Where Would the Money Come From? On Film Festivals, Distribution and the Economies of Change

Where Would the Money Come From? On Film Festivals, Distribution and the Economies of Change

"Fair Trade for Filmmakers," an article by Sean Farnel that we published last week, attracted a lot of attention from filmmakers, festival programmers and other industry members, who carried on an intense debate in the comments about the feasibility of Sean's suggestion that festivals pay filmmakers a percentage of their event's earned revenues. We invited Tom Hall, the Director of the Sarasota Film Festival, to write a response to the piece and offer a perspective from someone currently involved in running a major regional festival.

Last week, Indiewire ran a piece by Sean Farnel, a friend and colleague, asking a vital question about the future of film festivals: with the proliferation of film festivals and the decline in the viability of theatrical distribution for many independent films, what role can festivals play in creating a sustainable economic platform for filmmakers? Sean's conclusion, which argued in favor of film festivals offering cash payments to filmmakers on par with percentages found in traditional distribution models (roughly 35% of gross ticket sales), set off a great deal of debate among festival organizers and in the comments of the article, with opinions deeply divided. Indiewire invited me to respond to Sean's piece, and I am honored to be asked, but I write with some trepidation as the Internet is not a place known for reasonable, measured conversation.

As I said, Sean is a friend and colleague, so I want to be clear that the thoughts presented here are not in any way seen to be a judgement on Sean or his experience, but I do think and honest assessment of his ideas, and some of the assumptions behind them, is in order. Instead of responding directly to Sean's argument, I thought it important to instead describe the current reality of film festival organizing in this country and to present a case for transparency and clarity in this environment. I want to use my own experience as Director of the Sarasota Film Festival as a framework for this discussion if only because it allows me to address what I know to be true and because Sarasota is a relatively large, non-profit regional festival of the type that makes up the vast majority of festivals in this country.

In the autumn of 2008, following what seemed to be a very successful festival in April of that year, our festival was forced to undergo a radical transformation in its economic structure. Sarasota, which was at the epicenter of the real estate market collapse, was confronted with significant cuts in sponsorship dollars (which collapsed along with the real estate business), individual giving (which was tied to the stock market crash and real estate values) and state and local funding (while Florida has no state income tax, property taxes are vital to government funding, so that when property values declined, so did revenues). 

Working with our management team, our Board of Directors responded to this crisis by making deep cuts across the organization to create both a sustainable economic model for our festival and offset existing expenses we had taken on during better economic times. Like most, our organization was forced to reassess its position and viability in the face of lost revenues and new deficits and we responded by becoming leaner, more efficient and by tightening the margins around the key areas of our festival:  staff costs and size, film presentation (projection), guest services (filmmaker travel and hospitality), marketing, 

That same year, in addition to my duties with Sarasota, I was hired by The Newport International Film Festival in Newport, RI to program the festival. The organization was carrying a deficit into 2009 and despite the best efforts of management, with Rhode Island having some of the worst unemployment numbers in the country, the festival only broke even on the year. Unable to raise enough money to host the festival and simultaneously pay down previous deficits, the Board of the festival shuttered the organization. And while a group of excellent and dedicated locals have kept film alive in this amazing community by starting newportFILM, a year-round organization that hosts a screening series at various venues around the city, Newport is left without a festival. 

Across both of these festivals, every stone was turned to find ways to keep them solvent; nothing was spared and the impacts of the economic downturn remain in place to this day. So does the economic environment for fundraising. As non-profits around the country work harder than ever to secure limited numbers of grants, sponsors and donors, the costs of operating a film festival continue to creep upward; travel costs, new technologies (including the transition to Digital Cinema) and a general decline in sponsor dollars have created a new set of challenges. Thankfully, surviving festivals are working hard to deliver great events to their communities and industry constituencies (filmmakers, distributors, the press), but as these changes require diligent management, an entirely new set of economic pressures are being shifted on to festivals, those of traditional film distribution. 

