ten feet between your computer and your TV.

I solved the crisis of the last ten feet. It’s called get off your ass and walk, ya fatass.

[get here by accident? this is a blog post from Hollywood-2.0, read more at www.hollywood-2point0.com]

If you want to go BIG, there’s no better model than the bigass Hollywood studios and their bigass tentpole movies. But already the logic is flawed because hardly any of the tentpoles’ underlying properties were big right out of the gate.

There’s a reason why the biggest studio movies are remakes, reboots, sequels, and adaptations… it’s just too damn costly, risky, and most importantly ineffective these days to market an entirely new property from the ground straight up to the stratosphere of massmarket, major motion picture distribution. It’s rare to accuse Hollywood-types of being fiscally-conservative, but just as ‘we’re all marketers now’ we’re also ‘all beancounters now.’

Hollywood isn’t rebooting and remaking movies nonstop because there’s a lack of new ideas… there are zillions of unmade spec scripts circulating around town that could make perfectly good films. But they can’t go big if they don’t have a core audience, because it’s simply bad business to try and make something out of nothing. Here’s the sad truth: film is a terrible incubator for new ideas.

The solution? Well, the studios have existing brands (that they own or that they have the warchest to license), but we all share niches. Vampires and zombies are popular right now for this reason, you can’t afford Will Smith but zombies and vampires are public domain box office superstars. It’s also a reason why indie H.P Lovecraft adaptations are so popular, his stories are public domain and have a huge built-in core audience. Adaptations and marketable monsters are shortcuts, you can start with an original idea… but you shouldn’t start big and you shouldn’t expect it to go big quickly (or anytime soon).

A niche is a portal to a core audience. That core will enable you to start with a targeted base that can be galvanized into supporting your project, and once you’ve got the base you can potentially grow it into something BIG. You don’t have to, you can subsist for a long time catering solely to your core audience and that’s great… but there’s another possibility: a project that was initially geared for a specific audience could grow far beyond that into BIG… like Harry Potter or Batman. Those properties were not strategized in a corporate board room and taken out in their infancy to market BIG. They started relatively small with core audiences and then grew incrementally and later exponentially. Even Transformers had humbler beginnings than a $200M Michael Bay effectsapalooza. Batman had 50 years of marketing behind it before Tim Burton’s major motion picture adaptation took it BIG, and 70 years before Christopher Nolan made it respectable. Lord of the Rings brewed for 47 years before Peter Jackson took it BIG BIG BIG (no disrespect to Ralph Bakshi). Transformers had 23 years of marketing before Michael Bay’s re-imagining took it BIG. Sure Harry Potter was relatively young at 4 years when it got taken to the major motion picture level, but hell sometimes you win the lottery… plus JK Rowling had that property in the incubator for 7 years prior to the first book being published, so you could just as easily call it 11 years. Will the ‘Half-Blood Prince’ movie outperform the ‘Sorcerer’s Stone’ movie? I certainly hope so… Half-Blood Prince is benefiting from 19 years of incubation/marketing whereas Sorcerer’s Stone only benefited from 11. Going BIG takes longer than most marketers would like to admit. Can you imagine bringing an investor a business plan for a superhero franchise with a 70 year marketing campaign?

Of course, it’s not as simple as throwing a vampire or a wizard or a punk or a robot into your project. Studios can buy access to niches by licensing existing, credible properties… indie creators have to earn their access to niches by creating new credible properties. That takes time and it requires starting with a small core audience that will support you in the long term.

If a project has no core audience, it is not marketable. The massmarket will never champion your project, no matter how good it is. If you build a core audience and deliver the best project for them, they will champion the project. That way, if it’s not crossover-material, you’ll still have an audience to support you… and if it is crossover-material, your core will do the legwork of getting it to the next level. Then you can go big and go home.

[Cautionary notes: When thinking niche, there are two things to keep in mind. 1- it is problematic for your project to be confrontational against its own niche, this is a hurdle I personally face all the time since I’m inflammatory to a fault. From a marketer’s point of view, the best kind of niche marketing is a Robert Greenwald or Michael Moore movie where they sell to a niche that already believes what they’re saying and feels vindicated by seeing it onscreen… if it’s successful it expands to less sympathetic audiences who might welcome an intellectual debate, but Outfoxed’s core audience was people who already hated Fox News. So if you want your marketing effort to be financially successful, you’ll want to pander to your niche, not challenge it. 2- if you can organically and authentically cater to more than one niche that’s great, but it's risky. Each time you add a niche, you dilute the core. I’ve seen so many projects and marketing campaigns fail by trying to incorporate something for everyone. Find your niche and be the best for that niche, don't spread yourself thin by going too broad -- better to be the best for a small audience than to be mediocre for a huge one.]

