CwF + RtB For Filmmakers (Part 6 of 6)

This is an article in a series called The Filmmaker's Roadmap to Value. You may read all the articles in this series by clicking here.

CwF + RtB FOR FILMMAKERS
A lot of film people address parts of the CwF + RtB equation but not the whole equation comprehensively. Mike Masnick does a wonderful job explaining the equation's fundamentals in the concluding article of his series, The Grand Unified Theory On The Economics of Free. Masnick lists four steps with examples from the music industry:

1. Redefine the market: The benefit is musical enjoyment
   
2. Break the benefits down: (not a complete list...) Infinite components: the music itself. Scarce components: access to the musicians, concert tickets, merchandise, creation of new songs, CDs, private concerts, backstage passes, time, anyone's attention, etc. etc. etc.
   
3. Set the infinite components free: Put them on websites, file sharing networks, BitTorrent, social network sites wherever you can, while promoting the free songs and getting more publicity for the band itself—all of which increases the value for the final step
   
4. Charge for the scarce components: Concert tickets are more valuable. Access to the band is more valuable. Getting the band to write a special song (sponsorship?) is more valuable. Merchandise is more valuable.

If we applied these steps to filmmaking, the results wouldn't be that much different:

1. Redefine the market: The benefit is musical cinematic narrative enjoyment
   
2. Break the benefits down: (not a complete list...) Infinite components: the music story itself. Scarce components: access to the musicians filmmakers, concert tickets theatrical showings, Q&A with the filmmakers, merchandise, creation of new songs films, CDs DVDs, private concerts screenings, backstage on set passes, time, anyone's attention, etc. etc. etc.
   
3. Set the infinite components free: Put them on websites, file sharing networks, BitTorrent, social network sites wherever you can, while promoting the free songs films and getting more publicity for the band itself film company—all of which increases the value for the final step
   
4. Charge for the scarce components: Concert tickets theatrical showings (actually, the true equivalent here is a Q&A with the filmmakers) are more valuable. Access to the band filmmakers is more valuable. Getting the band filmmakers to write a special song shoot a short webisode (sponsorship?) is more valuable. Merchandise is more valuable.

Using this approach for films and skillfully blending it with Kevin Kelly's generatives is the next logical step; below is a first pass at how generatives might be applied to create value for films. One size does not fit all here—the final phase would be a much deeper analysis to break each good listed here into its scarce components (attention, time) and its non-scarce components (reputation, trust, etc.)... enough material for a book in itself.


IMMEDIACY
Fans want the product now. How can they get it?

Film: Internet VOD, Cable VOD, Hulu, Netflix, tickets to a premiere, BitTorrent, sneak preview (like a software beta release, but for a film, the preview is either free if you need a full house, or at a discount price if your product is high in demand)

Non-film: Email notifications and newsletters from the filmmakers, physical newsletters, blog posts, twitter/facebook updates, forum threads, IMs, live broadcasts (Ustream), lifecasting, ebooks, pdfs, iPhone apps. NB: in development, customers' feedback adds value by focusing on areas they want to see developed; transmedia is ideal for this.


PERSONALIZATION
Fans want something just for them. To create that "personal touch", producers start and maintain a dialog with fans. The end result is "stickiness"—both sides have a time investment in the relationship, so neither is inclined to let that relationship die. And the dialog adds further value to the product.

Film: Customized DVD mixes (for different ratings, a 3D and/or 2D version), a high quality version, limited editions, special editions, a director's cut, some versions could be tweaked for a specific theatrical venue, e.g., LOST did some hilarious mock clips at a convention just for publicity. Allow consumers to create their own mixes and offer a prize for the best mashup. Offer up the film without a soundtrack so musicans can show off their musical prowness by adding their own score. Let editors try their hand at editing your trailer and choose the best as your trailer. Or let the community pick your trailer for you.

Non-Film: customized merchandise (e.g., Cafe Press, or autographed goods), customized soundtracks like a kareoke version, offer only parts of a soundtrack so musicians can riff along with the score, customized ebooks, autographs, web sites with varying subscription levels (higher levels have more personal interaction with the filmmakers).


INTERPRETATION
Some fans simply want a film to be explained, while others want a film to be a rich starting point for a discussion. A movie could be free (or nearly free), but its accompanying commentary or literature could be charged for because a free product is more valuable with deeper insight, references, and a vibrant (and intelligent) forum discussion.

Film: A special edition DVD with multiple commentary tracks by actors, director, film critics, etc.

Non-Film: A "manual"—especially one written by the filmmakers—might ask questions like, What is the product? How does it pertain to me? What can I do? If your movie is a stand-alone product, it will eventually fade over time. But if you wrap your movie in an issue, it will have a much longer shelf life on the long tail.


AUTHENTICITY
Fans can get your product from other sellers... but why not get it from you?

Film: If a film is allowed to be mixed and remixed by its fans, then the original unmixed and "authoritative" version becomes extremely valuable. Authentic DVDs could be marketed as donating its proceeds to related charities, e.g., a prison movie could donate its proceeds to Amnesty International. DVDs that glow in a DVD player when played also dissuade customers from pirating DVDs. Remember how cool it was to see the Paradise Theatre LP by Styx?

Non-Film: Autographs establish credibility. Twitter & blogging, podcasting, and audio commentaries are all voices of authority which add value to the scarce product (a DVD). In some cases—like Ansel Adams purposefully burning negatives of prints he considered complete—destroying a master adds enormous value to all other copies.


ACCESSIBILITY
Fans want your product at any time. Are you part of their problem or part of their solution?

If you accidentally break a DVD, wouldn't it be nice if you always had free access to a replacement DVD, or at least a digital copy (which costs a producer nothing to produce)? If you buy a standard DVD and want to upgrade to a Blu-Ray version, wouldn't it be nice to upgrade to the better quality version for a small extra fee rather than feel gouged when buying the latest full price version? Why not create a subscription-based service through your web site to stay in contact with fans by providing them a service after you sell them a product? If you've done it right, users should feel completely safe that buying from you means they'll never have to worry about their content again. If they buy a DVD from you, they should know that they'll be able to watch that content on any device they own—TV, computer, iPhone. Customers should have access to anything they want, whenever they want, however they want. Offer that kind of service at a low price, make it simple and intuitive, and you'll have loyal customers forever... who will be very interested in whatever you sell next.


EMBODIMENT
Fans will pay good money to get their product in a high-quality physical format.

Film: IMAX 3D tickets are $16 ($18 if you buy them online). Fans will pay extra money for anything they can't get at home: 3D, Digital Light Projectors, Dolby Surround Sound, etc.

Non-Film: Q&A with the filmmakers, related live events before and/or after the film. Special print collateral could be given out or sold at screenings, e.g., a sheet with the cast of its characters, information about the movie's issue, or a special souvenir. Why not sell or raffle off a printed screenplay (with official card stock covers & Acco brads)? Or auction off clothing actually worn in the movie? Or create a book of collected printouts of development emails to be sold only at screenings? You could print high quality invitations, all slightly different, and include a "Willie Wonka" type invite with a special prize only to be given out at the screening (not only does a lucky audience member get the prize, but everyone gets to keep that high quality invitation as a cool keepsake!).


PATRONAGE
Fans want to throw you their money—are you ready to catch it?

Use a web site as a portal for fundraising and donations (subject to SEC regulations about soliciting investors). Let users join the web site as free members but offer paid tiers, too, with every donation range, especially the lower tiers. It's important to let people feel part of something no matter how small and their seemingly insignificant patronage could pay off later when you need free word of mouth to promote your film's release. Each tier would include more perks and make consumers feel they're doing the right thing. You need not simply ask for funds, either: along with subscriptions, you should also be offering scarce goods like T-Shirts and books. One example of a subscription tier, with amusing labels:

• $1-$9 Pal
  
• $10-$49 Friend
  
• $50-$99 Sneezer
  
• $100-$249 Supporter
  
• $250-$499 Megaphone
  
• $500-$999 Decoder Ring
  
• $1,000-$2,499 Patron
  
• $2,500-$4,999 Super Patron
  
• $5,000-$9,999 Über Patron
  
• $10,000–$24,999 Advocate
  
• $25,000-$49,000 Heavyweight
  
• $50,000-$99,999 Aristocrat
  
• $100,000–$249,000 Time Lord

Create physical and virtual tip jars: checks, VISA, cash, Paypal, cell phone donations. Allow options for anonymity and/or ability to leave notes with donations.

Accept bartering as payment by offering partnership deals with companies, e.g., you let us show our film at your company and help us advertise, we'll donate X% of our proceeds to your company. Perhaps advertise that all or some of the film's proceeds go to a charitable cause.

Make it easy to give. It should be so easy that your septuagenarian grandmother could donate without help in less than sixty seconds.