As the economy continues to struggle, the film industry has also felt the effect across the board, from film investment and production to the dramatic cost shift from traditional theatrical distribution (and the marketing dollars required for success) to a diversified approach that has seen a dramatic rise in video on demand (VOD) utilization across a number of platformed distribution strategies. And so, filmmakers and many distributors, facing a new environment where theatrical distribution grows more costly (and therefore unlikely for many) while the marketplace for VOD grows more crowded, are looking for new revenue streams to replace the diminishing likelihood of wider distribution and revenue

So, why not film festivals? They are, in many cases, the only opportunity for a film to screen in a movie theater in many communities. They appear to be spending money on things that, when seen by a filmmaker struggling to make investors whole, appear relatively superfluous– parties, hotels and plane tickets, etc. The new thinking is that since the decline of the theatrical market for most independents, film festivals have become a "de facto" distribution strategy unto themselves. So, why not apply the old distribution model to festivals to replace what was lost in the ongoing theatrical decline and transition?

First and foremost, the reason the traditional distribution economy is failing and changing is because it didn't make economic sense for distributors and exhibitors themselves. Why should we be applying a failing and uncertain economic model to any organization at this point?  The recent example of Indomina shuttering its theatrical distribution arm in the wake of releasing two of the most acclaimed films of the year is only a small example of how difficult distribution and exhibition of independent, non-fiction and foreign films are today. The theatrical film experience is competing against a dizzying array of choices for the consumer, from home VOD to other forms of entertainment, while consumer dollars remain relatively flat or in, many cases, decline.

And of all the structures in place to generate revenue for films, the least profitable and viable is the film festival. At each screening of a film, my festival loses money. The cost of theater rentals, projection rentals and technical staffing, building and implementing a stand alone ticketing system online and on site, marketing our films and promoting them to the press, staffing the theaters and often traveling filmmakers to the festival means that ticket sales do not cover the cost of any screening.  Yes, festivals raise money outside of ticket sales, but they do so in order to not only supplement film exhibition costs, but to create the kind of environment and event that actually drives an audience into the theaters to see films.

Which is to say that yes, you can have a film festival without filmmakers, press and community events that create an environment outside of theatrical norms, but I am not sure how that helps anyone. Without building the event itself, there is no audience. Just take a look at a weekend’s per-screen average for some of the most interesting work that has played the festival circuit.  Even with five screenings a day in cities full of millions of people, there are films losing money against the cost of exhibition and P&A.  Film festivals are not simply exhibitors, generating revenue on concession stands and throwing a print on a screen, they are there to create a living environment where the experience of seeing a film matters. Where there is dialogue and engagement, where word of mouth can be a powerful force for a film’s future. Film festivals are marketing partners and audience builders, platforms from which filmmakers can and should be launching an integrated campaign for their VOD and ancillary distribution strategy. We live in world where, aside from the biggest studio films, theatrical exhibition is a loss leader for the long tail of VOD and home video revenues.

This gets to the real heart of one of Sean’s arguments– that festivals believe they are “force multipliers” and have a misperception of their role and the real value that they exchange for the “gift” of exhibiting a film. By and large, this is less and less true (although certainly there are those among us with delusions of grandeur). Just look at the situation with premiere status.

When I started programming the Nantucket Film Festival in 2002, we would fight battles to ensure an East Coast Premiere or some other meaningless status, not because it mattered to the film, per se, but because it mattered in the perception of press and sponsors that the festival was seen as a place to premiere work. Today, that argument is pretty much dead; aside from the largest festivals, premiere status is irrelevant for most if not all festivals. 99% of festivals must concentrate on delivering value in a hyper-local world while establishing and maintaining a national presence in other ways.

But Sean is certainly right that the value proposition of film festivals has already shifted and many of us, my own festival included, are going to need to constantly re-examine what that value truly is and can be. This is an area where festivals can and must become better– by offering support and audience building for filmmakers throughout a film's entire lifecycle. Integrating long tail awareness for films is a big part of the future, and festivals whose organizations can capitalize on social media, local partnerships and integrated support for driving revenue opportunities to VOD and other platforms can play a major role in supporting artists over the long term.

READ MORE: Why the Hell is One of the Most Well-Respected Doc Fests in Columbia, Missouri?