[get here by accident? this is a blog post from Hollywood-2.0, read more at www.hollywood-2point0.com]

Chapter 1 is titled “The Long Tail of Death, The Evil Aggregator Empire, The Decline of Distribution, and You: The Producer-Marketer.” While we pride ourselves on this book’s commitment to actionable information, the first chapter is a bit of a primer on the shifts in the media creation-distribution landscape. We think it’s important to get everyone on the same page before breaking down hard-numbers and logistics.

The first section of this chapter, Rise of the Producer-Marketer, is free for everybody. The chapter continues for 16 pages after that and can be read by Members — an Early Adopter account is currently 99 cents per month, you can join here.

The sections of chapter 1 are:
- Rise of the Producer-Marketer
- “Marketing is for suits”
- “Isn’t my distributor supposed to handle marketing?”
- “What about The Long Tail?”
- “But isn’t it great that my movies will be on Amazon & Netflix?”
- “How have the Long Tail e-Tailers made all this more difficult for me?”
- “So why bother with Amazon & Netflix?”
- “Why are you telling me all this?”

Let us know what you think.

CHAPTER 1: The Long Tail of Death, The Evil Aggregator Empire, The Decline of Distribution, and You: The Producer-Marketer

Rise of the Producer-Marketer

When I was first getting started as a filmmaker, I interned at a non-profit film school in downtown NYC called Film/Video Arts. A lecturer named Dov S-S Simens was coming through to deliver a filmmaking course called The Hollywood Film School and I volunteered to be his assistant. Dov’s class blew my mind.

Without getting too far into Dov’s curriculum (his course is available on DVD and I highly recommend it), the primary lesson I took from it was this: you are NOT a filmmaker, there is no credit on a movie for “filmmaker;” you are a producer. As a producer, you may choose to hire yourself as writer (or not) or you may choose to hire yourself as director (or not). Regardless, when you call yourself a filmmaker you mean that you will be the driving force behind the creation of a new film. There is a title for that: it’s called producer.

Dov is a brilliant instructor and his course is still incredibly relevant today, but its main thesis was forged and polished in the Independent Film Explosion of the 1990s. In fact, 90% of books on independent filmmaking are based on the marketplace of the 1990s. Certain things are still very relevant: story structure, casting, cinematic composition, editing theory, lighting design, sound recording, etc. Anything antiquated about those subjects in terms of technology has been revised over the years, so this book is not going to tackle them. The basics of creating content haven’t changed drastically, but everything else has. And so in this book we’re focusing on “everything else.”

The central thesis of this book is that, in order for a contemporary filmmaker to compete today, (s)he can no longer be just a producer… (s)he must be a producer-marketer.

“Marketing is for Suits”

Generally speaking, filmmakers consider themselves artists and artists consider marketing to be beneath them… in the mind of most artists, marketing is the work of suits. But filmmakers cannot be just artists. Filmmakers are leaders, collaborators, business(wo)men, technicians, as well as artists. In truth, filmmakers are entrepreneurs. And every entrepreneur is also a marketer.

There are many colorful histories of the rugged individualist filmmaker wrassling against the bureaucratic monolith of studio marketing execs. Those “histories” are marketing. The enfante terrible is a marketing cliché. It’s hard to know which filmmakers really were enfante terribles and which ones just positioned themselves that way. The truth is, it doesn’t matter. Most marketing clichés are subjective… you’re an “iconoclast” if enough people agree you’re an iconoclast, there’s no independent arbitration process. Marketing has very little to do with empirical evidence, it has everything to do with perception. Perception is influenced by creative storytelling, so filmmakers should be great at this… and they are, except when they convince themselves it’s beneath them.

“Isn’t my distributor supposed to handle marketing?”

