Us vs. Them
Reid Carolin is a producer, screenwriter, and co-founder of Constellation, a start-up digital exhibition platform launching this summer. He produced and developed Kimberly Peirce’s Stop-Loss (2008), and wrote and produced Earth Made of Glass (2011), a documentary on Rwandan President Paul Kagame. His upcoming films include Jamie Linden’s Ten Year and Steven Soderbergh’s Magic Mike, written and produced by Carolin.
"Most distributors’ brands aren’t worth much of anything. Would you agree that people would much rather see a film presented by Doctors Without Borders than, say, Millennium Films?"
I took the documentary I produced, Earth Made of Glass, to Tribeca last year. It was the first time I’d ever been involved with selling a film at a festival, so like any newbie, I listened to all the pros that I could. I received a lot of opinions about what I needed in order to land a distributor (sales agents, publicists, buzz, etc.) and what we could expect in terms of offers. The opinions offered disparate pieces of advice, but one thing I noticed to be consistent through them was that when I expressed high ambitions for the film (‘Hey, maybe we could get HBO to buy it!’), I was quickly encouraged to graze in more realistic pastures. Indeed, the documentary business is a tough one, and for a film about Rwanda premiering at Tribeca, we just didn’t have the muscle to crack into that upper echelon of the market. Sure enough, by the end of the festival, that sentiment proved correct. We had great press, solid buzz, and an incredible movie on our hands, but we were we left with no significant offers for the film. Despite our efforts to lure our desired mate, HBO didn’t even show up to our premiere. We’d invested two years of our lives putting the film together and loved it beyond belief, not to mention the considerable amount of capital we’d spent to do it.
Weeks after the festival, a good friend passed some kind words about our film to HBO for us. We cold-called them ourselves, wrote impassioned e-mails, and urged them to watch it. They said they might. A few days went by, and then we got a call. HBO loved the film and wanted to buy it – even better; they wanted to pay us for it in a significant way. Contractually, I can’t define ‘significant,’ but what I mean is that they paid for it with a value that no other distributor even came close to offering. They valued the film internally, based on what made sense for them, and not on what many would call ‘the market.’ As the rights-holder of the film I felt the content was still undervalued – to me the movie was so good it was worth a fortune that no distributor could possibly pay. But if I were a value investor, a shareholder of TimeWarner, or any rational businessman, I would have looked at HBO’s offer and deemed that they paid a premium when they could have extracted more value out of their acquisition by paying competitively with the ‘market’ (or lack thereof). This raises the age-old question: How does one define the value of a film? And it sets the table for the bittersweet meal that is the rest of this post.
Obviously, products are defined by a market (i.e. what someone’s willing to pay for something). In order to exist within a market, most products have fairly standard costs associated with creating them that fit within their acceptable consumer values and are built to yield relatively predictable returns. Independent movies, however, cost many different values to create, contain many different intangibles that wildly affect their potential consumer bases, and yet are distributed to consumers through generally similar mediums. So while we content creators are making products that span a gigantic scale of value, the folks who distribute our products are doing their jobs in pretty repetitive ways, hoping to extract consistent returns. If you consider another consumer product, like a toothbrush, it’s obviously a different story. There are many brands of toothbrushes, but the costs associated with making them, the consumers who want them, and the ways in which they are distributed to those consumers are very similar. So the makers of toothbrushes value them the same way that the market does, in turn creating stability. The issue with us independent content creators is that we generally value our products differently than distributors know how to value them through the markets. And since there’s no way to really know how any particular movie will perform, a distributor effectively gambles on every acquisition, creating an environment where risk must always be minimized. In the case of my documentary, HBO paid a price that didn’t make them feel at risk, so it was worth it to them. But for many other distributors nowadays, any cash advance at all is a risk. So when content creators go into festivals with a sense of the equation: ‘what we spent + the intangibles we bring to the table = the value of our film,’ they’re walking in with a potentially volatile mindset, because the current landscape says that the value of a film is only equal to what distributors are willing to gamble on it based on how they currently can monetize content in general. This naturally creates an environment of Us Vs. Them: The content creators who know how good their products are; and the necessary evil of the distributors who usually undervalue them.