Film festivals, and again I include myself here, have done a lousy job of making this case for value in the face of our economic realities. Assumptions about the submission process and the idea that programmers hold “hoity-toity notions of curatorial independence and prestige” are really just an expression of justifiable frustration that festivals have not been transparent about their processes and their economic realities. I would also suggest that, in a competitive non-profit fundraising environment, projecting uncertainty and economic frailty is a certain way to make your situation worse.

Confidence breeds investment, and negative perceptions have as much to do with the seasonal and regional nature of the organizations as it does with a lack of a national voice that can gather data and create a landscape analysis of the domestic festival world. I, and many colleagues from across the country, have recently begun meeting under the guidance of the IFP in the hopes of creating a national organization of festivals that can help us all get our arms around these new challenges confronting our organizations, information that we hope will create far greater transparency for filmmakers, distributors and festival partners.

And so, instead of questioning the motivations of film festivals, the overwhelming majority of which are run by very good people looking to help connect films with audiences, a reality check seems in order; in almost all cases, there is no profit to share and the loss of revenue from ticketing would create another economic disadvantage in an already difficult environment. That said, festivals must work with filmmakers to help create real value for their films, value that capitalizes on the rapidly changing marketplace without repeating the failed models of the past.

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Comments

Tim

This is an interesting discussion, and a vital one for anyone who cares about independent film, especially film as an art form. I think it would be useful to frame the subject by all of us first acknowledging the sad fact that, even though most filmmakers and festivals have the best of intentions, the status quo of independent film as an industry is nevertheless dysfunctional in so many ways. We must also all acknowledge that, despite our best intentions, we are all still complicit in perpetuating the dysfunctionality as players within the ecosystem and as consumers in the marketplace.

If the logic we're using here is that of good intentions and "fairness", the solvency/insolvency of a festival itself is actually irrelevant if their very existence is almost entirely dependent on insolvent films and insolvent filmmakers, and the festival is not creating enough value for those insolvent filmmakers. But, if the logic is just business, well then let's be clear to admit it and just call it what it is. There are good festivals in some of the richest parts of the country who sell expensive gala tickets and spend a lot of money flying their programmers all over the world, and it would seem the ethical imperative is certainly on them to either be breaking new films in a big way or paying filmmakers.

"Fair trade" is good language to use, because regular people are familiar with it, and because we are dealing with very similar problems related to the supply or value chain of products that consumers buy. Film festivals and film societies, in their capacities of curators, tastemakers, and film markets, are in a perfect position to use their influence to shape the ecosystem to fairer outcomes and to educate their audiences about the fairness of the supply chain they rely on to consume their content.

The status quo is dysfunctional largely because the logic of risk and return in independent film is essentially inverted, with various layers of distributors taking a very large percentage of the aggregate upside that likely bears no relation to their risk-taking. There are a few very good reasons why that is able to persist, and a main one is because the system of independent film in the US is built upon a large supply of speculative and eventually insolvent films and insolvent filmmakers that is seemingly never-ending, as it is fueled by the desperation of current filmmakers and the hopes of the next generation waiting to take their place.

Anyone who cares about independent film should care about this issue, because it is a recipe for continual mediocrity in the art form, and it doesn't allow even much of the best talent to grow into real filmmaking careers. Hopefully, a combination of educating the audience so they won't let Hollywood crowd out independent film as much, greater VOD access and a more over-the-top world, and conscious decisions to buy more direct will eventually bring us to a fairer place. But film festivals are in a position to lead by example, not least by buying direct themselves through ideas like revenue sharing — and generally putting their money where their mouth is to add value in as many other ways as they can and becoming real long-term partners in the films they believe in.

seafar

just catching up with the continued discussion around last week's piece (a little fuzzy on a semi-late Berlin eve)…really pleased with all the discussion, and especially that IW editor's choose somebody experienced and articulate to respond in such a thoughtful way as Tom has. And have learned lots form the comments on D-Word, across facebook, etc….i intentionally came up with a b&w proposal (the 35% thing) as a kind of provocation (and benchmark)…I understand that festivals are hardly one-size fits all, struggle financially to do good work, etc…but honorariums for visiting filmmakers, fostering direct connections to audiences, less restrictive premiere policies, more leniency toward day/date VOD, and, most importantly, transparency are all stepping stones toward recognizing that filmmakers are key economic actors in the enterprise of festivals….and we all need and want them to be able to make a living at this….BUT, I've modeled budgets that could make this work (and could be a selling point to sponsors, philantropists, gov't and festival audiences)….so ultimately I hold to the goal of transforming festival economics, whilst maintaining curatorial integrity. believe it can be done.

