tfc_blog

We’re going to be checking in with a few educational distributors with a brief Q&A over the next few months. The Video Project is the first…stay tuned!

website: VIDEO PROJECT, INC.

What is the range of educational distribution you do, including the various categories of licensees/viewers, and any age/demographics specifics (please address K-12, any government, institutional, etc)?

Video Project is a nonprofit organization that specializes in non-theatrical distribution, including educational licensing and community screenings. We license films to all types of educational institutions, including Colleges, Universities, Community Colleges, and private and public K-12 schools. We also license to public school districts and state Departments of Education. Our institutional reach includes non-profits, libraries, corporations, community groups, government organizations, municipalities, and museums.

Community Screening requests continue to grow and we promote and support them with our website intake form, sales follow up, community screening kits, tech support and fulfillment. We allow filmmakers to work with organizations directly on speaking engagements and book screenings directly if they chose.

What type of distribution arrangements do you do? (e.g. licensing [and what types], screenings, other?)

Video Project is proud to offer flexibility to meet the varied needs of independent producers and their films, but typically we license North American educational and institutional rights, plus non-exclusive worldwide rights. This includes rights for our direct DVD and digital site license educational and institutional sales, as well as sub-distributors, which include Kanopy. Many of our contracts contain non-exclusive community screening rights, which allow for filmmakers to do community screenings directly, and also allows us to fulfill community screening orders. We can also arrange for VOD placement (either exclusive or non-exclusive) and in-flight through a third party. We occasionally also partner with theatrical distributors for limited theatrical screenings.

What is the range (low-middle-high) of both (a) revenue to filmmakers and (b) impact/degree film will have been seen (both in terms of number of venues/outlets/institutions and actual people).

In our experience, revenue and impact is a function of the goals for the film. Every film has its own unique distribution strategy, which we develop and implement together with filmmakers. Revenue is dependent upon many variables, including timeliness and quality of the film, awareness of the film from theatrical and/or impact campaigns, and the availability of the film on consumer streaming platforms or some other free access. While making a film available for free a low-cost streaming can promote broader viewership, it’s much harder for us to sell a license once it is available on low or no-cost platforms.

Impact distribution can serve a critical role in raising awareness of issues, which can lead to engagement and affect change. While measuring impact can be challenging, we have had good success with a number of films to catalyze change, which have been substantiated by evaluation metrics after release.

Sometimes a film is requested by a faculty member for classroom screenings, or by a campus organization for a pubic screening(s). It may be purchased for a media library collection, in which case the film could have impacts on the consciousness of students for decades. We can get approximate audience numbers on community screenings requested through our site, and also in the gifted film campaigns which are mostly targeted to K-12. And films like STRAWS have been used to support single use plastic bans in towns throughout the U.S.

Please describe any impact work you do. What forms does it take? What type of arrangements are involved on both licensor to you side and licensee from you side?

Impact work is a growing part of our business. One of the reasons we decided to become a nonprofit was to facilitate distribution opportunities that lead to engagement and change through filmmaking. Much of our impact work comes in the form of “gifted campaigns,” wherein a donor subsidizes the free distribution of the film, usually to K-12, but also to colleges and universities, as well as other types of institutions. We have also produced live event campaigns for K-12 schools that reached thousands of students. We can also work in parallel with a filmmaker’s existing impact campaign to help create further educational sales. Examples and case studies can be found in our website “impact” tab.

What types of films are most likely to succeed? Which types of films usually do not work?

Some of our most successful films are those that speak to acute or trending issues such as educational justice or plastic straws, and help stakeholders such as nonprofits, government agencies, teachers, administrators, and ultimately students, address those issues. There is also growing interest in films that highlight the history of racism and segregation in schools, films directed by BIPOC about issues in their communities, and films that address current mental health concerns in student populations.

Normally we prefer to maintain educational exclusivity by postponing consumer streaming. A successful educational distribution strategy allows for 1-2 semesters (or sometimes more) of educational sales before it is released onto AVOD and TVOD consumer streaming platforms. TV broadcast is a good way for a film to gain visibility, which can help educational sales, as long as the streaming periods by the broadcast channels are limited.

Films that are most likely to be more difficult to sell are on topics for which the market is saturated, for example, climate change. Films which are widely available on consumer streaming platforms, and have already had extensive visibility may also be difficult to distribute.

Summarize your basic deal terms (term of license, rights, fees, expenses recouped).

Every agreement is different, but our basic deals often include the following:

Term:
5 years

Rights:

Exclusive North American Educational and Institutional (U.S. and Canada)
Non-Exclusive Worldwide Educational and Institutional
Rights include direct DVD and Digital site license sales, third party educational streaming, and public library and other sub-distributors.
Non-Exclusive Community Screenings

Expenses:
The only expenses ever charged against filmmaker royalties are for DVD cover graphics, closed captions, and DVD authoring. Maximum total expenses capped at $1,400, and can be reduced if producers can provide said assets.

Fees
None

How you manage issues around commercial streaming and educational streaming conflicts?

If a producer has a streaming deal in the works, we will provide a contractual holdback, stating that we will not release the film to any educational streaming partners without written permission from the producer. We strongly advocate for thoughtful distribution sequencing, to maximize the potential of educational distribution before consumer streaming becomes available.

Any thoughts about the state of educational distribution these days and thoughts about the future?

For the types of films we distribute, including those focused on social justice and the environment, educational sales are still an important way for most filmmakers to monetize their films.

We are told that educational streaming budgets continue to remain strong and could even grow in the future. DVD’s are still being bought by collection-minded school librarians, and by public libraries. Once a film gains a foothold in a teacher’s curriculum, it can be used year after year. And older films still sell; there is a long tail in educational distribution. Impact campaigns can also really help raise the visibility for a film, and we are seeing a growing demand for community screenings, both live and virtual.

Any final comments about Video Project, any tips to filmmakers, and anything else you want to say?

Video Project was formed in 1983. In 2019 we became a nonprofit so that we could better serve our filmmakers. We are very receptive to active collaboration and pride ourselves on being easy to reach and communicative with our filmmakers. If you think your film is a good fit, please do submit your film here.

December 31st, 2022

Posted In: Distribution, education


Anyone keeping up with VOD distribution has read that the SVOD streamers are licensing and funding fewer independent films, placing instead more focus on series and productions. While Transactional VOD (TVOD) and Subscription VOD (SVOD) revenues have declined (after being a boon), Ad-supported VOD (AVOD) revenues have come in as the next boon wave. In fact, some of the SVOD players, such as Netflix and Disney+, are adding AVOD tiers to their services.

As we covered in the initial blog about AVOD, it’s been lucrative for certain kinds of content and especially for distributors with libraries of the right kind of content. For example, see Indie Rights’ answers to the questions below and note that for some films (usually with some commercial or strong niche elements and, rarely, docs, as well) can generate high 5-figure and sometimes low 6-figure revenue via AVOD.

What is your overall observation regarding AVOD at this time (2022) with respect to independent film?

I believe that AVOD is an extremely attractive revenue source and opportunity for independent film. We have watched virtually every major player add AVOD to their channels/platforms including Netflix. The advertisers from traditional broadcast will follow the eyeballs and the eyeballs are leaving traditional broadcast and cable and moving to AVOD. Even our fairly new YouTube AVOD channel is doing great and is now our third largest revenue source for our filmmakers. In July, streaming audiences surpassed broadcast audiences in size for the first time and this trend will continue.

What kinds of independent films do you see doing well?

We have successes and failures in all genres. The most successful are films where the filmmaker has thoroughly embraced our concept of “Post, Post,” i.e., actively engaging with their audience using social media currency.

What does that look like in terms of revenues? What kind of films do not do especially well via AVOD?

Straight dramas without a strong niche subtext. Docs without a strong niche audience, i.e. don’t do a doc about your grandfather or friend/relative that survived cancer unless there is a huge reason to do so besides your personal feelings or you are willing to put it on a YouTube channel and give it away.

Please share any marketing/publicity observations/tips including what Indie Rights does and what its filmmakers/licensors do.

We provide our filmmakers with a fifty page marketing bible that lays out the best social media platforms to have a presence on and very specific strategies to use, for example rotating promotions mentioning only a specific channel, so that channel will re-post to a much larger audience, using short video clips from the movie with links as opposed to just continuing to post your trailer over and over, making sure posters are “click-bait”, that trailers are fast moving and that Amazon, IMDb and Rotten Tomato reviews are maximized as all buyers now check these. We also provide our filmmakers with a private group where we can support each other and that we can continually provide them with new resources and industry news. Every filmmaker/production company needs a YouTube Channel because that is the brand and you can build an audience for your entire body of work. Put clips from your move their, interviews with your cast and crew, behind the scenes clips and/or bloopers and always put a link to where people can watch your film first up in the Description. Most people ignore the fact that there are 2.6 billion YouTube active users and that you are most discoverable there. Also, you can get the best demographics there if you are unsure who your audience is.

As always, feel free to share anything else you want to regarding AVOD (including if it’s a comparison to SVOD and TVOD/EST).

We are finding that very few independent films are doing much TVOD these days unless they have a huge waiting audience. SVOD can do OK if you have a very specific niche to market to.

While we endeavored to get more feedback from other established VOD distributors, we need a little more time and will circle back in a part 3 of this blog in early 2023. In the meantime, it’s interesting to note that FAST channels are all the rage and TFC gets approached along with traditional distributors to supply content to emerging FAST channels (typically very niche-specific as FAST channels are meant to be, in part, a solution to that punishment of choice viewers have when facing all the supply via their Smart TVs, computers, and phones). But how successful those FAST channels are and will be is a topic for 2023, since it’s too soon to tell.

In the meantime, please see below for our colleague and friendly VOD guru Wendy Bernfeld’s update about AVOD & FAST outside the United States.


Is FAST getting FASTER in Europe?

by Wendy Bernfeld, Rights Stuff

Backdrop

Earlier in 2022, TFC published Part 1 of what was intended to be a two-part series on AVOD and FAST channels in the U.S. and the licensing opportunities for indie films, whether indirectly via representatives (aggregators, sales agents, other) or directly (limited but occasionally possible). We also addressed impact and angles of marketing, packaging, audience engagement and revenues.

Fast-forward to the end of 2022, and AVOD—and particularly FAST—has exponentially exploded in the U.S. There’s currently a vast landscape with more than 1,400 channels across 22 networks, including via Pluto TV, Xumo, Tubi, Roku, Samsung TV Plus, and Amazon’s Freevee (formerly IMDbTV), to name a few examples. Some of these bigger services (and other AVODS) have begun to cross over to UK and portions of Europe. But in the U.S., we are seeing some starting to drop channels and/or content to focus on more tailored/curated services. Other trends include moving non-exclusive deals to exclusive ones and expanding from merely licensing older content to acquiring higher profile titles, and in some cases even Originals.

Europe

Europe has generally lagged behind the U.S. in terms of AVOD/FAST, with the UK growing quickly but still 2-3 years behind, and rest of Europe trailing behind that, particularly in the non-English language regions. This pattern is not so unusual when one considers that new service launches and business models (including SVOD services, which are the prior window) often begin and grow in U.S. first, before getting rolled out to the UK and other English-speaking regions and then other EU regions sometime later.

Various challenges unique to international have also affected both U.S. services crossing over to the EU (such as Pluto, Roku, Xumo, Samsung TV Plus) as well as new homegrown EU services (like Rakuten, wedotv, etc). These challenges and distinctions include:

  • The EU market is more diversified and fragmented in regard to tech, cultural tastes, and cultural requirements (including EU quotas favoring content from EU origin over U.S.).
  • Platforms must deal with a patchwork of complex rights issues, generally and particularly regarding AVOD/FAST in Europe. These include issues arising from public and private funders, broadcasters, prior windows (SVOD, Pay TV, etc.), and distribution rights gaps (e.g., local distributors handling only some regions for titles but with rights gaps in others).
  • Add to this the need for costly localization (for example, dubs and subtitles) and in FAST channels, a need for a significant and regularly refreshed volume of programming. Overall, this requires a more tailored content rights acquisition for these types of 24/7 services, for each market and its unique content tastes.
  • Also, audiences in the EU have very strong offerings of free ad-supported content available (film, tv, docs) via broadcast/free tv (unlike the U.S.). So, in Europe, it’s more of a case for platforms of trying to convince audiences to switch over from their plentiful free-to-air TV to FAST services, or to discover and use them as a complement to their existing TV and SVOD packages.
    • Almost 70% of EU households watch ad-supported content free in one form/source or another.
    • There’s also a strong paytv, telecom, cable environment in the EU (cheaper packages relatively to the U.S.) and SmartTVs and OTT device penetrations have increased exponentially, but not in all regions of Europe.
    • Until recently, the majority of successful TV apps were mainly SVOD or AVOD services in Europe, other than a few more mainstream extensions, such as AVODs for Free TV or Pay/SVOD channels, or, for example, JOYN in Germany (jointly owned by ProSiebenSat.1 and Discovery). [Frankly, they are not a real large buyer for U.S. niche indies/docs.]
2023 EU Opportunities in FAST: Affordable streaming alternative, especially during economic downturns

Since COVID and the explosion of FASTs in the U.S. market, the EU has begun to catch up quickly, driven by:

  • the continued rise of devices—connected Television/Smart TVs/OTTs that are rolling out. By now 2/3 of EU households have access
  • the increased demand to get other sources of curated, “lean-back” content programming for free. This is perhaps partly due to an SVOD overload, with too many subscriptions and streaming options (subscription fatigue) and difficulties finding what to watch, where—it’s all too much, a virtual paradox of choice
  • commercial breaks tend to be shorter in FASTS (5-8 min/hr instead of double that for linear broadcasts) and the ads can be more palatable (new formats, more personalized, targeted)
Content Licensing Opportunities

Although the uptake in EU AVOD/FASTs presents an opportunity for rightsholders, admittedly most will come from mainstream and big brand film/series suppliers, as well as volume aggregators (as discussed in Part 1 of TFC’s AVOD series). The same pattern carries over to Europe.

