September 30, 2019

How a Distribution Company Died and Fucked Filmmakers Over

The tale of once-popular aggregator Distribber’s demise is complex, ironic, and Filmmakers should be taking note.

As we covered last week, Distribber has closed down its offices. Filmmakers have not been able to get ahold of or get money from the business for months.

The unfolding story of why Distribber went down is one of twists and turns, with backroom deals and courtroom brawls. But it does not *appear* to be a nefarious scheme to defray filmmakers of their funds. Ironically, the reason that Distribber is going under may be tied to a business relationship that it sought to eliminate for filmmakers: Eternal revenue share.

Filmmakers, take a deep breath. Understanding what happened here and how we as artists need to adapt, might help us.

Background: Indie Filmmakers & the Rise of Pay-to-Play Platforms

Over the last ten years of indie film landscape, filmmakers have bought in heavily to platforms promising to free us of old distribution models, make us money, and “get our films out there.” Need film funds? Pay a percentage of what you raise to have a fundraising platform host a page for your film. (IndieGoGo, Kickstarter). You get the funds as long as you bring in all the donations yourself.

Need a theatrical run? Pay a fee or percentage to a theatrical platform to host a page where people can request a screening. (Tugg, Gathr.) You screen as long as you get all the tickets sold yourself.

Need online distribution? Pay a percentage of your revenue to a streaming platform and they will put you on there. (iTunes, Google Play) You money as long as you direct fans to your film.

Need to get past the gatekeepers to get to iTunes, Google Play? Pay another percentage to get on these platforms through a distributor, or more recently, an aggregator. Distribber falls loosely into the platform of aggregator, but their model (like Quiver, Bitmax) makes one crucial difference: no revenue share. Instead, a flat fee.

Note: like many of you, as an independent filmmaker, I’ve used all of these platforms. (I had never worked with Distribber, but do use Quiver). I’m not here to demonize or exalt any of them. Sometimes they help some of us, sometimes they don’t. The point of this article is to explore where we are as filmmakers, using Distribber as a case study in the the changing distribution landscape.

The Whistleblower: How we found out Distribber was going down

Filmmakers had been quietly and independently dealing with a distant Distribber all year. But it seems that no one quite knew what to make of the delays in content and payment -- until Alex Ferrari of Indie Film Hustle broke the news that Distribber had enlisted a bankruptcy firm.

Ferrari had been using Distribber since 2017 to release his feature film, This Is Meg. He had a close relationship with many key players of the company (now gone) and had promoted Distribber heavily to the Indie Film Hustle audience because he felt they had done well by him and others. But as he explained to No Film School, he began to suspect something was up when the process of working with them slowed to a crawl.

“I engaged them to release a few films for some clients and it was taking a long time to get responses. The process should take no longer than 60 days to put a film on a platform, but we were over four months. I reached out again and finally received an email from Michael Sorenson (head of business affairs at Distribber) telling me that they couldn’t guarantee if -- or when -- they would be able to place my films on the platforms I paid for. Regarding refunds, he pointed me to the bankruptcy firm Glass Ratner. After this, I blew the whistle and went public with the story.”

Alex Ferrari of Indie Film Hustle was once a champion of Distribber. Now, he's telling everyone to get the hell out. Credit: Indie Film Hustle

A look back at the history of Distribber: Where did it go wrong?

The fall of Distribber is still shrouded in mystery, but growing evidence points to a diminishing profit margin and the unfortunate condition of a forced revenue-sharing agreement with which Distribber became entangled in the middle of its life as a business.

2009: Distribber emerges from IndieGoGo euphoria

Distribber was founded in 2009, by a former principal at Indiegogo, Adam Chapnick. Indiegogo was relatively new on the market, having launched only a year earlier in 2008, with a mere 3,000 campaigns under its belt. (Today, it has over 200,000.) Indiegogo business model was formed on the charging filmmakers a fee for using their platform to conduct crowdfunding.

The Distribber model, charging a flat fee to get filmmakers on platforms like iTunes, seems like a natural progression for Chapnick, a tech entrepreneur.

