In May 2006, UK screenwriter Matt Hanson soft-launched his A Swarm Of Angels project, the first step in creating a $2m (£1m) feature film that will be conceived, developed, funded, produced and ultimately distributed via the internet.

The project is touted as the first truly "open-source" feature film - involving movie fans rather than the studio system in funding and producing a full-length feature. It will then be distributed free online to a million targeted users.

As author of the book The End Of Celluloid: Film Futures In The Digital Age and founder of the onedotzero digital short-film festival, Hanson has long believed the film industry needs to evolve if it is to survive.

"Making a debut feature film in a traditional way felt like a missed opportunity," explains Hanson. "Rather than banging on all the usual doors, I thought, 'Here's an opportunity to put the ideas from my book into practice.'"

The A Swarm Of Angels project has 50,000 web-based subscribers involved in every aspect of the production. A $50 (£25) fee entitles each subscriber to have input on everything from the colour of the website logo to how profits will be spent.

When the film goes into production - as early as the end of the year - Hanson will direct and the crew will be sourced through 'The Swarm', as the subscriber base is known. They are hoping to include recognisable names in the cast.

The projects under consideration are The Unfold, about a man battling secretive forces as he uncovers family secrets; and Glitch, about a video-game artist, a voyeuristic cable installer and a neglected housewife.

"It's not about competing with the Hollywood studio system," says Hanson. "The people who subscribe are my audience - we're a self-selecting production community. A Swarm Of Angels is about creating the missing link between traditional film and user-generated content."

Hanson notes that this unique $1.97m production will be equivalent to a $4m-$6m feature financed with traditional resources.

Members will receive the DVD and free downloads will be available to a million members of the public; theatrical and broadcast rights are also available, for a release in the second half of 2008.

Hanson says: "For a film lover, it's a very appealing choice to be a subscriber and participant in this type of community. It gives you the chance to be at the forefront of a new movement."