But there are still some select opportunities for indies, which pop up on a case-by-case basis, depending on the nature of the film and possible matches to the service, including theme, international recognition/acclaim, and other factors:

  • some FAST services are seeking deliberately lesser-exposed quality indie or local content for audiences (and what’s older to one viewer may be new to another)
  • and, in turn, those FAST services can help indies at least find new audiences abroad, since the channel-flicking nature of FAST helps with discoverability.
    • FAST channels and AVOD can help bring a second life to older films, but also various services are increasingly focused on newer content offerings, particularly in niches or themes that fit their channel(s)
Who’s Out There in AVOD/FAST in Europe

For clarity’s sake, I’m not addressing here the separate phenomena of AVOD ‘tiers,’ such as SVODs like Netflix, HBO Max, NBC/Universal’s Peacock, and Disney+, which are premium-priced subscriptions platforms that now also offer a lower priced ‘tier’ (still a subscription, but cheaper because they are supported by ads, and with less features and content —in other words, a subset of the premium service).

Let’s not confuse them with pureplay AVOD or FAST platforms who are buying content specifically for a service supported by ads, free to consumers.

  • The main FASTS of course stem (as discussed in Part 1) from studio-backed or other mainstream U.S. services, and/or from device manufacturers—PlutoTV, Roku, (North America, UK, Mexico), Samsung TV Plus, Xumo (via LG), as well as certain EU homegrown services such as Rakuten (detailed further below). Most offer a mix of on-demand (AVOD) and linear FAST, and some have live programming as well.
  • Tubi is not yet in Europe. Ironically Fox’s TUBI (in North America, Mexico, Australia, New Zealand) has not yet been able to launch in EU/UK, in part due to GDPR privacy legislation in EU. The very model that makes it successful in personalization/ad revenue generation is a barrier to its ability to crossover to EU.
  • There are also FASTs set up by large EU/international rightsholders (Banijay, Fremantle, A&E, ITVx, BBC, All3Media, Corus,). These suppliers already have rights to a volume of titles and can create multiple subchannels of content, whether under their own brand, under thematic categories, or around single titles popularity (e.g., in series).
    • These types often naturally begin with and emphasize their own content. But they eventually do add content from third parties (including indies, selectively, where a good match) to supplement and enhance the channels.
    • Beyond their U.S. launches, most of the above already have FASTs in the UK.
  • Some FASTs are styled as niche thematic channels, such as Blue Ant’s HauntTV (horror), Tribeca’s UK FAST channel, or FilmRise who, among scores of other channels, has 3 free movie channels tailored per market via LG internationally, beyond its offerings in U.S., as well as FilmRise British (in UK, Eire, Nordics, via LG), and FilmRise SciFi (Italy). Other regions will follow in the future.
  • A&E (but not yet FAST in the EU); Curiosity Stream (the SVOD’s) FAST channel CuriosityNow in U.S. (but not yet in Europe).
  • Not relevant for TFC readers, but many are “single program title” FASTs—like a Baywatch or Australian MasterChef or Midsomer Murders type of channel.

The SmartTV (CTV)-run channels are a mix of all the above.

  • Samsung already offers close to 100 free channels through Samsung TV Plus.
    • Focused on high brand names, known partners, producers, and distributors, they see AVOD and FAST not just for library titles sitting on a shelf, but as a higher profile bigger window/destination.
      • For example, in Germany they acquired the top new Das Boot series in 8K.
    • They have O & O (owned and operated) dedicated channels of their own in 5 markets (Netherlands, Sweden, Germany, UK, Spain) but also the ‘single title’ bingeable branded channels (e.g., Baywatch) and curated entertainment hubs (e.g., comedy, entertainment, reality, lifestyle).
  • Xumo had earlier also crossed over to EU and also offers, via LG smart TVs, a FAST TV service with more than 190 channels available in France, UK , Germany, and Italy. Some include natural history, drama, or foreign language.
  • Paramount’s Pluto TV (part of the ViacomCBS Inc., which is now Paramount Global), already a leader in the U.S. has been expanding aggressively through Europe. It’s just had its 10-year anniversary, apparently, with 70M overall monthly active users (MAU), over $1B in revenue last year, and by now has spread to 25 regions (including beyond US: UK, GAS [Germany Austria Switzerland], Spain, Italy, France, and, via its Viaplay partnership, the Nordics, and in Canada, via Corus, which launched in December 2022).
    • They differentiate themselves from other types of FASTS as they are “pureplay” FAST (linear), not a free tv companion/AVOD ‘add on’ like others in the UK (Freevee, ITV, MY5). They already have 150 channels in the UK.
    • In the UK, they focus on the opportunity arising from the 3M viewers who have zero linear connection (no free tv) and also an additional 10M who technically have a connection to Cable TV, but who don’t really ‘use’ it, so for them, FAST is the key opportunity to give those viewers a “linear-like” free experience, via CTV.
    • In France, they have 100 channels, some focused on film and nonfiction.
    • In Nordics, they already partnered with Viaplay SVOD, replacing the former free AVOD Viafree, and this is a model they want to continue in other regions.

Other AVODs but not FAST include:

  • Amazon Freevee, formerly IMDb.tv – which just launched in the UK and Germany
  • NBCU’s Peacock (part of Sky/Comcast group) launched in UK, GAS, and Italy as part of Sky partnership (subscription and ads angles, but not FAST channels) and some of its content will also follow the path of the new Comcast SVOD SkyShowtime SVOD which rolls out to 20+ EU regions that are not UK, Germany, Italy (so as to not compete with SKY PayTV subscription, not FAST channels).
Homegrown FAST Services in the EU
  • The largest, Rakuten TV, for example, offers both TVOD, SVOD, AVOD, and FAST, with 12M viewers across the continent, 95% of them on connected television. Their emphasis is now mostly on AVOD/FAST.
  • AVOD: 10,000+ titles (films, docs, series) from the U.S. and the EU/local indies, as well as Rakuten Stories (Originals and Exclusives). Movies here, for example, on the UK side.
  • FAST: 90+ free linear channels from global networks, top EU broadcasters and media groups, and the platform’s own thematic channels with curated content (some movies and docs from indies, too).
  • Currently in 43 EU regions including in Spain, Portugal, UK/Ireland, France, GAS, Italy, Sweden, Finland, Benelux, Croatia, Portugal,, reaching more than 110M households via SmartTVs/Apps.
  • Some examples of channels of interest potentially to our readers include:
    • In France WildSide Tv (an offshoot of Wildbunch sales agent style of films/docs, i.e. arthouse/festival) as well as Universcine (indie cinema and fest titles sourced worldwide). Both those FASTS also have SVOD counterparts that preceded the addition of the FAST, so windowing is important.
    • Rakuten’s Zylo Emotion’L is a film channel aimed at women with a mix of romance, comedies, and thrillers, while Zylo’s Ciné Nanar Channel, is a new FAST channel dedicated to a mixture of nostalgic movies that focus on action, disaster, and creature movies in the fight and sci-fi/ fantasy realm.
    • In Italy they have also added shorts, natural history, nature themed channels
Other EU Players

Beyond mainstreamer JOYN (JV ProSieben and Discovery, with limited opportunities for U.S. indies), there are other local regional smaller AVOD/FAST sites, such rlaxx.tv in Germany (indie movies, series, doc channels, among other genres and niches).

  • WEDOTV: (UK/Germany) For indie movie producers/sellers, there’s a stronger appetite in niche content services such as WEDOTV (the late-2022 Rebrand of earlier AVODS WatchFree and Watch4Free) in UK/Germany (both AVOD and FAST). Italy will be added in 2023.
    • Wedotv (which includes thematic niches (we do movies, we do docs, etc.) began as AVOD and it remains the mainstay of their service offering (90%), with FAST being used more as a promotional or discovery complementary offering.
    • Wedotv is mainly for movies, also tv, and a new documentary channel, as well as more other recent genres.
    • Their main focus is movies for AVOD, from all over the world, usually with some cast/distinguishing sales features/festival acclaim, socials. They “don’t need” Oscar winners, but candidate films should be capable of international region traction in terms of cast, theme or acclaim, if not readily recognizable.
    • They are increasingly interested in other genres like factual, factual entertainment, and sports.
    • They market the service simply as “free to air,” whether FAST or AVOD. Consumers don’t care, although they’d need both rights, respectively.
    • After their earlier days of playlists, they now have a more “curated thoughtful approach to programming,” with categories and themes—for example, action night, thriller day, horror night, etc.
  • MOJItv: (Benelux) FAST channel (carried on Samsung TV Plus and Rakuten—kids content only
  • The Guardian FAST channel: (UK, EU) Launched in spring 2022 on Rakuten TV, it is the “first time The Guardian’s documentaries and videos will appear on a scheduled, linear channel as part of The Guardian’s global digital network.” (source).
    Reach: the 43 Rakuten TV regions above (via Samsung, LG, and also via Samsung’s own FAST TV service Samsung TV Plus in select countries.)
  • SoReal (all3media’s lifestyle TV FAST)
  • ITVX: (UK) Just launched in December 2022. SVOD with an AVOD tier and also 20 FAST channels in the UK, which they expect will make FAST more mainstream and help normalize the UK audience’s behavior, which was more traditional in terms of TV viewing and SVOD.
    • However, most of the content on ITVX at launch is, predictably, from their own stable – thematic single program channels (such as Inspector Morse, Vera, ITV shows), also themes from their stable: crime drama, classic vintage films, sitcoms, reality formats, true crime), but…
    • On the plus side there will also be some third-party content acquisition from indies selectively over time to round out the offering.
  • LittleDotStudios: many AVOD channels including 7 FAST channels, many themes would be of interest for TFC viewers and they do buy from indies.
    • FASTs: Real Stories, Timeline, Wonder, Real Crime, Real Wild, Real Life, and Don’t Tell the Bride
    • For the other channels/YouTube and other AVOD activations, see these links (here and here) for multiple narrower themes you can match your titles with.
    • They are actively buying from indies both direct and via sales agents, aggregators, core regions such as the UK, the U.S., other English regions, and then some EU regions, for example, Germany.
    • Paying either rev share, MG plus rev share, or flat fees, film dependent – that’s the good news. The bad news is that lately they’re buying in packages of 50 or so titles, and phasing out the ‘’one-offs’’ from indies…but there can be some exceptions.
  • TF1’s STREAM: (France) This service is part of myTF1, via Samsung: it offers multiple (40+) FAST/AVOD offering channels, aimed at the French market; some are IP (single title specific, regarding French titles on the broadcaster), while others more genre-led programming (such as archive movies, international dramas – mainly big names like Mad Men, French dramas, thriller, romance, manga/anime, for example).

Pragmatics

Sourcing Deal possibilities: How to reach the platforms?

The EU opportunity is growing in 2023 as opposed to the very overcrowded market in U.S. That’s the good news. But to manage expectations, the bulk of content sourcing by these larger FAST services is first from the content libraries of the studios, distributors, aggregators (as in the Part 1 AVOD blog).

There can be some exceptions for stellar one-offs, but it is easier for the platforms to deal with packages, volume and frequent “refresh.” The smaller niche services (like movies, horror, or LGBTQ+ specialized ones) you can approach directly with more ease.