Ted Hope's Hope for Film blog hosted a guest post from Chapnick the following year, where he explains that the point of Distribber was to charge filmmakers a flat fee (then $1295) instead of a percentage of profits, as well as offer a user-friendly interface where they could transparently monitor what profits their films were making across different platforms at any given time. From Chapnick:

Distribber was conceived as a solution to several persistent complaints from filmmakers and other creative rights holders about distributors in general and aggregators in particular.

Complaint #1.  Eternal revenue-share for finite service

Complaint #2.  Large deducted expenses, often including fees for marketing services that seemed unhelpful or nonexistent

Complaint #3.  Late payments, and sometimes no payment

Sidebar: The difference between the two types of aggregators

What’s an aggregator again? We’ve discussed here before, filmmakers use an aggregator to get on platforms that otherwise do not deal with individual filmmakers. It’s becoming harder to differentiate some distributors from just plain aggregators. Self-distribution expert Jon Reiss recently covered this in the wake of the Distribber story:

An aggregator for hire is one that you pay a flat fee and in exchange, they will shepherd your film through the encoding process on TVOD and AVOD…well as sometimes pitch your film to SVOD.  Beyond putting your films on platforms, they don’t promote your film.  That is up to you. You keep 100% or nearly 100% of all revenue that the aggregator receives from those platforms from the sale/rental of your film. 

An aggregator for percentage will generally (although not always) front the encoding costs (but they generally always take these expenses off the back end).   They will promote your film to all the platforms they have relationships with including not only broadband but also cable VOD.   However, they also take a percentage of the gross return from those platforms.

Why would you bother giving a percentage instead of a flat fee?

Well, as Reiss describes, the aggregator for percentage will often do “merchandising” which is when they try to get your film prominence on a platform (like iTunes) so people will notice it amongst all the other new releases.

2010: Indiegogo buys Distribber, then slowly diversifies beyond filmmakers

Not long after founding, Distribber is acquired by Indiegogo. Of course, today Distribber is shuttering and Indiegogo is doing fine. Better than fine, actually. The difference between Indiegogo and Distribber? Distribber exists only for filmmakers. IndieGoGo long ago moved onto to a fertile field of campaigns beyond independent filmmakers.

According to a 2018 interview with Fast Company, Indiegogo just passed the $1.5 billion dollar mark in funds raised. Their trick? Focus on business, not just artists, from smallish to mega-sized Procter & Gamble and Sony. Chinese companies now account for 23 percent of their campaign business. Independent filmmakers are now a small part of the Indiegogo platform. Chapnick is focused on other startups, running something called Security Token Academy.

2012: A dark cloud starts brewing between companies with the word “GoDigital”

Nick Soares has been in charge of Distribber since 2014, and he is presumably the last CEO the company will have. To understand this, we need to investigate how the mysterious acrimony between GoDigital Media Group (Jason Petersen et all) and GoDigital Inc. (Nick Soares) begins. We're still not entirely sure what to make of it all, but will break it down as best as we can. 

Sometime in 2012, a pre-existing company GoDigital MediaGroup licensed the use of the name GoDigital in exchange for a cut of the new venture. This resulted in Nick Soares to formed GoDigital, Inc., on Aug. 1, 2012, with a focus of film distribution. The original GoDigital Media Group was started by Jason Peterson, Logan Mulvey, and Dave Lindsay in 2005, as a music distribution service. In 2008, the company reorganized with Mulvey as president to focus on moving from dying CD/DVD to instead “go digital.”

The strange relationship between GDMG and GoDigital Inc. (soon to own Distribber) is almost certainly what lead to this demise. There is still so much confusion about which company owns what, that GoDigital Media Group recently added this button to their homepage:

Followed by this announcement when you click on it.

Distribber would be in a de facto arrangement of an eternal revenue share for a finite service, exactly what the company was trying to eliminate for filmmakers.

