Maximizing Your Profit in Academic Distribution

Most of the fimmakers I meet think the major difference between self-distribution and mainstream distribution is the person who does the work; otherwise, an independent can copy the mainstream model and, if they’re lucky, achieve equal success. The truth is that there are major differences, and if you don’t fully understand them, you stand to lose a lot of money.

Here’s why. The film industry (if such an entity still exists) makes money from movies in four ways: from theatrical release, broadcasting, licensing, and the home market.  The least obvious of these is licensing.  You don’t see it unless you look.  Go to Amazon and you can usually buy a feature-length film for $20 or less–pretty cheap compared to my 30-minute film that sells to universities for $250 (the price of the DVD plus a public performance license which allows institutions to show it without risk of copyright infringement). In reality, most institutions pay much more for the Amazon feature, we just don’t see the transaction.  If the film comes from a major studio, an umbrella license is usually required, and is purchased yearly to comply with copyright laws that protect the institution should  a professor or other professional rent a film from Netflix and show it in class.  (The average professor, of course, won’t even know a license is required—a fact spoken from experience.  How many films have I rented and shown to classes without a second thought?)* Swank Films, a distributor of successful independents, sells rental licenses that give colleges and universities a ‘one night only’ right to screen an indie DVD to audiences for as much as $500.

If the deal is right, getting picked up by Swank could be a good option, but it’s not one open to all filmmakers, and in addition, only covers daily rentals.  Meanwhile, most independent filmmakers have to fend for themselves if they want to hold onto their licensing revenue.   This is because the number of institutions out there to buy licensed films is small.   There are less than 5,000 universities in the United States.  If 500-1000 of them buy your DVD, you’ve had tremendous success.  At $295 each, that’s about $150-300,000—peanuts compared to what major studio releases make, but still a very nice chunk.

But what if you’ve already sold 500 of your DVD’s at $20 each because you’ve been selling on Amazon and you want to stay competitive?    Do you know for a fact that each of your buyers was not a librarian or professor?  Because if they were, you’ve just wiped out $150,000 in revenue.  The reason is that professors are the driving force behind getting their department or institution to purchase a licensed copy.  If they need the film and it’s available for $20, they will buy it for $20, or stream it to their class for $1.99, the requirement for a license be damned, if they even know about it.

However, if it’s only available for $295, then they will use their class budget (many professors have one), to request the purchase, or more often, ask their library to purchase it.

In my opinion, this is grossly unfair, but one of the most important realities you will need to confront to succeed as an independent distributor in the academic world.   Where will the majority of your revenue come from? Education or home sales?   Can you really make enough $20 sales (or $2 streams) to equal 500 academic sales?

Think clearly about your business goals, review your sales numbers carefully, and formulate your strategy with a level-head. Short-term experiments are also good.  In the fall when universities make a lot of purchases, take both your $20 version and your $2 stream off your website and see how many more institutional sales you can make.  You can always put those prices back at a later date, or in a year or two after you’ve made the bulk of your academic money.

“Your time is limited, so don’t waste it living someone else’s life.  Don’t be trapped by dogma.”
— Steve Jobs, Apple Computers.

“When all the rules change, there are no rules.  The successful businessperson makes his or her own rules.”
— Judith Dancoff

*(Note: Something called the “Face-to-Face” exemption in the Copyright Act does give a professor the right to show an unlicensed film if it’s just in the classroom, so long as he or she doesn’t show the whole movie.  In my opinion, though, the bottom line for filmmakers is that since we can make licensing revenue this way, we should. Sure you’ll sell more films at a lower price, but your net profit will be the same, plus the institutional market is small. You’ve worked enough ‘B’ jobs to support your art.  Let your revenue last as long as you can.)

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