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As Tax Court Suggests Documentaries are Hobbies, Two Articles Show How Hard It Is to Turn a Profit

As Tax Court Suggests Documentaries are Hobbies, Two Articles Show How Hard It Is to Turn a Profit

While documentary filmmakers wait to find out if an Arizona tax court considers their work to be a business or a hobby,, the U.K.’s Guardian and the New York Times looked closely at some of the business models underlying nonfiction movies. Or, to put it as plainly as the Guardian’s headline: “Can you make a film and a profit?”

Written as part of a supplement to support the upcoming Sheffield Doc/Fest (which indieWIRE will cover), the article didn’t specifically note the controversy inspired by the tax status of the “Up With People!” documentary. However, the piece also took note that it’s a hell of thing to make money with documentaries online.

The volume of broadcast-quality, long-form documentary content available online is growing, fast. But despite the array of platforms, aggregation services and websites that are eager to work with content creators, many documentary-makers are still struggling to effectively monetise this growing internet audience.

“It’s Armageddon, culturally,” documentary-maker Ben Lewis, whose credits include Art Safari, says. “At a time when broadcasters are spending and scheduling less, there’s still no clear way of making money online; platforms hold on to most of the revenue, aggregators’ fees are sky high, and what money you do make is nowhere near enough to fund your next film,” he explains.

Lewis generates revenue selling DVDs and streaming content via his own website. He is also selling via Amazon and hopes to soon have his content listed on iTunes. “The only way forward is to distribute your content across as many platforms as you can at a modest percentage, uploading content yourself,” he says. “Fifty outlets each delivering as little as £20 ($32) a week would be serious revenue compared to the trickle coming in today.”

Meanwhile, The New York Times’ Michael Cielpy took a look this weekend at at Participant Media, the production company behind Oscar-winning docs, “An Inconvienient Truth” and “The Cove.” The film company produces both docs and traditional features with a bent toward “social entrepreneurship,” the article notes.

Far from being a hobby,

the eBay co-founder Jeffrey S. Skoll, is still pouring in money. In an interview, Mr. Skoll put the amount he has invested at “hundreds of millions to date, with much more to follow.”

Yet Mr. Skoll last week described his growing enterprise — which also publishes books, produces television programs, has a wide Internet presence through its TakePart social action network, and owns a major stake in Summit Entertainment — as only the beginning of a media empire that he and his partners expect to surpass eBay in terms of impact, if not profit.

Skoll said Participant is expected to eventually become self-sustaining, “though both expansion and the soft performance of some films have kept it from making a profit to date,” Cielpy noted. Coming soon from Participant along with Magnolia Pictures is Andrew Rossi’s Sundance 2011 doc, “Page One: Inside the New York Times.”

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