We’re not sure of the agreements that happened in 2012. However, Christina Jo'Leigh, a lawyer and producer at Cinematic Artistry shared this on the Protect Yourself from Distribber Facebook group:

“GoDigital Media Group (Jason Peterson) owns a trademark for its name issued May 2012. Through GDMG, Jason collaborated on a venture and licensed the use of the name GoDigital in exchange for 35% of the new venture. Thus, GDMG became a shareholder of GoDigital, Inc., formed Aug. 1, 2012. By March 2017, things went sour. On 10/25/2017, GDMG filed a lawsuit against GoDigital, Inc. in U.S. District Court for the Central District of California claiming Trademark Infringement, on the basis that GoDigital, Inc. had improperly diluted its shares to less than 10% yet was continuing to use the mark in breach of their agreement. GDMG demanded treble damages incurred and/or profits earned by GoDigital, Inc., whichever was greater; or statutory damages of up to $2 million per counterfeit mark used by GoDigital, Inc.”

If Soares’ GoDigital was indeed required to pay 35 percent of their revenue to GDMG, then Distribber would be in a de facto arrangement of an eternal revenue share for a finite service, exactly what the company was trying to eliminate for filmmakers.

Fast forward to 2018, and Nick Soares sues Peterson, Mulvey, and the GDMG for fraud. How come? In this filing of Case no.: BC702402 listed on Trellis, Soares' representation outlines what he witnessed:

  • GDMG relinquished control of Soares’ GoDigital predecessor to a group of investors
  • Peterson and Mulvey devised a scheme “whereby money would be siphoned” from GoDigital back to them through their other company Contentbridge
  • Mulvey became CEO of the new GoDigital, ensuring this money, $14,900 a month for three years, would make it to Contentbridge
  • The services provided by Contentbridge would only be worth $5000
  • Contentbridge eventually stopped providing these services
  • Soares finds all this out in a secret email

Here is part of the case:

Before we go any further, it is impossible to know who the “good guys” and “bad guys” are in this. Maybe there are none? It’s not a three-act drama after all. (If it were, we would have come up with a more clear inciting incident.) As filmmakers, it is important to should look at Distribber under Soares' tenure. Partnering with IDA and getting Distribber into Redbox are not exactly calculated moves a grifter would make whose only aim is to take filmmakers' money and run. These are the moves someone would make who is aware of the landscape of indie filmmakers and is trying to get filmmakers to audiences. So, how or why would anyone think anything was not on the up and up? Soares currently has removed his Twitter account as well as his LinkedIn profile. We wish we knew more. 

“As part of this transition, DiGi Worldwide is re-launching Distribber with the following partnerships in place: Redbox, Redbox Instant, Walmart, VuDu, Google Play, amongst others. Distribber will also be expanding its Video On Demand (VOD) reach to new territories including UK, Russia, South America and China. We acquired Distribber simply because it completed our robust game plan. Allowing filmmakers to receive every option imaginable from funding to distribution, while maximizing their potential to not only return their investment but to actually make a living producing movies."

  • June 2015: GoDigital Inc. Buys Distribber and Soares expands it from 6 employees to 14

From a Variety article:

“GoDigital Inc. has expanded its holdings by acquiring do-it-yourself provider Distribber for a low seven-figure price in cash and stock. Distribber, led by CEO Nick Soares, will become a third component of GoDigital to go along with Amplify Releasing and GoDigital Worldwide divisions. It will be adding an additional six employees to its existing staff of 14. Distribber allows filmmakers to access digital distribution platforms and to monitor their earnings in exchange for an upfront flat fee. Filmmakers keep 100 percent of all revenue generated. The deal was orchestrated by Preferred Ventures Managing Partner Kevin Iwashina, who advised GoDigital on the transaction."

  • January 2016: Nick Soares is named CEO of GoDigital, Inc. (presumably replacing Mulvey) 

  • June 2016:  Distribber partners with International Documentary Association (IDA)

As reported by Variety, a grant was started with IDA to empower filmmakers to take control of their releases and directly distribute their content, making grants totaling $50,000 in the first year. Nick Soares, CEO GoDigital/Distribber.com said:

“We have been fortunate enough both as filmmakers and as technologists to have vast experience in the distribution world and we believe in supporting outstanding filmmakers like Josh Fox. We are honored to be working with IDA on this effort." 

Incidentally, GoDigital Inc. files a fictitious name statement as Distribber this year.

