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The “360 Equation”: The One Business Model Every Filmmaker Needs To Know

Indiewire By Marc Schiller | Indiewire May 13, 2013 at 11:01AM

Marc Schiller started a new company to help connects films with audiences a few weeks ago, BOND360. He's been writing about the field he's entering for IFP's blog since then, and this week, he's explaining what his company and others like it must do in order to get films to audiences and to help filmmakers profit off their work. Here's the 360 model, reprinted with permission from the IFP blog.One thing is clear. For independent cinema to grow and thrive, it needs to find a more sustainable business model. And while there’s been a lot of hype around new forms of “alternative” (or “direct”) distribution, few people have an answer to the sixty-four thousand dollar question: “How does this new approach to distribution make me more money than the older more “traditional” approach?”
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Fans waiting outside the Castro Theater in San Francisco
Flickr User torbakhopper Fans waiting outside the Castro Theater in San Francisco

Marc Schiller started a new company to help connects films with audiences a few weeks ago, BOND360.  He's been writing about the field he's entering for IFP's blog since then, and this week, he's explaining what his company and others like it must do in order to get films to audiences and to help filmmakers profit off their work.  Here's the 360 model, reprinted with permission from the IFP blog.

One thing is clear. For independent cinema to grow and thrive, it needs to find a more sustainable business model. And while there’s been a lot of hype around new forms of “alternative” (or “direct”) distribution, few people have an answer to the sixty-four thousand dollar question: “How does this new approach to distribution make me more money than the older more “traditional” approach?”

Akin to the old catch-phrase “Where’s the beef?”, today smart filmmakers are asking “Where’s the business model?”

Having spent the last three years analyzing all aspects of independent cinema in incredible detail (from production to marketing to distribution), I’ve developed my own answer to this question, which I put forth in the form of an equation. With the recent launch of BOND360, I’m calling it the “360 Equation”:

Community + Data + Content Bundling + Dynamic Pricing = $$$

Treated separately, none of these elements (Community, Data, Content Bundling, and Dynamic Pricing) will on their own bring financial success. They are only pieces of a much larger puzzle. But when you put all of them together, and execute them well (that’s the hard part), they form a very potent combination. And if you develop and distribute your film in a certain way, adopting the 360 equation will definitely bring in more revenue for an independent film than any of the alternatives, including the more “traditional” ones.

So first, let’s break down each component:

Community:  Today when people hear the word “community” they immediately think that their community equates to the number of fans and followers their film has on Facebook and Twitter. And while this is indeed a form of community, in itself its not at all what community is about. Today, filmmakers are being pressured by consultants to arbitrarily increase the number of their social media fans, all the while without being given any direction on how they should be using them most effectively. But how many fans is “enough”? 500? 5,000? 50,000? The number is completely arbitrary. The reality is that true results from a community comes from its quality, not its quantity. Having over the last twenty years worked on more community based projects than I can count, one thing that I do know is that the number of fans and followers your film has does not alone, in any way, equate to your future success. I’ve had films with almost no social media followers do EXTREMELY well financially and I’ve had films with tons of followers absolutely bomb. Communities need to be curated and nurtured, not “acquired.”  A community that will bring long term rewards is always earned and never bought. And the problem for most traditional releases is that this takes time. The process of building a sustainable community can’t be confined to the weeks that a social media agency has been retained by a distributor  Community is the by-product (the results),  that, after a lot of hard work, comes when your film starts to connect with audiences. It comes from goodwill, benevolence, and the creation of an environment that motivates people to get involved. It’s the rewards of your efforts, not the genesis of it. And it’s developed more offline that it is online.

For me, your community are those people who want your film to succeed as much as you do, and are willing to do anything and everything they can do to help it get there. They are the people who are willing to spend their Saturday afternoon putting up posters for you in their local towns. They are the ones who can’t wait to meet others who share a similar passion for your project. The real value of community is that these are the people who will tell ten others to go see your movie.  And there’s nothing more powerful (and inexpensive) than leveraging the passion of your community.

When people ask me what the “call-to-action” should be for their film, I always have the same answer – “Get your core fans to tell ten others to go and see it.”  And because of this, when I’m asked what the most powerful community building platform is for independent filmmakers, my answer is never Facebook or Twitter or Tumblr.  It’s the personal email lists of the filmmaking team. Nothing is more powerful when it comes to getting people to see a movie.