  • If dealing with sales agents, and/or aggregators, some are more active/savvy in this part of the digital sector (beyond the big global platforms) than others, such as Syndicado (Canada), OD MEDIA (Netherlands-based but in 10 regions and dealing with 200 platforms in TVOD, SVOD and now strong in AVOD/FASTS including FASTS of their own), First Hand Films (GAS) (sales agent for docs, social, gender issues, etc. but they are also active in digital and AVOD/FAST), and Abacus Media (UK), all of whom do activity in AVOD/FAST as well.
Age of Film/Windowing
  • Films 3-8 years old, as I outlined in my previous TFC blog article on SVODs, were usually possible candidates for acquisition on a non-exclusive basis in the SVOD window for the SVOD platforms beyond the Big Globals. Films older than this fell nicely in the AVOD/FAST window.
  • However, those lines are rapidly blurring, and now newer titles (for example, those that are 5 years old or even more current) can be picked up by an AVOD/FAST and occasionally exclusivity can be required. Therefore, it is critical to watch the windowing to avoid shooting yourself in the foot. As mentioned in part 1 of the AVOD blog, sometimes U.S. AVOD revenues can exceed those of SVOD, but that’s not yet the status in UK/EU, which is a few years behind, so this needs to be balanced carefully.
Slanting the pitch
  • It is also essential to show [as mentioned in part 1 of the AVOD blog] some connection of your U.S. film to the EU platforms, for example, in theme, cast, IMDb and Rotten Tomatoes ratings, metrics (socials, audience engagement, clever marketing, or packaging/bundling) with other titles in similar category or theme or other hooks (like name cast in your film or elsewhere on the platforms).
  • Generally, the overseas EU platforms need to prioritize their own EU originated producers and suppliers (also for content quotas that are express or implied, depending on the region), so it is a lot harder these days to sell a one-off from the U.S. over something originating from the EU.
    • That said, U.S. indie content can still have appeal, and one can find other “hooks” to pitch, for example, when we helped producers from the U.S. sell music docs to the EU, we also indicated the massive fan bases of the rock/punk groups in the very regions of Europe where we were selling the film and added film festival or press reviews from those regions so the pitch was more tailored.
    • What might be old to someone in the U.S. could be new to someone else in the EU, which is a double-edged sword–either an undiscovered gem that helps the platform differentiate itself, or a unsold film that was unsold for a reason. Handy to address this in the pitch, if relevant.
    • Overall, each platform needs different types of content so find your match: niche subjects with traction indeed include paranormal, Sci-Fi, Black, LGBTQ+, action, adventure, horror, fast-paced docs (e.g., music/lifestyle, but also educational). The key is to match….

Basically, if you are able to go direct, or, if indirect, with the support of reps, then it is helpful to do as much as possible to “help do the buyer’s job for them”—and indicate where the film fits in their offerings, or suggest other titles they already have on their site that are comparable, etc.)

Deals

AVOD/FAST revenues: most platforms expect non-exclusive and via rev share, and only some titles are doing well on this basis, if standalone—it’s still early days in the EU.

Some platforms do pay a flat-fee (e.g., 5-figures per title, depending on regions). It helps you have some certainty but then again, they don’t have to share the viewership data/calculations, so to speak. Some of the various larger players are moving in this direction.

In cases of mid-sized or smaller platforms, one can choose, in some cases, not to take a flat fee, but a smaller minimum guarantee (M.G.) plus rev share, or take a larger ongoing rev share for upside (e.g., some platforms offer the indie film the choice). Its platform- and film-specific FAST is too new to have a locked-in model, so at least there is some room for negotiation with the mid-sized and theme/niche platforms overseas, where deals are not negotiable at all (again this depends on the platform and film).

Discovery helps increase ad revenues
  • Outside of U.S., as with Part 1 of the AVOD blog, it is even more important when a sale is made (whether by you or your reps) on a AVOD rev share basis, to take steps to actively ensure you help audiencesfind your film” on the AVODs/FASTs, so that it doesn’t sit unnoticed in a huge online store (and thus unmonetized).

The bottom line is that it’s important to be familiar with each platform and know how one might best match and search for your film. Pay attention to keywords, genres, formats, and topics actually used on the AVOD and FAST sites, not just the ones you had in metadata from earlier windows.


Wendy would like to note that much of the factual content from the above article was sourced and summarized from the following sources (articles and podcasts):

Articles

WTF are Fast channels (and should advertisers care)? (The Drum, November 25, 2022)

Why Haven’t FAST Services Taken Off in Europe? (Videoweek, April 26, 2021)

La FAST TV accélère en Europe (JDN, March 11, 2022)

FAST channels: The New Grail of Connected TV (Onemip, July 25, 2022)

Ad-Supported Content Will Benefit from Streaming Subscription Overload (SpotX, Sept. 2, 2020)

Samsung TV Plus launched new channels across Europe (Prensario, Oct. 18, 2022)

Samsung TV Plus: AVOD pioneer seeks content partners in Cannes (Onemip, Oct. 14, 2022)

Rakuten TV expands FAST offering in Europe with 21 new channels (Digital TV Europe, Nov. 18, 2021)

The State of European FAST (Variety, Dec. 23, 2022)

Free, Ad-Supported Television Is Catching On FAST: Boosters Hail It As Second Coming Of Cable, But Just How Big Is Its Upside? (Deadline, Dec. 14, 2022)

The Meteoric Rise of Free Streaming Channels: A Special Report (Variety, Dec. 1, 2022)

Podcasts

Samsung on the FAST and AVOD environment | Inside Content Podcast (3Vision, May 4, 2022)

wedotv on the growth of FAST, innovating distribution strategies and harnessing opportunity | Inside Content(3Vision, Dec. 15, 2022)

The Best of FAST with All3Media, Paramount UK and Samsung | Inside Content (3Vision, Nov. 9, 2022)

December 31st, 2022

Posted In: Digital Distribution, Distribution, Distribution Platforms


forest_road_logo

zachary_taricaZachary Tarica is the CEO of The Forest Road Company, a specialty film financing company that lends against U.S. tax credits, providing financing solutions for responsible creators across not just the film industry, but the real estate and renewable energy sectors as well. For more information, please visit their website or Facebook Page.

  1. [The Film Collaborative:] What are tax credits?
    [Zach Tarica:] A tax credit is a way in which state governments incentivize people to complete otherwise expensive transactions (like making films). Movie incentive programs entice production companies to spend in their state by offering a percentage of qualified expenditures back to the production company. State governments do this because it builds infrastructure, creates jobs, and boosts tourism. These programs vary by state (and country) in structure and scope, but the end goal is universal: a symbiotic financial relationship between the state/country and the production company.
  2. [TFC:] How do they work?
    [ZT:] Each state has different requirements for qualifying for a tax credit, but in most states you must submit an initial application, spend at least a specific amount on qualifying expenditures, and go through an audit or AUP. The audit/AUP is conducted after you’ve completed spend. You then submit your audit along with a final application to the film office. After the film office reviews and approves, they send it to the state-level department of revenue. This department issues your credit. You can receive it in the form of a credit, which is a certificate that must be bought by an entity that has tax liability in that state, or a check, which is payable directly to the production entity and its owners.
    Many states offer additional incentives for certain categories. For instance, there is a 10% increase in Louisiana if your screenplay was written by a Louisiana resident. New Jersey offers a 2% increase if your crew meets a certain diversity threshold. Forest Road offers detailed information on the programs in each state to help you determine what works best for your production and budget.
  3. [TFC:] Which states and countries offer them?
    [ZT:] We’ve funded projects in the following states:

    • Alabama
    • Georgia
    • Louisiana
    • Nevada
    • New Mexico
    • New York

    There are plenty more states that offer competitive incentives. For more info on each state, please visit our site below:

    https://www.forestroadco.com/state-rankings

    They are also offered in the following countries:

    • Australia
    • New Zealand
    • Canada
    • Ireland
    • Romania
    • Poland
    • Belgium
    • Hungary
  4. [TFC:] What does Forest Road do?
    [ZT:] Forest Road is a lender against tax credits. Every US state (and many countries) with a tax incentive program requires a production to be completed before receiving a tax credit, so Forest Road helps by lending a portion of the value of the tax credit to the production company before the project is completed. A loan from Forest Road can be used to help complete production so that the tax credit is received, and the money from the credit is used to repay the loan. Forest Road also offers tax credit administration services to production companies to help ensure they qualify for and maximize the value of the credit.
  5. [TFC:] How does it distinguish itself from other similar services/companies?
    [ZT:] Forest Road offers a solution for independent films that don’t have access to the major banks’ lending platform: either the production is too small, the paperwork process is too arduous, or the time it takes for banks to close on deals is too long. Non-bonded films in particular do not have access to the banks’ lending platform. Other non-bank lenders are often too expensive for most independent films. Forest Road works with low-budget films to offer a no-fee lending service at a year-one interest rate of 10% (about half the rate of our closest competitors).

    We can also close on and fund projects within days, not months. This is due to the fact that our diligence process is streamlined, and our agreements are short. We took the opportunity to expand on this below, but we take pride in our docs being easy to read with no hidden agenda or confusing legal language. We keep our lending process as simple as possible, and straightforward paperwork is one of the best ways to maintain simplicity.

    Furthermore, we are careful to lend only what we are confident production companies will be able to pay back. We provide a conservative estimate of the value of the tax credit, and then lend a percentage of that value — enough so that the production accomplishes its goals, while also having enough money left over to meet the repayment schedule. And because we are lending against the credit, rather than buying it outright, any extra value that comes in from the state goes back into the production company. Therefore, you’re left with extra money from the tax credit, even after repaying the loan and interest.

    Lastly, Forest Road takes no producer credits on your film. We appreciate that the filmmakers are the storytellers, and we want to help tell stories that are the most authentic to their creators. We call this “letting you make the movie, while we take care of the headache.” We keep 100% of the creative decisions to you, and empower you to create unique content by providing unique services.

  6. [TFC:] What are some common producer/filmmaker mistakes?
    [ZT:] Producers often receive funds from debt lenders that they can’t afford to use. Most lenders will try to give as much money upfront against an incentive in the hopes that you are not able to pay back principal + interest using only credit proceeds, therefore you default on your loan and the lender can foreclose on your film or other collateral. Production teams also make a number of administrative mistakes. Producers often enter incorrect corporate and tax information on their initial/final application. They also organize their entity incorrectly, or choose the wrong type of entity altogether. It’s very important to have the entity earning the incentive setup correctly, otherwise it may not be possible to obtain financing against the incentive; or even earn the incentive at all.

    It is extremely important to pay close attention to how purchases are made during production. Remember, governments create incentive programs in order to bring money to the state. So, ordering everything online for your production means none of those expenses will qualify. Take the time to ensure what you’re purchasing, and what you have outlined in your budget that will qualify for the credit, does in fact qualify. It can be the difference between receiving hundreds of thousands of dollars back from the state or much, much less.

  7. [TFC:] Feel free to share common FAQs and answers not covered above.
    [ZT:] What’s the best state to shoot in?
    Louisiana has a great base incentive coupled with a number of regional bonuses and bumps based on personnel. They also have a healthy buyback system and solid infrastructure. An often-overlooked state is Massachusetts. The program has no cap, a minimum spend requirement of $50,000, and your above-the-line talent qualifies. Ultimately, producers have to determine whether the production can work in a given incentive jurisdiction, then look to see if the production spend will meet the minimum requirements of the program.

    At what point do I come to a tax credit lender to receive money?

    In order to fund your project, Forest Road needs to see that you have your equity raised and your package secure. However, we can get involved even at script stage to advise on which states to shoot in, how to properly create a budget that makes sense for your project, and even how to properly fill out a state application.

    What should I look out for when I’m financing my project?

    A key indicator that a lender/financier is taking advantage of you is if there are high fees associated with the funds you’re receiving or sliding closing dates. Upfront legal fees, closing fees, marketing fees etc. are very quick ways for lenders to take money away from the screen without doing much work. Forest Road charges zero fees. Also, you should look at the length of the agreements that they send over. Film finance is relatively straightforward. If the documentation is extensive, the financier is usually trying to slip something by you. All Forest Road agreements combined are no more than 20 pages. That includes signature pages.

    When I receive a loan against the tax credit, why am I not receiving the full estimated amount?

    With any purchase, you never want to buy into something that you cannot afford to pay back. Therefore, we protect the production from this happening by pricing out a loan in such a way that you’ll have excess value in state proceeds after you pay back principal + interest. When you receive the incentive in the form of a credit, you also have to take into consideration brokerage fees as well as at what price the market is trading your credit at. For example, Georgia credits are trading at a very different price point than Nevada credits.

May 16th, 2019

Posted In: Uncategorized

Tags: ,


by Orly Ravid

After participating in the Film Bazaar market in India (connected to the International Film Festival of India, now in Goa), I decided to investigate the distribution potential in India, specifically VOD and Blockchain and the distribution potential for independent cinema.

A 2018 report in Business Today noted that the OTT market in India is worth ½ billion and will grow to be 5 billion by 2023 with Fox’s Hotstar leading with 75 million subscribers with American companies such as Netflix and Amazon in hot pursuit. The reason for the growth is rising affluence and adoption across demographics including in rural areas. Today, the VOD market is AVOD-dominated but Business Today anticipates a flip with AVOD going down and SVOD and TVOD doubling from their present estimated 18% of the market.

This is fun—search “Film distribution in India” on Google and you get a nice scroll of logos with links to a bunch of companies. And you can find a list on Wikipedia.

At Film Bazaar I interviewed a couple of top players in the VOD distribution space, and also MinersINC, a new Blockchain distribution platform/service.

First, I spoke to Ajay Chacko is Co-founder & CEO of Arré, one of the country’s foremost original digital content brands. Arré was founded in 2015 by B. Saikumar, Ajay Chacko & Sanjay Ray Chaudhuri. Arré offers multimedia content across genres & formats and has won many international & domestic awards & accolades for its work in digital fiction & non-fiction. Arré Studio is also working on large-format original shows in collaboration with domestic and international OTT platforms as well as broadcast television networks. Ajay has over 2 decades of experience in media & financial services. He spent over a decade with Network18 and was Group COO and also President A+E – TV18 JV in his last held roles with the Group. He has also worked with IL&FS, Sharekhan and the Indian Express Group prior to his stint with Network18. The company’s website can be found here.

