In what could be a big blow to independent filmmakers, Amazon Video Direct will change the way the company compensates filmmakers who use the service to make their shows and movies available for streaming on Amazon Prime. The revenue-sharing program currently pays content owners $0.15 for every hour their content is streamed domestically in the U.S., and $0.06 for every hour it is streamed internationally. Starting March 1, royalty rates will be tiered based on the total number of streaming hours per year.
Rates will only reach $0.15/hour in the U.S. after a movie or TV episode streams for 500,000 hours. For the first 100,000 hours, the rate drops 60 percent to $0.06/hour. Between 100,000 and 500,000 streaming hours, the rates are $0.10/hour (a 33 percent drop). After a million hours are streamed, or at the end of a 365-day cycle, the streamed hours reset to zero and earnings begin again at the lowest tier of $0.06.
To the content providers’ benefit, international rates will be improved. Currently, international rates are a flat $.06 per hour. These also will be tiered under the same rules for domestic streaming. With these changes, Amazon will also lift its annual revenue cap next month. Currently, films stop earning revenue share after 500,000 hours, or $75,000 in the U.S.
“The new structure aligns providers Prime Subscription Access (Included with Prime) rate with the level of customer engagement generated by each individual title or season (more engaging titles earn a higher royalty rate),” wrote an Amazon spokesperson in response to an inquiry about the change. “This change offers advantages for providers, including elimination of the title-level annual earnings cap and expanded earnings potential in territories outside the U.S. We are always listening to provider feedback, and iterating on their behalf and occasionally that will mean changes to our service.”
Like other customers, documentary filmmaker Michael Dominic was only recently notified of the rate changes. Dominic’s 2001 documentary, “Sunshine Hotel,” in many ways represents both the incredible promise and frustration of AVD for independent filmmakers. The film was 15 years’ removed from its festival run, and previously Dominic’s biggest payday for the film was $23,000 he received from the Sundance Channel. Dominic told IndieWire that after selling DVDs and digital rentals through Amazon’s Creative Space, he viewed uploading his 15-year old documentary to Amazon Prime as his way of “putting the film out to pasture.” And for the first year on Prime that was the case, as the film’s earnings ranged from $100 to $300 a month. Then, last August, something changed.
“I uploaded the trailer and suddenly more people start watching it,” said Dominic. “I asked Amazon what changed in August, and their answer was it got into the algorithm. The more people watch it and give it good ratings, the more the algorithm features the film. People started telling me, ‘Hey I saw your film recommended on Amazon.”
Through U.S. streaming, Dominic earned over $2,700 in September, $4,000 in October, $7,000 in November and $11,000 in December, when his film streamed for over 73,000 hours in the U.S. December is traditionally the biggest month of the year for streaming, and Dominic saw his January earnings trim back to just over $5,000.
It was supplemental income the animator never imagined would come from his long-forgotten documentary, but he is also frustrated that his future profits will likely be slashed. “There’s no way I’m ever going to hit 500,000 [hours] in a year and get back up to 15 cents, and if I do it’ll be in the last month,” said Dominic. “Sunshine Hotel” is available in Germany and the U.K. via AVD, but Dominic said the streaming hours are a very small fraction of what he sees in the U.S..
For titles like “Sunshine Hotel” that were on Prime before March 1, 2018, all hours streamed between September 1, 2017, and February 28, 2018 will be aggregated and used to determine a title’s starting tier. In the case of “Sunshine Hotel,” Dominic will start in Tier 2 at $0.10/hour in the U.S., despite his hour total being reset to zero on March 1, 2018. The real blow will be the dip down to $0.06/hour on March 1, 2019, when the clock resets again.
“Amazon is trying to candy-coat it and say we can make more internationally and there’s no cap, and I can see how it will help bigger films, but Indies like mine will definitely take a hit,” said Dominic.
Amazon confirmed to IndieWire that these new rate changes will not effect their Festival Stars program. In an effort to lure new films from top festivals, like Sundance and SXSW, the Festival Stars program offers cash bonuses (reaching as high as $150,000 and $200,000 at Sundance 2018) for festival titles to sign an exclusive two-year subscription streaming (SVOD) deal with AVD. Those films are also given a special royalty rate, which domestically is currently $0.20/hour (down from the $0.30/hour offered in 2017). Amazon told IndieWire the films in the Festival Star program are locked into their initial rates and will not be effected by the new tiering rates.
Correction: An earlier version of this article incorrectly stated that AVD titles on Prime before March 1, 2018 would have their total number of streaming hours reset to zero on September 1, 2018, at which point they fall back to the lowest ($0.06/hour) tier. This change will not happen until March, 2019.