September 7, 2010

Is Phased Distribution the Future of Self Distribution?

Last week I wrote about bestselling author Seth Godin's switch to self-publishing and what it could mean for filmmakers. Scott Macaulay at Filmmaker Magazine linked to the post in his invaluable Instapaper Sunday Morning Links, along with a pro-publisher argument written cogently at TechCrunch by author Paul Carr (whose book Bringing Nothing to the Party: True Confessions of a New Media Whore has been in my queue for a while). The slug of Carr's post -- "Self Publish and Be Damned" -- makes his views pretty clear, but upon further reflection I think both Carr and I are oversimplifying the argument and missing out on a viable distribution strategy for the published and unpublished alike.

The Pro-Publisher Argument

First of all, to address Carr's pro-publisher arguments, I completely discount this point:

Authors of professionally published books instantly have more credibility when it comes to securing lucrative speaking engagements, journalism gigs and a whole host of other money-spinners for which knowledgable talking heads command top dollar. Compare the number of professionally published authors you see opining in print and on television (or on stage) with the number of ebook-only authors you find in the same locations. Exactly.

We're talking about the future of publishing here, not the present. People always point their fingers at current numbers to rebut a nascent trend (he does this again by pointing out how small the eBook market is... currently). This would be like pointing out in 1997 that most people still use regular mail, and therefore paper mail is where it's at and e-mail isn't the answer. Nowadays I can't stand getting paper mail; in fact, I send most of mine to an address in Michigan where I have it scanned and e-mailed to me (more on this soon)! Besides, eBook sales recently surpassed hardcover sales on Amazon. Nuff said about that.

Carr also brings up the value of publishers, but no one in the self-publishing movement is denying that publishers bring value to the table:

Publishers provide a whole host of services including: “editorial input; marketing and publicity expertise; first-class sales contacts and proper remuneration”. They also take care of tricky legal matters: “Protecting copyright and ensuring authors are properly paid is a key function of every publisher: publishers have created and manage anti-piracy schemes and contractual rights for e-books, often taking legal action where an author’s copyright is breached.”

Yes, these are valuable services. But look at the numbers that I shared via author Tim Ferris -- authors keep just 7-15% of the cover price of a book sold through a publisher. Are the above services so valuable that they should make up 90 cents on the dollar? Hell no. That's the argument for self-publishing: it's not that publishers are worthless, it's that they take an unjustifiably large slice of the pie. In fact, you can't call 90% a slice -- publishers and retail chains take home the whole damn pie and leave the author with a doggie bag. ((I include "retail chains" in this statement because that 7-15% number is based on the cover price -- the store itself takes a sizable part of this 90% slice as well.)) So when an author declares they're dropping their publisher (and physical shelf space) in favor of eBooks, they're essentially making the calculation that their loss in number of sales will be more than made up by their increase in take-home revenue from each sale.

Self-Publishing and Musicians

To put this in perspective, I've taken a look at revenue statistics for musicians in the past; let's revisit these stats from the perspective of self-selling versus going through a publisher/label:

The statistics show, if you're a musician, to make a barely livable wage, every month you need to do one of the following (I've indicated in parenthesis if this is independently or under contract to a record label):

  • Sell 150 CDs yourself (no label)
  • Sell 1,200 albums through iTunes (label)
  • Sell 1,500 tracks through CDbaby (no label)
  • Sell 12,000 tracks through Amazon MP3 (label)
  • Stream 850,000 tracks through Rhapsody (label)
  • Stream 1.5 million tracks through last.fm (label)

What do you think is a more attainable goal, finding a way to sell 150 CDs by yourself, or hoping your tracks are played 850,000 times on Rhapsody? In terms of money in your pocket, those two are the same. Except I'd be willing to bet that the money from selling CDs directly finds its way to your pocket much faster than waiting for Rhapsody to pay your label and then waiting for your label to cut you a check. As the person who designed Rhapsody's music player -- yes, it may seem strange, but this independent filmmaker designed a music player currently used millions of times a day (you can find it in my little-known design portfolio) -- I'd put my money on selling 150 CDs by yourself. If you're interested in further reading on what it's like to await digital royalty checks from a record label, here's a treatise by my former boss Tim Quirk.

Toward a Hybrid, Phased Approach

Back to the topic of self-publishing books. Carr makes a valuable point, that despite the splash Godin made by announcing his switch, Godin has already self-published previously -- but his self-published book ended up being published traditionally via Hyperion later. As I mentioned this weekend, Radiohead did the same thing with In Rainbows -- self-publishing first, and then later distributing via Warner. I wonder if this hybrid strategy will be more common going forward, offering the best of both worlds. In the film world, Tze Chun and Mynette Louie first self-distributed Children of Invention, but now the film is available through more traditional avenues like Amazon (though IndieBlitz isn't a great example of a "traditional" publisher, given they exist because of the skewed revenue splits of larger publishers). Nevertheless, I wonder if the future of self-publishing -- for films, books, games, or anything -- looks like this:

  1. Build up your niche audience online
  2. Self-publish and sell directly to the audience you already own
  3. If successful, get a publisher/label/distributor on board
  4. Begin a second phase, wherein you publish more widely

This hybrid publishing model -- a phased approach -- would seem to offer the best of both worlds, because of the following factors:

  1. You own your audience - they are your followers online, and you can take them from project to project. This isn't always the case if you're relying on a publisher to find your audience and market your product.
  2. You don't have to deal with gatekeepers until you already have social proof, due to the fact that you've already built an audience (and have sales figures to share). Pitching a project that doesn't exist yet is a bitch, but if you have something that's already successful, it will sell itself.
  3. You derive the maximum share of profits until you exhaust your reach, and then trade in for a smaller slice of the pie in order to reach a larger market.