FINDABILITY
Generate massive publicity around your release date. Have a central web site where all traffic is directed. Put that URL on all your literature. Make that URL dead simple to remember and type into a browser:

YES: www.deadsimplemovie.com
NO: www.deadsimplemovie.com/moviesplash/&2hg/index.html

More tips:

• One piece of merchandise can and should cross-sell another piece of merchandise, e.g., a behind the scenes pictorial book could promote a printed screenplay, T-Shirts, etc.—but all merchandise should point back to the same URL. Perhaps all collateral would even have the URL at the bottom of every page.
  
• Don't be haughty about where your film gets distributed: upload teasers/trailers/movie to every single video platform you can, including Vimeo, Youtube, blip.tv, Facebook, Apple trailers, Hulu, Netflix... even BitTorrent (if you are hesitant about uploading to BT, why not insert sponsored ads into your BitTorrent release?).
  
• Generate buzz by putting different clips on different video platforms to get people comparing notes.
  
• Hand out partial or full-length screeners with your URL emblazoned across the bottom.
  
• Launch your film domestically and internationally on the same day.
  
• Donate a copy of your film to related charities or organizations.

As you can see, there are countless ways to infuse generatives to bring value to your film, and in doing so, bring value to all of its related scarce goods. The unfortunate truth filmmakers face in the modern age: films are no longer a protected scarce commodity as they were a half a century ago. In this digital age, the internet is one giant copy machine... once content gets online, it stays there, echoing throughout eternity. Rather than waste time and money fighting that Hydra, why not use the internet's unique ability to infinitely distribute content to add more value to your scarce goods? Why not use transmedia to build audiences who will buy your scarce goods? Why not let profits from your scarce goods fund your film's fixed costs? Why not weave generatives into every aspect of your business model so that only you can offer the product you're creating?

Filmmaking isn't only feature films anymore—it has expanded to be storytelling across many different media. Things like machinima will creep onto the scene as well as webisodes and short, funny clips. Feature films as a format will still exist, but they'll have to compete with the freemium and transmedia models that indie filmmakers are pioneering today. And, because of these wonderful new models, more indie filmmakers are connecting with fans and giving them a reason to buy.

There will always be money in filmmaking because there will always be value in storytelling... just don't expect films to be the main products that generate all the money.

This article is part of a series called The Filmmaker's Roadmap to Value. You may read the entire articles by clicking here, or the other articles here:

1. Save the Tower Theatre
   
2. A Plea to Consumers
   
3. A Rotating Film Tour
   
4. What Are You Really Selling?
   
5. Transmedia: Connecting With Fans
   
6. CwF + RtB For Filmmakers

Transmedia: Connecting With Fans (Part 5 of 6)

This is an article in a series called The Filmmaker's Roadmap to Value. You may read all the articles in this series by clicking here.

TRANSMEDIA: CONNECTING WITH FANS
Telling a movie's story outside of a movie—i.e., in other media—is called "transmedia" and it's fast becoming a dominant model for filmmakers who realize transmedia's power to cultivate and exploit fans for their projects. Robert Pratten of Zen Films wrote a superb analysis about transmedia business models called Moving Filmmakers to a Transmedia Business Model. Pratten emphasizes how critical it is to target and nurture fans in the earliest stages of a project in order to build a platform before the product is even developed. From a cost perspective, this is fundamentally true. Filmmakers determined to only make a feature film may have difficulty understanding that making and selling feature films in themselves will become an increasingly outdated model. Of course, filmmakers will still be able to make feature films the old way by trumping for funds before connecting with audiences, but it will just get harder because other filmmakers will have already been feverishly connecting with their fans. If you were an investor, which film would you rather dump money in—a project whose target audience has never even heard of the film, or a project with a growing and vibrant community excited about a film's release despite it not having entered pre-production yet?

Pratten's Transmedia model explains how using transmedia to connect with fans early in the process is integral to getting funding sooner. For independent filmmakers, Pratten's overview should be like getting manna from heaven. Unfortunately, Pratten doesn't really address the other part of the formula, which is getting consumers to buy. The assumption goes that consumers involved in the development process will automatically buy the final product, and that's probably true. Still, I feel it deserves more attention. If I'm a fan connecting with your film across multiple media—what am I inspired to buy from you, and why? I love your story across DVDs, movies, the web, forums, software, etc., but why should I plunk down cash for your product? I'm not talking about the tired Old Guard defense, "I made a DVD and slapped a price on it—that's why you should buy it." I'm talking about what makes your product so unique, so clever, so irresistible that I would pay money for it even if I could already get it for free.

Transmedia shows us how and why we can get eyeballs on a product, but how do you covert those eyeballs into dollar signs? This is the part where we have to talk about CwF + RtB = $$$:

Connect with Fans + Reason to Buy = Profitable business model

First, we look at a product(s) we produce and ask, what benefit does it provide? Are consumers buying the film itself or the enjoyment of the film's story? Then, we take that benefit and figure out which components of it are scarce and which are non-scarce (or abundant/infinite). Tangible goods are scarce, intangible goods are non-scarce. For example, CD's are a tangible good and a producer's ability to produce 1 million CDs is limited by the producer's bank account. However, the music on those CDs is an intangible: a song can be listened to and copied infinitely with no cost to its original producer.

Non-scarce or abundant goods add value to the scarce goods. An infinite/non-scarce good like trust adds value to a scarce good it's associated with. For example, given two cars of equal retail price, we will always choose one brand over the other because we know one brand has a longer history of reliabilty. This brand's cars never break down. We trust that company to make a reliable product. So the infinite good (reliability) adds value to the scarce good (the car). Consider the example of this clever music band:

...The String Cheese Incident, a band that recognizes, "The more people are exposed to the music, the better it is for the band." The music (the non-scarce good) helps them sell a lot more tickets to concerts (a scarce good). However, that band took it a step further. They set up their own travel agency to help fans attend their concerts—and have been making money there by saving people time (scarce good!) and helping them secure flights (scarce good) and lodging (scarce good), all in the pursuit of access to the band (scarce good) who they value so much because of the music (non-scarce good).

Trust is a non-scarce good, but also a specific tool to influence behavior. Sally Hogshead has spent years trying to answer a simple question: why are we fascinated by things? The results are in her new book, coming out in February, called Fascinate: Your 7 Triggers to Persuasion and Captivation. In Sally's words:

There are seven different "triggers" that activate our fascination: Power, lust, mystique, prestige, alarm, vice, and trust. Each trigger shapes our behavior in a different way. For instance, the mystique trigger provokes our curiosity, making us want to seek out more information. The lust trigger makes us crave an experience. Alarm increases anxiety at the threat of negative consequences. Trust calms us with familiarity and reliability.

All seven non-scarce triggers are used to entice customers to buy certain products or, put another way, to add value to scarce goods. If you are marketing any kind of product (and "product" includes stories and characters!), Sally's book will become a must read in an age of "free" where attention is our most valuable scarce good, a good which every company fights to obtain.

This article is part of a series called The Filmmaker's Roadmap to Value. You may read the entire articles by clicking here, or the other articles here:

1. Save the Tower Theatre
   
2. A Plea to Consumers
   
3. A Rotating Film Tour
   
4. What Are You Really Selling?
   
5. Transmedia: Connecting With Fans
   
6. CwF + RtB For Filmmakers (12/29 09:00 PST)

Parts 5 and 6 of this article series would have been impossible without Mike Masnick's lucid and insightful writings on Techdirt. To say I owe Mike a debt of gratitude here is an understatement of the grandest possible measure.

What Are You Really Selling? (Part 4 of 6)

This is an article in a series called The Filmmaker's Roadmap to Value. You may read all the articles in this series by clicking here.

WHAT ARE YOU REALLY SELLING?
There is a larger and more urgent question: are filmmakers, especially independent filmmakers, really aware of what business they are in? If they think they're in the business of producing and selling movies, they are dead wrong—filmmakers are actually in the business of entertainment. Consumers don't buy movies to support a filmmaker... they buy movies to be entertained. All too often businesses define themselves strictly around providing a tangible item and then fight to the death when that tangible item is replaced by a better product. Horse and carriage drivers weren't in the business of providing a horse and carriage—they were in the business of providing personal transportation. When cars were introduced and took over their market, horse and carraige drivers futilely tried to hold back the tides of progress. Newspapers aren't in the business of printing newspapers (a tangible), they're in the business of providing newsworthy information (an intangible). Before the digital age, where printing was costly, there was a place for newspapers... but now, when killing trees is increasingly unpopular, newspaper print production seems the pargon of waste.

