By Eric Kohn | Indiewire October 1, 2008 at 12:12PM
The Sundance Film Festival has ended its relationship with new media aggregator Mediastile Inc. after the company repeatedly failed to send royalty payments and traffic reports to Sundance directors who screened films online via iTunes, Netflix and XBox LIVE. Over the weekend, Sundance organizers e-mailed filmmakers to confirm the shift, leaving them to resolve their individual situations with Mediastile, which controls digital rights to their work. The decision affects at least 45 filmmakers who had opted to put their work online after also being accepted to screen at Sundance this year, as well as another crop from the 2007 festival.
Last year, Sundance partnered with Nevada-based new media aggregator Mediastile to make the festival's short film selection available for purchase on iTunes, and this year, organizers added Xbox and Netflix to the package, requiring filmmakers to enter into an exclusive deal with Mediastile, which aggregated the films for the digital platforms on Sundance's behalf. However, after the company repeatedly failed to deliver royalty payments and traffic reports to filmmakers from the past two years of the online festival on a timely basis, Sundance finally gave up. On Saturday, participating filmmakers received an e-mail from John Cooper, Sundance's director of programming, announcing the festival's move to terminate its contract with Mediastile.
The email from John Cooper to participating filmmakers is published in its entirety at the end of this story
"Our hope and intention were that Mediastile would be convinced that it was in its own best interests to comply with its contractual commitments, both to the [Sundance] Institute and to filmmakers," Cooper wrote in the email message. "To our enormous disappointment, however, Mediastile has failed to do so, and we have lost confidence in its willingness and ability to perform to the level that all of us originally hoped and expected."
The situation leaves countless filmmakers with an unclear idea of the payments owed to them by Mediastile, a company currently whittled down to a single elusive employee. That employee, identified as Mediastile president Jason Turner, failed to return calls for this article and evaded similar requests from filmmakers and other interested parties over the last several months. "It came to a point where it was going to be dangerous if it went on any longer," Sundance's Cooper told indieWIRE during a telephone interview.
The festival's decision to terminate its deal with Mediastile calls for the company to remove the Sundance banner from outlets where the shorts are currently being sold. (As of this writing, the shorts remain available for download on iTunes, but Cooper said he expects Apple to remove them soon.) In his letter, Cooper urged participating filmmakers, whose contracts with Mediastile promise a 57% net profit from each download, to sort out their individual contract problems and "to promote and showcase your short film as you deem appropriate." (Sundance's end of the bargain called for the Institute and the Sundance Channel to receive a 25% cut of each download.) The contract permitted Mediastile to sell and distribute the films online for a period of three years.
"We didn't want the filmmakers to go on any longer thinking nothing was wrong," Cooper said. "It's their money, their deals, their contracts with Mediastile. They have to start pushing for their own cuts." In his email to the filmmakers he added that Sundance has engaged counsel to forecefully handle the situation with Mediastile.
However, many filmmakers are hesitant about engaging in long-term contract disputes. "I am a fighter, but I'm not sure how expensive a fight I'm willing to have," said animator Signe Baumane, whose short film "Teat Beat of Sex" played at Sundance in January, when she entered into a deal with Mediastile. Although the film was not made available on iTunes because Apple objected to its sexual content, the film did appear on Xbox LIVE and Netflix. Baumane told indieWIRE that she never heard from Mediastile after the festival.
"I assumed that my film wasn't bought at all, that nobody ever clicked on it," she said. A quick glance at the viewer reviews on the Netflix page for "Teat Beat of Sex" indicates otherwise.
Since Netflix functions as a subscription-based service, filmmakers were supposed to be paid -- via the aggregator -- a flat fee for their inclusion on its service. However, Mediastile failed to elaborate on the specific amount, despite its pledge to do so in December.
Even when Mediastile did emerge from the shadows, its motives remained suspicious. After the aggregator e-mailed "Funeral" director Sara St. Onge with requests for bank account information in April, presumably to deliver royalties, the filmmaker was unable to reach the company with her request to have the film taken down. Now, she's proceeding as if her contract with Mediastile has been nullified and will work with a new distributor on future options. "I don't hold Sundance responsible for what happened," she told indieWIRE, "but, unfortunately, it was because of them that I had so much confidence in getting involved."
Filmmaker Carson Mell entered into deals with Mediastile in 2007 and 2008, with his shorts "Bobby Bird: The Devil in Denim" and "Chonto," respectively. In the first year, he was told that his check was lost in the mail, but he did manage to get paid after several months of insistence. This year, he was not so successful. "I've tried to give them the benefit of the doubt," he said, "but when a company you're working with won't even communicate with you, you get pissed off pretty quickly."
Mell recently sent the company a note about his decision to terminate the contract and plans to threaten legal action if his demands for payment and sales figures are not met. "Over the course of working with them, my opinion was first that they were incompetent and now that they're crooked," he told indieWIRE.
In 2006, Sundance began collaborating with Mediastile, an affiliate of Agnostic Development Corporation, to sell short films. The filmmakers were supposed to receive quarterly traffic reports and royalties from the company. While some filmmakers did get paid, Sundance realized after the 2008 festival that filmmakers from a year earlier still largely remained in the dark about the money owed to them.