Dan Mirvish

Great piece, Tom! Nicely said, and definitely dovetails with the recent IFP-led discussions about best practice standards for festivals and accreditation.

At Slamdance we gave out 10% of our box office to filmmakers last year. It wasn't much, but the thought was there and our filmmakers appreciated it (enough to buy a beer or two after the screenings). But that's not necessarily a model that's going to work for all festivals.

I think some gay and other specialized festivals (ie. Jewish/Israeli) have paid screening fees for years – because there wasn't a robust theatrical market for those films, so the festival circuits became the theatrical release. It is time for other festivals to start to recognize the stark reality of the current theatrical state of things.

In general, my feeling is the filmmakers should be getting SOMETHING out of the festival experience. In some cases, that may well be cash. In other cases (as Elliot Grove mentions below), it could be a database for your audience – nice idea! But it can also range from a number of other less quantifiable things like finding distributors, getting reviews, meeting other filmmakers, competing for cash awards, going on a nice vacation, picking up laurels for your poster, sight-seeing or just getting laid. At Slamdance this year, two of our filmmakers even got ENGAGED during the festival. Some festivals may – for example – give a choice to a filmmaker: Get a free trip here, or take some cash and Skype in your Q-and-A.

The point is, as long as filmmakers are getting some kind of uniquely positive experience from the festival, then they should submit and go. But if they're not, then they shouldn't. It's kind of a free market.

But free markets only work with full access to information (or so I vaguely remember from getting a C+ in Econ 101 – obviously the reason I went into filmmaking).

So one of the things that we talked about at these IFP festival meetings was to create some kind of user-generated Yelp-ish system for filmmakers (as well as audiences and others) to rate or otherwise fairly evaluate their experiences. Up until now, it's just been a cryptic word-of-mouth basis for deciding what festivals to go to. Withoutabox doesn't have a system for this (and it probably shouldn't anyway). IndieWire doesn't do this (but maybe could). Chris Gore's Ultimate Film Festival Survival Guide was the best qualitative test of festivals, but it's been a while since an edition's come out.

Playing at several international festivals this year with my new film "Between Us", I was surprised at how few US festivals European, Asian and Latin American filmmakers were submitting to. When I asked, the most common answer was that their foreign sales companies do their submissions for them and only submit to festivals which pay screening fees. So, maybe US festivals are just late to this game. I dunno.

But I would suggest people read my opening night poem this year at Slamdance called "Putting the Festiv Back into Festivals" – basically making the point that there's a ton of great reasons to go to festivals even if it's not some fancy "premiere" festival. (you can find it at Film Threat – but apparently I can't link to it here)

Thanks again to Sean and Tom for discussing the value of festivals in such a great thoughtful manner!

Elliot Grove

An excellent article Tom. I'm pondering your comments on premiere status. We introduced UK premiere status for features 3 years ago and it has really helped our profile.

Here at Raindance (in Europe) we are constantly asked for screening fees, usually by sales agents. We can't afford to pay screening fees. Box office receipts account for just 24% of our annual budget. If we were to pay screening fees this would come from our marketing budget which would spell the death knoll after 21 years, and I'm not about to do that.

We try our hardest to attract distributors to our screenings. In 2012 forty-one of the 101 features secured a deal. To the remaininig films we hope and pray that their experience in London was worthy of their trip and effort.

This year we are trying to devise a system as James suggests here to share audience with filmmakers but are hampered by the arcane UK data protection laws. We are also doing our best to keep the memory of films from years gone by fresh in our publics mind – the long tail.

