If the new technical opportunities are now clear, how to make money out of them is anything but. The term 'business model' has been haunting the film industry for some years. It has been a given in any conference presentation and a must at market and festival discussions.

It's not difficult to see why. For all the recognition of the struggles of existing industry economics, convincing alternatives are thin on the ground.

As the writers' strike in the US demonstrated, it is difficult to agree on a fair share of the digital spoils when it is so unclear what those spoils might turn out to be.

Recent film markets have seen the conundrum demonstrated in projects left on the table because agreements could not be reached on digital assets.

Trying to shoehorn the current balance of power between producers/ sales agents/ distributors and exhibitors into a digital age is all but impossible.

Yet many in the film industry are understandably reluctant to let go of the old rules while this nascent and unpredictably evolving market provides alternatives that offer uncertain returns and serious control issues.

Nowhere is this more obvious than in the area of online distribution. But that may be changing - whether the film industry likes it or not.


The idea of a digital dividend has been exciting interest for years. A greater number of platforms will bring new routes to audiences, goes the argument, and that must mean an opportunity to make money, or at least replace some of that lost from declining revenues elsewhere.

As yet, however, it is the disruption to existing platforms that are most exercising minds.

Television money has been falling dramatically in recent years and competition from new digital platforms will only accentuate the marginalisation of film on schedules.

It is likely that television will demand all digital rights from a content owner which can lead only to two scenarios: a refusal to sign a big deal or a big reduction in what television is prepared to pay.

The potential for premium-rate VOD screening of a film - the equivalent of television's pay-per-view - is limited by the theatrical exhibitors' insistence on a three-month release window between cinema screening and home entertainment and by piracy.

Day-and-date theatre and home release - at top prices - is so far a non-starter.

And of course in the short term, online business will not be allowed to jeapardise DVD sales, which remain the primary driver of revenues.

In other words, any business model that would seriously benefit the digital rights holder will have to compete with a powerful set of vested interests.

It is difficult to conceive of a means to reconcile the existing business with new models at present.

The market needs to mature considerably before the revenues generated ate sufficient to tempt many to voluntarily change the entire way they work.

The timing may, of course, not be in the power of the industry but driven, as with music, by demanding customers.


A demand-driven world is naturally exciting interest in those who believe they can cut out the middlemen and go straight to the customer.

It is one of those internet promises that often comes crashing into the day-to-day world of business.

The theoretically infinite potential customer base for a product online often proves more of a problem than an opportunity: any individual film is going to be a drop in a vast ocean of web traffic. A Google search for self distribution film already brings up 3.9 million pages.

Building a customer base for a film requires a huge degree of web savviness and a great deal of effort.

There is, however, a growing number of new platforms that already offer the ability to self-publish content, sharing profits with the online distribution platform. YouTube and Amazon Unbox in the US are two prime examples.


Often in hearing case studies of film projects that have succeeded in garnering public attention, one is struck by the amount of effort and dedication needed to reach what would be fairly modest results in the old world.

But that's not the point. There is an assumption that new film-makers now picking up cameras or expressing themselves through filmed media want to enter the business as it is and hence all their online work has to be seen as a calling card.

That is increasingly often not the case. In fact active rejection of film as a career can be a motivating factor among particularly young film-makers.

They want to create the new world film industry in their own image.

This is punk cinema in its truest sense and the primary goal beyond film-making itself is not giving away creative control.

No one should ignore the idea that while the industry tries to work out how to tame digital distribution, new film-makers in particular will simply drive ahead making the digital world in their own image.

There is often a political edge to the film-makers, who are particularly attracted to the arguments that come with the open source movement.

This posits the idea that what business tries to do is put a lid on creative expression and tries to commercialise the free country of the web.

For many of them, copyright is the enemy and conventional business models a mean of forcing an anachronistic elitism on a democratised digital world.

Writing them off would be a dangerous mistake, and a waste; this is after all the first time in history when the cost of film-making is low enough to create genuinely underground cinema.


A number of these film-makers have been experimenting with direct approaches to their potential audience to maximise reach and increasingly financial returns.

There are now plenty of examples of new approaches from innovators.
There is even something of a community of pioneers. communicatinn.g through social networking.

Whether any will produce a model that is replicable is open to question - not least because most are operating in virgin territory for business where novelty value may drive interest that would not scale to a mass market.

Here are a few interesting examples:

» Four-Eyed Monsters (Arin Crumley and Susan Brice)
Crumley and Brice have exploited the virtues of building a loyal and interactive fanbase to create a following for a film they financed on personal credit cards. Intriguingly, with a fanbase behind them, the film-makers were able to convince a few US exhibitors to give them limited release

» Outfoxed (Robert Greenwald)
Greenwald came to public attention in 2004 with a film that was highly critical of the news agenda of network channel Fox News. He believed that getting a film about th Rupert Murdoch-owned channel to a wide audience would be all but impossible through conventional routes. His solution was to exploit the viral reach of the web and to draw directly on support from customers. Having built up online word of mouth, he sent the film to 'house parties' where screenings could be accompanied by discussions and enjoyed some success with DVD sales through Amazon. He has since built on that success with further successful documentaries.