Another great example is iTunes—they aren't in the business of providing media to consumers. If that were the case, they might only be selling DVDs or digital files with highly restrictive DRM. Instead, iTunes is actually providing quality and convenience at a low cost. I know (and so does Apple) that I can get almost anything iTunes offers for free from countless pirated web sites, but iTunes offers the best quality version on an intuitive platform for next to nothing. Why would I bother BitTorrenting when I can find anything I want, easily, and download it immediately... and do it legally?

As I was walking around Disneyland a few years ago, I realized that Disney doesn't simply sell merchandise for their films. Merchandise is a tangible, and as such, any other company could do that. What Disney does, what really separates them from everyone else, is that they sell an intangible. Disney cultivates and sells the magical experiences all children want (be a princess, be a pirate, a Jedi, etc.)... and offers it in the shape of physical merchandise (toys, keychains, stuffed animals, sweatshirts, etc.). Since most parents will do anything to please their children, parents trip over themselves to buy merchandise to sustain that magical Disney pixie dust. If you look at Disneyland closely, everything they do there is infused with this concept: "free" parades, fireworks, random musical numbers, barbarshop quartets. Pirates of the Carribean isn't just any old theme ride—it's a boat ride through supernatural piracy.

Filmmakers aren't in the business of selling movies—movies are the tangible. Instead, filmmakers are in the business of selling the experience their movie provides. Once you understand that distinction, you realize that clinging to many aspects of filmmaking could threaten your long-term career in filmmaking. If you focus your energies on enhancing the experience movies provide, then the movie becomes just one of numerous media adding to that experience. Depending on your career goals, you can either make the movie the main part of the experience, or you can let it be only a secondary part of the experience.

The Blair Witch Project has sometimes been described as an outlier, something so far above the mean that it's an exception that proves the rule. However, I believe Blair Witch was so successful because its filmmakers understood (perhaps only intuitively) that the experience of the story was what audiences wanted... so the filmmakers built an entire world outside of the film which enhanced the film's experience. For example, on the Blair Witch web site, you could see "real" pictures (from the local Sheriff department's murder investigation) of the film cannisters from which the movie is supposed to have been edited. Allegedly, college archeologists on a dig found all three film canisters 20 feet under the ground nestled snugly beneath an undisturbed stone wall over 100 years old. How could the cannisters have possibly been buried there without disturbing the stone wall above it? It's a small detail, perhaps even unnecessary to the movie, but a detail with such supernatural creepiness that it piqued a lot of people's interest in the movie's storyline, and thus enhanced the experience of the film. On their web site, you could get immersed in Blair Witch's detailed alternative reality. You knew it was all fake, but the more you looked at it, the more you wanted to see the film to find out what had happened. In the end, it was fun to squint your eyes and pretend it was real just to feel what the characters might have been feeling. Cloverfield took this approach a step further by creating web sites for an ARG treasure hunt and gave all the movie's main characters Myspace profile pages to interact with the public, a remarkably inexpensive but effective marketing campaign for a studio film.

This article is part of a series called The Filmmaker's Roadmap to Value. You may read the entire articles by clicking here, or the other articles here:

1. Save the Tower Theatre
   
2. A Plea to Consumers
   
3. A Rotating Film Tour
   
4. What Are You Really Selling?
   
5. Transmedia: Connecting With Fans (12/28 09:00 PST)
   
6. CwF + RtB For Filmmakers (12/29 09:00 PST)

A Rotating Film Tour (Part 3 of 6)

This is an article in a series called The Filmmaker's Roadmap to Value. You may read all the articles in this series by clicking here.

A ROTATING FILM TOUR
A pet peeve of mine is those who criticize but offer no viable alternative. Here goes:

Using my previous example, the Tower Theatre could thrive if it adapted to the changing market's needs. Art house film owners should be rethinking what scarce goods only they can offer, things which other theatres can't or won't offer. Taking a cue from Jon Reiss, art house film owners could make their movies more event-based. Let's look at that in more detail.

Imagine if 50 art house theaters across the nation held a kind of "rotating filmmaker Q&A tour"? Pair up two filmmakers, one famous with someone not so famous and double bill those movies. Play that double-bill for a whole week at an art house theatre and the filmmakers show up after the show for a Q&A a few days of the week (Saturday & Sunday?). 50 weeks long, 50 art house cineplexes, 100 films, 100 filmmakers. Filmmakers talk about their movie with local audiences, sign autographs, sell DVDs, merchandise, etc. It brings much needed business to all 50 art house theatres and offers the filmmakers a chance to sell merchandise and help build awareness about their movies. Now that's a model for sustainability! As a consumer, I can tell you that whatever "urgent" plans I have going on, I'll find day care and scramble to the Tower Theatre to hob nob with visiting indie film directors.

This is all about giving a consumer a good reason to buy. It's about creating value. You don't lure customers into your store because you appeal to their pity, because 'your store has been in the same location for 20 years and it would be such a shame to see you go out of business.' You lure customers in your store by offering them something they can't resist, something only you can provide. And, whenever possible, you make sure it's a scarce good they have to pay good money for.

Trent Reznor has successfully made that strategic shift—he doesn't sell CDs for $15 because he knows his fans can already get his music for free on P2P networks. Rather than gripe about it, he uses that industry shift to his advantage by giving away his music for free and the only "payment" he asks for is a fan's email. That may not sound like such a great deal for Reznor but consider how clever that as a way to stay in contact with fans. No record label has standardized this approach yet for CD purchases... and they wonder why their business is hurting.

Offering great content for the price of contact information is called an "ethical bribe". Fans get your music, you get to contact them about upcoming concerts, new products in your store, etc. For instance, Reznor created a ultra deluxe limited edition 4 disc collection of his music (a product he already gives away for free) and sold each copy for $300 to his first 2,500 fans. The limited edition is swanky, including three embossed fabric-bound hardcover books, a data DVD of the multi track recording sessions, etc... and it sold out in days. Reznor grossed $750,000 from a product he already gives away for free. How? Because he's collecting emails. Because he's selling something scarce. Because he's giving away his digital products. Because he's connecting with fans and giving them a reason to buy. Still not convinced? Read the story of Amanda Palmer who made $19,000 in less than a month simply using Twitter to connect with her fans.

The trick with independent films is straightfoward—to give fans a reason to buy, you need to offer them value. But how do you create value when art is so subjective? Nobody could have predicted Slumdog Millionaire would win an Oscar for best picture. A dramatic feature about extreme poverty in India's slums? No way. Boyle's films are not your standard fare for studio films... Trainspotting has some "page killer" scenes which no Hollywood studio would have ever dared to film. However, because Slumdog won an Oscar and did so well at the box office, it is—by many earmarks, an independent picture with a big budget—thus, a commercial film. So how do you slice the pie to figure out what an indie film is and what isn't?

This article is part of a series called The Filmmaker's Roadmap to Value. You may read the entire articles by clicking here, or the other articles here:

1. Save the Tower Theatre
   
2. A Plea to Consumers
   
3. A Rotating Film Tour
   
4. What Are You Really Selling? (12/27 09:00 PST)
   
5. Transmedia: Connecting With Fans (12/28 09:00 PST)
   
6. CwF + RtB For Filmmakers (12/29 09:00 PST)

A Plea To Consumers (Part 2 of 6)

This is an article in a series called The Filmmaker's Guide to Value. You may read all the articles in this series by clicking here.

A PLEA TO CONSUMERS
Jon Reiss recently posted a very thorough article called A Christmas (and Hanukah) List to Help Save Independent Film. It's a valiant effort and may actually help some independent filmmakers stay afloat, much in the same way that NPR has stayed afloat with listener donations. Which is great. If CC P2P services like Vodo.net explode and consumers find a simple way to patronize the indie filmmakers they like, we'll all live in a much better world for the arts.

Even so, I can't help wonder: isn't this just bailing a sinking ship? Don't misunderstand: I'm not saying independent filmmaking is a sinking ship, at least not in whole. Quite on the contrary, some recent indie films have been wildly successful, both artistically and commercially, e.g., Precious, Once, Paranormal Activity. Supporting indie filmmaking, though, comes naturally when the market enjoys the content. If you're telling a story people enjoy, you should—in theory, anyway— never have a problem finding some kind of funding for your film.

Last week, I started a virtual panel on Twitter called Infinite Distribution. The panel focuses on film distribution in the digital age which you can find and contribute to at #infdist. Lots of people have been contributing to it, including Jon Reiss (author of the must-read book, Thinking Outside the Box Office), but a few comments in particular resonated with me. Self Helpless is a no budget comedy being released for free over BitTorrent for 7 days, followed by a DVD release with related mechandise like T-shirts, etc. In itself, their model is worth writing more about (read more about their BitTorrent model here), but this is a collection of @Selfhelplessmov's tweets:

Make shit people want and give it to them for free. Not for everyone, but it works for us. The idea of retraining or cajoling audiences irks me... maybe audiences need to retrain filmmakers to make movies people will like. Training people to be more film-savvy seems weird. Making movies FOR the audience often gets left out of the conversation—before we can teach, don't we have to gain their trust by giving them good films?