If this were 1996, the answer would be yes. But times have changed. Distributors basically control a pipeline to the marketplace, and they are slaves to the marketplace’s consumption demands. The marketplace has become a voracious beast that gobbles up content at a frantic pace. The life cycle of a film has shrunken drastically, so distributors have to supply more content faster than ever before. Distributors no longer have the luxury to spend a year or more developing marketing strategies, building buzz, courting tastemakers and slowly bringing a release to the market. The overhead costs are too high. In fact, even major producers barely have that kind of time anymore… that’s why most studio movies these days are based on existing brands (comic books, novels, existing movie franchises). It’s an obvious solution, if you no longer have time to market a new brand you instead acquire an existing brand. “Iron Man” did great last year, but it’s slightly less impressive when you consider the marketing for that movie started 45 years ago.

The most likely results of this shift in the marketplace and the life cycle of a film are twofold:

a-    There will no longer be a “middle class” of films. You will have tentpoles that get major marketing efforts, and you will have low-budget/low-revenue movies. Some of these low-budget/low-revenue movies will win the lottery and become breakout successes, but that will be a mix of luck, timing, and effective marketing on the part of the producer.

b-    Distributors will be replaced by aggregators. An aggregator is basically a distributor who does no marketing. Which brings us to the next question I just know you’re wondering.

“What about The Long Tail?”

The long tail sucks. You don’t want to be on the long tail.

Chris Anderson created the concept of the long tail when writing about how internet companies such as Amazon, eBay, and Netflix developed a model to make a fortune by selling very low quantities per title on a very high quantity of titles. For example, it doesn’t matter to Amazon if they sell 1,000 copies of one of your movies or one copy each of 1,000 of your movies. But guess what: it sure as hell matters to you. For one thing, you probably can’t make 1,000 movies. But even if you could, your production costs on those movies demand you sell a certain amount per-title to break even (and hopefully profit). Amazon has no such concern.

So when Chris Anderson talks about the long tail, he is not talking about anything that is helpful to you. In fact, what he terms “the long tail” is actually bad for you.

When I was an adolescent, back in the Stone Age before Amazon and eBay, there was already a long tail. Every subculture had its own long tail. I was a hardcore kid and would buy hardcore punk records that weren’t carried by Sam Goody. How was this possible without Amazon.com? People would set up tables at hardcore shows and sell records (CDs, tapes, vinyl). People would list their records in Maximum Rock N Roll and we would mail them checks or money orders and they would mail us records. Community oriented shops with low overhead would come and go. Every subculture had versions of this, I’m sure you can remember your own nostalgic memories of unique or obscure media you felt was personal to you. I had similar experiences with underground comix and underground movies. So the long tail existed before Amazon perfected it and before Anderson named it. But what’s worse, Amazon’s perfection of it and Anderson’s naming of it has made it less fruitful for you.

When I ordered a record from a listing in Maximum Rock N Roll, the person selling it had to place the ad in MRR (marketing) but received the entire amount of the check I sent her or him. When you order a record on Amazon, the person selling it is still spending advertising/marketing dollars to tell you about it, but Amazon is taking 50% of the MSRP (Manufacturer’s Suggested Retail Price). Being in MRR meant most readers would come across your ad, because it was a finite space and appealed solely to a crowd who was looking for your record. Being on Amazon is worthless without marketing elsewhere, because nobody looks at every title on Amazon. Sure, Amazon has internal structures to help browsers find new things to buy, but those structures are based on Amazon Sales Rankings, which means if your product is not selling on Amazon then Amazon won’t direct browsers to your product. So in order to take advantage of Amazon’s in-store marketing, you need not only market the product to an audience but you must also direct that audience to buy the product from Amazon… and only *after* enough of them have purchased it on Amazon will Amazon’s in-store marketing for browsers help you. Maybe.

This is important, so stick with me for a brief tangent because this will come up again. The Amazon in-store marketing structure and its relationship with the Amazon Sales Ranking demonstrates The First Rule Of Hollywood-2.0 Marketing: You must cultivate a core base of fans who will buy each of your new releases as soon as they are available (preferably as pre-orders before release date)… it is your job to galvanize the base on or before street date and then leverage that inertia into making the Web-2.0 internal structures spread the word about your release. This is your primary task, and it’s tougher than it seems.

“But isn’t it great that my movies will be available on Amazon & Netflix?”