Q [to Ajay Chacko of Arré]: What are key trends today in India with respect to audiences/consumers getting content (please comment on both type of content and means of consumption/viewing (technology and price model))?:

A: The Indian digital media market has seen renewed traction ever since data prices crashed with the advent of JIO & the subsequent competitive intensity in the telecom market; the digital media audience is approaching the 400 million mark. More than (>)85% of content consumed is on the mobilewith the structure of consumption now pretty much getting aligned to what it was in the case of TV but with a different idiom i.e. audiences are watching long form shows and movies, albeit on-demand and of the kind they’d like to watch. This has also created a boom in original content commissioned by OTT platformssince TV content in India has isn’t really working when it comes to individual level consumption (remember India is a single TV household where most programming was catering to semi-urban and rural housewives since they formed the primary ratings driven chunk of viewership). The granularity of the Indian market is reflected by its languages and consumption driven by regional and national languages – these trend in the long run to be 50/50 or thereabouts (Hindi: Regional Indian languages like Bengali, Tamil, Telegu, Marathi etc.). The current roughly 800 million TV audiences which is fairly penetrated has reflected this trend and this is also showing up in digital with YouTube India reporting that almost half of its 200 million+ audience is coming from regional markets/ watching regional language content. Video market for English content is at the ‘uppermost socio-economic’ strata but it has never exceeded 4-5% of the overall pie. In fact, English TV entertainment did not cross 2% market share despite it being present in India for over two decades.

India has also been a predominantly ad-funded marketwhen it comes to even fiction/ entertainment. Currently the OTT space is 95%+ AVOD (audience numbers) and some players like Netflix, Amazon, Alt Balaji, Eros Now etc. are trying to push a subscription- based model with some degree of success. Even after 2.5 decades of the existence of cable TV with over 500 channels, India still remains a 70%+ advertising driven market and cable/ pay TV subscription packs are available for 300+ channels at less than 2.5 dollars a month.The consumption trend when it comes to the ‘pay for content’ aspect is still pretty much in the Indian idiom of being ad-driven (various models have emerged here – for example brand integrations into stories has also emerged as an important line of revenue for Independent content players as well as some AVOD platforms).

Q: What about piracy concerns and copyright infringement / protection in India?

A: Piracy has always been an issue in India though I would not put it to be the number one problem as most content in India is freely available since its ad driven/ AVOD. There are many steps being taken by industry associations to help tackle piracy when it comes to music and movies with some degree of success. Digitization has also helped in freeing the movie business from the distribution related leakages.

Q: To what extent is there an appetite / market for American independent cinema in India?

A: Like I mentioned in my earlier point, American Indie cinema has limited appeal, maybe restricted to the top tier of film-buffs etc. in terms of percentage share of the market. However, in terms numbers due to the sheer size of the market there maybe opportunities to have a couple of hundred thousand folks access these thru digital platforms/ OTT services.

Q: I hear documentaries are more popular in India than they used to be in large part due to services such as Netflix—what can you say about that?

A: Much as one would love for this to be true, it isn’t. Docs haven’t really taken off in any meaningful way and one can spend an entire day analyzing why 🙂

A couple of stray examples really don’t break this trend.

Q: Please comment about Amazon, Netflix, and Blockchain with respect to your market (India).

A: The entry of international players like Netflix, Amazon etc. has hastened the process of creation of quality original programming made for digital. This is an important breakthrough in the Indian market and a lot of the OTT platforms (who were banking on catchup tv content) now have realized that they need to up their game and come up with quality original programming in Indian and regional languages. This has thrown up a lot of opportunity for creators, film-makers who were earlier left out of the TV boom as that idiom of programming was considered regressive by most. So, I am hoping that one would see a deluge of quality original programming targeted at various demographics and geographies coming out of India in the near term. As for Arré, we are already working on over 140 hours of high-quality original shows (some for our own platform and a few in partnership with some of the domestic and international OTT players).

On Blockchain, I believe it’s a tad early, but it helps really disintermediate efficiently and this may be a boon for independent film makers and creators.

Then, I spoke to Suri Gopalanis, the Founder of Vista India Digital Media Inc., which distributes to the largest Indian studios and broadcasters with a focus on featuring films prominently on its partner platforms. Vista’s client list includes Red Chillies, Sun Network, Viacom18, Balaji Motion Pictures, Disney UTV, among others. Vista claims to be a pioneer in taking regional films on OTT platforms and having successfully delivered content in Indian languages like Marathi, Tamil, Telugu, Malayalam, Bengali, Kannada, Punjabi, Oriya, Assamese and Gujarati across all our digital platforms. The company’s website can be found here.

[Suru Gopalanis of Vista India Digital Media Inc.]: With a remarkably young population and low cost of bandwidth, the Indian market has seen explosive growth in online video. While YouTube continues to dominate AVOD, we have a hyper-competitive OTT space (both domestic and International players) operating at all the different segments. As of now, we have over 32 platformswith financial muscle fighting for a pie of the Indian market which is expected to touch $ 5 billion by 2023. While primary consumption is still on mobile devices it is expected to gravitate towards TV with dongles and apps built into TV sets.

India is a price sensitive market. With average cable bundling at less than $2.00 per month, the ability for Indian consumers to pay in comparison to International markets still remains to be proven. Having said that, there are a number of price tiers at work domestically with a mixture of AD (AVOD) and SVOD to provide maximum economic value to consumers.

India is a very diverse country with many different regional languages and audiences. The segmentation of this online is relatively easier compared to standard broadcast TV. This, in turn, is leading to a number of niche regional platforms emerging in the pay markets that are targeted via language and tastes.

Sports continues to the biggest driver both offline and online with Cricket dominating minutes watched. There has been a lot of inflows into content development as audience tastes are changing and continue to beinfluenced by what’s happening in the West.

Indian audiences have been habituated to YouTube which has grown very aggressively in India and continues to attract advertising dollars. Given the diversity of content consumption, it is little wonder that DIY content in a host of niches has found audiences on YouTube.

With so much of competition, there is a need to create differentiated content and almost all the platforms including YouTube are investing in new original shows to attract and retain eyeballs.  We have seen a number of new shows which have been localized to multiple regional languages which is a new feature that OTT platforms have the advantage to experiment in.

In terms of independent features, there is not much good news. The consumption at this point appears to be to the big budget highly promoted features. Our hope is that a new generation of Indians will be more receptive to both foreign and Indian original films.

When at Film Bazaar I mentioned the launch of the Blockchain company to filmmakers and industry professionals the reaction was always extremely enthusiastic—It seems the right model for the market.…So I interviewed Nitin Narkhede, Founder & CEO of MinersINC, a new Blockchain platform/service that provides a unique opportunity to watch critically acclaimed films in India:

[Nitin Narkhede of MinersINC]: 2018 saw a progressive step forward for Indian independent cinema when Rima Das’ Village Rockstars became the country’s entry to the Oscars Best Foreign Language Film category.A passion project where Das and her school going cousins got together with a bunch of village kids to write, shoot, edit and direct this film entirely on hand held camera—Village Rockstars embodies the untapped, underutilized potential of self-trained, inspired and independent filmmakers in the country. That there is an audience for such cinema is evident to a logical mind, yet often left un-catered to by the country’s established filmmaking, distribution and exhibition segments. Das’ lilting, surreally beautiful film released in over 30 theatres in Assam and West Bengal and stayed on for over a month in very limited multiplex screens in Delhi and Bangalore, cities with sizeable and concentrated diaspora from the state. Village Rockstars had been screened at 88 film festivals, won 44 awards including four Swarna Kamals, the highest honors offered by the National Film Awards (India), to finally claim a restricted space in movie theatres.

This film elucidates aptly the absolute lack of a distribution mechanism for small, substantial and freethinking cinema or entertainment content within India. Another prime example is Mukti Bhawan, an introspective and moving film about death, old age and detachment. This film won critical acclaim in ten of the most respected film festivals, found theatrical releases in Japan and Germany, territories where familiarity with Hindi as a language is sparse.

Yet, in India, it barely found sufficient screen space- ultimately nesting on an OTT platform for viewers. Films that don’t boast of stars, celebrity filmmakers or the wizardry associated with mainstream movie making do not have a mechanism for their exhibition and distribution. Notwithstanding recognition globally, international independent films also never make it to an Indian audience’s viewing menu. With OTT platforms emerging in the country, some expected the restrictions that independent films, faced from a traditional, profit oriented distribution-exhibition system to change. Unfortunately, change for the small film, which rides on passion for a good, relevant story, is barely visible.

OTT platforms from international giants offer varied content but stay firmly focused on star-driven films and shows. English language content is also preferred by these platforms. Small, substantial films find room in a space where glitzier behemoths dominate.

Over the years, what we’ve come to firmly believe is that there is a definite audience keen on watching quality films, engaging stories from across the world here in India. With the country’s aspirational youth, levels of interest in cinema beyond typical Hollywood and Bollywood are evident. Given the challenges of access for such content, piracy often becomes a habit. Increasingly, world cinema that is shown at the film festivals, Cinefan by Osian and MAMI, based in Mumbai, runs to packed auditoriums. These films travel from across the globe, ranging from Iran, to South American nations, to East Asia and Europe. Watching them is top priority for the keen Indian cinephile today.

myNK, the OTT platform from MinersINC firmly focuses on filling this gap between demand and distribution of quality world cinema. Utilizing Blockchain technology, it ensures a safe, assured distribution platform for filmmakers to access a whole new audience that has only just begun consuming content on smart phonesand hand held devices. Currently, approximately 299 million people use smartphones in India. Over time, this number is expected to grow to 499 million as Reliance Jio expands access to high-speed data at very low prices. This is a market for movie consumption that simply has no match in terms of reach and numbers. The Hollywood Reporter has argued in a well-researched column that OTT giants like Netflix and Amazon PrimeVideo are battling it out to grow their share of the Indian video on demand market; simply because the numbers of video in India are mind boggling. In a scenario when mobile phones will often become access point for one’s personalized entertainment choices, myNK’s offering of critically acclaimed and quality world cinema offers a never before opportunity to access content for cinephiles.

Rapidly evolving digital technologies and declining costs of filmmaking equipment has led to a growth in the number of filmmakers worldwide. Rima Das, as explained, provides the perfect example. Finding an audience for these films though holds a real challenge. Additional problems that emerge are, firstly, a shortage of screens. India has just 10 screens per million people. When films don’t get released, they run the risks of getting pirated.Combined with high costs of acquiring distribution for a film often leave the film producer with no profits. Aside from this oligopolistic distribution model controlling content that makes it to a film theatre, marketing, sales and publicity for films are huge additional costs. Adding to the woes of the creator, there is a huge market of illegal downloads. Lopsides royalties and revenue distributions further reduce a creator’s earnings.

Conventional distribution mechanisms work in silos, somewhere incapacitating filmmakers and producers financially. Blockchain technology, as used by MinersINC, can help in resolving this opaque situation making a radical positive change by empowering creators in the long run. Blockchain technology naturally extends to the fundamental framework of how digital media gets distributed. It is a peer-to-peer decentralized network that brings the filmmakers in direct contact with their consumers without passing through the archaic distribution system. It gives leeway to filmmakers to bypass the costly distribution mediums and distribute their films directly to consumers. It has the potential to liberate the filmmakers by putting them back in control of their work and gives them complete autonomy on how their content gets distributed and priced. Parellely, consumers are empowered as they get the freedom to chose from a global library of films.

myNK, a product created by MinersINC envisages creating an entertainment ecosystem that will liberalize the industry from oligopolistic distribution practices, revenue dilution across middlemen, piracy, revenue leakages, copyright issues, breach of contracts, lost monetization, non-transparent earnings and unjust right attributions. Apart from addressing the current set of challenges, myNK aims at achieving greater goals by weaving the entities and components together in a fabric of trust and transparency, work on business models that make value sets more direct, less intricate and more rewarding.

In the long term, myNK aims to use blockchain technology to build an autonomous marketplace for creators to discover the real worth of their creations based on market governed dynamic pricing principals and community-driven curation. Consumers would have a significant role to play as they would act as a prudent community who will be collectively responsible for reviewing, rating, distributing, recommending and doing intelligent curation of content.

myNK empowers the creator and the consumer in Indian entertainment. Focused on bringing independent, recognized quality films from across the world, it will encourage interactions within the community, creating social media that has a definitive purpose. For those who love and live cinema, this platform is a valuable new opportunity to access worthy content while adding to a democratic, fair and collective voice for quality over hype in entertainment.

The Film Collaborative has had little or no success with its American or European indies in India but is now trying again with a curated selection to be distributed via MinersINC. Here’s hoping! And we will write again to update about changes in the India VOD market and with respect to Blockchain distribution.

February 4th, 2019

Posted In: blockchain, Blockchain, Digital Distribution, Distribution, Documentaries, International Sales


by Max Hacker

Nathan Apodaca, also known as 420doggface208 on the popular social media video site TikTok, recently announced that he was selling an NFT of his virally iconic skateboard-riding, Fleetwood Mac-lip synching, cranberry juice-swilling 2020 TikTok video. Bidding for the NFT starts at $500,000. If you’ve seen the video, you may be surprised to learn that Fleetwood Mac’s “Dreams” and Ocean Spray’s logo are absent from the NFT version.