Why are indie films struggling? I see two obvious reasons (though there may be many others): the market doesn't support indie films, and costs to make indie films are too high. This is a tragic and vicious circle... when the market does support those films, then the costs aren't too high, right? So are we seriously objecting to a lack of support in the market for fringe indie films that can't seem to find their market? As Big Champagne CEO Eric Garland recently said:

...growing a sector is a privilege and not a right. There is no right size. There is no correct or God-given size for any sector. Why do we get to make movies that cost $300 million to make? Because we have found venues where people will spend more than $300 million on the result. If people spend only $50 million then the price of a movie must be $49 million or less.

This economic principle is and always will be mercilessly democratic. It applies to physical products 100 years ago and to digital products today: if audiences for indie films only spend $1 million, then the cost of indie films must be less than $1 million. If audiences spend $50,000, then the cost must be under $50,000. If there is no market for a particular indie film, then that indie film must either adapt... or it will die. You can bail water on the sinking ship if you so wish, but sooner or later, your arms will get tired. Appealing to consumers' good nature to help fund independent movies for its own sake is putting a band-aid on a bleeding jugular.

Terry Rossio once wrote on Wordplay, either in a column or a comment, and I'm paraphrasing: "we can give you all the advice about pitching your story to a producer, about how to format your script, about all these other little tips and tricks... but it won't make any difference if you can't write a Damned Good Screenplay. You could even write a screenplay in crayon but if its story and characters were compelling enough, that multi-colored script will still get a green light. So stop worrying about two vs. three brads and start worrying about your opening words. Worry about your character development. Worry about your story." Indeed. Rather than focus all your efforts on how to market your product cleverly, just focus your efforts on improving the damned product. Good content advertises itself.

This article is part of a series called The Filmmaker's Roadmap to Value. You may read the entire articles by clicking here, or the other articles here:

1. Save the Tower Theatre
   
2. A Plea to Consumers
   
3. A Rotating Film Tour (12/26 09:00 PST)
   
4. What Are You Really Selling? (12/27 09:00 PST)
   
5. Transmedia: Connecting With Fans (12/28 09:00 PST)
   
6. CwF + RtB For Filmmakers (12/29 09:00 PST)

The Filmmaker's Roadmap to Value (Part 1 of 6)

This is an article in a series. You may read all the articles in this series by clicking here.

SAVE THE TOWER THEATRE
Sacramento has a local art house cineplex called the Tower Theatre. Its billboard out front reads, "Save The Tower Theatre" and has been posted there for years because Sacramento was going to (and might still) spend millions on a competing theatre in a fancy mall area in nearby downtown. The new mall theatre's art films would compete directly with Tower, but the new theatre would also be given, rent free, to the Century Theaters Corporation. Obviously, Tower Theatre and its patrons are up in arms about the deal.

Now let's be abundantly clear: I support the arts. I support the very idea of the arts. I got my B.A. in the Humanities and love publicly supported news organizations like NPR—they play a critical role in holding other for-profit news corporations accountable. That's a long-winded way of saying I get the warm and fuzzies whenever I see the arts flourish.

That said, Darwinism is an unrelenting and unforgiving bitch. Any animal, technology, system, or concept unable to sustain itself will either adapt... or die. And, to be blunt, if it can't adapt quickly enough, it should die. The cold truth is that extinction is not anathema to evolution—it's part of evolution. In order for newer and better systems to be born and thrive, decaying and less efficient systems must die off to clear the way forward. In the words of Dennis Leary, "I once heard Keith Richards say kids should not do drugs... Keith, we can't do any more drugs because you already did them all! We'll have to wait until you die and SMOKE YOUR ASHES!!"

I hope the Tower Theatre stays afloat. I really, really do. I try to make it over there when I can, but... it's a little too far away, I have two kids keeping me busy at home, and the movies Tower shows don't always grab me right away... It's interesting how I ordered my list of objections. If I lived next to the Tower, even if I had kids and their movies didn't grab me right away, I'd still go more often than I do now.

Whenever I do get over to Tower, I don't give them my money simply to support independent movies—I give them money because I like the indie movies they show there. If the Tower can't sustain itself showing indie movies, I will of course be extremely sorry to see them go... but I also have little sympathy for a business that's failed because they didn't understand how to earn more money than they spent.

The monetization of digital distribution is shifting under our feet like tektonic plates. Take a good look around because things will not always be so: if Blockbuster doesn't act fast, it won't be around in 5–10 years. On the other end of the scale, Netflix is already migrating its DVD rentals into a Watch Instantly service. News comes this week about Apple offering a $30/month iTunes TV subscription. Things are moving quickly and the ones who can adapt will earn the privilege of sticking around.

This article is part of a series called The Filmmaker's Roadmap to Value. You may read the entire articles by clicking here, or the other articles here:

1. Save the Tower Theatre
   
2. A Plea to Consumers (12/25 09:00 PST)
   
3. A Rotating Film Tour (12/26 09:00 PST)
   
4. What Are You Really Selling? (12/27 09:00 PST)
   
5. Transmedia: Connecting With Fans (12/28 09:00 PST)
   
6. CwF + RtB For Filmmakers (12/29 09:00 PST)

The Key is Generatives (Part 8 of 8)

THE FILMMAKER'S ROADMAP TO FREE (part 8 of 8)
This is an article in a series. You may read all the articles by clicking here.

THE KEY IS GENERATIVES
When Sheri Candler passed me this speech by Brian Newman at DIY Philladelphia, I'm not ashamed to say I was ecstatic. Finally, I thought, fiiiiiiinally, somebody who really gets it. Brian’s lecture provides a succint overview of how content producers can still make money in a free economy:



I went searching for more information about generatives and found what appears to be the original article by Kevin Kelly. Below are the most salient parts from his article:

The simplest way I can put it is thus:

When copies are super abundant, they become worthless. 
When copies are super abundant, stuff which can't be copied becomes scarce and valuable.

When copies are free, you need to sell things which can not be copied.

Well, what can't be copied?

There are a number of qualities that can't be copied. Consider "trust." Trust cannot be copied. You can't purchase it. Trust must be earned, over time. It cannot be downloaded. Or faked. Or counterfeited (at least for long). If everything else is equal, you'll always prefer to deal with someone you can trust. So trust is an intangible that has increasing value in a copy saturated world.

There are a number of other qualities similar to trust that are difficult to copy, and thus become valuable in this network economy.  I think the best way to examine them is not from the eye of the producer, manufacturer, or creator, but from the eye of the user. We can start with a simple user question: why would we ever pay for anything that we could get for free? When anyone buys a version of something they could get for free, what are they purchasing?

From my study of the network economy I see roughly eight categories of intangible value that we buy when we pay for something that could be free.

In a real sense, these are eight things that are better than free. Eight uncopyable values.  I call them "generatives." A generative value is a quality or attribute that must be generated, grown, cultivated, nurtured. A generative thing can not be copied, cloned, faked, replicated, counterfeited, or reproduced. It is generated uniquely, in place, over time. In the digital arena, generative qualities add value to free copies, and therefore are something that can be sold.

Eight Generatives Better Than Free

Immediacy—Sooner or later you can find a free copy of whatever you want, but getting a copy delivered to your inbox the moment it is released—or even better, produced—by its creators is a generative asset. Many people go to movie theaters to see films on the opening night, where they will pay a hefty price to see a film that later will be available for free, or almost free, via rental or download. Hardcover books command a premium for their immediacy, disguised as a harder cover. First in line often commands an extra price for the same good. As a sellable quality, immediacy has many levels, including access to beta versions. Fans are brought into the generative process itself. Beta versions are often de-valued because they are incomplete, but they also possess generative qualities that can be sold. Immediacy is a relative term, which is why it is generative. It has to fit with the product and the audience. A blog has a different sense of time than a movie, or a car. But immediacy can be found in any media.

Personalization—A generic version of a concert recording may be free, but if you want a copy that has been tweaked to sound perfect in your particular living room—as if it were preformed in your room—you may be willing to pay a lot.  The free copy of a book can be custom edited by the publishers to reflect your own previous reading background. A free movie you buy may be cut to reflect the rating you desire (no violence, dirty language okay). Aspirin is free, but aspirin tailored to your DNA is very expensive. As many have noted, personalization requires an ongoing conversation between the creator and consumer, artist and fan, producer and user. It is deeply generative because it is iterative and time consuming. You can't copy the personalization that a relationship represents. Marketers call that "stickiness" because it means both sides of the relationship are stuck (invested) in this generative asset, and will be reluctant to switch and start over.