NO!
Well, that’s not entirely true. Yes and No.

“How have the Long Tail e-Tailers made all of this more difficult for me?”

The problem with Amazon and Netflix is the seismic shift they’ve created in the retail marketplace.

When we started Halo-8, we applied an indie record label business model to distributing movies. Record labels long ago determined a formula for how to market a new release with a budget that is enough to support it at retail and stick with it in case it’s a slow burn, but not overspend to the point of irrational risk. That formula is to spend $2-3 per unit shipped on marketing… which means not just the initial shipment on street date, but re-investing as re-orders come in (which helps us stick with a slow burn for the longrun).

Understanding why this makes sense requires a bit of background on how CDs (and DVDs) are sold at retail. They are 100% returnable. Stores will say they’re “buying” 1,000 copies, but for the labels those aren’t “sales” they’re “shipments.” A shipment isn’t a sale until a person (end consumer) walks into a store, picks it up off the shelf, walks over to the cash wrap and pays for it. When it’s sitting on the shelf there, it’s a liability. It can and will get returned without warning sooner or later if it does not get purchased.

Shipment numbers are very important though, because (a) they signify the amount of support a new release is getting from store buyers, (b) they give a sense of the initial outlay of product that has to be supported immediately to prevent massive returns, and (c) shipments equal cash flow. Stores pay for the shipments, but if the label takes that money to Vegas and blows it on hookers and beer it will be a sad day a few months later when thousands of records arrive at the doorstep with an invoice for the balance. Shipments are liabilities, but they are also interest free loans to be spent on marketing the release.

If a Halo-8 DVD’s MSRP is $19.95, the wholesale cost (the price a retailer pays for it) is generally $10. We also take on various sub-distributor fees of 20-30%, so we can round that off to $7.50. It’ll cost about a buck per unit to manufacture, so now we’re at $6.50. We deduct marketing costs before splitting the profits with the producer. A healthy return rate from stores (an amount that feels like it was stocked broadly enough to get exposure to its audience) is about 25%. So we’re counting on 25% getting returned in a best case scenario. So that $2-3 dollars per unit shipped is hopefully only $2.50-3.75 per unit sold, but we never know… we could get stung with incredibly high returns if we’re in the wrong place at the wrong time. Deducting $2.50-3.75 puts us at a best-case scenario of $2.75-4.00 in profit margin, which we then split with the film’s producer.  You do the math from there… movies need to sell *a lot* of DVDs to make their money back, and in order to sell those DVDs they need to be marketed effectively.

Now allow me to compare the marketing cash flow generated by Tower Records (R.I.P.) versus Amazon (who are doing just fine, thank you very much).

Tower had roughly 100 stores. Each time we put out a DVD, they would order anywhere from 4-100 copies per store (literally). That means we could count on Tower to buy 400-10,000 copies of a new release. At $2-3 per unit shipped, Tower was giving us an interest free loan of $800-30,000 to spend on marketing. And that’s just Tower.

Amazon, on the other hand, orders just slightly more than the pre-orders they receive. How many times have you pre-ordered a DVD? I never have. It takes a special kind of fan to pre-order a DVD. Our initial orders from Amazon are generally below 100 total. So Amazon gives us an interest free loan of $200-300 dollars to spend on marketing.

But it’s not fair to compare Amazon’s $200-300 against Tower’s $800-30,000. Because Amazon is also replacing Virgin Megastore, Circuit City, Suncoast, Media Play, scores of mom and pops, and more. Amazon is already the key account for many labels. This makes it incredibly difficult to market a new release. For one thing, there’s no cash flow to cover marketing, so the marketing dollars are being spent completely speculatively. On top of that, since there’s no retail stores supporting the release with in-store exposure, there’s no basis for how much to spend. Retail buyers are like scouts on the ground feeling out how the marketplace will respond to a new release, and their initial orders are basically a briefing to distributors on how receptive the marketplace is. Amazon provides no such service, so without brick and mortar retailers the distributor is spending marketing dollars blindly.

Amazon put all those brick and mortar stores out of business because it is far cheaper for Amazon to post a webpage for a new release and keep a small amount on-hand in warehouses than it is for brick and mortar stores to fill their shelves and pay for all that real estate. In the short run, Amazon’s efficiency is putting brick and mortar stores out of business. But is it sustainable or does it ignore the broader ecology of the supply chain that those brick and mortar stores played a pivotal role in? It is very possible that Amazon’s efficiency will devastate independent suppliers in the long run… in fact, it already has.