"The fact that the project has to end prematurely is very specifically about a content aggregator that failed," explained Joseph Beyer, associate director of Sundance Institute Online. He pointed out that several shorts, particularly this year's "Sick Sex," managed high download rates on iTunes (however, those figures are not disclosed). "The shorts themselves were extremely successful," he said. "I would love for short filmmakers not to think this is another example of why shorts don't work online. There was a very robust audience for this content out there."
Beyer explained that much of the festival's early interest in working with Mediastile came from its confidence in the company's former vice president of business development, Hank Frecon. From 2003 until 2007, Frecon worked with the festival on its online shorts program prior to his involvement with Mediastile. "It was definitely a fairy tale start to the business," said Frecon, who left Mediastile in the second quarter of this year. Along with Mediastile's former chief architect and co-founder Kirk Marple, Frecon said that he has his own plans to seek legal action against Turner for personal damages.
Frecon told indieWIRE that Mediastile's economic problems resulted from Turner's decision to handle the company's finances by himself, applying a tight, unneccesarily enigmatic approach to the budget. Clearly restraining his dissatisfaction, Frecon admitted he had limited knowledge of Turner's financial management approach. "As a business development person, you would think I'd have to be privy to that information," he said. "There are too many frustrations to talk about."
The festival only hesitated to end its deal with Mediastile sooner because Cooper and others had heard that royalty payments for digital distribution tended to encounter delays. At this point, they are making all data at their disposal available to the participating filmmakers and hope to remove the shorts from the three main outlets as soon as possible. "We want to cut [Mediastile] off so they're not collecting any money off this," Cooper said.
Lamenting the festival's inability to resolve individual filmmakers' contract issues with Mediastile, he reiterated the original intention of the collaboration. "We wanted to set a standard for selling shorts online," Beyer added. "Everyone was talking about features, but here was a whole body of work that seemed like a great genre. We were hoping to make it so that a filmmaker could realize there was a way to make money off their product."
The incident speaks to an uncharted range of accountability problems with an increasing number of filmmakers entering into deals that ask them to sign away digital rights for indeterminable periods and vaguely defined profits. "It's okay to take risks on the technological side. You can quickly find a replacement to correct any errors," noted Frecon. "The risk when engaging with a company on an accounting basis is the one that really needs to be scrutinized. It is a new world and a new business."
Moving forward, the Sundance filmmakers -- furious about their botched arrangements with Mediastile -- expressed a wide variety of sentiments about distributing their films online. "Now that I know how to distribute, I'm thinking about taking things into my own hands," Signe Bauman said. "At least I can be free to do what I want with it." But few people expect to make money off such an option. "I think it benefits me more just to put my work online for free and let everyone watch it," said Carson Mell.
Sara St. Onge displayed similar trepidation in the wake of the Mediastile scandal. "Stealing from short filmmakers is like robbing poets or something," she said. "It will definitely make me more wary."
From: John Cooper
Subject: Important SUNDANCE UPDATE
Sent: 27 Sep '08 16:32
We are writing to update you on the situation involving Mediastile, Inc., which, as you know, aggregated the short films for the Sundance Film Festival Online.
As we have previously advised you, the Sundance Institute has been engaged in extensive efforts over the past several months to address various concerns and issues regarding Mediastile's performance, including concerns over whether Mediastile was making the required royalty payments to the Institute (as well as you and other filmmakers). The Institute engaged outside counsel to convey and underscore to Mediastile the importance that the Institute attached to Mediastile's full satisfaction of its obligations and the serious consequences of its failure to honor its commitments. The Institute's lawyers have been very forceful with Mediastile.
We undertook these efforts not only because Mediastile had failed to honor its commitments to the Institute, but also because our relationships with you and other filmmakers are of paramount importance to us. Our hope and intention were that Mediastile would be convinced that it was in its own best interests to comply with its contractual commitments, both to the Institute and to filmmakers. To our enormous disappointment, however, Mediastile has failed to do so, and we have lost confidence in its willingness and ability to perform to the level that all of us originally hoped and expected.
Accordingly, earlier today, the Institute notified Mediastile that its contract with the Institute has been terminated, effective immediately. In so doing, we notified Mediastile that it is prohibited from offering any of the 2007 and/or 2008 short films on any platforms, including iTunes, Xbox and/or Netflix.com. Mediastile also was notified that it must immediately cease and desist from any use of or references to the Institute's name and trademarks. We further reminded Mediastile that it retains several affirmative obligations despite the termination of the Agreement, including the duty to pay all amounts owed and to account fully for sales through today, and we demanded that these commitments be honored.
You and other filmmakers have your own separate contracts with Mediastile, and the Institute is not a party to those contracts. As such, we cannot act on your behalf or advise you on how to handle your individual situation with Mediastile. We can tell you, however, that the Institute will be happy to share any information that we have obtained if you elect to engage your own counsel to pursue efforts to collect money that is rightfully yours and to protect your legal rights and interests vis- -vis Mediastile. We fully understand that this unfortunate situation is likely to be disappointing to you, just as it is to the Institute.
In the coming days and weeks, the Institute will address future online ventures and strategies. In the meantime, we encourage you to promote and showcase your short film as you deem appropriate, and we encourage you to let us know if we can be of assistance in that regard. We also sincerely hope that we will have an opportunity to work together again on future projects and endeavors.
To the extent that you may wish to contact Mediastile or its legal counsel directly, their contact information is listed below my signature in this email.
Very truly yours,
Director of Programming, Sundance Film Festival