Maybe this isn't anything new, but this hybrid, phased approach is going to be the strategy I'm planning on taking with my forthcoming feature. The strategy is to make it cheaply via DIY methods, see if it catches on with your own audience (which I'm of course using this site to build, and if you're reading this I count you as a valuable audience member!), and see how far you can take it under your own power. It's in your best interest to make the self-distribution phase as successful as possible, knowing that your revenue share will be largest in this first rollout. If all goes well, you'll be able to take it wider after that. This way you retain the creative control and the direct connection to your audience through the nascent stages of distribution, but still expand to new social circles and grow your audience with outside help. This also allows you to retain control over when your film is first available, instead of touring the festival circuit and then waiting a year or two or three for it to actually reach theaters (and for you to see remuneration from that rollout).

One question in my mind is whether publishers and distributors will be keen on taking on a project that's already been available through other channels. But in the same way that Hollywood only makes remakes and adaptations these days, the phased approach could be good for them as well, because they'll be mitigating risk.

So it's not an either/or argument. It's one and then the other.

[Lunar phase photo by Dazzie D]

Your Comment

9 Comments

sounds well, but I'd phrase it as follows:
"self-distribute; if you're successful, other options will manage to reach you; if any of those is good, then take it"

September 7, 2010 at 3:29PM, Edited September 4, 10:54AM

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The self-distribution method - the phase method as described above - is extremely exciting for those of us who want to have the rights to our films, and also make sure that people see them while we hopefully can make enough money to produce the next project.

Since it takes so much time and effort to completely self-distribute, obviously there's a huge place for small start-ups than can take care of some of the logistical issues and still give you a large piece of the pie - the best of both worlds for everyone and for those who don't have the time or resources to distribute themselves.

The thing that worries me, however, is when studios and the like finally realize how much money can be made from niche audiences and films directed at a small number of people - with little risk - are all of these start-up companies going to be swallowed up by large corporations like Amazon? For example, if Amazon thought they could create a business model that suited them from a company like Kickstarter, what will stop them from buying out Kickstarter for a large sum and then taking a larger percent of the profits?

I think unfortunately time and time again you see a lot of little companies with great ideas get bought out and then become less creative and more mainstream, hurting everyone in the process. Self-distribution and promotion would hopefully avoid the whole system altogether (like what you're doing with this site).

September 7, 2010 at 5:12PM, Edited September 4, 10:54AM

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Joe

@Joe

I don't share your worries: if big companies buy the smaller ones and turn them into a new vehicle that is not what the creative indies want, other small outfits will appear that are willing to offer what those customers want (and probably they'll be in the hands of the same people who created the first batch, or close to that)

what I would worry about is that those big companies could use their power to shut down the channels for the second batch of smaller outfits; it wouldn't be much worse than it is today, but it means there's a risk that the indie industry can find itself back at square one after a few years of building new paths

September 7, 2010 at 6:23PM, Edited September 4, 10:54AM

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> Ya you said it better than me. I guess that's more the point that I was trying to get at, that we could do all of this hard work and end up nowhere in 5 years all over again. Big companies can throw money at these problems while independent filmmakers cannot.

September 7, 2010 at 6:51PM, Edited September 4, 10:54AM

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Joe

Yes, I have just such a startup in mind, but it couldn't premiere until my feature film premieres, so it's a ways off. Of course, most startups would love to be acquired by Google/Amazon/Yahoo etc. The question with acquisition is whether the culture stays the same -- not just the percentage taken off the top. I think the key with building a startup in the distribution space will be to create something that brings more to the table than simply "you keep a high percentage of your sales!" because that's just a race to the bottom. And if you're able to bring value to the table, who's to say that you couldn't do the same under Amazon's wing?

(I'm just preparing for the day when NoFilmSchool gets bought out by, I dunno, NYU Film School or something).

September 8, 2010 at 2:10AM, Edited September 4, 10:54AM

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Ryan Koo
Founder
Writer/Director

> That's actually a really interesting prospect. Film schools being involved with distribution. I don't know quite how that would work - and even if you didn't specifically mean film schools - but imagine how the film school culture would change if you could go to film school and the school would actually teach - from the ground up - making a film and distribution - and then they could actually distribute it - or at least they'd have structures in place to help you distribute it and find your audience.

That would be much more valuable in this new media world.

But you're right, it's not impossible that you couldn't operate more or less as usual under a larger corporation. If your user base would actually revolt if they felt like they were being used by a big corporation, I think that large company would be as careful as possible in how they made their presence known - more or less letting you do what you'd been doing.

September 8, 2010 at 3:23AM, Edited September 4, 10:54AM

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Joe

> Joe, I am actually attending a film school that does just that. DePaul University has a program called Blue Light that is a vehicle for students to learn on the set of a movie produced by the faculty (or a student, after approved), that then has the goal for distribution. AND they give you full rights to your movies. Its a great, progressive approach to film school

September 9, 2010 at 4:09PM, Edited September 4, 10:54AM

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Jeff

of course even if these acquisitions may be bad for the community as a whole, they usually are great for the owners of the small company that gets bought

I've had a couple of projects (unrelated to film) were the plan was: build this, market it just enough to get bought for a very big load of money, move to something else (needless to say, none worked, but that's just my fault, it has worked for others)

September 8, 2010 at 3:21AM, Edited September 4, 10:54AM

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There are a bunch of movie agents out there who could help. If you are looking to self-distribute worldwide & self-distribution I would reccommend filmbay.com

On amazon, there is also createspace, but I don't know more about it.

April 27, 2013 at 1:51PM, Edited September 4, 11:21AM

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Martha