Netflix is even worse, because Netflix is even more efficient than Amazon. When you order a DVD on Amazon, they have to ship it to you right away. Netflix? Not so much. Netflix ships it to you when they have it. And of course, they’re recycling the DVDs, they’re not buying new ones.

Netflix buys from independents at wholesale prices, and their infrastructure is so efficient that they can service the entire country by starting with an order of about 60 DVDs. If it’s particularly successful for them they’ll order another 150 copies. So we *gross* $600-1,500 from Netflix, and you’ve seen how those profits shake down… we really net a few hundred bucks. That’s it… there’s no profit-sharing, no per rental royalty. “Well,” you might think, “those sales are not returnable, though, so isn’t it still a good thing?” No, it’s really not… because Netflix is essentially giving the movie away for free, which cannibalizes sales elsewhere. Once you have a Netflix subscription that DVD is free… and so Netflix is devaluing the movie. Part of marketing is creating a “perceived value” for a product. Q: What is the value of a movie? A: Whatever someone will pay for it. The perceived value for a CD used to be $15-20. Then Napster made the perceived value $0 + the cost of a broadband connection. It took millions of dollars in marketing for iTunes to convince us music is worth $.99 per song and $9.99 per album. Netflix is just a legal Napster… they have changed the value of a movie to $0 + the cost of a Netflix subscription.

Why buy a movie on Amazon if you can get it just as easily for free on Netflix? When I was a kid, I would rent a video at the local video store for 3 bucks, but if it was too underground for the video store to stock it then I would order it on mailorder and pay the full price of $20. That was a perfectly logical system where the big guys get less per unit but make exponentially more sales while the little guys have fewer sales but make more per sale. The “level playing field” of Netflix (actually it benefits the big guys since they can broker better deals) is another factor that is destroying independent suppliers. This isn’t theory. Halo-8’s top selling DVDs are (a) releases that Netflix doesn’t carry, and (b) releases that are less suited to Netflix’s model (multi-disc sets and fitness videos designed to be watched repeatedly and consistently).

“So why bother with Amazon & Netflix?”

Because the market demands it. It used to be that if your movie didn’t play in theaters, it wasn’t a real movie. Now, if your movie isn’t in Amazon and Netflix, it’s not a real movie. Hell, it doesn’t exist. We distributed a documentary called “Your Mommy Kills Animals” that ran into some legal issues with a Washington lobbying firm. The firm’s attorney sent Cease & Desists to every store that carried the DVD. Without getting too much into the details of it, most stores ignored the Cease & Desist. However, Amazon and Netflix immediately pulled the DVD from their websites… after all, when you’re a long tail e-tailer what’s the value of defending one DVD? “Your Mommy Kills Animals” was available for sale on our website, on dozens of webstores including Tower.com and DeepDiscountDVD.com, and in retailers across the country… yet the most consistent meme on message boards, blogs, and emails was “When is this movie coming out? There’s no release date listed on Amazon or Netflix.” Even IMDb didn’t list a sales link because they’re owned by Amazon! Amazon and Netflix have gone beyond being just stores, they are cultural institutions. If your movie is not on Amazon and Netflix, it doesn’t exist.

“Why are you telling me all this?”

If you have a head on your shoulders, while reading this chapter I bet you’ve wondered “If distributors are so ineffective in the marketplace nowadays, then why the hell do I need a distributor?” And that’s a fair question.

Do you need a distributor? Right now, yes. You still do because distributors still have more muscle than you do, they still have an existing pipeline that will get your movie out in a timely fashion on a national/international scale. They also have the proper relationships in place to reach big boxes, niches, press, and tastemakers. And they’re the only ones who can effectively spend marketing dollars to grow your sales from the core fanbase you’ve cultivated.

But…

a-    You need to know where distributors are getting hammered right now to understand why a distributor’s skills these days are different than they were in the heyday of the Independent Film Explosion of the 1990s;

b-    Understanding these challenges helps demonstrate why you need to be a producer-marketer who builds a core following that the distributor can use its muscle to expand upon; and

c-    Whether you need a distributor or not, they are disappearing. They will become less viable as retailers disappear, and then you really will be on your own. Distributors are being replaced by aggregators, who provide a pipeline with absolutely zero marketing. So educating yourself on being a producer-marketer will be helpful in the short term, and absolutely critical in the medium term.