  • 2016-2018: Filmmakers find both modest and extreme success using Distribber

As we covered on No Film School in 2016, the self-distributed documentary The Resurrection of Jake the Snake Hit No. 1 on iTunes using Distribber. Clearly they were working for many filmmakers.

A still from "The Resurrection of Jake The Snake" a film by Steve Yu handled by Distribber that made it to iTunes #1.Credit: Steve Yu

Film statistician Stephen Follows is one who should be on your radar. He crunches film data like cookie monster, for fun, and churns out easily digestible bar charts like, every other day. Here is one of his graphics on calculations for the kinds of films Distribber represented:

Credit: Stephen Follows
  • 2019: tVOD (transactional VOD) profits are down across the board in indie film, and a court ruling comes in

When we asked Jon Reiss about whether the Distribber shuttering could be an of indicator of how indie film aggregators are doing in the marketplace, he suggested:

“I think since a bulk of [Distribber’s] business was TVOD (transactional VOD) they were perhaps hurting due to the downturn of TVOD revenue. However, since they didn’t take a percentage this should not have really mattered to their bottom line. I think DIY alternatives in indie film are tough in general and the margins are thin. However, it could just represent issues with their business model, pricing as compared to competitors, and how they were run which – except for their pricing is all unknown at this point."

As you can see in this document, again posted by Christina Jo'Leigh in the Facebook group, the court ruled that GoDigital/Distribber must send a check to GoDigitalMediaGroup. Shortly after, Distribber shuts down its offices, stops paying filmmakers, and crumbles. A crippling financial arrangement with GDMG coupled with a drop in profits, and maybe more yet unknown factors leads Disrtibber to ruin. Glass Ratner Bankruptcy firm is hired by GoDigital Inc. aka Distribber. Filmmakers are left in the cold with mostly radio silence from the company.

“I wanted control back of my film. Currently, there are thousands of films on these platforms, collecting money and still sending that money to Distribber. I wanted to cut my losses."

How Filmmakers Are Dealing with the Distribber Fall Out

As we covered in our original post, it's unclear to many Distribber filmmakers what they are supposed to do right now that Distribber has stopped paying or fulfilling their agreements. Should filmmakers contact Amazon, Netflix, iTunes and ask for their films to come down? What happens to the films ratings and reviews? Does your film disappear from viewers who bought a digital copy? Can you get your film back up if you take it down? But for Alex Ferrari, the most important thing is having your film back.

For filmmakers like Ferrari, the path was clear: Pull your film.

“I emailed support and requested my film, This is Meg, get pulled down of all platforms. Within a few days, it had been pulled off. From what I’m hearing it is taking 30-45 days for films to come down. The skeleton crew of 4-5 people who are left to clean up the Distribber mess has been inundated with request after all the word got out about their issues paying filmmakers back and not refunding money. I had my film on ten platforms at one point but had pulled back because of other distribution deals I had entered into since my original self-distribution run. During the early days of self-distributing This Is Meg, I licensed the film to Hulu and generated most of my TVOD revenue from Amazon and iTunes. The other platforms were a waste of money. If I were doing it all over again I would strictly focus on Amazon. iTunes and TVOD, in general, is on a massive decline for indie films. SVOD and AVOD is where I’m seeing the potential for the most growth and revenue for self-distribution." 

“I wanted control back of my film. Currently, there are thousands of films on these platforms, collecting money and still sending that money to Distribber. I wanted to cut my losses and have the power to place my film on the platforms again through another aggregator of distributor so I could continue to generate revenue from my work." 

Where do indie filmmakers go from here?

While much of the Distribber story remains a mystery, one thing is clear: the period of filmmaker trust in the ‘democratizing’ platforms is over. After a decade of diminishing returns, the Distribber debacle is a wake-up call that platforms are just platforms. The anonymity with which we can list with them is the same anonymity we get in the case of a platform bankruptcy.

“It really depends on your film and who is interested in it,” explained Reiss to No Film School about whether aggregators will continue to play a role in indie film distribution. "So, yes – but the landscape is changing and the relevant aggregators will reflect those changes. By the way, I recommend while Amazon allows filmmakers to go up by themselves on Amazon to do so.”