Data: When someone watches your movie on any of the older established transactional platforms (brick-and-mortar movie theaters, Cable VOD channels, Amazon, iTunes, Netflix, etc) you, as the content creator, are given ZERO access to an incredibly vast array of data that that platform has collected from the sale or rental of your film. Not only do you not have the ability to communicate directly to those who’ve watched your film, you’re not given any information as to who they are, where they live, what they like, etc. Because of this lack of transparency, a growing movement of content creators who are demanding to have direct access to their own customer data has lead to a whole new wave of more open (and not always film centric) dashboard based digital platforms like Kickstarter, VHX, and others. The real threat that the more established players in digital distribution face is not coming from any one of a host of new hot start-ups. Rather, it’s coming from all of them. The threat is not a company per se, it’s a philosophy is one of data portability. Companies like Apple will either become more open with their data, or eventually they will be left behind. What retailers have known for years is that owning the relationship with your customers means having the ability to reduce waste in your marketing. And in reducing waste, you will reduce your costs. And in reducing your costs, you will be increasing your profits. It's as simple as that. And the key to all of this is having access to your own data. The good news for filmmakers is that each month new start-ups are being formed where giving the content owner direct access to customers is a core principle of the platform.

Content Bundling: Filmmakers who will succeed in the new direct-to-fan model will be those who understand and maximize the bundling of digital content and physical goods to raise the average price point of their films when they’re offered direct through their own digital channels. To be successful, the value that is given to fans through your own website needs to be greater than what’s being offered elsewhere. And the best way to do this is to bundle digital content and physical goods so that a higher price point becomes not only justified, but something that fans desire because they’re getting exclusive materials directly from the filmmakers. Today, we’re giving away far too much good content for free as part of our marketing campaigns because we don’t have any other use for it. We’re still conditioned to think that all bonus materials that’s any good should be put on a DVD for your film. But when was the last time you purchased a DVD?  If you’re like me, you haven’t bought a DVD in years. Until companies like VHX and Vimeo began allowing filmmakers to sell direct, there was no commercial use for bonus content other than on a DVD. Today, smart filmmakers are bundling this content with their films when offering them for sale on their website and giving fans more value for their money. Today, nobody can compete on price with Amazon. And at a time where Netflix offers a month of unlimited access for less than the price of a single movie ticket, the only way filmmakers can make any money by going direct to fans is to offer them something that the other platforms can’t. And if done well this can come at a higher price as long as you are giving fans more value at the same time.

Dynamic Pricing:  For me, the most exciting aspect of new direct-to-fan video streaming tools like VHX and Vimeo is not simply that filmmakers can now offer their films directly to their communities through their own websites; it’s that they can control the pricing of their films without having to go through a third-party. Success in retail comes not from establishing a fixed price and then keeping it at that price until declining sales compels you to lower it. It comes from analyzing sales patterns and adjusting pricing to take advantage of opportunities that occur each and every day. Dynamic pricing is both an analytical and creative process that, if done well, can be the differentiator between making money and losing money. Today, “agility” is the key factor which determines success and failure. And because of this, putting the control of pricing into the hands of the content owner is, for me, the true “game changer” when it comes to VHX, Vimeo, and others in this category. Today, most people believe the statement – “Prices never go up, they only go down” But, for those who know how to use these tools, this is simply no longer the case. When you connect dynamic pricing with content bundling not only can prices go up, they can go up and down as often as you like.

$$$: From all of the work that I have done in this area, I’m convinced that signifiant revenue for independent filmmakers will never come from the current platforms that are based on the old models. Rather, to truly have a sustainable business model for independent film, we will need new platforms that were never a part of the old way of doing things.

And one thing is certain, they will be platforms that offer filmmakers a true “360 Equation”.

So to recap…

Community (Curating and nurturing those who are not only willing to pay more, but WANT to pay more… as long as they’re getting more value.

+

Data (Reaching your community directly, without going through a middleman, thus reducing waste)

+

Content Bundling (Offering a wide variety of versions of your product at different price points)

+

Dynamic Pricing (Adjusting pricing “on the fly”)

=

$$$ (Profit, baby!)

(An earlier more stream-of-conscious “draft” version of this article was shared with those on my personal email list. To subscribe, click here)