Which leads me to ask myself again: why bother? Running a film festival is probably as much or even more work than making a feature. And we at Raindance all have kids who need shoes, and Tom: I totally agree that film festivals have to be constantly re- invented.

Why do we do it? Because we believe in it. When it's working, when the cinema is full, when the filmmakers are applauded, when there is a real buzz, it's fantastic.

Stewart

There is something basically wrong here. Not only financially, but also morally. Filmmakers work for years, sacrifice for years, they have to eat every day, their kids require spending money every week, yet when their films are screened at a festival they receive zilch of the admissions. Wrong. The percentage of payment may vary depending on the festival, but something should be paid. If a festival can't afford even an honorarium, then it should close up.

James Belfer

I think this is a pretty sound argument. Saying that festivals should pay filmmakers is almost too easy and is a bandaid on a gaping wound. Let's take a brief look at the math. I screen my film four times at the Library Theater at Sundance to a full house of ticket buyers ONLY (no passes, no press or buyers comps, etc.). That's 448 seats X $15/seat X 4 screenings X 35% which equals $9,408. That's peanuts and and not taking into account that much of the audience is comped sometimes even by the filmmakers buying tickets out of pocket themselves! Asking for money isn't the key. Asking for 1,800 people that saw my movie at the Library is…

Suppose you had to register an email address or a Facebook account with Sundance in order to buy any tickets (online or in person). That list of your first eyes on your film is VITAL to the word of mouth and beginning steps towards building your audience. I don't want Sundance to give me money, I want Sundance to give me my audience. I want to interact with them, poll them, incentivize them to tell their friends about my film, and maybe even reward them for choosing my film over the hundreds of other films playing at the fest. But I can't do this. On a similar topic, there should be better ways to regulate who comes into screenings with badges. Relying on a few junior sales agents standing at the door writing down notes on their iPhone about what buyers are attending my film is a wildly inefficient process. Better scanning options won't take up any more time in the admission process and will provide so much value and take away stress from the film's team.

If festivals gave me my audience I could do incredible things with it. I could A/B test SEO and inbound marketing techniques. I could use it as a springboard towards self distribution. I could even make new friends and family for my film. These things will lead to a stronger audience overall, a higher chance of becoming cash flow positive, and maybe even use it as leverage to show proof of concept when negotiating distribution deals. Don't give me money, give me my audience!

Laurie Kirby

As a former festival director and now ED of the IFFS, I know first-hand the struggles of keeping a film festival afloat (which included 5 years at Newport amongst others). I used to say, and not in jest, that if I did away with the films and the filmmakers, I could make a profit. Standing alone, the ticket revenue from films did not support the festival. What sustained us was sponsorship, grants, membership & events. The core of the festival is the filmmaker and the film but this idea only robs Peter to pay Paul. And Peter is the venue for possible distribution with third parties, not the distributor. We believed taking care of our filmmakers was the paramount objective but paying a percentage of revenues would have been unwieldy & would only further bootstrap an already struggling industry.

brian fantana

Mr Hall's comments are incredibly insightful and spot on – he would be the complete package if he could play defense

Sujewa Ekanayake

Both articles (this one – Tom's response – and the original one that initiated the convo) are good, make valid arguments about the state of things for indie filmmakers and indie film festivals. things being where they are right now, as a filmmaker i have a Start of Distribution expenses item in my budgets for current projects, and cost of submitting to film festivals, etc is covered under that (meaning when I fundraise that's one of the essential expenses that i try to raise $s for). On the film fest end, I like what NewFilmmakers NY (& probably others) does – as a part of the submission process they create a digital copy of the film & set up options to sell downloads, etc (i believe), anyway, additional services such as those will probably make most filmmakers happy. it's interesting that we have this convo at all, it's possible that indie filmmaking & film festivals have grown to be a unique aspect of american culture, i don't think any other country produces as many indie films or as many indie film festivals (and this is probably a positive thing or can be framed as a positive thing).

– Sujewa Ekanayake
Director of 2013 indie film Breakthrough Weekend

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