Interpretation—As the old joke goes: software, free. The manual, $10,000. But it's no joke. A couple of high profile companies, like Red Hat, Apache, and others make their living doing exactly that. They provide paid support for free software. The copy of code, being mere bits, is free—and becomes valuable to you only through the support and guidance. I suspect a lot of genetic information will go this route. Right now getting your copy of your DNA is very expensive, but soon it won't be. In fact, soon pharmaceutical companies will PAY you to get your genes sequence. So the copy of your sequence will be free, but the interpretation of what it means, what you can do about it, and how to use it—the manual for your genes so to speak—will be expensive.

Authenticity—You might be able to grab a key software application for free, but even if you don't need a manual, you might like to be sure it is bug free, reliable, and warranted. You'll pay for authenticity. There are nearly an infinite number of variations of the Grateful Dead jams around; buying an authentic version from the band itself will ensure you get the one you wanted. Or that it was indeed actually performed by the Dead. Artists have dealt with this problem for a long time. Graphic reproductions such as photographs and lithographs often come with the artist's stamp of authenticity -- a signature -- to raise the price of the copy. Digital watermarks and other signature technology will not work as copy-protection schemes (copies are super-conducting liquids, remember?) but they can serve up the generative quality of authenticity for those who care.

Accessibility—Ownership often sucks. You have to keep your things tidy, up-to-date, and in the case of digital material, backed up. And in this mobile world, you have to carry it along with you. Many people, me included, will be happy to have others tend our "possessions" by subscribing to them. We'll pay Acme Digital Warehouse to serve us any musical tune in the world, when and where we want it, as well as any movie, photo (ours or other photographers). Ditto for books and blogs.  Acme backs everything up, pays the creators, and delivers us our desires. We can sip it from our phones, PDAs, laptops, big screens from where-ever. The fact that most of this material will be available free, if we want to tend it, back it up, keep adding to it, and organize it, will be less and less appealing as time goes on.

Embodiment—At its core the digital copy is without a body. You can take a free copy of a work and throw it on a screen. But perhaps you'd like to see it in hi-res on a huge screen? Maybe in 3D? PDFs are fine, but sometimes it is delicious to have the same words printed on bright white cottony paper, bound in leather. Feels so good. What about dwelling in your favorite (free) game with 35 others in the same room? There is no end to greater embodiment. Sure, the hi-res of today—which may draw ticket holders to a big theater—may migrate to your home theater tomorrow, but there will always be new insanely great display technology that consumers won't have. Laser projection, holographic display, the holodeck itself! And nothing gets embodied as much as music in a live performance, with real bodies. The music is free; the bodily performance expensive. This formula is quickly becoming a common one for not only musicians, but even authors. The book is free; the bodily talk is expensive.

Patronage—It is my belief that audiences WANT to pay creators. Fans like to reward artists, musicians, authors and the like with the tokens of their appreciation, because it allows them to connect. But they will only pay if it is very easy to do, a reasonable amount, and they feel certain the money will directly benefit the creators. Radiohead's recent high-profile experiment in letting fans pay them whatever they wished for a free copy is an excellent illustration of the power of patronage. The elusive, intangible connection that flows between appreciative fans and the artist is worth something. In Radiohead's case it was about $5 per download. There are many other examples of the audience paying simply because it feels good.

Findability—Where as the previous generative qualities reside within creative digital works, findability is an asset that occurs at a higher level in the aggregate of many works. A zero price does not help direct attention to a work, and in fact may sometimes hinder it. But no matter what its price, a work has no value unless it is seen; unfound masterpieces are worthless. When there are millions of books, millions of songs, millions of films, millions of applications, millions of everything requesting our attention—and most of it free—being found is valuable.

This article is part of a series called The Filmmaker's Roadmap to Free. You may read the entire articles by clicking here, or the other articles here:
The Filmmaker's Roadmap to Free: An Introduction

The Free Debate:

1. Free: The Future of a Radical Price by Chris Anderson
   
2. PRICED TO SELL: Is Free the Future? by Malcolm Gladwell
   
3. Dear Malcolm: Why so Threatened? by Chris Anderson
   
4. Malcolm is Wrong by Seth Godin
   
5. Free vs. Freely Distributed by Mark Cuban
   
6. Chris Anderson, Malcolm Gladwell And A Look At Free by Michael Masnick
   
7. Freemium and Freeconomics by Fred Wilson

The Filmmaker's Roadmap to Free:

1. OK, it's wrong... so what?
   
2. The Moral Issue
   
3. Feedback from Pirates: A Case Study
   
4. Digital Theft, Oxymoron
   
5. It's All Fixed
   
6. Creating Value
   
7. The Way Out
   
8. The Key is Generatives
   
9. Acknowledgments & Further Reading

The Way Out (Part 7 of 8)

THE FILMMAKER'S ROADMAP TO FREE (part 7 of 8)
This is an article in a series. You may read all the articles by clicking here.

THE WAY OUT
To survive in this new economy, moviemakers must first and foremost be able to recoup their fixed costs, and secondarily recoup their marginal costs. It follows, then, that moviemakers must:

1. make movies cheaper than they have before
   
2. exploit old income streams and discover new income streams

The downward pressure to make movies cheaper is already happening as studios torpedo A-List stars’ salaries in favor of offering them larger back end points, and use relatively unknown actors to make their tentpole blockbusters (e.g., Star Trek). Another measure to cut costs, also well underway, is studios relocating outside of Los Angeles. The other major boondoggle, of course, is slashing union salaries. Hey, I never said this would be pretty.

Moviemakers also need to minimize their marginal costs by streamlining theatrical distribution costs, which means nixing prohibitive film duplication costs in favor of beaming files directly to digital light projectors, and pushing more online sales via portals like iTunes and Hulu. CEO Reed Hastings believes DVDs will stop being the primary delivery format in two years, so free marginal costs are just around the corner. If the studios ever get DECE up and running, 21st century entertainment might finally become a reality.

Discovering new income streams from movies will mean employing advertising in creative ways like product placement and product integration. It will also mean selling any scarce goods which adds value to the movie (the infinite good), e.g., a collector’s edition DVD, an evening Q&A with the filmmaker, T-shirts, toys, etc.

Consider Cnet reporter Greg Sandoval's insightful open letter to Hollywood:

Cut your spending. Save your money. Many of the revenue streams that have gushed into your industry for decades, some for nearly a century, are about to dry up. This will likely mean a period of belt tightening like you've never seen before.

The end is coming for DVDs, traditional movie rentals, and yes, much of your cable money will likely disappear.

The news isn't entirely bad; you still have iTunes and Netflix—places where people spend money to buy or rent movies. You still have Hulu, Crackle.com, and YouTube, which are generating ad revenue by streaming full-length films and TV shows online. But the reality is that the amount of money that these legal operations generate is far less than the returns your industry is used to making. Unless some dramatic technological breakthrough occurs that can defeat file sharing, then you are staring at checkmate. Your business is headed for the same meat grinder that has chewed up the recorded music sector and print publishing. What will come out the other side is still uncertain but will likely be much smaller.

This article is part of a series called The Filmmaker's Roadmap to Free. You may read the entire articles by clicking here, or the other articles here:
The Filmmaker's Roadmap to Free: An Introduction

The Free Debate:

1. Free: The Future of a Radical Price by Chris Anderson
   
2. PRICED TO SELL: Is Free the Future? by Malcolm Gladwell
   
3. Dear Malcolm: Why so Threatened? by Chris Anderson
   
4. Malcolm is Wrong by Seth Godin
   
5. Free vs. Freely Distributed by Mark Cuban
   
6. Chris Anderson, Malcolm Gladwell And A Look At Free by Michael Masnick
   
7. Freemium and Freeconomics by Fred Wilson

The Filmmaker's Roadmap to Free:

1. OK, it's wrong... so what?
   
2. The Moral Issue
   
3. Feedback from Pirates: A Case Study
   
4. Digital Theft, Oxymoron
   
5. It's All Fixed
   
6. Creating Value
   
7. The Way Out
   
8. The Key is Generatives
   
9. Acknowledgments & Further Reading

Creating Value (Part 6 of 8)

THE FILMMAKER'S ROADMAP TO FREE (part 6 of 8)
This is an article in a series. You may read all the articles by clicking here.

CREATING VALUE
I used to think producing a film was like building a house. You build a product for $200,000, and sell it for $500,000. Like building a house, you create a perceived value from nothing, which is called “forced appreciation”. When films are distributed, though, they don’t appreciate in value over time, but act more like cars—when you drive a car off the lot, its value drops almost in half. But a film’s long tail does continue to add value to its film company and to all other films made by that company. This explains how Roger Corman was able to sell his entire 400 film catalog to Disney-owned Buena Vista Entertainment for hundreds of millions of dollars.