Alex Ferrari is certainly not going back to an aggregator after this. “I think the film aggregator business has preyed on the indie filmmaker and has positioned itself as the savior from predatory film distributors,” he told No Film School. “If you have a large following, have a low budget and really understand what you are doing then using an aggregator might be a good plan. Even if I had all that, knowing what I know now I would rather go with companies like Indie Rights or Filmhub. They have a much larger reach than a film aggregator and the 80/20 split is more than fair."

Filmmaker Alex Ferrari of Indie Film Hustle wants filmmaker's to take more control of their destinies.Credit: Indie Film Hustle

"I believe that the future of indie filmmaking with be the Filmtrepreneur, the entrepreneurial filmmaker. Depending on anyone outside company or person for the success or failure of your film is looney to me. This is why over 95 percent of indie films fail to be distributed and less than that actually make any money. This is why I wrote my new book, Rise of the Filmtrepreneur: How to Turn Your Indie Film into a Moneymaking Business. If filmmakers do not take a serious interest in the business side of making film, then they will most likely fail. It's a new world for indie filmmakers and if we all do not adapt, adjust and continuously pivot then the entire indie film industry will not survive. There is no reason why you can’t tell the story you want and generate money with that film. It’s all how you approach the situation. Who is your audience? What products or services can I create to service this audience? What revenue streams can I generate from this film? Answering these questions will start you on a path to having not only a successful film but, dare I say, a successful filmmaking career."

Is all this a fluke or forecast of indie film? How do filmmakers navigate distribution going forward? Can we pivot? The Distribber fallout is a clear sign that we have to seriously revisit our models and find or make new ones that work.

If you’re a filmmaker trying to navigate your way through distribution in the wake of Distribber, please share your experiences with us.     

Editor's Note: We were not able to get insight from Distribber/GoDigital, GDMG, Amazon, or Glass Ratner for this article. Some were not at liberty to provide quotes to the press, some just did not respond. If you are from one of these places, or if you have insight into this story, we want to hear from you.

 

Your Comment

7 Comments

The market just keeps getting more and more convoluted. I keep reading stories like this, with deep implications for smaller(ish) and independents. It's sad to see distribber die like this.

September 30, 2019 at 3:26PM

3
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John Watkins
Consultant
25

Oakley, thank you so much for laying all of this info out. This is the kind of content that makes NFS great.

September 30, 2019 at 3:47PM, Edited September 30, 3:47PM

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Rick Caplan
Writer/Producer/Director
70

Thanks Rick, I truly appreciate you reading!

September 30, 2019 at 4:15PM

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Oakley Anderson-Moore
Writer
Director/Shooter/Editor

This is an incredible piece of reporting, Oakley! Thanks so much for doing all of the legwork and compiling everything so thoughtfully and thoroughly. Super appreciated!

September 30, 2019 at 9:15PM

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Rob Hardy
Founder of Filmmaker Freedom
5629

The unfolding story of why Distribber went down is one of twists and turns, really?

October 1, 2019 at 4:36AM

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I have a bad feeling the same thing is going to happen to Quiver. I just put my movie on there a few months ago and they have been horrible. They reply to less than half my emails and there’s no direct way to contact them by phone or email. Fingers crossed nothing happens, but I wouldn’t be surprised.

October 2, 2019 at 10:27AM

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Matthew Tibbenham
Director/Writer
86

What ever happened to the film transparency project? Something like that would probably help here, because, hey, how many of you true indie creators scrapping it out on weekends and over the summers have films on TVOD, AVOD, SVOD services and are looking at your numbers and thinking its a perfectly great arrangement? As a personal example, a line item on a fresh report from a certain large streaming platform (that is not Netflix or Hulu) showed we had 2000 views and guess what that netted us? $35. No, that's not a typo, 2,000 people viewed a film and the filmmaker got $35 dollars. At those rates (which sometimes dip to as low as .0005 on one platform - I kid you not), why shouldn't you keep all rights and just release it on your own? Heck, might as well give it away for free and just ask for a tip jar to be filled. At least you'd be able to interact with your viewers/followers instead of it being a black hole.

October 3, 2019 at 3:21PM

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