Unless you’ve been living under a digital rock, you’ve probably come across this somewhat new form of digital collectible. If not, you can learn more here, here or here. It’s clear from the $69 million price tag digital art piecerecently fetched, NFTs provide a way for creators to capitalize on a seemingly insatiable market. Calling the crypto craze a “digital gold rush” is not far-fetched.

Proclamations abound that NFTs are a massive untapped revenue source and are here to save the arts and entertainment industry. While the financial upside for sellers (copyright owners/licensors) is tremendous, it’s uncertain how the smart contracts that form when an NFT is acquired will impact those purchasers (NFT owners). Are the restrictions in the smart contract consistent with U.S. copyright law or are purchasers at risk of facing punitive measures beyond copyright protections? Transactions on a blockchain are immutable, so do NFTs open the door for harsh penalties enforced on NFT purchasers who are never put on notice of what terms they violated?

First-sale doctrine

One specific issue to monitor is whether NFT smart contract terms reach beyond the first-sale doctrine. The first-sale doctrine, codified at 17 U.S.C. §109, establishes the clear right for purchasers of copyright works (e.g. songs, albums) to sell copies of that work without seeking the original seller’s consent. In other words, the copyright holder can control the initial sale by setting the price and choosing distributors to sell copies of their copyrighted work. However, for example, once I buy Fleetwood Mac’s Rumours on vinyl (which this author can confirm he does indeed own a copy of), I can freely transfer that copy. No need to get consent from Mick, Stevie or (most thankfully not) Lindsay to sell my copy to a friend or a used record store.

But imagine in a not-too-distant future in which the Mac releases an NFT version of Rumours. It’s possible that the smart contract controlling the purchase bars me from selling to certain sellers, via certain platforms or otherwise restricts my transfer rights in an overreaching or even hostile manner. One of the intoxicating elements to the crypto craze in general is the wild, investment-like nature. Purchasers are seeing large returns within weeks of their initial investment. However, if smart contracts controlling NFT sales are more prohibitive than my first-sale doctrine right to sell my vinyl copy to my local record shop (don’t worry, I’d never sell my copy), potential purchasers may start to shy away, and industry skepticism may set in.

IP licensing for NFTs

Back to 420doggface208, why didn’t he include the song or the logo in the NFT if he was allowed to include it in his TikTok?

For the song, TikTok has a license to use the song and that license allows users of TikTok to upload songs for use on TikTok. That license is likely very narrow; TikTokers do not have the right to take their TikTok videos w/ songs included and then sell it in some other medium or version. Fleetwood Mac no doubt loved the resurgence in their streaming numbers, but apparently not enough to let Apodaca use “Dreams” in the NFT (more on this later).

As for the juice, despite Ocean Spray’s public embrace of Mr. Doggface, his use of the logo in the NFT without consent is trademark infringement, a clear attempt to profit off of the brand’s logo without any license to do so. Or so a lawyer for OS may claim.

What does the future hold?

As the NFT market grows, many artists and creators will benefit from a hot, emergent revenue stream. Works of digital art and music are selling for eye-popping figures, and we haven’t yet scratched the surface regarding licensing revenue. NFTs have the potential to breathe new life into older works, presenting an ocean of new licensing opportunities for use within third party NFTs. Despite the fact that smart contracts have been designed to simultaneously and instantly kick all interest holders their piece of the pie, significantly reducing transaction costs and delays in receiving payments, it appears no such licensing deal was struck here for “Dreams” or the wave logo. Once intellectual property holders grasp how relatively quick blockchain-based payments are triggered, the aforementioned proclamations may come to fruition. Soon, they will realize that like any gold rush, it’s best to be the one selling the picks and the shovels.

Max Hacker is the owner and founder of the Law Offices of Max H. Hacker. Max earned his J.D. from Southwestern Law School in 2013 and is licensed to practice in California and New York. His practice includes representing individuals and businesses in transactions across the digital media, TV/film and music industry landscapes.

December 18th, 2018

Posted In: Blockchain, blockchain, Digital Distribution, Legal


If you missed our SXSW Case Study Discussion on The Light of the Moon, or if you just want a copy of the accompanying PowerPoint deck, you can download it here.

Case study discussion of the distribution of SXSW Winner The Light of the Moon diving into topics including: the platform theatrical release, educational, festivals and hybrid theatrical distribution, collaborative nature of the release involving key vendors, the filmmakers, grassroots partnerships, corporate sponsorships, use of social media, publicity firms on both coasts and representing lead actress Stephanie Beatriz, release timing analysis, and socio-cultural impact objective, all while coordinating TVOD and international licensing alongside utilizing the Amazon Festival Stars AVD offering and reconciling when to go direct-to-platform vs. license to buyers.

Participants: Michelle Mower, Imagination Worldwide (Distributor • International Sales Agent), Orly Ravid, The Film Collaborative/MSK (Festival/Theatrical Distribution), Michael Cuomo, Gran Fallon (Producer of The Light of the Moon), and Myriam Schroeter, Stedfast Productions (Co-Producer of The Light of the Moon)

March 14th, 2018

Posted In: Amazon VOD & CreateSpace, case studies, Digital Distribution, Distribution, Distribution Platforms, DIY, education, Film Festivals, iTunes, Key Art, Marketing, Publicity, Social Network Marketing, Theatrical, Vimeo


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CEO & Cofounder, FilmDooby Orly Ravid.

I was introduced to indie film platform FilmDoo.com and decided to share it with you all here by asking FilmDoo some questions. I spoke to Weerada Sucharitkul, CEO & Co-Founder and most of what is below are Weerada’s own words in response to my questions.

What is FilmDoo’s Mission?

We help people to discover and watch great films from around the world, including documentaries and shorts. Essentially, we help people discover non-Hollywood films, which include independent films from the US and UK, as well as mainstream blockbuster films from China and Japan, for example. We not only help people to discover films but languages and regions, and are very much a ‘TripAdvisor for Films.’ On FilmDoo, you can discover films from Africa, Asia, Latin America and Europe, many of which we are the first to show internationally outside of film festivals. Furthermore, we also have a very engaged global film community (users can have an active social profile and leave reviews, comments as well as engage with other community members) and are an extensive international film database source, which is increasingly becoming an alternative to IMDB for foreign language films. As such, we are not only a VOD platform, we are more than that—a global database of foreign films as well as rapidly growing international community of film fans.

How does the platform work? What is FilmDoo’s Business Model?

FilmDoo’s current model is TVOD (pay-per-view) for feature films on the main FilmDoo site. We are a global online streaming platform and have the ability to sell and show films anywhere in the world. We are at over 500,000 visitors a month, with users from 194 countries. As we are increasingly getting a lot of traffic from emerging countries (e.g. Indonesia is now our second biggest traffic country, and countries like Turkey, India, Malaysia and Philippines make our Top 10 list), we are now looking at more ways to further monetize from these parts of the world and could be looking to do an AVOD model in these countries in the near future. We are able to geo-block for any country combination, and only require one month notice from filmmakers or content owners if they would like to change the geo-block country combination. We are able to accept transactions in UK Pound, US Dollar, Australian Dollar and Euro, as well as Paypal and AliPay (for Chinese-based users).

Which types of films do best on your platform?

Search ’gay movies’ and ’lesbian movies,’ and you will see we rank very high on Google from a SEO perspective. At the moment, their best selling category is LGBT films. FilmDoo claims to already have one of the biggest LGBT online film collections in the world. In terms of typical demographics, the audience base is a lot younger than typical ‘world cinema’ audience. They tend to be globally mobile, active on social media, speak many languages and/or learning languages, and come from an international or expatriate background (such as second generation French or Italian). Human rights documentaries have also tended to do well. As such, we see strong appeal for films that fit our current demographics: average age 22-39, young, learning languages, loves travelling and enjoys watching coming-of-age movies, first love movies, thriller movies, road movies, LGBT movies and human rights and social issues.

Where do most of your consumers live? Explain which countries.

Our current Top 10 countries by traffic, in order, include: 1. US, 2. Indonesia, 3. Turkey, 4. UK, 5. Turkey, 6. Malaysia, 7. Philippines, 8. Egypt, 9. Germany, and 10. Saudi Arabia. However, in terms of sales, our top selling countries include: US, UK, Canada, Australia, France, Germany, Ireland, Norway, Netherlands and India. As you can appreciate, given the global nature of our traffic, for many in emerging countries in Asia and Africa, for example, the current TVOD price point is either too high for them, they do not have credit card or they are more used to an AVOD or free viewing model and not used to making transactions online. Hence why we are now exploring AVOD as an option to do more in the rest of the world.

What is the revenue split? Are there any costs recouped?

Revenue share is 70/30, same as iTunes. There are no costs to put the films on the FilmDoo platform, no further additional transcoding or ingestion costs. There are no marketing costs recouped either. The mission is to make it as easily and as flexible as possible for film makers to be able to put their films online at no additional costs and with maximum ease to be able to maximize their full global potential.

Some of their top selling content partners are LGBT content partners who have a collection of films with us and are able to make a decent sum month (I was asked not to share the exact sum publicly).” They note doing increasingly better for other film genres and collections. Launched in 2015, FilmDoo claims to be growing rapidly and expects to grow its catalog and audience.

Please speak to the simplicity, ease, and flexibility of the platform as far as geo-blocking, limiting territories, and the simple delivery, non-exclusivity…

Simplicity, ease and flexibility are absolutely at the heart of what we do at FilmDoo. Our goal is to reduce current barriers to international distribution in the film industry and most of all, to help films, especially films that have had their festival runs and may have already sold in a few territories, to continue to be able to monetize and reach their full global potential. That’s why we want to make it as easy as possible for them.

This includes:

  • Ability to geo-block to any country combination requirement, with only one month notice required if you need to make changes to this. We will be able to sell your film in any country.
  • We will try our best to work with your material—we can take both HD and SD files (where HD is not available), AppleProRes and H.264. We can accept the digital files via our FTP, WeTransfer, Aspera as well as any other way.
  • We can also accept film files sent to us in hard drives by post.
  • Where the films are not available digitally, we will also accept DVD/ Blurays and will digitize these at no additional costs to the film makers.
  • We do require that all films have English subtitles. If available, it would also help to have native language caption files as separate files (e.g. English captions for English language films, French caption for French language films, etc), although this is not required.
  • Our preference is for clean film files with separate subtitle files in .SRT or .WebDTT format.
  • However, if separate subtitles are not available, we can also accept film files with burnt in English subtitles.

What is FilmDoo’s Term?

Our terms are 2 years non-exclusive.

As you will see, we are much more flexible and easier to work with than most other global platforms, because our number one goal is to make it as easy as possible for film makers and content owners to put their films online and reach their global audience.

Are filmmakers able to see the data of where their audiences live (country) and how many transactions per each country? Is there a dashboard?

Yes, we have an online reporting dashboard. Film makers or content owners will be able to log in any time to see their total sales in real time. They will be able to see where the sales are coming from, the countries their films are getting the most interest in, and where available, the demographics breakdown of people interested in their films such as gender and age.

Can filmmakers contract with you directly?

Absolutely, please feel free to email me directly at wps@filmdoo.com. In addition, we can also be contacted at our general email: info@filmdoo.com. Please also feel free to follow our news, film releases and reach out to us on our social media: FacebookTwitterYouTube.

What is FilmDoo doing to increase its consumer/audience reach?

Through our proprietary marketing technology, we are doing very well on SEO, where we are able to reach global audience interested in Lesbian and Gay movies as well as films by language collection. Furthermore, our proprietary technology include our personalized film recommendation engine.

At the same time, we also have a very strong Editorial and Curation team, where we continuously help to promote our films via our Blog, YouTube channel, social media and newsletters. We are also able to interview directors and film makers at no additional costs to help create promotional and editorial content. We also have community user-generated content, such as film playlists and film reviews, which are growing rapidly.

Most importantly, what is unique about FilmDoo, is our “DooVOTE” concept, whereby we are empowering users to discover films not yet available in their country and to express a demand in seeing that film. Consequently, we are using this data to try to go after the films we know there is interest from our community:

filmdoo.com/doovote. To increase our audience reach, we often do a lot of on the ground marketing, including partnerships with film festivals and giving presentations and talks at film workshops and events.

Please share anything else you think is relevant — including that you may turn into an SVOD or AVOD

I think it’s important to note that unlike other players in this space, we are not going after the already hardcore indie or world cinema film fans. We are identifying and converting new film audiences, many of which are traditional mainstream audiences, who may be increasingly interested in exploring new and refreshing content, whether from a cultural and language perspective or from an awareness of gender or human rights topics. Effectively, our audience is an increasingly growing group of people who are becoming more interested in travel, studying or traveling abroad, as well as forming multi-cultural families. FilmDoo is all about providing a truly global platform to traditionally underrepresented voice, such as emerging film makers and female and LGBT film makers from around the world. Their films deserve to be discovered and seen legally and FilmDoo is building a community and global platform to help them achieve that.

Sydney Levine has written an article on FilmDoo as well. Please read it here.

Please note: I did not publish information about revenue per FilmDoo’s request as that is proprietary information, but I am told I can discuss it privately/confidentially with filmmakers.