To state the obvious, products build cumulative value to your brand over time. Once a film’s fixed costs are recouped on the front end, its marginal costs are ultimately pushed down to zero. If a product is effectively “free”, i.e., not able to regain any more money, then it can be given away for free to help build branding and, thus, add value to the company and its future products.

When the film Ink was pirated on BitTorrent last month, its filmmakers had no distribution deal locked down. They had made no money from the sale of their film at the typical jaunts like AFM or Cannes. In essence, they were screwed... or so it seemed. Instead of getting bitter, they chose to embrace the inevitable and play their hand for as much as they could: they chose to let their hundred of thousands of illegal viewings add value to their film by leveraging Ink's unprecedented buzz.

This is the dilemma in the title of Matt Mason's fantastic book, The Pirate's Dilemma: if piracy is taking value away from your product, Mason posits, you must fight them or you'll have to put the keys under the doormat. "Fighting" piracy can take more traditional forms like legal action, but it can also mean competing with piracy a la iTunes and Hulu. In some cases, as happened with Ink, piracy may be adding way more value to your product than you could ever have added yourself. Are you mentally ready to make that shift in perspective if it happens to you?

This article is part of a series called The Filmmaker's Roadmap to Free. You may read the entire articles by clicking here, or the other articles here:
The Filmmaker's Roadmap to Free: An Introduction

The Free Debate:

1. Free: The Future of a Radical Price by Chris Anderson
   
2. PRICED TO SELL: Is Free the Future? by Malcolm Gladwell
   
3. Dear Malcolm: Why so Threatened? by Chris Anderson
   
4. Malcolm is Wrong by Seth Godin
   
5. Free vs. Freely Distributed by Mark Cuban
   
6. Chris Anderson, Malcolm Gladwell And A Look At Free by Michael Masnick
   
7. Freemium and Freeconomics by Fred Wilson

The Filmmaker's Roadmap to Free:

1. OK, it's wrong... so what?
   
2. The Moral Issue
   
3. Feedback from Pirates: A Case Study
   
4. Digital Theft, Oxymoron
   
5. It's All Fixed
   
6. Creating Value
   
7. The Way Out
   
8. The Key is Generatives
   
9. Acknowledgments & Further Reading

It's All Fixed (Part 5 of 8)

THE FILMMAKER'S ROADMAP TO FREE (part 5 of 8)
This is an article in a series. You may read all the articles by clicking here.

IT’S ALL FIXED
The problem at the chewy center of the free debate is about fixed costs.

Let’s say you’re publishing a book. If your book costs $5,000 to produce the initial printing plates, but only $5 to print and distribute each book after those plates are made, then your fixed cost is $5,000 and your marginal cost is $5. Traditionally, a publisher might charge $20 per book and break even once that $5,000 fixed cost had been recouped after which the publisher could either sell each book for as little as $5 or continue selling them at $20 to make handsome profits.

Unfortunately for producers, competition will always drive retail prices as close as possible to their product’s marginal cost and—in the case of airlines desperate to capture holiday travelers—retail prices can sometimes go lower than the marginal cost. Other market forces like labor unions and anti-outsourcing lobbyists are hard at work to artificially inflate this downward market pressure but, ultimately, businesses must seek profit (or simply survival) by using their resources in the most efficient way possible… which often means relocating factories overseas where 10 foreign employees cost the same as one American employee, or installing cutting edge technological systems that do three times the amount of work with only half the staff. Still, it’s the fixed costs that matter. If you don’t get your fixed costs paid back, your business will soon die.

And no matter what your product is, basic economic laws apply—no business model is sustainable when 1) fixed costs are so high that they can never be recouped or 2) retail prices are consistently lower than marginal costs. Therein lies the quagmire for the movie industry: unlike books and music, movies cost a lot. Studio movies have staggeringly high fixed costs and, for theatrical releases, substantial marginal costs as well. By comparison, a movie’s digital distribution (marginal) costs are nil—once a film gets burned into a digital version, it can spread like wildfire around the world with no harm to the original file. Digital files are an infinitely renewable resource.

If movies cost too much (i.e., their fixed costs are higher than their projected revenue) and the movie itself is the only product being sold, then piracy does indeed pose a fatal threat to that particular movie and fundraising for similar films in the future. Thus, if studios are resolute in keeping the industry exactly as it has been over the last 60 years, then the film industry will get left behind, just as horse carriage drivers were left behind when automobiles were first introduced into the market. As Big Champagne CEO Eric Garland says, “…growing a sector is a privilege, not a right.” How bitterly ironic that Hollywood was founded by a group of independent filmmakers who blatantly ignored Thomas Edison’s patent laws—those outlaw "pirates" are now the orthodoxy. Oh, how the mighty shall fall...

This article is part of a series called The Filmmaker's Roadmap to Free. You may read the entire articles by clicking here, or the other articles here:
The Filmmaker's Roadmap to Free: An Introduction

The Free Debate:

1. Free: The Future of a Radical Price by Chris Anderson
   
2. PRICED TO SELL: Is Free the Future? by Malcolm Gladwell
   
3. Dear Malcolm: Why so Threatened? by Chris Anderson
   
4. Malcolm is Wrong by Seth Godin
   
5. Free vs. Freely Distributed by Mark Cuban
   
6. Chris Anderson, Malcolm Gladwell And A Look At Free by Michael Masnick
   
7. Freemium and Freeconomics by Fred Wilson

The Filmmaker's Roadmap to Free:

1. OK, it's wrong... so what?
   
2. The Moral Issue
   
3. Feedback from Pirates: A Case Study
   
4. Digital Theft, Oxymoron
   
5. It's All Fixed
   
6. Creating Value
   
7. The Way Out
   
8. The Key is Generatives
   
9. Acknowledgments & Further Reading

Digital Theft, Oxymoron (Part 4 of 8)

THE FILMMAKER'S ROADMAP TO FREE (part 4 of 8)
This is an article in a series. You may read all the articles by clicking here.

DIGITAL THEFT, OXYMORON
Regardless of my own views on morality, I suspect our global society's understanding of "theft" and "property ownership" in the digital age is being slowly redefined. Unlike an apple, an idea is not a scarce good: if you have 10 apples and and I take one, you only have 9 apples. That, we can all agree, is theft. By contrast, ideas are an infinite good—nobody can claim ownership over an idea because we can all think them: if I take an idea from you, you are not left without that idea.

However, the digital age has been thrust upon us and we've inappropriately grafted that ancient concept of scarce property ownership onto this modern market of infinite ideas and called it "intellectual property". In a digital age, things like CDs, DVDs, and software can be copied infinitely, like ideas. If I pirate a movie from you, you aren't left without a movie—you still have it. Thus, in the digital age, "theft of digital products" reads like a vestige from a time when resources were finite and not shared without violent complications. With infinitely duplicative media, our world isn't entirely a zero sum game anymore. Once most of us realize that, P2P networks will finally be seen as the blessing they actually are—a highly efficient means to share infinite goods.

This article is part of a series called The Filmmaker's Roadmap to Free. You may read the entire articles by clicking here, or the other articles here:
The Filmmaker's Roadmap to Free: An Introduction

The Free Debate:

1. Free: The Future of a Radical Price by Chris Anderson
   
2. PRICED TO SELL: Is Free the Future? by Malcolm Gladwell
   
3. Dear Malcolm: Why so Threatened? by Chris Anderson
   
4. Malcolm is Wrong by Seth Godin
   
5. Free vs. Freely Distributed by Mark Cuban
   
6. Chris Anderson, Malcolm Gladwell And A Look At Free by Michael Masnick
   
7. Freemium and Freeconomics by Fred Wilson

The Filmmaker's Roadmap to Free:

1. OK, it's wrong... so what?
   
2. The Moral Issue
   
3. Feedback from Pirates: A Case Study
   
4. Digital Theft, Oxymoron
   
5. It's All Fixed
   
6. Creating Value
   
7. The Way Out
   
8. The Key is Generatives
   
9. Acknowledgments & Further Reading

Feedback from Pirates: A Case Study (Part 3 of 8)

THE FILMMAKER'S ROADMAP TO FREE (part 3 of 8)
This is an article in a series. You may read all the articles by clicking here.

FEEDBACK FROM PIRATES: A CASE STUDY
Consider the case of Cliff Harris, whose software games were being pirated even at the low price of $20. Frustrated, he opened up the can of worms and asked pirates—without malice or judgement—why they were pirating his game.