Why are distributors assumed to be tasked entirely with marketing and finding an audience for the movies that they acquire?
Having worked (and currently working) on both teams (I produce independent films and I co-founded a start-up digital exhibition platform), what I’m most curious about right now is how emerging technology can start to bridge the divide between Us and Them, and how we can all start helping each other do our jobs better and more efficiently. I am convinced that the way to do this is by first changing the framework through which we view our roles and abilities in the business, and assuming that everything we assume to be true is only as true as we collectively allow it to be. For example: Why are distributors assumed to be tasked entirely with marketing and finding an audience for the movies that they acquire? Superficially, I think the answer is that because most distributors don’t incentivize the content creators enough to help them with their job, because they don’t see the value in doing so. For example, I didn’t get any backend in my HBO deal, so why would I fight tooth-and-nail to get people to watch the film on their platform? Of course, we content creators are fall-on-our-sword types (and the distributors know this), so we do it anyway, but even for those of us who do get interesting backend deals the ROI is rarely worth it (if there’s any ROI at all) because there just isn’t much value to go around. Traditionally speaking, though, distributors are tasked with finding an audience for and marketing a movie because they’ve invested the time and money to become well versed and capable in doing so. Thus, we understandably assume that they should market our movies and find our audience because they know how to do it; they have people on staff whose job titles indicate that they should do it, and they have the money, infrastructure and tech savvy to get it all done. We put our faith in them because we don’t have it in ourselves – and why should we? However, what if we could find and aggregate at least a sizable portion of our audience for our films, and then approach distributors with them in hand? What would that be worth? And would it change the landscape for us?
I have a company with a young actor named Channing Tatum. We’ve produced a couple independent films together, and Channing was an executive producer on my HBO documentary. When HBO acquired the doc, Channing flew to New York and did a day of press, and made sure to inform his fans of the premiere on HBO. A handful of his fans (who are dispersed throughout the world and aggregated together within online networks) caught the film on HBO, but many either expressed remorse that they weren’t HBO subscribers, or didn’t engage because the ask was too removed from the way in which they typically liked to engage with Channing: online. Channing has about 600,000 Twitter followers and 200,000 Facebook followers – so 800,000 people potentially listening to him when he has something to say (by contrast, I’ve heard it rumored that between 500,000 and 1 million people watch a typical HBO documentary during its lifecycle). The swelling size of Channing’s fan community has caused us to spend a great deal of time lamenting together over the frustration that we couldn’t just distribute content to them directly. We knew his fans were already willing and excited to engage with him on Facebook and Twitter (they tell us so every day), so why couldn’t we take that experience to the next level and allow them to engage with him directly around a screening of his new film?
Channing’s frustration is not unique to content-creators, and it’s one that, over the past couple years, plagued my friend James Lawler and I so much that we translated it into building a new digital exhibition platform called Constellation. The concept is simple – it’s the first global movie theater. Movies show online just like they do at regular theaters. People buy tickets, invite friends across social networks, and watch films together. VIP hosts (like Channing) can present content live to their fans, leading live video Q&As with the audience after the movie right from their webcams. It’s like a Sundance screening that’s live to the world rather than just Park City, and we pay the majority of every ticket sold back to the rights-holder, giving them the incentive for going out and finding their audience.
More and more, celebrities, brands, non-profit organizations, and other groups are building large followings online. Every day another entity aggregates a massive number of users into its virtual ranks. And because of the tools available to us, once you’ve aggregated that audience, reaching out to them is much less expensive and more efficient than traditional advertising (if not free). Meaning, if Channing could demonstrate to HBO that he could realistically bring his 800,000 followers to watch his documentary with him on HBO, their jobs would be a lot easier, their P&A spend a lot smaller, and their overall risk a lot less. And if HBO didn’t have to assume as much risk, would they have considered paying even more for the film? Or might they have built in incentives for us?
Crowd-funding, DIY distribution, and new digital distribution platforms are all offering exciting solutions, but none – from a true business standpoint – have demonstrated yet that they can or should change the landscape for all.