October 18th, 2017

Posted In: Digital Distribution, Distribution, DIY, International Sales

Tags: , , , ,


by Orly Ravid, Founder, The Film Collaborative and Attorney, Mitchell Silberberg & Knupp LLP)

The following the final part of a three-part series on Educational Distribution. Part 1: “Get Educated About Educational Distribution,” by Orly Ravid, Founder, The Film Collaborative • February 18, 2016. Part 2: “Fair Use Is Not Fair Game,” by Jessica Rosner, Media Consultant & Orly Ravid, Founder, The Film Collaborative, Attorney, Mitchell Silberberg & Knupp LLP • June 1, 2016. It was offered as a handout at the Low Down on Educational Distribution Panel that took place as part of the SXSW Film Festival on March 12, 2017.

Educational distribution is often part of “Non-Theatrical” rights and generally refers to distribution to schools and libraries (not film festivals, airlines, ships, or hotels, for example). Traditional educational distribution is focused on educational institutions at the university and K-12 level. It can also cover private organizational and corporate screenings. It can involve both physical media (DVDs/Blu-rays) either sold or rented and streaming (via licenses for a term, typically 1-3 years). Not all educational distributors cover the same turf or have the same business models. Below is a summary of some companies and how they define and handle educational distribution. You’ll notice differences and a range of what the companies do within the space. This document also covers revenue ranges, technology differences and industry changes, use of middlemen, best practices, and release examples. I often use the company’s own words to explain how they work. I did not interview filmmakers who have worked with the panelists or other companies, and always recommend checking references and asking around. For any follow-up questions please feel free to contact the distributors or panel moderator Orly Ravid.

Companies explain their take on educational distribution:

Alexander Street: Offers both streaming and DVD options across its catalog. Focus is on institutional selling and providing both university librarians and university faculty with options ranging from single title streaming and DVD, to demand-driven models and wide access to packages of 60,000 or more titles.

Kanopy: We define educational distribution as sharing important stories with the next generation. Films have the power to engage and challenge like no other medium, and with students watching more film than any other resource, it’s more important than ever before that these films reach this important demographic. We take our relationships with the college librarians very seriously as they are our paying customers and work tirelessly to understand and promote Kanopy to their patrons.

We are lucky to work with such a progressive market of librarians that believed in our new model, Patron Driven Acquisition, whereby libraries only pay for what is watched. This model is now the benchmark for libraries globally and has revolutionized the industry by promoting educational streaming as a viable channel for filmmakers while offering excellent ROI for libraries.

Passion River: Selling or licensing public performance rights for films to schools, colleges, libraries, and community centers/organizations.

Ro*co Films: Distributing content (in our case, top-tier documentary films) to schools, organizations, and corporations for instructional and/or screening purposes.

Outcast Films: Sales and rentals on campuses, academic conferences, campus activities and student film festivals. There are times when we also partner with non-profit organizations both on and off campus. We want to work in collaboration with filmmakers and their outreach efforts to maximize opportunities so we can be flexible. Because the educational market is our only focus, we believe we are the best to handle and coordinate.

The Video Project: ‘Educational and Institutional’ market means all schools, home schools, school districts, offices of education, learning centers, education and research institutions, colleges and universities, libraries, NGOs, nonprofit organizations, corporations, government agencies and offices.

Collective Eye: Thinks of Educational Distribution as any film media sales and licensing made for educational intent. Collective Eye Films is very clear in defining rights to carry a film as certain types of Products; these are generally products that include Public Performance Rights (defined in the below link), Campus & Community Screening Licenses, Public Library licenses and Educational Streaming licenses. Collective Eye covers the traditional educational institutions and offers PPR licenses to non-profits and Government agencies. The company finds that “Community Screening” licenses are very beneficial to filmmakers. Because we are non-exclusive we always discuss the filmmakers’ rights and how our distribution would or would not impact their other distribution deals already in place. Public Libraries as a media right generally come within Home-Entertainment markets, so Collective Eye carries these as a service to filmmakers that do not have other home-entertainment distribution. Since we are non-exclusive we can also provide this as a product alongside another non-exclusive home-use distributor if amenable to both parties. A full list of how we define our licensing types can be found here: http://www.collectiveeye.org/pages/film-licenses.

What They Do in The Educational Distribution Space, and An Estimate of How Much of Their Company’s Business Is Educational Distribution

Alexander Street: We are a 17-year-old company dedicated to making silent voices heard to support scholarly inquiry. In 2006 we launched our first streaming video product and we have been innovating in streaming video to university libraries ever since. Because our roots are in providing databases to university libraries, we understand better than most how to package, price and deliver streaming video to universities. Our approach is multi-channel, allowing content creators to distribute their content on a title-by-title basis or in packages with multiple pricing options from one-year subscriptions to life-of-file sales. Because we offer these multiple models, we are able to satisfy the collection development approaches of all librarians while also meeting the budget capacity (or lack thereof) of all libraries. Simply put, because we offer multiple purchase models we are best positioned to generate more revenue for premium films, because premium films can easily be leveraged across all models. We work with hundreds of individual filmmakers as well as with organizations large and small, including First Run Features, Kino Lorber, Milestone Films, the Smithsonian Institute, PBS, Sony Pictures Classics, The Criterion Collection, NBC-Universal, the BBC, and many others. We are the leaders, with more than 12,000 universities worldwide using our platform to access video, text, music, images and data sets. Our focus is primarily on licensing great content and offering tools to make the content come alive for faculty and students for research and learning.

  • 95% of our business is to educational institutions, with the remaining 5% in public libraries, government agencies, historical societies and the like.
  • Territory Covered: Worldwide

Kanopy: Kanopy is a video streaming solution for colleges and public libraries delivering one of the largest curated collections of classic cinema, festival documentaries, and movies in the world through the best-in-class user interface. Kanopy streams to over 2,500 of the top colleges and universities across 100 countries. Millions of students, professors and public library members can watch The Criterion Collection, indulge in festival indie, world cinema and acclaimed documentaries sourced from award-winning filmmakers globally or learn about every subject imaginable from The Great Courses and PBS. Kanopy’s unrivaled collection contains over 30,000 curated films. Unlike other platforms, we preserve the integrity of the collection and only accept films that we know will be watched and in demand.

Kanopy is now the most watched video streaming platform in higher education due to our relentless pursuit of excellence in user experience and unwavering commitment to a democratic relationship with filmmakers. We ensure each film performs on its own merit, overcoming the problem of incumbent collection sales model where thousands of films were bundled together and sold into institutions at discounted rates.

Filmmakers receive a clean 50% of each sale with no deductions and are provided with a dashboard to track their audience’s viewing behavior and associated sales.

We are proud of being privately owned which is very rare in the library vendor world where most companies get bought out quickly by the large multi-national library conglomerates. By being independent, we are free to take risks and change the status quo to deliver on our mission of creating a sustainable economy for our filmmakers. Part of our DNA is having the user at the heart of all decisions we make to ensure we are offering an unparalleled viewing experience that is relevant and engaging.

Over half of our operating budget is dedicated to our Product & Engineering team who listen to our incessant customer feedback and continue to raise the benchmark of video streaming platforms in education.

  • Last year, the majority of our business was educational and although this distribution channel continues to grow rapidly, we are seeing exponential growth in our public library business. We anticipate our business to be fairly evenly split between education and public library channels by the end of the year.
  • Territory Covered: The key markets for any US video platform are English speaking territories. We work with pretty much every viable institution in the US, Australia and NZ and most in the UK. We do have customers on every continent too, but our main focus is obviously English markets.

Passion River: Passion River Films is a distribution company for DVD, digital, non-theatrical, and educational markets. Their diverse catalog of films has won a variety of the most prestigious awards and has also screened at every major film festival in the world. We market, sell, & license films to educational buyers & community/organization leaders.

  • 20% of Passion River’s business overall is educational, but educational sales are 80%+ of its revenue.
  • Territory Covered: Worldwide, but primary focus is North America.

Collective Eye: Collective Eye Films is an educational film distribution company that represents compelling documentaries that explore untold stories of our time. Our films build bridges between cultures and provide unique perspectives by exploring social, political, environmental and spiritual issues to bring provocative and entertaining stories to the screen. We provide documentaries to campuses, classrooms, libraries and through community screenings. We believe that film is a medium that can present critical issues, challenge audiences, and raise important questions. Keeping true to the notion that documentary films are powerful tools for change, we strive to unearth stories that make a difference.

We are a distributor primarily for Educational Rights, including DVD with Public Performance Rights for University and K-12/Government/Non-profit, Digital Site Licenses, Public and Campus Screenings, and Public Libraries. We will carry home-use DVD when the filmmaker desires an outlet to satisfy demand, but this is not our primary market. We are one of the few non-exclusive Educational Distributors in the educational ecosystem. As a boutique distributor, we specialize in Environmental subjects, Anthropology, and Criminal Justice, and offer films specific to the Pacific Northwest and by Pacific Northwest filmmakers. Our films are generally character-driven, and carry a strong advocacy angle. Because of the emphasis on films that advocate for an issue, and that “make a difference,” we offer Community Screenings and emphasize our keen ability to navigate and negotiate licensing questions with interested audiences who need support in planning their screenings. Jon Betz, Collective Eye Films director, has over a decade of experience as an independent documentary filmmaker and is a strong filmmaker advocate, often speaking with filmmakers in depth about their distribution strategies when partnering on the films we distribute.

  • Collective Eye is primarily an Educational Distributor. About 75-80% of our revenue is from licensing Educational DVD Public Performance Rights, Digital Site Licenses, K-12/Non-Profit/Government PPR and Campus Screenings. The remaining 20-25% is from Community Screening licenses and Public Library sales.
  • Territory Covered: Our primary reach is the US, including US institutions abroad. We also reach colleges and universities in Canada, the UK, New Zealand and Australia.

Ro*co Films: A leader in the documentary distribution world, ro*co films understands that a compelling real-life story can educate, entertain, and engage diverse audiences around emotionally gripping, universally important themes. A growing division of ro*co films international, ro*co educational launched in 2009 with the mission to advocate for documentary film as an educational tool, to bring these stories to schools, libraries, and other instructional environments across the country, and to broaden the impact and influence of our films by mobilizing communities to host, organize, and execute their own public screening events. Whether you are striving to illuminate a topic or issue, create change, or simply start a conversation, showing a compelling film is the best way to do it. The films represented by ro*co educational are inspiring, provocative, and challenging —connecting us to human experiences well beyond the boundaries of our own.

We are a boutique educational distributor, which means that we stay small by choice. We take on only 10-12 films per year, and have become a trusted curator and source for the best of the best in documentary film. Our films are highly-acclaimed, festival award winners, selected with their production quality, academic relevance, and impact potential in mind. For each film that we add to our collection, we produce a high quality and proprietary educational package that includes the feature film, any shorter or ‘chapterized’ versions that are available and would be valuable in an educational setting, curriculum or discussion guide, and screening kit. Subscription streaming services are also available through our exclusive digital portal, Film Platform. We bring all of these options to our network of over 50,000 active educational buyers, with a focus on public screenings and community engagement. In addition, we design custom distribution campaigns for each film we release, where we go beyond traditional marketing to find unique audiences and income streams — to not only elevate impact but also to provide the highest possible returns to our filmmakers.

  • Ro*co Films’ business is approximately 50% educational (we also do sales).
  • Territory Covered: Worldwide

Outcast Films: Outcast Films is a distribution company that assists filmmakers in capitalizing on the educational market. Focused on social justice and environmental issues, our company actively engages educators, community leaders and activists to become personal advocates for your film through targeted outreach and one-on-one engagement. We work in collaboration with producers to develop and implement strategic marketing and sales initiatives aimed at academic and public library markets as well as community-based organizations. Outcast Films can work with filmmakers in one of two ways: (1) traditional percentage split contract where Outcast Films would hold the exclusive educational rights or (2) a fee-for-hire business model, in which, you, the filmmaker, maintain 100% of your project’s rights and 100% of the profits. The educational market is vast and lucrative but can be daunting for those new to it. Outcast Films and our experienced staff will help maximize your opportunities while minimizing the time it takes to reach your goals. Our goal is not only to distribute great documentaries, but position them as catalysts for change in the community. We do this by providing filmmakers the ability to directly connect with students and teachers through multiple outreach activities.

Outcast Films will oversee the production and design of all the elements needed to manufacture the exclusive educational DVD including cover and menu design. This will be done in cooperation with the filmmaker: (i) Ordering processing and fulfillment; (ii) Organize and schedule live event screenings; DVD and DSL (Digital Site License) Educational Sales; (iii) Organize and promote screenings in academic conferences; (iv) Solicit blurbs and reviews from professors, instructors, and subject specialists that focus on and teach the core subjects that are relevant to our films for use on the DVD cover, website, and promotional materials; (v) Launch email blasts for new release announcements, awards, reviews, or relative current event news; (vi) Monitor and post news related to the film to media librarians, pertinent academic listservs and throughout our social network; (vii) Submit titles to academic journals, reviewers, bloggers and other on-line and print journals for possible review; and (viii) Assist filmmaker with outreach to NGO’s and other non-profit organizations; Provide a Platform for Enhanced Educational Opportunities through our “Research Centers” and Website. Because college classes are generally 50 minutes long, the ideal running time to teach a film in the classroom is less than 60 minutes. In addition, many states require universities to purchase films that are closed captioned so we require all of our films to be captioned.

