Ten Commandments Before Diving into Digital Delivery

Larry Daressa February 24, 2009

[SF360.org editor’s note: These remarks by Larry Daressa were delivered at the SFFS Film Arts Forum February 9, 2009.]

1. The first commandment is that there are no commandments. Each film demands and deserves its own distribution strategy, including no digital distribution strategy. Any strategy should begin with a clear—and realistic—assessment of the target audience. Find your niche. It’s more important to do a thorough job reaching motivated buyers than wasting your time and money trying to lure the mass market. In making this decision, you need to decide whether your bottom line is exposure or the bottom line; the two aren’t always synonymous. These ten commandments address the bottom line—how best to "monetize your content" today.

2. Don’t feel pressured to go digital. We often hear that the death of DVD is inevitable. That’s true, but so is yours and mine. That doesn’t mean we can’t enjoy ourselves in the interim. Eighty percent of film revenues still derive from DVD sales. Therefore your most important task is to maximize those revenues and avoid digital distractions.

3. Don’t exchange analog dollars for digital pennies. No one is making money from digital video at present, not Apple, not Google, not Netflix. Therefore always calculate if the presumed increase in digital unit volume will compensate for the decrease in DVD unit revenue. Here are some statistics on net producer revenue per unit. Like all statistics they are based on certain assumptions. Any individual case could prove an exception, but they may offer some grounds for comparison. Educational DVD sale: $100; Home DVD sale: $5; iTunes download $5.70; iTunes rental: $1.70; YouTube page impression: half a cent.

4. Don’t confuse big numbers with big money. Wayne Wang’s Princess of Nebraska was reputedly the first feature film to premiere in YouTube’s high-visibility screening room. It was written up in all the national press and hailed as a huge success, receiving 153,000 hits its first weekend. But how many dollars does that translate into at YouTube’s average pay-out per page impression? Only $765, the equivalent of less than eight college sales. And most independents can’t expect coverage in Time and Entertainment Weekly or inclusion in YouTube’s exclusive Screening Room. In fact, most of us don’t even qualify to get a cut of YouTube ad revenues.

5. Don’t assume that you’ll be the exception however exceptional your film. Content aggregators will always tell you about their hits. Be sure to ask for their median sales volume—that will tell you what most content providers can expect to make. If they don’t know their median sales volume, they aren’t a professionally run business.

6. Don’t confuse access with audience. The question isn’t how many people could view your content but how many even know it exists. In the over-crowded digital world, it is even harder to gain visibility than in the analog. Promotion is key. The Internet offers new opportunities for marketing but it doesn’t replace the need for marketing. Content aggregators, whatever they tell you, don’t do marketing and they don’t aggregate audience for individual titles. Betting on viral marketing is like betting on the lottery. You or your distributor still have to do the work.

7. Don’t feel you’re missing the digital boat. As you’ve seen, you won’t be missing much by waiting cautiously. So-called "early adaptors" need deep pockets and a lot of luck. Let others ride down the "learning curve" for you. Remember: Content aggregators need you more than you need them. They make 100 percent of their revenue from your productions; you will make only a fraction of yours from them.

8. There’s even less urgency now. The current economic meltdown will slow migration to digital platforms for a further year or two. Public institutions and ordinary consumers just don’t have the capital to invest in the infrastructure—the bandwidth and set-top boxes—which will make digital delivery commercially viable.

9. Look before you leap. Since content aggregators aren’t making money right now, most are dependent on continual infusions of venture capital to stay in business. According to last week’s Wall Street Journal, venture capital has virtually dried up in the liquidity crisis. Therefore a repeat of the dot com bust seems inevitable. Ask to see the balance sheet of any company to whom you’re entrusting your film—if they won’t show it to you, there’s probably a reason.

10. After all this, don’t dismiss digital delivery out-of-hand. It remains an inexpensive way, indeed the only way, to distribute all the worthwhile films that won’t get theatrical or DVD distribution. Of the 9,000 films submitted to Sundance last year, only seven have found distributors. Internet promotion, as distinct from Internet delivery, is the best promotional value around. Some producers even report that free streaming increases DVD sales (though others claim just the opposite; it seems to depend on the nature of the title.) Building a social network around your film is a great way to lock in pre-sales and recruit an unpaid sales force even before your film is completed. This is, to my mind, the most promising aspect of the web: It provides a place where producers can establish a more organic, ongoing connection with their audiences, a sustainable ecology, no doubt different from the past, but one where the two can evolve together.

Larry Daressa is a Co-Director of California Newsreel, a San Francisco based non-profit distributor and producer of social change documentaries for the past 41 years.

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