Talking To 'Pirates'

A few days ago I posted a simple question on my blog. "Why do people pirate my games?". It was an honest attempt to get real answers to an important question. I submitted the bog entry to slashdot and the penny arcade forums, and from there it made it to arstechnica, then digg, then bnet and probably a few other places. The response was massive. This is what I found:

Introduction
Firstly it's worth pointing out that there were LOTs of responses (and they are still coming in now), hundreds of comments on the sites listed, a ton of comments on the blog (despite it crumbling under the strain) and hundreds of emails made it through to me. I read every one of them. They were also generally very long. Few people wrote under 100 words. Some people put tolstoy to shame. It seems a lot of people have waited a long time to tell a game developer the answer to this question. Some people thought my name was chris, or that I developed Braid. But that doesn't matter :D It's worth pointing out that the original question was specific to MY games, because I already do the majority of what people complain about (free demos, easy demo hosting, digital distribution, original games, good tech support etc), but the majority of the replies were aimed at games devs in general, not me. Here is what they said:

The semi-political ones
I got a few people churning out long arguments about whether or not intellectual property is valid, and claiming that it was censorship, or fascism and other variations on this theme. I'm used to reading all this, and find it completely unconvincing, and to be honest, silly. The really interesting news was that this was a trivial proportion of the total replies.

Money
This *did* surprise me. A LOT of people cited the cost of games as a major reason for pirating. Many were kids with no cash and lots of time to play games, but many were not. I got a lot of peoples life stories, and a ton of them were my age. Even those who didn't cite cost as their main reason almost always mentioned it at some stage. A lot of anger was directed at the retail $60 games, and console games. People in Australia were especially annoyed about higher prices there. My games were $19-23, but for a lot of people, it was claimed this was far too high. People talked a lot about impulse buying games if they were much cheaper.

Game Quality
This was a big complaint too. And this also surprised me. I have a very low opinion of most new games, especially triple A ones, but it seems I'm not alone. Although there were many and varied complaints about tech support, game stability, bugs and system requirements, it was interesting to hear so many complaints about actual game design and gameplay. Not a single person said they had felt ripped off by a game due to substandard visuals or lack of content. The consensus was that games got boring too quickly, were too derivative, and had gameplay issues. Demos were widely considered to be too short and unrepresentative of the final product. People suspected that the full game was no better than the demo. Almost everyone had a tale of a game that was bought based on hype which turned out to be disappointing.

DRM
This was expected, but whereas many pirates who debate the issue online are often abusive and aggressive on the topic, most of the DRM complaints were reasonable and well put. People don't like DRM, we knew that, but the extent to which DRM is turning away people who have no other complaints is possibly misunderstood. If you wanted to change ONE thing to get more pirates to buy games, scrapping DRM is it. These gamers are the low hanging fruit of this whole debate.

Digital Distribution
Lots of people claimed to pirate because it was easier than going to shops. Many of them said they pirate everything that's not on Steam. Steam got a pretty universal thumbs up from everyone. I still don't get how buying from steam is any different to buying from me, other than you may already have an account on steam. For the record, I'd love to get my games on steam. I wish it was that easy.

Confessions
I got a few people, maybe 5% of the total, who basically said "I do it because I like free stuff and won't get caught. I'd do the same with anything if I knew I'd get away with it." This is depressing, but thankfully a small minority. I also got the occasional bit of abuse and sarcasm from hardcore pirates who have decided I am their enemy. Who would have thought that would happen? They give the other 99% of pirates a bad name, and are the reason people don't listen to pirates.

What I'm going to do about it
There was a point to all this, and it was partly to sell more (I have bills to pay!) as well as hopefully get more people to legitimately play my games. I'd be very happy if some reduction of overall piracy happened too, as I love PC gaming and the current situation is only helping to kill it off. I've thought hard about everything people have said and I have decided to change a few things about my games.

1) No more DRM
I only used DRM for one game (Democracy 2) and it's trivial. It's a one-time only internet code lookup for the full version. I've read enough otherwise honest people complain about DRM to see that its probably hurting more than it help's. I had planned on using the same system for Kudos 2, but I've changed my mind on that. I have also removed it from Democracy 2 today. I now use no DRM at all.

2) Demos
People think demos are too short. My demos *are* short, because the marketing man in me sees that you can't give away too much. I've wanted people to feel a bit annoyed when the demo cuts out, so they buy the game to keep playing. Too many people are put off by this and pirate games so they can see exactly what they are getting. I'll be making my demos much better, and longer, and will retrospectively change this when I get around to it for some of my older games. (I'm swamped with work right now)

3) Price
I think my games are priced right, and was considering charging more for Kudos 2 (which is my biggest and best ever game). I sometimes play casual games for $20 which seem to have maybe a tenth of the effort I put into mine. However, enough people out there see price as a factor to change my mind. I halved the price of Kudos 1 a few days ago, to $9.95. I'll keep an eye on how it does. I'm also strongly inclined to price Kudos 2 lower than I originally planned to.

4) Quality
My games aren't as good as they could be. Ironically, one of the things that reduces your enthusiasm to really go the extra mile in making games is the thought that thousands of ungrateful gits will swipe the whole thing on day one for nothing. It's very demoralizing. But actually talking to the pirates has revealed a huge group of people who really appreciate genuinely good games. Some of the criticisms of my games hit home. I get the impression that if I make Kudos 2 not just lots better than the original, but hugely, overwhelmingly, massively better, well polished, designed and balanced, that a lot of would-be pirates will actually buy it. I've gone from being demoralized by pirates to actually inspired by them, and I'm working harder than ever before on making my games fun and polished.

A final note is trying to make it easier for people to buy my games. I'm really hassling my payment provider to support amazons one-click method. For me, I think that's even more convenient than steam. I'm always doing what I can to make buying them as quick and easy as possible.

Conclusion
So it was all very worthwhile, for me. I don't think the whole exercise will have much effect on the wider industry. Doubtless there will be more FPS games requiring mainframes to run them, more games with securom, games with no demos, or games with all glitz and no gameplay. I wish this wasn't the case, and that the devs could listen more to their potential customers, and that the pirates could listen more to the devs rather than abusing them. I don't think that's going to happen.

But I gave it a go, and I know my games will be better as a result. I'll never make millions from them, but I think now I know more about why pirates do what they do, I'll be in a better position to keep doing what I wanted, which is making games for the PC.


Thanks for reading.
Cliff 'cliffski' Harris

Link.

This article is part of a series called The Filmmaker's Roadmap to Free. You may read the entire articles by clicking here, or the other articles here:
The Filmmaker's Roadmap to Free: An Introduction

The Free Debate:

1. Free: The Future of a Radical Price by Chris Anderson
   
2. PRICED TO SELL: Is Free the Future? by Malcolm Gladwell
   
3. Dear Malcolm: Why so Threatened? by Chris Anderson
   
4. Malcolm is Wrong by Seth Godin
   
5. Free vs. Freely Distributed by Mark Cuban
   
6. Chris Anderson, Malcolm Gladwell And A Look At Free by Michael Masnick
   
7. Freemium and Freeconomics by Fred Wilson

The Filmmaker's Roadmap to Free:

1. OK, it's wrong... so what?
   
2. The Moral Issue
   
3. Feedback from Pirates: A Case Study
   
4. Digital Theft, Oxymoron
   
5. It's All Fixed
   
6. Creating Value
   
7. The Way Out
   
8. The Key is Generatives
   
9. Acknowledgments & Further Reading

The Moral Issue (Part 2 of 8)

THE FILMMAKER'S ROADMAP TO FREE (part 2 of 8)
This is an article in a series. You may read all the articles by clicking here.

THE MORAL ISSUE
If you’re still in the Universal Morality Camp of, "Nope, it’s morally wrong, it’s theft, pirates should be banned from the internet and you’ll never convince me otherwise," then let me offer you some historical perspective on how the Morality card has been used in the past:

Below is a list of wars or warring factions, and their "immoral" actions:

• The Battle of Agincourt—the French viewed the British longbows as unchivalrous
  
• Hashshashins—the first Muslim suicide assassins, and highly effective
  
• Ninjas—Samuraii warriors considered ninjas dishonorable in part because ninjas’ blades were sharpened on both sides (as opposed to a samuraii’s one-sided blade)
  
• The American Revolution—the Brits thought the Americans' guerilla warfare was dishonorable
  
• Vietnam—the Viet Cong intentionally left wounded soldiers in the field to lure out and kill rescuers
  
• The US Civil War—sniping was considered dishonorable and they rarely survived capture
  
• The Algerian War—kidnapping, ritual murder and mutilation were all used to weaken the French occupying force
  
• Al Qaeda & The Iraqi insurgency—suicide bombs killing innocent civilians are deemed immoral

In each case, the winning side or faction used more efficient fighting methods typically described (by the losing side) as "unfair", "unethical", "dishonorable", etc. In the early examples, it's obvious that what was once thought of as unchivalrous, dishonorable, immoral or unethical—i.e., longbows, guerilla warfare, sniping—is now widely accepted and used as a standard tool of warfare, even seen as ethically sound. Thankfully, we haven't gone so far as to embrace kidnapping, mutilation and ritual murder as commonplace tools in our wartime arsenal (at least not publicly; waterboarding is considered torture, so I suppose it's possible we're slowly leaning in that direction... ah, but I digress).