» A Swarm Of Angels (Matt Hanson)
Hanson is a UK pioneer currently attempting to fund a film by creating a network (swarm) of small investors, each paying a small fee. Each supporter has at least the opportunity to comment and influence the direction of the project. Marrying democratisation and finance is a model which is interesting many film-makers - not least because it builds a substantial audience for the product when finished.

» Head Trauma (Lance Weiler)
Weiler is an innovator who has taken online marketing to a new level - to the considerable interest of the mainstream. His route from low-budget new media idea to a Warner Bros VOD release is an object lesson in DIY cinema.

These are just a small number of ideas that have made at least a small splash.

What they point to is not a future that the existing business can, or would necessarily want to embrace.

But it's clear evidence of a net-native generation attempting to rewrite the rules.


For the experimental film-makers mentioned above, straight-to-download will not be the equivalent of the straight-to-DVD market - often seen as the resting place of sub-standard product.

They see the web as a valid medium for artistic expression in its own right.

More mainstream companies have been trying out the idea of the web as a legitimate place of entertainment.

The UK's legendary Hammer Films announced in December 2007 that it was making its first film in 30 years to be released on MySpace as a series of episodes. Beyond The Rave is to be produced with nternet content pioneers Ben Grass and Tom Grass from Pure Grass Films (When Evil Calls).

Marrying the viral appeal of the net with to build a bnase before transferring to theatre, DVD or other media may tap into a general entertainment trend.

The live element of much entertainment has recently seen a renaissance which has changed the thinking about the dynamics of business.

Pop artists, such as Prince, for example, have been experimentign with giving away albums in order to promote more profitable live gigs.

For many new film-makers, online film may not need such symbiotic business relationships because it will establish its own vocabulary and style, suitable for the medium.

Perhaps a better analogy than online becoming the new DVD is that it will mirror video gaming, where there may be films of the games and games of films but each has its own distinctive place where neither is superior.

The current experiments in form are focused on the optimum length of an online film and on interactivity.Nikolay Moustakov and Liz Rosenthal's Marsipan.co.uk offers an interesting example.


Those looking to make money from this new media have in recent times been looking at ad-supported free models as opposed to subscription or pay-per-view models.

The idea of funding free content through advertising obviously apes the model of commercial television but more importantly it does not go against the general consumer resistance to paying online.

Advertising is now a well established part of the medium - the first ad was sold in 1993 - and the business is now worth $41.6bn.

But online advertising has in recent times met a degree of customer resistance.

There are now live experiments testing consumer response. In the UK,BT Vision is offering free movie rentals through its BT Vision download service, supported by unskippable adverts inserted at certain points during the film.

The trial is a collaboration with Hiro Media, a 2004 startup which has developed the underlying software for the project. The company has previously conducted trials with NBC and Israeli TV station, Reshet.

Sponsorsip of content is another interesting area where a film can be downloaded for free though again there are few examples that have made much impact.

Music again provides an even more experimental model that has made it into the mainstream. One of the UK's biggest bands Radiohead grabbed the headlines in 2007 by offering their album In Rainbows online and asking downloaders to pay what they thought was a reasonable price.

The idea has to be seen in context. context: it was both a one-off publicity drive but also a sign of how much the money in music has turned to live performances for major band.

Games companies are now involved in the same discussions. Video game giant Electronic Arts IEA) has tried out a bold new business model, giving away free online access to its popular FIFA soccer game in South Korea - where piracy was wrecking its business - but charging customers for all sorts of so-called 'micro-transactions' for added accessories.

These tiny exchanges brought the company $24m in revenues in 2007, almost twice what it earned in its peak year of retail sales in 2002.

There have been a small number of film-makers trying the same trick. A UK film-making team at Molehill Productions in 2007 made a feature film available as a pay-what-you-like offering online.

But the question of what's in it for the film-maker is complicated. Right now, the benefits will mainly be only in profile.


But increasingly, the idea of holding on to digital rights and looking to share in the success of its exploitation is taking hold.

Some of the bigger online brands have been trying the idea of turning web hits into payments. Amazon Unbox in the US has been working with the idea.

The internet has given a new dimension to revenue-sharing models and, although the ideas are still in their infancy, they at least provide the basis for a coherent strategy,

The potential to directly share in success in real time is one of the attractions to small businesses, particularly when the alternatives means giving away so much.

The most exciting possibilities come in the form of a cost-per-click ir cost-per-transaction - ie the meter begins running whenever someone actually views a product.

YouTube in 2008 is about to turn the idea into a mass phenomenon with its decision in January 2008 to pay a small sum to the posters of popular content.


In all these cases, the question is how the content owner will divide his or her rights.

This proliferation of platforms is so far not showing signs of pushing up prices at markets - in fact a currently disrupted market with little or idea about the value of online properties is pushing down prices.

It may be, as Tim Johnson, of lawyer SJ Berwin argues, that for the mainstream business we are at the point where there is no such thing as a digital right as a discrete entiry; ie it is just another right alongside any other form of home entertainment.

Every attempt to seek to deal with digital rights as a separate thing in itself with its own specific rules has been met with resistance. In fact, deals have been left on the table when rights holders try to hive off their digital rights.

Witholding digital rights is not an attractive option before there are convincing arguments for alternative sources of revenue.