The basics of creating content haven’t changed, but everything else has changed. Filmmakers are part artist and part entrepreneur. If you’ve already mastered the art of creating content, now is the time to master everything else that your entrepreneur side will have to tackle.

To a certain extent, it’s completely accurate. There is so much content already out there and so much new content being generated every second that you literally have to be everywhere just to be noticed. But there’s a dark side to hypersyndication… the same dark side as massmarket distribution.

Massmarket/hypersyndication is for mainstream, broadly-accessible content that requires no context. That’s fine for major studio tentpoles, but the trend these days is more toward niche/narrowcast than mainstream/broadcast. When niche/narrowcast content is seen out of context, it does more harm than good.

An example… Iron Man (directed by Jon Favreau) is mainstream/broadcast. 95% of people who stumble across that movie randomly could instantly be pulled in on some level. On the other hand, Tetsuo the Iron Man (directed by Shinya Tsukamoto) does not have the same broad appeal. Even someone who might fall in love with Tetsuo the Iron Man would probably not enjoy it immediately based on seeing it play in someone’s embedded video on their Myspace page. The viewer needs to know what they’re getting themselves into… they need to commit to Tetsuo the Iron Man before watching it. Iron Man requires no such prior commitment.

Does that mean Iron Man is a better film than Tetsuo the Iron Man. I don’t think so, I think they’re both great at what they are. It’s meaningless to compare them, they have nothing in common other than they are stories on film that we collectively label as “movies” or “films.” To Netflix, they’re the same thing. Netflix offers hardly any context. And once you have a Netflix subscription, the movies are essentially free. FREE means that there is no commitment on the part of the consumer… there is no due diligence required, and thus FREE further diminishes context. As Michael Ironside says in Starship Troopers “something given has no value.” I could see a mainstream Netflix customer who enjoyed Iron Man happen across Tetsuo the Iron Man, think to himself ‘I liked Iron Man, I’ll check this out’ and add it to his Netflix queue… then a week or so later it winds up in his mailbox, a week or two after that he pops it in the DVD player forgetting everything about why he selected it in the first place, and then he gets immediately annoyed by the movie, stops it after 3 minutes, mails it back and writes a bad review on Netflix about how it’s unwatchable and pretentious. That’s a bummer for Tsukamoto… he doesn’t deserve that kind of aggravation.

Most people will argue that hypersyndication still works because a small percentage of an exponentially larger audience is still far huger than a relatively large percentage of a tiny niche. The problem with that model is the Tyranny Of The Naysayers. Someone who dislikes a movie is far more likely to write a bad review than someone who likes a movie is apt to write a good review. If you exponentially increase the number of people who see the movie (knowing full well that the number of viewers it’s truly geared for is disproportionately smaller than those who simply won’t get it), you’re setting the film up to be tarred and feathered on the public stage. You’ll have no niche audience to champion the film, only naysayers hating on it… and most consumers can’t discern the comments of people who ‘don’t get it’ from people who ‘do get it.’

Some of the coolest, most exciting, most compelling films simply should not be seen by everyone. They’re great films, and they’re not for everybody. That statement flies in the face of the given wisdom about great films… about Oscars and box office and the meritocracy of great storytelling. Being a best-seller requires appealing to the widest possible audience–sure that can mean it’s a great transcendent film that every human being can relate to, but more often it means that it’s lowest common denominator cotton candy. There’s nothing wrong with cotton candy, but is it a better made food than sushi? Not everyone likes sushi… and even people who may like sushi wouldn’t like it if I put it on a stick and sold it to them at a theme park next to the funnel cakes and cotton candy.

One of my first questions to filmmakers is “who is the audience of this movie?” The answer is generally some variation on “people who love great films.” That is not a type of person. Iron Man is a great film. Tetsuo the Iron Man is a great film. If your audience is people who love BOTH movies, then your audience is smaller than you think.

Scarcity creates value. It’s better to build a core fanbase and grow your audience from there than to hypersyndicate and try to reach the largest possible audience as quickly as possible.