When we put Constellation into a small test-run back in September, we limited our virtual theaters to twenty-users each (i.e. after 20 tickets were bought a screening would sell out), and we began showing a great but little-exposed documentary called Living in Emergency: Stories of Doctors Without Borders. We scheduled showtimes regularly for three weeks, and programmed many screenings that were hosted live by the director and members of the Doctors Without Borders non-profit organization. We priced tickets at $2.99, and did no advertising outside of having Doctors Without Borders, which supported the film, put out a tweet to its 200,000 or so followers. Then, something very interesting happened... We sold out almost every showtime for the film. In fact, we couldn’t come close to accommodating all the user-demand for the film, and many people weren’t able to get in to see it. People loved interacting with the hosts and told their friends about the upcoming showtimes, creating a market where users were buying tickets to upcoming showtimes many days in advance. All that buzz from just ONE tweet… and no one really had to lift a finger or spend a dollar to promote it. That got our brains churning.
This post isn’t meant to be an advertisement for Constellation (we’re launching soon though and I hope you like us!), but it’s meant to raise an idea geared towards connecting Us and Them in a deeper way. If we could find ways to make distributors’ jobs more efficient, and understand what they do and how we might add more value to their process, could we then see more value for ourselves? Consider the value that distributors have in comparison to say, the value of an organization like Doctors Without Borders. Beyond just their know-how to physically distribute a film (i.e. all the real costs, collecting, etc.), distributors are really only as valuable as their brand and their ability to reach and monetize an audience. Many distributors have recognizable brands (i.e. most people see documentaries on HBO because they associate HBO with great documentaries, not because they’re looking for a specific film), but most distributors’ brands aren’t worth much of anything. Would you agree that people would much rather see a film presented by Doctors Without Borders than, say, Millennium Films? And as far as reaching an audience is concerned, many distributors have artful and creative ways of doing this that regular Joes like us could never rival (see Fox Searchlight and their wildly successful marketing department), and many others have proprietary platforms with dedicated consumer bases (see Netflix et. al), but most distributors don’t exactly know how to find your audience any better than you do. What I mean is, who better to find the audience for a movie about Doctors Without Borders or Channing Tatum, than Doctors Without Borders or Channing Tatum themselves? As a stand-alone entity, each one means a few hundred thousand people, but if you combined their forces on a project, and then added other actors and their followings, a director and his or her following, a brand, another organization, and so on and so on. You might be able to build a film with elements that make up a very sizable core audience. Therein, if Doctors Without Borders or Channing Tatum can mobilize many thousands of people to purchase a ticket to a film at little to no cost to the distributor, are they not acting in some way as a distributor themselves? And if they indeed are acting as a distributor and minimizing risk, then is that not worth more value and incentive?
As far as shifting existing paradigms in this business towards the ideas I write about above goes, it’s obviously easier said than done, and it’s not clear if I’m even identifying an emerging trend. In many ways it will take a collective force to make any significant movement in this direction. Crowd-funding, DIY distribution, and new digital distribution platforms are all offering exciting solutions, but none – from a true business standpoint – have demonstrated yet that they can or should change the landscape for all. Regardless of how we get our films made, if we want to monetize and distribute them in an efficient and quality way to as wide an audience as possible, we have to play by the rules that the distribution companies set until we make it worth their while to change. That said, I believe that our hand is far better than the way we seem to be betting on it. Actors, directors, organizations, brands… these are the entities consumers want to interact with. A distributor is nothing without the content it sells, and the content is what contains the elements that consumers truly want. The issue is that independent content and content creators act disparately because they’re stand-alone businesses that don’t collectivize or support/share information with each other. But tides are certainly turning on this front (ahem…Sundance), and if content creators can begin to consider the process of smartly building an audience to be as critical as building their film, then we might be surprised by how much more powerful their positions would be. And if entrepreneurs consider how valuable it might be to create tools that more easily allow distributors and content creators to collaborate and more efficiently release films, then we might also be surprised at how much more value winds up in the system.