  • Outcast is 100% focused on educational distribution. We are a small but mighty! We only pick up 6-8 films a year and focus solely on the educational market.
  • Territory Covered: Ask for worldwide but okay with just North America.

The Video Project: The Video Project was founded in 1983 by Oscar-winning documentary filmmaker Vivienne Verdon-Roe (Women for America, For the World) and Oscar nominee Ian Thiermann (In the Nuclear Shadow: What Can the Children Tell Us). Our mission is to provide the best media programming available on critical social and global issues to classrooms and communities to help advance awareness and encourage action on the most important concerns of our times. The Video Project collection features programs for all ages from over 200 independent filmmakers, including Oscar and Emmy winners, as well as films that aired on Showtime, HBO and PBS. Our films are regularly honored with top festival awards and with critical praise from major review publications. More recently, we are focused on impact distribution, combining traditional distribution with impact campaigns. On the impact campaign side, we prepare the strategies (fee based) and implement the campaigns. The Video Project only takes on 15-18 films/year and believes in the films that we distribute. They are all cause based.

The Video Project does direct DVD sales to an email list of over 10k, and works with streaming partners Kanopy and ASP. We also do email and social media marketing to reach media buyers, faculty, and students, and phone calls to media buyers, outreach to and attendance at relevant conferences, seek published reviews, organize film festival submissions, arrange publicity through partner organizations, and do sales through sub-distributors.

  • A large percentage of The Video Project’s work is educational, and we also do direct U.S. broadcast sales and facilitate digital sales. The impact distribution is becoming a larger piece of our business.
  • Territory Covered: Primarily North America, also Worldwide thru sub-distributors.

Alexander Street: In short, we work with every key customer group on campus: librarians, faculty, students, administration, curriculum development specialists, centers for online learning, and departments of continuing education and lifelong learning.

Kanopy: We have a variety of different customers we work with:

  • We have a whole team dedicated to B2B (our college and public librarians) to ensure we continue to deliver transparent usage information, relevant content and the associated ROI.
  • Professors are a very important segment to Kanopy – they are influencers and tend to be power users on Kanopy, embedding thousands of videos into learning management systems each year for mandatory viewing.
  • Of course Higher Ed students are one of the toughest demographics to reach and engage with, so we are proud of how well the Kanopy brand resonates with this market. One of the most rewarding parts of the work we do is to have student feedback declaring how Kanopy films have changed the way they see and think about the world they are living in.
  • The public library audience is managed by a separate team at Kanopy because the users are obviously motivated to watch Kanopy for completely different reasons.

Passion River: Professors, Librarians, Community Event Organizers, & Students

Collective Eye: We work with a variety of customers that generally fall into the following categories: Media, Acquisition & Subject Librarians; Professors, Students and Campus Groups; Non-profits, Advocacy leaders; and Film series coordinators, and community members of all kinds who seek to arrange community-based screenings.

Ro*co Films: Educators, Administrators, Students, Non-profits, Corporations, Individuals, Places of Worship, Community groups, PTAs.

Outcast Films: We work with teachers, campus organizations and student groups, department chairs, administrators.

The Video Project: Educational media buyers at colleges & universities, NGOs, businesses, government agencies, pubic libraries, and other organizations.

I asked these educational distributors to explain the technology used and media:

Alexander Street: Alexander Street Press provides on-demand streams through a proprietary platform we’ve developed in-house. We support IE9+ on PCs, and Safari on Mac OS X, and any browser with Flash 8 or higher support can generally access our service. Generally we provide SD and HD video using the following encodings:

  • Adobe Flash FLV format using the On2VP6 codec (we are phasing out the use of this codec
  • H.264 Baseline Profile (for older mobile devices)
  • H.264 Main Profile level 3.1 (for all devices that support it)
  • HLS (for our mobile application and tablet devices that support it)
  • MPEG-DASH (for DRM-protected content)

Kanopy: We strive to have Kanopy available anywhere on any device. We have just launched a channel on Roku but ultimately, if you have a device with internet connection, we aren’t doing our jobs right if you can’t watch Kanopy like you watch any other streaming platform.

Passion River: DVD & Digital

Collective Eye: DVD, Blu-ray, Digital Site Licenses (Files hosted on institution servers) & Educational Streaming through Streaming Partners.

Ro*Co Films: DVDs, Blu-rays, Subscription EVOD streaming services

Outcast Films: DVDs and streaming. We use Vimeo as our streaming platform.

The Video Project: DVD and streaming as described above.

Alexander Street: Standard pricing per title is:

  • $149 for a 1-year subscription
  • $299 for a 3-year subscription
  • $499 for life-of-the-file

This is our recommended pricing. Individual providers are free to establish preferred pricing.

Kanopy: Each Kanopy film can be purchased for a one-year license for $150 or a 3 year license for $350 per institution. Once expired, it must be renewed at the same price. Over 90% of our edu customers have adopted our Patron Driven Acquisition (PDA) model whereby once a film is watched 4 times, a one-year license is automatically triggered. This is fair for the libraries who are only paying for films that are watched and for filmmakers who are rewarded by merit. Libraries can also opt to license a film upfront a la carte.

Passion River: Public Performance Rights (PPR) licensing at: $199-$399. We may lower or start the pricing at $49-$99 if no PPR is included.

Collective Eye: They vary depending on filmmaker specifications, but generally are listed as:

  • $295 – Educational DVD w/ PPR
  • $295 – Digital Site Licenses
  • $125 Non-Profit/K-12/Gov w/ PPR
  • $250 Community Screening
  • $450 Campus Screening

Ro*Co Films: $95-$580 depending on format and license term.

Outcast Films:

  • $29.99 for home video
  • $325 for DVD w/PPR (public performance rights)
  • $595 for DSL (digital site license in perpetuity

The Video Project: Generally, for features with (w/PPR)

  • Colleges (DVD with digital site license) $395
  • Colleges, Businesses, Other Institutions $295
  • K-12, Public Libraries, Community Groups $89

Alexander Street: 50/50 for single title PDA and can be case-by-case.

Kanopy: Filmmakers receive a clean 50% of each sale with no deductions and are provided with a dashboard to track their audience’s viewing behavior and associated sales.

Passion River: 50-60% depending.

Collective Eye: We generally operate on a 50% split to filmmakers with a zero expense system, meaning the filmmakers receive their percentage of revenue from all sales immediately.

Ro*Co Films: 50% split with filmmakers.

Outcast Films: 50/50 on DVD+DSL sales and rentals; 75/25 (producer/distributor) for filmmaker appearances; 50/50 on Expenses.  All major expenses will be discussed with the filmmaker. More details in attached document.

The Video Project: Just the cost of creating the DVD (Cover art, closed captions, DVD authoring).  And we will use the filmmaker’s assets as much as possible to minimize those costs. We typically offer 30% royalty to the Producer.

Revenue Analysis: Gross and Net Revenue Ranges for Films and Factors that Influence

Alexander Street: The gap between gross and net is not really significant as the vast majority of our sales are direct without distributor fees or other fees. Our best-selling titles can generate as much as $25,000 in a single year across models. With nearly 70,000 titles in our catalog, the long-tail is definitely in effect. There are a few factors that can impact revenue range, such as whether the film fills a gap in coverage or establishes an authority resource in a subject area, but the biggest impact we see is where a film is adopted into a specific course. Where films can potentially become part of a syllabus is where we are focused.

Kanopy: Our best-performing films recoup over $35K per annum (the filmmaker receives 50% of this in royalties). These tend to be mandatory viewing documentaries that also resonate with themes to a wider market. The beauty of our model is that the longer a film is licensed with Kanopy, its revenue grows over the years (tends to be an opposite trend with other edu and home video platforms). A well-produced documentary that has high awareness (a festival presence, perhaps a theatrical release) and themes that resonate with an educational audience will probably recoup on average $10-15K in year one, $15-20K in year two and grow from there. Some of our best performing films didn’t have a festival release but have been marketed well by the filmmakers or distributors, making our job much easier in terms of rolling out a promotional plan.

Passion River: In terms of “units” sold, a gross range of sales can be 100+ at PPR pricing. Net can be 1/2 of what’s collected. Influences are festival runs, reviews, buzz, value of topic to community, price point, release date, and price point exclusivity.

Collective Eye: We see a wide range in revenue, from under $5,000 in gross revenue per film to over $50,000 and beyond in gross revenue. However, because we are non-exclusive we know that on some lower-performing titles, we are only seeing a piece of the sales, because the filmmaker is selling directly to their audience. Some films that we have low numbers for, the filmmakers are very happy about, because they have a hybrid strategy that is working well for them. In other cases, with our higher grossing films, we are solely handling Educational DVD and Community Screenings Sales (and in some cases home-use sales as well). Aside from carrying more or less rights, or sharing more or less of the sales with the filmmakers’ own efforts–we find that films that have performed well across the board in the mainstream arenas, from film festivals to theatrical release and broadcast, tend to perform much better in the Educational realm. It is still true that students and professors are often the ones demanding the film be purchased by an institution, and they will hear about it through traditional marketing efforts, filmmaker or distributor-driven outreach campaigns, and grass-roots marketing efforts. Films with strong Facebook follows, active audiences, and more visible releases perform categorically better in the educational sphere as well.

Ro*Co Films: $10K-$1M. Influencing factors include release windows, exclusivity of content, availability of proprietary educational materials (like curriculum, shorter versions, discussion guides, action kits, etc.), and release of other formats (TVOD, SVOD, etc.).

Outcast Films: $30-$50K

The Video Project: Gross Range is $5k-$80k. Net would be about $1.5k to $24k. The best films have some of the following: festival award winners, first in a new genre (mindfulness in schools), strong NGO support, famous people/famous VO narrator, release coincides with cultural wave/interest.

I asked each company to note if they use Middlemen:

  • Alexander Street: No middlemen.
  • Kanopy: Part of Kanopy’s success is due to the great relationships we have fostered directly with our customers so no, we do not use middlemen.
  • Passion River: No middlemen but work with partner companies that can help us expand our reach.
  • Collective Eye: Our primary sales revenue is direct to Educational Buyers. We work with wholesalers to public libraries, as well as a few third-party distributors to Educational & K-12 Institutions. For Educational Streaming, we offer Digital Site Licenses directly and also work with an Educational Streaming Partner.
  • Ro*Co Films: No middlemen.
  • Outcast Films: We only use two: Kanopy assists us with streaming but we only release our films to them after a year of exclusivity with Outcast Films (we also offer streaming services). We use one sub-distributor who works only with public libraries. They do a lot of other work that public libraries require, like cataloging, which Outcast does not do.
  • The Video Project: Yes, we use several sub-distributors to reach most public libraries and colleges that prefer to deal with one sub-distributor.

Alexander Street: We attend nearly one hundred conferences a year exhibiting to reach librarians and faculty. We do daily email marketing to faculty and librarians to promote exceptional titles. We do extensive direct mail of catalogs and title announcement pieces. We are data-driven and use the results of these hundreds of campaigns and millions of contacts to adapt and refine our marketing strategy. Co-marketing with video content providers is in our DNA. We work with you to feature the content you know is best received by university customers based on your knowledge and your experience.

Kanopy: Kanopy attends all the key librarian conferences and has targeted email marketing to faculty, but our strongest way to reach our users is on-screen (personalized content and messaging), social as well as personalized emails. Our most successful form of onboarding is users referring the platform to each other – possibly the most important way to onboard new users.

Passion River: Library conferences, National Media Market, ALA Midwinter, ALA Annual, EDNET, & regional specialty markets.

Collective Eye: No Response Provided

Ro*Co Films: Varies by year and new release strategy.

Outcast Films: We work with all the academic conferences: ALA, Women’s Studies, SCMS, Charleston, and other subject-specific academic conferences.

The Video Project: National Media Market, various conferences.

The panelists and others comment on best practices for best results, windowing and distribution timing:

Alexander Street: The most important practice for film providers is to identify the titles with the highest likelihood of success for educational streaming. Many distributors know titles that have been requested by faculty and librarians. Second, by working closely with our marketing team to craft and deliver targeted faculty-specific marketing for email, social media and conference participation the chances of success accelerate. Maximizing total return requires a strategy of leveraging the different packaging and pricing models to leverage high price point single title sales for new content along with wide-catalog sales across the backlist in packages and collections.

  • Best performance examples: Basic Attending Skills, a counseling and therapy title, has routinely sold in excess of $20,000 a year for more than a decade across multiple editions. We have an anthropology catalog of several hundred films that generated more than $1m in revenue in a five-year span.

Kanopy: We have been trialing day and date releases with some distributors to leverage the awareness they are generating through theatrical releases and associated press. To be honest, windowing doesn’t have a big impact on Kanopy – if we have the film and the subject matter resonates with our audience, we will perform well regardless when we have it. The sooner we have it, the faster we are paying growing royalties to the rights owners!