[BTW- before I get called out on the fact that Tetsuo the Iron Man is generally favorably reviewed on Netflix (despite it being a lower score than Iron Man or even the dreadful Invincible Iron Man animated movie), let me just point out I was using Tetsuo the Iron Man as an example that most readers could easily identify (and also I was being a bit clever, sue me). Tetsuo the Iron Man was not hypersyndicated upon its initial release back in the 90s, so by the time Netflix came along Tetsuo had already protected itself with a core following and a cineaste pedigree... precisely what I'm suggesting you do before you consider hypersyndicating. Also, I recognize Netflix has the 'Ratings of Users Like You' addition to the ratings system, which is an appreciated effort but not a silver bullet for the problems faced by content creators/suppliers.]

This is all great advice if your chief aim is to separate suckers from their money, which certainly is the primary goal of many film producers–and who am I to criticize? But that philosophy is also a relic from a previous generation where you packed as much production value as you could into a film (usually an artsy, feel good film about the triumph of the human spirit) so you could flip it for a huge return-on-investment at a film festival… and we’ve already exhaustively discussed how badly that turns out for 99.9% of films and filmmakers. It’s barely even an option on the table anymore, so why not get with the cool kids on the next big thing… spending money wisely (even Other People’s Money) so you can turn a reasonable profit and re-invest in more productions, grow your body of work, expand your audience over time, and increase your budgets as the size of your audience allows. Sure, this isn’t the sexiest business model in the world especially for a pastime as narcissistic as filmmaking… but you could do a lot worse than to spend money wisely these days.

The reason this topic is on my mind is because of a few comments I’ve seen popping up around the blogiverse after we posted the trailer for our upcoming illustrated film Godkiller. Many people seem to be asking the question of whether we devised the illustrated film format because we think it’d be a cool form of filmmaking or if we devised it because we couldn’t get the money to make a completely animated movie.

It’s a weird question because it presumes that every filmmaking decision isn’t a mix of creative and economic choices. Movies are really expensive to make and really risky, you can’t make a creative decision without weighing the economic impact on the film.

According to IMDb, the budget for The Hangover was $35M. Well, why wasn’t it $200M like the budget for Transformers 2? Is Warner Brothers a bunch of pussies because they could only come up with $35M for The Hangover while Dreamworks shelled out $200M for Transformers 2? Maybe, but probably not… it’s probably a little more complicated than that.

On the one hand, it would cost us millions to make Godkiller as a fully animated feature film. So the short answer is, no we didn’t have a few mill laying around to make Godkiller look like Final Fantasy VII. But as business-people who have to justify the money we spend and actually earn it back on the films themselves since we can’t sell air conditioners and Blu-ray player to make up our shortfalls, I wouldn’t want to spend millions on Godkiller even if I could. Why not? Don’t I believe in it? Sure, I believe that it’s a totally rad movie for its audience. But it’s not a totally rad movie for everybody in the world. And I don’t want it to be. Godkiller is really fucking weird and it’s made for weirdos. When I write for studio production companies, Development Hell consists of rewrite after rewrite removing any element that won’t work for the widest possible audience. That’s fine because those movies will cost tens of millions if not hundreds of millions and the studios need to sell them to everybody on the planet in order to make their money back. I don’t want to have that problem when producing for Halo-8… the great part about creative control is having the right to create for my audience, not for everybody I hate plus my audience. We take on so many risks at Halo-8 that it’s only worth it to us if we can make weird movies for weird people. And in order to do that effectively and continue doing it, we have to keep our budgets low. After all, our audience is more likely to download our movies on Pirate Bay than haul ass out to a store and buy the DVD, so just how irresponsible do you expect us to be?

All of that equivocating and over-justifying does not in any way diminish how much I creatively adore the illustrated film format, nor does it diminish the brutal amount of backbreaking work we put into producing these things. It’s great to love a storytelling format you’ve developed, and it’s even better to love a storytelling format you can afford to take creative risks with. If we’re going to be creatively daring, experimental, controversial, confrontational, and subversive for a long time into the future we also have to be smart with our money… it’s no coincidence that the same Wall Street firms who’ve been financing ridiculously expensive independent films for the past ten years are choking to death on debt. Tinseltown has always been about separating suckers from their money, we think there’s a better way.