Many things we first think of as immoral and unethical are re-evaluated and often downgraded in the longer lens of history. Losers of any conflict are often heard complaining, "How could we have possibly won that war when our opponents were doing 'X'?", where 'X' is any of the above. In the Battle of Agincourt, the French outnumbered the British more than 4 to 1 but they refused to use longbows because they thought longbows were unchivalrous/unethical/immoral/unfair. If the French had only set aside their obstinate righteousness and accepted that longbows were a vastly more efficient weapon, they would have crushed the British. Instead, they became preoccupied with longbows as an unethical, unchivalrous and dishonorable weapon... and they lost.

I see this same head-in-the-sand attitude crop up in strikes. When unions go on strike, they are typically protesting a new and more efficient system that threatens their jobs. Case in point: 1984's Wapping Dispute saw British typesetters going on strike to protest the newer, more efficient desktop publishing systems. Instead of embracing the future by adapting to change on their own terms, career typesetters were forced to adapt on someone else's terms by accepting the unavoidable truth that newer DTP systems were more efficient than old typesetting methods. Yes, many people lost their jobs and it was an extremely sad chapter for all career typesetters. I'm sure all the old typesetters even thought of the new DTP systems as "unfair" and perhaps even "dishonorable", but the newer and more efficient DTP systems benefited everyone. In the end, nobody ended up caring what was unfair or dishonorable—the only thing that mattered was how efficient the system ending up being.

We’re faced with a similar situation with Peer-to-Peer networks like eDonkey, Limewire, and BitTorrent. Even after years of increasingly harsher laws and incessant moral reproaches, P2P networks continue to flourish unabated and now have representatives in Sweden's Pirate Party (if that isn't a signal of a neverending battle, I don't know what is). In my eye, then, the moral and legal arguments against piracy are becoming moot—what becomes important is recognizing why P2P networks are still so popular despite all the moral and legal roadblocks.

Two things have become clear to me:

1. Compared to current distribution channels, P2P networks are an astonishingly efficient distribution method. Consumers want content and they want it now. Should they walk/drive down to the movie theatre or video store, or sit at home and watch it on their desktop computer? Increasingly, it is the latter. This has affected theatrical releases: desperate to see a movie because of its massive marketing campaign, consumers scramble online to find a leaked version. Their goal is not necessarily to watch something for free (though that can be a bonus), but to watch it now. If producers/distributors provided a convenient and low-cost option to fill that market need, I assure you that piracy would fade away, but producers/distributors are (understandably) too committed to defending the status quo of the Old Model's staggered release windows. Despite what producers and distributors want the world to be, the New Model is give-it-to-me-now-or-i-will-take-it-from-you-anyway. Of course, producers and distributors have their livelihoods to defend, and they will defend it with vitriol, but they can’t make P2P file sharing any less efficient—the genie is out of the bottle.
   
2. Overall, both consumers and producers are better off with P2P network distribution. When consumers watch content, they get it now. When producers have their content watched now, consumers talk about it to their friends and that's free publicity. Even if the movie is downloaded for free, other income streams can/should make up the difference, e.g., George Lucas made more money off Star Wars merchandise than he did off his movies. While music CD sales may be declining because of piracy, the music business overall has grown because more people are listening to more music as a result of piracy. As Jamin Winans of Ink said about the 400,000 BitTorrent downloads of his film, "...I don't see it as lost revenue, but fans gained."

This article is part of a series called The Filmmaker's Roadmap to Free. You may read the entire articles by clicking here, or the other articles here:
The Filmmaker's Roadmap to Free: An Introduction

The Free Debate:

1. Free: The Future of a Radical Price by Chris Anderson
   
2. PRICED TO SELL: Is Free the Future? by Malcolm Gladwell
   
3. Dear Malcolm: Why so Threatened? by Chris Anderson
   
4. Malcolm is Wrong by Seth Godin
   
5. Free vs. Freely Distributed by Mark Cuban
   
6. Chris Anderson, Malcolm Gladwell And A Look At Free by Michael Masnick
   
7. Freemium and Freeconomics by Fred Wilson

The Filmmaker's Roadmap to Free:

1. OK, it's wrong... so what?
   
2. The Moral Issue
   
3. Feedback from Pirates: A Case Study
   
4. Digital Theft, Oxymoron
   
5. It's All Fixed
   
6. Creating Value
   
7. The Way Out
   
8. The Key is Generatives
   
9. Acknowledgments & Further Reading

OK, it's wrong... so what? (Part 1 of 8)

THE FILMMAKER'S ROADMAP TO FREE (part 1 of 8)
This is an article in a series. You may read all the articles by clicking here.

OK, IT’S WRONG… SO WHAT?
Gladwell makes some excellent points, and eloquently, but I feel he misses the larger picture. Ethically, I feel file sharing is wrong, so I actually agree with Gladwell. I don't want to gloss over this point, so I'll belabor it: I am not a feverish file sharer defending my own lifestyle of piracy. I don't pirate "because everyone else is doing it." In fact, I never even used the Pirate Bay.

Not only is piracy unethical, it's also illegal. Yet the legality of an action does not in itself infer moral purity—"law-abiding citizens" have committed morally repugnant actions, including slavery and the Holocaust. If everyone always obeyed the law, slavery would still exist, America would never have been founded (if you think America wasn't founded on piracy, go brush up on the etymology of the word "Yankee"), and Hollywood wouldn’t have existed. History has fun portraying leaders of a rebellion as either heroes or outlaws depending on the outcome of the conflict in question and the point of view of the current government. For instance, we aren’t taught to see the Founding Fathers as violent criminals yet, from the 18th century British perspective, that is exactly what they were: if Benjamin Franklin had been caught, he'd have been swiftly executed for “betraying his country”. Thus, the mere fact of disobeying a law is not enough to draw a morally righteous condemnation—one must also commit an act that does more harm than good.

No matter how much I agree with Gladwell, and how morally wrong I may think file sharing is, I also see piracy as the way of the future, a genie out of the bottle which has the potential to foster a more vibrant entertainment industry if we can all simply accept digital file sharing as the key innovative tool of The Digital Age. I'm aware of how contradictory that may sound. On the one hand, I'm admonishing file sharing: file sharing is (usually) taking content from producers without permission. On the other hand, I look at all the unexpected benefits that come with file sharing and I have to ask myself whether all the ethical and legal jangles are trumping a fantastically new technological innovation.

When you examine the practicalities of the exchange of goods—meaning, are all parties better or worse off when content is pirated?—ethics and legalities become irrelevant. File sharing continues to thrive because producers and distributors are not yet providing en masse a service the market is starving for: convenience at a low cost. iTunes makes money selling content that anyone can get for free... Spotify in the UK is starting to do the same. So obviously, the market is still willing to pay money for content if it's convenient and inexpensive enough. If it's too inconvenient or too expensive, the market will pirate. People won't pay $35 for a DVD, but they'll download it first to see if it's worth the money (and if it isn't, they won't bother paying for it). They won't pay $25 for a CD, but they'll download a few tracks to see if they like them (and if they do, they may even get more tracks on iTunes). Perhaps they download all their music and never pay a dime... but they will enthusiastically pay for merchandise and live concerts of that musician.

Money can still be made in this new “freemium” economy... we all just have to start accepting that morality, ethics and legality are not the core principles determining whether piracy will starve or thrive. Sure, piracy is wrong, but so what? People are still pirating content. Britain is trying to ban users from the internet, but if banning users succeeds in stopping them from pirating, it still won't get them to buy more music... and isn't that the whole idea?

This article is part of a series called The Filmmaker's Roadmap to Free. You may read the entire articles by clicking here, or the other articles here:
The Filmmaker's Roadmap to Free: An Introduction

The Free Debate:

1. Free: The Future of a Radical Price by Chris Anderson
   
2. PRICED TO SELL: Is Free the Future? by Malcolm Gladwell
   
3. Dear Malcolm: Why so Threatened? by Chris Anderson
   
4. Malcolm is Wrong by Seth Godin
   
5. Free vs. Freely Distributed by Mark Cuban
   
6. Chris Anderson, Malcolm Gladwell And A Look At Free by Michael Masnick
   
7. Freemium and Freeconomics by Fred Wilson

The Filmmaker's Roadmap to Free:

1. OK, it's wrong... so what?
   
2. The Moral Issue
   
3. Feedback from Pirates: A Case Study
   
4. Digital Theft, Oxymoron
   
5. It's All Fixed
   
6. Creating Value
   
7. The Way Out
   
8. The Key is Generatives
   
9. Acknowledgments & Further Reading