  • Best performance examples: Some of our best performing documentary films include Killing us Softly, Miss Representation, and Race –The Power of an Illusion. These films have performed well as the universal themes they deal with around women’s issues and race are timeless. They have also had the benefit of streaming on Kanopy for many years so are well into their growth curve. The Criterion Collection is of course a top performer as it is mandatory viewing at all the film schools, and historically their DVDs have been part of nearly every university’s permanent collection. New Day Films and documentaries of that caliber also tend to perform well on Kanopy.

Passion River: Make PPR available as soon as possible. Take advantage of awareness starting from the film’s first public screening. Once the film is released “wide” (to consumers), expect higher price point sales to drop because if there are lower pricing options available ($19.99 SRP vs. $299 PPR), buyers may acquire at the lower price. So delaying a consumer release can help maximize higher-priced educational sales.

  • Best performance example: Rich Hill – 1,024 units sold

Collective Eye: It is helpful to have a strong launch in tandem or prior to Educational sales, such as a theatrical or screening tour/and multiple film festival selections/awards prior to or during the Educational Release to create initial community, audience and professor/student demand. If the film is a known entity to students and professors alike, it stands out when it is released. The more cities your film actively screens in during its educational release, the better it is for institutional sales, always. Broadcasts don’t hurt either, either before or during the release window. Because we are non-exclusive, we work with filmmakers’ existing outreach campaigns to launch educational sales on a timeline that allows the filmmakers to benefit from the arrangement all-around. In best-case scenarios we exist in the area between a theatrical launch and a home-entertainment release. Existing prior to VOD and DVD Home-Use prevents cannibalization and the possibility that professors may acquire a home-use for direct peer-to-peer teaching, and also maximizes screening sales at a time when screenings are the only way to watch the film outside of an educational institution or theatrical run. We do work with filmmakers who are just releasing their film educationally, at a time when other rights have already been released, so it is not required that we work in this window before home-entertainment release; we just find it is a stronger potential revenue when we come in at that time. In all cases, distributing films that have active campaigns and active filmmaking teams who are championing their film throughout the first year of release makes a huge difference in overall sales revenue.

  • Best performance examples: We’ve had a number of stand-out titles across many categories. A few highlights include:
    1. Watershed – Executive Produced and Narrated by Robert Redford and Directed by award-winning filmmaker Mark Decena, WATERSHED tells the story of the threats to the once-mighty Colorado River and offers solutions for the future of the American West. (Played at over 35 Film Festivals and won numerous awards).
    2. The Greenhorns, a powerful grass-roots-driven film that follows young farmers across the U.S.; Monoculture, monopoly, cheap food and poor diets– these are the consequences of an agricultural system gone awry, driven by policy and corporate control. These young farmers have vision: a prosperous, satisfying, sustainable food system. It is ambitious, it will take work, but it won’t be boring. (Very strong grass-roots following).
    3. Girls in the Band – tells the poignant, untold stories of female jazz and big band instrumentalists and their fascinating, history-making journeys from the late 30s to the present day. (Good mix of Filmmaker DIY distribution savvy and good curriculum uptake, as well as an entertaining and uplifting story that plays well for community screenings.)
    4. Broken on All Sides – Mass incarceration has emerged as America’s new caste system. How could this happen? With Philadelphia as an entry point, BROKEN ON ALL SIDES explores the intersection of race and poverty within the criminal justice system. (Strong inclusion in many departments’ curriculum.)
    5. SEED: The Untold Story – In the last century, 94% of our seed varieties have disappeared. As biotech chemical companies control the majority of our seeds, farmers, scientists, lawyers, and indigenous seed keepers fight a David and Goliath battle to defend the future of our food. (Theatrical Release, US Broadcast PBS Independent Lens, Strong grass-roots following.)
    6. Girl and a Gun – Reaching far beyond Hollywood’s hypersexualized femme fatales, the film candidly explores the modern American woman through intimate portraits encompassing issues of protection, power, feminism, and violence. (Theatrically released by First Run Features, unique content that provides a new subject to Women’s Studies curriculum.)
    7. Get the F&#% Out – Sparked by a public display of sexual harassment in 2012, GTFO pries open the video game world to explore a 20 billion dollar industry that is riddled with discrimination and misogyny. (SXSW, timely subject and unique approach that provided an important subject for Women’s Studies curriculum and taps into gaming subculture.)
    8. Starfish Throwers – Worlds apart, a five-star chef, a twelve year-old girl, and a retired schoolteacher discover how their individual efforts to feed the poor ignite a movement in the fight against hunger. This documentary tells tale of these remarkable individuals and the unexpected challenges they face. (13 Film Festival Awards, Strong and meaningful story that found demand with community screening audiences.)

Ro*Co Films: Always exclude educational distribution from any larger deal where educational rights may not be exploited. Maintain exclusive educational window for as long as possible before available elsewhere (TV, TVOD, SVOD, Home DVD, etc.).

  • Best Performance Examples: Executed successful distribution campaigns for films like Trapped, Life, Animated, Do Not Resist, Miss Representation, The Hunting Ground, Chasing Ice, A Place at the Table, Inequality For All, Girl Rising, This Changes EverythingPoverty, Inc. and The Music of Strangers. (See Orly’s previous blog that discusses revenue ranges. Ro*Co can be on the higher end and works with a select few pedigree films often from top festivals.)

Outcast Films: Ideally, we would like to begin working with the filmmakers during their initial festival run. The academic market is slow, so the sooner we can begin the process the better. We ask for a 6-month (at least one semester) hold back from streaming and home video. It really helps educational sales if the filmmakers are involved in the process and that other markets are exploited. For example: the films we distribute that also have a good festival run, limited theatrical, or a broadcast deal ALWAYS do better that films that don’t exploit those other markets.

  • Best Performance Examples: Big Men, Shored Up, She’s a Boy I Knew

The Video Project: Windowing and timing: for best results we prefer to release educational with a 6-month window before the consumer release. Better results in educational if the film is already available in time for tentpole marketing events such as a broadcast or digital premier. Best times to market are Jan-May, and Aug-Dec.

  • Best Performance Example: Room To Breathe – $80k+, first really good film on mindfulness, strong NGO support, it caught the “wave of interest” in the educational world.

Alexander Street: The consumer market for streaming video products and access models is having an outsize influence on the models institutional customers in the library are expecting. This, coupled with data-driven access models and usage analysis systems to inform cost-per-use and return-on-investment decisions, are the major forces we see at work shaping distribution and access.

Kanopy: The major shift in educational video distribution is without doubt the demand coming from the audience. It’s not ok any more to have a corporate-looking platform with no UX and videos that don’t play well. In terms of technology, we don’t see ourselves competing with library vendors any more, but with home video platforms. Our audience demands Kanopy to be as cutting-edge as, say, Netflix, which keeps us developing, innovating and upsetting the status quo in the name of bringing an even better viewing experience to our users.

Passion River: Buyers are getting smaller budgets every year for buying media, so they’re unable to acquire everything they want. Also streaming is impacting the market by offering additional options to buyers.

Collective Eye: No specifics about change in industry.

Ro*Co Films: While DVD continues to be the preferred format for much of the educational market, demand for streaming is growing year over year.

Outcast Films: Like the rest of the markets in film distribution, libraries are moving more towards streaming, although most of our business still lies in selling DVDs. With the flood of films in the educational market, it’s getting harder and harder to make noise and get noticed. Also, teachers do not have to have the PPR to show the film in their classroom which is driving down the average price. We market to both teachers at the home video price and to institutions who need the PPR.

The Video Project: Steaming is becoming more prevalent. Access to media is much easier, so films need to be of very good quality and marketed well to reach their audience.

Other educational distributors or companies that do educational distribution are: Film Sprout, Zeitgeist, Kino Lorber, First Run Features, Icarus Films, California Newsreel, Women Make Movies and Swank Digital Campus. These companies, and a few others, are listed on the ResourcePlace™ section of the Film Collaborative website: thefilmcollaborative.org/resourceplace.

March 23rd, 2017

Posted In: Digital Distribution, Distribution, education


By Mark Hiraide, who is a partner at Mitchell Silberberg & Knupp LLP. He defends directors and officers in securities litigation and counsels companies in corporate financing transactions.

The final tremor of a monumental shift in federal securities laws took place in May 2016, and when the shaking stopped, entrepreneurs had gained unprecedented access to capital. For the first time in the history of federal securities regulation in the United States, emerging businesses may raise capital from the general public without registering a securities offering with the Securities and Exchange Commission. This expansion of the funding universe is the heart and soul of the Jumpstart Our Business Startups (JOBS) Act of 2012. The JOBS Act removed restrictions making it easier for entrepreneurial clients to fund their ventures using OPM (other people’s money).

The JOBS Act legalized equity crowdfunding, fostered private peer-to-peer lending, created a new regime for regulating “mini-IPOs,” and paved the way for the SEC to create new sources of liquidity for early-stage investors through secondary “venture markets.” The law already has spawned new and innovative financial intermediaries dispensing capital to startup and growing businesses. It has been heralded as “democratizing” access to capital by “disintermediating” Wall Street from the process of selling securities. Many hail the JOBS Act, in particular its provisions for equity crowdfunding, as allowing everyday people to invest in an asset class previously reserved for venture capitalists—crowds of small investors now may directly fund startup businesses that pique their interest. Yet others are skeptical. There is concern that the new regime for raising capital from unsophisticated investors lacks sufficient investor protections.

Prior to the JOBS Act, companies could not publicly solicit any investor unless they registered and subjected the offering to scrutiny by the SEC and/or state securities regulators. The JOBS Act’s elimination of the regulatory burdens on private offerings, and the associated reduction in cost, will make public capital markets attractive to many. No longer will early-stage financing be reserved for those few with the resources to attract and engage Wall Street investment bankers and lawyers. This “uberization” of capital markets will make capital more readily accessible to every budding entrepreneur.

The strict federal securities laws that regulate raising investment capital—well-intentioned in the aftermath of The Stock Market Crash of 1929 and the Great Depression—made the ambition of successfully raising capital for startups unattainable for most people. It relegated entrepreneurs to raising seed capital from friends and family and others with whom the entrepreneur had the requisite relationship.

The term “crowdfunding” generally describes campaigns that accept relatively small amounts of money from large numbers of people. Modern crowdfunding started with campaigns soliciting donations for social causes or new business ventures; in exchange for a donation, individuals typically received a token of appreciation for their donation, a t-shirt, a first opportunity to purchase a product, or a movie-production credit. A stark example of the difference between non-equity and equity crowdfunding is illustrated by the crowdfunding campaign of virtual-reality pioneer Oculus VR. Many of the 9,522 people who contributed to Oculus’s non-equity crowdfunding campaign on Kickstarter may have been surprised to learn that they would not share in Oculus’ gains two years later when Facebook announced in March 2014 that it was acquiring Oculus for $2 billion.

Promulgated under Title III of the JOBS Act is the new Regulation CF, commonly known as the “equity crowdfunding” exemption. Effective last May 26, this regulation enables entrepreneurs to raise up to $1 million during any 12-month period from anyone who wants to invest, subject to certain dollar limits on the amount of the individual investment. There is no requirement that the investor be accredited or sophisticated. If the investor’s net worth or income is below $100,000, he or she is subject to an investment cap of the greater of $2,000 or 5 percent of the lesser of the investor’s annual income or net worth. If both net worth and annual income are at least $100,000, the investment cap is 10 percent of the lesser of the investor’s annual income or net worth, not to exceed an amount sold of $100,000. These caps reflect the aggregate amount an investor may invest in all offerings under Regulation CF in a 12-month period across all issuers.

An offering statement is required, which must include general information about the issuer, officers and directors and significant shareholders, the intended use of proceeds, the company’s ownership and capital structure and financial statements for the two most recently completed fiscal years. If the offering amount is greater than $100,000 but less than $500,000, the financial statements must be reviewed by an independent accountant. If the offering amount is greater than $500,000, the financial statements must be audited, unless the company is conducting its first Regulation CF offering, in which case the financial statements need only be reviewed. For offerings less than $100,000, the financial statements need only be certified by the issuer’s principal officer. The offering statement must be filed with the SEC, but it is not reviewed by the agency. Once the offering statement is filed with the SEC, the offering may immediately commence and the company may accept investor subscriptions. The issuer is required to set forth a minimum or target offering amount, and proceeds must be deposited in a third-party escrow account until the minimum is reached.

A significant limitation under Regulation CF is that all offerings must be conducted through a single Internet portal, which must either be registered with the SEC as a broker-dealer or as a new form of regulated entity, a “financing portal.” There are limits to advertising an offering and, given the potential liabilities, consultation with good legal counsel is a must.
In theory, Regulation CF enables anyone to reach out to capital sources and raise seed levels of money. No doubt, without the benefit of professional financial intermediaries, such as investment bankers, entrepreneurs on their own will face challenges raising capital. What the JOBS Act offers, however, is a pathway for companies to access capital previously available only to the most privileged few. Fasten your seatbelts, it’s going to be a bumpy night.

February 2nd, 2017

Posted In: crowdfunding, Legal, Uncategorized


We are gearing up for a big article on DIY Digital Distribution, which will be posted very soon. In the meantime, we liked this No Film School case study article on DIY DVD Distribution so much that we had to link to it on our blog as well as SM. Enjoy!

August 17th, 2016

Posted In: case studies, Distribution, DIY

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